Colin’s Note: Virtually everywhere you look, stocks have rolled over…

It’s part of what I warned would happen back on April 1… when I said the four weeks that followed would be the most critical for investors in 2024… and would define this year’s market.

And it’s all coming to a head as we enter week four.

Many of the biggest names in tech – including Meta, Google, and Microsoft – will be posting earnings over the next few days. And the combined sway of these megacompanies is more than enough to move markets.

Not to mention, there’s one number on these reports that I’m paying extra attention to this week… because it matters to us far more than revenue or profits…

It’s all in today’s video below… click to watch or read on for the transcript.


Bleeding Edge subscribers, hopefully, you guys are doing well. Colin Tedards here.

At the beginning of this month, I came to you here in the newsletter with a message: the next four weeks would define the 2024 stock market.

And that’s exactly what’s happened.

Shares of Nvidia have traded higher 13 out of the last 15 months… and are now down 10% this month alone.

And it’s not just Nvidia.

Shares of AMD are down 15%. Other hardware stocks in the broadly diversified semiconductor ETF, the SMH, are down about 10%.

The losses haven’t just been confined to the semiconductor industry either. Virtually everywhere you look, stocks have rolled over since the start of the month.

But we’re about to head into the biggest week yet.

When I identified at the beginning of April just how critical this month would be, it was because of this week.

On Wednesday, we’ll hear from Meta. The social media giant still relies almost exclusively on advertising for revenue. But the company has been playing a critical role in the advancement of artificial intelligence (AI).

Last week, Meta released Llama III – its open-source large language model (LLM). It follows the successful release of Llama II, which is one of the most widely used LLMs today.

Elon Musk even weighed in on the release, calling the new LLM, “Not bad,” on X.

The open-source release means anyone can use the model for their own purposes. And it flies in the face of Google and Microsoft, which are spending tens of billions of dollars on LLMs that are proprietary to them.

Now when Meta releases their earnings later this week, very little will rely on AI. It all comes down to online advertising spend. And that’s what I’ll be monitoring very closely.

Weakness in online ad spend gives us further evidence the consumer is stretched and small businesses are starting to pull back.

Google will follow with earnings on Thursday. Again, it will all be about advertising in terms of revenue and profits.

The first test for AI software earnings will begin on Thursday as well when Microsoft reports its earnings. The software giant is well ahead of its peers rolling out its Copilot AI feature late last year.

 Combined, these three companies can turn these markets on a dime.

If Meta and Google show robust advertising spend, it’s a sign that despite inflationary pressures and higher interest rates and other things, small businesses and consumers continue to remain resilient.

Microsoft can send other software stocks like Salesforce, ServiceNow, Adobe, and others flying if it can show investors that real profits are coming from AI.

But there’s a more important number that I’m focused on this week.

In fact, I hope the number goes unnoticed by most investors. Then you and I can take advantage of this huge opportunity.

In the short run, Google, Microsoft, and Meta may disappoint investors… and the shares of these companies – which have been on a tear for nearly a year and a half now – might fall even further.

But one quarter isn’t going to derail the largest investment in technology that you and I have ever seen.

The real number to look for isn’t what Microsoft and these companies are bringing in terms of revenue and profits…

It’s what these three companies are spending.

Microsoft and Google have committed $50 billion each in data center spending just for 2024. Meta is projecting just under $40 billion. Any indication of a slowdown in spending will signal the hardware cycle of AI has officially peaked. Shares of Nvidia, AMD, and others will have likely seen their highs of the year.

But that’s not what I’m expecting.

These companies know exactly what’s at stake. Google has to protect its $2 trillion search engine. Microsoft has to protect its $3 trillion software business. And Meta, look, it can’t get left behind like pretty much every other social media website has before it.

To do this, these companies have to spend billions of dollars to create and launch new AI products and services in the coming months and years ahead.

But here’s the deal…

Wall Street investors are going to want results this week. But the fact of the matter is that Microsoft is the only company that will print real revenue and profits from AI this quarter.

Google, Meta, and others can only show how much they are spending and investing.

With Wall Street already on edge, this can create a situation we dream of as long-term investors… one where Wall Street is focused on one quarter or the short term… and one where we can focus on more.

Great technology advancements aren’t a sprint, they’re a marathon. And the AI race has only just begun.

I’ll be back later this week to dissect the results and let you know what I think is happening next. Until then, have a great week and I’ll see you again soon.