Technology stocks found some relief Wednesday following news that Nvidia secured a significant multi-year agreement to provide artificial intelligence chips to Meta Platforms, though rising oil prices are creating new market concerns.
The chip manufacturing giant, currently the world’s most valuable company, will supply Meta with millions of both existing and next-generation AI processors. While financial terms weren’t disclosed, Nvidia shares climbed 1.6% on the announcement, building momentum ahead of the company’s earnings report scheduled for next Wednesday.
The partnership highlights the massive capital expenditures planned by major technology companies through 2026, with Meta preparing to nearly double its AI-focused investment spending. The deal also addresses recent investor worries about increasing competition facing Nvidia in the semiconductor market.
However, the agreement underscores how concentrated artificial intelligence development remains among a small group of companies. Nvidia’s most recent financial results revealed that four customers alone accounted for 61% of the company’s revenue growth.
Market sentiment appears to be shifting again, with S&P 500 futures trading lower ahead of Thursday’s opening bell. Adding pressure to equities, crude oil prices surged more than 4% Wednesday, approaching yearly highs amid escalating tensions between the United States and Iran, plus ongoing diplomatic discussions involving Ukraine and Russia.
Parallel negotiations in Geneva addressed both international conflicts this week. The Ukraine-Russia talks concluded Wednesday without significant progress, while U.S.-Iran discussions continue despite both nations increasing military activities and exercises.
Oil prices also gained support from data showing U.S. industrial production and manufacturing posted their largest monthly increase in nearly a year during January.
Rising energy costs contributed to higher U.S. Treasury yields after Federal Reserve meeting minutes revealed strong opposition to additional interest rate cuts. The central bank documents also showed divided opinions on how the AI revolution might affect productivity and inflation rates.
The dollar retreated but remained above recent lows.
Thursday’s economic calendar includes Walmart’s quarterly earnings, weekly unemployment claims, and the Philadelphia Federal Reserve’s latest business activity surveys.
In commodity markets, prices for two critical rare earth elements used in electric vehicle magnets and defense equipment have doubled over seven months due to supply constraints and growing demand. The price surge for neodymium and praseodymium has risen above the $110 per kilogram threshold established by the U.S. government, meaning taxpayers won’t need to subsidize domestic miner MP Materials’ production.
These four-year price highs also benefit other rare earth companies that Western governments hope will reduce dependence on China, the world’s dominant producer.
Key economic data releases Thursday include December trade balance figures, weekly jobless claims, and Philadelphia Fed business surveys, all at 8:30 AM. Several Federal Reserve officials are scheduled to speak, including Michelle Bowman, Atlanta Fed President Raphael Bostic, and Chicago Fed President Austan Goolsbee.
