A global market overview from analyst Ankur Banerjee paints a complicated picture for investors who thought the artificial intelligence rally still had plenty of room to run — Apple just delivered a sobering reminder that someone has to pay for it all.
iPhone prices are staying put for now, but expect to pay more for iPads and MacBooks. Apple says it can no longer absorb the rapidly climbing cost of memory and storage, costs being driven higher by the explosive demand from AI data centers. The situation was further highlighted by Micron’s strong earnings results this week, with customers committing to $22 billion worth of memory chip supply — a clear signal that markets are tightening and chip makers are gaining pricing power.
If Apple — the most valuable consumer electronics company in the world, with supply chain connections the rest of the industry envies — cannot escape a memory price surge, it raises a serious question about who can.
And it is not just Apple. Reports this week that Microsoft is considering raising Xbox prices added to the sense that tech consumers broadly are facing higher costs ahead.
Asian stock markets fell sharply on Friday, partly due to reports that OpenAI may delay its planned public stock offering until next year. South Korea’s KOSPI index, widely watched as a gauge of AI industry health, dropped 8% on Friday alone and fell 9% for the week — its steepest decline since early March when conflict first broke out involving Iran.
On the energy front, oil prices are easing but remain a concern. More tankers that had been stranded are now moving through the Strait of Hormuz, though a cargo vessel was struck near Oman, keeping the situation unsettled. Brent and WTI crude prices have given back nearly all the gains they saw following the outbreak of Middle East hostilities in late February. However, analysts suggest a recovery in demand and a gradual return to normal shipping could tighten oil markets again next year.
That modest relief in oil prices has not been enough to calm broader economic worries. U.S. inflation climbed above 4% in May for the first time in three years, keeping the possibility of another Federal Reserve interest rate hike very much alive.
The strength of the U.S. dollar continues to grow as a result, while Japan’s yen is struggling near a 40-year low as concerns about government intervention mount. The dollar index is on pace for a 2.6% gain this month, its best monthly performance in a year.
Finally, a deadly early summer heatwave has settled over much of Western Europe, with record-high temperatures for June recorded in Britain and Switzerland. The extreme heat is creating a surge in demand for air conditioning units, benefiting Asian manufacturers. Health officials are warning about the serious risks posed by prolonged exposure to extreme heat.
Key economic event to watch Friday: France releases its unemployment figures for May.
