The AI trade has survived recession fears, tariffs, and daily predictions that the party is over. But somehow, whenever investors start wondering whether the AI trade has any more room left to run, another company comes along with a reminder that the AI buildout is still in full swing.

The memory boom

Micron jumped 6.82% today after deepening its ties with Anthropic, partnering with the AI startup to supply memory and storage chips while also investing in its latest funding round. The announcement comes just ahead of Micron’s earnings report on Wednesday, and expectations are now sky-high.

After posting a 756% year-over-year jump in EPS last quarter, the memory chip-maker is expected to increase profits nearly 1,000% this quarter. Looking further ahead, Micron is expected to generate $136.7 billion in net income by 2027—far more than Amazon and Meta, and roughly on par with Apple.

Much of Micron’s growth is being driven by rising memory prices as AI demand continues to outpace supply. With the market expected to remain tight, analysts don’t foresee meaningful price declines for at least the next 12 to 18 months, even as Micron ramps up production capacity.

Peers Samsung and SK Hynix have also benefited from surging AI demand, with Samsung’s EPS rising roughly 500% year over year last quarter, and SK Hynix’s operating profit jumping 406%. Both became $1 trillion companies last month, as did Micron—the cherry on top of each company’s recent rise to stock market superstardom.

A valuation disconnect

Despite its rapid growth, Micron still trades at just about 9 times forward earnings as of last week, and SK Hynix and Samsung trade at roughly 6.5 times—well below Nvidia’s roughly 23 times, for example. Investors are worried that today’s AI spending boom could prove temporary, and if the biggest AI buyers pull back, the companies supplying the AI infrastructure—including Micron—could see their growth slow sharply.

Whether those fears are well-founded may become a little clearer on Wednesday. But for now, a company with profits growing nearly 1,000% while trading at a single-digit earnings multiple doesn’t seem like the worst bargain on Wall Street.—SY

🟢 What’s up

• Super Micro Computer gained 15.66% on the rollout of a new AI data center platform built around Nvidia’s Vera Rubin architecture.
• Visteon rose 5.44% after both Barclays and JPMorgan upgraded the automotive electronics maker, citing stronger growth prospects in automotive technology.
• Credo Technology climbed 11.29% after Evercore initiated coverage with an Outperform rating, pointing to growing opportunities in AI networking and optical connectivity.
• Fervo Energy advanced 3.62% despite an earnings miss, buoyed by a new Nvidia partnership focused on geothermal drilling technology.
• Definium Therapeutics surged 49.8% on positive Phase 3 results for its depression treatment.

What’s down

• Alphabet fell 5.08% after two prominent AI researchers departed for rival companies.
• Drone maker AeroVironment dropped 10.78% following plans to restate prior earnings because of an accounting error.
• Roblox slipped 8.27% as third-party data showed peak user activity declined from a year ago.
• CoreWeave sank 5.65% as CEO Michael Intrator disclosed more than $35 million in stock sales, part of a broader wave of insider selling by company executives.
• Salesforce fell 1.09%, extending its losing streak to 14 sessions as investors continued to weigh AI-related disruption risks across the software sector.
• SpaceX slipped 16.43% for a third straight day of losses after announcing a big bond offering.

A picture’s worth a thousand words, but a licensing deal with an AI company is worth a whole lot more.

Late yesterday, Getty Images announced a partnership with OpenAI allowing its licensed content libraries to appear in ChatGPT searches. The stock photo company’s stock soared around 200% in pre-market trading this morning, and while some of the excitement receded after the opening bell, shares still ended the day up a whopping 84.51%.

Shareholders’ enthusiasm is understandable: Getty has been absolutely pummeled by fears of AI encroachment, with investors fretting that image-generating AI models will one day make Getty (and pretty much all human photography) obsolete. Management has tried everything from buying rival Shutterstock to creating its own AI image generator, but to no avail. Shares have plummeted 88% over the last five years, and despite today’s pop, they remain down 40% over the last 12 months.

Also, keep in mind that details of the deal weren’t forthcoming. We don’t know how much OpenAI is paying Getty, and we don’t know whether or not Getty’s pictures will be used to train future OpenAI models, which would only exacerbate the photo company’s decline. In short: Today’s announcement may be good news, but Getty’s situation is still not a pretty picture.—MR

Big pharma is speeding toward a $170 billion patent cliff, and hoping acquisitions can soften the landing.

Today, AbbVie is buying biotech Apogee Therapeutics for $10.9 billion in one of the biggest pharma deals of the year so far, and AbbVie’s largest acquisition in five years.

The deets: AbbVie is offering $135.11 per Apogee share, which implies a nearly 50% premium from yesterday’s closing price before the announcement.

Shares of AbbVie jumped 6.29% today, while shares of Apogee skyrocketed 46.66%.

AbbVie isn’t in it for Apogee’s name (which, let’s be real, is better). The company wants access to its lead drug candidate, zumilokibart, an experimental treatment for a slew of inflammatory diseases, including asthma and atopic dermatitis. AbbVie is doubling down on its already successful immunology drug franchise, which brought in $30 billion in revenue last year, a 14% jump from the year prior.

The best defense is offense

Today’s acquisition is about more than just one potential drug candidate. It’s part of a larger trend of big pharma giants acquiring promising biotech firms in an effort to replace future revenue losses before a slew of patents for blockbuster drugs expire. According to CNBC, best-selling brand name drugs worth $174 billion in annual sales will lose exclusive patents by 2032. Other calculations estimate that figure could be as high as $350 billion.

For pharma giants like Pfizer, Merck & Co, and of course AbbVie, that means a slew of biosimilar versions of their cash cows are about to hit the market, which could seriously undercut revenue.

AbbVie is still struggling with the expiration of its patent for its popular drug Humira (sales plunged over 38% last quarter), and is staring down eventual patent expirations for its blockbuster immunology drugs Skyrizi and Rinvoq. But not all pharma giants are exposed equally: Novo Nordisk and Eli Lilly are both somewhat protected compared to the broader industry due to the success of newer GLP-1 drugs.

By doubling down on its acquisition strategy, AbbVie is hoping to offset some of the impact of these patent expirations. Recently, AbbVie spent $10.1 billion on ImmunoGen to acquire its ovarian cancer drug, Elahere, and spent about $8.7 billion to acquire Cerevel Therapeutics, a neuroscience drug developer.

Between zumilokibart, Rinvoq, and Skyrizi, we just want to know which Lord of the Rings fan is in charge of coming up with names.—LB

• SpaceX just signed a huge computing power deal with startup Reflection AI worth up to $6.3 billion.
• Microsoft CEO Satya Nadella accused AI giants of wrecking the economy, encouraging job losses, and basically ruining everything for everyone. 
• The market feels unbeatable, but nothing’s perfect. Here are the biggest red flags investors are facing right now.
• Alphabet is investing $75 million in film studio A24 as part of a new AI research partnership.
• Former New York Gov. Andrew Cuomo is making a natural career pivot into crypto.
• US-listed ETFs brought in a record $1 trillion this year.
• Here’s how Labubu dolls took over China’s economy.

Earnings announcements: Quarterly reports are few and far between at this point, but there’s still a handful of names worth watching, including FedEx, KB Home, and Carnival Corp.

Economic reports: It’s also pretty darn quiet on the economic front this week, and the only things to keep an eye on are the flash Services and Manufacturing PMI reports tomorrow morning.

Everything else: Amazon moved its Prime Day event up a month, with the shopping spree kicking off tomorrow and running through Friday.