Outside AI, Market Outlook Less Than Stellar

The so-called “everything store” may have just landed its most significant client to date, potentially reshaping the cloud computing landscape.

Amazon disclosed Monday a substantial $38 billion agreement with OpenAI, granting the AI powerhouse access to its Amazon Web Services (AWS) infrastructure. This move arrives as OpenAI intensifies its resource acquisition efforts to support the immense computational demands of its cutting-edge artificial intelligence models.

While not entirely unexpected, given OpenAI’s voracious appetite for computing power, this deal signifies a strategic diversification away from Microsoft, OpenAI’s previous exclusive cloud services provider. This shift could signal preparations for an eventual initial public offering (IPO), projecting both “independence and operational maturity,” as previously noted.

News of the deal propelled Amazon’s shares to a record high close. Nvidia also benefited, buoyed by Microsoft’s announcement that it had secured a U.S. government license to export Nvidia’s advanced AI chips to the United Arab Emirates.

Despite the investor enthusiasm surrounding Big Tech, the broader market displayed a more subdued performance.

Even as the S&P 500 and Nasdaq Composite indices gained ground, fueled by the tech giants, a significant number of stocks within the S&P 500 closed lower, highlighting the increasingly narrow market participation in the recent rally. This trend raises concerns about the overall health and breadth of the market’s upward momentum.

Palantir’s third-quarter results exceed expectations. The data analytics firm anticipates revenue of approximately $1.33 billion for the current quarter, surpassing analysts’ estimates of $1.19 billion. However, shares experienced a 4.3% decline in extended trading on Monday evening.

OpenAI commits $38 billion to Amazon. This agreement enables OpenAI to immediately commence running artificial intelligence workloads (training and inference) on Amazon Web Services, leveraging Nvidia’s AI accelerators. Consequently, Amazon shares surged 4% and achieved a record closing price.

Microsoft receives clearance to ship Nvidia chips to UAE. The U.S. Commerce Department license, issued in September, authorizes Microsoft to export a substantial quantity of A100 chips, including Nvidia’s advanced GB300 graphics processing units. Nvidia’s shares responded positively with a 2.2% increase.

U.S. markets predominantly advance. Driven by technology stocks, the S&P 500 and Nasdaq Composite indices recorded gains. The pan-European Stoxx 600 concluded the session relatively unchanged. Automotive stocks, including Renault and Volkswagen, exhibited positive performance.

[PRO] Mounting risks to global equities. While European stock markets reached recent peaks, analysts caution against potential factors that could disrupt the current upward trend, suggesting investors implement appropriate risk mitigation strategies. These factors range from geopolitical uncertainty to potential adjustments in monetary policy.