Markets
Luke Kawa

US stocks swoon as AI trade takes a beating

A double whammy of negative AI headlines and tougher tariff talk sank stocks on Wednesday.

The S&P 500 fell 1.1%, the Russell 2000 gave back 1%, and the tech-heavy Nasdaq 100 slumped 1.8%.

Tech was the worst S&P 500 sector ETF, down 2.2%, while consumer discretionary fell more than 1%. Staples was the biggest gainer.

TD Cowen analysts, whose report on Microsoft’s dimming demand for data center projects last month weighed on AI infrastructure and energy names, said that the company had walked away from 2 gigawatts’ worth of data centers. The bottom of the S&P 500 leaderboard was a who’s who of AI-adjacent names: Super Micro Computer, Arista Networks, Vistra, Nvidia, Quanta Services, GE Vernova, and Monolithic Power Systems were all among the 10 worst-performing constituents on the day.

Meanwhile, President Trump pledged that auto tariffs are coming. Ford was relatively unbothered, while General Motors tanked.

On the other hand, some all-around good news for gaming:

GameStop was up double digits after posting its largest operating profit since Q4 2017 and announcing a tweak to its investment policy to allow the purchase of bitcoin.

Nintendo also rallied as Goldman Sachs resumed coverage of the company with a “buy” rating, expecting strong sales from its Switch 2 console.

Dollar Tree’s commitment to low prices is admirable: the company announced that it’s selling Family Dollar (which it bought a decade ago for $9 billion) for $1 billion.

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markets
Luke Kawa

Nvidia to reportedly raise at least $20 billion in first bond sale since 2021

While other tech companies are turning toward equity markets to finance their latest AI investment plans, Nvidia is reportedly about to tap the corporate bond market for the first time since 2021.

Per Bloomberg, the world’s most valuable company plans to raise at least $20 billion by selling bonds with maturities ranging from 2 to 30 years. Initial chatter has the 30-year maturities priced at a spread of roughly 90 basis points to US Treasurys.

When Nvidia last issued 30-year debt in 2021, markets were still reeling from Covid-induced lockdowns and the coupon was about 220 basis points above the rate on US 30-year government debt.

Does Nvidia need the money? Unequivocally, no. But when you can raise money through the mid-2050s at less than a percentage point above US Treasurys, I suppose you don’t say no. It’s better (and cheaper) to raise money when you don’t have to compared to when you’re in dire straits.

And of course, while there’s been some tiptoeing into stock issuance, the credit market has still been the dominant means by which megacap tech companies look to find extra cash to facilitate their AI outlays. Google, in particular, has gone on a United Nations issuance spree this year.

markets
Claire Yubin Oh

Energy stocks follow oil lower as Strait of Hormuz set to reopen

Oil names including Occidental Petroleum, Marathon Petroleum, CF Industries, Devon Energy, Phillips 66, ConocoPhillips, Exxon, and Chevron are all ticking lower on Monday, following oil itself, after the US and Iran agreed to strike a deal to end a conflict that has pushed energy stocks up in recent months.

Alongside the countries both declaring the end of their military operations, US President Donald Trump said on Sunday that the Strait of Hormuz would be opened when the agreement is signed in Switzerland on Friday, writing on Truth Social, “Ships of the World, start your engines. Let the oil flow!”

Let the oil flow?

Vessel traffic through the Strait of Hormuz, however, remains largely unchanged since the announcement of the peace deal on Sunday, per crossing data tracked by AIS. With the exception of some smaller vessels and prearranged crossings, shipowners are likely waiting for the planned signing on Friday and further confirmation from the Iranian side before attempting transits.

Analysts at the Baltic and International Maritime Council said that they “still consider it very risking for ships to commence transits” through Hormuz, adding that they “expect it will take several weeks for all [trapped] ships to leave” in a conversation with CNN.

US-POLITICS-DIPLOMACY

Stocks soar as US and Iran reach deal to open Strait of Hormuz, end the war

The details of the framework for peace are not yet available.

J. Edward Moreno4h
markets
Helena Cheng

AMD shares climb on double Citi upgrade to “buy” with $575 price target

AMD’s shares are rising in premarket trading following a double upgrade from Citi. Citi analyst Atif Malik raised AMD’s investment rating to “buy” from “neutral” and boosted the bank’s 12-month price target to $575 from $460 per share, per Barron’s.

Malik argued that the broader market currently misprices AMD by looking at it primarily as a CPU producer, underestimating its massive GPU potential. Citi says that AMD is uniquely “poised to win the lion’s share” of Meta’s customized graphics chip business. Meta is leaning into AMD’s custom MI450 chips, which deliver a lower total cost of ownership compared to buying traditional off-the-shelf merchant hardware, according to Investing.com.

Citi highlighted a massive multiyear deal between the two tech giants involving a 160 million-share common stock warrant. As the first phase ramps up through 2027, Citi expects each gigawatt of data center infrastructure to translate into roughly $15 billion in revenue. Consequently, Citi hiked its 2027 AMD AI sales forecast to $33 billion (up 137% year over year) and projects GPU sales to reach $50.8 billion by 2028.

CEO Lisa Su recently delivered an optimistic demand forecast, predicting that the global market for CPUs will grow by more than 35% annually over the next five years. The chipmaker delivered a robust Q1 earnings report back in May that beat Wall Street expectations across key data center segments.

markets
Claire Yubin Oh

Astera Labs, CoreWeave, Nebius, Rocket Lab, Teradyne rise on Nasdaq 100 Index inclusion announcement

Tech stocks Astera Labs, CoreWeave, Nebius, Rocket Lab, and Teradyne have risen as much as 8.9% in premarket trading on Friday, thanks in part to Nasdaq’s announcement that the five companies will join its flagship Nasdaq 100 Index starting June 22.

As part of the index operator’s quarterly rebalance, which affects some $1.4 trillion in assets within the Nasdaq 100 ecosystem, the companies will replace Charter, Zscaler, Cognizant, Insmed, and Verisk — relatively slow-growth legacy businesses that have lingered around the bottom of the index in market cap terms of late. Most of those stocks slipped slightly on the news.

With CoreWeave and Nebius as two of the major players in the neocloud space, and Astera Labs and Teradyne specializing in making AI hardware and semiconductors, the latest additions reflect how the index is upping its exposure to the AI infrastructure stack. Back in December, Nasdaq also added AI data storage names Seagate Technology Holdings and Western Digital, as well as AI server manager Monolithic Power Systems, as part of its quarterly rebalance.

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