📊 Market Overview
Stocks are opening slightly weak to start the week, with pressure coming from rising long-term bond yields and oil price swings. The biggest driver last week was a combination of bond market volatility, oil uncertainty around the Strait of Hormuz, and concerns about the cost of financing AI infrastructure. The one event to watch this week: NVIDIA (NVDA) reports earnings on Wednesday, which JPMorgan considers both a micro and macro event all by itself.
📊 Market Snapshot
The AI chip boom’s fundamentals keep improving, but rising long-term bond yields could cap how much investors are willing to pay for growth stocks — stay patient this week.
📈 The Big Picture
This is a week where the real story shifts from stock prices to interest rates and earnings. Goldman Sachs dramatically raised its forecasts for the semiconductor equipment market — projecting $150 billion in 2026, $218 billion in 2027, and $281 billion in 2028, up roughly 35% from prior estimates for 2028 alone. That’s a massive vote of confidence in chip spending. Meanwhile, JPMorgan’s inventory check shows chip inventories actually fell to 136 days from 140, sitting below seasonal norms — meaning companies aren’t over-ordering, and the growth cycle looks healthy.
But here’s the tension: all that AI infrastructure spending requires enormous financing, and long-term Treasury yields (the interest rate the U.S. government pays on 10- and 30-year bonds) are climbing again. Gold and crypto are strengthening while the dollar weakens, signaling investors are nervous about government debt levels. For your portfolio, this means even great AI earnings could get a muted reaction if bond yields keep rising.
📖 Term of the Day
CapEx (Capital Expenditures) — the money companies spend on big, long-term investments like factories, equipment, and data centers, rather than everyday operating costs. Why you care today: JPMorgan estimates large organizations could spend roughly $1.7 trillion on AI-related CapEx over the next 12 months, up from about 4.5% to 5.8% of total spending — and that surge is what’s driving the entire chip equipment boom.
💼 Watchlist: 3 Stocks to Know Today
NVIDIA (NVDA) — “The Main Event”
NVIDIA reports Wednesday and it’s the most important earnings event of the week. Reports surfaced that major customers received notices of server price increases — a sign of strong demand and pricing power — but Deutsche Bank notes the stock has actually fallen after each of its last four earnings reports, even when it beat expectations. The bar is very high.
Applied Materials (AMAT) — “The Picks-and-Shovels Play”
This company makes the equipment used to manufacture chips, and Goldman’s upgraded spending forecasts directly benefit it. Unlike AI stocks driven by hype, AMAT is supported by actual rising factory orders — making it one of the cleaner ways to play the chip boom.
Newmont (NEM) — “The Gold Shield”
Gold is strengthening as investors worry about government debt and a weakening dollar. Goldman notes three consecutive weeks of significant gold futures buying, and analysts see gold miners like Newmont as a way to hedge against the same fiscal risks that could pressure your tech stocks.
💬 Esther’s Take
