This Is the New AI Champion
We're coming off another week of fun market action marked by a light CPI report, a massive surge for Tesla (TSLA), and a newly crowed King of AI.
So let's dig in to the 10 things you need to know about markets right now.
1. Micron (MU) Is Your New AI Champion
Nvidia (NVDA) had its time in the sun. Then Oracle (ORCL) and Alphabet (GOOGL) took the reins.
But memory giant Micron (MU) became the new AI champion after reporting strong earnings on Wednesday along with shocking guidance.
Earnings estimates went through the roof. Analysts now expect EPS of $19.61 this year, up from $12.77 pre-earnings.
That's an increase of 53%.
And since estimates went up so much, its forward P/E is now at 7:
Many folks are wondering why it trades at such a cheap valuation.
First, single-digit P/E ratios for Micron are nothing new.
And second, the memory market is extremely cyclical, so there's always the question of when peak earnings happen.
Because at some point, earnings estimates can contract just as fast.
But good luck trying to figure out when, because the AI industry is sucking up memory like nothing we've seen before.
2. Oracle Played the Best Possible Card
We've talked for weeks about Oracle's (ORCL) meltdown on worries over its debt load and the sustainability of the AI growth cycle.
But it surged big-time on Friday on news TikTok would sell its US operations to an Oracle-led joint venture.
So for now, the market's assuming the financial benefits of the TikTok investment offset concerns about the strength of Oracle's AI business – particularly, the dependence upon OpenAI.
This may have been the best possible card to play because of TikTok's growth potential.
3. OpenAI May Be Worth More Than These Companies
This week, we heard a string of news reports saying OpenAI is in talks to raise a whole ton of capital, which it needs to pay off its obligations to Oracle (ORCL).
A Wall Street Journal report said this latest funding round could value OpenAI at $830 billion.
That would make OpenAI worth more than Oracle itself, along with:
- Visa (V)
- Mastercard (MA)
- Johnson & Johnson (JNJ)
- ExxonMobil (XOM)
- Palantir (PLTR)
- Netflix (NFLX)
- Bank of America (BAC)
- Costco (COST)
- Home Depot (HD)
- AMD (AMD)
And plenty of other household names.
At some point, OpenAI will come public.
The tough part will be timing because who knows how far it will be in its growth cycle by then?
The way things are going, OpenAI could IPO at a multi-trillion dollar valuation!
4. Biotech Is the Quiet Crusher
Traders waited for years for Biotech to play catch-up to the major averages.
And 2025's been a banner year for XBI. Over the past 6 months, XBI has risen over 48%, crushing SPY and QQQ:
Lower rates certainly helped, as did strong M&A activity and successful clinical trials.
There may also be a simple catch-up factor here.
If we take the same chart and wind it back 10 years, XBI is miles behind:
5. Coinbase Is Coming for Robinhood
This week, crypto exchange Coinbase (COIN) announced it's beefing up its offerings by adding stock trading and prediction markets to its feature stack.
Coinbase wants to be a one-stop financial app, which makes sense given its reliance upon the ever-volatile crypto markets.
With Bitcoin and Ethereum well off their October highs, Coinbase stock is down -2.4% year-to-date.
More equities-focused competitors like Robinhood (HOOD), Interactive Brokers (IBKR), and Charles Schwab (SCHW) are up huge:
Since we're talking about the crypto mess, let's take a look at the ETF leaderboard:
6. Bitcoin and Ethereum Are Way Behind
I don't know about you, but I don't see how these four things can be true at once:
- The Fed is cutting rates
- SMH is up 48% YTD
- XBI is up 37% YTD
- Bitcoin and Ethereum are down YTD
Yet the numbers don't lie:
If you can explain this, I'm all ears.
But if crypto is about to make a comeback, it will probably be vicious – especially on the equity side.
7. Crypto Stock Short Interest Is Sky-High
Short interest is high across the board on crypto-related equities like Strategy (MSTR) and Bitmine Immersion Technology (BMNR):
Now, I'm not interested in playing with this dynamite myself just yet.
But if you are bullish on crypto, you have to think we see some epic short squeezes in these names.
Who knows?
Maybe Tom Lee and Michael Saylor, and their followers, will be rewarded for their bullishness in the end.
8. Tesla's Comeback Has Been Stunning
Tesla (TSLA) hit a record high at $495.28 Wednesday to break its prior record high from last December.
That put it up 131% from the April lows to reward the faithful:
Tesla's latest catalyst was Robotaxi hype.
And investors once again forgave this company's unique combo of high valuation and questionable fundamentals.
Meanwhile, analysts are still rolling their eyes at the stock. Their average target price is just $395.73:
9. Nike Has Some Bizarre Stats
Shoemaker Nike (NKE) got smashed Friday after earnings.
But here's the wild thing about Nike.
It's actually beaten earnings estimates for 10 straight quarters.
And the average upside surprise was 37.4%:
Of course, the problem is that Nike's actual earnings are shrinking.
So it's dropping huge earnings beats, but no actual growth.
Weird.
10. JR Is Behind Reddit
On Wednesday, JR Romero laid out the bull case for Reddit (RDDT).
And it's already started creeping up. See why he likes this stock so much;
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