$7 Trillion Panic? Why AI Stocks Could Lead the Next Market Surge

What began as a promising rally quickly unraveled into chaos. 

The stock market started this year on a high, locking in 3% gains in January. AI momentum was still red-hot. Chatter about President Trump’s potential tax cuts and deregulation were keeping hope alive. And for a while, it looked like we were heading into another bull market breakout.

Then came the trade war, and optimism gave way to panic.

In February, the White House launched its first tariff threats. Stocks dropped 10% in 20 days – one of the fastest corrections in modern market history. 

Then April’s “Liberation Day” tariffs took center stage. Markets crashed again, falling nearly 20%. At one point in mid-April, the S&P 500 was on track for its third-worst start to a year in the past century.

It felt like the market was in meltdown mode. Some investors called it a slow-motion 1987 crash. Others feared it was 2008 all over again.

But just as quickly as things went south, they bounced back.

From Crash to Comeback: How the 2025 Trade War Sparked Stock Market Volatility

In a sudden shift, Trump walked back the harshest tariffs and paused reciprocal duties for 90 days. He exempted electronics from Chinese tariffs, then auto parts. The administration started talking about trade deals with Japan, India, the EU, even China. The rhetoric softened. 

And markets ripped higher.

In the past three weeks alone, the S&P has surged nearly 12%. It’s been one of the fastest recovery rallies on record.

So… what happens next?

That’s the question every investor is asking. And most are looking for the answer in the wrong place, trying to game out the next step in the trade war.

Is a deal with Japan coming? Will China retaliate again? Will Trump rescind exemptions and hit the gas?

Important questions, no doubt – but ultimately, the wrong ones.

Because we believe the thing that’s going to move markets next isn’t the trade war at all.

Instead, what will send shockwaves through the market – as soon as next week – is something much, much bigger. And it’s tied to the most powerful force in the market today: artificial intelligence.

AI Demand Is Surging Despite Economic Chaos

Let’s zoom out for a moment.

Despite the threat of a global trade war, U.S. recession, or stock market meltdown, the AI Boom has been humming right along.

Just look at the data.

Last night, Microsoft (MSFT) and Meta (META) – two of the world’s most important AI companies – reported earnings. And those results showed that the AI Boom is accelerating.

Microsoft’s Azure cloud business (home to most of its AI services) grew 35% year-over-year last quarter. That’s up from 31% the quarter before – and the first acceleration in over a year. 

Management said AI demand is so strong, it’s outstripping supply. The firm is investing more – a lot more – to meet demand for things like Copilot, GitHub Copilot, Microsoft Fabric, etc. It plans to spend approximately $80 billion on data centers in fiscal year 2025 to support those generative AI technologies.

Meta echoed the same sentiment. The number of advertisers using its AI creative tools rose 30%. Time spent on Facebook and Instagram is rising thanks to AI-powered feed improvements. And like Microsoft, Meta is spending even more on AI infrastructure to keep up with demand. In this latest earnings report, the company announced plans to spend between $64 billion and $72 billion on capital expenditures in 2025, a significant increase from previous estimates.

Let me be clear: These are trillion-dollar companies. They don’t hype things unless they have to. Both are saying that AI demand is soaring despite the trade war.

And they aren’t the only ones.