📊 Market Overview
Markets moved higher after July’s CPI (Consumer Price Index — the main measure of inflation) came in exactly as expected, removing the biggest near-term risk traders had been watching. The key driver was relief: core inflation held steady at 2.5% year-over-year, giving the Fed no new reason to raise interest rates. Today, watch how the 10-year Treasury yield reacts — if it stays calm, growth and tech stocks have room to run.
📊 Market Snapshot
Today’s CPI didn’t change the story — it removed a risk, and that’s exactly what AI infrastructure stocks needed to keep rallying.
📈 The Big Picture
July’s inflation report was a “nothing burger” — and that’s actually great news. Headline CPI rose just 0.1% month-over-month and 3.4% year-over-year, while core CPI (which strips out volatile food and energy) came in at 2.5% annually. Gasoline fell 2.9%, housing ticked up only 0.1%, and energy dropped 1.5%. None of this gives the Fed a reason to get aggressive with rate hikes. Inflation isn’t solved — it’s still above the 2% target — but it’s stable enough to keep the door open for possible future rate cuts.
Underneath that calm macro surface, AI infrastructure earnings are painting a powerful picture. CoreWeave (CRWV), Lumentum Holdings (LITE), Super Micro Computer (SMCI), and Nebius Group (NBIS) all reported results showing the same thing: demand for AI computing power, optics, servers, and memory is outstripping supply. When inflation stays tame, borrowing costs stay manageable — and that directly helps companies financing billions of dollars in data center buildouts. If you own tech or growth stocks, a boring CPI report like this one is quietly your best friend.
📖 Term of the Day
CPI (Consumer Price Index): A monthly government report that tracks how much everyday prices — like gas, food, and rent — are rising or falling. Why you care today: CPI came in exactly at expectations, meaning the Fed has no new reason to raise interest rates, which keeps the environment friendly for growth stocks and AI infrastructure companies.
💼 Watchlist: 3 Stocks to Know Today
Lumentum Holdings (LITE) — “The Breakout Star”
Lumentum beat revenue estimates with $1.01 billion versus $989 million expected, and earnings per share hit $3.23 versus $2.99 expected. Its adjusted operating margin jumped to 36.6% from just 15% a year ago — a sign that demand for fiber optic components powering AI data centers is surging.
Super Micro Computer (SMCI) — “The Caution Sign”
SMCI missed on revenue ($11.1 billion vs. $11.8 billion expected), but its earnings per share of $1.70 crushed the $0.68 estimate. The big question: the company is guiding next quarter revenue to $14.5–15.5 billion — way above the $11.7 billion consensus — and needs to prove those massive orders actually convert to sales.
Micron Technology (MU) — “The Bottleneck Play”
Micron says it can fill less than half the memory demand from data center customers, even at very high prices. The company already has 16 long-term contracts locked in through 2030 — a sign that AI memory is becoming critical infrastructure, not a boom-and-bust commodity cycle.
💬 Esther’s Take
