Positioning For The Next Phase: Reindustrialization, Embodied AI, Energy, and Crypto—And How We’re Trading It
Big Picture
On the horizon of U.S. equities, I find myself optimistic. A confluence of structural, policy, and technological forces is at play, notably reindustrialization, the shift from AI infrastructure to embodied AI, a significant energy build-out (including nuclear), and increasing clarity around pro-crypto policies. While we navigate through near-term macro challenges—rising tariffs that could reignite inflation, and growing narratives around an "AI bubble"—these factors haven’t yet derailed earnings or capital expenditures. I’m focusing on secular winners while employing "safety first" hedges at attractive prices.
The Interlocking Macro Themes
1. Reindustrialization & Strategic Reshoring
Two main motivations underpin the drive for reindustrialization. First, there is a political emphasis on “bringing manufacturing back” to enhance job creation and spur innovation through localized supply chains. Secondly, the imperative from a strategic standpoint seeks to minimize dependency on geopolitical adversaries for critical components, such as advanced manufacturing equipment and energy technologies. This push generates incremental demand for power systems, precision components, industrial software, and localized manufacturing.
2. AI Infrastructure → Embodied AI
The evolution of the AI market indicates that we are transitioning from Phase 1—focused primarily on securing GPUs, networking, and power supplies—to Phase 2. This new phase emphasizes operationalization, returns on investment at the application layer, and the deployment of embodied AI—think sensors, robotics, and edge computing. Capital continues to flow into enhancing data centers, including investments in liquid cooling and power distribution. However, the real growth will come from firms that can leverage this infrastructure effectively or provide the specialized hardware needed for implementation.
3. The Energy (and Nuclear) Build-Out
The interrelationship between AI and reshoring is poised to create a structural uplift in electricity demand. This burgeoning demand supports the construction of new gas peaking plants, necessitates grid hardening, and encourages a revival for nuclear energy through modular reactors. Electrification of industrial processes and improvements to data center cooling amplify this activity. Our investment focus includes companies that either supply critical infrastructure to data centers, or are integral to the nuclear fuel and technology chain, or engage in natural gas compression and infrastructure.
4. Crypto Policy Tailwinds & Institutionalization
In the political arena, cryptocurrency played a pivotal role in establishing a winning coalition, leading to noticeable shifts towards regulatory clarity and more favorable policies. This trend is bullish for network beta assets like Bitcoin and Ethereum, as well as for platforms and on-ramps. Moreover, the concept of a “BTC/digital asset treasury”—where companies hold or stake cryptocurrencies—introduces a hybrid business narrative that combines operating performance with embedded crypto leverage. We strategically entered positions during April’s corrective dip in several “treasury” stocks to benefit from this evolving dynamic.
Selected Companies and Their Strategic Fit
| Theme | Company (Ticker) | Why It Fits / Core Exposure |
|---|---|---|
| Nuclear & Energy Infrastructure | Oklo, Inc. (OKLO) | Developing micro-modular nuclear reactors for reliable, high-density power. |
| Nuclear & Energy Infrastructure | Centrus Energy Corp. (LEU) | U.S. pathway to HALEU enrichment, a strategic necessity for next-gen reactors. |
| Nuclear & Energy / Industrial Power | Powell Industries, Inc. (POWL) | Engineered power control systems benefiting from grid hardening and energy-intensive onshoring. |
| Datacenter Thermal & Resiliency | Tecogen, Inc. (TGEN) | Natural-gas engine chillers providing cooling capabilities for datacenters. |
| Advanced Manufacturing / AI Hardware | Celestica, Inc. (CLS) | Electronics manufacturer poised for demand in AI integration. |
| AI Infrastructure | Super Micro Computer, Inc. (SMCI) | Rapid AI server design, well-positioned for GPU and custom silicon diversification. |
| Embodied AI & Sensor Layer | Ouster, Inc. (OUST) | Digital lidar sensors for robotics and industrial automation. |
| Applied / Operational AI Software | Palantir, Inc. (PLTR) | Data integration and orchestration, vital for monetizing AI applications in enterprise settings. |
| Crypto Rails & Retail Access | Robinhood Markets, Inc. (HOOD) | Brokerage providing crypto trading and staking access, drawing mainstream participation. |
| Corporate BTC Treasury Leverage | Semler Scientific, Inc. (SMLR) | Operating healthcare analytics firm with an accumulating Bitcoin treasury. |
| Digital Asset Staking / Compute Optionality | Bit Digital, Inc. (BTBT) | Transitioning toward ETH staking with performance computing potential. |
(Not an exhaustive list; these represent significant thematic “nodes” that we emphasize.)
Market & Macro Stance
Inflation & Tariffs
So far, the burden of tariffs seems partly absorbed by foreign producers, resulting in limited pass-through effects, while tariff revenues have recently contributed to a fiscal surplus.
Fiscal & Policy Tailwinds
Strategically beneficial tax adjustments, targeted industrial incentives, and sustained public sector investments in defense and infrastructure present favorable conditions for growth.
Monetary Inflection Potential
With the market beginning to price rate cuts later this year, this poses a potential catalyst for both duration assets and equity resilience in the absence of a profit recession.
Our resulting stance remains constructive—albeit with strategies to hedge against potential adverse events while implied volatility is manageable.
Process: How We Execute
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Safety First (Systematic Hedging):
We routinely search for optimal put options on index ETFs using the Portfolio Armor app, retaining a hedge steady to manage risks while implied volatility is low. -
Objective Entry Confirmation:
- Internal Quant Signal: Recognizing names that appear in Portfolio Armor’s top names list gives us a green light for further investment, ensuring we’re targeting stocks that have previously shown a robust return potential.
- External Expert Confluence: If acknowledged traders align on bullish setups for our targeted stocks, we treat that as a secondary confirmation.
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Structure Selection & Time Horizon:
- When IV Elevated: We adopt strategies like risk reversals to capitalize on high premiums.
- When IV Muted: We prefer direct calls or spreads where delta efficiency exceeds premiums.
- A preference for longer time frames (4–8+ months) ensures we capture longer trends and fundamental catalysts.
- Documentation & Feedback Loop:
Each trade exit—successful or unsuccessful—is archived, allowing us to analyze losses based on cause (direction, timing, or structure) and fine-tune our approach accordingly.
Case Study: OUST – Two Paths, Two Outcomes
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Short-Dated Weeklies:
Acquired on 6/27 for expiration on 7/3 → -100% due to insufficient movement in direction in a short time frame. -
November Risk Reversal (Opened 6/25):
Long November $28 Call @ 4.50, Short November $20 Put @ 3.77 → Net debit 0.80. Current position marks at 6.425.- Unrealized P/L: +5.625 → +703% on initial debit (≈+27% of worst-case assignment exposure).
Lesson: Financed convexity harnesses structural trends; short tenor positions leave too much to timing.
Current Playbook Going Forward
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Continue Core Hedges: Maintain QQQ put layers to manage portfolio risks while enabling upside potential.
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Rotate Into "Phase 2" AI Beneficiaries: Center our focus on companies adept at leveraging data workflows rather than solely on hardware advancements.
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Add on Constructive Pullbacks: Use volatility corrections to scale into promising names instead of chasing immediate price rises.
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Favor Time & Structured Optionality: Default to longer expiries, employing various options strategies suited to current market conditions.
- Selective Cash / Stock Ownership: Carefully position in microcaps, maintaining disciplined sizing and index hedges for risk management.
Transparent Risks
- Policy Shifts: Future tariff implementations could reignite inflation, affecting growth.
- AI Capex Saturation: A slowdown in spending from major tech firms might compress growth expectations.
- Crypto Regulatory Curveballs: Changes in regulations may create headwinds for digital asset investments.
- Financing Risk in Microcaps: Companies requiring capital raises need tight liquidity management.
- Volatility Regime Shift: A sudden uptick in implied volatility could inflate the costs of new hedges rapidly.
Bottom Line
The foundational infrastructure is largely established; now, with a focus on embodied AI, re-industrialization, energy expansion, and crypto frameworks, the operational phase begins. By prioritizing safety and targeting curated secular winners via time-advanced strategies, we can remain active even when market valuations seem high. Expect continuous updates and analytical insights to refine our approach, enhancing transparency around both successes and losses to sharpen our process.