Nvidia Puts $3.5 Billion Into The AI Chip Race

Brian CurcioPublished September 1, 2026

Nvidia agreed to put $3.5 billion into a Taiwanese chipmaker on Monday, a reminder that the artificial-intelligence buildout is still the engine under this market. Running underneath it was a quieter and less comfortable story: a weekend escalation between the United States and Iran pushed oil above $92 a barrel and lifted government bond yields around the world, with the U.S. 10-year Treasury note reaching its highest level since January 2025. Stocks slipped as investors weighed the two against each other.

Fast Facts

Twenty-one financial firms, including several of the largest U.S. banks, said they plan to form a joint company to launch a stablecoin, a digital coin pegged to the dollar, to fend off competition from crypto-native rivals (Read More)
Federal Reserve Governor Michael Barr said he would support raising interest rates if inflation does not ease, pointing to concern about "broader price pressures taking hold" (Read More)
SB Energy, an AI data-center developer backed by SoftBank, Nvidia and OpenAI, filed to go public even though it reported a $3.21 billion loss for the first half of the year (Read More)
The Trump administration reached drug-pricing deals with nine midsized drugmakers, tying some U.S. prices more closely to the lower prices those companies charge abroad (Read More)
Nuclear-plant maker Westinghouse Electric is exploring a stock-market listing to capitalize on renewed demand for nuclear power, with the U.S. government as an interested ally (Read More)
A federal judge ruled that the FDIC, not the investors who bought up Silicon Valley Bank parent claims, is entitled to a disputed $1.71 billion deposit (Read More)

Global News

Oil topped $92 a barrel after reports that two tankers carrying Saudi crude were struck in the Strait of Hormuz, the Persian Gulf shipping lane that carries much of the world's oil (Read More)
Indian Prime Minister Narendra Modi urged Russia's Vladimir Putin to end the war in Ukraine as the U.S. threatens new tariffs tied to Russian oil (Read More)
The London Stock Exchange said it plans to launch tokenized trading, recording shares as digital tokens instead of paper certificates, as it competes for listings against crypto-native platforms (Read More)
India rejected a Hague arbitration ruling that ordered it to keep honoring a decades-old water-sharing treaty with Pakistan (Read More)

Nvidia Pays $3.5 Billion To Stay At The Center Of The AI Buildout

Nvidia agreed to invest $3.5 billion in MediaTek, a Taiwanese chip designer, through convertible bonds, which are loans that can later convert into company shares. Nvidia is the company whose processors train most of the world's artificial-intelligence systems, and its stock has become one of the most important single names in the U.S. market. The deal brings MediaTek onto Nvidia's platform for wiring chips together and lets the two combine Nvidia's designs with MediaTek's custom chips, personal computers and cars. MediaTek shares jumped about 10% on the news and are now up close to 200% since the start of the year.

Investors treated a $3.5 billion outlay as a much larger signal than its size. The clearest tell was in MediaTek's own stock, but the read across the chip sector mattered more, because the deal says something about how the AI buildout will be paid for and who stays central to it. When a single transaction moves a partner's shares 10% in a day, the market is pricing not just this deal but what it implies about the next several.

Here is why Nvidia would put money into a company that also makes chips. Its biggest customers, the giant cloud providers, are increasingly designing their own chips so they depend on Nvidia less, which is a genuine long-term threat to a company that sells the picks and shovels of the AI boom. By investing in a partner and threading its own technology through that partner's roadmap, Nvidia buys itself a place in the next generation of AI hardware even where it will not be the only supplier. It is spending money now to keep the industry building around it.

The caveat is that the same enthusiasm cuts both ways. The companies in the AI supply chain now make up an outsized share of the U.S. stock market, and therefore of the index funds inside many people's retirement accounts, so when the story wobbles it moves far more than a handful of technology stocks. On the same day this deal landed, a SoftBank-backed developer that does not yet operate a single data center filed to go public carrying a multibillion-dollar loss, a sign of how much money is flowing into AI ahead of the revenue to justify it. None of that says where any stock goes next; it is a reminder of how much of the market now rides on one story, in both directions.

Sources: CNBC · TechCrunch · Quartz

Euro-Zone Inflation Climbs And The ECB Is Now Expected To Move

Inflation across the countries that use the euro rose to 3.3% in August, up from 2.9% in July, according to the region's first estimate. Most of the increase came from energy prices, the same oil-driven pressure now showing up in the United States, though core inflation, which strips out volatile food and energy costs to show the underlying trend, held steadier at 2.4%. For a central bank that spent years trying to nudge inflation up toward its 2% target, a jump back above 3% is the kind of reading that forces a decision rather than allowing a wait.

Traders now think that decision is nearly made. A market that tracks expected central-bank moves is pricing a near-certain quarter-point increase in the European Central Bank's key interest rate, from 2.25% to 2.5%, at its September 10 meeting. When a central bank lifts that rate, the higher cost of borrowing flows outward into the rates charged on business loans, government debt and mortgages across the euro area.

That is where it reaches ordinary budgets. Many European mortgages carry rates that reset as the central bank's rate moves, so a hike is not an abstraction for a household in Madrid or Milan; it can turn up in a monthly payment within months rather than years. And it is happening at the same moment the Federal Reserve is weighing whether to raise rates at home, which is what lifts this above a purely European story: one energy shock is nudging two of the world's most important central banks in the same direction at once.

Sources: CNBC · Investing.com

The Gulf Escalation We Covered Yesterday Just Spread To Bond Markets

The weekend escalation between the United States and Iran, which we covered in yesterday's briefing, took a sharper turn. Reports that two tankers carrying Saudi oil were struck in the Strait of Hormuz, the Persian Gulf shipping lane, pushed oil above $92 a barrel, and government bond prices fell around the world as investors braced for the inflation that costlier oil can bring. As those bond prices fell, the interest rates attached to them, known as yields, climbed to compensate the next buyer.

What is new since yesterday is how far the move spread. The U.S. 10-year Treasury yield, the rate the federal government pays to borrow for ten years and the reference point beneath most 30-year mortgages, reached 4.75% as of the August 31 close, its highest since January 2025, while Japan's equivalent hit a level it had not touched in roughly three decades. No barrels of oil actually went missing; what changed was the perceived risk that supply could be disrupted, and bonds and oil are priced on what people expect next, not only on what is true today.

Sources: CNBC · MarketWatch · Rapunzl, our Aug 31 briefing

What To Watch

The figures below are analysts' average estimates for earnings per share, not results, and the actual numbers can land well above or below them.

Reporting today:

Palo Alto Networks (PANW) is expected to report after the close, with an estimate of $0.51 per share against $0.42 a year ago.
Dell Technologies (DELL) is expected to report after the close, at $4.72 against $2.10 a year ago.
Medtronic (MDT) is expected to report before the open, at $1.38 against $1.26 a year ago.
Credo Technology (CRDO) is expected to report after the close, at $0.93 against $0.34 a year ago.
MongoDB (MDB) is expected to report after the close, at $0.08 against a loss of $0.38 a year ago.
NIO (NIO) is expected to report before the open, with an expected loss of $0.07 per share against a $0.32 loss a year ago.
GitLab (GTLB) is expected to report after the close, with an expected loss of $0.07 against a $0.03 loss a year ago.

Later this week:

Broadcom (AVGO) is expected to report on September 2, one of the more closely watched results of the week for the AI-chip trade.
The Federal Reserve's Beige Book, a survey of business conditions across its regional districts, is expected on September 2, and Governor Christopher Waller is expected to speak on the economic outlook on September 3.
The government's monthly international trade report is expected on September 3, and the Fed's next interest-rate meeting is scheduled for September 15 and 16, with a press conference expected at 2:30 p.m. on the 16th.