The Street

Bank of America is growing more bullish on software valuations, lifting price estimates on 10 equities as concerns that artificial intelligence could upend traditional software companies begin to fade.

The Aug. 19 research report doesn’t represent an across-the-board bullish call. BofA analysts Tal Liani, Koji Ikeda, and Matt Bullock maintained their profit projections and fundamental outlook.

Instead, the analysts say, investors are more than willing to pay up for software businesses following excellent earnings from select infrastructure names and an improved tone of large-cap and application software.

BofA raised price targets on ServiceNow (NOW), Figma (FIG), Workday (WDAY), Adobe (ADBE), Snowflake (SNOW), GitLab (GTLB), Amplitude (AMPL), Box (BOX), Asana (ASAN) and Zeta Global (ZETA).

The bank, however, remains picky, choosing startups with more growth and better prospects to turn AI use into income.

Bank of America raises ServiceNow stock price target

ServiceNow is one of BofA’s top large-cap software stocks.

The analysts retained their Buy rating and upped their price target to $150 from $130. At the $119.49 share price noted in the report, the new target provides a potential upside of over 25.5%.

BofA’s confidence also reflects higher software values.

ServiceNow reported second-quarter current remaining performance obligations growth of 21.5% in constant currency from a year earlier, ahead of Wall Street expectations of 19.5%. Subscription revenue increased 23% in constant currency, compared with the Street’s 21.9% expectation.

Related: ServiceNow investors must consider latest alert from Bank of America

AI is becoming a meaningful element of the story, too.

ServiceNow’s AI annual contract value has surpassed $1 billion and is on track to exceed the company’s $1.5 billion fiscal 2026 target, according to the report.

BofA believes ServiceNow’s control of corporate workflow context and historical data positions the company to develop agentic AI products for managed and secure enterprise workflows.

That advantage should drive high-teens revenue growth and continuous free-cash-flow growth.

Bank of America says the market is rethinking software’s AI risk.Bloomberg / Getty Images

Snowflake gets a major AI-driven price-target boost

Another favorite of BofA is Snowflake.

The bank raised its price objective to $395 from $330, or nearly 20%, while maintaining its Buy rating.

The increased target indicates almost 21% upside based on the $325.33 stock price in the research note. BofA analysts said they are more confident that demand for Snowflake is healthy and that the business can continue to monetize its AI offerings.

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The bank has Snowflake growing sales around 22% in calendar 2027, compared with 11% for infrastructure-software rivals on average.

BofA is also forecasting a free-cash-flow margin of 25% for Snowflake, compared with 18% for its peers. Analysts say the company should warrant a big valuation premium, as they expect it to develop faster and be more profitable.

Another long-term tailwind might be the bank’s estimate of the entire addressable market for AI software at $155 billion.

Workday gets a 46% price-target increase

One of BofA’s most dramatic changes was reserved for Workday.

The bank increased its price objective to $205 from $140, a jump of more than 46%.

But there’s a catch: BofA maintained its Neutral rating.

Analysts said the revised target reflects broader multiple expansion across large-cap enterprise software companies as well as “acquisition possibility.”

BofA said Workday’s position in human capital management and financial software, 97% gross retention and durable cash production warrant a greater valuation.

The firm is also advancing its AI approach with Sana, its AI interface and agent platform, and Flex Credits, its consumption-based monetization model.

But BofA isn’t ready to call an AI-driven growth inflection yet.

Workday’s revenue growth is expected to decelerate from 16.4% in fiscal 2025 to 11.5% in fiscal 2027, 11.3% in fiscal 2028, and 10.3% in fiscal 2029, the bank said.

That leaves analysts seeing the stock’s risk-reward as fairly even.

Bank of America remains bearish on Adobe stock

BofA’s new attitude isn’t helping all software companies equally.

Analysts boosted their price target on Adobe to $220 from $190, in line with the general increase in software valuations. But BofA maintained its Underperform rating.

More crucially, the $220 goal is still well below the $263.14 Adobe share price referenced in the report, suggesting a potential downside of nearly 16%.

BofA recognizes Adobe’s entrenched professional workflows, significant margins, and solid cash production. It worries about the implications of AI for the ease of generating sophisticated content and the rise of cheaper and AI-native competitors.

BofA said Adobe’s AI-first annual recurring revenue remains less than 2% of overall ARR and has failed to yield a meaningful acceleration in growth.

The bank expects Adobe’s revenue growth to slow from 10.5% in fiscal 2025 to 8.8% in fiscal 2027 and 8.7% in fiscal 2028.

BofA sees no clear near-term catalyst for a more optimistic rating unless there’s better evidence that standard artificial intelligence can reaccelerate growth.

Figma’s AI adoption catches Bank of America’s attention

BofA also restated its Buy recommendation on Figma, lifting its price target to $33 from $30.

Figma’s second-quarter revenue was up 48.2% from a year ago, and net dollar retention was 136%, the company said.

The number of customers generating more than $100,000 in annual recurring revenue increased 46% year over year.

Another potentially critical development lever is AI usage.

More than 80% of Figma customers with at least $10,000 in ARR consume AI credits weekly, according to BofA.

Analysts think that Figma’s increasing AI offering might help the platform reach beyond its usual designer audience, capture more of the software-development workflow, and ultimately drive more seat and consumption growth.

BofA raises price targets across software

The complete changes are:

Zeta Global: Buy; price target raised to $34 from $29

ServiceNow: Buy; price target raised to $150 from $130

Figma: Buy; price target raised to $33 from $30

Workday: Neutral; price target raised to $205 from $140

Adobe: Underperform; price target raised to $220 from $190

Snowflake: Buy; price target raised to $395 from $330

GitLab: Neutral; price target raised to $45 from $38

Amplitude: Neutral; price target raised to $14 from $12

Box: Buy; price target raised to $39 from $37

Asana: Buy; price target raised to $10.75 from $9

BofA also confirmed Buy ratings on Box, Asana and Zeta, while keeping Neutral on GitLab and Amplitude.

The bigger shift could be more essential than any particular aim.

Software stocks have long grappled with the question of whether generative AI will extend their markets or cannibalize the subscription companies that have been the bedrock of the sector’s profitability.

The current valuation reset at BofA shows investors are less inclined to price in the worst-case scenario across the industry.

But the bank’s contrasting views on ServiceNow, Snowflake, and Adobe underline an important distinction: AI fears may be fading for software stocks, but BofA doesn’t expect every software company to emerge as a winner.

Related: Workday’s $51 billion takeover talks could reset the software trade

One of the most pressing questions for homebuyers in the United States is when mortgage rates will go down.

The second is when home prices will decrease.

Who can blame them? The 30-year fixed mortgage rate has been over 6.5% for six consecutive weeks, according to Freddie Mac data. Multiple sources put the median home sales price at well over $400,000, depending on the exact timeframe.

Those are rough numbers for people trying to afford a house, especially first-time homebuyers.

The Mortgage Bankers Association (MBA), a trade group representing the U.S. real estate finance industry, has released the August MBA Mortgage Finance Forecast. The MBA’s monthly reports provide outlooks on various aspects of the housing market — including mortgage interest rates and home sales prices.

The August forecast has a mix of good and bad news for homebuyers.

Don’t expect mortgage rates to provide much relief through 2027. Home prices may offer some relief, particularly for existing homes, but the decline is expected to be modest.

Mortgage rates expected to stay near 6.7%

Along with the Mortgage Bankers Association, the government-sponsored enterprise (GSE) Fannie Mae is the other big name in housing market forecasts. Fannie Mae released its August Housing Forecast on Aug. 13. Afterward, I wrote about the drastic spike in mortgage rate predictions compared to previous months.

Fannie Mae now predicts the 30-year fixed mortgage rate to average 6.7% in Q3 and 6.8% in Q4 2026. Next, it predicted a 6.8% rate in the first half of 2027 and 6.7% in the second half.

The MBA published its August forecast on Aug. 20. As with Fannie Mae, the mortgage rate projections for 2026 and 2027 had changed significantly from the previous month.

In the July MBA Mortgage Finance Forecast, the trade group’s 30-year mortgage rate outlook was 6.5% for the second half of 2026 and all of 2027.

Related: Zillow predicts major mortgage rate, housing market change

But in August, the MBA shifted its mortgage interest rate prediction to 6.6% in Q3 2026, then to 6.7% in Q4 2026 and for all of 2027.

Quarter-by-quarter projections from Fannie Mae and the MBA differ a little. But both organizations’ August reports put the average 30-year mortgage rate at 6.7% for at least half of the next six quarters.

Of course, these predictions aren’t set in stone. Mortgage rates could decrease when the war between the U.S. and Iran ends, or when inflation cools significantly. The current geopolitical and economic uncertainties are two major reasons mortgage rates are staying well above 6.5%.

The MBA predicts the 30-year mortgage rate will be 6.7% through the end of 2027.sommart / Getty Images

The MBA foresees lower existing-home prices

The Mortgage Bankers Association (MBA) monthly forecasts include a category you won’t find in Fannie Mae’s predictions: home prices.

The MBA breaks up its home sales price predictions into two categories. The first is existing-home sales, which represents homes that have been previously owned and are listed for sale. The second is new homes, or new-construction houses that haven’t been lived in before.

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In Q2 2026, the median sales price of an existing home was $430,500, according to the MBA.

The organization forecasts existing-home prices to fall for the rest of 2026 and into 2027. The exceptions are predicted increases in Q3 and Q4 2027. Because I’ve reported on the housing market for years, my read is that the increase could reflect the typical seasonal strength of the homebuying market, when buyer competition can drive up prices.

Overall, the MBA puts the median existing-home price at $410,400 to close 2026, or a 4.7% decline from Q2 prices. It also expects the median price to be $404,600 in Q4 2027, or a 6% decrease from Q2 2026.

So there’s potential for existing-home prices to fall — but mortgage rates could stay elevated. These two forces could partially offset each other.

New-home prices are a different story

The MBA put the median price of newly built homes at $408,700 in Q2 2026. The organization expects the median price to hold steady in Q3, then drop to $400,300 in Q4.

But its 2027 projections are a little volatile.

The trade group foresees median new home sales prices jumping in Q1 and Q2, then inching down in Q3 and Q4. Overall, the MBA says new home prices will end 2027 at $411,200, higher than in 2026.

The MBA also predicts that new housing starts will decrease for most of 2027. Less inventory typically leads to more competition and higher prices. And sales prices probably wind down in Q4 because fewer people tend to buy homes at the end of the year.

Whether you want to buy a new or existing home, the MBA’s forecast sends a clear message: Home prices may give buyers some relief, but mortgage rates aren’t expected to do the same. So even if houses become somewhat cheaper, financing one may remain expensive.

Related: HELOC rates are 7.31%. Why that’s actually good news

Alibaba is asking investors to pay for a transition that is much broader than a fresh product launch.

The Chinese technology giant plans to issue HK$80 billion, or about $10.2 billion, in new shares and use the proceeds to expand its artificial intelligence capabilities across chips, cloud infrastructure, large language models, and AI applications, Reuters reported.

For Alibaba Group Holding (BABA) shareholders, the immediate effect is dilution. Existing investors will own a slightly smaller percentage of the company once the new shares are issued.

But the strategic bet is much larger: Alibaba is trying to position itself as a full-stack AI competitor to Amazon (AMZN), Microsoft (MSFT), and Alphabet (GOOGL) rather than remain primarily an e-commerce company.

That change matters beyond the stock market. Companies are increasingly using AI for customer service, software, advertising, inventory management, and online purchasing. If Alibaba can create cheaper or more powerful AI infrastructure, it might force U.S. Big Tech rivals to respond with lower costs, speedier product launches, or more generous services.

There is no guarantee of success. But the spending competition has become so intense that consumers and investors alike may feel the impact.

Alibaba is spending heavily to become a full-stack AI company

Alibaba said it will use the funds from the fresh share offering to enhance its “full-stack AI capabilities,” including infrastructure and processing capacity.

That spending comes as the company’s cloud and AI businesses are accelerating. Revenue from those operations rose 45% year over year in the April-to-June quarter, according to the Associated Press, while capital expenditure climbed 75% to 67.7 billion yuan, or roughly $10 billion.

The data demonstrate how swiftly Alibaba’s identity is shifting.

It was born out of digital commerce, markets, and online shopping. The corporation is now seeking to exert more influence over the technology stack that supports AI, including chips, computing infrastructure, models, and apps.

That method increasingly looks like the approach followed by Amazon, Microsoft, and Google, all of which mix cloud platforms with proprietary AI models and specialized hardware.

The case for investors is straightforward. There are additional possibilities for companies with infrastructure and applications to monetize AI spend. They can sell computer power, software access, enterprise tools, and consumer-facing solutions on top of the same underlying technologies.

For consumers, the influence is more indirect, but it is no less important. The more vigorously these companies compete, the more pressure to make AI services cheaper, faster, and easier to use.

Related: Alibaba drops a laptop AI model days before Meta’s move

Alibaba CEO Eddie Wu has also argued that the economics can improve over time, Reuters reported. He said the company expects its AI computing investments to break even within three years, with the payback period potentially shortening to roughly two years if gross margins continue to improve.

That’s a big ask, considering that Alibaba’s AI push is already pricey. Heavy capital investment might depress earnings, while issuing new shares produces dilution.

Management is essentially asking investors to pay those costs today for a shot at higher cloud growth and a better competitive position tomorrow.

Alibaba’s $10.2 billion AI bet could hit closer to home.China News Service / Getty Images

The AI arms race could eventually reach Main Street

Most consumers will never buy a data center server, but they increasingly pay for the services that computers enable.

Retailers employ AI to improve search, suggestions, and inventory management. Banks use it to identify fraud and deliver customer care. Software businesses are adding AI assistants to goods that users already pay for. Advertisers use AI to reach clients more efficiently, and logistics companies use it for routing and delivery.

All of those applications rely on computing infrastructure someplace upstream.

When the price of AI infrastructure is still high, companies typically have three choices: eat the cost, save money elsewhere, or pass some of it on in the form of increased rates and more restrictive subscription plans.

However, if competition reduces those costs, the reverse can occur. Companies may add AI capabilities without raising prices as aggressively, and customers can receive access to superior tools at a lower incremental cost.

That’s why the $10.2 billion that Alibaba raised is important, according to The Wall Street Journal, even to Americans who don’t own a share of BABA or shop on one of Alibaba’s marketplaces.

Alibaba wants to get in on the infrastructure layer of the AI economy. If so, Amazon, Microsoft, and Google may need to respond more forcefully.

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It’s important not to overestimate the effect on consumers. Alibaba’s recent share sale doesn’t promise cheaper AI subscriptions or lower shopping prices.

Still, big infrastructure competition does tend to matter in the long run.

Amazon Web Services, Microsoft Azure, and Google Cloud competed for enterprise customers, making cloud computing more capable and more widely available.

AI infrastructure might take the same direction, especially as more firms construct their chips, models, and data-center networks.

BABA investors are taking on more risk for a bigger prize

The shareholders have the instant trade-off.

Alibaba is issuing new stock, which will dilute existing shareholders. At the same time, the company is investing another $10.2 billion in a market management feels might be a significant long-term growth engine.

The bull case is that Alibaba is already big enough to make the investment worth it. The company was reportedly able to increase the amount of the offering due to high investor demand. Its cloud and AI businesses are growing quickly.

The negative argument is that AI turns into a capital-intensive arms race with unpredictable rewards.

Alibaba is up against U.S. firms with massive balance sheets, leading cloud platforms and worldwide client bases. The challenge may be that even if Alibaba succeeds quickly, it will still need to show the economics justify the spending.

What Alibaba’s $10.2 billion raise means

$10.2 billion: Approximate size of Alibaba’s new share offering

45%: Year-over-year growth in its cloud and AI businesses last quarter

75%: Increase in quarterly capital spending

Proceeds: All going toward AI, Alibaba said

Investor impact: Dilution for existing shareholders

Competitive impact: Alibaba as a more direct competitor with Amazon, Microsoft, and Google

Consumer impact: Greater AI infrastructure competition, which could eventually influence the cost and availability of AI-powered services

That’s where BABA is increasingly different from the Alibaba investors knew a few years ago. The stock is becoming less of a bet on Chinese e-commerce and more of a wager on whether Alibaba can become one of the world’s big AI infrastructure businesses.

Alibaba is constructing an end-to-end business from semiconductors to computing infrastructure, models, and apps. This makes it a more direct rival to major U.S. tech corporations and gives it more control over the economics of AI.

BABA investors have to ask themselves if that investing will pay off in terms of returns eventually outweighing dilution and near-term profit pressure.

The question for consumers is whether a stronger Alibaba means the rest of Big Tech will have to work harder to compete. That may look like improved AI tools, more features in existing products, lower cloud costs for enterprises, or faster adoption across retail, finance, software, and logistics.

Those results aren’t guaranteed. Nonetheless, Alibaba’s $10.2 billion financing makes one thing clear: The global AI arms race is getting costlier, more competitive, and more impactful.

Shareholders are paying up for the next stage immediately. Eventually, the rest of the market may feel the effect.

Related: Alibaba shares defy major AI scandal as Wall Street bites

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Why we love this deal

Summer may be close to winding down, but that doesn’t mean outdoor space has to go unused. A comfortable seat still has a place outside on cooler evenings, especially when there’s a fire going after the sun goes down. A comfortable and versatile patio set makes your outdoor space more inviting, giving you another reason to spend some time outdoors, even as the days get shorter.

One great reason to keep spending time outdoors is the Noelse 3-Piece Rocking Patio Set. It’s small enough to fit on most patios and porches, while also offering a lightweight option to use around the backyard. Originally $106, this set is on sale at Walmart for $52, which is a 51% markdown. Even with the $20 shipping charge, it’s still a great deal.

Noelse 3-Piece Rocking Patio Set, $52 (was $106) at Walmart

Courtesy of Walmart

Shop at Walmart

Why do shoppers love it?

The set includes two rocking chairs and a side table. The chairs are lined with textilene fabric that’s made for outdoor use, with quick-drying, breathable, and tear-resistant qualities. The seat shape presents a laid-back and relaxing position to make rocking easier while also providing comfort for long hangouts. The ergonomic armrests feature wooden toppers that prevent the area from overheating, protecting your arms from hot metal that’s been sitting in the sun. The anti-slip strips prevent the rockers from moving around and scuffing the floor as you relax, and the stoppers prevent the chair from toppling backwards. 

Related: Walmart is selling a sturdy patio glider swing that can support up to 400 pounds for $108

The accompanying coffee table is designed with a tempered glass tabletop that’s heat-resistant and easy to clean. The adjustable table legs help keep it stable across different surfaces, while the 17.3-inch tabletop is great for holding drinks, snack plates, phones, Bluetooth speakers, and more, making it a great addition to a backyard barbecue or fireside s’mores. The set features a powder-coated steel frame, with the chairs measuring 28.9 inches deep, 22.8 inches wide, and 31.5 inches tall, and featuring a high weight capacity of up to 300 pounds per chair. The set comes in a variety of colors, but the black color is the best deal.

Details to know

Sizes: The table measures 17.3 inches wide and 15.6 inches tall, while the chairs measure 22.8 inches wide, 28.9 inches deep, and 31.5 inches tall.

Colors: The black color is the best deal, but they also offer gray, brown, green, blue, and yellow. 

Weight capacity: The chairs can hold up to 300 pounds. 

“I really like this set,” said one shopper. “The color looks modern. The rocking chairs are sleek and comfortable. I like that the matching table ties everything together perfectly. The assembly was not terrible. The quality is sturdy and lightweight. The table is pretty stable for drinks, plants, and small decor.”Another reviewer said, “The quality of this set is beautiful. I was able to put the table together in about 25 minutes. This set is definitely worth the money; I highly recommend it.” 

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The Noelse 3-Piece Rocking Patio Set is an affordable and comfortable set to use for relaxing during the week, hosting friends on the weekend, and moving around the yard as needed. At just $52 plus shipping, it’s worth the price if you’re looking for a compact and comfy set for your outdoor space.  

Amazon (AMZN) buyers, who are used to scoring cheap electronics at the company’s enormous online store, got a jolting reminder this week that even Big Tech eventually has to pass along increasing expenses.

The company has sharply raised prices on a range of its own devices, including Echo smart speakers, Kindle e-readers, Fire TV streaming sticks, and Eero Wi-Fi equipment, reported The Verge. The increases reach as high as 60%, with some of Amazon’s least-expensive products suffering the biggest jumps.

The most extreme example is the Echo Dot. The popular entry-level smart speaker used to cost $49.99 and now sells for $79.99, an increase of $30, or 60%.

“After absorbing these increases for as long as we could, we recently adjusted pricing across our product lines,” Amazon spokesperson Kristy Schmidt told The Verge.

Amazon has increased the price of its Fire TV Stick 4K Max to $84.99 from $59.99 and its basic 16GB Kindle to $149.99 from $109.99.

The Kindle Paperwhite went from $159.99 to $199.99.

Those numbers make what were quite cheap additions to a household into significantly larger purchases for customers. And the reason behind the hikes is a far bigger story of technology.

Amazon said the consumer electronics market is seeing big rises in the cost of memory and storage components, and it has absorbed such increases for as long as it could before adjusting prices.

The price adjustments provide another piece of evidence that the huge amounts of money going into artificial intelligence infrastructure are starting to have implications well beyond Wall Street and Silicon Valley.

Amazon’s price increases reach the family budget

Prices vary significantly per product.

Amazon’s Echo Dot Max went up 20% from $99.99 to $119.99, and the Echo Show 21 went up 25% from $399.99 to $499.99. The Verge noted a three-pack of Eero 7 routers is up from $349.99 to $399.99.

Not every Amazon device was affected. Ring cameras and video doorbells, along with the $219.99 Echo Studio, appeared to escape the latest round of increases.

But the largest percentage gains, occurring on some of Amazon’s lesser hardware, may be especially significant. Much of the allure of an Echo Dot or Fire TV Stick isn’t just what the device does. Amazon has spent years marketing products like these as a relatively inexpensive route into its wider ecosystem.

That equation becomes upset when a $49.99 smart speaker now costs $79.99.

Some of Amazon’s biggest device price increases

Echo Dot: $49.99 to $79.99, up 60%

Fire TV Stick 4K Max: $59.99 to $84.99, up 41.7%

Echo Spot: $79.99 to $109.99, up 37.5%

Kindle 16GB: $109.99 to $149.99, up 36.4%

Kindle Paperwhite 16GB: $159.99 to $199.99, up 25%

Echo Show 21: $399.99 to $499.99, up 25%

Eero 7 three-pack: $349.99 to $399.99, up 14.3%

Related: Swatch watches come in fun, unique styles starting at $65 at Amazon

The bigger concern for consumers, though, is that Amazon isn’t operating in a vacuum.

Memory is a crucial ingredient in devices from smartphones and laptops to routers and servers. The economics of that business have changed with the phenomenal expansion of AI computers.

In August, JPMorgan Global Research warned that hyperscalers’ AI data center building and demand are using an outsized amount of global memory capacity. Its analysts predict that DRAM costs will have risen more than 400% from the start of 2024 to the end of 2026.

More troubling for consumers, JPMorgan anticipates that some consumer devices could see prices rise as much as 40% as higher component costs are passed on to buyers.

Thus, Amazon’s price rises could be one extremely visible symptom of a much broader squeeze.

AI’s memory appetite is reaching Amazon shoppers

Artificial intelligence demands a lot of computer power and those systems require a lot of memory.

That has generated a curious competition for production capacity.

Samsung Electronics, SK Hynix, and Micron have been targeting high-bandwidth memory required by AI data centers, S&P Global Market Intelligence said. The challenge is that the same business also makes traditional DRAM for use in servers, PCs, and consumer gadgets.

IDC also notes that the rapid growth of AI infrastructure is putting tremendous strain on the memory ecosystem, with manufacturers favoring higher-margin memory for AI data centers over traditional DRAM and NAND used in everyday devices.

The effect is measurable to an increasing extent.

Earlier this year, Counterpoint Research projected prices for DRAM and NAND used in consumer applications had climbed over 600% year-on-year, driven in part by increasing demand from higher-margin AI servers.

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Those pressures are still there.

TrendForce expects another quarter-over-quarter increase of 13% to 18% in contract pricing of conventional DRAM in 3Q26, while NAND flash costs will grow by another 10% to 15%. The research firm singles out AI inference and big data-center deployments in particular as big sources of demand.

The TrendForce data also has a particularly telling detail: consumer customers are hitting what it calls its “affordability limit.”

Higher component costs are slowly filtering through stockpiles and into retail prices. As that happens, TrendForce anticipates notebook prices to broadly increase, possibly dragging down shipments.

That makes Amazon’s action more than just a modification to the price tag on an Echo.

It suggests the AI investment boom has created a supply-chain pressure that ordinary consumers can now encounter when they buy relatively mundane technology for their homes.

Amazon just made the smart home more expensive.Jerod Harris / Getty Images

What Amazon’s higher prices mean for AMZN investors

For Amazon investors, the price rises raise another question: How much inflation can the company’s hardware division pass along before consumers just decide not to buy?

Amazon has had incentive to price devices aggressively in the past. An Echo may drag a household deeper into Alexa and Amazon’s services, while Fire TV provides another entry point into Amazon’s entertainment and advertising ecosystem. Kindle hardware supports Amazon’s digital-book business, while Eero extends the company’s presence inside linked homes.

Which means the cheapest gadgets are strategically useful, even if the technology itself isn’t the primary engine for profit.

The danger is simple. An extra 10% might not be seen in a household budget. That’s a much harder bump to ignore, especially on a discretionary device.

The Echo Dot, however, is not alone. Apple raised its HomePod mini prices from $99 to $129 this summer, according to The Verge, while Google’s competing Home Speaker was priced at $99.99 when Amazon’s hikes were announced.

So consumers have choices, which naturally limits how much of a component-cost increase Amazon can pass on in higher pricing without affecting demand.

At the same time, the challenge facing Amazon underscores the peculiar position Big Tech today finds itself in.

The industry is pouring money into capitalizing on the economic opportunity of AI. But the same development in AI infrastructure is placing pressure on the parts that go into making the somewhat run-of-the-mill devices that consumers already own.

At the other end of the technological market, Nvidia’s customers are seeing the same thing. Several of the chipmaker’s top customers have reportedly been advised that servers using its AI chips will cost more than 15% extra in many cases, with skyrocketing memory costs again part of the equation.

That puts an increasingly obvious chain in place:

AI infrastructure demand

Tighter memory capacity, higher component costs

Higher device prices

For a stockholder of Amazon, this is a tale of supply-chain and pricing dominance.

For those only looking for an inexpensive Echo Dot, it’s another $30 at checkout.

And that may be one of the most obvious pieces of evidence yet that the expense of the AI growth no longer stays in the data centers.

What Amazon shoppers should know

Amazon’s Echo Dot has risen 60%, from $49.99 to $79.99

The base Kindle now costs $149.99, roughly $40 more than before

Amazon attributes its increases to sharply higher memory and storage component costs

TrendForce expects DRAM and NAND prices to continue rising during the third quarter of 2026

Independent researchers link the wider memory shortage partly to enormous AI and data-center demand

That final bullet point makes a big difference. Amazon has cited memory and storage expenses, not AI explicitly. Meanwhile, the link to AI comes from independent semiconductor-market analysis showing that data centers are gobbling up memory capacity and manufacturers are shifting output toward higher-margin server goods.

For customers, however, the outcome is much less technical.

Some of Amazon’s cheapest items are suddenly a lot more expensive.

More on Amazon & its stock: 

History of Amazon: From garage startup to tech titan

Is Amazon a good long-term investment? Its buy-and-hold prospects explained

Amazon’s dividends and stock splits: What you need to know

Amazon’s stock buybacks explained

What is Amazon’s free cash flow in 2026?

Treasury Secretary Scott Bessent set out to calm a jittery bond market. Instead, he may have handed investors a new reason to worry, one that reaches well beyond the trading desks that watch government debt for a living.

The episode says as much about the limits of financial engineering as it does about the state of government debt heading into a closely watched speech. One that will land at a moment when patience for reassurance is wearing thin.

Bessent’s bond gambit is fueling inflation fears

Investors have priced in higher inflation expectations over the past several days, a sign that the Treasury Department’s own effort to improve liquidity in the government debt market is backfiring in an unexpected way.

The breakeven rate, a market gauge that compares Treasury yields with inflation-protected securities of the same maturity, rose across the curve to its highest level in more than two months.

On Aug. 20, the breakeven rate at the 10-year horizon climbed to 2.34%, its highest since June 10. Five-year breakevens hit the same level for the first time since June 16. The moves are volatile by nature and do not signal runaway inflation on their own, but they point to a renewed increase in inflation concerns among bond investors.

Related: Scott Bessent’s economy claim is raising eyebrows on Wall Street

The concern traces back to a Treasury announcement on August 19, according to CNBC, when the department said it would at least double the size of its long-dated debt buybacks, from $2 billion to at least $4 billion per operation, starting Sept. 9 and running through Nov. 4. The move came after the 30-year Treasury yield touched levels not seen in nearly two decades.

Bessent insisted the buybacks were not an attempt to artificially suppress yields, calling the move a routine liquidity operation that began in 2024. Markets reacted immediately anyway, with long-dated yields tumbling as much as 10 basis points and the dollar weakening nearly 0.8% against a basket of major currencies on the announcement.

Why the bond market keeps pushing back

The relief did not last. Long-dated Treasury yields plunged the day of the announcement but rebounded Aug. 20 and climbed again Aug. 21, wiping out most of the initial move.

The 10-year yield stood at about 4.63% on Aug. 21, trading above its pre-announcement level, while the 30-year yield climbed to approximately 5.27%, leaving both yields above their pre-announcement levels, CNBC reported.

Wall Street’s skepticism goes beyond one week of price action. JPMorgan strategists argued the operation changes little about the underlying imbalance pushing Treasury yields higher, including persistent fiscal deficit and rising inflation expectations.

More Economy:

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Meanwhile, foreign demand for official holdings of U.S. government debt has weakened, as debt sits near multi-decade lows even as issuance keeps climbing.

The timing made the skepticism sharper. Total U.S. government debt crossed $40 trillion for the first time on Aug. 19, NBC News reported. The same day as the buyback announcement, a milestone reached roughly four and a half years after debt topped $30 trillion.

Yields have also been under pressure from forces well beyond Treasury’s control. Higher-yielding government debt in Asia and Europe, a record pace of corporate issuance from hyperscalers financing AI data centers, and a general rise in the term premium investors demand for holding long-term U.S. debt have all pushed borrowing costs higher throughout 2026.

The Council on Foreign Relations described it as reflecting genuine supply and demand pressures, including rising government debt, rather than Treasury issuance mismanagement alone.

Precious metals have already begun pricing in the uncertainty.Jim Lo/Getty Images

The Fed’s Warsh faces a bigger test at Jackson Hole

The market’s mixed response raises the stakes for Federal Reserve Chairman Kevin Warsh, who is scheduled to deliver his closely watched keynote address on Aug. 28 at the central bank’s annual symposium in Jackson Hole, Wyoming. Investors are looking for clues on whether recent hawkish signals in Fed meeting minutes will carry into his own policy message.

Warsh’s prior statements endorsing a reduced Fed role in markets have widely drawn dovish interpretation from some investors. That framing now cuts against him.

If Warsh signals he intends to maintain an accommodative stance, breakevens could rise further and potentially undo some of the stability Bessent’s buybacks managed to produce at the long end of the curve. Macquarie strategist Thierry Wizman flagged the risk directly.

Related: Scott Bessent’s net worth in 2026 as Treasury chief

This is not the first time yields have complicated Warsh’s position this year. A similar spike tied to inflation fears in mid-May pushed the 30-year yield to 5.18%, its highest level since July 2007, as investors grappled with an energy-driven inflation scare.

Precious metals have already begun pricing in the uncertainty. Gold has climbed roughly 14% since July 31 to about $4,380 an ounce, while silver is up nearly 20% over the same stretch, a rally strategists have tied directly to rising inflation worries and a weaker dollar ahead of Jackson Hole, as TheStreet reported.

What bond investors should watch next

For bond investors, the immediate signal to track is whether breakeven rates will continue climbing into next week or stabilize once Warsh actually speaks. A further rise would suggest the market genuinely doubts the Fed’s inflation-fighting resolve, regardless of what Treasury does with its buyback program.

Equity investors should watch the 10-year yield’s relationship to the 4.5% to 5% range that has repeatedly pressured stock valuations this year.

Strategists have warned that yields sustained near the top of that range tend to compress price-to-earnings multiples across the broader market, particularly for longer-duration growth stocks.

The bigger picture is that Bessent and Warsh are now effectively working the same part of the yield curve with different tools and different incentives.

Investors watching this space should treat next week’s Jackson Hole speech as the more important catalyst, since it will clarify whether the Fed intends to reinforce or undercut the Treasury’s own efforts to keep borrowing costs in check — a question that neither buybacks nor rhetoric alone has managed to settle so far.

Related: Scott Bessent just made a bold move on the bond market

Artificial intelligence may seem like a free service to the person entering an inquiry into a chatbot.

Behind that prompt is an increasingly costly assemblage of chips, memory, electricity, and data centers.

Now one of those costs is reportedly about to jump.

Some of Nvidia’s (NVDA) largest customers have been informed that prices for servers containing the chipmaker’s artificial-intelligence processors will increase by more than 15% often, Bloomberg reported.

The hikes are likely to cover early 2027 shipping systems, which include servers powered by Nvidia’s flagship Vera Rubin and Grace Blackwell CPUs. The exact amount depends on the chip generation and memory arrangement. Reuters was unable to independently verify the Bloomberg claim. Nvidia did not immediately reply to a request for comment.

Microsoft (MSFT), Alphabet (GOOGL) and Oracle (ORCL) are among the major technology companies exposed to rising AI infrastructure costs.

For Nvidia investors, rising prices might be a testament to the huge demand and pricing power of its AI ecosystem.

They show us the other, less pleasant face of the AI revolution for the rest of us.

Somebody has to pay for all this processing power eventually.

Nvidia’s AI boom is running into a memory problem

Nvidia’s graphics processors might get most of the attention, but good AI servers need more than just GPUs.

Memory is crucial for storing and transferring massive amounts of data swiftly needed by AI models.

The increases are reportedly the result of soaring memory costs. The main providers of DRAM are Samsung Electronics, SK Hynix, and Micron, with demand outstripping supply as corporations scramble to build over AI infrastructure.

Also Read: History of Nvidia: Company timeline and facts

That makes for an odd predicament.

Even the leading supplier in the AI boom, which has become extremely profitable by selling AI accelerators, is subject to expenses elsewhere in the semiconductor supply chain.

And Nvidia has a lot of demand to defend.

The company reported record first-quarter fiscal 2027 revenue of $81.6 billion, an 85% increase from a year earlier. Its Data Center business generated a record $75.2 billion, up 92%. Nvidia’s GAAP gross margin was 74.9%.

Those data help illustrate the importance of the stated price hikes for Nvidia stockholders.

They aren’t being asked to pay more for an experimental product whose demand is unclear. Nvidia is at the center of one of the biggest infrastructure spending cycles in tech.

Related: Anthropic makes quiet move Nvidia investors must consider

The question is, do increasing expenses start to affect customer behavior?

Microsoft, Google, Amazon and Meta are building their own AI technology while buying Nvidia goods. This gives the hyperscalers a longer-term incentive to wean themselves off Nvidia, especially if infrastructure prices keep rising.

But replacing Nvidia at scale is easier said than done.

The latest financial figures from the corporation indicate just how strong demand still is. When the company reported its May results, Nvidia CEO Jensen Huang said the AI infrastructure buildout was unfolding at “extraordinary speed.”

Microsoft shows how quickly the AI bill is growing

A particularly graphic example of the amount of this expenditure may be found at Microsoft.

The company spent $31.9 billion on capital expenditures in its fiscal third quarter, of which almost two-thirds was on shorter-lived assets, namely GPUs and CPUs. Microsoft later forecast quarterly capital expenditures in excess of $40 billion.

There is another metric that puts the stated Nvidia pricing rise into perspective.

Microsoft said it expected to invest roughly $190 billion in capital expenditures during calendar 2026, including approximately $25 billion attributable to higher component pricing.

That doesn’t mean Nvidia was the only contributor to that $25 billion rise.

But it points to a wider problem: the building blocks of the AI economy are becoming so pricey that they are starting to strain the spending plans of some of the world’s richest firms.

So far, Microsoft has had the revenue growth to warrant the investment.

Revenue in its fiscal fourth quarter was $90 billion, up 18% from a year earlier, while net income rose 31% to $35.8 billion.

Revenue from Azure and other cloud services climbed 40% earlier in the year, but Microsoft also stated its cloud gross-margin percentage was being pushed by ongoing investments in AI infrastructure and higher AI usage.

That is an important tension for Nvidia investors. Big Tech desperately wants Nvidia’s computing power. But Big Tech also needs to make money from it.

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Those economics become increasingly more crucial as the infrastructure bill grows.

A 15% increase may be manageable for Microsoft, Google or Oracle individually. But when higher server prices are multiplied across enormous data-center deployments, the dollars become significant.

And that brings the story out of Silicon Valley and onto Main Street.

Nvidia’s price increase could eventually reach consumers

A consumer isn’t going to receive an invoice from Nvidia because Microsoft paid more for an AI server.

The transmission process is more subtle:

Cloud providers buy infrastructure. Software companies lease that computing capability. Companies deploy AI solutions using those services. Somewhere in the chain, consumers and business customers ultimately pay for the subscriptions, advertising, software, or services.

Increased hardware costs don’t always translate to increased consumer pricing. Providers can absorb some of the cost, find efficiencies, negotiate better contracts, or accept lower margins.

Also read: Goldman Sachs spots huge twist ahead of Nvidia’s earnings

But someone has to get a return on the hundreds of billions of dollars being invested in AI infrastructure.

That can involve firms charging more for premium AI products, placing tighter limits around free services, nudging users into subscriptions, or finding other methods to commercialize AI usage.

Microsoft already offers an illustration of the importance of the economics of infrastructure. Azure demand remains strong, but AI investment has pressured its cloud gross margin.

So for the average user of Copilot or Gemini or ChatGPT, the reported rise in servers for Nvidia is not primarily a story about buying semiconductors.

It provides a glimpse of the ever more expensive gear underpinning the AI devices that are becoming part of our everyday lives.

Nvidia’s latest price move puts the AI boom to a new testPHILIP FONG / Getty Images

Nvidia earnings now carry an extra question

The report is particularly interesting for shareholders because of its timeliness.

Nvidia is set to release its fiscal second-quarter results on Aug. 26.

Already, investors have big expectations to digest from Nvidia’s $81.6 billion first quarter.

Now they have a new question.

It’s not clear whether Nvidia can keep passing rising component costs on to customers without hurting demand.

The stated gains might strengthen one of the best portions of the Nvidia investment thesis, if it can: pricing power.

But those same increases could highlight a weakness if customers start to balk at higher prices, slow deployments, or speed up their move to chips made in-house.

That’s a surprisingly significant memory cost in the Nvidia narrative.

What Nvidia investors and AI users need to know

More than 15%: Reported increase in the price of many Nvidia-powered AI server systems.

Early 2027: When the new prices are expected to affect shipments.

Vera Rubin and Grace Blackwell: Nvidia systems expected to be affected.

$81.6 billion: Nvidia’s fiscal Q1 2027 revenue, up 85% year over year.

$75.2 billion: Nvidia’s Data Center revenue, up 92%.

$190 billion: Microsoft’s expected calendar-2026 capital expenditures.

$25 billion: Amount Microsoft said higher component pricing was expected to add to that spending.

Aug. 26: Nvidia’s next scheduled earnings report.

The irony of AI growth is that the digital product that people perceive might appear almost weightless.

You pose an inquiry to a chatbot, and seconds later, an answer appears.

But behind that answer lies some of the most expensive computing infrastructure ever built.

Nvidia has been one of the largest beneficiaries of that reality.

If the anticipated price hikes hold, it could make Nvidia an even greater winner while reminding investors, Big Tech, and eventually customers that the AI revolution comes with a very real price tag attached.

Related: Bank of America sends blunt message to Nvidia stock investors

Few companies have shaped modern culture quite like Coca-Cola (KO). Its clever advertising jingles introduced billions of thirsty drinkers to its sweet, fizzy beverages, helping to popularize the refreshment around the world.

Coke even had a hand in shaping the image of Santa Claus — that jolly, red-suited figure we know around the world today.

It’s true. In 1931, Coca-Cola commissioned illustrator Haddon Sundblom to paint images of Santa Claus for its holiday ads. Sundblom depicted him as a kind, bearded figure dressed all in red.

Before that, Santa had been drawn in all different shapes and styles: as an elf, or a huntsman, wearing green or gold; sometimes cheerful, othertimes stern.

Coca-Cola then used its marketing power to run Sundblom’s Santa ads for decades, helping to shape our perception of St. Nicholas, selling a ton of soft drinks in the process, and turning the soda into a symbol of holiday cheer.

That kind of influence helps explain why Coca-Cola has remained one of the world’s most popular brands for over 140 years. Its staying power has also helped the company mint generations of consistent profits and cash flow — and return billions of dollars to its shareholders through dividends and share buybacks.

Here’s a look at Coca-Cola’s share repurchase history and how much stock the company is buying back in 2026 — as well as what that means for investors.

What is Coca-Cola’s latest stock buyback plan?

Share repurchases are a consistent part of Coca-Cola’s capital return strategy. Its most recent share reauthorization program dates to 2019, when the company announced it would buy back an additional 150 million shares of its common stock, representing 3.5% of its outstanding shares at the time.

@therealoshow Santa wasn’t always red. For centuries, St. Nicholas and Father Christmas were drawn in green, brown, & blue. Basically every color imaginable. Even Thomas Nast, the illustrator who shaped the modern Santa, switched between outfits. Then in 1931, Coca-Cola hired artist Haddon Sundblom to paint a warm, friendly Santa for their holiday ads. He dressed him in bright Coca-Cola red and Coke blasted that image across magazines, newspapers, and billboards worldwide. By the 1950s, all the old versions disappeared. Not because they were wrong but because Coke’s campaign became the global default. The Santa we picture today isn’t ancient tradition. He’s one of the most successful branding wins in history. ♬ original sound – The Real Oshow

Coca-Cola’s stock buyback history

Coca-Cola has been buying back its own stock for more than four decades. Since launching its share repurchase program in 1984, the company has repurchased 3.6 billion shares at an average price of just $18.43 per share.

In 2020, however, Coca-Cola did not repurchase any common stock. The company ended the year posting net revenues of just $33 billion, an 11% year-over-year decline and its sharpest drop since the 1940s, due to COVID-19-related lockdowns that shuttered restaurants and bars.

But its then-CEO James Quincey remained positive. He stated, “We’ve been through challenging times before as a company, and we believe we’re well positioned to manage through and emerge stronger.”

Related: Does Coca-Cola pay dividends? Its yield and payout explained

In 2021, the company did not repurchase any shares either, again choosing to conserve its cash amid uncertainty. It ended that year with approximately $10 billion in share repurchase authorization.

By 2022, however, the buyback machine was back on. Coke reported that its business had recovered from pandemic-related disruptions and announced it would resume its share repurchases. By year’s end, Coke had repurchased $0.6 billion in net shares.

The company accelerated its buybacks in 2023, making $1.7 billion in net share repurchases. Since then, however, Coke has taken its foot off the gas. Net share repurchases fell to $1.1 billion in 2024 and just $0.4 billion in 2025.

Its measured pacing has continued into 2026. Coca-Cola entered the year with approximately $5.2 billion remaining under its authorization. It didn’t repurchase any common stock during the first quarter but bought back approximately 7.3 million shares for $549 million in the second quarter.

So, even though Coca-Cola still has billions available for future buybacks, its recent activity demonstrates that management is not in a hurry.

For shareholders, Coke’s restraint could actually prove beneficial.

Related: How many employees does Coca-Cola have in 2026? Its workforce, locations, & layoffs explained

What do Coca-Cola’s stock buybacks mean for investors?

Share buybacks can benefit investors because they reduce the number of shares outstanding. And so long as the company continues to grow its earnings, fewer shares often translate into higher earnings per share for shareholders.

But Coca-Cola has another shareholder priority, too: its dividend. The company expects to generate roughly $12.4 billion in free cash flow in 2026, which gives it plenty of financial firepower. However, with a payout ratio of roughly 62%–77%, a significant portion of its profits is already being directed towards dividend payouts.

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That could help explain why Coke isn’t rushing to exhaust its remaining buyback authorization balance. Unlike dividends, which shareholders have come to consistently expect each year, share repurchases give management flexibility to return additional cash when conditions are right.

So while it might not be quite as jolly as its iconic Santa Claus ads, Coca-Cola’s disciplined approach to capital allocation could still give shareholders plenty to smile about down the line.

Related: Where is Coca-Cola’s headquarters? All about its Atlanta, GA base

Target’s latest earnings report delivered a strong sales recovery and good news on future price cuts, but one figure signals a concerning shift in customer behavior.

As one of the largest retailers in the United States, Target’s sales can often point to widespread consumer habits across the country. 

Its second quarter financial results confirm the retailer is on the right track under the leadership of new CEO Michael Fiddelke (since Feb. 2026) to recover from previous sales struggles and bring back customers to its aisles. 

Net sales improved 5.3% year over year, reaching $26.5 billion, and comparable sales rose 3.8%, according to Target’s official report. 

“Comparable traffic increased 3.6%, suggesting more shoppers are visiting Target as the retailer works to sharpen its merchandise, improve its stores and offer more value,” reported TheStreet’s retail journalist Maurie Backman.

And while the retailer’s executive vice president and chief merchandising officer, Cara Sylvester, delivered great news to its customers, pledging further price cuts on top of lowering prices on more than 10,000 items over the last 12 months, Fiddelke disclosed an important change in consumer behavior. 

Target’s external AI traffic is growing more than 3.5× the industry rate

Earlier this year, Target became one of only a small number of retailers to team up with OpenAI, Google Gemini, and similar leading platforms to help further the development and growth of agentic commerce. 

“More people are discovering products and finding inspiration in AI-powered environments, and we see a real opportunity to meet them on their shopping journey. By partnering early with leading tech innovators, we’re helping guests turn inspiration into action and shop Target in a way that feels natural and easy” stated Sarah Travis, chief digital and revenue officer at Target, in a June press release.

Related: 125-year-old mall retail anchor closes discount outlet, cuts 101 jobs

Target’s latest results show a small but fast-growing share of shoppers arriving at the retailer through AI-powered shopping experiences. 

“While still small in total today, as more consumers begin to explore the benefits of agentic shopping, Target’s digital traffic sourced from external AI platforms is growing more than 3.5 times the industry as compared to a year ago,” Fiddelke highlighted during the Q2 earnings call. 

Although Target is building infrastructure for agentic commerce, it describes the consumer-facing experiences it has launched primarily as conversational AI shopping. Shoppers can ask questions, discover products, browse recommendations, build baskets and, on some platforms, complete purchases while retaining control of the final decision.

Target consumers relying on AI for shopping risk missing out on real deals.Douglas Rissing / Getty Images

Shoppers risk missing out on real deals and more 

When consumers use conversational AI platforms to discover products and build their shopping baskets, they risk missing local store clearance markdowns.

Some store-level discounts are not digitally exposed and therefore cannot be discovered by an AI shopping system operating on digitally accessible product and pricing information.

For example, a shopper walking through a store may encounter a clearance sticker or other localized markdown that isn’t reflected in the online price.

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“In-store clearance pricing isn’t visible online. Clearance items and pricing can only be found and purchased in-store,” reads Target’s Price Match Guarantee page. 

As a result, an AI shopping agent operating from online, machine-readable product data cannot identify discounts that the retailer does not expose digitally. 

As AI-powered shopping becomes a growing part of how consumers discover and purchase products, this could create a new blind spot: Shoppers may increasingly rely on digital recommendations while missing discounts that exist only inside physical stores.

Other risks for consumers stemming from agentic and online shopping

Earlier this year I reported on what Walmart’s e-commerce growth could signal. 

Researchers at the Digital Watch Observatory warn that AI could give large retailers an even greater advantage because they have more resources to invest in advanced technology.

This could increase market concentration, make it harder for smaller businesses to compete, and reduce consumer choice, while also raising concerns about data privacy and reduced human interaction in customer service.

AI shopping could make online purchases less transparent and allow companies to use chat histories and personal data to target consumers or enable dynamic pricing, warns Tech Policy Press. Meanwhile, a study published in the Journal of Electronic Commerce Research found that AI shopping assistants can produce convincing but false information, including fake discounts and promotions.

There are also concerns about consumer spending. A 2025 study published through PMC found that digital shopping can make spending feel less tangible, potentially encouraging impulse purchases. 

Overall, the growth of AI-powered and online shopping could bring greater convenience, but it may also mean fewer choices, greater privacy risks and a higher risk of impulsive spending or missing cheaper in-store deals. 

Related: Popular shoe retailer closing dozens of stores after a costly mistake

Steve Cohen made his fortune by being right when other people were comfortable being wrong. The Point72 founder runs one of the most data-intensive multi-manager platforms in the world.

So when he makes an 188% increase in one position and a 55% cut in another simultaneously, to me, that is not portfolio rebalancing — but a thesis change.

The Q2 2026 13F filing tells us the story. Cohen sold 1.24 million Broadcom shares, cutting his position by 55%, while purchasing 2.23 million additional Oracle shares, lifting his stake by 188% to 3.41 million shares worth approximately $499.82 million. 

Point72’s portfolio sits at $88.13 billion across 3,859 holdings with a 27% turnover rate, according to GuruFocus.

This is Cohen’s answer to a question every AI investor is asking right now: Which company makes more money from the next phase of the build-out?

Why Cohen is trimming Broadcom: The ‘fell short’ problem

Let me be clear about what Broadcom is. It is one of the best-positioned semiconductor companies in the world. The Q2 fiscal 2026 results proved that. 

Revenue hit $22.2 billion, up 48% year over year (YOY)

AI semiconductor sales of $10.8 billion, up 143%. 

Free cash flow of $10.26 billion. 

Q3 guidance for $29.4 billion in revenue, up 84% YOY

So why is Cohen selling?

The answer is in a single phrase from management’s Q3 AI revenue guidance. The forecast came in at more than $16 billion in Q3, representing more than 200% year-over-year growth. 

But that number missed recent elevated investor expectations. When a stock is priced for perfection, and the guidance is merely extraordinary rather than extraordinary enough, the stock gets sold.

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Broadcom also faces a new competitive pressure worth noting. Marvell recently expanded its relationship with Google across multiple TPU programs, including accelerators, storage controllers, and networking, according to TheStreet. 

That raises the prospect that Google, historically a Broadcom anchor customer, could shift meaningful semiconductor work toward Marvell over time. For a company whose custom-silicon customer relationships drive the long-term revenue story, that dynamic matters.

Cohen is not calling Broadcom a broken business, but is saying the risk-reward at current prices has shifted.

Why is Cohen loading up on Oracle?

Oracle’s 12-month stock chart, down approximately 36% according to Yahoo Finance, tells you everything about why the stock is controversial and nothing about why it could work.

The business has one of the most extraordinary demand signals in enterprise technology right now. 

Remaining performance obligations (RPO) grew by $85 billion in a single quarter, from $553 billion to $638 billion

Cloud infrastructure revenue grew 93% YOY to $5.8 billion in Q4

Full-year cloud revenue reached $34.0 billion, up 39%

Total fiscal 2026 revenue was $67.4 billion, up 17%

GAAP EPS grew 34% for the full year.Source: Oracle Q4 and FY 2026 Results

The $638 billion RPO figure is the number that really matters here. It represents contracted revenue that has yet to be recognized, giving investors insight into the company’s revenue visibility and the substantial amount of work already lined up for the years ahead.

The question investors are wrestling with is not whether Oracle has demand. It is whether the capital expenditure required to fulfill that demand will destroy shareholder value before the revenue recognition begins.

Related: Legendary fund manager makes aggressive SpaceX prediction

Free cash flow was -$23.7 billion in fiscal 2026. Oracle plans to raise approximately $40 billion through debt and equity in fiscal 2027 to fund the infrastructure buildout. Those are real costs with real dilution risk.

Cohen’s 188% increase in the position suggests he may be betting that the market is underestimating how quickly Oracle can reach positive cash flow — and how durable that $638 billion backlog could prove to be.

Oracle’s multicloud strategy strengthens that case. By allowing its databases and services to run across AWS, Microsoft Azure, and Google Cloud, Oracle can benefit from cloud growth without having to compete entirely on the same terms as the hyperscalers. 

That gives the company a potentially durable position as enterprise workloads continue moving across multiple clouds.

Steve Cohen’s Point72 portfolio sits at $88.13 billion across 3,859 holdings with a 27% turnover rate.Bloomberg / Getty Images

What the switch tells investors about AI

Point72’s top five holdings in Q2, per GuruFocus statistics, were Credo Technology at 1.90%, ASML at 1.25%, Amazon at 1.20%, MKS Instruments at 1.01%, and Arista Networks at 0.99%. The Oracle position at $499 million approaches that concentration level. For a 3,859-holding portfolio, that is meaningful sizing.

The pattern I see in Cohen’s switch is a rotation from AI infrastructure that has already been priced to perfection toward AI infrastructure that has been punished for its capital intensity. 

Broadcom’s 48% revenue growth looks impressive on the surface, but with the stock broadly flat after guidance failed to clear already-elevated expectations, the valuation leaves little room for disappointment. 

On a risk-adjusted basis, investors are still paying a hefty price for that growth. Oracle down 39% over 12 months with $638 billion in backlog and 93% cloud infrastructure growth is, in Cohen’s read, mispriced.

My read of the trade is directionally coherent. After rewarding AI chips and custom silicon in 2025, the market is now asking who will capture the infrastructure boom in the long term.

Oracle’s $638 billion backlog is a powerful demand signal — and Cohen is betting the path to free cash flow won’t be as painful as bears expect.

Related: Billionaire investor makes Amazon his biggest stock bet