S&P 500 and Dow turn higher, Nasdaq dips with Fed’s Powell, China tariff tensions in focus

OpenAI (OPAI.PVT) recently committed to bringing online 26 gigawatts worth of computing capacity through deals with chipmakers Nvidia (NVDA), Advanced Micro Devices (AMD), and Broadcom (AVGO).

Citi (C) analysts estimate that for every 1 gigawatt of compute capacity it looks to add, OpenAI will have to spend a total of $50 billion on infrastructure. Hence, analyst Chris Danely estimated in a note to clients on Monday that OpenAI’s latest deals with chipmakers would represent $1.3 billion in cumulative capital expenditures from the firm through 2030.

Meanwhile, fellow Citi analyst Heath Terry estimates OpenAI’s revenue will rise from $12.5 billion in 2025 to $163 billion by 2030 — raising the question of how the ChatGPT maker will fund its ambitious AI infrastructure investments.

There’s also the question of whether US power infrastructure could scale up in time to support such massive amounts of computing capacity.

OpenAI’s latest deals with Nvidia, AMD, and Broadcom are not inclusive of its total commitments. The AI chatbot company also has a reported $300 billion commitment to Oracle (ORCL) and $22 billion worth of deals with AI data center provider CoreWeave (CRWV).

The world’s largest corporate bitcoin holder, Strategy (MSTR), and crypto exchange platform Coinbase (COIN) led some crypto stocks down Tuesday, with shares in the firms dropping nearly 2% in midday trading.

Crypto investment platform Robinhood (HOOD) and stablecoin issuer Circle (CRCL) pared losses from earlier in the session to trade down fractionally as the broader market recovered from an earlier rout.

Meanwhile, some crypto stocks jumped. Riot Platforms (RIOT) shares gained nearly 4%, while MARA Holdings (MARA) was up more than 8%.

Yahoo Finance’s Jake Conley reports:

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While the broader market suffered from a trade war-fueled rout, Arm (ARM) shares jumped more than 4% Tuesday following a report the previous day from the Information that the semiconductor designer is in talks with OpenAI (OPAI.PVT) for the ChatGPT maker to use its chips.

Arm designs blueprints for central processing units (CPUs) — the “brains” of computers — which work alongside specialized AI chips to run artificial intelligence software. For example, Arm-based CPUs are used in Nvidia’s (NVDA) servers alongside its Blackwell AI processors.

But Arm is reportedly developing its own CPU in addition to selling design blueprints, the Information reported. The company is talking with OpenAI about the AI chatbot firm using those CPUs alongside the AI chips it’s developing, according to the outlet. OpenAI unveiled a partnership with Broadcom (AVGO) to make such AI chips on Monday.

Nvidia (NVDA) stock fell 3.6% Tuesday, leading a downturn in Big Tech stocks after a strong but short-lived recovery on Monday.

All of the chipmaker’s fellow “Magnificent Seven” tech stocks also dropped, with Tesla (TSLA) shares sinking 3.2%, Amazon (AMZN) declining 2.2%, and Meta (META) dipping 1.3%. Alphabet (GOOGL, GOOG), Microsoft (MSFT), and Apple (AAPL) fell less than 1%.

Meanwhile, Broadcom (AVGO) — the custom AI chipmaker with a larger market capitalization than Tesla, which isn’t a part of the Magnificent Seven — also sank. Shares fell 3.5% after a big upswing on Monday as the company announced a massive deal with OpenAI (OPAI.PVT).

Tech led a decline in stocks at the market open Tuesday, as trade tensions once again escalated between the US and China.

The tech-heavy Nasdaq Composite (^IXIC) sank over 1.4%. The S&P 500 (^GSPC) dropped 1%, and the Dow Jones Industrial Average (^DJI) slid 0.9%.

In addition, investor attention turned to third quarter earnings season with multiple big US banks reporting results. But surging profits at JPMorgan Chase (JPM), Citigroup (C), Goldman Sachs (GS) failed to be reflected in the banks’ stocks in early trading.

Nvidia (NVDA) rival Advanced Micro Devices (AMD) saw its stock climb as much as 3% in premarket trading on Tuesday as the company announced a deal with Oracle (ORCL) to provide its cloud business with 50,000 AI chips.

The news comes amid a slew of deals in the AI space just a week after AMD announced a deal with OpenAI (OPAI.PVT) to provide the AI chatbot maker with 6 gigawatts worth of its GPUs (graphics processing units). OpenAI is also a major customer of Oracle.

AMD shares are up more than 36% over the past month.

Meanwhile, Oracle stock was down more than 1% before the market open amid the broader market downtrend. The company recently soared after announcing a backlog of massive AI contracts with its cloud business, Oracle Cloud Infrastructure, with $300 billion of that contracted revenue reportedly coming from OpenAI.

But the stock pulled back some as Oracle unexpectedly raised $18 billion in debt, just as some analysts have cautioned that tech firms may begin turning to debt rather than relying on internal cash flows to fund their ambitious plans for AI infrastructure.

Read more about AMD and Oracle’s deal here.

JP Morgan (JPM) CEO Jamie Dimon to me on his thinking behind calling asset prices “elevated” for the second straight time on his earnings release. The comments are fresh off Dimon’s call with journalists to discuss earnings.

Explained Dimon:

“I would put it in the category of a risk factor at this point. And when asset prices are elevated, you have further to fall. Something goes wrong, and things look pretty good. You know, consumers are still spending companies are making money. Prices are up. So I just put it as a category of concern. We measure historically, they’re pretty high. Credit spreads are kind of low. You have a lot of assets out there which look like they’re entering bubble territory. That doesn’t mean you don’t have 20% to go. It’s just one more cause of concern.”

Bloomberg News reports:

Read more here.