Jobs Data Mess & AI's Moment: Unpacking the Week's Biggest News

Economic Data and Job Market - The Bureau of Labor Statistics (BLS) revised employment data, indicating that the US economy created over 900,000 fewer jobs from April 2024 to March 2025 than initially reported, highlighting a weaker job market under the Biden and early Trump administrations [2][3] - The job market had been deteriorating prior to the implementation of Trump’s tariff policy, suggesting that tariffs are not the primary cause of job losses [3] - The significant job revision implies that the Federal Reserve is likely to cut interest rates in its upcoming meeting, which could be a bullish signal for stocks [4] Inflation and Economic Outlook - The Producer Price Index (PPI) showed a decline of 0.1% for the month, contrary to expectations of a 0.3% increase, with year-over-year core PPI rising only 2.8%, below the anticipated 3.5% [5] - The inflation data suggests that the consumer is not bearing the full burden of tariffs, as many foreign companies and importers are absorbing the costs [5] AI Industry Developments - Nebius Group secured a five-year deal worth over $17 billion with Microsoft, significantly impacting its market cap and demonstrating the trickle-down effect of big tech's capital expenditures [7][9] - Oracle reported a Remaining Performance Obligation (RPO) increase of 359% to $455 billion, indicating strong future revenue growth and a substantial contract backlog [10] - The AI industry's growth is compared favorably to the internet boom of the late 1990s, with current AI companies being more profitable and having stronger balance sheets than their internet counterparts at that time [14][15] Market Sentiment and Valuation - Despite skepticism regarding the AI industry's growth, recent developments from Nebius and Oracle counter these criticisms, suggesting that the AI boom is still in its early stages [20] - Current valuations in the AI sector are more reasonable compared to the internet boom, with the Nasdaq price-to-earnings ratio around 30x, indicating that companies like Oracle are likely to grow into their valuations [15]