♦ Waterloo Capital ♦ Last Weekon Wall Street | S&P 500 7,476 ▲ +0.42% WK | DOW JONES 50,562 ▲ +1.32% WK | NASDAQ 26,344 ▲ +0.13% WK | 10-YR YIELD 4.51% ▲ +6 BPS WK |
| LEAD Markets & Macro · By the Waterloo Research Desk A new Fed chair sworn in at the White House, a sharp reset in crude on the prospect of an Iran deal, and a fresh record-high close for the Dow. Eight straight winning weeks for the S&P 500, and a tape that is no longer being held up by a single thesis. |
Eight straight up weeks for the S&P 500, the longest streak since 2023. The Dow added almost 300 points Friday to close at 50,562, a fresh record. The Nasdaq finished slightly green on the week, the Russell 2000 led on Friday with a near-1% gain, and the VIX closed below 17. Quiet on the surface, but the move was anything but mechanical: three distinct catalysts did the work this week, and none of them was the AI-capex story that has anchored most of the year. The week started with Iran. Trump said Monday that talks were in their final stages and called off imminent strikes, and by Friday the State Department was signaling "good signs" toward an agreement. WTI fell more than 8% on the week to around $96.60, Brent off more than 5% to $103.54, and the energy-driven inflation pressure that has dogged the tape since February eased on every passing hour of negotiation progress. Then came Friday's Fed transition: Kevin Warsh was sworn in at the White House, the first chair to be sworn in at 1600 Pennsylvania Avenue since Greenspan in 1987. He inherits an economy with 3.8% headline inflation, a 10-year yield around 4.51%, and a president who has been unusually public about what he expects on rates; the first FOMC under his chair lands in June. Across the week, retail earnings from Target, Lowe's, and TJX beat their numbers but flagged a middle-class consumer pinched by gas-pump prices, and Washington announced an "Intel-style" equity-stake program for nine quantum computing firms (more on that below). For diversified portfolios, the broader read is that the rally is now sitting on multiple, uncorrelated stories at once: an oil reset that depends on Tehran, a Fed transition that depends on Warsh, an AI capex cycle that has its own momentum, and an industrial-policy story that is starting to anchor specific corners of the chip stack. When a market is supported by one thesis, a single bad print can shake it. The current setup is harder to dislodge, but it is also harder to read; the portfolios doing the work in stretches like this continue to be the ones with broad equity exposure plus duration at yields meaningfully higher than they were a year ago, rather than tactical positions in any one of these stories. BOTTOM LINE Eight winning weeks, a new Fed chair, a crude reset on Iran-deal progress, and Washington's industrial-policy machinery moving from chips to quantum. For balanced portfolios, the rally is now sitting on multiple legs at once, which is sturdier than the one it was sitting on last month. |
| By the Numbers ▸ | S&P 500's eighth straight winning week, longest streak since 2023; Dow closed Friday at a fresh record 50,562 | ▸ | Retail bellwethers: Target, Lowe's, and TJX all beat Wednesday morning, but Target's guide flagged middle-class shoppers feeling the gas-price squeeze | ▸ | Crude reset: WTI down more than 8% on the week to $96.60; Brent down more than 5% to $103.54 on Iran-deal progress | ▸ | Warsh sworn in: first Fed chair sworn in at the White House since Greenspan in 1987; first FOMC under his chair in June | ▸ | Quantum equity stakes: Commerce Department to award $2B across nine companies with the U.S. taking ownership interest in each | ▸ | SpaceX S-1: public prospectus filed Wednesday; Nasdaq debut targeted June 12 at a valuation of up to $2 trillion |
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| · Two Stories That Moved the Tape · The Week's Defining Headlines |
| STORY 01 Industrial Policy · Quantum The key takeaway, the Commerce Department is awarding $2 billion across nine quantum computing companies and, just like with Intel last year, taking an equity stake in each. IBM gets the lion's share at $1 billion. The pure-play names ripped on the news: Rigetti up 19%, D-Wave up 14%, Quantum Computing up 19%, Arqit up 25%, Infleqtion and IonQ each up roughly 12%. |
The Wall Street Journal reported Thursday that the Commerce Department is finalizing $2 billion in grants to nine quantum computing firms in exchange for equity stakes in each, funded from the 2022 CHIPS and Science Act. IBM is the headline recipient at $1 billion and confirmed that the money will fund a new wholly-owned subsidiary called Anderon, set up to build America's first purpose-built quantum foundry. IBM will match the government grant with $1 billion of its own capital. GlobalFoundries is in line for $375 million. D-Wave Quantum, Rigetti Computing, and Infleqtion each get roughly $100 million, with $38 million going to Australian startup Diraq. The remaining slots go to Atom Computing, PsiQuantum, and Quantinuum. Each deal still needs to be formally completed. The "Intel-style" structure is what makes this consequential. The U.S. government took a roughly 10% stake in Intel last August in exchange for its CHIPS Act funds and has been the company's largest shareholder ever since. The mechanism the Commerce Department is now extending to the quantum sector takes the federal government from being a customer or grantor to being a direct equity holder in the most strategically sensitive segments of the chip stack. The tape responded the way a tape responds when capital flows are about to change: pure-play quantum names that have traded on speculation for years suddenly had a federal balance sheet anchoring their cap table. The trade is not just about who got the grants; it is also about what valuation framework the market starts using for the companies that did, and about whether the broader semiconductor sector reads this as a precedent the next time a strategically important capability needs subsidizing. DATA THAT DROVE THE STORY ■ | Total program: $2 billion across nine firms, funded from the 2022 CHIPS and Science Act; U.S. takes equity in each | ■ | IBM: $1 billion grant matched by $1 billion IBM investment to fund a new subsidiary, Anderon, building America's first purpose-built quantum foundry | ■ | Other recipients: GlobalFoundries ($375M), D-Wave, Rigetti, Infleqtion (~$100M each), Diraq ($38M), Atom Computing, PsiQuantum, Quantinuum | ■ | Tape reaction: pure-play quantum names rallied sharply Thursday; the sector outpaced the broader semiconductor complex on the print | ■ | The "Intel-style" structure: mirrors the August 2025 deal that took the U.S. to a roughly 10% Intel stake; same mechanism, more strategic industries | ■ | Status: deals still need to be formally completed; Commerce Department has not yet publicly commented |
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Source: CNBC: Quantum stocks soar as U.S. plans $2B funding and equity stakes → | | STORY 02 Earnings · Semiconductors The key takeaway, Wednesday night's Nvidia print was clean across every line. The number that mattered was the next-quarter guide of $91 billion, and the line on the call that mattered was Jensen Huang's: "demand has gone parabolic." Then the board approved an $80 billion buyback and a 25-fold dividend hike, which is a different kind of statement entirely. |
First-quarter fiscal 2027 revenue came in at $81.6 billion, up 85% year-over-year, against a consensus of roughly $79 billion. Data Center alone did $75.2 billion, up 92%. Non-GAAP gross margin was 75.0%. Non-GAAP EPS was $1.87, up 140% from a year earlier. Inside Data Center, networking revenue, the line that captures InfiniBand, Spectrum-X Ethernet, and NVLink, tripled to $14.8 billion, up 199% YoY, an indicator that the rack-level architecture Nvidia introduced with Blackwell 300 is doing real work on adoption. No Data Center revenue from China was assumed or recognized; the previous-year quarter had $4.6 billion of China Hopper shipments, so the headline beat is, if anything, understated. Free cash flow for the quarter was $48.6 billion. The Q2 guide was the line that moved the room. Management put it at $91 billion plus or minus 2%, well above the $86 billion consensus, with the same assumption that there is no Data Center revenue from China. Hyperscaler revenue held at roughly 50% of Data Center, with the other 50% spread across AI clouds, sovereign customers, and enterprise. The capital-return announcement was its own statement: the board approved an additional $80 billion in share repurchase authorization and raised the quarterly dividend from one cent to 25 cents, a 25-fold increase. CFO Colette Kress confirmed on the call that Vera-Rubin, the architecture replacing Blackwell, will ship in fiscal Q3 and ramp in Q4, with "Q1 of next year" expected to be "very big as well." For a company that has guided conservatively every quarter for three years and still printed records, the message was unambiguous. DATA THAT DROVE THE STORY ■ | Q1 revenue: $81.6B (+85% YoY, +20% sequential), beating consensus of ~$79B | ■ | Data Center: $75.2B (+92% YoY); networking $14.8B (+199% YoY); no China Hopper shipments vs. $4.6B prior-year quarter | ■ | Margins and EPS: non-GAAP gross margin 75.0%; non-GAAP EPS $1.87 (+140% YoY); free cash flow $48.6B | ■ | Q2 guide: $91B revenue +/- 2% (consensus ~$86B); 75% non-GAAP gross margin; no China Data Center revenue assumed | ■ | Capital return: additional $80B buyback authorization; quarterly dividend raised from $0.01 to $0.25 (25x increase) | ■ | Next architecture: Vera-Rubin ships fiscal Q3, ramps Q4; CFO Kress said "Q1 of next year is certainly going to be very big as well" |
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Source: Kiplinger: Nvidia earnings updates and commentary, May 2026 → | | · Other Things Worth Knowing · Around the Water CoolerSix stories from this week worth your morning coffee. | |
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