Davos Digest
The 2025 World Economic Forum in Davos brought together world leaders, policymakers, industry titans, and academics to discuss pressing global issues under the theme "Collaboration in an Era of Accelerated Change." Across four days of panels, workshops, and discussions, AI and nuclear energy emerged as transformative technologies with the potential to address complex global challenges, from climate change to economic inequality and technological advancement.
Artificial Intelligence: Revolutionizing Industries and Society
AI was a recurring focus at Davos 2025, with discussions exploring its growing role in reshaping industries, enhancing societal resilience, and driving innovation. On Day 2, during the "Industries in the Intelligent Age" session, leaders such as Julie Sweet, Chair and CEO of Accenture, and Matt Garman, CEO of Amazon Web Services, emphasized the societal potential of AI. Sweet highlighted how AI can transform public services, particularly in healthcare and education, and address challenges like food insecurity. She framed AI as a tool for governments to improve service delivery and reduce inefficiencies. Paul Hudson, CEO of Sanofi, provided a specific example from the pharmaceutical industry, explaining how combining human expertise with AI in drug development has accelerated the discovery process while improving outcomes. This, he argued, demonstrates the complementarity between human creativity and machine learning. Panels also discussed the role of AI in improving supply chains, creating personalized consumer experiences, and advancing green technologies. AI's ability to optimize resource usage, predict consumer behavior, and reduce carbon footprints was particularly noted as key to aligning business growth with sustainability goals.
Nuclear Energy: A Cornerstone of the Energy Transition
Nuclear energy was another cornerstone of the discussions, with its role in achieving global energy security and sustainability being extensively debated. Sessions focused on how advancements in nuclear technology, including small modular reactors (SMRs) and fusion energy, could support global decarbonization efforts.
On Day 4, during the "All Hands on Deck for the Energy Transition" session, Ursula von der Leyen, President of the European Commission, outlined Europe’s ambitious plan to triple renewable energy capacity and double energy efficiency by 2030. Nuclear energy was highlighted as an essential part of the energy mix, providing a reliable, low-carbon power source to complement variable renewables like wind and solar. Fatih Birol, Executive Director of the International Energy Agency (IEA), emphasized the dual goals of energy security and decarbonization. He noted that nuclear energy is uniquely positioned to provide stable electricity in a sustainable way, especially as global electricity demand surges, partly driven by the energy needs of AI infrastructure.
Discussions highlighted the potential of next-generation nuclear technologies, such as advanced SMRs, which are more cost-effective, scalable, and safer than traditional nuclear reactors. Fusion energy, while still in development, was discussed as a longer-term solution to provide virtually limitless clean energy. Speakers stressed that nuclear energy could play a vital role in addressing energy inequality, particularly in regions with limited access to reliable electricity. By integrating AI to optimize grid management, nuclear energy could become more accessible and efficient, supporting equitable economic development.
The Intersection of AI and Nuclear Energy
A significant theme throughout the forum was the intersection of AI and nuclear energy and their combined potential to accelerate innovation. AI is increasingly used to optimize the safety, efficiency, and maintenance of nuclear reactors. By analyzing vast amounts of operational data, AI can predict equipment failures, optimize energy output, and reduce costs. As AI adoption grows, so does the energy demand from data centers, machine learning models, and edge computing devices. Nuclear energy offers a sustainable solution to meet these energy demands without increasing greenhouse gas emissions, ensuring the AI revolution remains environmentally responsible. Collaborative initiatives between AI and energy companies were proposed to harness AI’s capabilities in improving nuclear reactor designs, accelerating the deployment of SMRs, and managing complex energy grids that integrate nuclear, renewable, and AI-powered systems.
Key Takeaways
The 2025 World Economic Forum underscored the critical roles of artificial intelligence and nuclear energy as transformative forces in the modern world. AI’s ability to revolutionize industries and tackle societal challenges, paired with nuclear energy’s potential to provide reliable, low-carbon power, was presented as a blueprint for sustainable growth and innovation. However, the discussions also emphasized the importance of addressing ethical, regulatory, and equity concerns to ensure these technologies benefit humanity as a whole. As these fields continue to evolve, Davos 2025 reaffirmed the need for global collaboration to responsibly harness their potential for a more sustainable and equitable future.
The DeepDrama of DeepSeek
The reaction to the DeepSeek app overtaking ChatGPT on the Apple store is quite overblown, potentially creating an excellent dip for people to re-enter the AI trade.
Sure, it definitely is an eye opener for the US and semiconductor companies that China will not give up the fight for global economic dominance especially when it comes to the technology revolution and the AI race. However, does anyone trust China with this responsibility of all of their AI infrastructure, data, private information and IP. Why would anyone give up the information in their Gmail accounts just to be able to use this open-source AI platform (as is alleged to be part of the user agreement that obviously no one reads), when it hasn't even been verified yet.
But, the market reaction should also serve as an awakening for just who China is and why it is so important for America to win the AI race and perhaps, drive Elon Musk and Sam Altman to drop their public feud and get onboard as a force to ensure that the US remains the dominant player in all things AI.
All that said, hardware demand is incredibly robust, and the commitments that have been made by the Mag 7 and big tech should not be jeopardized one bit. Much information on planned capex spend will be revealed this coming week when Meta, Microsoft, Tesla, and Apple report. I find it very hard to believe that everyone in the AI world is in totally shock regarding this announcement, and that they will change their investments in GPU spend because of it. If I had to pick a horse in this race, I would bet on the ones ridden by Jensen Huang, Larry Ellison, Lisa Su, Sam Altman, Elon Musk and the rest of the US tech executives that are building one of the most game-changing tech platforms to ever revolutionize the way that humans live and work. China may have set a new pace in the AI race, but I don't think they will place in the winners' circle.
Investment Themes
After traveling the US helping President Trump sell his vision for America, it’s time for Elon Musk to face shareholders and sell his vision of AI, self driving vehicles, and robots to shareholders on Wednesday when Tesla (TSLA) reports after hours. TSLR shares had been running hot since its last earnings report on the tailwinds of Musk’s close association with President Trump, who won reelection in November and was inaugurated last week. The thought was that his influence would have a measurable impact on the tech space, AI, and the electric vehicle market. But with Tesla reporting its first year-over-year decline in vehicle deliveries last month, all eyes will be focus on how it plans to monetize the AI revolution in a meaningful way to justify the run up its its share price. Analysts are split fairly evenly between bulls and bears heading into the report. Will musk deliver for Tesla on the call as well as he did on the stump last fall for Trump.
Meta Platforms (META) was unphased by the DeepSeek news on Monday, closing the day nearly 2% higher while the rest of the Mag 7 (ex Apple), it’s hyperscaler peers, and semiconductor partners were routed. This may be a strong sign for Meta as it heads into earning results on Wednesday. Meta has been perceived as the big winner with the release of its open source Llama 3 large language model that has been widely adopted and highly regarded and because it has been able to show meaningful revenue from its AI investments. However, in this market you are only as good as your last report and your future guidance and Meta’s teflon share price during the market pullback will be under scrutiny Thursday when it reports. The question is, will it be enough for a next leg higher and what will they say about Capex spend to assure the semiconductor partners that they still intend to buy hardware.
Microsoft (MSFT): when it comes to the Mag 7, Microsoft has been like vanilla ice cream, always really good but not as exciting as those more exotic ice cream flavors. And on Monday, that “vanilla” performance in the share price took a nose-dive along with the semiconductor market after it was announced that DeepSeek took over Chat GPT as the number one application on the Apple Store. The good news is that Microsoft has been able to consistently grow its legacy business in software and gaming, as well as grow its very lucrative Azure cloud business. Investors will want to see growth in the Azure market share and continued growth from AI investments in the Cloud which has steadily risen over the past few earnings call. Perhaps the dip from Monday is a good place to invest heading into the earnings call.
Like Meta, Apple (AAPL) stock rose on Monday while most of its peers sank. The reason was that it hadn’t done enough in the AI development space and may now benefit from less expensive open source AI platforms in a more cost effective manner now that DeepSeek revealed an open source AI platform that is building momentum. That’s like offering a kid an A on a paper before he writes it, because his next door neighbor is going to help him write it. At this point we know as much about DeepSeek as we do about the neighbor’s ability to write a good paper. Whether or not DeepSeek can deliver is yet to be determined and whether or not it replaces all hardware costs is far from an immediate reality. As for Apple, they need to be focused on growing lackluster IPhone sales, and providing an actual plan to compete with hyperscalers on its AI applications. Either way, investors will want to see that Apple is making progress is sales and AI innovation and implementation.
Major US Economic Reports & Federal Reserve System Speakers (Times in EST)
TUESDAY, JAN. 28
8:30 am Durable-goods orders
8:30 am Durable-goods minus transportation
9:00 am S&P Case-Shiller home price index (20 cities)
10:00 am Consumer confidence
WEDNESDAY, JAN. 29
8:30 am Advanced U.S. trade balance in goods
8:30 am Advanced retail inventories
8:30 am Advanced wholesale inventories
2:00 pm FOMC interest-rate decision
2:30 pm Fed Chair Powell press conference
THURSDAY, JAN. 30
8:30 am GDP
8:30 am Initial jobless claims
10:00 am Pending home sales
FRIDAY, JAN. 31
8:30 am Fed Gov. Michelle Bowman speaks
8:30 am Employment cost index
8:30 am Personal income (nominal)
8:30 am Personal spending (nominal)
8:30 am PCE index]
8:30 am PCE (year-over-year)
8:30 am Core PCE index
8:30 am Core PCE (year-over-year)
9:45 am Chicago Business Barometer (PMI)
Source: MarketWatch.com, US Economic Calendar
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