AMD demand strong, SpaceX catalysts cited, and Nike yield outpaces Treasuries

Yahoo Finance Executive Editor Brian Sozzi reports that AMD CEO Lisa Su stated chip demand is strong and the company wishes it had more inventory to sell. Sozzi noted this follows a bullish outlook from Micron, positioning the semiconductor sector for a significant earnings season. Citigroup analyst Atif Malik raised his price target on AMD to $800, citing Meta's success with its AI model as a driver for increased CPU demand. The firm also raised its total addressable market estimate for CPUs from $29 billion in 2025 to $300 billion in 2030.

Morgan Stanley analyst Adam Jonas described SpaceX as undervalued, pointing to specific upcoming catalysts. These include Starship Flight 15, where a successful rocket booster catch is anticipated, and Flight 16, expected before year-end. Jonas also highlighted third-quarter earnings as a potential first look at the economics of SpaceX's internal AI services, including Cursor and Grokbot. Further catalysts cited include Grok model releases and potential capacity leasing deals with Microsoft or Anthropic.

The concentration of the S&P 500 in three technology stocks reached a record level, with Nvidia, Apple, and Microsoft representing over 21% of the index according to Creative Planning data. This concentration exceeds the peak of 13.4% held by IBM, AT&T, and ExxonMobil in the mid-1980s. Sozzi emphasized that while these three stocks have driven recent market performance, opportunities exist among the other 497 companies in the index.

In an interview with The Conference Board CEO Steve Odland, the discussion centered on consumer confidence and spending. Odland stated that the consumer confidence index has been in a long-term decline, driven by concerns over inflation in oil and food. Despite this, spending remains intact because consumers must drive to work and school. Odland noted that consumer debt has reached $1.3 trillion, with credit cards being maxed out. He explained that CEO pay is rising primarily due to equity compensation, which constitutes 90% of executive packages and is tied to market performance. Odland also addressed the increase in personal security costs for CEOs, stating that threats to executives and their families have made security a business requirement rather than a perk.

Nike's stock price decline has pushed its dividend yield to approximately 4.83%, a level Sozzi noted is higher than the US Treasury yield. He contrasted Nike's performance with peers Ralph Lauren and another retailer whose CEO has shown stronger results. Sozzi also discussed US debt warnings from Goldman Sachs and Ray Dalio. Goldman Sachs estimates the debt-to-GDP ratio could reach 132% by 2035 if high interest rates persist, necessitating deficit reduction. Dalio warned that US Treasuries are vulnerable to reduced demand from China and Japan, which could further increase borrowing costs.