Good morning, investors. Investors have made a habit of talking about the Magnificent Seven as a single entity or trade idea, but recent months have given us plenty of opportunity to snap out of that instinct.

The latest batch of earnings may have been the final straw.

Wall Street spent the last three years treating Big Tech as a single, unified bet on the AI revolution.

That narrative is starting to fracture.

In place of the monolithic Magnificent Seven trade, a two-lane race is emerging.

Earnings from Microsoft and Apple on Thursday showed investors growing more skeptical of capital-intensive AI buildouts, while rewarding companies generating profits from hardware that’s already in the hands of consumers.

Microsoft stock dropped more than 10% — it’s worst earnings sell-off in a decade — after reporting a $37.5 billion in capital expenditures for the quarter, a 66% increase from a year ago.

Internal AI priorities, the company said, are absorbing computing resources.

That sell off happened even though the company beat expectations on top and bottom lines.

Shares of Apple, meanwhile, climbed after reporting a record-breaking $143.8 billion quarter, beating estimates largely thanks to a surge in iPhone demand.

Unlike Microsoft, Apple’s AI strategy is embedded directly into devices that its customers already own and love.

That allows software updates to serve as an incentive to upgrade hardware, rather than something like a speculative bet on infrastructure.

Should these same results play out over multiple quarters, Big Tech as a theme would split:

To be clear, this is not a final verdict on which strategy will win the next decade.

Not only will winners stem from both lanes, but Microsoft and Apple will each do just fine as the companies continue to evolve, regardless of which way investors position in then near-term.

In this moment, though, can we really blame investors for giving a premium to certainty today over uncertainty tomorrow?

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🏦 President Trump said he’ll announce his Fed pick today. In an interview late Thursday, he said Friday morning could be when he shares who will succeed Jerome Powell. (CNBC)

💰Amazon eyes a $50 billion investment in OpenAI. CEO Andy Jassy is leading negotiations with the ChatGPT maker, sources said. That would make Amazon the biggest contributor to OpenAI’s ongoing fundraising round. (WSJ)

🤝 Perplexity inked a $750 million cloud deal with Microsoft. The fast-growing AI company will now use Microsoft’s Azure cloud service, marking yet another massive deal in the AI world. (Reuters)

We sent a report on Hut 8 to Best Ideas Club members last February and the stock has destroyed almost every other name in the market.

Get other high-conviction ideas at BestIdeasClub.com.

🗓️ January 30, 1934: President Franklin D. Roosevelt signed the Gold Reserve Act, transferring all privately held gold to the US Treasury and prohibiting gold redemptions.

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