Key Takeaways

• A technology super cycle and real asset boom are creating a powerful multi-decade investment opportunity.
• Hyperscalers are targeting ~$700B in AI-driven capex, signaling a technological arms race, not a normal cycle.
• Inflation is rising again, with CPI at 3.8% YOY, driven by supply disruptions, energy shocks, and war risk.

Overview

Paul Tudor Jones was recently on the Invest Like the Best Podcast. It is well worth your time.

The interview reinforced three timeless investment truths:

1. Most of your money will be made by riding a trend for a very long time.
2. Harness the power of compounding.
3. Every successful investor is a great risk manager.

Markets change. Great investment principles do not.

Ride the Big Trends

We are living through a technology super cycle. Technology has never moved this quickly and it will never move this slowly again. We have been positioned for this shift for years and expect it to persist for a very long time.

But technology is not the only wave we are riding.

Real assets are the bottleneck required for technology to scale. AI needs data centers. Data centers need power. Power needs grids, copper, steel, pipelines, and fuel. Robots still need metals. Semiconductors still require industrial supply chains.

The AI boom is ultimately an industrial story.

Add in reshoring and strategic industrial rebuilding and you have the hallmarks of a powerful multi-decade real asset cycle.

We believe this real asset cycle evolves over the long term as real-world constraints collide with massive technological ambitions.

Harness the Power of Compounding

The power of compounding is well illustrated by the S&P 500 Index and its long-term double digit return profile.

The wealthiest investors in history did not find hundreds of great ideas. They found a few and stayed with them for a long time.

We seek to identify the assets with the strongest long duration compounding characteristics and structurally overweight them.

This sounds simple because it is simple.

The hard part is behavioral. Most investors interrupt compounding by chasing headlines, panicking during volatility, or constantly repositioning portfolios.

Compounding requires patience. Patience is rare.

Great Investors are Great Risk Managers

There is no one size fits all approach here.

We target a consistent aggregate level of portfolio risk and seek to derive that risk from multiple differentiated exposures while reducing unnecessary concentrations.

Our objective is straightforward. Target an appropriate level of risk while ensuring that no single exposure dominates the portfolio.

The future is uncertain. Risk concentrations are easy to spot.

Earnings and Capex are Surging

Disruptive technology, insatiable capex, and tremendous earnings growth remain the fuel that keeps bull markets running.

LPL Research recently highlighted that the largest hyperscalers are on track for roughly $700 billion in combined capex aimed largely at AI infrastructure.

Larry Page reportedly said he would rather go bankrupt than lose the AI race. That perfectly captures the wartime spending mentality we have been discussing for some time now.

This no longer resembles a normal investment cycle.

It increasingly resembles a technological arms race.

That matters because wartime economies do not care much about efficiency. They care about winning.

That is bullish for infrastructure, energy, industrial production, semiconductors, utilities, and real assets broadly.

The U.S. is rebuilding industrial capacity at an impressive scale. The chart below demonstrates that manufacturing capacity in the U.S. has expanded for 51 months straight. We believe that this process lasts much longer and is more capital intensive than most investors expect.

The technology sector still has the potential to deliver significant earnings growth from here.

Hyperscaler Capex Projected to Hit ~$700B

Source: LPL Research, Bloomberg. Past performance is not a guarantee of future results. Estimates may not materialize as predicted and are subject to change.

U.S. Manufacturing Capacity Has Expanded for 51 Straight Months

Source: LPL Research, Bloomberg, U.S. Federal Reserve 04/21/26. Past performance is not a guarantee of future results.

EPS Growth: Technology vs. S&P 500 Ex-Tech

Source: LPL Research, Bloomberg, 04/30/26. Past performance is not a guarantee of future results. Estimates may not materialize as predicted and are subject to change.

The views expressed are for illustrative purposes only, subject to change without notice, do not constitute investment advice or recommendations, and are those of the author(s) and not necessarily those of VanEck or its other employees. Past performance is no guarantee of future results.

If AI truly is a disruptive general-purpose technology, as is our view, then eventually productivity gains spread across the economy and market breadth will materially broaden.

That is a trend we look forward to riding for a very long time.

Inflation is Rising Again

Physical constraints and supply chain vulnerabilities are driving inflation higher. Since this conflict started, we have warned that wars always begin with confidence and rarely end on schedule. Unfortunately, that observation is proving correct once again.

Risk will increase non-linearly over the next two months if the Strait of Hormuz remains closed as supply shortages become increasingly visible.

Inflation is rising again.

The latest CPI report came in at 3.8% on a year-over-year basis. Cost increases were most notable in gas prices, grocery prices, and airfares. Expect this to get worse before it gets better.

According to the IEA, this is one of the largest supply disruptions in history. ConocoPhillips recently warned that the grace period from tankers departing before the conflict began is over. Countries dependent on imports for energy and other raw materials are facing shortages.

Quick response buffers to the oil shock have thus far helped stabilize prices near the $100 per barrel range.

The most powerful tool has been Strategic Petroleum Reserve releases globally.

The United States alone has committed massive reserve releases to cushion price spikes ahead of the summer driving season. But reserve releases are not production growth.

Meanwhile, U.S. rig counts remain subdued as producers prioritize profitability and shareholder returns over aggressive expansion. That may be good for energy company shareholders. It may not be great for inflation. Time is not on our side.

We remain long oil and other commodities.

Number of Ships Passing Through the Strait of Hormuz Grinds to a Halt

Latest CPI Report Came in Hot at 3.8%

U.S. Taps Strategic Reserves Ahead of Summer Driving Season

Subdued U.S. Rig Counts Reflect Producer Discipline Over Expansion

Source: Bloomberg. Past performance is not a guarantee of future results.

The Physical Economy Matters Again

The world is changing quickly.

Technology is accelerating. Industrial capacity is being rebuilt. Governments are spending aggressively. Inflation is coming back.

Ride the big trends. Harness compounding. Manage risk carefully.

The future may be digital, but the infrastructure behind it remains stubbornly physical.

To receive more Model Portfolio insights, sign up in our subscription center.