Markets Digest Chip Rout, Earnings Beats, and the OpenAI Megadeal

US: Chips Drag, Earnings Flow

The S&P 500 and Nasdaq closed lower Monday as a semiconductor rebound attempt ran out of steam. Chip stocks have been at the centre of the volatility. Bears have been active — options data shows heavy negative flow into Sandisk and Micron, with MU up 207% year-to-date and now carrying a large target on its back.

Earnings kept rolling in after the bell. Upwork beat on both lines, posting Q2 adjusted EPS of $0.41 against a $0.34 estimate. Plug Power offered full-year guidance ahead of consensus. AST SpaceMobile missed on headline numbers but saw its backlog grow to $1.3 billion.

OpenAI bought back $7 billion of employee shares in a tender offer, per Bloomberg. The move benefits Microsoft indirectly as a major OpenAI backer and signals confidence in private AI valuations.

Europe: Geopolitics and M&A

European stocks slid as geopolitical tension around Iran weighed on sentiment. Defense names bucked the trend after Ukraine ratified a $105 billion EU loan deal. On the corporate side, Dulux maker AkzoNobel surged after rejecting a $14.5 billion rival bid. That's a clear signal management sees fair value well above the offer price.

Cross-Market Themes

Cisco CSCO reports Wednesday. Markets are watching for enterprise AI spending signals. Analysts remain bullish on Datadog, lifting the consensus target to $283.74. Short sellers are still pressing beaten-down names — Wolfspeed sits at 81% SI % of FF and Hertz at 67.5%, with both showing near-zero borrow availability. Financials are drawing call buyers, with U.S. Bancorp and BNY Mellon hitting 100% positive options flow readings this week.