📊 Market Overview
Wednesday saw the S&P 500 slip 0.1% and the Nasdaq lose 0.4%, while the Dow bucked the trend and rose 0.4%. The pullback came on lighter momentum, though Micron’s blockbuster after-hours earnings report injected fresh energy into the AI trade. Today, all eyes are on the PCE inflation report — the Fed’s preferred measure of inflation — expected to show 0.4% monthly growth and a 4.1% annual rate.
📊 Market Snapshot
Micron’s massive earnings beat and 16 long-term customer deals are reigniting belief that AI demand is structural and not slowing down — but today’s inflation data could shift the mood fast.
📈 The Big Picture
Two forces are pulling the market in different directions right now. On one side, Micron’s blowout quarter — revenue of $41.5 billion versus $35.5 billion expected, with gross margins hitting 84.9% — is proof that AI spending is accelerating and spreading beyond just GPU chips into memory. The company signed 16 strategic agreements with customers worth roughly $100 billion in cumulative revenue, signaling demand that stretches years into the future.
On the other side, today’s PCE (Personal Consumption Expenditures) inflation reading will test whether the Fed can eventually lower interest rates. GDP growth came in stronger than expected at 2.1%, and jobless claims dropped to 215,000 — both signs the economy is resilient but also reasons the Fed may keep rates higher for longer. If inflation runs hotter than expected, it could pressure the consumer-facing stocks that have been rallying on hopes of cheaper energy and cooling prices — and that matters for anyone holding retail, airline, or restaurant stocks.
📖 Term of the Day
Strategic Agreements (Long-term supply contracts) — deals where a customer commits to buying a minimum amount of product over several years, often with guaranteed minimum prices. Why you care today: Micron signed 16 of these deals, locking in over $100 billion in future revenue and transforming its business from boom-and-bust cycles into something more predictable — which is why analysts are raising price targets aggressively.
💼 Watchlist: 3 Stocks to Know Today
Micron (MU) — “The AI Memory Giant”
Micron crushed expectations with $41.5 billion in revenue (vs. $35.5B expected) and earnings of $25.11 per share (vs. $20.40 expected), sending shares up over 17% in pre-market trading. Multiple analysts raised their price targets — Melius to $2,200 and Susquehanna to $2,000 — citing a new era where memory chips are becoming as essential to AI as GPUs.
Qualcomm (QCOM) — “The Upgrade Story”
Morgan Stanley upgraded Qualcomm from Underweight to Equalweight and raised its price target to $231, citing the company’s growing data center business projected to hit $5 billion by fiscal 2027. Susquehanna also lifted its target to $190 after Qualcomm outlined a $1.7 trillion market opportunity by 2030 — though concerns about its mobile phone business remain a headwind.
Affirm (AFRM) — “The Downgrade Warning”
Morgan Stanley downgraded Affirm from Overweight to Equalweight with a $79 price target, saying the stock’s big rally since March now fully reflects its strong credit performance and steady growth. They removed Affirm from their top picks list — a reminder that even quality companies can become fairly priced after a big run-up.
💬 Esther’s Take
