Data Centers

Despite U.S. export controls restricting advanced Nvidia chip shipments to China, Chinese firms are circumventing restrictions by accessing computing power via data centers in Southeast Asia. This strategy enables rapid AI model development, a key factor in the U.S.-China AI race. Proposed legislation, the Remote Access Security Act, aims to close this loophole, but enforcement remains a challenge.

SpaceX significantly increased its investment in Tesla Megapack battery energy storage systems in the first half of 2026, spending $329 million to power its “Colossus” data centers. This move supports SpaceX’s aggressive AI infrastructure expansion and aims to secure substantial power and cooling capabilities. The company plans to have 20 gigawatts of AI power and cooling online by the end of next year. This investment comes amidst community backlash over SpaceX’s use of natural gas turbines at its data centers.

Meta is set to release Q2 results, with analysts expecting strong revenue growth driven by AI integration in advertising. Investors will focus on Meta’s AI strategy and monetization efforts, as the company invests heavily in AI infrastructure and data centers to compete with tech giants. Despite significant spending, Meta’s stock has underperformed, raising questions about capital expenditure returns. The company is exploring offering AI capacity to third parties, potentially challenging existing cloud providers.

Stocks declined as geopolitical tensions, tech earnings, and healthcare advancements influenced sentiment. Oil prices surged due to Iran-related risks, reigniting inflation concerns and increasing rate hike probabilities. Investors are now demanding tangible AI returns, pressuring companies like Alphabet. Healthcare showcased promising growth with Eli Lilly’s obesity drug data and Johnson & Johnson’s robotic surgery system approval.

Nvidia has secured a $500 billion deal with South Korea’s SK Hynix for a critical supply of AI memory, ensuring components for its processors and AI systems. This partnership also initiates large-scale data center construction by 2027 and includes SK Telecom developing a cloud business with Nvidia’s systems. Nvidia is also investing $1 billion in Korean cloud company Naver, bolstering AI infrastructure development beyond hyperscale providers.

Chinese optical transceiver manufacturer Zhongji Innolight’s stock surged following news of its potential $8 billion Hong Kong listing, one of the largest in years. This move, driven by the booming AI sector, aims to fuel R&D and expand its global reach in high-speed optical interconnects. The listing highlights Hong Kong’s resilient IPO market and its attractiveness to technology firms.

New York Governor Kathy Hochul has enacted a one-year moratorium on new, large-scale data center construction (50MW+), citing concerns over their significant energy and resource demands impacting the grid and ratepayers. This move, unprecedented in the U.S., aims to protect consumers and the environment while allowing for planned development. While lauded by environmental groups and some politicians, critics worry it may harm technological competitiveness. Public opinion polls indicate strong support for the moratorium.

Despite recent stock volatility, AI demand remains strong, with experts citing energy as the primary constraint. While some companies like Meta and xAI are leasing excess capacity, the overall market faces supply shortages for compute power and components. Enterprises are shifting from “tokenmaxxing” to “valuemaxxing,” prioritizing ROI and a more rationalized approach to AI spending. This trend is expected to sustain long-term demand.

The first half of 2026 saw a volatile yet upward stock market, with the S&P 500 gaining 9.5% and the Nasdaq 13%. Several portfolio holdings recovered, while others were divested. Geopolitical tensions and inflation persisted, but many tech stocks, like Intel, Arm, and Corning, surged. Palo Alto Networks and Eaton benefited from AI growth, while Starbucks recovered due to its turnaround plan. Nike underperformed significantly, leading to divestment. Amazon showed modest gains but lagged the market due to AI investment concerns.

The AI boom is driving massive demand for GE Vernova’s industrial gas turbines, essential for powering energy-intensive data centers. The company is rapidly expanding production and hiring to meet unprecedented orders from hyperscalers like Microsoft and Google. These turbines, capable of powering hundreds of thousands of homes, are crucial for AI infrastructure, leading to substantial price increases and a booked order book through 2029.