Good morning,

Sitting next to Trump at the recent White House dinner broadcast, Zuckerberg pledged to invest at least $600 billion in data centers. But a moment later…

…a hot mic caught him telling Trump, “I wasn’t sure what number you wanted to go with.”

It’s a funny slip-up at first glance, but this “hundred billion here or there” moment sums up the state of AI spending today.

Oracle shocked the Street yesterday when the near-trillion-dollar company jumped 36% after reporting a massive 359% surge in contract backlog for its cloud infrastructure.

Everyone knows that cloud demand is growing fast because of AI, but nobody expected it would grow that fast.

Analysts who went on TV yesterday were "in shock," including D.A. Davidson’s Gil Luria (one of the top tech analysts on the Street) who called it "absolutely staggering."

But much like the fiber buildout of the internet era, today’s AI spending is largely FOMO-driven and front-loaded on the assumption that AI's exponential adoption curve will hold.

No line captures this “blank check” spending better than Google CEO Sundar Pichai’s remark during Alphabet’s earnings call last August.

“When you go through a curve like this, the risk of underinvesting is dramatically greater than the risk of overinvesting.”

Some of that overinvestment will eventually have to bleed out, but when, and where, only time will tell.

For historical context, only two of the six internet companies that dominated the S&P 500 in the ’90s ever returned to their dot-com highs, and it took them more than a decade.

Let's dive in!

Quote of the day 

Five things to know before opening bell

📈 S&P and Nasdaq notch fresh records

The biggest one-day pop for Oracle in 30+ years pushed the S&P 500 and Nasdaq to new highs. The Dow lagged (it’s light on tech), finishing slightly lower. A softer-than-expected producer inflation print also fed the rally ahead of today’s CPI report. Gold cooled, holding just under $3,700 an ounce.

💳 Klarna IPO is here

Klarna’s long-delayed IPO is here. The Swedish BNPL giant opened at $40 a share, landing a $15.1B valuation, which is higher than analysts expected, though still a far cry from its 2021 peak. Even so, it’s more than double the valuation it hit the following year. Klarna scrapped an April listing over market jitters, but 2025 has been an IPO stampede: 144 deals worth $50M+ have priced this year, up more than 50% from last year’s pace.

🌍 Trump ramps up tariffs on China and India 

With most of his tariff playbook still stuck in court, Trump is upping the ante. The White House urged EU officials to slap 100% tariffs on China and India, promising the U.S. would match. Talks with New Delhi are showing faint signs of progress, with Modi striking an upbeat note on resolving disputes over Russian oil. “Our teams are working to conclude these discussions at the earliest,” he said.

🏛️ Lisa Cook stays (for now)

Trump’s bid to oust Fed governor Lisa Cook hit a wall. A federal court granted an injunction keeping her in place as her case against the White House plays out. The president cited old mortgage fraud claims, which Cook denies, but the judge ruled pre-term issues aren’t grounds for removal. The fight could climb to the Supreme Court. Meanwhile, Trump blasted Powell again on Truth Social, “Powell is a total disaster, who doesn’t have a clue!!!”

📰 All eyes on jobs & CPI today 

The Fed’s juggling act between its two key mandates (price stability and employment growth) is getting tougher. Inflation remains sticky, while unemployment is creeping higher. This morning brings fresh CPI data for August alongside weekly jobless claims. Kroger’s earnings will also drop today, offering a snapshot of inflation in the grocery aisle.

🎮 Can GameStop Bitcoin its way out?

Bitcoin’s been acting more like a seasoned commodity than a meme asset this year, but with recession signals flashing, crypto has more to prove now that corporations are piling in.

📉 The rise (and risk) of Bitcoin treasuries

GameStop grabbed headlines yesterday with a big Bitcoin buy, but other firms that raised money to hoard crypto are feeling the squeeze as euphoria cools. 

With prices flat to down, leveraged players are bleeding.

Kaiko analyst Adam McCarthy wasn’t surprised. “These are all essentially volatility plays … if Bitcoin is down 3%, they’re down a multiple of that, sometimes four or five times as much.”

And when (not if) sentiment shifts, sell-offs will follow.

“Beyond their Bitcoin exposure, most have only modest fundamentals, so their valuations don’t have much of a cushion.” Capital-market access fuels these bets — but that “dries up when sentiment cools,” said eToro’s Lale Akoner

🎯 Investors like GME’s strategy, though

For GameStop, the Bitcoin gamble is getting a friendlier reception. The company topped earnings expectations this week, but the real buzz was its crypto stack:

• 🟠 Bought 4,710 Bitcoin last quarter, worth $528.6M as of Aug. 2

• 🎮 Hardware & accessories sales rose, software slipped

• 🎁 59M special dividend warrants set for distribution next month

The stock closed up more than 3% despite fading from earlier highs. Buying Bitcoin isn’t the only reason, but it’s the one that apparently lit up investors.

🚀 Oracle's $244B pop nobody expected 

Wall Street had a solid day yesterday, but Oracle stole the show; Its stock ripped 36% after CEO Safra Catz laid out a jaw-dropping revenue forecast.

💬 What the CEO said

The rally was less about Oracle’s latest numbers and more about Catz’s vision. 

“We expect Oracle Cloud Infrastructure revenue to grow 77% to $18 billion this fiscal year — and then increase to $32 billion, $73 billion, $114 billion, and $144 billion over the subsequent four years,” she told investors.

That optimism came despite a mixed earnings print. The company brought in $14.9B in revenue and adjusted EPS of $1.47, both just shy of estimates.

📊 How analysts reacted

Oracle’s long-term AI-driven cloud growth (if it materializes) would cement its heavyweight status and quiet fears of an AI bubble.

• Jefferies analyst Brent Thill said the report showed “growing AI optimism.”

• Deutsche Bank’s Brad Zelnick called it “truly awesome,” underscoring Oracle’s “position as the leader in AI infrastructure.”

• Truist Wealth co-CIO Keith Lerner argued it validated the bull market’s dominant theme: “AI and technology … we’re seeing that confirmed once again with this latest report.”

Even as skeptics like Sam Altman warn about the sustainability of the AI boom, Oracle just handed the optimists a big win.

🎶 A final word of advice

The whole AI rally rests on relentless AI capex. If that slows, so does Wall Street’s music. As Wells Fargo’s Ohsung Kwon put it, “Music stops when AI capex stops. Enjoy the party.”

📉 PPI cools in August

Oracle wasn’t the only good news yesterday. While its blowout forecast grabbed the headlines, inflation data also gave Wall Street another reason to remain bullish.

📊 A surprise dip

According to the Bureau of Labor Statistics, both headline and core PPI slipped 0.1% from July to August. On a year-over-year basis, PPI rose 2.6% and core 2.8%. 

Economists had expected a 0.3% monthly increase after July’s 0.7% jump.

Capital Economics economist Stephen Brown said the “big picture remains that tariff effects are feeding through only slowly.” 

Bill Adams, chief economist at Comerica Bank, agreed that sellers “have been slow to pass on the cost of tariffs,” citing the possibility of foreign suppliers discounting to maintain market share, weak U.S. demand, or companies waiting for clarity before raising prices.

🔮 Eyes on CPI

The real test comes today, when the Bureau of Labor Statistics releases consumer price index data for August. Analysts expect headline CPI to accelerate to 2.9% from July’s 2.7%.

Douglas Porter, chief economist at BMO, noted the importance of the data for Fed policy. 

“The market is heavily building in the odds of quick follow-up cuts in October and December … we’re not quite all the way there yet, but are starting to lean in that dovish direction if upcoming inflation reports cooperate,” he wrote.