What’s Working in AI, Small/ Mid Caps Primed on Cut, Zoom.

Happy Friday. It was a healthy week for the future of markets as rate cuts were solidified, economic data came in tame, and Powell’s press conference struck a dovish tone, all the bullish signals investors wanted. We also got fresh AI usage data that highlighted important shifts, alongside macro indicators that pointed to a healthy backdrop. Taken together, these factors keep us constructive on the outlook, with small and mid caps positioned to rip over the next 12–24 months.

One interesting note: Microsoft and Nvidia, leaders of the rally over the past 12–24 months were down this week despite the rate cut. Small caps, meanwhile, gained about +3%. Just another reminder of what we’ve been saying: patience and valuation matters. We expect more to come but not in a straight line. Let’s get into the data!

Here is the summary if you want just that:

• Zoom 10 million phone seats.

• 11% conversion for ChatGPT

• Peak vibe coding traffic?

• 3% by July 2026

Let’s kick off with some fresh AI data. This chart looks at how ChatGPT, now the default consumer app for AI, is driving retail conversions.

The number is 11.4%. That may sound low at first glance, but it’s actually higher than direct traffic to retailer sites and ahead of channels like email, display, and social.

This is how business models form. Conversion at this level means real value is being created. And where there’s value, I fully expect ChatGPT to eventually take a cut. Think Google, but AI-first.

This week we also now have data from both OpenAI and Anthropic on how people actually use these tools. Turns out it’s not all about work.

Practical guidance is the top use case, nearly 30% of activity

Seeking information and writing are right behind

Technical help is just ~5%

The big takeaway: AI is becoming a daily companion for decisions and advice, not just a workplace tool/ My view is that this is good news for job doomers.

Another interesting stat this week: web traffic to AI coding apps. Lovable and Cursor remain at the top, but traffic across the category actually peaked months ago. I thought it might be seasonality, but the trend lower has continued.

Signals that even in fast-moving AI, hype cycles show up quickly, and adoption curves don’t always move in a straight line. Lets see if this is THE peak or A peak.

Now where is AI thriving. Cars. Waymo out with more data showing how they are really delivering value in safety. 92% fewer crashes with injuries. Every stat on this page is 78% or lower in certain situations. Impressive.

It is probably why we are seeing millions of miles driven in 4 major metros and more cities announced.

Now lets turn to some macro. OpenTable reservations and people moving through airports remain firm.

Consumers are also spending. Here is credit card data showing just this. Since March Y/Y spending has had a nice trend higher.

Now we also got rate cuts. We are now at 4%-4.25%. Market at the time of this writing is expecting rates to hit 3% by July next year.

The combo of all this has driven demand for small caps here in the short term, But Investors are not only underallocated but also net short. Small caps have mostly been used as a defensive hedge against long books. But if the economy holds firm and cuts continue to push rates toward neutral, I see small and mid caps shifting from defense to offense.

Lastly for our investors: Zoom’s Zoomtopia, their annual event, brought some great updates this week.

10M Zoom Phone seats: now near the top of cloud phone systems

Zoom Contact Center: growing +100% ARR

Clear signs that Zoom is broadening well beyond video into full cloud communications.

This slide reinforces what we’ve been saying: Zoom is becoming a true platform. Just a few years ago, it was a single-product company. Now it leads in multiple categories and even hinted at an acquisition. They are a BIG PLAYER IN AI. More to see there.

Exciting times ahead.

That's all folks!

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Avory specializes in high-conviction equity strategies, emphasizing Secular Growth and Transformation Stories driven by exceptional teams. Data guides decisions. We cater to high net worth investors, family offices, and institutional investors. Note: This information doesn't constitute a recommendation to buy or sell any mentioned securities. Avory is based in Miami, Florida with clients all across the globe.

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Disclaimer: Not a recommendation to purchase or sell any securities mentioned. This is for educational purposes only.