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This week’s highlights:
Could this past week’s stock market decline be among the least surprising selloffs in history? Memory chip stocks that doubled, tripled, and more over the past year turned sharply lower over the last few weeks, staging declines well into the double digits.
As we noted in our coverage of SK Hynix’s SKHY IPO, there may have been a fair amount of fast money and leverage driving these stocks into the stratosphere. That kind of momentum trade unravels as fast – and generally even faster – as it went up. Compounding matters is the renewed fighting between the United States and Iran, which has led to a fresh spike in oil prices that threatens to erase some improved news on inflation.
It seems that to some degree, investors are becoming more cautious about valuations amid the massive capex spending on AI infrastructure. Some evidence of that caution could be seen in the lackluster reception for data center company Csquare’s IPO. You can check out the details of the IPO from our colleagues at PitchBook here. Meanwhile, the outlook for AI spending was further clouded by news that Moonshot AI’s Kimi K3 can reportedly match Anthropic’s most advanced model while being cheaper. This kind of development is something that has been expected by those arguing we are in an AI stock bubble.
Some of the concerns bubbling to the surface are tied to the massive capital being raised by hyperscalers like Alphabet and Amazon. It’s not just the stock market; it’s flooding the bond market. PitchBook looks at the massive scale of AI-related debt and the impact it’s having on the market. And it’s not just in the US. On our UK website, Sara Silano reports on the wave of US companies selling debt in Europe.
All this as the markets are still waiting on massive IPOs from OpenAI and Anthropic. However, it looks more like OpenAI won’t be coming to the public market this year. PitchBook’s Harrison Rolfes digs into the implications this delay would have for both Anthropic and OpenAI.
Meanwhile, earnings season is heating up. Morningstar analyst Austin Taggart explains what second-quarter results from the country’s biggest banks tell us about the economy. (Hint: It’s good news.) Looking ahead, the pace of earnings reports picks up. We’ve got previews of what to watch for a pair of big names due out: Tesla and Alphabet. Big Tech earnings come while the “Magnificent Seven” stocks are not looking so magnificent.
Lastly, we’ve finished out wrap of the second quarter with a look ahead at the third, collecting Morningstar equity analysts’ sector outlooks and top picks.
As always, be sure to visit our Markets page for our latest coverage and live stock market updates, along with our full weekly calendar of key upcoming data and events.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
