₿ Justin Tew - Objective Finance 📈

Nvidia is bringing Wall Street deeper into AI infrastructure financing

Nvidia announced that a coalition of major financial institutions, including BlackRock, Goldman Sachs, Apollo, Blackstone, Brookfield, and KKR, will independently deploy more than $500 billion to help fund AI infrastructure.

The issue investors were watching: “circular financing”. If Nvidia lends money to customers like OpenAI so they can buy Nvidia chips, and those customers fail, Nvidia could be left with the losses while already having booked the revenue.

In less than three weeks, the cost of protecting Nvidia’s debt against default had nearly doubled via credit default swaps (CDS)

Tuesday’s announcement helped calm credit markets because Nvidia’s own exposure will be limited to guaranteeing up to 25% of some projects through a “residual value mechanism”, with the rest of the risk absorbed by outside investors.

The concern has not disappeared. It has been redistributed. If projects fail, losses could flow to bondholders, life insurers, and pension holders instead of Nvidia shareholders....

What Earnings Calls are saying about the Economy

Bloomberg Economics’ transcript-based indexes show two things rising in S&P 500 earnings calls:

- Growth optimism
- Inflation concern

The growth optimism index tracks how broadly industries are expressing expansion signals in earnings calls, such as guidance raises, record orders, or margin improvements.

The inflation concern index tracks the breadth of inflation-related discussion, including wage pressure, pricing power, consumer demand, and supply costs.

Both measures have moved higher into Q1 2026, suggesting companies are sounding more optimistic on growth while still talking more about inflation pressure.

Even with all that , Big Tech’s AI capex is still rising tho

Btw, capex stands for capital expenditures, which means the big money tech companies spend to buy physical things and long-term tools like data centers, computer chips, and power plants to build and run artificial intelligence

The chart of the week shows combined capital expenditure and free cash flow for Alphabet, Amazon, Meta, Microsoft and Oracle.

Capex has been rising sharply since 2023 and is expected to keep climbing through 2029.

The chart estimates combined capex moving toward around US$1.1 trillion+ by 2029. Free cash flow is expected to recover later, but the near-term picture shows how expensive the AI infrastructure race has become.

This is the KEY market question around AI:

Can Big Tech turn huge AI spending into enough future revenue and free cash flow?

If yes, the spending supports long-term growth. If not, investors may start questioning whether AI capex is becoming too heavy relative to returns.

And the results: Rates left unchanged at 3.5%-3.75%

Stock Market Highlights 🇺🇸

The Dow Jones Industrial Average dropped 1,152.46 points to close at 51,594.86.

The S&P 500 lost 1.5% to finish at 7,316.37, heavily pressured by industrial and tech sector pullbacks.

The Nasdaq 100 fell 2% to 27,192.31 amid ongoing concerns over heavy capital spending on AI infrastructure.

Bond Market and Yields

The 30-year Treasury yield surged 12 basis points to 5.21%, reaching its highest level since 2007.

The 10-year Treasury yield jumped 7 basis points.

This reaction reveals that investors are resetting their expectations for the economy, inflation, and interest rates.

Value stocks are Beating Growth this year

One of the more surprising market storylines of 2026:

The Russell 1000 Value Index is up roughly 20%, while the Russell 1000 Growth Index is down around 1.6%.

That is a reversal from the past few years, where growth stocks dominated.

But the reason is not traditional “cheap value” stocks like banks, utilities or energy.

A June index reconstitution moved Apple, Amazon and Microsoft into the value index, while chip stocks like Micron, AMD and Western Digital were moved into growth near their peak. So value benefited from picking up megacap tech names near their lows, while growth got more exposed to semiconductors before they sold down.

The Russell Value Index still trades cheaper than growth, at about 18x forward P/E versus 26x for growth.