Stocks are mixed in early trading, with tech weak but other sectors hanging in. Crude oil, gold, and silver are all lower, while Treasuries are up modestly and the dollar is flat.
Chip stocks continued to get crushed overnight, with a broad basket of Asian semiconductor names losing more than 7%. The MSCI World Semiconductor Index is now down 13% in July, putting it on track for the worst month in four years. South Korea’s Kospi index plunged 11%, while US chip names extended their summer slump.
Chip Stocks on Track for Worst Month in 4+ Years
Source: Bloomberg
One area of concern: “Circular” chip and AI deals. Nvidia Corp. (NVDA) is reportedly working on $750 billion (or more) in transactions with companies like OpenAI and SK Group. They will involve Nvidia backstopping compute leases, financing purchases, and teaming up on AI data center construction projects. Nvidia CEO Jensen Huang has downplayed worries, but the company’s stock has lost 9.1% in the last three months nonetheless.
Still, Wall Street and Big Tech are continuing to plow money into AI infrastructure. Meta Platforms Inc. (META), and BlackRock Inc. (BLK) just partnered on a $14 billion data center project in El Paso, Texas, with the firms splitting the development costs. That comes shortly after Meta boosted the size of its mega-project in Louisiana to 5 gigawatts of capacity – with private credit company Blue Owl Capital Inc. (OWL) providing some of the funding.
Finally, oil prices pulled back a bit further in the last 24 hours after Iran and Oman engaged in fresh talks focused on the Strait of Hormuz. The US is only participating indirectly. But attacks and counterattacks in the region ceased on Friday evening – and haven’t yet restarted. That has been good enough to push WTI futures prices down about $10 from their recent peak. They were trading around $81 a barrel this morning.
