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Micron’s earnings, soft inflation, and OpenAI valuation chatter revive speculative AI trade

The three biggest news events since markets closed yesterday are all helping spur a big bounce-back for the more speculative companies tied to AI:

Micron’s eye-popping Q2 guidance reaffirmed beyond a shadow of a doubt how hot AI demand continues to run in the near term.
While the data is undoubtedly messy, core CPI inflation decelerated by much more than anticipated in November. Lower rates are a clear positive for more marginal companies levered to the AI theme, whose stocks trade with a higher embedded risk of default and whose bonds have also been suggesting more credit risk as of late.
OpenAI reportedly getting its hands on more money (and commanding a higher valuation in the process) provides some semblance of valuation support for these firms and also a better fundamental foundation as well: more cash in CEO Sam Altman’s pockets means more cash he has to make good on commitments to OpenAI’s many suppliers.

Put together, the key news items since Wednesday’s close are producing massive gains for the likes of Bloom Energy, Cipher Mining, POET Technologies, CoreWeave, IREN, and Nebius.

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Matt Phillips52m

The stock market loves your rising electricity bill

Utilities with a footprint in the massive PJM Interconnection, the country’s largest power grid, were up Thursday after prices set in a key auction hit a record high of $333.44 per megawatt-day.

Such power providers, including Talen Energy, Constellation Energy, and Vistra, saw tidy gains shortly before midday.

“This auction leaves no doubt that data centers’ demand for electricity continues to far outstrip new supply, and the solution will require concerted action involving PJM, its stakeholders, state and federal partners, and the data center industry itself,” Stu Bresler, set to become PJM’s chief operating officer next month, told Reuters.

As I’ve previously mused, political pushback from high power prices, partially created by the AI boom, could become a constraint on development of such sites. Democrats in the US Senate are now calling for hearings on the issue.

It’s fertile political soil. This morning’s US CPI report for November showed electricity prices up nearly 7% year over year, the highest since the tail end of the postpandemic inflation in April 2023.

Costs on Key US Grid Hit New Record, Testing Affordability

Costs on Key US Grid Hit New Record, Testing Affordability

“This auction leaves no doubt that data centers’ demand for electricity continues to far outstrip new supply, and the solution will require concerted action involving PJM, its stakeholders, state and federal partners, and the data center industry itself,” Stu Bresler, set to become PJM’s chief operating officer next month, told Reuters.

As I’ve previously mused, political pushback from high power prices, partially created by the AI boom, could become a constraint on development of such sites. Democrats in the US Senate are now calling for hearings on the issue.

It’s fertile political soil. This morning’s US CPI report for November showed electricity prices up nearly 7% year over year, the highest since the tail end of the postpandemic inflation in April 2023.

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Matt Phillips2h

GE Vernova upped to “buy” at Jefferies

GE Vernova is up early, enjoying the benefits of both a rebound in the AI data center trade and an upgrade to “buy” from analysts at Jefferies. In a note published on Thursday, they wrote:

“We upgrade to Buy. More positive on the outlook for Power (gas pricing & services visibility) and electrification yet shares are down since the December 9th Analyst Day. $815 PT up from $736. Gas turbine pricing continues to positively surprise and services provides visibility deeper into the 2030s, eventually offsetting gas equipment weakness.”

The target is slightly above the FactSet consensus price target of $753 on the stock, and implies a 23% premium to GE Vernova’s closing price on Wednesday. The stock is up almost 100% in 2025.

US stocks get hot as inflation cools by more than expected

Annual core CPI inflation falls to lowest level since March 2021.

Federal Reserve Chair Jerome Powell Testifies Before The House Financial Services Committee

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Coinbase rises after announcing entry into prediction markets, stock trading

Coinbase was nearly 3% higher in early trading on Thursday after the crypto exchange said Wednesday it’s launching stock trading and prediction markets in the US — as the company accelerates its push to become an “everything exchange.”

Users will now be able to trade stocks and ETFs alongside their crypto portfolios at zero commission — using either US dollars or the USDC stablecoin — within their Coinbase app and account, the company said.

Prediction markets will be offered through CFTC-regulated provider Kalshi, allowing users to trade yes-or-no contracts tied to elections, sports, economic indicators, and more, with bets placed in US dollars or USDC stablecoin.

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Max Knoblauch5h

CarMax sinks on declining used car sales as Carvana closes in

Used car retailer CarMax is down more than 5% in premarket trading on Thursday following the company’s third-quarter earnings report.

The company posted adjusted earnings per share of $0.43, beating the Wall Street consensus estimate of $0.31 per share. CarMax’s comparable-store sales came in down 9% from the same period last year and in line with its preliminary results posted in November, when it announced the sudden firing of longtime CEO Bill Nash.

CarMax sold 169,557 used vehicles to retail customers in its fiscal third quarter, an 8% drop from the same period last year. The company said it anticipates lowering margins on its used vehicles in Q4, which it expects will boost sales.

That declining used car sales figure is getting closer to rival Carvana’s, and Wall Street expects the gap to continue to shrink. In November, analysts at Wedbush Securities said they expected Carvana’s retail sales to surpass CarMax’s in Q4 of 2026 — six months earlier than initially forecast. Carvana rose 1% in premarket trading.

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