June 2nd Pre-Market

Good Morning

Futures are taking a breather after eight straight green days. Oil's cooling off as the Iran headlines quiet down, which is taking some pressure off.

Jobs week kicks off this morning with job openings, building to Friday's big report.

Let's dig in...

Today's Big Picture

1. HPE Hands The Receipt Everyone Wanted

Marvell is up because Huang called it the next trillion-dollar name. That's just a quote though, not proof. HPE is trying to be the proof. Revenue beat by nearly a billion, the biggest earnings beat since 2018, and the CEO went out of his way to say nobody is canceling. He even named COVID and said this isn't that.

2. The AI Bill Comes Due, And Alphabet Pays First 

Alphabet is down because it asked the market for $80 billion to build AI, with Berkshire taking $10 billion of it. Sit with that. These are cash machines, and they're now funding the buildout with stock sales instead of profit. Data center construction just passed a $50 billion annual pace, triple where it was in 2022, so the bills keep climbing.

3. The Record Is Thinner Than It Looks

Eight straight green days on the S&P, so on paper everything's working. Pull out the AI names and the index has gone basically nowhere since February. A dozen stocks did almost all the lifting while the other 490 sat there. Barclays said the same thing this morning, calling the rally “crowded and stretched”, and the VIX is sitting at 16. So when someone tells you "diversified index at record highs," know that under the hood it's mostly one trade.

Market Overview

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Stock Spotlight (pre-market)

STMicroelectronics $STM ( ▼ 0.42% )  

Jumped after raising its data center revenue target on AI demand. The AI pull is reaching past the US megacaps into European and analog chipmakers. Anyone who thinks this trade is just a handful of American names has to widen the lens.

Microchip Technology $MCHP ( ▼ 3.31% )  

Up after Huang tagged it the next trillion dollar name, the same blessing that lit Marvell. Funds with no position now own a decision chase the Huang halo or sit it out and explain the miss.

Credo Technology $CRDO ( ▼ 4.21% )  

Raised guidance, and still fell. A clean AI adjacent beat got sold. Anyone long the AI supply chain has to ask how much good news is already baked in.

Intel $INTC ( ▼ 4.67% )  

Slipping again as its Computex AI pitch lands flat, days after Nvidia walked into its PC turf. The x86 story keeps leaking. Holders waiting on the turnaround have to decide how much more patience the pivot is worth.

Strategy $MSTR ( ▼ 5.85% )  

Sold Bitcoin for the first time since 2022 to stay solvent, after years of Saylor preaching never sell. The loudest bull is trimming to pay bills. Everyone running the same crypto leverage playbook now has to look at their own runway.

Berkshire Hathaway $BRK.B ( ▼ 0.88% )  

Steady after agreeing to buy homebuilder Taylor Morrison for $6.8 billion cash. Abel is buying housing at record highs while everyone else chases chips. It puts a quiet bid under a sector the market left for dead, and forces a second look at builders.

What to Watch

Palo Alto Tonight, CrowdStrike Wednesday

Money has rotated out of chips and into software for weeks. These prints decide if that move has legs or snaps back to semis. On CrowdStrike, options are priced for a big swing, but the actual move has come in smaller seven quarters running.

Watch Oman, Not The Headlines 

The market is leaning on "talks continue," but the odds tell a different story. Polymarket has a US-Iran deal this month at 27%, down from 75% just over a week ago, and Hormuz reopening dropped to 22% from 60%. Meanwhile Washington is leaning on Oman, the neutral broker that carried every round of these talks. Squeeze the only middleman both sides trust and you don't speed up a deal, you knock out the table it gets signed on.

- John

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