So Kevin Warsh might be the next Fed chair. And before you roll your eyes and think “great, another Fed guy,” hear me out – this could actually shake up the AI world in ways that make your portfolio very happy.
Here’s the deal: Warsh isn’t your typical “let’s print money and see what happens” Fed chair. He’s more like that friend who cuts up your credit cards when you’re drunk shopping on Amazon. He hates quantitative easing (QE) – you know, that thing where the Fed buys bonds to keep asset prices artificially high.
Why This Matters for Your AI Stocks
For the past 15 years, QE has been like a trust fund for the stock market. Companies could say “we’ll make money… eventually” and investors would throw cash at them because, hey, the Fed’s got our back. This worked great for AI companies that were all promise and no profit.
But Warsh wants to end the party. And that’s where things get interesting.
The Great AI Split
Without QE propping everything up, AI stocks are about to split into two camps:
“AI Now” Companies: These are the ones actually making money from AI today. Think the companies building the chips, data centers, and infrastructure that power AI. They’re like the guys selling shovels during the gold rush – except the gold rush is real and they’re getting paid in actual dollars, not promises.
Companies like NVIDIA’s suppliers, data center builders, and semiconductor manufacturers fall into this bucket. They don’t need cheap money to survive because they’re solving real problems for customers who pay real bills.
“AI Later” Companies: These are the “trust us, we’ll figure out how to make money from AI eventually” crowd. They’ve been riding the QE wave, but when that wave crashes, they’re going to need actual business models.
We’re already seeing this with companies like Adobe, Salesforce, and others getting hammered despite having AI features. The market is basically saying “cool story, bro, but where are the profits?”
Why This Is Actually Good News
I know, I know – market corrections aren’t fun. But think of this as Marie Kondo for your portfolio. The companies that survive will be the ones that actually “spark joy” (aka generate cash flow).
Plus, when the government starts throwing money at AI infrastructure – which they will, because nobody wants to lose the AI race to China – the “AI Now” companies will be first in line. It’s like being the only restaurant open during a food shortage.
The Bottom Line
If Warsh becomes Fed chair, we’re looking at the end of the “fake it till you make it” era for AI stocks. The winners will be companies that are already making money from AI infrastructure, not the ones promising to revolutionize everything “soon.”
It’s going to be messy, it’s going to be volatile, but it’s also going to separate the wheat from the chaff. And honestly? It’s about time.