Big Tech received a modest lift on Wednesday after Nvidia disclosed a multi-year arrangement to sell millions of current and future artificial intelligence chips to Meta Platforms. The announcement, which did not include a dollar valuation, nudged Nvidia's share price up by 1.6% and is likely to add focus ahead of the chip maker's upcoming quarterly results next Wednesday.
While the deal underscores the scale of capital expenditures already allocated by hyperscalers for 2026 - including Meta's plan to almost double its AI-related investment spending - it also highlights how concentrated the AI buildout remains within a small group of industry leaders. Nvidia's most recent financial results indicated that 61% of its revenue increase was attributable to just four customers, underscoring the narrowness of demand and attendant concentration risk.
Alongside the tech-specific dynamics, a broader set of market forces restrained gains. Crude oil prices climbed sharply, rising more than 4% on Wednesday and edging close to the year's highs. The jump in oil followed a mix of heightened geopolitical tensions between the U.S. and Iran and the resumption of parallel diplomatic engagements in Geneva involving mediated talks between Ukraine and Russia. The Ukraine-Russia discussions met on Wednesday but concluded without a concrete breakthrough. Despite some initial signs of diplomatic engagement on the U.S.-Iran front, both sides have increased military activity and maneuvers, contributing to the commodity rally.
The surge in oil was reinforced by stronger-than-expected U.S. industrial data. Industrial production and manufacturing registered their largest monthly gains in nearly a year in January, a development that can increase fuel demand expectations and consequently lift crude prices.
Rising energy prices are having knock-on effects across fixed income and currency markets. U.S. Treasury yields inched higher after Federal Reserve meeting minutes revealed considerable resistance among officials to further policy easing, as well as divergent views on how the AI expansion will influence productivity and inflation. The dollar eased slightly but remained above recent lows as markets digested the mix of stronger activity data and central bank hesitancy.
Credit and private capital strains were also visible. Blue Owl Capital, whose shares have fallen by half over the past year, said it would sell $1.4 billion of assets from three of its credit funds to facilitate capital returns to investors and reduce leverage. The presence of such balance-sheet adjustments contributes to a sense of caution across equity markets, and S&P 500 futures were trading lower ahead of Thursday's opening bell.
Market positioning and upcoming catalysts
The Nvidia-Meta supply pact may soothe some recent investor concerns about intensifying competition in the chip space, but it simultaneously reinforces how concentrated the AI investment cycle remains. That concentration, together with the broader backdrop of rising oil and elevated debt-related repositioning in private markets, has tilted sentiment away from the prior week’s tech-led momentum.
Market attention will shift to a number of scheduled data points and corporate updates. Walmart is due to report results, while the U.S. will publish December trade balances, weekly jobless claims, and the Philadelphia Federal Reserve’s February business surveys. Central bank speakers from the U.S. regional Federal Reserve banks are also on the calendar, and the Treasury will conduct a 30-year TIPS auction.
Chart of the day
Prices for two vital rare earth elements used in high-strength magnets for electric vehicles and defense applications have surged, rising to their highest levels in almost four years. A near doubling of prices over the past seven months has pushed spot levels above the U.S. price floor of $110 per kilogram established last year for miner MP Materials. At prices above that threshold the U.S. government would not need to subsidize MP Materials’ output of neodymium and praseodymium, and the price uptick also benefits other rare earth producers that Western governments view as alternatives to the dominant supplier in China.
Events to watch
- U.S. December trade balance (8:30 AM EST); weekly jobless claims (8:30 AM EST); Philadelphia Fed February business surveys (8:30 AM EST)
- Japan January CPI (6:30 PM EST); Eurozone February flash consumer confidence (10:00 AM EST)
- Speeches by Fed’s Michelle Bowman, Atlanta Fed’s Raphael Bostic, and Chicago Fed’s Austan Goolsbee
- U.S. 30-year TIPS auction
- U.S. corporate earnings: Walmart
Implications across sectors
Technology - The Nvidia-Meta agreement supports chip demand visibility for hyperscalers and could reduce immediate investor anxiety over competitive losses, but concentration of customer revenue remains an operational and valuation risk for chip suppliers.
Energy - Renewed geopolitical frictions and stronger U.S. industrial output have boosted crude prices, with upward pressure on inflation and potential effects on consumer-facing sectors.
Materials - The rally in key rare earths improves the economics for domestic producers and reduces near-term subsidy needs for at least one large U.S. miner, altering the supply-side outlook for critical magnet components.
Note: The article presents market developments, upcoming economic releases and corporate news as reported. No new data or projections beyond the information summarized here are provided.