OpenAI and Oracle to Use Google Chips: 8 Key Items Shaping the Stock Market Wednesday

These are the early headlines and other items poised to influence the market at the start of the trading day. As we share this collection of market drivers, U.S. equity futures point to another mixed market open.

1. Oil prices rose over 1% on Wednesday after an attack on a refinery in Saudi Arabia, the world’s top crude exporter, renewed concerns about supply risks because of conflicts in ‌the Middle East. (Reuters)

The U.S. has told several Gulf Arab countries to be prepared for a short, intense military campaign after the U.S. midterm elections, people briefed on the conversations said. The communications through diplomatic and military channels are among a growing number of indications that the U.S. and Israel are readying to launch a new round of heavy combat operations against Iran, risking a major escalation in hopes of degrading Tehran’s strength and pushing it toward negotiations. (WSJ)

Oil prices are not only creeping back up on Wednesday morning, but potential for renewed fighting runs the risk of oil and related energy products creeping even higher. As we expected, we are seeing the flow through of higher petroleum product prices as companies report their earnings. And as we suspected would be the case, companies are planning a new round of pricing action to protect their margins.

2. The world’s top consumer goods and food companies, from Coca-Cola and Procter & Gamble to Nestle and Reckitt, have warned of further price hikes next year to cover rising costs even as shoppers remain reluctant to splurge on groceries. Higher energy, raw material and freight costs as a result of the US war on Iran mean that the companies making everything from laundry detergent to soda and snacks face a balancing act to protect profit margins. (Reuters)

Hard to say you couldn’t see this coming, but to us the standout wording above isn’t “price hikes,” but “next year.” That implies yet another layer to inflation tailwinds that are already blowing hard. Our thinking is that, if those pending price increases cited by those companies mentioned above are followed by others, and they stick, expectations for what the Fed need to do next year on the monetary policy front may need to move even higher. By mid-2027, the CME FedWatch Tool shows the potential for the Fed funds rate to be 450 to 475 basis points versus the current 375 to 400.

3. The Fed is widely expected to keep interest rates unchanged today despite accelerating inflation and an economy that has shown few signs of slowing… There’s one issue: Inflation has picked up since those comments were made, complicating the case for waiting to raise rates until December. Fed Chair Kevin Warsh’s 2:30 p.m. press conference could hold clues about what comes next… Warsh’s explanation for waiting, and what he indicates about the possibility of moving again in December will be more important. (Barron’s)

Economists and many Fed policymakers now see prices driven higher not just ⁠by the lingering energy cost shock from Trump’s decision to attack Iran and the holdover effects of his tariffs, but by strong demand from the artificial intelligence industry and healthy consumer spending. (Reuters)

Heading into Wednesday’s Fed policy decision, our stance has been that while the market expects the Fed to do nothing by a wide margin, what Federal Reserve Chair Warsh says during the subsequent press conference will be important. Warsh eschews formal guidance, but following the step up in recent inflation data and with a high probability that continues ahead of the Fed’s early December meeting, our thinking is somewhat dependent on what scenarios might be discussed. If Warsh doesn’t raise them, we’d place a friendly wager that they are likely to come up during the Q&A portion of the press conference.

4. OpenAI plans to buy Google’s AI chips, The Information reported on Tuesday, citing a person familiar with the matter, as technology companies ramp up spending to meet surging demand for AI computing. (Reuters)

Oracle said on Tuesday it is expanding its cloud AI chip deals with Nvidia while also diversifying to add offerings from Nvidia rivals such as Alphabet’s Google and Cerebras Systems… Oracle, which plans to hold an investor day this week, did not disclose how it plans to finance the chip purchases. (Reuters)

We knew industry chip capacity was tight coming into the Q3 2026 earnings season, but the step up in capex spending confirms we’ve heard and will likely hear again when Microsoft (MSFT), Google (GOOGL) and Amazon (AMZN) report on Wednesday and Thursday, means at least two things. First, companies will increasingly turn to chip suppliers other than the already sold out Nvidia (NVDA), which is positive for custom silicon efforts at Google but also Amazon and others. That bodes well in our view for the Portfolio’s positions in Broadcom (AVGO) and Marvell (MRVL).

When Amazon delivered its shareholder letter this year, it shared quite a bit on the demand it was seeing for its custom silicon. If Google does something similar when it reports on Wednesday night, such a look behind the curtain would be a very nice catalyst for AVGO and MRVL shares.

We’ll get to our second point, but to help set it up, let’s first read the next item:

5. Memory chipmaker Micron Technology gained 4% in premarket trading after South Korean rival SK Hynix reported a more than sevenfold jump in quarterly profit. (Reuters)

The world’s second-biggest memory chipmaker reaffirmed it expects shortages of the components crucial to Nvidia Corp. accelerators to persist through at least 2030. Executives said they will invest heavily in expanding capacity, after selling out of conventional and high-bandwidth AI memory till 2029. (Bloomberg)

With that in mind, our second point is that, with tight chip capacity and rising demand, we are likely to see another leg up in chip equipment capacity. The expanding capacity comment from SK Hynix (SKHY) is supportive of that thinking but so too are the capital spending budgets at Taiwan Semiconductor (TSM), Samsung (SSNLF) and Global Foundries (GFS). As we parse Amazon’s earnings Thursday night, we’ll also sift through Intel’s (INTC) results, focusing on what it says about capacity utilization and capex plans. Back in July, Intel guided its 2026 capex plans to north of $20 billion and shared it was not only “aggressively locking in tool purchase orders,” but it also telegraphed that its 2027 capex spend “to be significantly above the 2026 levels.”

6. ASM International forecast on Tuesday fourth-quarter revenue above expectations and said it would reach its 2030 sales target three years early, driven by AI-related capacity investments. The Dutch chip equipment maker expects fourth-quarter revenue of 1.23 billion euros ($1.37 billion), plus or minus 5%, beating analysts’ average forecast of 1.18 billion euros, according to a poll by LSEG. (Reuters)

The demand environment remains very strong. The continued build-out of AI infrastructure is driving significant capacity requirements across the industry, particularly in the leading edge. Capacity remains tight across our customer base, and customers are moving quickly to increase output. (ASM International)

We’ll look to get more from ASM International (ASMIY) when it holds its earnings call on Wendesday morning. Connecting the dots across the above items, has us taking a hard look at one of the Portfolio holdings that is on our shopping list… that means you, Applied Materials (AMAT).

7. Economic data today per TipRanks: MBA Mortgage Application Index (Weekly), Advanced Retail and Wholesale Inventories (September), EIA Crude Stocks (Weekly), Fed Interest Rate Decision and press conference.

8. Companies reporting today per TipRanks: AM – American Electric (AEP), ADP (ADP), Brinker (EAT), Dana (DAN), Del Monte (DMC), Flex (FLEX), GE Healthcare (CEHC), GE Vernova (GEV), Jersey Mike’s (JMKE), Radware (RDWR), SK Hynix (SKHY), Terex (TEX), VF Corp. (VFC). PM – Alphabet (GOOGL), American Water (AWK), Benchmark Electronics (EHE), Chipotle (CMG), Equinix (EQIX), FedEx (FDX), Ford (F), Fortinet (FTNT), KLA Corp. (KLAC), Microsoft (MSFT), ServiceNow (NOW), Teladoc (TDOC), T-Mobile USA (TMUS), Universal Display (OLED).

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At the time of publication, TheStreet Pro Portfolio was long AMAT, AMZN, AVGO, GOOGL, MRVL, MSFT and NVDA.