Market Report: AI power play gives tech a fresh boost
Matt Britzman, senior equity analyst, Hargreaves Lansdown: “The FTSE 100 opened slightly higher this morning, as investors tread cautiously ahead of key economic updates. Attention is firmly on this week’s PMI surveys and speeches from Bank of England officials, which could shape expectations for the next policy move. With the index hovering near record territory, sentiment is caught between hopes of easing inflation and lingering concerns over growth and wage pressures.
The S&P 500 and Nasdaq notched fresh record highs, but the rally remains strikingly narrow. Fewer than one in ten stocks are hitting 12-month highs, underscoring a market increasingly dominated by its largest names. This concentration reflects a broader disconnect as equity indices are soaring even as the real economy shows signs of strain, with sticky inflation, a cooling labour market, and uncertainty over the timing of rate cuts. For now, optimism around AI-driven growth and record levels of investment is keeping momentum alive, but the balancing act is precarious.
Nvidia and OpenAI dropped a bombshell on the AI landscape. A staggering commitment from Nvidia of up to $100 billion to OpenAI, paired with plans for the ChatGPT maker to deploy 10 gigawatts of AI data centres running on Nvidia chips. This makes Nvidia’s recent $5bn investment in Intel look like pocket change. The first gigawatt is slated for the second half of 2026, powered by the new Vera Rubin platform. For Nvidia, the prize is huge – every gigawatt of AI data centre capacity is worth about $50 billion in revenue, meaning this project could be worth as much as $500bn.
This move cements Nvidia’s position as the undisputed king of AI at a time when custom chips from hyperscalers and startups had started to nibble at its dominance. By locking in OpenAI as a strategic partner and co-optimizing hardware and software roadmaps, Nvidia is ensuring its GPUs remain the backbone of next-gen AI infrastructure. The market is clearly big enough for multiple players, but this deal underscores that, when it comes to scale and ecosystem depth, Nvidia is still setting the pace – and raising the stakes for everyone else.
Gold has surged to a fresh record high, buoyed by expectations of further US rate cuts and a softer dollar. The Fed’s recent pivot toward easing, coupled with weak labour market signals, has reinforced the appeal of the metal as a hedge against policy uncertainty. While some policymakers urge caution amid lingering inflation pressures, markets are already pricing in additional cuts, keeping the spotlight on Jerome Powell’s upcoming remarks and Friday’s PCE data for confirmation. For now, gold’s momentum reflects a market betting that monetary policy will loosen faster than the economy can cool.
Oil extended its losing streak in early trading, slipping to its lowest level in months as supply concerns overshadowed simmering geopolitical tensions. News that Iraq could soon restart exports from Kurdistan added to expectations of rising global output, reinforcing the sense of an oversupplied market. Even as NATO warned of escalating risks in Eastern Europe and Middle East tensions remained high, traders appear more focused on the near-term reality of abundant barrels than on potential flashpoints.“
The author holds shares in Nvidia.