📊 Market Overview
J.P. Morgan has shifted to a “tactically bullish” stance on stocks, citing solid consumer data, strong earnings expectations, and some stabilization in bond yields. Goldman Sachs echoes the positive view, noting the S&P 500’s valuation multiple has already dropped from roughly 23x to 19x over the past year, absorbing much of the interest-rate pain. Today, watch for ADP weekly employment data and — more importantly — how the bond market reacts to still-elevated ISM Services prices, with Fed inflation expectations and the Fed minutes arriving later this week.
📊 Market Snapshot
The AI investment story is spreading beyond chips into power, memory, and nuclear energy — but borrowing costs need to come down before the broader market can truly join in.
📈 The Big Picture
The AI trade is getting more physical. TSMC (TSM) is racing to ramp up production of its most advanced 2nm chips, with Apple, Qualcomm, NVIDIA, and AMD all increasing orders by 10–20%. Meanwhile, Micron (MU) says the memory shortage could last through 2028, and a reported multi-billion-dollar nuclear power deal between Constellation Energy (CEG) and Google shows that big tech companies are locking in electricity for 10–20 years to fuel AI data centers. Goldman estimates the market for battery backup units inside data centers could grow from $2.2 billion in 2025 to roughly $50.2 billion by 2030.
The catch? Long-term borrowing costs (the interest rate on 10-year government bonds) remain stubbornly high near 5.25–5.30%, and the rally is still being carried almost entirely by big tech. Until rates stabilize or fall, it’s hard for the rest of the market to broaden out — so your portfolio likely still leans heavily on a handful of names.
📖 Term of the Day
Bottleneck — a single point in a supply chain that limits how fast the entire industry can grow, like a narrow neck on a bottle slowing the flow of water. Why you care today: TSMC’s limited 2nm chip-making capacity is the bottleneck for on-device AI — no matter how much Apple or Qualcomm want to build, they can only get chips as fast as TSMC can make them.
💼 Watchlist: 3 Stocks to Know Today
TSMC (TSM) — “The Gatekeeper”
Every major chipmaker is racing to secure TSMC’s next-generation 2nm production slots, and the company is pushing toward 120,000 wafers per month by end of 2026. If you own any tech stock that relies on cutting-edge chips — Apple, Qualcomm, NVIDIA, AMD — TSMC is the company that decides how fast they can deliver.
Micron (MU) — “The Scarcity Play”
Micron is signaling that demand for memory chips will outstrip supply not just this year but potentially through 2028, because major capacity additions from Samsung and SK hynix don’t arrive until then. That means Micron can maintain strong pricing and healthy profit margins even as it invests heavily in expansion.
Constellation Energy (CEG) — “The Nuclear Bet”
Reports say Constellation is nearing a multi-year, multi-billion-dollar nuclear power deal with Google’s parent company Alphabet (GOOGL). If confirmed, it would follow a similar 20-year deal CEG already signed with Amazon — proving that big tech views nuclear energy as essential infrastructure for AI.
💬 Esther’s Take
