• Commodities: Saudi Arabia’s closure of a key oil pipeline means that about 4% of the world’s oil supply is suddenly cut off. It’s no wonder that crude prices continued to climb today, while diesel prices hit another record high.
• Bonds: The 10-year Treasury yield briefly broke above 5% for the first time since 2023. Here’s why investors freak out anytime yields rise beyond that key level.
• Stocks: As if higher yields and crude prices weren’t enough, stocks also took a beating amid surging fears that the AI trade may soon come to a screeching halt (more on that below).

Tech

Illustration: Morning Brew Inc., Photos: Adobe Stock

After years of seemingly endless hype, the AI bubble may finally be starting to pop—thanks to the very people who inflated it in the first place.

More and more AI insiders are warning that the technology may be advancing too fast. Anthropic researcher Jacob Coxon sounded the alarm last week when he resigned, declaring that people building frontier AI believe it “could kill us all by the end of the decade.” Then over the weekend, Anthropic CEO Dario Amodei called on the industry to “pace the frontier,” warning that “in 6–12 months such a swarm could be capable of taking over the entire internet.” Sam Altman and Elon Musk were among the major AI figures that backed the push for more caution.

Hold your robot horses

Not everyone is buying the doomsday scenario:

• Nvidia CEO Jensen Huang argued that some of the recent safety fears are being overhyped by companies that stand to sell the solutions. “What better way to create demand than to create a problem?” Huang said.
• President Trump rejected calls to slow development, arguing that the US can’t afford to give up its lead over China. “WHOEVER WINS AI, WINS!” Trump wrote on Truth Social.
• China also dismissed the push for a slowdown, with a spokesperson for China’s Foreign Ministry warning that, “Fear-mongering, confrontation, competition will just disrupt [the] process of global AI governance.”

Still, the unusual agreement among rivals like Amodei, Altman, and Musk was enough to get Wall Street’s attention, especially because the AI boom now extends far beyond ChatGPT into an ecosystem spanning semiconductors, infrastructure, and energy.

A new era begins

The market’s reaction today illustrated which companies will feel the most pain from an AI slowdown—and which stand to benefit.

The losers: Companies most exposed to continued AI expansion took the biggest hit. The Philadelphia Semiconductor Index fell 5.86%, while Nvidia, AMD, Micron, and other chip names dropped. OpenAI has scrapped plans for a 2026 IPO, while Anthropic’s own path to market has become murkier.

That’s bad news for a market that has become increasingly dependent on AI. Four of the biggest AI spenders make up roughly 17% of the S&P 500, while the largest hyperscalers are on track to drive more than half of all S&P 500 capital spending by 2028.

The winners: Companies that have been threatened by rapid AI progress moved the other way. Software names including ServiceNow, Adobe, and Salesforce rose as investors bet that slower development could reduce the threat of AI replacing traditional software. Cybersecurity stocks like CrowdStrike and Palo Alto Networks rallied sharply, while Alphabet, Microsoft, and Meta gained, as investors considered whether a slowdown could give the two tech giants’ lagging models more time to catch up to the competition.

Zoom out: The AI trade was built on one simple assumption: Progress will keep accelerating. This weekend’s warnings challenged that premise, forcing investors to consider what happens if the race slows before the spending does. For now, though, they’re left with nothing but a big question mark hanging over the market’s most important trade.—SY

      

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Stocks

🟢 What’s up

• Microsoft rose 1.97% following the release of a proposed code of conduct outlining safeguards for developing and operating its AI models.
• Rum Group surged 11.58% on reports that Anthropic reached a $13.7 billion deal to buy computing power from the cloud infrastructure company.
• Palo Alto Networks popped 13.09% and CrowdStrike jumped 13.85% as growing concerns about AI safety boosted cybersecurity stocks.
• Affirm climbed 2.72% following a Wolfe Research upgrade to Outperform that called the stock’s recent selloff a buying opportunity.
• Elmet Group soared 32.8% on a $450 million US government investment aimed at boosting domestic production of a critical metal used in defense and aerospace.
• Roblox gained 12.73% after unveiling new features and AI-powered tools for creators at its annual developer conference.

🔴 What’s down

• Oracle fell 3.65% following the news that co-founder Larry Ellison scrapped plans to sell $7.5 billion worth of shares.
• Hewlett Packard Enterprise slipped 10.76% on an Evercore ISI downgrade that argued this year’s rally has left limited room for further gains.
• GE Vernova dropped 8.62% after GLJ Research initiated coverage with a Sell rating and a $470 price target, the lowest among analysts covering the stock.
• Corning sank 13.7% amid a broader AI selloff and plans to potentially sell up to $2 billion of stock.
• Bank of America declined 5.12% after CEO Brian Moynihan said third-quarter sales and trading revenue is expected to be roughly flat from a year ago.

Stocks of the day

Mallrats strike back

Illustration: Morning Brew Inc., Photo: Adobe Stock

When Robin Sparkles sang “Let’s Go to the Mall,” she was speaking directly to investors.

Malls were widely expected to go extinct after Covid-19 forced consumers to shift their spending online. They already seemed like relics of a bygone era, peaking in the 1980s with about 2,500 enclosed malls across the country—today, there are fewer than 900—and the pandemic only accelerated the inevitable.

Yet the Wall Street Journal reports that the value of malls has risen 13% this year alone, outperforming every other type of commercial real estate (take that, multifamily housing). Strong consumer spending has buoyed shopping centers, particularly at the top of the K-shaped economy: Luxury retail is less likely to be usurped by online competition than everyday products. Meanwhile, savvy mall owners have replaced vacant storefronts with entertainment venues that draw a crowd.

That’s been a boon for mall-focused real estate investment trusts: REITs like CBL Properties, Simon Property Group, and Macerich have risen 47.03%, 10.74%, and 21.78% this year, respectively. So the next time you go on a spending spree at your local mall, you can chalk it up as market research.—MR

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Name game

Morning Brew Inc.

It’s a business strategy that sounds straight out of Nathan For You: Just shorten your name.

Today, the pharmaceutical giant Novo Nordisk announced that it will go by “Novo” from now on, though it will keep its full name legally. The name change comes with a rebrand, too: The company is revising the mandates that make up the “Novo Way”—its internal set of corporate guidelines—to refocus on speed, competitiveness, and customers.

That may sound like corporate gobbledygook, but shareholders seemed moderately bullish on the move: Novo rose 0.87% today. The announcement comes ahead of the company’s capital markets day next week, in which new CEO Mike Doustdar will give investors a blueprint of how he plans to turn the struggling pharma giant around.

But we wouldn’t get too excited—historically, when a company changes its name, it’s usually a sign of trouble. According to research by quant analyst Alexander Hübbert, companies that arbitrarily change their names underperformed peers by more than 5% over the next year, the Wall Street Journal reported last week.

Novo’s woes

Changing its name isn’t Novo’s first attempt at winning back market share—and it likely won’t be the last.

The company enjoyed breakout success with Ozempic, the first of the uber-popular GLP-1 drugs, followed by Wegovy. But after a series of supply chain bungles, Novo gave up its lead to Eli Lilly, who zoomed ahead with its own slate of GLP-1 drugs. Novo is still struggling to regain ground: In the last year, shares of the company have plummeted 20.82%, while Eli Lilly soared 50.54%.

Despite getting FDA approval to launch its own oral GLP-1 medication, analysts are still skeptical of Novo’s ability to crawl out of the hole. “The Novo Nordisk bull case rests on 1) the oral market representing a larger volume share of obesity than consensus expects, and 2) Novo capturing a larger share of the oral opportunity vs. market expectations; however our survey only suggests a moderate expansion of the oral category over the next 18 months,” explained Morgan Stanley equity analyst Terence Flynn in a note on Friday. “[The] latest US prescription data also implies a slowdown of Wegovy Pill growth,” he added.

Last year, Novo laid off over 11% of its workforce, removed its CEO, and replaced its Board of Directors. But hey, maybe a new name will be the real beginning of a new era.—LB

      

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News

• Here’s why some economists think it would be a huge mistake for the Federal Reserve to hike interest rates.
• Weather traders are betting big money that a powerful “Super El Niño” will mean a milder winter this year.
• This is how experts recommend managing your bond portfolio amid rising Treasury yields.
• President Trump agreed to include an ethics requirement in the crypto Clarity Act before it goes up for a procedural vote Tuesday.
• American pharma giants are bankrolling China’s biotech boom.
• US data centers will consume more natural gas than most nations within a decade.

Calendar

There aren’t any economic reports or earnings announcements of note tomorrow. Instead, the Fed will kick off its two-day FOMC meeting—keep an eye out for white smoke drifting from the Fed building’s chimney when the central bankers have made their decision about what to do with interest rates.

Bitcoin bulls also have tomorrow circled on their calendars: The Clarity Act is on the Senate’s docket as legislators prepare for a key procedural vote that could clear the way for the crypto bill to become law.

recs

📈 If today’s AI trade mayhem put you off of investing in tech, here are eight non-AI stocks that are set to double their earnings in the coming years.

🇺🇲 Midterm elections are creeping closer. Don’t try to predict the winner with your portfolio, just stick with this simple investment that pays a great yield.

🍋‍🟩 Jimmy Buffett’s $275 million fortune is wasting away in Margaritaville.

☺️ The Fed’s next interest rate decision is just days away. Here’s why you should stop worrying about it.

🚀 Everyone said SpaceX would flop. Now, the pros are beginning to admit they were wrong.

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