Wall Street spent the week gaming out who gets rich and who gets squeezed in the artificial intelligence boom, while the people footing the bill were nowhere near the trading desks. Micron’s blockbuster earnings showed demand for computing resources is still raging, but the same report also sharpened fears that the AI buildout is becoming too expensive for the hyperscalers financing it. The result was a volatile week in which the tech-heavy Nasdaq Composite fell 4.6%, the S&P 500 slipped 1.95%, and the Dow Jones Industrial Average edged up 0.6%.
Who Pays for the Boom
The first hard answer came from Apple. Shares of the iPhone maker sank 6.1% Thursday after the company announced price increases across several MacBook and iPad models, citing soaring memory and storage costs. It was Apple’s first formal move to pass higher component prices on to consumers after CEO Tim Cook acknowledged last week that the company could no longer absorb the increases. In other words, the bill for the AI infrastructure race is already being pushed outward, from corporate balance sheets to ordinary buyers.
Every member of the “Magnificent Seven” finished the week in the red as investors kept moving away from the companies funding the AI buildout and toward the businesses supplying it. Amazon, Alphabet, Microsoft and Meta have the financial resources to keep pouring money into artificial intelligence, but the surge in demand has created supply shortages that are driving the cost of inputs like memory sharply higher. Earlier this year, Microsoft and Meta both cited rising component costs as contributing to their ballooning AI capital expenditures.
The Supply Chain Gets Richer
Micron became one of the week’s clearest winners after the company said revenue more than quadrupled from a year ago and issued current-quarter guidance well above Wall Street’s expectations. Micron also announced 16 long-term supply agreements spanning data center operators, automakers and other customers. In response, Micron soared 16% Thursday, lifting peers across the memory-and-storage complex, including SanDisk and Western Digital, as well as equipment makers such as Applied Materials and Lam Research.
The report reinforced the theme that AI-related companies with product shortages continue to benefit from extraordinary demand and pricing power. The enthusiasm spilled over to Corning, whose fiber-optic products have become increasingly critical to AI data centers. Shares climbed to fresh record highs Thursday. But the market’s celebration was brittle, because the whole arrangement depends on a funding machine that can wobble at any sign of strain.
When the Money Wobbles
That wobble showed up Friday, when a basket of chip stocks fell more than 5% after reports that OpenAI is considering delaying its initial public offering until next year raised fresh questions about the durability of funding for the AI infrastructure boom. Micron fell 6.7% Friday and finished the week down 0.15%. The broader semiconductor trade fared even worse, with Nvidia, Broadcom, Intel and Arm ending the week down 8.6%, 12.3%, 4.2% and 23.9%, respectively.
Semiconductor stocks had already come under pressure Tuesday after a sell-off in South Korea’s Kospi Index spilled over to Wall Street. Shares of Korean memory giants Samsung and SK Hynix plunged overnight, dragging AI stocks lower and fueling concerns that the chip trade had run too far, too fast. Micron fell roughly 13% on Tuesday, while the Nasdaq Composite dropped 2.2%.
The Military and the Market
Falling oil prices gave some economically sensitive stocks a boost, but even that came wrapped in the machinery of state power. U.S. standard West Texas Intermediate crude ended Friday at roughly $69 a barrel, while international benchmark Brent hovered around $72, erasing nearly all of the gains sparked by the conflict earlier this year. Traders focused on signs that tanker traffic was returning to the vital shipping route for global energy and chemical supplies. After the market closed Friday, the U.S. military disclosed it conducted strikes against Iran in response to the “unwarranted aggression against commercial shipping by Iranian forces.”
Declining oil prices helped ease inflation concerns, pushing Treasury yields lower and reducing fears that the Federal Reserve will need to raise interest rates multiple times later this year. That gave sectors sensitive to economic growth, including industrials, financials and transportation stocks, a lift. Gains in Sherwin-Williams, Caterpillar and Home Depot helped the Dow Jones Industrial Average cling to a modest weekly gain, while healthcare stocks such as Johnson & Johnson, Eli Lilly, Cardinal Health and UnitedHealth were another source of strength. Johnson & Johnson ended Friday at a record close, as did Eli Lilly and Cardinal Health.
FedEx also rode the same backdrop. The company topped Wall Street’s expectations on both revenue and earnings and pointed to continued momentum in higher-margin businesses such as healthcare, aerospace, automotive and AI-related data center logistics. FedEx Freight said demand is beginning to stabilize after a multiyear downturn. The week’s trading left the basic hierarchy intact: the firms supplying the infrastructure, components and logistics for the AI buildout kept extracting value, while the costs and risks were pushed outward through prices, shortages and market volatility.