2026-05-27 · Hosted by Caroline Hyde, Ed Ludlow · Bloomberg / iHeartMedia

A sweeping AI-driven rally dominated markets on May 26, with Micron surging ~17% to briefly cross the $1 trillion market cap threshold after UBS more than tripled its price target to $1,625 from $535. Qualcomm hit a fresh record high after Bloomberg reported it struck an ASIC chip deal with ByteDance/TikTok. The gains were amplified by Huawei’s announcement of a new chip manufacturing technique called “logic folding” — an alternative to extreme ultraviolet lithography — though analysts called the technology years away from practical deployment. On the geopolitical front, China formally extended travel-exit permit requirements to private-sector AI researchers and executives, signaling a new front in the US-China talent competition. Meanwhile, SpaceX kicked off its IPO runway following a successful Starship V3 debut launch, Uber made a ~€10B offer for Delivery Hero, and Pope Leo XIV issued a landmark encyclical calling for AI to be “disarmed” and regulated.

The AI cycle has fundamentally transformed how investors and analysts view memory chips. Micron’s $1 trillion valuation reflects a growing consensus that memory is no longer a commoditized, cyclical input but a strategic bottleneck for AI advancement. Long-term supply agreements with hyperscalers are removing pricing cyclicality, and analysts like the portfolio manager at Sans Capital note that Nvidia is effectively “sold out,” driving demand further down the supply chain to memory and semi-cap equipment.

China is now competing on three simultaneous fronts in the AI race: chips (Huawei’s logic folding), talent (exit-permit controls on AI researchers), and software/model development. The travel restrictions parallel US export controls — both nations are treating their AI talent and technology as national strategic assets. This mutual restriction dynamic has the potential to bifurcate the global AI ecosystem over the next decade.

SpaceX’s imminent IPO at a ~$1.5 trillion valuation represents an inflection point for public equity markets. At 80x price-to-sales, it would enter indices with limited float, yet would still constitute ~0.4-0.5% of the Nasdaq 100. As OpenAI, Anthropic, and others follow, technology’s share of the S&P could exceed 60%, fundamentally altering the index’s volatility and fundamental profile. This is raising structural questions about how ETF investors are exposed.

Pope Leo XIV’s encyclical marks a new phase in the AI governance debate — moving from technical and regulatory discussions into moral and philosophical territory. The presence of Anthropic’s co-founder Christopher Ola at the encyclical’s presentation underscores how leading AI labs are proactively engaging with governance frameworks. Sam Altman’s concurrent comments that AI has produced less job displacement than feared adds nuance to the picture, suggesting the near-term disruption narrative may be overstated even as long-term concerns remain valid.

Multiple analysts on the show explicitly framed the current moment as “revenge of the hardware companies” — with semiconductors and memory taking on the premium multiples that software once commanded. As AI runs through token budgets faster than expected, software companies face margin compression from customers and competitive pressure from AI tools that can replicate their outputs. This rotation is accelerating and is visible in the chip sector’s outsized earnings revisions vs. software’s declining estimates. —-

Markets hit new all-time highs across major indices, led almost entirely by the AI semiconductor complex. The mood was risk-on across hardware and memory names, with analysts calling for re-ratings even at historically stretched valuations.

Memory cycle reversion: Analyst at Swiss Quote noted parabolic valuations historically precede corrections; boom-bust cycles haven’t disappeared, only lengthened

SpaceX execution risk: S1 warns compute constraints and Starship must work; Mars profitability “very questionable”; 80x price-to-sales historically associated with underperformance post-IPO

Macro headwinds: Rising borrowing costs, energy supply disruptions, and AI infrastructure supply chain risks could weigh on non-tech sectors

China tech ecosystem bifurcation: Travel restrictions on AI talent and chip export controls may deepen the split between US and Chinese AI ecosystems, raising supply chain uncertainty for global tech firms

Huawei chip timeline uncertainty: Logic folding is theoretical; commercial viability uncertain given heat dissipation challenges; could still be a decade away — misleading market euphoria

AI regulatory risk: Pope’s encyclical and growing government interest in regulation create potential for slowdown if Western governments respond by imposing governance frameworks

Software margin compression: Token budget overruns at firms like Uber and Microsoft suggest AI productivity gains may be slower to materialize than projected, weighing on software multiples and cloud spending

Index construction disruption: SpaceX + OpenAI + Anthropic entering public markets could dramatically concentrate tech weighting in major indices, amplifying volatility

This episode was cove