HPWG Podcast June 2026: AI Infrastructure - The Next Big Investment Wave

Todd:
Hello and welcome to the June edition of the Hoffman Private Wealth Group Podcast. I'm Todd Hoffman, Certified Portfolio Manager and CFP®, Founder and Managing Director at Hoffman Private Wealth Group at Steward Partners. Thanks for joining us.

Jenna:
And I'm Jenna Makras, Wealth Advisor at Hoffman Private Wealth Group. We hope your summer is off to a great start. There is a lot happening in markets, geopolitics, and with interest rates — so let's get into it.

Jenna:
Before we dive in — Todd, I know you've been in Colorado. How are things out west?

Todd:
Really good. I was there in May for a couple of weeks and I'm heading back in July.  I am looking forward to seeing some of our Colorado clients and spending time there. I want to reassure everyone that when I am in Colorado, I am still working full time, I am available by phone, and continuing Zoom client reviews as usual — just with mountain views. I am also still working with the team every day and diligently staying on top of the portfolios. Our son Sam lives in Boulder, so some family time is a bonus too. What’s going on with you Jenna?

Jenna:
My summers are a busy balancing act of work and keeping Chloe busy and entertained. She is so fun right now, it’s a good time but she is also at that age she doesn’t like downtime and she is so smart I must keep coming up with things that keep her interest. I do love spending time with her in the summer. My son John has been a pleasure also. I don’t see him as much these days, but he still loves spending time with us so when we do see him it’s always great. 

Todd:
These are the moments that remind us of what long-term financial planning is really for — the freedom to be present for the people and things that matter most.

Todd:
Quick riddle before we get into markets: "The more you take, the more you leave behind. What am I?" Take a second... The answer is footsteps. Every step you take leaves a mark — and in investing, the consistent steps you take over years are what build lasting wealth. Markets will shake you around short-term. But the footprint you build over time is what matters.

Jenna:
Todd, we've been watching the Iran conflict for several months now. What's the latest — and is there any chance the Strait of Hormuz reopens soon?

Todd:
The conflict has not resolved, but there is cautious optimism. As of May 23rd, prediction markets put the probability of the strait reopening before July 1st at 54%.  Secretary Rubio suggested a deal could be close, but the deal is not done.  

Jenna:
What does Iran want? What are they asking for?

Todd:
Iran has been trying to turn this crisis into a permanent revenue stream. They launched the Persian Gulf Strait Authority in May — a government body to charge transit fees on every ship passing through. Some vessels have reportedly paid around $2 million per transit. J.P. Morgan estimated Iran could generate $70 to $90 billion a year if this system stands. The short version: they want to be paid to let the world use a waterway that international law says everyone has the right to use for free.  

Jenna:
And the U.S. response?

Todd:
Unambiguous. Secretary Rubio called the tolls illegal. 

Jenna:
Is Iran deliberately stalling these negotiations?

Todd:
Yes — and it's a financially sophisticated strategy. Iran wants to separate the Strait of Hormuz from nuclear talks. Their proposal — rejected by Trump in early May — would reopen the strait first and tackle nuclear negotiations later. Trump called this unacceptable. Once the strait reopens, oil prices drop, economic pressure on the U.S. eases, and Iran enters nuclear talks with less leverage pointed at them. Meanwhile, every week of delay, Iran collects toll revenue, drains global oil inventories, and profits enormously at $95 oil versus the $60-70 range before the conflict. The pain falls on American consumers and European manufacturers — not Tehran.  

Jenna:
Even if a deal gets done — does oil come back down quickly?

Todd:
Not immediately. The Pentagon told Congress on April 21st it could take up to six months to clear mines Iran has laid in the waterway. War risk insurance premiums have surged from 0.25% to as much as 5% of hull value — that doesn't disappear overnight. Intel’s CEO warned full capacity restoration could be delayed until Q1 or Q2 of 2027. A deal is a big positive signal for markets — but the structural oil trade doesn't unwind overnight. 

Jenna:
What is all of this doing to inflation? Give us the numbers.

Todd:
According to the BLS, April CPI came in at 3.8% year-over-year — the highest reading since May 2023, up from 3.3% in March. Energy costs rose nearly 18% annually; gasoline is up over 28%. National average gas prices hit $4.54 a gallon in early May. Core inflation — stripping out food and energy — is 2.8% and rising far from the Fed's 2% target. Practical tip: if you haven't booked summer travel yet, do it now — jet fuel inventories will take months to normalize even if a deal is struck.  

Jenna:
We have a new Fed Chair. What should listeners know about Kevin Warsh?

Todd:
Kevin Warsh was confirmed and sworn in on May 22nd. Trump appointed him expecting lower rates — but he's walking into a complicated environment. His first major test is on June 17th, his first press conference following an FOMC meeting. According to Bloomberg, Bond markets are pricing in the possibility of a rate hike by year-end — a complete reversal from where we started 2026. My expectation: Warsh communicates patience and data-dependency, and a small hike is a real possibility if inflation doesn't cool.  

Todd:
One more riddle before the most exciting topic of the year: "I'm not alive, but I grow. I don't have lungs, but I need air. I don't have a mouth, but water kills me. What am I?" The answer is fire. AI infrastructure works the same way — it needs massive fuel: capital, electricity, chips, data centers. Right now, that fuel is being poured on at a scale we've never seen.

Jenna:
Our clients have been asking a lot about AI and semiconductors, which is a large part of our portfolios. This has clearly been the standout story of 2026 — and it has driven our results! What are your thoughts about these areas now? 

Todd:
This is the most important structural investment story in markets right now. According to Factset, The Philadelphia Semiconductor Index is up over 165% year-over-year — it hit an all-time high on April 24th. The S&P 500 is up 11% on the year. The Nasdaq is up 16.33%, Dow is up 6.86%. and our portfolios have significantly outpaced all three indexes.

Jenna:
Why AI infrastructure specifically — not just broad tech?

Todd:
This is the key distinction. A lot of investors bought broad tech or software exposure and got hurt when markets sold off on inflation and rate fears earlier this year. We went narrower — focusing on the physical backbone of AI: chips, data center hardware, power infrastructure, networking. These earnings are not contingent on whether AI applications succeed commercially. They are driven by purchase orders already placed. 

Jenna:
Why is this insulated from the macro noise — Iran, inflation, rate uncertainty?

Todd:
Because the demand driver is locked in and non-discretionary. Goldman Sachs reported on April 2, The four major hyperscalers — Amazon, Google, Meta, and Microsoft — have committed a combined $630 billion or more in capital spending for 2026. That's up 62% from last year's already-record levels. Amazon: $200 billion. Google: $175 to $185 billion. Meta: $115 to $135 billion. Microsoft: $110 to $120 billion. This spending doesn't stop because oil is at $95. It doesn't slow down if Warsh raises rates. Goldman Sachs estimates $7.6 trillion in total AI-related capital investment between 2026 and 2031. We are in year one of a six-year structural buildout.  

Jenna:
That covers demand. But couldn’t chipmakers just ramp production and compete those profits away?

Todd:
That’s the other half of the story — and it’s the part most people miss. Supply physically cannot keep pace. According to IDC, DRAM supply is growing about 16% this year while demand is closer to 35%. The specialized AI memory called HBM, high bandwidth memory, is effectively sold out at all three global suppliers through 2026 and into 2027. And the advanced packaging step every AI chip must pass through — done almost entirely at one foundry in Taiwan — is oversubscribed, with the leading chipmaker reportedly holding more than 60% of the world’s capacity. When supply can’t grow fast enough, the companies that have it gain pricing power, and that compounds for years. The CEO of Intel said in April there will likely be no relief until 2028. This is not a one-quarter trade — it’s a multi-year structural shortage, and we own the names that have the capacity.

Jenna:
Are we early or late in this cycle?

Todd:
We are early — and this is what I feel most strongly about. The internet required a decade of infrastructure built out before it transformed the economy. Cloud computing required years before AWS and Azure dominated. According to Morningstar, on May 10th, AI is on the same trajectory, but at a larger scale and faster pace. Morningstar's analysis of 2026's top performers include the entire AI supply chain. The outperformance is running through the full ecosystem, not just a handful of mega-cap names. We leaned in early — bought the dip in March when geopolitical fear was peaking — and stayed positioned through the noise.  

Jenna:
A lot of people are calling this an AI bubble — another dot-com. How do you respond when a client asks if it’s 1999 all over again?

Todd:
I take that seriously, because I lived through 1999 — but I respectfully disagree, for three reasons. First, in 1999 the companies driving the cycle had almost no revenue; they were funded by a speculative market. Today’s buildout is funded by the most profitable companies in history, paying out of their own cash flow against revenue that already exists. Second, this is a physical story, not a financial one. Materials move out of China and Ukraine, get refined in Japan and the Netherlands, are fabricated in Taiwan and South Korea, and ship to U.S. data centers — you cannot speculate a supply chain like that into existence, and you cannot inflate it away. Third, the money is going into durable physical assets — power, cooling, networking — running services that customers already pay for. Will there be drawdowns? Absolutely. But when sentiment turns, the bottleneck does not disappear with it. That is a structural mindset, not a bubble mindset.

Jenna:
Walk us through the other key positioning calls across the portfolios.

Todd:
Five themes. First, we are overweight U.S. equities because U.S. corporate earnings have been resilient, the S&P 500 is near all-time highs despite everything in the Middle East, and domestic energy production has buffered the oil shock in ways other regions can't match.

Second, We are overweight U.S. small and mid-cap stocks. The Russell 2000 surged 22% from mid-2025 through February — nearly double the S&P 500's 11.8%. About 70% of small-cap revenue is domestic, so minimal exposure to Hormuz or global supply chains And The ISM PMI hit 52.4 in February — signaling industrial expansion.

Third, we shortened maturities earlier this year — that protected clients from the real price pain that hit long-duration bondholders as inflation concerns reentered the markets.

Fourth, we prefer high-yield credit and bank loans over investment-grade. Recession risk is low, default environment is benign, and floating-rate bank loans offer protection in a steepening rate environment.

Fifth and our highest conviction bond position: non-agency residential mortgage-backed securities.  Home prices are stable, inventory is tight, and the spread over agency MBS remains above historical.

Jenna:
Strong performance creates tax implications. How are you managing that?

Todd:
We've been proactive about tax-loss harvesting all year — not just at year-end. We identify positions that have lagged or no longer fit the thesis, realize the loss, and reinvest into similar but not substantially identical securities to maintain exposure while capturing the tax benefit. We don't let the tax tail wag the investment dog — but we do everything we reasonably can to minimize the burden. Over time, that discipline makes a meaningful difference in net after-tax results for clients.

Jenna:
How have Municipal bonds held up?

Todd:
Municipal bonds tend to have longer maturities and feel impact from inflation news. By shortening the maturities again this year, we have avoided much of the volatility, and even with the shorter duration, we have still focused on areas where we can get high tax-advantaged fixed income. The returns certainly cannot compare to the equities in our portfolios, but they have been solid. 

Jenna:
Todd — any big takeaways for listeners heading into summer?

Todd:
Geopolitics will remain contentious and inflation and oil elevated, inflation is sticky, and with a new Fed Chair we expect continued volatility.

The important thing to remember is for long-term investors — is the AI infrastructure buildout. When the world's largest companies commit $630 billion a year to build the infrastructure for the next era of computing, it creates durable, multi-year opportunities and we believe the AI cycle is still in its early innings.

Our goal at Hoffman Private Wealth Group is to help high-net-worth families, executives, business owners, and physicians navigate these shifts with discipline and clarity — so you can stay on track toward your long-term goals no matter what the headlines say.  

Jenna:
Thank you for listening to the June edition of the Hoffman Private Wealth Group Podcast. If you found this helpful, please share it with a friend, colleague, or family member who could benefit from a thoughtful perspective on today's markets. We'll see you next month.