Markets
markets
Luke Kawa

The AI trade roars back after its worst week since April tariff announcements

The AI trade is roaring back after getting speed checked last week.

Baskets of US AI beneficiaries compiled by Morgan Stanley and Bank of America, which just suffered their worst week since the Rose Garden tariffs announcement, are up more than 3.5% in early trading to lead a broad-based market recovery amid optimism that the government shutdown will soon be over.

The likes of Palantir Technologies (which tumbled despite reporting strong results), Western Digital, and Seagate Technology Holdings are all up more than 4.5% as of 10:45 a.m. ET.

Semiconductor stocks are also rallying strongly after Nvidia CEO Jensen Huang asked his counterpart at TSMC to boost chip output.

“While the bears will continue to yell ‘AI Bubble’ from their hibernation caves we continue to point to this tech cap-ex supercycle that is driving this 4th Industrial Revolution into the next few years,” Wedbush Securities analyst Dan Ives wrote. “This is our focus and along with our AI use case work in the field is driving trillions of spending over the next few years and thus will keep this tech bull market alive for at least another 2 years in our view.”

Bank of America argues (convincingly) that last week’s retreat in the cohort had little to do with any industry-specific fundamental news.

“The pervasive skepticism re AI capex is understandable but likely a contrarian positive, helping minimize overcrowding,” Bank of America analyst Vivek Arya wrote in a note reaffirming his conviction on his preferred data center and semicap stocks. “Yes, large-cap AI semis have been volatile (down 7-8% on average last week) but we argue that was driven by (correctable) macro factors (US govt. shutdown, weak jobs data, tariff turmoil, misstated OpenAI comments) rather than any negative datapoint about the AI spending cycle.”

Further bolstering that argument, 22V Research flagged how earnings expectations are improving much more rapidly for AI-linked firms than the S&P 500 at large.

“AI usage and AI related fundamentals are unusually strong,” wrote Dennis DeBusschere, chief market strategist at 22V Research. “In 3Q, AI earnings growth rate has been ~3x that of other S&P names.”

22V Research earnings trends

More Markets

See all Markets
markets
Max Knoblauch

Rivian climbs following EV maker’s new CEO pay package worth up to $4.6 billion

Shares of EV maker Rivian are up more than 6% on Monday, following the announcement Friday evening that it will award CEO RJ Scaringe a pay package of up to $4.6 billion over the next decade.

The news came a day after Tesla shareholders approved CEO Elon Musk’s $1 trillion pay package, and investors appear hopeful that the incentives will pay off for Rivian stock. Under the tenure of Scaringe, who is also Rivian’s founder, the company’s stock has dropped more than 90% from its peak in 2021.

To earn the full pay package, Scaringe will need to achieve stock price milestones of between $40 and $140, along with other undisclosed targets tied to cash flow and operating profit.

markets
Matt Phillips

Alex Karp explains what Palantir does, in his own words

Palantir’s iconoclastic CEO, Alex Karp, sat down with Wired’s Steven Levy for a Q&A published Monday. The discussion yields little of specific note for shareholders, focusing mostly on the more controversial aspects of the company’s work with Israel and United States Immigration and Customs Enforcement (ICE), among other cultural hot buttons.

But there was one interchange in which Karp was asked for his own explanation of what Palantir actually does, which seems to shed some light on Karp’s vision for the company:

A lot of people say that it isn’t clear exactly what Palantir does. Can you explain it in your own words?

If you’re an intelligence agency, you’re using us to find terrorists and organized criminals while maintaining the security and data protection of your country. Then you have the special forces. How do you know where your troops are? How do you get in and out of the battlefield as safely as possible, avoiding mines, avoiding enemies? Then there’s Palantir on the commercial side. The shorthand is if you’re doing anything that involves operational intelligence, whether it’s analytics or AI, you’re going to have to find something like our products.

Basically, it’s about orchestrating information with AI, which is something lots of companies in Silicon Valley want to do. But you contend that no other tech company can do it like yours.

What I’m really saying is we know how to do it. If you find someone else who can do it, and you don’t want to work with us, buy it from them.

Thanks to an upswing in the AI trade, shortly before noon Palantir shares were having their best day since early August. But the stock remains down by more than 8% since it reported objectively fantastic earnings a week ago, then slumped amid a breakout of market jitters over high valuations.

Alex Karp Goes to War

Alex Karp Goes to War

But there was one interchange in which Karp was asked for his own explanation of what Palantir actually does, which seems to shed some light on Karp’s vision for the company:

A lot of people say that it isn’t clear exactly what Palantir does. Can you explain it in your own words?

If you’re an intelligence agency, you’re using us to find terrorists and organized criminals while maintaining the security and data protection of your country. Then you have the special forces. How do you know where your troops are? How do you get in and out of the battlefield as safely as possible, avoiding mines, avoiding enemies? Then there’s Palantir on the commercial side. The shorthand is if you’re doing anything that involves operational intelligence, whether it’s analytics or AI, you’re going to have to find something like our products.

Basically, it’s about orchestrating information with AI, which is something lots of companies in Silicon Valley want to do. But you contend that no other tech company can do it like yours.

What I’m really saying is we know how to do it. If you find someone else who can do it, and you don’t want to work with us, buy it from them.

Thanks to an upswing in the AI trade, shortly before noon Palantir shares were having their best day since early August. But the stock remains down by more than 8% since it reported objectively fantastic earnings a week ago, then slumped amid a breakout of market jitters over high valuations.

markets
Matt Phillips

Coinbase rises after token platform launch is confirmed

Coinbase shares jumped early Monday, after The Wall Street Journal confirmed rumors about it launching a new site offering retail traders access to “token offerings” reminiscent of the “intial coin offering” craze from a few years back.

After soaring between 2016 and 2018, the ICO market imploded amid a “collapse in crypto prices, along with the rampant fraud,” that “led to regulatory scrutiny and a drastic decline in token offerings in the following years,” the Journal reported.

The new site from Coinbase, however, will “provide users with a more professional, safer way to buy new tokens. It will feature investor-protection mechanisms that discourage quick profit-taking and prevent immediate token dumping by project founders,” company officials told the Journal.

Exclusive | Coinbase Launches Platform for Digital Token Offerings

Exclusive | Coinbase Launches Platform for Digital Token Offerings

The new site from Coinbase, however, will “provide users with a more professional, safer way to buy new tokens. It will feature investor-protection mechanisms that discourage quick profit-taking and prevent immediate token dumping by project founders,” company officials told the Journal.

markets
Luke Kawa

Bank of America: Claiming an AI bubble over OpenAI's money situation is a “lazy/cherry-picked argument”

Bank of America analyst Vivek Arya is throwing down the gauntlet: there’s one bear case against AI stocks he really doesn’t like.

“The common argument that ‘AI stocks must be overvalued because OpenAI cannot justify $1.4 trillion of long-term commitments’ is a lazy/cherry-picked argument in our view,” he wrote in a note to clients on Monday, in which the analyst reiterated his confidence in his favorite data center and semi stocks.

He added:

“While we agree OpenAI’s plans are very ambitious, none of that spending has yet been put in place and will be gated by practical constraints such as access to power and data center space. The majority of AI spending is being done by profitable, public hyperscalers for whom upgrading infrastructure is mission-critical (upgrade to accelerated from traditional CPU-computing) and defensive (e.g. Google’s $92bn capex ‘defends’ a $200bn+ search leadership by providing Gemini-chatbot driven results to all customers who might otherwise defect to ChatGPT, Perplexity or other search engines.) Meanwhile private AI companies are making rapid strides attracting business customers (1mn+ by OpenAI, 300K+ by Anthropic) which will continue to put pressure on public software and infrastructure-as-a service vendors to raise AI investments.”

On the one hand, yes, I concur: while ChatGPT may have been what brought the AI boom into public consciousness, it’s not the alpha and omega of the movement. The continued push from the publicly traded, immensely profitable tech companies that lead the S&P 500 is probably the more important factor behind the mile-deep, inch-wide AI spending boom in the here and now.

On the other hand, OpenAI’s spending commitments have driven big valuation bumps for Amazon, Broadcom, AMD, and Oracle in just the past two months. In other words, those stocks have priced in that demand being real and realized. To the extent it isn’t, or can’t be, well then some overvaluation worries would be somewhat justified.

Reports that OpenAI is moving toward an IPO, however, would offer some enhanced confidence that it’ll be able to get its hands on the cash necessary to follow through on these pledges.

Luke Kawa
4h
Inside Opendoor’s plan to give short sellers a temporary middle finger

“I mostly just pity them. They don’t really build anything,” Opendoor CEO Kaz Nejatian said of short sellers.

Anti-immigration Rally And Pro-immigration Counter-demonstration In Toronto, Canada

Latest Stories

Sherwood Media, LLC produces fresh and unique perspectives on topical financial news and is a fully owned subsidiary of Robinhood Markets, Inc., and any views expressed here do not necessarily reflect the views of any other Robinhood affiliate, including Robinhood Markets, Inc., Robinhood Financial LLC, Robinhood Securities, LLC, Robinhood Crypto, LLC, or Robinhood Money, LLC.
©2025 Sherwood Media, LLC