Copper’s $478/ton price exposes AI’s physical limits. Nvidia’s record earnings hid a growing problem: copper inventories (200,000 tons on the LME) and rising prices signal AI data-center demand is outstripping supply, yet markets still assume 70% earnings growth.
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Salesforce’s 22.6% jump lifts the software sector. CRM’s strong quarter (+22.6% Thursday) pushed Adobe (+5.7%), ServiceNow (+10%), and cloud stocks higher, showing how one standout report can lift an entire industry.
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Jackson Hole kicks off, Fed’s patience in focus. Chair Warsh speaks at 10 a.m. ET. Markets expect a December rate cut, but a hawkish shift could push those bets into 2027.
The big story
Copper shortages could slow AI’s expansion
Nvidia’s stock jumped 8.7% after reporting $96.2 billion in revenue, up 106% from last year, and guiding to $108 billion next quarter. But the bigger issue isn’t the earnings beat; it’s the physical constraint now threatening AI growth: copper.
Each new AI data center needs about 200 tons of copper per megawatt. With global AI expansion adding 5 gigawatts of capacity in 2026, demand will eat up 1 million tons of copper, 5% of the world’s annual production. Meanwhile, LME inventories have dropped to 200,000 tons (down 30% from 2025), and spot prices hit $478 per ton.
The pressure is building. Nvidia’s 70% projected revenue growth assumes unlimited data-center expansion, but copper supply only grows 2.5% a year. TSMC’s Arizona chip plant and OpenAI’s custom Jalapeño processor face copper-related delays. If prices stay above $450 per ton, data-center construction could slow, capping semiconductor revenue growth at 30-40%, not the 70% markets expect.
Why this matters for markets:
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Tech stocks (NVDA, MSFT, GOOGL, META) embed growth assumptions copper may not support. A slowdown here could influence the Fed’s rate decisions.
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Copper producers (FCX, SCCO) become a direct play on AI’s supply challenges. Inventories below 180,000 tons could signal a deeper shortage.
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Treasuries and the dollar may rise if AI spending slows. The 10-year yield (4.66%) has room to fall if growth cools.
Markets cheered Nvidia’s results. Copper markets are flashing a warning.
What's moving today
Tech led Thursday’s rally, with the Nasdaq up 1.57% and the S&P 500 rising 0.72%, driven by Nvidia’s earnings and Salesforce’s 22.6% surge. The XLK tech ETF climbed 3.2%, while Adobe (+5.7%) and ServiceNow (+10%) followed CRM higher.
Commodities told a different story. Copper rose 2.3% to $6.74 per pound (up 6.6% this month), reflecting AI demand outpacing supply. Jackson Hole begins today, and Fed Chair Warsh’s 10 a.m. ET speech could shape whether this rally lasts. Markets bet on a December rate cut, but hawkish comments may delay it. The dollar (DXY: 99.21) and VIX (14.49) both ticked up, traders hedging their bets.
Safe havens gained: silver jumped 2.7% to $71.32 per ounce, gold rose 1.1% to $4,658 per ounce. Oil pulled back, with Brent crude down 1.7% to $88.20 per barrel despite Russia’s overnight strikes on nine Ukrainian cities. Crypto slipped: Bitcoin fell 1.2% to $79,293, Ethereum dropped 0.8% to $2,490.
The key question:. Can tech’s momentum hold if copper constraints limit AI growth? And will Warsh’s tone at Jackson Hole accelerate, or disrupt, this rally?
The big picture
Markets split Thursday. Stocks rose: The Nasdaq (+1.57%) led on Nvidia and Salesforce, while the S&P 500 (+0.72%) and Dow (+0.2%) followed. Yet bonds signaled caution: The 10-year yield fell to 4.66%, the 2-year dropped to 4.19%, flattening the curve further. With Fed Chair Warsh speaking at 10 a.m. ET, traders are bracing for potential shifts.
Commodities sent mixed signals. Copper (+2.3% to $6.74 per pound) and silver (+2.7% to $71.32 per ounce) rallied on AI demand and safe-haven flows. Gold (+1.1% to $4,658 per ounce) climbed as investors hedged Fed uncertainty. Oil retreated: Brent crude (-1.7% to $88.20) and WTI (-0.4% to $83.19) declined despite geopolitical tensions.
Key risks ahead:
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Jackson Hole (Warsh’s speech at 10 a.m. ET).
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Copper inventories: Below 180,000 tons, AI’s physical limits become harder to ignore.
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Oil’s geopolitical premium: Further escalation in Ukraine or the Middle East could reverse Thursday’s decline.
Around the world
Geopolitics and economics are colliding, with market consequences.
Russia’s overnight strikes. on nine Ukrainian cities disrupted its own oil refining, forcing imports from Turkey and India. Since March, Ukrainian drones have taken out 20-40% of Russia’s refining capacity, creating fuel shortages in six regions.
China’s slowdown. is reshaping commodity flows. OPEC+’s oil-market influence fades as China’s demand drops by 400 million barrels year-over-year. Wheat prices hit three-year highs on Black Sea export concerns. The U.S.-Canada trade dispute escalated after the U.S. moved to rename Lake Ontario “Lake America”, part of a broader fight over fertilizer exports.
Energy transition updates:
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Uranium nears $89 per pound as nuclear power becomes critical for AI data centers.
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The U.S. Army allocates $2.2 billion to micro-reactors.
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The DOE funds 13 advanced nuclear projects.
For investments:
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Oil volatility may persist, but refined products face bigger risks if Russian outages continue.
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Canadian stocks (banks, fertilizers) are caught in the U.S. trade crossfire.
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Uranium ETFs (URA, NLR) benefit from the nuclear-energy push.
Companies in focus
Salesforce (+22.6%) lifts the software sector.. CRM shares soared after reporting $11.3 billion in revenue (vs. $10.9 billion estimate) and $3.08 EPS (vs. $2.36). Next-quarter guidance beat expectations by $1 billion, signaling strong enterprise AI spending. Adobe (+5.7%), ServiceNow (+10%), and Oracle (+2.1%) rose in tandem.
PayPal’s takeover talks fail, shares drop 15%.. Advent International and Stripe walked away from acquisition plans. PYPL now trades at 2020 levels, pressured by Apple Pay and blockchain competition.
L3Harris reorganizes as missile demand grows.. Defense contractor L3Harris (LHX) reshuffles leadership, but the focus stays on its missile-systems business. With global tensions rising, demand for advanced missiles is climbing. LHX has fallen 20% over the past year, but geopolitical risks could trigger a rebound.
eBay bans airbag sales after counterfeit deaths.. The platform will block all airbag listings following at least 10 fatalities tied to fake components, a rare self-regulatory move.
Generali eyes $10 billion bid for Banca Generali.. Italian insurer Assicurazioni Generali may offer $10 billion for Banca Generali, a private bank controlled by Monte dei Paschi. A deal could speed up European banking consolidation.
Timber industry collapse hits rural South.. The pulp and paper sector, once a Southern economic staple, is collapsing. Mill closures devastate rural towns, even as AI-driven lumber demand surges elsewhere.
From Washington
Jackson Hole takes the spotlight.. Fed Chair Kevin Warsh speaks at 10 a.m. ET, with markets pricing in a December rate cut. His tone could shift that timeline.
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Hawks gain ground. Kansas City Fed’s Jeffrey Schmid called the 3.50-3.75% benchmark rate insufficiently restrictive, calling inflation “stubborn.” Cleveland Fed’s Beth Hammack urged action: “Now is the time.”
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July PCE holds at 3.7%. The Fed’s preferred inflation gauge remains well above the 2% target.
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FOMC dissent rises. At the July meeting, three of twelve officials pushed for a 0.25% hike instead of holding steady.
Neutral/Dovish: Stays data-dependent → December cut remains likely.
Trade tensions flare.. The U.S.-Canada dispute worsened after the U.S. ordered Lake Ontario renamed “Lake America”, part of a broader fight over fertilizer exports. Canadian banks reported record earnings, but the loonie weakened to 1.3853.
Under the hood
AI’s growth hits a copper wall
Nvidia’s $59.69 billion Q2 net income and 70% growth forecast depend on a capital spending cycle assuming endless data-center expansion. But copper, essential for AI chips and power grids, now trades at $478 per ton, with LME inventories at 200,000 tons (down 30% since 2025).
Each new data center needs about 200 tons of copper per megawatt. Global AI demand is adding 5 gigawatts of capacity in 2026, requiring 1 million tons of copper, 5% of annual supply. With mine output growing just 2.5% a year, the math no longer works.
The bottleneck is already visible:
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TSMC’s Arizona chip plant delayed by copper shortages.
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**OpenAI’s Jalapeño processor** faces production slowdowns.
Markets applauded Nvidia’s earnings, but copper reveals the capex-to-earnings pipeline is breaking. If prices stay above $450 per ton, data-center growth slows, capping semiconductor revenue at 30-40%, half of current expectations.
The takeaway:. AI’s future is now a copper story. And copper is signaling the boom may stall.
Prices >$500 per ton → AI capital spending slows meaningfully.
Worth learning today: Earnings season decoded
Yesterday’s Canadian GDP prediction remains pending, data has yet to release. We’ll revisit in Monday’s edition.
How to read earnings reports
When Salesforce surged 22.6% on its quarterly results, four numbers drove the move:
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Revenue:$11.3 billion vs. $10.9 billion estimated.
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EPS:$3.08 beat the $2.36 forecast.
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Margins: Operating margin expanded to 28% (from 25%).
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Guidance: Full-year revenue raised by $1 billion.
The earnings call. reveals the deeper story. When Nvidia’s Jensen Huang downplayed copper shortages, investors relaxed, despite data showing real risk.
Why it matters:
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Index funds? Earnings drive sector rotation. Tech leads now, but weak guidance could shift momentum to defensives.
401(k) tech exposure? Directly tied to these reports.
Linking back:
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How companies make profits? Earnings show if the engine is running smoothly.
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Yield-price seesaw? Weak earnings → stock decline → bond yields often rise.
Tomorrow’s focus:. If Warsh’s Jackson Hole speech leans hawkish, how does that reshape rate-cut odds, the 2-year yield, and the dollar? We’ll break it down Monday.
Concept 43 of 83 in the Fair Value course.
What to watch this week
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Fri, Aug 28:
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Fed Chair Warsh speaks — (10:00 ET), A hawkish tone could delay December cut expectations.
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Preliminary Benchmark Payrolls Revision — (10:00 ET), Last adjustment: -911,000; another large revision could unsettle the Fed.
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Jackson Hole Symposium — (all day), Central banker comments may move markets.
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Mon, Aug 31: — China PMIs (overnight), Weak data pressures commodities.
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Tue, Sep 1: — U.S. ISM Manufacturing (10:00 ET), Below 50 fuels recession concerns.
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Wed, Sep 2: — U.S. Jobs Report (ADP) (8:15 ET), Soft data revives December cut hopes.
