AI Earnings Explosion and Tame Inflation Give Markets a Double Boost

Three AI Infrastructure Giants Stun Wall Street

The AI spending story just got a major vote of confidence. On Wednesday, August 12, three AI infrastructure companies — CoreWeave, Super Micro Computer, and Nebius Group — delivered blockbuster earnings that sent shockwaves through the market and renewed investor faith in the durability of the AI boom. AI infrastructure stocks rose on Wednesday after CoreWeave, Super Micro Computer, and Nebius Group all beat quarterly forecasts, lifting server, memory, and optical suppliers together.

CoreWeave shares popped 19% after the AI infrastructure provider reported that its second-quarter revenue doubled, driven by surging demand from hyperscalers for AI compute capacity. The company reported second-quarter revenue of $2.6 billion, up 112% from $1.2 billion in the second quarter of 2025. Looking ahead, CoreWeave is guiding for third-quarter revenue of between $3.4 billion and $3.6 billion. Meanwhile, Amsterdam-headquartered, Nasdaq-listed Nebius ripped 34% higher after announcing a strong commercial quarter, with revenue growing 514% to $575 million, and the total value of contracts won quadrupling. Super Micro, which makes data center hardware, saw its shares surge 19% after it reported more than $60 billion in new orders over the past year in its fourth-quarter earnings.

CoreWeave's order backlog expanded to $104.2 billion from $99.4 billion in the previous quarter, and during this timeframe the company also locked in over $25 billion worth of fresh customer agreements. The ripple effect spread far beyond those three names. Lumentum, which makes optical and photonic parts for data centers, gained after its fiscal fourth-quarter revenue more than doubled to $1.01 billion, while in the memory and storage industry, the Roundhill Memory ETF gained 4%, with Micron and Sandisk both climbing 4%.

Inflation Cools, Giving the Fed Room to Breathe

The earnings surge wasn't the only good news investors received on Wednesday. A closely watched inflation report came in right where economists had hoped. On a year-on-year basis, the July CPI eased to 3.4% from June's 3.5%, and core CPI eased to 2.5% from June's 2.6%. On a month-on-month basis, the July CPI rose 0.1% and core CPI rose 0.2%.

Stocks received a lift from the favorable CPI report, which supported Treasury note prices and reduced the odds of a rate hike at the next FOMC meeting to 40% from 51% on Tuesday. That's meaningful for everyday investors — lower rate-hike odds mean borrowing costs are less likely to rise, and equities become more attractive relative to bonds. As Cooper Howard, director of fixed income research and strategy at the Schwab Center for Financial Research, put it: "The report likely doesn't change the narrative for the Fed. We expect the Fed to remain on hold for the time being. They are closely focused on their inflation mandate and given this was as expected, it gives them time before making the next move."

Megacaps Stumble While AI Pure-Plays Shine

Not everything moved higher. Wednesday's session highlighted a notable divide in the tech world. The Magnificent Seven struggled, with six of the seven stocks closing lower, led by a decline of more than 3% in Meta. Microsoft closed down by more than 2%. The lone winner was Nvidia, which rallied 3% thanks to the chip rally. The contrast is telling — it wasn't broad tech that won the day, but the specific companies building and powering AI infrastructure.

The S&P 500 has notched around 25 record highs in 2026 and is up 13.7% year to date, while the Dow has crossed 54,000 and a Bank of America survey shows the most bullish investor positioning since 2021. Yet the rally carries concentration risk. The index's climb remains fairly dependent on a handful of large names, and if Nvidia or Micron disappoints, the effect can ripple across the whole market.

What Comes Next: Applied Materials and Nvidia in Focus

Today, Thursday, August 13, the earnings spotlight shifts to Applied Materials (AMAT), a key chipmaking equipment supplier reporting after the bell. Cisco Systems shares dipped in after-hours trading as the networking equipment provider's strong AI-driven earnings ran up against lofty expectations, while AI chip gear supplier Applied Materials is due to report after the bell today. With both the CPI and PPI readings in hand, economists will also have the chance to put together more detailed predictions for the upcoming core personal consumption expenditures price index — one of the Fed's preferred inflation measures.

Big Tech companies have already signaled that spending on AI would not slow down, with combined outlays set to surpass $730 billion this year.