Likes ReceivedInterest rate cut cycle is coming: How to view the rotation from AI hardware to software and early bets
Over the past few years, the Fed's interest rate hikes have poured cold water on the market, and capital has been hesitant to rush in. Now that rate cuts are imminent, once money becomes cheaper, tech stocks, especially AI, will undoubtedly be the first to benefit. However, the investment logic for AI is also undergoing a subtle 'shift from hardware to software.' Meanwhile, cryptocurrencies and related stocks may also become new favorites of the rate-cut-driven capital.
1. Why the 'Hardware to Software' Shift?
Hardware (CRVW, NVDA, AAPL)
Initially, the focus was on computing power, GPUs, and data centers. Without shovels, you can't mine gold—this logic holds. NVDA is the 'shovel giant' of the entire AI revolution, a position that's hard to shake.
However, the hardware sector has already seen significant gains, and valuations are high, making short-term doubling unlikely. Thus, the market naturally shifts some attention downstream.
Software (GOOGL, OPEN)
Hardware sets the stage, software steals the show. GOOGL thrives on AI search and ad ecosystems, while OPEN leverages AI tools and office applications—these are the businesses that reach end-users directly. Post-rate cuts, new capital will seek higher-value opportunities, and software is the natural landing spot.
Cryptocurrencies and related stocks
Rate cuts benefit crypto directly: lower funding costs, a weaker dollar, and higher risk appetite.
Cryptocurrencies:
BTC: Digital gold, a store of value, ideal for long-term DCA.
ETH: The foundation of smart contracts and DeFi, with unchanged long-term growth logic.
Crypto-related stocks:
COIN (Coinbase): The leading U.S.-compliant exchange; rate cuts will boost crypto inflows, increasing trading volume and directly benefiting COIN.
HOOD: A hybrid stock/crypto exchange popular with younger users, with a high moat. Recently added to the S&P 500, it's a long-term hold.
MARA, BMNR: Highly correlated with BTC, more volatile swings, suitable for short-term or satellite positions.
The crypto strategy: BTC/ETH for long-term core holdings, HOOD for mid-to-long-term gains, MARA/BMNR for satellite plays.
2. How to Approach Long-Term Holdings?
Long-term doesn’t mean holding blindly—it’s focusing on moats and growth potential.
$NVIDIA(NVDA.US) NVDA (NVIDIA): The undisputed leader in AI computing power, the hardest core holding in hardware. Regardless of short-term volatility, it’s a must-have for long-term portfolios. (23% of my portfolio)
$Coreweave(CRWV.US) CRVW: A mid-cap hardware stock, NVDA’s 'prodigy' with both cyclicality and technical depth. High volatility makes it suitable for small positions as a 'safety net.'
$Alphabet - C(GOOG.US) GOOGL: A cash flow machine, driven by ads, cloud, and AI—a core long-term holding.
$Opendoor Tech(OPEN.US) OPEN: High growth potential but more volatile, ideal for 'satellite' positions to capture long-term upside.
$Apple(AAPL.US) AAPL: A consumer electronics giant and AI gateway, with a stable ecosystem—perfect for defensive, slow-growth core holdings.
Long-term strategy: NVDA+GOOGL+AAPL as the core, value crypto (BTC/ETH) for defense and growth; OPEN for high-growth satellite, CRVW as a small hardware hedge.
3. How to Approach Short-Term Trading?
Short-term is about timing, not narratives.
Hardware (NVDA, CRVW): Trim on rallies, add on dips. NVDA is more resilient, AAPL is stable for holding, CRVW suits quick trades.
Software (GOOGL, OPEN): Chase breakouts when the market shifts to application logic. Short-term rallies are common.
Tactics: Trim hardware on highs, buy software on dips—don’t reverse it.
Crypto stocks (COIN$Coinbase(COIN.US) , MARA$Mara(MARA.US) , BMNR$BitMine Immersion Tech(BMNR.US)CRCL$Circle(CRCL.US) ): Follow Bitcoin’s moves; chase breakouts at key levels.
Cryptocurrencies (BTC, ETH): Short-term trades can scalp swings, but the core logic remains DCA and long-term holds.
4. What to Bet on Ahead of Rate Cuts?
Don’t forget, rate cuts don’t just favor AI:
REITs (Z$Zillow-C(Z.US) , LEN$Lennar(LEN.US) ): Lower financing costs benefit real estate and REITs first.
Finance (small banks, brokers): Easing rate pressure drives stock recovery.
Consumer (apparel, discretionary COST$Costco Wholesale(COST.US) ): Cheaper borrowing boosts spending.
Healthcare (LLY$Eli Lilly(LLY.US) UNH$Unitedhealth(UNH.US) ): Defensive long-term plays that also benefit from valuation resets.
In short, AI leads, but capital won’t stay in tech alone. Diversify into 'tech + real estate + consumer + healthcare' to hedge risks.
Don’t expect one strategy to work forever. Markets change fast—learn to adapt. The rate-cut cycle is coming, and the hardware-to-software shift in AI is inevitable.
True investing wisdom: Spot trends, pick the right assets, and hold steady. NVDA is the 'shovel,' GOOGL and OPEN are the 'stars,' CRVW is the 'ammo reserve.' Balance your portfolio to capture long-term trends while weathering short-term swings.
$SPDR S&P 500(SPY.US) $Invesco QQQ Trust(QQQ.US) $VG S&P 500(VOO.US) $Invesco Nasdaq 100 ETF(QQQM.US) $Cboe Volatility Index(.VIX.US) $Direxion Semicon Bull 3X(SOXL.US) $Direxion Semicon Bear 3X(SOXS.US) $Strategy(MSTR.US) $Circle(CRCL.US) $Netflix(NFLX.US) $Meta Platforms(META.US) $Tesla(TSLA.US)
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