Pre-Market Market Movements
1. On Friday, August 14, US stock futures were mixed before the market open. As of writing, Dow futures fell 0.14%, S&P 500 futures rose 0.12%, and Nasdaq futures gained 0.28%.
2. European markets were mostly higher, with the German DAX up 0.90%, the UK FTSE 100 down 0.01%, the French CAC 40 up 0.05%, and the Euro Stoxx 50 up 0.29%.
3. Oil prices climbed, with WTI crude up 0.48% at $81.64 per barrel and Brent crude up 0.18% at $87.23 per barrel.
Market News
Bank of America's Hartnett believes the 2026 midterm elections will be a critical turning point for the AI bull market. If Republicans retain the Senate and Texas Governor Abbott is re-elected, AI capital expenditure could continue, potentially driving the market, especially AI stocks, into a rally lasting until 2027. Conversely, a Democratic sweep could trigger a market decline of over 10%. Currently, earnings and AI investment support the bullish outlook, but extreme crowding and surging bond yields pose major risks.
Prominent short seller Steve Eisman has identified Anthropic and OpenAI as the "Achilles' heel" of the AI trade. While the market eagerly awaits their IPOs, Eisman argues that these two giants are the weakest link in the AI chain. He notes that about 70% of big tech's AI revenue comes from these two companies, and trouble could arise if cheap Chinese models spark a price war. Despite market anticipation of an Anthropic IPO, potentially valued at $2 trillion, Eisman says he will wait for the company to disclose real data before making a judgment.
The Bank of Japan is reportedly considering raising interest rates as early as September and may accelerate the pace of subsequent hikes. Sources indicate the central bank is increasingly concerned about inflation pressures from the Middle East conflict, rising prices from global AI demand, and the persistent yen depreciation. Despite recent joint intervention by the US and Japan, the yen's decline continues. The sources suggest a rate hike at the September 17-18 policy meeting is highly likely.
AI infrastructure bonds are pushing real yields higher, creating a "capital scarcity" test for the global economy and stock market boom. As AI companies and governments increase bond issuance, inflation-adjusted borrowing costs in major economies have hit their highest levels in over a decade. The US 30-year real yield, measured by TIPS, is near levels not seen since the 2008 financial crisis, while the 30-year nominal yield is at its highest since 2007. The US 10-year yield recently hit an 18-month high. This trend is not limited to the US, as UK and German 10-year real yields are also near their highest levels in over a decade.
OpenAI has surpassed a $40 billion annualized revenue run rate, according to sources, roughly doubling from the end of 2025. The company's revenue growth has accelerated in recent months, partly driven by its AI coding software business. Subscription sales and an early-stage advertising business are also gaining momentum, alongside continued growth in its core consumer business.
Individual Stock News
SanDisk Corp. (SNDK.US) continued its pre-market rally, rising over 6%. At its recent investor day, the company signaled a shift toward sustainable growth through long-term supply agreements. It has signed contracts with eight data center customers, covering about 50% of bit shipments for FY2027 and two-thirds for FY2028, with minimum revenue commitments of $93.9 billion backed by $16.5 billion in financial guarantees. SanDisk provided a financial framework for FY2028-FY2030, projecting mid-to-high double-digit revenue growth and gross margins around 80%. The company also estimates the enterprise data center flash TAM will reach 1.2ZB by 2030, with AI inference becoming a key growth driver.
US drone stocks surged pre-market, with Unusual Machines (UMAC.US) jumping over 15%. President Trump signed a proclamation on Thursday imposing 10% to 100% ad valorem tariffs on imported drones and drone components. The new tariffs take effect September 3, with exemptions for non-sensitive drone parts or those waived by the Defense Department, which will be effective February 9, 2027.
Applied Materials (AMAT.US) delivered a "beat on all fronts" Q3 earnings report after the close Thursday, with revenue of $9.12 billion exceeding analyst estimates of $9.0 billion and setting a company record. Adjusted EPS of $3.50 also broke records. GAAP gross margin of 50.3% improved 150 basis points year-over-year, marking the 13th consecutive quarter of improvement. However, the stock fell about 5% pre-market, reflecting the market's extremely high expectations for AI equipment stocks after a year of doubling.
Advanced Micro Devices (AMD.US) issued a record $4.75 billion in bonds on Thursday, the largest debt offering in company history. The bonds are expected to close on August 17. The move highlights how semiconductor companies are increasingly relying on capital markets to fund AI investments, data center expansion, and manufacturing projects. AMD recently announced partnerships with Anthropic and Microsoft (MSFT.US) to expand its chip applications. Market analysis suggests AMD's revenue could grow 47% this year, potentially exceeding $51 billion.
Apple (AAPL.US) has trained a large language model specifically for the China market, partnering with Alibaba (BABA.US) to develop on-device AI. This marks a departure from Apple's previous strategy of relying on third-party models for AI features in China. The model was developed with technical support from Alibaba, according to sources. Both companies declined to comment on the report.
Lam Research (LRCX.US) announced a $3 billion investment over five years to expand its research lab network. The multi-site expansion is expected to increase experimental capacity by over 50%. The company says this model has already helped reduce process development cycles to about 40% of the original time, speeding up development by up to 2.5 times.
Agora, Inc. (API.US) reported Q2 revenue of $40.4 million, up 18% from $34.3 million a year ago, driven by real-time engagement services in live shopping and financial services. Net income was $2.2 million, compared to $1.5 million a year ago. The company achieved its seventh consecutive quarter of GAAP profitability.
RLX Technology (RLX.US) reported Q2 2026 net revenue of RMB 1.0105 billion ($148.9 million), up 14.8% year-over-year. Non-GAAP net income was RMB 238.8 million ($35.19 million), compared to RMB 291.2 million a year ago.
Key Economic Data and Events
20:30 Beijing Time: US July Retail Sales Month-over-Month, Canada June Manufacturing Sales Month-over-Month.
22:00 Beijing Time: US August University of Michigan Consumer Sentiment Index (Preliminary).
01:00 Beijing Time (Next Day): US Baker Hughes Total Rig Count for the week ending August 14.
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