(Nathan Howard/Getty Images)

The nuclear-powered AI data-center trade roars into a new year

1/3/25 5:02PM

It’s early going, but so far the trade of the year is clearly another big bet on an ongoing boom in an AI-related investment.

Just check out the top gainers of the S&P 500 in the first two days of 2025 trading.

Nuke stocks Vistra and Constellation Energy — the second- and 10th-best peformers in the index last year — exploded out of the gates amid rising expectations of growing demand from power-hungry data centers.

Giant landowner Texas Pacific Land, which traditionally leased its massive holdings of West Texas land for oil and gas drilling but has recently talked up the potential for slapping up data centers, comes next.

Then embattled server-hardware maker Super Micro Computer, another nuke stock NRG, the Magnificient 7’s Nvidia, renewables and power-generation firm GE Vernova, disk-drive maker Western Digital, a newly enlivened Uber, and finally Micron. We could go on, with the next tier of top performers including more tech, AI, and energy-related firms like First Solar, Enphase Energy, and Palantir.

For what it’s worth, there are plenty of reasons to believe that this bet on the continued boom in AI investment is pretty much a sure thing.

For instance, Friday Microsoft said it was going to spend $80 billion to build AI data centers in fiscal 2025 alone. That can buy a lot of chips.

But from a slightly longer-term perspective, nervous Nellies can’t help but wonder whether such a single-minded investment mania might be setting up the US economy — and potentially the markets — for the mother of all malinvestment cycles, akin to or perhaps worse than the tech-stock boom of the late 1990s that turned into a gnarly stock-market bust by 2001. But that’s all ancient history.

This time is, of course, completely different.

Claire Yubin Oh1m

Nebius drops after announcing that it aims to raise $3.75 billion in a convertible loan offering

Nebius dropped as much as 7.5% in premarket trading on Tuesday, after the AI infrastructure company announced its intentions to sell $3.75 billion worth of convertible senior notes with maturities in 2031 and 2033.

The company will offer the debt in two tranches, the first batch worth $2 billion and due March 15, 2031, followed by $1.75 billion worth of notes due March 15, 2033. There’s also the potential for an additional $562.5 million of these notes to be issued via an over-allotment option.

The interest and initial conversion rate will be determined at the pricing of the offering, but regardless of the premium, the $3.75 billion offering would be pretty sizable for a company that closed yesterday's trading session with a ~$33 billion market cap, and the market is quickly pricing in a decent chunk of equity dilution.

The offering is conspicuous in its timing, with Nebius soaring 15% yesterday on the back of a major infrastructure deal with Meta — worth up to $27 billion over five years.

The funds will likely be put to good use to deliver on some of these major projects. Per the company’s press release, the capital raised will be used to:

“finance the continuing growth of its business, including expenditures related to the construction and build-out of its data centers, investments to develop its full-stack AI cloud, the expansion of its data center footprint and the procurement of key components (including GPUs), and for general corporate purposes.”

Luke Kawa

29m

Investors just raised the most cash since the March 2020 pandemic panic

It’s just a caution, though.

Referee Marco Guida shows a yellow card during the UEFA EURO

Claire Yubin Oh1h

Amazon introduces one- and three-hour delivery options in hundreds of new towns and cities

Harder, better, stronger, faster... Amazon, not content with completely altering our expectations for how quickly our goods should arrive, is rolling out one- and three-hour deliveries in new cities in the US as it continues to double down on ultrafast delivery.

Per the company’s press release, one-hour delivery is now available in “hundreds of cities and towns” in the US, and three-hour options are offered in “over 2,000 cities and towns,” both available seven days a week though their regular same-day shopping experience. More than 90,000 products, which are typically available in local supercenters, are currently eligible for delivery under the two plans, and Amazon expects to bring the new scheme to more areas in the coming months.

Delivery fees for Prime members are set at $9.99 for one-hour delivery and $4.99 for three hours, though this price range more than doubles to $19.99 and $14.99, respectively, for customers without a Prime membership.

Regarding the new delivery options, Udit Madan, Amazon’s senior vice president of worldwide operations, said: “we’re excited to say that two decades after Prime launched, we’re still innovating to make delivery even faster, while maintaining the same everyday low prices and vast selection Amazon is known for.”

Indeed, since it launched same-day delivery in 2015, Amazon has been experimenting with a number of ultrafast delivery options, including recently piloting a 30-minute delivery service in selected US cities, built on its network of fulfillment centers and on-demand workers. The e-commerce giant’s latest push also comes as competitors like Walmart started to boost its delivery capacity, touting that it can deliver to 95% of American households in less than three hours.

Tasha Matsumoto

17h

Stocks rebound as the price of oil retreats

Every sector traded higher, with tech leading gains on increased optimism that tankers will be able to pass through the Strait of Hormuz.