1. Rising yields remain the bigger story.

The 10-year yield has climbed to 5%, a level historically associated with sharp Nasdaq 100 pullbacks. Because technology stocks are valued heavily on future growth, they are particularly sensitive to higher bond yields.

2. The US buyback window is closing.

One of the market's largest structural buyers is stepping aside during exactly the window when the calendar is weakest.

3. US data center developers expect a 33 gigawatt power shortfall through 2028, equal to 34% of the power demand.

“A combination of bottlenecks with respect to people, power and politics is creating a more concerning shortfall of projected US data center capacity.
Given the magnitude of the US power shortfall, we expect to see greater efforts by hyperscalers and others to grow their data center fleets in other countries. This provides a bullish backdrop for many other key data center markets globally, such as the Nordics, Iberia, Australia, ASEAN and India, among others.”
Source: Morgan Stanley.

4. Enter the windpower from Orsted.

The case for renewables is increasingly about affordability and energy security rather than climate. A faster grid build-out is critical to lowering energy costs and reducing reliance on fossil fuel imports.
The shares are trading 10% below the value of existing assets and not pricing in any growth. Shares have corrected and we think there is no below the current price unless there are new stop work orders in the US.
We expect the Iran-related energy crisis to renew the energy security drive in Europe, with Orsted a beneficiary via more offshore wind projects.
We are buyers at these levels.
Source: DegroofPetercam

5. Alibaba unveils an AI chip to build data centers.

The company rolled out what it calls “China’s most powerful AI chip”, an accelerator to compete with Nvidia and underpin a massive expansion of data center capacity (20GW) in coming years.
Then again, Alibaba's 20GW by 2032 sounds massive, until you remember each U.S. hyperscaler is already operating at a multi-GW scale.
Anyway, the important takeaway from the announcement is that Alibaba has a comprehensive AI offering from chip to datacenter to model to cloud, so the self-designed chip will fit in with strong synergy, said Union Bancaire Privée.
The average broker target is $183.

6. EU contractors on sale.

EU Contractors (ACS, Bouygues, Eiffage, Ferrovial & Vinci) have experienced a tough five months, with shares under pressure for multiple reasons.
We see an opportunity to gain exposure to companies with meaningful long-term reinvestment potential at valuation levels that are below historical averages.
Below: EU contractor valuation metrics. The upside is considerable.
Source: Morgan Stanley.

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