franckreporter/iStock via Getty Images Thesis Summary While we can’t deny that headline data still supports the narrative of the AI supercycle, cracks are beginning to form in the industry. OpenAI recently missed internal revenue targets , and AI faces many other challenges. Markets are forward-looking, and one must wonder if the upside in AI is now fully priced in after a record rally in the semi...
franckreporter/iStock via Getty Images Thesis Summary While we can’t deny that headline data still supports the narrative of the AI supercycle, cracks are beginning to form in the industry. OpenAI recently missed internal revenue targets , and AI faces many other challenges. Markets are forward-looking, and one must wonder if the upside in AI is now fully priced in after a record rally in the semiconductors and other associated stocks. If the bubble is ready to pop, so to speak, these are the warning signs investors should be on the lookout for. Credit Markets: The First Crack Starts Here While, yes, stocks are forward-looking, nothing is more forward-looking than credit markets. The simplest and most straightforward way to tell if the market is in distress is by looking at credit spreads, or Credit Default Swaps. ORCL 5 YEAR (Fool.com) A lot of analysts have been recently tracking the CDS of Oracle ( ORCL ) bonds, for example. The company has made some major investments into data centers, and despite having strong cash flows, it has sought financing. We can see that five-year CDS for Oracle bonds reached a high in March, and though they have since cooled off, they have climbed back up in the last week. So now more than ever, investors need to keep an eye on the debt markets. Stress in these markets tends to show up 6–12 months before equities react. We’ve seen this movie before. Telecom credit, for example, deteriorated quietly in the late 1990s while equities kept rallying. During the decade, companies like WorldCom, Global Crossing, and Qwest invested more than $500 billion in laying down fiber optic cable. Like with AI, this seemed like a no-brainer. Internet usage was allegedly doubling every 100 days. But everyone was fighting for the same pie, and eventually these investments became unprofitable, credit markets deteriorated, and telecom stocks lost $2 trillion in market value from 2000 to 2002 Employment: The Good And The Bad Employment is usually a lagging i...
KalVista Pharmaceuticals (NASDAQ:KALV), a developer of oral therapies for rare diseases, closed Wednesday at $26.67, up 38.62%. The stock moved higher after news that Italy’s Chiesi Group will acquire KalVista for $27 per share in cash. Investors are watching deal closing risks a
KalVista Pharmaceuticals (NASDAQ:KALV), a developer of oral therapies for rare diseases, closed Wednesday at $26.67, up 38.62%. The stock moved higher after news that Italy’s Chiesi Group will acquire KalVista for $27 per share in cash. Investors are watching deal closing risks a
The U.S. Supreme Court appeared sympathetic to the Trump administration's move to end temporary protected status for Haitians and Syrians in the country. (Image credit: Roberto Schmidt)
The U.S. Supreme Court appeared sympathetic to the Trump administration's move to end temporary protected status for Haitians and Syrians in the country. (Image credit: Roberto Schmidt)
US equity-index futures fell early Thursday after a mixed picture from tech giants reporting late Wednesday in the US failed to ease concerns over AI spending. Contracts for the tech-heavy Nasdaq 100 declined 0.4% while those for the S&P 500 index slipped 0.2% after the underlying benchmark was little changed despite most of its constituents falling Wednesday. Share futures for Asian stocks also i...
US equity-index futures fell early Thursday after a mixed picture from tech giants reporting late Wednesday in the US failed to ease concerns over AI spending. Contracts for the tech-heavy Nasdaq 100 declined 0.4% while those for the S&P 500 index slipped 0.2% after the underlying benchmark was little changed despite most of its constituents falling Wednesday. Share futures for Asian stocks also indicated losses at the open on Thursday. Meta Platforms Inc. shares slid in post-market trading after the company revealed a boost to its spending outlook, while Microsoft Corp. stock also retreated as cloud growth failed to ease investors’ artificial-intelligence concerns. Alphabet Inc. was an exception among the trio of mega-caps reporting Wednesday in the US, climbing on solid sales. A widely followed US tech-focused exchange-traded fund fell after the closing bell. US crude opened 1.5% higher on Thursday as President Donald Trump told Axios he will not lift a naval blockade of Iran’s ports until he secures a deal with Tehran to address the country’s nuclear program, extending a standoff over the Strait of Hormuz that has caused a global energy crisis. Brent crude traded near $120 a barrel while the dollar closed 0.4% higher. “As long as there is no game plan to end this mess or at least open the Strait of Hormuz, the market will continue to tick higher,” said Robert Yawger , director of the energy futures division at Mizuho Securities USA. The Federal Reserve left rates unchanged . Traders have all but abandoned wagers on a rate cut this year and began pricing in the chances of a hike in 2027. Treasury 10-year yields hit a one-month high. Fed officials tweaked their statement, saying “developments in the Middle East are contributing to a high level of uncertainty about the economic outlook.” They repeated the phrase referring to “the extent and timing of additional adjustments” to rates. The gathering also revealed a deepening division. Cleveland Fed President Beth Hamm...