Inflation just hit 2.5% – its lowest point in four years. The Fed held rates at 3.5%–3.75% last month. But this fresh data shifts the outlook. Markets now see a 23% probability of a March cut.
Don't get too comfortable though. This isn't a replay of the last cycle. Back then, you could buy almost any tech stock and watch it climb. Today, with the neutral rate locked at 4.2%–4.4%, blind buying is a losing strategy.
Tech investors are picking sides right now
CME FedWatch data shows markets expect just one rate cut in 2026 – a single 25-basis-point move. That means no wave of liquidity. Instead, money is flowing to companies with clear rate sensitivity.
Let's look at where it's going.
Defensive plays: Google and Microsoft
These two don't need rate cuts. Cash flow is massive.
●Google: Cloud revenue hit $17.66 billion last quarter that's above expectations. Net profit jumped 30%.
●Microsoft: Azure and Office keep the cash flowing. Institutions call them high-quality cash cows for a reason.
Growth play: AMD
AMD powers Google's cloud infrastructure. That gives it something special right now: elasticity. When rate cuts start, Nasdaq growth rallies about 5% in month one. AMD is a mid-AI expansion. It usually moves twice as fast.
High-beta plays: Bitcoin and MSTR
These two live and breathe rate expectations. A 25-basis-point move can swing them 5–8%. After the Fed's January signal, MSTR jumped 10%. It's a Bitcoin proxy with leverage.
Look at the bigger picture
The Bank of Japan may hike. That unwinds yen carry trades. Tariff talks are paused, that helps.
Trade your view:
• Steady? GOOGL and MSFT.
• More upside? AMD.
• Volatility? MSTR and Bitcoin.
Pick your spot. Precision beats blind buying.
For informational purposes only. Not investment advice. Always do your own research.
