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Welcome back! We’ve made it to the middle of the week and stocks are still up. Hopefully we didn’t just jinx that. 

Big Tech is still frontrunning the rally and execs are still putting their money where their mouth is when it comes to AI. Casey has the rundown on why that’s potentially good and bad. 

Speaking of Big Tech, Ben ventured to Times Square on this rainy NYC morning so you didn’t have to. No, he wasn’t taking selfies. He was catching up with Hashdex at the Nasdaq. More on that below.

AI way or the highway

Thanks to the early signs of a trade deal with China and a better-than-expected April CPI print, Big Tech (and just about everything else) is up this week. 

The S&P 500 North American tech sector index is up 8.4% over the past five trading days. The Nasdaq Composite has gained 6.3% in that time. 

Even Microsoft and Nvidia — despite their respective headwinds (which we’ll get into later) — are in the green. They’re up 3% and 13%, respectively, in the past five days. 

The way I see it, there are two main forces poised to significantly impact Big Tech: tariffs and AI. These two forces just so happen to be intertwined. 

In an overgeneralized nutshell, higher tariffs mean many Big Tech companies may have to raise prices. While most consumer electronics are currently exempt from tariffs, Trump insists the relief is temporary. 

On the AI side, tariff-fueled supply chain disruptions for semiconductors and other infrastructure also make investing in AI more expensive. Still, the biggest names in the space say they’re forging ahead with massive AI budgets. 

Alphabet plans to spend $75 billion on AI and data center infrastructure, marking a 43% increase from 2024. Meta similarly upped its AI budget by 44% — bringing its 2025 target range between $60 billion and $65 billion. 

Microsoft, which revealed on Tuesday it would cut ~3% of its global workforce, said it will have spent $80 billion on AI expansion by June (when the company’s fiscal year ends). 

Grain of salt here. If tariffs make the tools to build out AI operations more expensive, of course the budgets will have to increase. But the budgets are growing by a lot. This signals companies are still on the offensive and see scaling AI models as an essential part of their businesses, even though this now costs much more. 

Nvidia shares have gained more than 10% since Monday’s open on news that the US and China had reached a temporary truce in the trade war. The chipmaker’s market cap is back above $3 trillion for the first time since February, even as its AI server maker, Foxconn, downgraded its 2025 outlook. 

A prominent theory in recent years has been that AI will improve productivity, and a new report published by the St. Louis Fed yesterday backs this up. 

See “Information” on that chart? That’s technology, and according to the St. Louis Fed, the industry has become about 5% more productive each year between 2019 and 2024. 

But what about the labor force? Isn’t AI coming for jobs? Yes and no. General consensus seems to be that AI will both create and destroy jobs. For now, I’d argue the biggest impact the Big Tech push into AI has had on the labor market isn’t that humans are being replaced by machines. It’s that their salaries are being redirected to fund those machines. 

The St. Louis Fed’s report notes that manufacturing jobs now make up a smaller share of overall employment, but productivity has increased. Economic growth happens when either more people are employed or when productivity increases. In a perfect world, we get both. 

Also, in a perfect world, ChatGPT doesn’t come for this journalist’s job. Here’s hoping.

— Casey Wagner

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The average daily transaction volume processed by JPMorgan’s Kinexys platform.

Kinexys joined Chainlink and Ondo Finance in completing the first cross-chain delivery vs. payment (DvP) settlement for a tokenized US Treasury fund across public and permissioned blockchain infrastructure, the companies revealed this morning.

The settlement of Ondo’s Tokenized Fund was the first transaction on the Ondo Chain layer-1 testnet and expanded Kinexys platform's settlement integrations beyond fully private chains.

Where the Internet’s Next Layer Gets Built

Permissionless IV kicks off June 24 in Brooklyn — the definitive builder conference for the teams scaling infra, deploying in prod, and designing the next era of crypto.

On the table: programmable Bitcoin, crypto x AI, modular infra, and real-world deployment workflows.

On stage: Furqan Rydhan (Thirdweb), Casey Caruso (Topology), Tarun Chitra (Gauntlet), Jeremy Rubin (Judica).

📅 June 24–26 | Brooklyn, NY

I just got back from the Nasdaq exchange, where I was chatting with Hashdex CIO Samir Kerbage.

His firm, which launched the Hashdex Nasdaq Crypto Index US ETF (NCIQ) in February, rang the opening bell this morning. A reminder of how far the crypto ETF scene has come. 

NCIQ currently holds both BTC and ETH and is looking to add other assets (XRP, SOL, etc.) once the SEC allows them in the ETF wrapper. Industry watchers are eyeing the agency’s July deadline to rule on crypto index funds.

Kerbage told me he sees the index products as more useful to investors who don’t want the risk of picking single winners in the segment. (Keep an eye on Blockworks.co for my full Q&A with him). 

In the meantime, crypto ETFs were mentioned plenty in Trackinsight’s latest ETF survey. You’ll notice crypto has its own line next to equities, fixed income, commodities and multi-assets:

Crypto and blockchain were the two best-performing ETF themes in 2024, with returns at roughly 62% and 43%, respectively. The next-best themes — each falling in the 30-40% returns range — were next-gen internet, travel tech and fintech. 

Those returns clearly matter as about 70% of respondents (600+ asset managers/advisers/family offices overseeing $1.1 trillion in ETF assets) listed performance as the main ETF selection criteria. That was more than fees, liquidity, provider reputation, AUM, etc.

But crypto ETF investors aren’t just reacting to price swings. Nearly 70% say long-term value appreciation is their reason for gaining/considering crypto exposure. That compares to the ~30% who are in it for the short-term gains.

As for investor plans for these products going forward, 53% of respondents said they expect to boost their exposure to crypto ETFs in the next six months. Just 4% intend to decrease their allocation to these — and 43% expect to stand pat.

Kerbage had plenty more to say on regulatory developments and the future of crypto ETFs, so look for that link in tomorrow’s FG.

— Ben Strack