Tobias

Despite recent volatility in tech stocks, State Street remains bullish on AI, citing strong investor appetite. Anna Paglia anticipates a potential shift towards diversification in early 2025, but believes AI’s growth potential remains significant. While the SPDR NYSE Technology ETF (XNTK) has seen robust gains, profit-taking caused a pullback. VettaFi’s Todd Rosenbluth suggests a sector rotation may be underway, with healthcare stocks gaining traction, reflecting a more defensive investment strategy amidst economic uncertainties.

Wall Street faced a volatile week, with the Nasdaq falling over 3% and the S&P 500 declining 1.6%, ending winning streaks. Concerns about AI stock valuations, particularly Nvidia, and uncertainty in China contributed to the downturn. New jobs data and consumer sentement was also low. Strategic moves included buying Starbucks and Boeing shares, adding GE Vernova stock for its AI-related benefits. Eli Lilly gained on strong GLP-1 agreement news and encouraging drug trial results. Eaton, DuPont, and Solstice Advanced Materials released earnings reports of mixed quality. Rising beef prices impacted restaurant like Texas Roadhouse.

AI tools are emerging as a significant benefit for neurodiverse professionals, fostering workplace equity. A UK study showed 25% higher satisfaction among neurodiverse workers using AI assistants. AI excels in communication, time management, and automating repetitive tasks, addressing challenges faced by individuals with ADHD, autism, and dyslexia. Inclusive organizations can see up to 20% higher revenue, leveraging unique neurodiverse skills. Ethical AI implementation, incorporating diverse voices and addressing biases, is crucial to maximize AI investment returns and prevent unintended harm.

Subsea cables, carrying over 95% of global data, are experiencing explosive growth driven by AI and data center expansion. Big Tech companies like Meta, Amazon, and Google are heavily investing in new cables, with investments projected to double between 2025-2027. Security concerns are rising due to potential sabotage, prompting increased surveillance efforts. Geopolitical tensions, particularly between the U.S., China, and Russia, are influencing regulations and supply chain decisions in this critical infrastructure sector.

Palantir’s stock fell despite strong earnings, prompting CEO Alex Karp to defend the company against short sellers like Michael Burry, accusing them of market manipulation. While the stock is up significantly this year, its high valuation (220x forward earnings) raises concerns. Short interest is low, but analysts like Citron Research suggest the stock is overvalued. Karp maintains confidence, highlighting Palantir’s growth and potential in AI, stating doubters can “exit.” His outspoken defense is not new, previously telling those unhappy with the stock price to simply sell.

Elon Musk announced Tesla may build its own “gigantic” chip fabrication plant (“Tesla terra fab”) to meet growing AI and robotics demands. Currently relying on TSMC and Samsung, Tesla could also partner with Intel. Musk envisions a capacity of 100,000 wafer starts per month, scaling to 1 million, potentially disrupting the semiconductor landscape. This signifies a major shift to vertical integration. Musk also announced the production of Cybercab in April, reinforcing Tesla’s commitment to AI and robotics as drivers of economic growth.

DBS Group CEO Tan Su Shan warns investors to anticipate higher market volatility amid concerns about inflated valuations, especially in AI stocks like the “Magnificent Seven.” She highlights the systemic risk of capital concentration and suggests a 10-20% market correction is possible. Tan, echoing sentiments from other financial leaders, advocates diversification across portfolios, supply chains, and demand distribution, positioning Singapore as a “diversifier market” due to its stable financial and political environment.

Recent equity market pullback, especially in AI stocks, has sparked valuation and contagion concerns. Warnings about a potential market drawdown are increasing. BOE Governor Bailey cautioned about an AI bubble and speculative risks. Despite this, data center construction remains strong, and some see buying opportunities in tech. However, SoftBank’s losses and Michael Burry’s short positions signal waning AI appetite. Strategists suggest caution on US equities, favoring emerging markets benefiting from AI.

Nvidia dominates the AI chip market, but Google is emerging as a silicon contender with its Tensor Processing Units (TPUs). Google’s Ironwood, its seventh-generation TPU, delivers a fourfold performance increase and is targeted at demanding AI workloads. AI startup Anthropic plans to deploy 1 million Ironwood TPUs. Google’s TPUs offer efficiency advantages and drive cloud growth. While Amazon and Microsoft are developing custom chips, Google leads in TPU deployment at scale, with potential for significant cloud market impact. Google is even exploring space-based solar power for TPUs.

This CNBC Morning Squawk newsletter highlights five key market insights: Elon Musk’s potential $1T Tesla compensation pending Optimus robot success, AI stock retreat amid valuation concerns, Trump’s negotiated prescription obesity drug savings, no federal bailout for OpenAI despite revenue projections, and Target’s retail strategy reset to improve the in-store experience. The labor market uncertainty and Target’s operational overhaul are also noted.