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Why AI Transformation Tops Trump’s Trade Wars and Fiscal Headwinds

The Nasdaq hit another record high in June, CoreWeave’s stock price quadrupled from its March IPO, and Circle trades at $190 after listing at $31. Even Klarna—after delaying twice—is racing to file while the IPO window is open. Welcome to the return of the public markets.

This resurgence arrives despite genuine headwinds. The US fiscal trajectory remains concerning, with debt service now consuming 17% of federal revenue. Trump’s tariff negotiations reach their climax on July 9th. And we just witnessed the most significant Middle Eastern realignment in decades, with US/Israeli strikes on Iranian nuclear facilities in June marking the culmination of months of regional upheaval. Yet markets have decided none of this matters as much as the AI transformation unfolding before us.

Let’s examine why investors are looking past the obstacles—and what could still derail this momentum.

The IPO Floodgates Open

While 2025 had promised to be a major IPO bonanze, the Trump Tariff pandemonium caused enough uncertainty to put a lot of IPOs on hold. As of the end of Q2, total capital raised in US IPOs is at $15.5bn (excluding SPACs), 7% below the same period last year. However, under the covers, there are signs that US ebullience is returning. CoreWeave and Circle have had exceptional runs since listing. And with a resolution to the Trump trade wars in sight, there is hope that things could accelerate in H2.

The optimism stems from several very successful IPOs. The standouts cluster in two categories: AI and crypto infrastructure.

In addition, 63 SPACs have IPO’d this year, raising a healthy $11 billion. That compares to $8.7 billion raised through SPACs in all of 2024, and signals a lot of capital now out looking for acquisition targets.

On the home front, June saw a nice “win” for London. Visma chose the London Stock Exchange over NASDAQ for its €19 billion listing, slated for 2026. Why would a software giant pick London’s lower liquidity? Simple: 70% of revenue comes from Nordic/Benelux SMEs. US investors struggle to understand European B2B dynamics. Sometimes the smaller pond makes sense.

AI’s Consumer Breakthrough

Menlo Ventures’ “State of Consumer AI” report captures a pivotal shift. AI has moved from “interesting feature” to “core functionality” across consumer applications. Key findings:

• Consumer AI apps now represent 8 of the top 20 non-gaming apps by revenue
• Average consumer interacts with AI features 4-6 times daily (up from near zero in 2023)
• Willingness to pay for AI features has tripled year-over-year

ChatGPT continues its dominance as the flagship consumer AI application, becoming the fastest-growing consumer application in history. The proliferation of AI-native apps—from character companions to AI photo editors—shows consumers absolutely do want dedicated AI applications.

This consumer adoption creates powerful network effects. As millions use AI daily, the feedback loop accelerates improvement, which drives more usage, which generates more data. We’ve seen this movie before with social networks. Now it’s happening with intelligence itself.

The Transformative Impact of AI

The revenue growth rates are magnificent.

• OpenAI: From $5 billion to approaching $10 billion annual run rate in six months.
• Anthropic: Now exceeds $3 billion ARR, tripling from $1 billion at the end of 2024.
• Cursor/Anysphere: $500 million ARR, still doubling every 8 weeks.

We’re watching the early innings of a multi-trillion dollar reorganization of how work gets done. It’s exciting.

Copyright Victories Clear the Path

Meta and Anthropic’s copyright victories in June removed a major uncertainty. US Courts ruled that training AI on copyrighted material constitutes “transformative use”—the same doctrine that allowed Google to scan books. The judges found that converting books into statistical patterns for AI training transforms their purpose entirely, making it fair use.

While appeals loom, the precedent gives AI companies confidence to train on broader datasets. This matters because better data means better models, and better models mean more valuable applications. It’s likely that the cases will come back in different forms, but it’s 1-0 to the frontier AI labs so far.

What Could Stop the Music?

Two near-term events could puncture the optimism:

1. The July 9th Trade Deadline

Trump has promised massive tariffs on EU goods, and the EU has prepared retaliatory tariffs on €95 billion worth of US goods if trade negotiations fail. Both sides seem confident that an agreement can be made, but in the unlikely event that negotiations blow up, expect markets to react negatively.

2. Q2 Earnings Season

The real test arrives mid-July when mega-caps report Q2 earnings. Key dates to watch:

• July 16: Major banks (JPMorgan, Goldman Sachs)
• July 23: Microsoft, Alphabet
• July 25: Apple, Amazon
• July 30: Meta
• August 6: Nvidia (the big one)

With the S&P 500 and Nasdaq now at record highs, expectations run hot. Any disappointment from the Magnificent Seven could trigger a correction. Nvidia especially matters. With a valuation now approaching $4trn, its August 6th report could make or break the rally.

Looking Ahead

Markets exhibit a distinctly risk-on mood. Following a strong June, the IPO window seems reopened after a three-year drought. AI adoption accelerates from 6% to what could be 15-20% of enterprises by year-end. And Europe shows signs of life, with serious infrastructure commitments finally emerging.

But let’s not mistake momentum for invincibility. Real icebergs float ahead. If earnings disappoint or trade negotiations explode, this rally could reverse quickly. The difference this time? The underlying transformation continues regardless. Companies using AI to achieve 10x productivity gains don’t stop because markets wobble.

June 2025 marked the month when markets decided transformation trumps turmoil. Whether that confidence survives July’s tests will set the tone for H2.

For those building through the uncertainty, the message remains constant: focus on creating real value, not riding waves. The patient builders survived 2001 and 2008. They’ll survive whatever comes next.