8 Takeaways from Sam Rines on Talking Markets
How big tech will find a way, some surprising beneficiaries of tariffs, and why the US consumer remains indefatigable.
Tech giants and the resilient consumer could defy bears, WisdomTree’s Sam Rines said on Talking Markets this week. Here are the key takeaways:
AI CapEx Looks Healthy
Contrary to concerns about tech valuations, Sam said recent earnings reports show an acceleration in AI investments. One example is Meta which announced higher-than-expected capital expenditure on data center chips for 2025.
“To me, you’ve got the big names doing the big things, and they’re telling you they’re going to do it for the next year,” Sam said. “Meta, Alphabet, Microsoft, Amazon, they’re seeing the returns on AI - they’re seeing the products begin to produce revenues. That's a pretty interesting environment for anyone that says it's too expensive.”
Big Tech Finds a Way
Post-election, a popular narrative is that policy will make things better for workers to the detriment of big tech. Sam disagrees: “Where do Amazon, Meta and Google get the vast majority of their revenues from? They get it from advertising.”
Sam points out that the number one ad category on digital and social is consumer packaged goods. “So, as the consumer strengthens and as you continue to have worker friendly policies put in place that puts more money in their pockets,” he said. “There's going to be a lot of companies trying to compete for [that money]. That's going to translate to advertising. That's going to translate into AI investment and you get a positive feedback loop.”
Data is the New Oil
Sam pointed out the growing importance of data for AI companies, suggesting investors should look beyond the obvious tech giants and seek out companies with under-the-radar, valuable datasets. “Lots of the companies that are currently valued at very high multiples are going to be looking for data, because you can build the technology all day long but if you don’t have the data, it really doesn’t matter,” he said.
💡”One of my favorites is Kroger,” Sam said. “Kroger has a giant data set of what American grocery consumers buy, when they buy it, and at what price they buy it at. That is a very powerful data set that they can license and or use for advertising themselves.”
💡Sam also mentioned GM bringing RoboTaxi to market. “GM said on their latest quarterly call, ‘we're going to have a tailwind on the EV front of $2 to $4 billion next year.’ GM actually has probably as much data as Tesla, if not more.”
Chips are Cyclical
AI spending will “get more discerning over time,” Sam said. “At some point, AI chips will be cyclical and it will go from building out AI data centers to maintenance capex on those data centers, putting in whatever new chip might be on the margin, but not building whole new facilities. So at some point there will be, call it a mini Cisco moment where the orders don't stop, but they do slow.” However, he said that’s unlikely to happen in next 3-6 months, adding, “It’s more something to worry about in 12-18 months.”
Don’t Fight Tariffs
“Take advantage of [tariffs'],” Sam said. “All you have to do is pay attention to what is most advantageous for the administration in terms of tariffs. He believes tariffs on China are politically popular and likely to continue. He also thinks the narrative that Mexico will suffer through tariffs is largely wrong. “I really think Mexico strikes a deal on immigration and gets very, very favorable treatment on the terror front, particularly since Trump negotiated USMCA,” he said. “He's going to hit China with a whole bunch of tariffs and that's going to be much more of a positive than negative for Mexico.”
💡“You don't want to fight the tape, and you don't want to fight the Trump tariffs,” Sam said. “You want to figure out what's most likely to benefit going forward. And that's pretty much India, a little bit of Japan, probably a little bit of South Korea and Mexico and U.S.”
Hunt for Quality in Small- and Mid-Caps
Sam is bullish on quality small caps and mid caps right now (emphasis on quality). He says that if there is a reduction in regulatory overhang, “you could potentially see a pretty big boom in mergers and acquisitions, and that’s going to be concentrated on the very well-run small and mid-cap companies.”
💡One small-cap brought up was Commercial Metals (CMC), which Sam had mentioned previously. “It’s still a phenomenally well-run company,” he said. “On their latest earnings presentation, they pointed out that they're the low-cost producer of rebar in Poland. The Trump administration has promised to end the war in Ukraine, that's a lot of rebuilding. And when it comes to rebuilding, a lot of rebar is going to be needed.”
The Consumer is King
Sam is paying attention to the consumer above all else, and the US consumer in particular. “The US consumer has remained undefeated in this cycle against all odds,” he said.
He says the consumer tends to pull back on spending going into an election, so the lack of political overhang at the moment is beneficial to the consumer. “I think it's going to be a very interesting holiday season,” he said.
Looking Ahead
Sam mentioned several factors could drive markets higher, including:
Potential tax reform in 2025-26
Continued tech capital expenditure
Strong consumer spending through holiday season
Merger & acquisition activity in small/mid-caps
“We could be talking this time next year, saying, ‘wow, the US economy just grew at 2.5-3%, the S&P 500 is at 6,500, and [we] don’t really have a narrative to crack.”
To watch the full episode, right this way.
Enjoy,
Maggie
Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and determine if an allocation to oil aligns with your overall financial plan.