Core Viewpoint - The AI capital expenditure (capex) is experiencing significant growth, presenting substantial investment opportunities, particularly in companies that provide the infrastructure for AI rather than the hyperscalers themselves [1][4]. Group 1: AI Capex Growth - AI capex spending is accelerating, indicating that the infrastructure build-out for AI has not yet peaked [1]. - The hyperscalers are engaged in a "winner-takes-all" competition, leading to unprecedented capital expenditures on infrastructure [3]. Group 2: Investment Strategy - The "picks and shovels" investment strategy focuses on companies that supply the necessary infrastructure for AI, rather than investing directly in the hyperscalers [2][4]. - Companies involved in the AI infrastructure are expected to benefit from a sustained flow of cash due to the hyperscalers' spending [3]. Group 3: Beneficiary Sectors - Chipmakers, such as NVIDIA and Broadcom, are key beneficiaries by providing AI processing power [6]. - Energy producers, including NextEra Energy and Constellation Energy, are essential for powering AI data centers [6]. - Commodities and materials suppliers, particularly those providing copper and wiring, are critical for connecting data centers [6]. - Infrastructure builders, like Vertiv Holdings and EMCOR Group, are vital for constructing data centers and cooling systems [6].

Market Overview - Stocks were mixed as Wall Street anticipated a resolution to the government's shutdown, with the House set for a final vote on a Senate-backed bill to reopen the federal government [1] - The Dow reached an all-time high, while the S&P 500 and Nasdaq faced pressure due to a lag in the tech sector, prompting investors to rotate into health care and financials [1] Company Highlights - Eli Lilly's stock surpassed $1,000 per share for the first time, and Goldman Sachs saw a 3% increase, both of which are holdings in the CNBC Investing Club [1] Data Center Investments - Anthropic announced a $50 billion investment in AI infrastructure, focusing on building data centers in New York and Texas, with the first locations expected to go live next year [1] - This investment is beneficial for Club holdings GE Vernova, Eaton, and Dover, which provide essential components for data center operations [1] - JPMorgan estimates that global data centers and AI infrastructure will cost over $5 trillion between 2026 and 2030, indicating a significant demand for compute resources [1] Analyst Insights - TD Cowen raised its price target for Broadcom from $370 to $405, citing increased AI spending by hyperscalers and partnerships involving OpenAI that could benefit Broadcom [1] - Analysts noted that while Broadcom is expected to deliver strong numbers, there is a "high bar" for chipmakers this quarter due to the stock's premium valuation [1] Upcoming Earnings Reports - Cisco Systems is set to release quarterly earnings after Wednesday's close, while Disney will report its quarter on Thursday morning [1] - Other notable earnings releases include Brookfield, JD.com, and Aegon before Thursday's open, with Applied Materials reporting on Thursday evening [1]

Market Performance - The Nasdaq Composite index fell 0.21% to 23,004.54, marking a total weekly decline of approximately 3% [2][4] - Despite the recent pullback, the Nasdaq has increased over 50% since April, driven by AI optimism following the announcement of tariffs by US President Donald Trump [2][4] - The S&P 500 rose 0.13% to 6,728.81, and the Dow Jones Industrial Average gained 0.16% to 46,987.10, both rebounding late in the session due to reports of progress in ending the federal government shutdown [4] Sector Analysis - Chipmakers and technology shares led the declines in the market, reflecting a cooling sentiment after comments from Nvidia CEO Jensen Huang regarding China's potential to surpass the US in the AI race [2][4] - Michael O'Rourke, chief market strategist at JonesTrading, noted that the sector's weakness indicates a "recalibration of multiples" and profit-taking by investors after a strong performance [2][4] Global Economic Indicators - The global equities index MSCI slipped 0.07%, and the STOXX 600 in Europe decreased by 0.55%, influenced by weak trade data from China [3][4] - Chinese exports fell by 1.1% in October, the largest decline since February, highlighting the impact of tariffs and affecting investor confidence across Asia [3][4] Bond Market and Currency - US Treasury yields decreased slightly, with the 10-year Treasury yield easing to 4.091% amid worsening consumer sentiment reflected in the University of Michigan's preliminary index for November, which dropped to 50.3, the lowest since June 2022 [3][5] - The US dollar weakened against major currencies, with the dollar index falling 0.11% to 99.57, while the euro strengthened to $1.1563 and the yen weakened to 153.45 per dollar [5] Commodity Prices - Oil prices rebounded, with US crude settling 32 cents higher at $59.75 per barrel and Brent rising 25 cents to $63.63, driven by optimism following a meeting between Trump and Hungary's Prime Minister [5] - Gold prices also increased as investors sought safety amid ongoing uncertainty in the market [5]

Market Overview - U.S. equity markets faced a broad retreat on November 7, 2025, primarily due to a sell-off in technology stocks, driven by concerns over inflated valuations in the AI sector and a prolonged government shutdown [1][10] - All three major indexes are on track for their steepest weekly losses in months, with the Nasdaq Composite poised for its worst weekly performance since March [1][2] Major Index Performance - The Nasdaq Composite (IXIC) declined approximately 1.5% to 2% in afternoon trading, following a 1.9% drop on Thursday [2] - The S&P 500 (SPX) fell between 0.9% and 1.2% by mid-afternoon, after a 1.1% decline on Thursday [2] - The Dow Jones Industrial Average (DJI) was down around 0.5% to 0.8% in afternoon trading, closing 0.8% lower on Thursday [2] Volatility and Investor Sentiment - The CBOE Volatility Index (VIX) surged by 8.3%, reaching its highest level in over two weeks, indicating increased investor nervousness [3] - The current market unease is exacerbated by the ongoing government shutdown, which has led to a "data blackout" affecting crucial economic releases [6] Sector Performance - There is a notable rotation out of high-growth technology stocks, with the Technology Select Sector SPDR Fund (XLK) and Consumer Discretionary Select Sector SPDR Fund (XLY) slipping 2% and 2.3% respectively [4] - The Energy Select Sector SPDR Fund (XLE) advanced by 1%, indicating a defensive shift in investor portfolios towards traditional and value-oriented sectors [5] Corporate Developments - Tesla (TSLA) shares fell 3.3% to 4% despite shareholder approval of CEO Elon Musk's $1 trillion compensation package [13] - Chipmakers like Nvidia (NVDA) and Broadcom (AVGO) faced significant pressure, with declines of 3.8% and 4.6% respectively, reflecting caution regarding high valuations in AI-related stocks [13] - Payments company Block (SQ) slumped 9.8% to 10.5% after disappointing third-quarter earnings [13] - Conversely, Peloton (PTON) and Expedia Group (EXPE) saw significant gains of 3.4% to 6.1% and 16.6% to 17.3% respectively, following better-than-expected earnings [13]

Core Viewpoint - The stock market is experiencing a challenging start to November, primarily driven by concerns over a potential AI bubble and high valuations in the tech sector, leading to significant declines in major AI-related stocks [1][6]. Market Trends - Investors are advised to focus on high-quality asset classes and sectors during market downturns, with a recommendation to avoid chasing rallies or selling during weakness [2]. - There is a notable shift away from communication services and information technology stocks, as these sectors have been downgraded due to more attractive valuations found in other market areas [2]. Valuation Concerns - There are growing doubts regarding the high valuations of certain tech firms, with specific mention of Palantir trading at a forward price-to-earnings multiple of approximately 217, indicating potential overvaluation [3]. Investment Recommendations - Investors are encouraged to buy into utilities, industrials, financials, and emerging market stocks, which are seen as having more favorable valuations compared to tech firms [4]. - Utilities and industrial stocks have outperformed the broader S&P 500 this year, with both sectors up over 17% year-to-date, highlighting their attractiveness [5]. Sector Adjustments - A strategic shift away from consumer discretionary stocks is recommended, as these stocks face risks from tariffs and reduced spending among lower-income consumers [5].

Core Insights - The current market is characterized by "micro-manias" across various sectors, including AI, crypto, gold, and more, without disrupting the overall market rally [1][2] - Ed Yardeni describes the situation as a "bubble in fears of bubbles," indicating that while there are many speculative assets, the broader market remains stable [2][4] - The market is experiencing fragmented exuberance, with multiple smaller frenzies rather than a single overarching boom [3] Market Conditions - Stocks are at record highs, and US real GDP has also reached a record high, with no official recession in the last 16 years, except for a brief lockdown in early 2020 [5] - The AI sector is under scrutiny, with Goldman Sachs questioning whether it has entered bubble territory, noting a "circular" investment pattern among Big Tech companies [6] Comparisons to Historical Trends - The narrative of an "everything bubble" gained traction during the pandemic stimulus period, similar to past speculative bursts, but did not lead to a financial crisis [4] - Current leading tech companies, such as Nvidia, Microsoft, Meta, Alphabet, and Amazon, are generating significant cash flow and returning capital to shareholders, trading below the extremes seen during the dot-com bubble [7]

Economic Impact - The US government shutdown is in its fourth week, affecting market sentiment and delaying key economic reports, including unemployment claims and the September payroll report [1] - Bloomberg Economics estimates that 640,000 federal workers will be furloughed, potentially increasing jobless claims and raising the unemployment rate to 4.7% [1] Mortgage Market - US MBA mortgage applications decreased by 0.3% for the week ending October 17, with the purchase mortgage sub-index down 5.2% and refinancing up 4.0% [2] - The average 30-year fixed mortgage rate fell by 5 basis points to 6.37% from 6.42% [2] Trade Relations - Markets are focused on US-China trade talks, with President Trump threatening to increase tariffs on Chinese goods if no deal is reached by November 1 [3] - The Trump administration is considering broad export restrictions to China in response to China's rare earth export restrictions [4] Stock Market Performance - Stock indexes closed lower, with the S&P 500 down 0.53%, Dow Jones down 0.71%, and Nasdaq down 0.99% [6] - Chipmakers faced significant losses after Texas Instruments forecasted lower-than-expected Q4 revenue, while Netflix dropped over 9% after reporting weaker Q3 EPS [5][6] Earnings Season - The Q3 earnings season shows rising expectations, with 85% of S&P 500 companies that reported so far beating forecasts, indicating the best quarter since 2021 [7] - Q3 profits are expected to rise by 7.2% year-over-year, the smallest increase in two years, while sales growth is projected to slow to 5.9% year-over-year [7] Interest Rates - Markets are pricing in a 97% chance of a 25 basis point rate cut at the next FOMC meeting on October 28-29 [8] - The yield on 10-year T-notes fell by 1.4 basis points to 3.949%, supported by strong demand for a recent Treasury auction [9] Corporate Movements - Texas Instruments and other chipmakers saw declines due to lower revenue forecasts, while Intuitive Surgical rose over 13% after increasing its growth forecast [5][16] - Netflix's Q3 EPS of $5.87 was below the consensus of $6.94, leading to a significant drop in its stock price [15] - Energy producers rallied as WTI crude oil prices rose over 2%, benefiting companies like Halliburton and Marathon Petroleum [18]

Core Insights - The artificial intelligence (AI) sector is driving significant growth in the utilities sector, transforming traditionally stable utility stocks into high-growth investments [1][3]. - Since the end of 2023, the utilities sector has increased by approximately 43%, making it the third best-performing group in the S&P 500, with a 20% gain this year alone [2][6]. - The demand for energy to support AI infrastructure is expected to benefit energy producers, particularly independent power producers [3][4]. Utilities Sector Performance - The S&P 500 Utilities index has reached multiple all-time highs recently, a notable achievement as it had never recorded back-to-back 20% gains since 1990 [2]. - Independent power producers have emerged as the best-performing stocks within the utilities index, with NRG Energy Inc. rising by 78% in 2025, Constellation Energy Corp. gaining over 60%, and Vistra Corp. increasing by 35% [5]. - Historically, utilities have been viewed as defensive investments, providing reliable cash flow during downturns, but the current rally is occurring during a broader bull market [6][7]. Market Context - The current rally in utilities is notable as it contrasts with other defensive sectors like consumer staples and healthcare, which have seen less than 6% growth this year [7]. - The performance of utilities is particularly striking given that they have outperformed during previous market downturns, such as the dot-com crash and the global financial crisis [6].

Economic Environment - The US government shutdown is impacting market sentiment and delaying key economic reports, including unemployment claims and payroll reports [1] - Bloomberg Economics estimates that 640,000 federal workers will be furloughed, potentially increasing jobless claims and raising the unemployment rate to 4.7% [1] Trade Relations - Escalating trade tensions between the US and China have led to increased demand for precious metals, with gold and silver reaching all-time highs [2] - President Trump indicated that current tariffs on China are "not sustainable," which has eased some trade concerns [3] Stock Market Performance - Stock indexes are showing slight recovery, supported by better-than-expected Q3 earnings from regional banks like Truist Financial and Regions Financial [4] - The S&P 500 Index is up +0.14%, the Dow Jones is up +0.43%, and the Nasdaq 100 is up +0.07% [5] Earnings Season - The Q3 earnings season is underway, with 78% of S&P 500 companies that have reported so far beating forecasts [6] - Q3 profits are expected to rise by +7.2% year-over-year, the smallest increase in two years, while sales growth is projected to slow to +5.9% year-over-year [6] Interest Rates and Bonds - The market is anticipating a 100% chance of a -25 basis point rate cut at the next FOMC meeting [7] - The 10-year T-note yield has increased to 3.992%, rebounding from a recent low [8][9] Sector Movements - Chipmakers and AI infrastructure stocks are experiencing declines, with Oracle down more than -5% [12] - Cryptocurrency-exposed stocks are also falling as Bitcoin prices drop, affecting companies like Coinbase and Riot Platforms [13] Company-Specific News - American Express reported Q3 EPS of $4.14, exceeding consensus estimates, leading to a +3% increase in stock price [16] - Truist Financial's Q3 non-interest income of $1.56 billion was better than expected, contributing to a +3% rise in its stock [16] - Micron Technology plans to stop supplying server chips to data centers in China, leading to a decline in its stock price [15]

Financial Performance - Cambricon Technologies' quarterly revenue surged 14-fold, indicating a significant increase [1] Industry Trend - China's chipmakers are benefiting from a national drive to replace restricted Nvidia gear [1] - Domestic AI development boom is driving the growth of Chinese chipmakers [1]