Well, that didn't last long. Speculation about whether the stock market had hit peak AI has bitten the dust. Fears over rising borrowing costs and excess computing capacity have been blown away by a barrage of spending news. Expect a volatile earnings season ahead.
A flare-up in the U.S.-Iran conflict this week has lifted bets on interest-rate hikes. That, in turn, raised the question of whether higher borrowing costs might lead one of the Big Tech companies to scale back investment -- with eyes on social-media company Meta Platforms, a relative laggard in advanced artificial-intelligence models.
That explains the big market reaction to a report Meta wants to double its computing capacity to 14 gigawatts next year, according to a Reuters report Thursday. A typical one-gigawatt AI data center requires $38 billion in up-front capital expenditure according to analysis firm Epoch AI -- so Meta's reported plan would imply roughly $266 billion in capex.
Whether Meta shareholders want to fund that kind of spending remains to be seen, especially in the face of Chinese competition undercutting the price for Western AI. Watch out for a big capex increase in Meta's earnings report, expected later this month.
But it's certainly good news for hardware companies such as memory-chip makers Micron Technology and SK Hynix as they made their own significant announcements Thursday -- Micron pledging $250 billion in U.S. investment and SK Hynix planning to raise $26.5 billion in the largest-ever listing of American depositary receipts by a foreign company. And those funds are set to continue down the supply chain, to boost chip-making equipment companies.
For some, this will just be a cyclical bubble further inflating. But with AI infrastructure companies dominating the ranks of top S&P 500 gainers this year, it is a brave stock picker who is willing to stay on the sidelines.
-- Adam Clark
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Micron Accelerates U.S. Investment Plan as Memory Demand Soars
One of the AI rally's biggest winners is accelerating its spending plans. Micron Technology is preparing to plow even more money into the U.S. in a bid to meet surging demand for its memory chips.
-- Micron said Thursday it would expand its U.S. investment plan to $250
billion through 2035 as memory demand soars. It had previously committed
to investing $200 billion in American semiconductor manufacturing.
-- The company said in a statement the increased investment would help it
produce 40% of its dynamic random-access memory in the U.S., while also
creating jobs.
-- In a separate announcement on Thursday, Micron said it planned to invest
up to $3 billion to strengthen the U.S. semiconductor supply-chain
ecosystem. As part of that, it will provide GlobalWafers with $500
million in financing support to advance a raw silicon wafer manufacturing
facility in Sherman, Texas.
-- Micron stock jumped 4.5% to just under $992 on Thursday. Shares have more
than tripled in 2026, even though they've been struggling over the past
month as investors question how long the AI boom will last.
What's Next: BofA Global Research analyst Vivek Arya believes the stock can continue to rally, arguing that Big Tech companies are set to spend around $1.5 trillion on global cloud and AI infrastructure in 2027. Arya reiterated his Buy rating this week, with a $1,550 target price implying shares can jump more than 50% from their level as of Thursday's close.
-- Adam Clark and George Glover
SpaceX's Grok 4.5 Is a Win for Nvidia's Chips
SpaceX's latest AI model, Grok 4.5, was trained across "tens of thousands" of Nvidia's latest GB300 graphics-processing unit. Nvidia stock, having bounced back from its recent lows, closed down 0.7% at $202.78 on Thursday, after gaining 3.7% in the prior session.
-- However, the SpaceX announcement may help Nvidia stock in the long term.
If Grok 4.5 proves competitive against the latest model releases from
Claude-developer Anthropic and ChatGPT-developer OpenAI, it will
reinforce the strengths of Nvidia's hardware.
-- SpaceX founder Elon Musk suggested on his social-media site X that Grok
4.5 could double -- or even more -- in speed once SpaceX starts using
internally developed software to optimize the model for Nvidia's GB300
chips.
-- Nvidia was named a Barron's stock pick on May 13, when shares were
trading at $226. Barron's named Nvidia CEO and co-founder Jensen Huang
one of the nation's Top CEOs last month.
What's Next: Nvidia recently won a central-processing unit deal with AI start-up Perplexity, and technology-focused news outlet The Information reported that Beijing is planning to let Chinese companies buy some Nvidia H200 chips. Mass shipments of Nvidia's Vera Rubin chips are expected in the second half of the year.
-- Adam Clark and Janet H. Cho
Pepsi Posts Earnings Beat, But North American Beverages Slipped 4%
PepsiCo's second-quarter earnings and revenue surpassed projections, as its international business helped drive revenue growth. But sales volumes for the North America beverages slid 4% from a year ago, suggesting PepsiCo is struggling to defend its market share.
-- The maker of Pepsi, Lay's, Doritos, and Gatorade reported an adjusted
profit of $2.20 a share, as revenue climbed 6.4% from a year ago to
$24.18 billion. The results weren't enough to reassure investors, who
wanted more evidence that CEO Ramon Laguarta's turnaround plan is
working.
-- Activist investor Elliott Investment Management has been pushing PepsiCo
to cut prices on selected products, expand more affordable pack sizes,
refresh major brands, and launch new products, such as Doritos Protein.
-- Morgan Stanley analyst Dara Mohsenian wrote that topline softness in the
U.S. and cost pressures in the second half of 2026 will likely be offset
by strength in international markets and tariff refunds.
-- Pepsi has closed plants and eliminated manufacturing lines, helping
increase its operating margin to 16.6%, from 7.9% a year ago. Management
reiterated its guidance for 2026, forecasting organic revenue growth of
between 2% and 4% and core earnings growth of 4% to 6%.
What's Next: Shares of Pepsi fell 3.3% on Thursday, while those of its rival Coca-Cola fell 0.9%. Coke stock, however, is near all-time highs: The company has higher operating margins, franchises its bottling lines, and is nearly entirely beverage-focused, including Fairlife milk products. Coke reports earnings on July 28.
-- Evie Liu, George Glover, Kit Norton, Anita Hamilton, and Janet H. Cho
Chinese AI Firms Race to Outrun U.S. Chip Giants, Hyperscalers
Chinese artificial intelligence company Zhipu AI announced Thursday that it wants to raise $4 billion in new capital. Chinese AI firms have been securing huge sums to compete with America's chip giants and hyperscalers, along with startups OpenAI and Anthropic.
-- Shares of Zhipu AI, an AI language model maker that trades as Knowledge
Atlas Technology, jumped 11.3% on Thursday in the Hong Kong exchange to
HK$2,032 (Hong Kong dollars), or $259.31 in U.S. dollars.
-- Thursday's stock move also signals that the AI trade -- under pressure in
the U.S. -- is heading to China as investors drop chip-makers for
large-language models. The price of Knowledge Atlas shares has surged
more than 1,000% since the stock's listing in January.
-- Zhipu's GLM 5.2 AI model is the most highly regarded in China right now,
coming in fifth behind three models from Anthropic and one from OpenAI --
and ahead of Alphabet-owned Google's Gemini model, according to
Artificial Analysis' multi-benchmark rankings.
-- DeepSeek, which last year rattled Wall Street by showing that AI models
can be developed far more cheaply than U.S. tech companies, raised more
than $7 billion in its first funding round last week. It remains
inexpensive, at only 3% of the per-token price of OpenAI's GPT 5.5.
What's Next: Zhipu AI plans to sell 19.8 million shares at HK$1,588 each -- representing about a 13% discount to Wednesday's closing price of HK$1,825 a share. With IPOs from Anthropic and OpenAI on deck, Zhipu's strong moves raise the stakes for those trading debuts.
-- Kit Norton and Janet H. Cho
Existing-Home Sales Rose in June, But Second-Half Recovery Unlikely
American home buyers are gradually coming back into the housing market, but the latest data suggest the path forward could be bumpy. Buyers are "not rushing in, but they are becoming more active," Nadia Evangelou, senior economist and director of real estate research at the National Association of Realtors, told Barron's .
-- Existing-home sales rose 2.8% in June from a year earlier, to a
seasonally adjusted annual rate of 4.09 million homes sold, NAR said
Thursday. Sales unexpectedly dropped 2.4% in June from May, below
economists' expectations for 4.2 million.
-- Mortgage rates rose this spring, with the 30-year rate peaking at an
average 6.75% in mid-May and hovering around 6.5% in June. The 30-year
fixed-rate mortgage averaged 6.49% as of July 9, compared with 6.72% a
year ago, according to Freddie Mac.
-- Affordability remains a challenge for home shoppers. Existing-home sales
prices have risen year-over-year for three straight years, NAR said. In
June, the median existing-home sales price rose 1.8% from a year earlier
to $440,600 -- the highest ever recorded.
-- Home sales rose in the first half of the year for the first time since
2021, according to NAR, which noted that inventory is up 1.3% from last
year -- yet remains below prepandemic levels and slipped in June from
May.
(MORE TO FOLLOW) Dow Jones Newswires
July 10, 2026 06:35 ET (10:35 GMT)
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