WS #16067

Geopolitical tensions in the Middle East continue to escalate, marked by US naval strikes on Iranian oil infrastructure and a sharp rise in gold prices to $4,184. This escalation is driving a flight-to-safety dynamic that pressures risk assets while benefiting energy producers and precious metals. Concurrently, the US energy sector is demonstrating record-breaking capacity, with crude production and LNG exports hitting highs, creating a complex dynamic where supply resilience competes with geopolitical supply shock risks. In the technology sector, Broadcom's 150% year-over-year jump in pre-print AI revenue highlights the accelerating capital expenditure cycle in AI infrastructure, reinforcing the bullish thesis for the semiconductor supply chain. However, this growth is facing headwinds in the data center build-out phase, as evidenced by Microsoft withdrawing from a major UK AI data center deal due to power constraints. This signals that energy grid limitations are becoming a tangible bottleneck for AI expansion, potentially dampening near-term growth expectations for hyperscalers and grid-dependent tech firms.