To The Moon

17/08/2026

U.S. equities pulled back slightly from record highs on Friday, as weaker-than-expected retail sales and rising shipping risks in the Strait of Hormuz and the Red Sea weighed on risk sentiment. Meanwhile, the AI theme remains intact, but the market is shifting its focus from “Is there enough demand?” to “How will massive AI infrastructure be financed, powered and delivered?”

S&P 500 fell 0.17% to 7,785.76

Dow Jones fell 0.20% to 53,732.41

Nasdaq fell 0.28% to 26,729.16

U.S. 2-Year Treasury yield fell ~5 bps to ~4.15%

U.S. 10-Year Treasury yield fell ~5 bps to ~4.63%

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News

1) Strait of Hormuz tensions escalate: U.S. and Iran clash over “control” as shipping nears a standstill

* Trump said the U.S. could declare the Strait of Hormuz “U.S. territory” after defeating Iran, escalating the dispute from shipping security into a sovereignty and military confrontation.

* Iran strongly rejected the statement, insisting that decisions over the opening and closing of the Strait cannot be made unilaterally by the U.S.

* Iran also said it has not decided whether to resume talks with the U.S. Qatar and Pakistan remain communication channels, but no formal negotiations are currently taking place.

* Talks between Iran and Oman over new shipping routes are continuing, although Tehran stressed that defining shipping lanes is different from fully reopening the Strait.

* Shipping activity remains extremely weak: Kpler data showed only around five commodity vessels crossed the Strait on Saturday and none on Sunday, compared with more than 130 vessels per day before the conflict.

* The UAE previously reported attacks on several ADNOC tankers in the Strait, adding to insurance, security and rerouting costs.

* The Strait historically handles around one-fifth of global oil and LNG shipments, meaning even partial disruption can significantly tighten global energy logistics.

Market Impact: Near-stalled shipping will keep adding geopolitical risk premium to oil prices and raise the risk of renewed inflation, pressuring long-duration growth and consumer stocks.

Positive Note: Iran and Oman continue to work on concrete shipping arrangements, meaning diplomatic channels remain open; a credible transit agreement could quickly reduce the oil risk premium.

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2) NVIDIA CPO enters mass production + LG humanoid robots: AI moves from “Compute” toward “Network + Physical AI”

NVIDIA’s next-generation AI data-centre networking is accelerating its adoption of CPO — Co-Packaged Optics, placing optical components directly next to the switch ASIC rather than relying entirely on traditional pluggable optical modules.

Spectrum-X CPO switches have entered mass production, with further production expansion expected in 2H26.

The significance of CPO is that as GPU clusters become larger, conventional electrical connections and pluggable optics increasingly face challenges in power consumption, transmission distance, signal loss and reliability.

By moving the optical engine closer to the ASIC, electrical signals travel only a very short distance before being converted into optical signals, improving network energy efficiency and reliability.

This means AI infrastructure spending is broadening beyond GPUs into switching, silicon photonics, lasers, optical connectivity, advanced packaging and high-speed networking.

Separately, LG and NVIDIA are working toward humanoid robots powered by NVIDIA technology in 2027, further extending AI from data centres into the physical world.

Market Impact: AI capex is broadening across the entire infrastructure value chain, benefiting networking, photonics and Physical AI alongside GPUs.

Positive Note: CPO mass production and humanoid-robot deployment suggest AI investment is increasingly moving from model training into real-world infrastructure and applications.

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3) SK Hynix: Memory prices are “rising too fast,” but the real issue remains insufficient supply

* SK Group Chairman Chey Tae-won said memory prices are currently at an “abnormally high” level and that excessively high prices are not healthy for the industry.

* The problem is not sudden demand overheating. AI-driven demand for HBM and server memory is growing faster than wafer and advanced-memory capacity can expand.

* SK Hynix has warned that 2027 could potentially see the worst memory shortage in history, with demand exceeding supply beyond 2030.

* High memory prices support margins for SK Hynix and Micron, but they also increase costs for PC, smartphone and other hardware manufacturers.

* SK therefore wants to increase supply and stabilise pricing rather than depend indefinitely on higher prices to drive earnings.

* SK is evaluating future fab locations across the U.S., Japan and Southeast Asia and has indicated that it is open to building a front-end wafer fab in the U.S.

* U.S. customers increasingly want locally produced memory, meaning AI supply-chain localisation is extending from advanced packaging into front-end wafer manufacturing.

Market Impact: Investors may worry that excessively high memory prices could eventually weaken PC and smartphone demand, while future capacity expansion could bring the post-2028 supply cycle into focus.

Positive Note: SK is expanding because supply remains insufficient, not because demand is weakening. HBM and AI-server memory demand remain structurally strong, with 2027 potentially even tighter.

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4) AI financing becomes the next risk point: Broadcom falls nearly 6%, Oracle hit by data-centre delays

* Broadcom fell around 5.9% on Friday and nearly 7% intraday as investors began scrutinising its AI-infrastructure financing model rather than just AI-chip demand.

* Bank of America estimates Broadcom-linked AI-chip financing platforms could accumulate approximately US$370 billion in senior debt by mid-2029; at 20GW of compute capacity, around US$150 billion of new financing could be required in 2027 alone.

* Apollo and Blackstone are helping finance approximately US$35 billion of Anthropic AI-compute expansion using Broadcom custom AI chips and networking.

* Such structures allow AI companies without hyperscaler-sized balance sheets to continue acquiring compute, but increasingly shift AI capex toward debt, private credit and securitisation.

* The concern is no longer whether AI demand exists, but who absorbs equipment residual-value and repayment risk if chip depreciation is faster than expected or customer cash flow disappoints.

* Oracle also fell as much as around 5% after the Green Chile natural-gas pipeline supporting its New Mexico Project Jupiter AI data centre was delayed from August 15 to February 1, 2027.

* Project Jupiter is part of OpenAI’s Stargate initiative and could reach around 2.5GW, highlighting how the biggest AI-data-centre bottlenecks are shifting from GPU availability toward financing, power, gas, land and permitting.

Market Impact: AI valuations are entering a second phase in which investors will scrutinise capital sources, leverage, project returns and energy-infrastructure risks more aggressively.

Positive Note: These bottlenecks largely exist because AI-compute demand is growing faster than capital and infrastructure can be supplied; CoreWeave’s order backlog exceeding US$100 billion suggests underlying demand remains strong.

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Daily

Today’s key events

* U.S. August Empire State Manufacturing Index: forecast around 12 versus 15.6 previously.

* U.S. August NAHB Housing Market Index: forecast around 33 versus 34 previously.

* U.S. TIC Long-Term Capital Flows data will provide an indication of overseas investment flows into U.S. equities and bonds.

* No major U.S. technology earnings today. This week’s consumer earnings focus includes Home Depot on Tuesday, Target and Lowe’s on Wednesday, and Walmart on Thursday.

* The major macro event this week will be Wednesday’s July FOMC meeting minutes, with investors watching closely for the Fed’s views on inflation, the rate path and growth risks.