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Weekly Newsletter
💾 Micron Joins the Trillion Dollar Club
🤖 Anthropic Nears $1 Trillion Valuation
🚀 AI Optimism and Investments
📈 Productivity Improvement in the U.S. Economy
🏷️ Sticky Inflation
QUOTE OF THE WEEK:
“First and foremost, we think this is the largest TAM and market that we've ever seen in multiple generations. And so, certainly, we absolutely believe that there can be multiple winners. If you look at the supercycles over the last few years—the internet, mobile, and now AI infrastructure—those have each generated a $5 trillion company. So we absolutely believe that both Anthropic and OpenAI can be multi-trillion-dollar winners over the course of time." - Pauline Yang, partner at Altimeter Capital
KEY US ECONOMIC EVENTS NEXT WEEK:
MARKET CLOSE:
WEEKLY MARKET WRAP:
Good Afternoon. Another great week for the markets, thanks to continued stellar earnings. Almost all the major companies that reported this week beat expectations, with some like Dell and Salesforce smashing them.
On April 12, we highlighted two things: the AI race was accelerating compute demand, and S&P 500 earnings growth was tracking around 14%. A week later, on April 19, we wrote that market focus would likely shift back to earnings. Since then, the data has moved in that direction: using April 10 as the last market close before the April 12 note, the S&P 500 is up ~11.2%, and the Nasdaq Composite is up ~17.8% through May 29. The San Francisco Fed’s latest work adds another layer: AI is not just a market story; it is increasingly visible in investment and productivity data. More on Fed SFO analysis in the curated insights seciton below.Inflation stayed sticky in April, keeping the Fed on hold. Headline PCE rose 0.4% MoM / 3.8% YoY, while core PCE rose 0.2% MoM / 3.3% YoY. Annual inflation remains elevated, but softer monthly core inflation suggests the latest price spike may be easing.
For the week:
CNN's Fear & Greed Index now stands at 60 (Greed) out of 100, up 1 point from last week. Details here
The top five trending stocks on Reddit are Virgin Galactic, Collaborative Investment Series Trust(SPCX), Micron, NVIDIA, and AST Spacemobile. Read More
Liquidity:
Banking Reserves + ON RRP: Banking reserves remain at approximately $3 trillion. The ON RRP balance is $11.67bn.
Standing Repo Operations: The New York Fed’s standing repo operation (primarily reflecting SRF take-up) is zero.
Here is a summary of this week’s key economic releases:
Target Rate Probabilities for June 17th FOMC Meeting:
CME FedWatch
CURATED INSIGHTS & ANALYSIS:
AI Optimism and Investments:
The more interesting takeaway from the San Francisco Fed’s latest AI note is not just that AI is boosting investment, but that the Fed now has a working methodology to track it. Because official data does not cleanly classify an “AI sector,” the authors use earnings-call text analysis to measure which public companies are positive on AI, then link that sentiment to actual capex and R&D spending. That gives policymakers and investors a more real-time way to detect whether AI optimism is turning into tangible investment. The early signal is clear: AI-positive firms have driven most of the recent investment growth, but the trend is still heavily concentrated among the largest technology companies.
Productivity Growth in the US Economy:
The follow-up San Francisco Fed note extends the AI framework from investment to productivity. The key point is that the Fed is not simply asking whether AI is “working” based on headlines; it is using a regime-switching model to test whether the economy is moving from a low-productivity to high-productivity growth period. The current signal is still mixed: labor productivity is improving, but total factor productivity — the broader measure of true efficiency gains — has not yet confirmed a sustained boom. That said, the pattern looks similar to the early stages of the 1990s tech cycle, when productivity gains were only obvious later with hindsight. In other words, the Fed now has a structured way to monitor whether AI is merely boosting worker tools and capex today, or whether it is starting to produce a broader productivity regime shift.
Key takeaways from this week’s earnings :
AI’s payoff is spreading down the stack. The biggest move of the week didn’t come from a chip designer. It came from a server maker, with a custom silicon and interconnect supplier close behind. The signal is that the AI build-out is now feeding the whole hardware chain — boxes, storage, optics, networking — not just the marquee accelerators everyone watches.
The bar is the valuation, not the beat. A beat has become table stakes. When a stock has already run hard, an in-line quarter gets sold, and even a strong forward guide earns a shrug. Costco is a clean example: solid numbers, premium multiple, lower share price. The reaction is set by where expectations already sit, not by the print itself.
Guidance owns the tape. The quarter that just closed barely matters; the next one does. A double beat can be undercut by a single soft forward number, and a raised multi-year outlook can carry a stock further than trailing results ever could. The market is trading the windshield, not the rear-view mirror.
The Canadian banks are quietly compounding. Away from the AI spotlight, the diversified, capital-heavy bank model keeps doing the unglamorous work — recording segment earnings, paying higher dividends, and executing steady buybacks. The consistency is the whole point. TD carries the extra wrinkle of an AML remediation effort it’s still working through, but the core engine is running.
The consumer is intact, but the fight has moved to margins. Demand for value is holding up on both sides of the Pacific. What’s changed is the cost of keeping it — reinvestment to defend a low-price moat in a tougher market, or membership economics at home. The top line still works; the open question is what it takes to protect it.
FRONT PAGES:
Iran MOU "Mostly Agreed" After Mid-Week Strikes Shake Ceasefire: Markets returned Tuesday from Memorial Day to fresh US strikes in Bandar Abbas and an Iranian missile aimed at a Kuwait base — Brent jumped 4% to $98.87. By Friday, NBC reported US and Iranian negotiators had agreed to the outline of a 60-day MOU extending the ceasefire and opening nuclear talks, with only Trump's sign-off pending. Brent finished below $97, and equities closed the week at fresh records. Read
Bitcoin ETFs Bleed $2.8B in Record 9-Day Outflow Streak: US spot Bitcoin ETFs logged nine straight sessions of net outflows from May 15–28, the longest since they debuted in January 2024 — surpassing the prior 8-day record set in February 2025. BlackRock's IBIT accounted for ~$2.04B of the bleed; its $528M outflow on May 27 was the fund's second-largest single-day redemption ever. BTC slid from $80K to $73K over the same window, even as the S&P notched a fresh ATH — a clean divergence between institutional crypto demand and broader risk appetite. Read
Robinhood Hands AI Agents the Keys to Stock Trading and Credit Cards: Robinhood launched Agentic Trading and an Agentic Credit Card on Wednesday, letting users connect third-party AI agents via MCP to trade equities and make purchases on a virtual Gold Card — with isolated accounts, spending caps, and a one-tap kill switch. The launch follows OpenAI's own personal finance rollout earlier this month and risks further disintermediating banks. Stock rose 6% on the week; Mizuho raised PT to $115. Read
Pfizer-Innovent $10.5B Deal Caps China Biotech Licensing Surge: Pfizer signed a global oncology collaboration with Suzhou-based Innovent Thursday — $650M upfront and up to $9.85B in milestones for 12 ADC and multi-specific antibody programs. Follows BMS-Hengrui ($15.2B) earlier this month; China biotech licensing into the US hit $137.7B in 2025, up ~10x from 2021. Innovent +10% in Hong Kong. Q3 close targeted. Read
SpaceX Valuation Flap as Roadshow Approaches: Bloomberg reported Thursday SpaceX cut its IPO valuation target to $1.8T from over $2T; Musk denied it on X Friday, calling the reports "false." The S-1 went public on May 20, 2025, with revenue of $18.7B, Q1 2026 revenue of $4.7B, 2025 net loss of $4.9B, and Starlink has passed 10M subscribers. Roadshow begins June 4, pricing June 11, trading June 12 under SPCX. Read
EARNINGS UPDATE:
Salesforce. Non-GAAP EPS $3.88, up 50% and past the $3.13 consensus; revenue $11.13B, up 13%. Current RPO rose 14% to $33.6B; non-GAAP operating margin hit a record 34.8%; Agentforce and Data 360 drove bookings as marketing, commerce, and Tableau lagged. The full-year revenue guide was raised, but Q2 came in slightly light. Shares rallied ~8%.
Marvell Technology. Non-GAAP EPS $0.80 versus $0.79; record revenue $2.42B, up 28%. Data center revenue $1.83B, up 27% and now 76% of the mix; non-GAAP gross margin 58.9%; record operating cash flow. Q2 is guided to $2.7B, and both FY27 and FY28 outlooks were raised on AI and interconnect demand. Shares barely moved after a ~145% run this year.
PDD Holdings. Non-GAAP EPS per ADS $1.38, well short of the ~$2.40 consensus; revenue RMB 106.2B (US$15.4B), up 11% but light. Net income fell 15% as the company funds a multi-year “deep transformation” — RMB 100B into supply chain and a new first-party brand business. Margins compressed; shares were little changed, already deeply discounted.
Costco Wholesale. EPS $4.93, roughly in line; revenue $70.53B, up 11.6% and a slight beat. Comparable sales rose 9.8% (6.6% ex-gas and FX); digital comps jumped 21.5%; record gasoline volumes lifted traffic. Worldwide renewal slipped to 89.7%, below 90%. With a 50x-plus multiple, an in-line print wasn’t enough — shares fell ~4%.
Dell Technologies. Non-GAAP EPS $4.86 versus $2.94; revenue surged 88% to a record $43.84B. Infrastructure Solutions jumped 181% to $29B, with $16.1B of AI server revenue recognized, $24.4B in new orders booked, and a $51.3B backlog; PCs grew 17%. The full-year revenue outlook was raised to $167B. Shares soared ~33%.
Royal Bank of Canada. Adjusted EPS C$3.90, up 25% and past C$3.77; revenue C$17.45B, up 11%. Capital Markets posted record net income of C$1.5B; Wealth Management gained 28% and Personal Banking 18%; ROE 17.2% on a 13.5% CET1 ratio. RBC raised its dividend and kept buying back stock. Shares were roughly flat.
TD Bank Group. Adjusted EPS C$2.38, up 21% versus C$2.25; adjusted net income C$4.2B, up 15%. Canadian Personal & Commercial set a Q2 record at C$1.93B; Wholesale jumped 46%; ROE 14.4% on a 14.3% CET1 ratio. The dividend was raised, and ~19M shares repurchased, while AML remediation continues. Shares were flat.
EARNINGS PREVIEW:
Date | Symbol | Name | Time |
1-Jun | CRDO | Credo Technology | After Close |
1-Jun | HPE | Hewlett-Packard Enterprise | After Close |
2-Jun | PANW | Palo Alto Networks | After Close |
3-Jun | AVGO | Broadcom Ltd | After Close |
3-Jun | CRWD | Crowdstrike Holdings | After Close |
3-Jun | MDT | Medtronic Inc | Before Open |
4-Jun | CIEN | Ciena Corp | Before Open |
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