Stock & Bull Markets

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Nvidia almighty

Data: S&P Capital IQ Pro. Chart: Erin Davis/Axios Visuals Nvidia made billions selling AI's essential ingredient: chips. Now the company is plowing those riches straight back into the AI ecosystem, betting on a buildout that craves ever more compute, Axios' Madison Mills writes. Why it matters: Nvidia has become the AI industry's supplier, banker and kingmaker, feeding a self-reinforcing cycle in which chip profits finance the next wave of chip demand. State of play: Already the world's most valuable company, Nvidia is now worth more than five of the 11 sectors that make up the S&P 500. The chipmaker reported nearly $60 billion in quarterly profit Wednesday, prompting The Kobeissi Letter to call the results "the most impressive earnings in history." Nvidia believes its reign is far from over, telling investors to expect roughly 70% revenue growth even from today's extraordinary heights. 🔭 Zoom out: Nvidia's vast chip windfall has enabled the company to take on a new role as financial patron of the entire AI industry. Nvidia is involved in more than $750 billion worth of AI investments, financing deals and partnerships, according to PitchBook — a staggering footprint for a company whose core business is still selling chips. That figure does not include this week's reported $13 billion acquisition of Hugging Face, which would give Nvidia control over one of the industry's most important model-distribution hubs. CEO Jensen Huang has enlisted Wall Street to mobilize more than $500 billion for AI infrastructure, channeling outside capital toward the data-center buildout that drives more than 90% of Nvidia's quarterly revenue. 🎡 Between the lines: The strategy creates a powerful flywheel: The more money Nvidia helps pour into AI, the more compute the industry builds — and the more chips it needs. Reality check: Critics say Nvidia's flywheel looks uncomfortably circular. The company is helping finance customers and infrastructure projects that then spend heavily on its own hardware, raising questions about how much demand is being supported by Nvidia's own balance sheet. Huang has dismissed those concerns, telling CNBC Wednesday that Nvidia's investments will generate "tremendous returns" and that "the risk is low." Threat level: The cozy relationship between Nvidia and its biggest customers is becoming increasingly competitive. OpenAI, Google, Amazon, Microsoft and others are pouring billions into custom chips designed to reduce their dependence on Nvidia. OpenAI claims its new Jalapeño chip outperforms Nvidia hardware on some workloads. Nvidia, meanwhile, is spending billions developing its own open-source AI models, aiming to become the American champion in a field increasingly dominated by Chinese models. The bottom line: The result is an unusually tangled ecosystem in which Nvidia is simultaneously supplier, investor, partner — and increasingly competitor — to AI's biggest players.

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🦁 Software roars back

Data: Financial Modeling Prep. Chart: Emily Peck/Axios AI was going to obliterate the software sector, or so investors believed earlier this year, but it turns out that this stuff is hard to quit, Axios' Emily Peck writes. State Street's Software and Services ETF, which tracks about 130 software and IT stocks, rose 5.2% yesterday, hitting a new all-time high. 📈 Zoom in: Investors really liked Salesforce's second-quarter earnings report Wednesday. The company, arguably the SaaS master, announced an expansion of a deal with Anthropic, which was taken as a sign that AI would be a complement to its business — rather than its death knell. Salesforce stock soared 22.6% yesterday, and is now trading close to where it was before the whole SaaSpocalypse got underway.

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Market frenzy

Prediction markets are gaining traction with young adults. Users ages 18 to 21 have traded an estimated $5.4 billion on Kalshi this year alone, sparking concern among experts.

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🥳 Happy 50th to the first index fund

Illustration: Sarah Grillo/Axios

The OG stock index fund, the Vanguard 500, turns 50 years old today. Why it matters: Passive funds ate the world. Today, index funds make up 64% of all stock fund assets, and millions of investors use them, Axios markets correspondent Emily Peck writes. Most of us are socking away money in these things automatically through 401(k) payroll deductions. Stat du jour: If you'd put $10,000 in the Vanguard 500 back in 1976, it'd be worth over $2 million today.

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🍎 Tim Cook's golden Apple

Data: Financial Modeling Prep. Chart: Erin Davis/Axios Visuals Apple CEO Tim Cook, whose last official day was yesterday, steps down after 15 years running the company, Axios' Emily Peck and Ina Fried write. Why it matters: He had an epic run and becomes executive chairman. John Ternus, SVP of hardware engineering, takes over today. 🧮 By the numbers: When Cook took over in August 2011, Apple's stock was trading at $13.35. It closed at $316.61 yesterday. That 2,272% gain easily outpaced the growth of the major stock indexes. The company's market cap — the value of all its outstanding shares — is now $4.7 trillion, up from $347 billion in 2011. The big picture: Cook's big innovation was taking the company from its roots as a device maker beholden to product cycles to a juggernaut with a huge recurring-revenue business built on App Store fees and services like iCloud, Apple TV and Music, Apple Pay and Apple News+. Via X 🤖 What to watch: The next challenge is how to navigate the AI era. Cook's long-term legacy is likely to be determined by the company's bet to build its AI strategy partly around other companies' models. The move could save substantial sums in the short term, compared with building and operating a frontier-model business of its own. But it has left Apple dependent on Google for some of its most important AI capabilities. Cook's stock success ... His AI legacy.

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The AI fear trade

Data: Financial Modeling Prep. Chart: Emily Peck/Axios Fear is splitting the AI trade: The same advances that are raising alarms about rogue agents, cyberattacks and apocalypse are creating a bull case for the companies paid to protect against those threats, Axios' Emily Peck writes. Calls for a slowdown in the advancement of the most sophisticated models pushed down stocks in sectors connected to the AI trade, like chip and memory companies. At the same time, stocks rose for cybersecurity companies. CrowdStrike and Palo Alto Networks — two of the industry's largest companies — were up yesterday roughly 14% and 13%, respectively.

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US stocks rise to a record on expectations companies will make even fatter profits

NEW YORK (AP) — The U.S. stock market has never been higher, even as the list of challenges chipping away at it keeps growing.

https://apnews.com/article/stocks-markets-oil-bonds-us-e8285ec7afbe81e9df277e8ee2127982?

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AI bull run turns four

Data: Financial Modeling Prep. Chart: Erica Pandey/Axios This bull market started Oct. 12, 2022 — so it turns 4 tomorrow. The S&P 500 is trading near record highs ahead of the anniversary. The current bull run has gained 117%, the sixth-best-performing bull market since World War II, Reuters reports. 🐃 Zoom in: AI has dominated the latest bull run, with the launch of ChatGPT coming about a month after the bull market began. Oxford Economics estimates about one-third of recent U.S. economic growth stems from AI. Nvidia, whose AI chips made the company the most valuable in the world, has soared in market capitalization over those four years from $286 billion to $5.5 trillion.

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💊 Health stocks boom

Data: FactSet. Chart: Axios/Matt Phillips Health care stocks have done well in recent months as investors bank on Democrats gaining power in the midterm elections, Axios Markets co-author Matt Phillips writes. Why it matters: The prices suggest traders and investors see increasing odds that some cuts to federal health spending imposed by President Trump's big 2025 spending bill could be undone. The S&P 500's health care sector is up more than 9% over the last three months, the second-best performer of the blue-chip index's 11 sectors. (Energy was the best.) Pharmaceutical shares like Eli Lilly, Merck and AbbVie were some of the strong contributors.

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💸 Musk merger math

Data: Financial Modeling Prep. (SpaceX shares began publicly trading on June 12.) Chart: Dan Primack/Axios The potential SpaceX-Tesla merger took an orbital leap forward yesterday, with Elon Musk calling it "a good idea" and both companies forming special committees to discuss a deal, Axios' Dan Primack reports. Such a deal would be the largest corporate tie-up in history. 📈 By the numbers: SpaceX ended the day yesterday with a $1.95 trillion market cap, making it the country's seventh most valuable company. Tesla landed in 11th place with a $1.48 trillion market cap. Shares of both companies are up sharply today. The bottom line: Musk cautioned that saying a merger will definitely happen is "overstating it," but he tends to move very fast once he gets the transactional truck rolling. Go deeper.