Markets
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Luke Kawa

One big difference between GameStop’s 2021 meme-stock rally and some of the newest targets

One common feature of stocks that get the meme stock treatment is that they’re highly shorted.

The reasons for this are, in my mind, pretty simple:

  • When you’re buying a stock without much in the way of a fundamental catalyst, it helps to have a ready-made “greater fool” in hand who “has” to buy from you at some level.

  • It creates an “us against them” mentality that’s useful in forming and binding together a group of committed buyers.

The basic thinking is either that short sellers will be forced to close their positions because of losses, or they will be unable to hold that position because the borrow rate on the stock gets too high to justify keeping the position. (In addition, people who might want to short would be deterred by the high cost of borrowing shares to sell them short.)

Some maximalist versions of this line of thinking loomed large in GameStop’s surge to all-time highs in 2021.

When it comes to Kohl’s and Rocket Cos, two such stocks that have received some bursts of love from retail traders recently, that is decidedly not happening this time around.

“Market makers appear well-positioned to provide liquidity in the latest rallies of Kohl’s and Rocket Cos, as reflected by implied lending rates. After the initial hype, borrowing costs have snapped back to moderate levels around 10% annualized,” wrote Garrett DeSimone, Ph.D. and head of quantitative research at OptionMetrics. “This stands in stark contrast to GameStop’s (GME) January 2021 run, when lending costs soared to nearly 80% annualized, making the stock virtually impossible to borrow. Overall, this suggests that the potential for an extreme short squeeze is likely limited.”

Option Implied Lending Costs
Source: OptionMetrics

Disclosure: I own some shares of Rocket Cos, and wrestling with what to do with a stock you own that gets some meme love has been annoying <world’s tiniest violin plays>.

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Toby Bochan, Luke Kawa
10h
Markets end the week in the red as Broadcom and Oracle concerns drag the entire AI trade down

The S&P 500, Nasdaq 100, and Russell 2000 were all negative on Friday.

The lunchbox
markets
Matt Phillips

Data center trade deep in the red

The data center trade is seeing its steepest sell-off since the market rout that was ignited by President Donald Trump’s Rose Garden tariff announcement back in April.

Goldman Sachs’ themed basket of AI data center shares was down more than 6% at around 12 p.m. ET, putting it on track for its worst day since the tariff announcement.

Losses hammered seemingly every form of input needed for the sprawling concrete server warehouses at the heart of the investment boom.

Hardware makers including data storage companies like Sandisk, Western Digital, and Seagate Technology Holdings, as well as DRAM maker Micron — some of the best-performing stocks in the S&P 500 this year — were taking a licking, as were networking stocks Cisco and Arista Networks and data center builders such as Vertiv Holdings and electrical and mechanical contractor Emcor.

Optimism for all things AI has seemed to evaporate throughout the week, as the stock market greeted lackluster quarterly numbers from Oracle and Broadcom with jittery sell-offs and concern about growing debts that could crater cash flows.

Those worries seem to be spreading to ancillary beneficiaries of the AI boom on Friday, gouging a chunk out of charts that retail dip buyers have not — at least so far — stepped in to buy as we head into the weekend.

markets
Luke Kawa

Oracle denies Bloomberg report that it’s delaying some data centers for OpenAI to 2028 from 2027

Getting a multi-hundred-billion-dollar backlog for cloud computing revenues from data center projects is easy. Building them is hard.

Oracle extended declines to as much as -6.5% on the day on the heels of a Bloomberg report that the cloud giant has pushed back the completion dates for some of the data centers it’s building for OpenAI to 2028 from 2027, citing people familiar with the work. Oracle denied this report, telling Reuters that there have been no delays to any sites required to meet its contractual commitments and that all milestones remain on track.

Shares had fully pared their report-induced drop ahead of Oracle’s reply, but remain in the red for the day.

Bloomberg said the reported postponement was attributed to labor and material shortages.

Oracle has been spending more on capex than Wall Street had anticipated, leading to higher-than-expected cash burn. Management boosted its full-year capital spending plans by $15 billion after reporting Q2 results earlier this week.

Oracle’s cloud infrastructure sales came in short of estimates in its fiscal 2026 Q2, a signal that markets already had reason to doubt its ability to quickly turn its humungous RPO (that is, remaining purchase obligations) into revenues.

Traders also seem to be of the mind that potential delays to data center completions are going to limit sales for what goes into them.

Some of the bigger losers since the Bloomberg headline hit the wires include:

markets
Luke Kawa

Broadcom’s post-earnings tumble is weighing on Google’s entire AI ecosystem

Broadcom’s post-earnings plunge is prompting a sharp pullback in Google-linked AI stocks, which had been on fire thanks to the warm reception to Gemini 3.

The stocks getting hit hard:

A basket of these Google-linked AI stocks compiled by Morgan Stanley is suffering one of its worst losses of the year. This brisk retreat also follows the release of GPT-5.2 by OpenAI.

markets
Matt Phillips

Citi initiates coverage of Planet Labs with “buy” rating

Planet Labs was up after aerospace and defense analysts at Citi initiated coverage with a “buy/high risk” rating and $19 price target.

The stock is up more than 40% this week, after a strong earnings result that spotlighted the company’s growing opportunity in linking its core business of capturing daily images of the planet with AI technologies.

Citi analysts noted the potential for a positive flywheel effect for Planet Labs as it deepens its focus on integrating AI into its offerings:

“AI is accelerating the conversion of pixels to decisions, where Planet’s daily scan and deep archive offer a uniquely large training corpus and broad-area foundation for automation. AI-enabled solutions (MDA/GMS/AMS) are gaining traction with customers such as NATO and the U.S. DoW, validating the approach of integrating AI into broad-area monitoring products... These AI moves create a compounding advantage: more coverage generates more training data, which improves models, which in turn increases product utility and addressable demand.”

The stock has also caught the attention of some of the retail trading crowd, with call options activity spiking on Thursday as traders rode the market reaction to the results.

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