The stock market rally hinges on two very different power struggles—one affecting the artificial-intelligence boom and the other determining whether the Federal Reserve will cut rates again this year.
If the AI trade does collapse, or even
start to unwind, what holds it back will likely be a supply issue—a lack of power to keep up with the seemingly insatiable demand.
CoreWeave CEO Michael Intrator said demand for its AI cloud platform “far exceeds available capacity,” on the company’s earnings call this week. The revelation that one of its data center developers had fallen behind schedule appeared to alarm investors as the stock tumbled. Microsoft CEO Satya Nadella also said recently that a shortage of electricity and data center capacity was an issue.
Demand, at least for now, is not a problem. AMD set out
annual revenue growth of more than 35% over the next five years at an analyst day in New York on Tuesday. That was better than Wall Street’s estimates. Fellow chip maker Nvidia is likely to
reinforce that view next week when it reports earnings, especially as CEO Jensen Huang revealed more than $500 billion in chip orders through 2026. Foxconn, which makes AI servers for Nvidia, also struck a bullish tone in its earnings early Wednesday.
The Federal Reserve has its own power battle ahead of the central bank’s final interest-rate decision of the year next month. A split is emerging between officials over whether or not to cut, The Wall Street Journal
reported.
The absence of data due to the government shutdown is one factor—but the real dilemma pits the weakening labor market against stubbornly sticky inflation. The presence of Trump-appointed governor Stephen Miran on the committee along with Fed Chair Jerome Powell’s impending departure in May further complicate the dynamic.
If the Fed does cut rates, and the AI boom avoids any major hiccups—the stock market can surge higher.
—Callum Keown
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SoftBank Dives Further Into OpenAI, Funded By Nvidia Stake
Even as more people are questioning the heavy investment in artificial
intelligence, Japan’s SoftBank is pouring into the space. SoftBank founder Masayashi Son has been one of OpenAI’s most prominent backers, and now SoftBank has shed a big investment in AI chip
maker Nvidia to bankroll that investment.
- SoftBank disclosed that it sold the $5.83 billion Nvidia stake in October, marking a shift in the longstanding relationship with the chip maker. But the move had nothing to do with Nvidia, according to SoftBank CFO Yoshimitsu Goto.
- SoftBank has been leading a $40 billion investment in OpenAI, with plans to syndicate $10 billion to co-investors. On
Tuesday it said co-investors had committed to the entire syndication amount, and that it will invest an additional $22.5 billion in OpenAI through its Vision Fund 2 in December.
- Son’s bet on OpenAI has been lucrative so far—SoftBank’s quarterly net profit more than doubled, helped by the revaluation of its OpenAI stake and its shares have more than doubled this year. Son has said he expects OpenAI to go public within the next few years.
- It isn’t the only splashy AI move on Tuesday. Advanced Micro Devices CEO Lisa Su projects AMD’s revenue to grow more than 35% a year over the next
three to five years, from a $34 billion baseline for 2025. That forecast beats expectations.
What’s Next: AMD’s AI data center revenue is projected to gain an average of 80% over the same three to five years, executives said during a company event. CFO Jean Hu said there’s a “clear path” to more than $20 in annual EPS by 2028, nearly double current expectations.
—Adam Clark, Tae Kim, and Janet H. Cho
Shutdown Nears End, But Travel Stocks Face Turbulence
The longest shutdown in U.S. history could soon come to an end, with the House expected to vote on a funding package to reopen the government on Wednesday. But the travel industry will be dealing with the repercussions well into the peak holiday season.
- The Senate passed a stopgap funding measure to reopen the government late Monday, voting 60-40 in favor. The bill has now been sent back to the Republican-controlled House for a final vote, and it will then go to President Donald Trump’s desk. Trump told reporters
earlier this week that he supported the “very good” deal.
- Air-traffic controllers have been working without pay throughout the shutdown, which has placed strain on the airline industry. The FAA initially cut planned flights by about 4% last Friday. It aims to ramp up to 10% fewer flights by the end of this week.
- It remains unclear if the FAA will reverse its decision. Transportation Secretary Sean Duffy has said while air-traffic controllers could receive back pay as soon as 48 hours after the shutdown ends, it is unlikely that normal flight patterns would be immediately reinstated.
What’s Next: It isn’t just airlines that will be affected—hotels, rental car services, and even some cruise lines are telling investors that the reduction in flights will have a knock-on effect on their fourth-quarter earnings. Mark Hoplamazian, CEO of Hyatt Hotels, said in a Nov. 6 earnings call that a reduction in air travel “by definition” means there are fewer people flying and thus needing to stay at a hotel.
—Sabrina Escobar, Callum
Keown and George Glover
