TKMS, a domestic rival, rallied 16% on expectations that it would instead supply four smaller warships to the German government. But aside from that news, the macroeconomic backdrop remained favourable for European stock markets. The benchmark European 10-year yield fell to 2.86%, the lowest since 10 March, as oil prices continued to decline, softening European Central Bank (ECB) expectations.

US crude slipped below the $70pb mark on news that vessels are now transiting the Strait of Hormuz with their satellite signals switched on — and not only. A combination of strategic inventory releases, a collapse in demand from top buyer China and a substantial number of tankers quietly leaving the Persian Gulf "dark" had contributed to a small oversupply in some key markets, according to traders interviewed by Bloomberg. That's in line with my earlier forecast that oil prices will likely swing between $60-80pb in the coming weeks.

Geopolitical risks remain, as the Middle East is rarely a calm sea, China will start tapping into the oil market as tensions ease, and countries will begin replenishing their strategic reserves, absorbing part of the additional supply. But over the medium term, the IEA has also warned that once Middle East tensions fade and markets return to normal, demand will continue to slow while supply remains ample — pointing to further declines in oil prices toward $50pb. That's my forecast for the next twelve months.

All of that is good news for the cyclical European indices that have been grappling with higher energy prices, which also contributed to the ECB's rate hike earlier this month.

Softer energy prices should also help tame inflation expectations elsewhere, including in the US. The US 2-year yield, which best reflects Federal Reserve (Fed) rate expectations, eased to 4.13% yesterday after reaching its highest level in a year and a half. That wasn't enough to lift the tech-heavy US indices, however, with the S&P 500 slipping 0.10% and the Nasdaq 100 retreating another 0.43%.

But the sun is shining again this morning, as Micron's earnings announcement after the US close went very well. The company delivered strong results, but more importantly, comfortably beat Wall Street expectations on both the top and bottom lines, with revenue of nearly $41.5 billion versus around $36 billion expected, while adjusted EPS came in at $25.11 versus about $21 expected. Guidance for the current quarter also came in well above expectations: the company expects revenue of around $49-51bn versus roughly $45bn pencilled in by analysts.

It was hard to find a reason to take profits after such a strong beat. The stock therefore jumped 15% in after-hours trading, sending its share price back above $1’200 and lifting sentiment across the rest of the AI and technology sectors.

The Korean Kospi is up nearly 6% as I write this morning, with volatility beyond imagination (Kospi VIX is now at 96!!!). SoftBank — another proxy for the AI trade — is up 6.40% and rising, while Nasdaq futures are leading gains into the European open.

So, is the tech stress over?

Possibly. Micron's earnings will likely give a sugar boost to tired tech runners and shift the narrative from "massive AI spending increasingly financed by debt as borrowing costs are rising" to "very robust demand for chips and data centres thanks to rapid AI adoption", at least for a few hours.

But don't uncork the champagne just yet, because attention will rapidly shift to US economic data that could reverse the positive mood. Later today, the US will release its latest GDP and inflation updates. The focus will be on the PCE and core PCE figures — the Fed's preferred gauges of inflation. Headline PCE is expected to rise above the 4% y-o-y mark in May, in line with the CPI figures released earlier this month, while core PCE is expected to have risen from 3.3% to 3.4% y-o-y.

Both remain well above the Fed's 2% inflation target. A softer-than-expected set of figures could temper hawkish Fed expectations, alongside easing inflation expectations thanks to lower energy prices and let the tech stocks take a breather – and rebound. A stronger-than-expected set of numbers, however, could further embolden Fed hawks and reverse the post-Micron optimism, bringing back the unpleasant topic of rising borrowing costs at a time when Big Tech is taking on increasing amounts of debt to finance its AI ambitions.

But whatever happens on the rates front, competition among AI enablers — whether in building models or designing chips — is intensifying.

OpenAI announced yesterday that it has designed its own chips – the Jalapeno chip. They did the core design aimed at inference –running the already-trained models with Nvidia’s most powerful GPUs – and Broadcom helped them with specific knowledge regarding the architecture.

Broadcom said that the first chips will be used at Microsoft and other partners by the end of this year, OpenAI added that the real volume will come next year. They are looking to power 10 gigawatts of compute by 2029 – it’s the equivalent of roughly 9-10 nuclear reactors.

And they are not the only ones. Meta, Amazon and Google are all designing their own chips to reduce costs and secure supply. As competition intensifies between traditional chipmakers and these new entrants, the AI chip market will become increasingly fragmented, leaving everyone with a smaller slice of the pie. The question is whether the pie can grow fast enough for everyone to still end up with a bigger slice.