What’s Moving Markets Today? AI Infra, Retail Earnings, and the $1.5T SpaceX Question
Good morning, investors. Today’s market story is a rich tapestry of AI hardware shifts, retail resilience checks, and a few head-scratching valuations that deserve a closer look. Let’s break it down.
Why Is the AI Market Suddenly Talking About CPUs Instead of GPUs?
Here’s the question everyone’s asking: if Nvidia still controls 80% of the AI chip market, why are analysts and fund managers like Stanley Druckenmiller piling into AMD, Arm Holdings, and Intel?
The answer lies in where the next wave of AI spending is headed—inference. Deloitte projects that two-thirds of data center AI computing in 2026 will be inference workloads, not training. That changes everything. Training needs raw GPU horsepower; inference needs efficient, specialized processors that can handle millions of queries cheaply. AMD is forecasting 35% annual growth in the server CPU market through 2030, Arm projects revenue jumping from $4.9B to $25B over five years, and Marvell expects growth acceleration from custom AI chips launching in the next two years.
Nvidia isn’t standing still—Q1 revenue grew 85% year-over-year to $81.6B, beating guidance. But the market is starting to price in a more nuanced future where inference-optimized silicon from multiple vendors matters just as much as training GPUs. Nvidia’s stock dipped 4% after earnings despite crushing results, suggesting investors are repricing growth expectations.
Meanwhile, Microsoft’s AI revenue run rate surged 123% YoY to $37 billion, and its Foundry platform now hosts over 10,000 customers using multiple AI models. That flexibility—reducing dependence on a single model provider—is a long-term growth catalyst for Azure AI services.
Retail Earnings: Who’s Winning and Who’s Warning?
The retail sector offered a split verdict this week.
Ross Stores delivered the kind of beat that makes value investors sit up. Q1 revenue hit $6.01B, up 21% YoY, with comp store sales +17%. Operating margin came in at 13.4% versus expectations of 11.8-12.1%. Net income was $650M versus $479M expected. The stock hit a new all-time high above $232, and management raised full-year guidance for same-store sales growth to 6-7% (up from 3-4%) and EPS to $7.50-7.74. This is the 16th consecutive earnings beat. Off-price peers TJX and Burlington are also showing strength.
Walmart, however, told a different story. Q1 revenue climbed 7% to $177.8B, but the company revised full-year net sales guidance down to 3.5-4.5% from higher prior expectations, citing rising oil prices and macro headwinds. The stock fell 8% post-earnings, trading at a 42x trailing P/E—well above the S&P 500 average of 26. Walmart’s fundamental business remains strong, but the premium valuation and narrowing guidance range are raising concerns about near-term performance.
Home Depot beat estimates with Q1 revenue up 4.8% to over $41B, gross margin at 31.14%, and management reaffirmed guidance. Nike saw wholesale revenue climb 5% to $6.5B with a gross margin of 40.57%. Carnival reported record revenue of $6.2B, bookings up double-digits, EPS up 50%, and launched a $2.5B buyback. All three appear reasonably valued after recent sell-offs.
The Data Center Power Crisis Nobody’s Talking About
Goldman Sachs projects global data center power demand could rise 160% by 2030, with U.S. data center electricity demand nearly tripling. Hyperscalers are designing campuses consuming hundreds of megawatts.
This is where Constellation Energy becomes interesting. As the largest U.S. nuclear producer, CEG benefits from this demand through its nuclear baseload capacity, renewable portfolio, and grid management services. Microsoft signed a long-term power agreement to restart a reactor at Three Mile Island for AI demand. Amazon, Alphabet, and others are also investing heavily in nuclear and battery storage. CEG generated about $4.2B operating cash flow in 2025 while returning capital through dividends and buybacks. The stock trades at $294 with a 0.55% dividend yield.
Modine Manufacturing is another name to watch. Data center sales surged 42% organically in Q2, with full-year sales guidance raised to 15-20% growth. Data center revenue is on track for a $1 billion annual run rate this fiscal year, with 50-70% annual growth projected through 2028. The company is commissioning chiller capacity to support $3 billion in annual data center revenue by end of fiscal 2027.
SpaceX’s IPO: $1.5 Trillion Valuation on Deep Red Ink
SpaceX is targeting a June 12 Nasdaq IPO at a $1.5 trillion+ valuation. The S-1 shows a total addressable market of $28.5 trillion. But here’s the tension: FY 2025 R&D expense rose 150% to $8.6B, accumulated deficit sits at $41.3B, and Q1 2026 posted a net loss of $4.3B on revenue of $4.7B. That’s deep unprofitability.
Elon Musk’s broader empire—SpaceX, Tesla, X, xAI—is converging around an AI-driven thesis, with orbital data centers as a potential future catalyst. But for retail investors, the risk-reward of paying a premium for a company burning billions while pre-revenue on many fronts is decidedly asymmetric. This is speculation territory, not investment territory.
Dividend Moves: Nvidia Joins the Income Conversation
Nvidia increased its quarterly dividend 2,400% to $0.25 per share, creating a 0.4% yield. The company’s diluted EPS of $2.39 easily covers the payout, and the minuscule payout ratio enables continued high dividend growth. The new yield exceeds Apple’s 0.35% but remains below Microsoft’s 0.87% and the S&P 500 average of 1.1%.
This move signals confidence in cash generation amid AI-driven capex growth. It also broadens Nvidia’s shareholder base, potentially attracting institutional income investors like pension funds and endowments. However, Nvidia is primarily a growth stock—returns will come mainly from share price appreciation, not dividends.
What’s the S&P 500’s CAPE Ratio Telling Us?
The S&P 500 trades at a CAPE ratio of 41, significantly above the century-plus average of 17. Only two previous instances hit similar levels—1929 and the late 1990s—and both preceded major crashes. Deutsche Bank projects OpenAI could lose $140 billion from 2024-2029 as energy costs rise.
The message for defensive investors: consider rebalancing toward recession-resistant consumer defensive sectors and maintaining cash to capitalize on potential market dislocations. Micron Technology shows strong fundamentals with a forward P/E of 7.1 and 163% YoY net income growth, but the business is cyclical—valuation sustainability depends on whether memory supply-demand imbalances persist.
Quick Hits: GLP-1 Race, Social Security, and More
Eli Lilly vs. Novo Nordisk: Lilly’s Mounjaro and Zepbound posted Q1 2026 sales growth of 125% and 80% respectively. Morgan Stanley estimates Lilly controls slightly over 50% of the international GLP-1 market. Gross margin sits at 82.83% with a P/E of 38x. The Indian market showed resilience with Mounjaro sales growing 10% despite Wegovy losing patent protection.
Social Security COLA: The latest 2027 estimate is 3.9%, up from 2.8%, potentially pushing the average spousal benefit above $1,000 per month for the first time. But a new $6,000 senior tax deduction reduces taxable income that funds trust reserves. With the trust fund projected to exhaust by 2032, reduced contributions could accelerate depletion—risking future benefit cuts of up to 28%.
Micron: Shares surged 700% in a year driven by memory shortages. Forward P/E of 8 and PEG of 0.30 suggest potential value, but the cyclical nature means caution is warranted.
Palantir: Guiding for 120% revenue growth from commercial U.S. customers in 2026. Stock up over 2,000% since 2023, trading at $136.85 with a $328B market cap. Gross margin of 84.07%, but trading at 67x sales and 155x earnings. The agentic AI market is projected to grow over 46% annually to $24.5B by decade-end.
Bottom Line for Today
The market is navigating a complex inflection point: AI spending is real and accelerating, but the question of who captures the next phase of value is shifting from pure GPU dominance to inference-optimized architectures and data center infrastructure. Retail shows pockets of strength but also early signs of consumer fatigue. And valuation extremes across the board remind us that even great businesses can disappoint when priced for perfection.
For investors, the playbook remains familiar: focus on businesses with durable competitive advantages, demand reasonable prices with a margin of safety, and resist the urge to chase headlines. The best opportunities often hide in plain sight when everyone else is distracted by the spectacle.