Macro

Nvidia's stock dropped 17% after Chinese AI firm DeepSeek unveiled a low-cost large-language model, undermining confidence in U.S. AI dominance and Nvidia's high-margin GPU demand. The $589 billion market cap loss marked a record single-day decline, impacting tech peers and raising concerns over future AI spending and Nvidia's growth thesis.

President Trump unveiled Stargate, a joint venture of OpenAI, Oracle and SoftBank committing an initial $100 billion and up to $500 billion over four years to build AI data centers in the U.S., starting in Texas. Arm, Microsoft and Nvidia were named key initial technology partners, with SoftBank's Masayoshi Son as chairman, putting the datacenter buildout at national-project scale.

The mega-project to build US AI datacenters sent Oracle and power-linked stocks surging. The announcement reinforced the AI capex supercycle as a matter of national policy, boosting utilities and grid plays.

Nvidia's market cap plunged nearly $600 billion after its stock dropped 17%, triggered by concerns over competition from China's DeepSeek AI model. The sell-off impacted tech peers like Broadcom, Dell, and Oracle, rattling the AI and data center ecosystem. Despite analyst reassurances, the event underscores market sensitivity to shifts in AI compute demand and global competition.

Meta, Amazon, Alphabet, and Microsoft plan up to $320 billion in combined AI and datacenter spending in 2025, up from $230 billion in 2024, driven by competitive pressures and cloud growth opportunities. Despite market concerns and short-term cloud performance hiccups, executives remain committed, signaling sustained investment to maintain technological leadership and capitalize on long-term AI demand.

The US imposed a 15% tariff on most EU goods effective July 1, 2026. The USTR also proposed up to 12.5% Section 301 forced-labor tariffs on 60 trading partners, with a hearing scheduled for July 7. A temporary 10% global tariff set to expire July 24 faces uncertainty as Congress debates its extension following the Supreme Court's February ruling against IEEPA tariffs.

Meta has entered a 20-year agreement to purchase 1.1 gigawatts of nuclear power from Constellation Energy's Clinton plant in Illinois, ensuring its continued operation and supporting relicensing efforts. The deal marks Meta's first major nuclear partnership, aligning with its 100% clean electricity goal amid rising data center energy demands. This follows broader tech industry trends, with companies like Microsoft, Google, and Amazon also investing in nuclear to power AI infrastructure, boosting sector confidence and Constellation's market valuation.

Nvidia reached a $4 trillion market cap, driven by explosive demand for its AI chips and record quarterly earnings of $18.8 billion on $44.1 billion revenue. The surge underscores its dominance over tech giants like Apple and Microsoft, propelling the S&P 500 despite broader economic risks.

The mega-deal tied the AI ecosystem's key supplier to its flagship customer, lifting Nvidia to records. Analysts flagged circular-financing concerns among AI giants even as the announcement extended the infrastructure rally.

Nvidia became the first publicly traded company to reach a $5 trillion valuation, fueled by strong demand for its AI-powered GPUs and strategic partnerships with firms like OpenAI and Palantir. The milestone highlights AI's transformative impact on tech markets, though concerns about an AI-driven bubble have emerged among financial regulators and analysts. Unlike the dotcom era, today's tech leaders boast solid cash flows, suggesting sustained momentum.

Famed investor Michael Burry's Scion Asset Management took bearish positions on AI-heavy stocks Nvidia and Palantir through put options, signaling concerns over inflated valuations. With AI stocks now dominating major market capitalization, Burry's move highlights growing fears of an AI-driven bubble. This could prompt broader market scrutiny on tech valuations and trigger volatility in high-flying AI equities.