We’re clearly in the Dog Days of Summer. Yesterday major US indices ended modestly lower in a rather subdued start to the week. Since the middle of last week markets have been trading in a pretty tight range consolidating the recent gains. Oil prices and yields moved higher yesterday which weighed on small caps and yield oriented sectors while the energy sector rebounded sharply recouping all of last week’s losses. Capital intensity of the AI Capex boom was once again in focus with Intel announcing a $15B equity raise and the FT reporting that Nvidia was working with major Wall Street firms to provide financing of up to $500B for data centers.

After the close Nvidia announced it is partnering with Apollo Group, Blackstone, BlackRock, Brookfield Asset Management, Goldman Sachs and KKR to establish a “compute financing platform” with Nvidia having the option to backstop 25% of the $500B. The stocks of all partners involved are trading higher and this is also helping stocks across the AI infrastructure complex and private credit. However, the hyperscalers (ex-Meta) are all under pressure as this signals more spending and competition going forward. It also highlights the fact that financing is a choke point, even Nvidia's balance sheet has its limits. Speaking of funding, the WSJ is reporting that Anthropic is now targeting a potential IPO in the fall ahead of midterms. Intel also upsized its equity offering to $20B highlighting that there is still demand out there. It is amazing how perception has changed and now $5B just sounds like a spit in the bucket.