Good Afternoon. Two stories carried Wall Street into Thursday afternoon and both rhymed with the same theme: AI infrastructure. Cisco shares climbed roughly 13% after the company posted record Q3 revenue of $15.8 billion, raised full-year guidance to $62.8-$63 billion, and announced plans to cut nearly 4,000 jobs to refocus on silicon, optics, security, and AI -- the kind of "shrink the old, scale the new" pivot Wall Street has been begging legacy networking to make. Cerebras Systems, meanwhile, debuted on the Nasdaq at $350 after pricing its IPO at $185, briefly topping a $100 billion market cap before settling near $310 -- the largest U.S. tech IPO since Uber in 2019. In Beijing, day two of the Trump-Xi summit brought a "constructive, strategically stable relationship" pledge.

—Rosie, Wyatt, Evan & Conor

🔥 What’s Hot: 🔥

🥶 What’s Not: 🥶

The News: Cisco Systems (CSCO) reported fiscal Q3 revenue of $15.8 billion, up 12% year-over-year and ahead of the $15.56 billion consensus. Non-GAAP EPS came in at $1.06 versus $1.03 expected. Product orders rose 35% year-over-year, with networking up 25%. Management raised full-year FY26 revenue guidance to $62.8-$63.0 billion (from $61.2-$61.7 billion) and full-year EPS guidance to $4.27-$4.29 (from $4.13-$4.17). Separately, Cisco announced plans to cut roughly 4,000 positions -- about 4% of headcount -- to redirect investment into silicon, optics, security, and AI. Shares climbed 15% intraday to around $116.

Why It Matters: For investors, this is the cleanest "old infrastructure becoming new infrastructure" trade of the cycle. Cisco's hyperscaler order book grew triple-digits, and the Splunk acquisition is finally showing attach-rate traction. Pair the raised guide with a workforce restructuring focused on AI, and you have a re-rate catalyst that should pull the stock from its perpetual 14x P/E discount toward the 18-20x band that Arista trades at. For consumers and enterprise IT buyers, expect Cisco's commentary to pull forward 2027 IT budget commitments -- and to put more pressure on Splunk renewal pricing.

What to Watch: AMAT earnings tonight, Nvidia's May 20 release, and any analyst price-target updates -- consensus targets were stale at $108 heading into the release and several desks are now signaling moves toward $130.

Source: Cisco IR

The News: Cerebras Systems (CBRS) opened on the Nasdaq Thursday at $350 per share after pricing its IPO at $185 -- well above the raised $150-$160 range that already implied a 20x-oversubscribed book. The stock hit an intraday high above $385, briefly carrying a $100 billion market cap, before settling near $310 by midday for a roughly $95 billion valuation. The company sold 30 million shares to raise $5.55 billion, marking the largest U.S. tech IPO since Uber in 2019.

Why It Matters: For investors, this is the AI-IPO reopening every late-stage growth desk has been waiting for. Cerebras's wafer-scale-engine architecture competes directly with Nvidia in inference and training, and the public-market validation gives competitors -- including AMD, Groq, and SambaNova -- a fresh valuation benchmark. Expect Databricks, xAI, Anthropic, and Stripe to accelerate roadshow timelines if Cerebras holds above its IPO price through the lock-up window. For consumers, more competition in AI silicon historically pulls down per-token inference cost -- a tailwind for any AI-enabled product over 12-18 months.

What to Watch: Day-two close, first earnings release (likely August), and lock-up expiry roughly 180 days from now. Watch the spread between Cerebras and pre-IPO secondary-market quotes ($102-$107) for early signals on insider sell pressure.

Source: CNBC

The News: The Senate confirmed Kevin Warsh as the 17th chair of the Federal Reserve on Wednesday afternoon by a 54-45 vote, almost entirely along party lines. Warsh, 56, will succeed Jerome Powell when his term concludes Friday. A former Fed governor (2006-2011), Warsh has spent the past decade as a visiting fellow at Stanford's Hoover Institution and as a partner with Stanley Druckenmiller. He committed to divesting "virtually all" assets and moving holdings into "plain vanilla" instruments. Only one Democrat, Senator John Fetterman, joined Republicans in voting yes.

Why It Matters: For investors, Warsh inherits the chair just as the inflation reacceleration crystallizes -- the 30-year Treasury yield crossed 5% Wednesday for the first time since 2007 partly on confirmation that the new chair will face a hot-data environment with limited room to cut. His Hoover-era writings emphasized balance-sheet normalization and Fed independence from fiscal pressure, but the political backdrop is structurally different from Powell's. Markets are now pricing zero 2026 cuts and a hike probability of roughly 18% for the September meeting. For consumers, mortgage rates have followed the 30-year higher -- the 30-year fixed averaged 7.42% Wednesday and may not see relief until at least Q2 2027.

What to Watch: Warsh's first FOMC statement on June 11, any sitting-Fed-governor resignations, and whether the White House signals a parallel push to fill any open board seats.

Source: Politico

The News: The yield on the 30-year U.S. Treasury bond crossed 5.0% Wednesday afternoon, the first time it has done so since August 2007, before settling at 4.99% by Thursday's open. The 10-year held at 4.45%, leaving the 2s-30s curve steeper by 11 basis points on the week. The move came on the combined catalyst of Wednesday's hot April PPI (1.4% month-over-month), Warsh's confirmation as Fed chair, and a soft 30-year Treasury auction that drew the highest yield at issue since 2007. The dollar index held near 98.50.

Why It Matters: For investors, the 5% handle on the long bond is more than a number -- it is the level at which long-duration assets get repriced systematically. TLT is approaching multi-decade lows, and 60/40 portfolios are absorbing their second consecutive year of duration losses. For consumers, the 30-year mortgage moves with the 10-year, but home-builder financing and corporate bond issuance are repriced off the long end -- expect housing affordability and new-build supply to face renewed pressure into the summer selling season.

What to Watch: Next week's 30-year reopening auction, any Bank of Japan policy hints (Japanese demand for U.S. long-dated paper has been the key marginal buyer this cycle), and the September FOMC dot plot for any acknowledgement of term-premium risk.

Source: Reuters

The News: The Bureau of Labor Statistics reported Thursday morning that April U.S. import prices rose 0.6% on the month and 2.6% on a 12-month basis, while export prices climbed 1.0% in April and 6.1% on the year -- the largest annual increase in export prices since November 2022. Fuel imports rose 1.9%, and nonfuel imports advanced 0.4%. Initial jobless claims for the week ending May 9 came in at 215,000, slightly above the 208,000 consensus.

Why It Matters: For investors, the import-price data closes the trifecta with PPI and CPI: inflation is broad, sticky, and at the margin getting worse rather than better. Combined with a labor market that is softening only gently, the Fed has no easy out. For consumers, the export-price acceleration is the more important read for U.S. competitiveness -- a 6.1% annual export-price rise is the kind of figure that gets attention from trade negotiators on the Beijing trip and could feed back into renewed tariff conversations within months.

What to Watch: Friday's retail sales and Michigan sentiment reports, plus next Wednesday's housing starts data, will round out the macro picture before Nvidia earnings on May 20.

Source: BLS

The News: President Trump and President Xi Jinping concluded the substantive second day of their Beijing summit Thursday with a joint pledge to build "a constructive, strategically stable relationship." Xi delivered a notably sharp warning that mishandling the Taiwan issue could send the bilateral relationship "down a dangerous path." Trump praised the more-than-two-hour meeting as "tremendous" but emerged without concrete trade or policy announcements. Treasury Secretary Scott Bessent told CNBC that the U.S. and China would "begin discussions" on AI safety best practices. The 16-CEO delegation -- including Tim Cook, Elon Musk, and Jensen Huang -- attended a state banquet Thursday evening.

Why It Matters: For investors, "no deliverables" is the modal outcome for first-day summits and is not in itself bearish -- Chinese ADRs (BABA, JD, PDD) held their pre-summit gains and KWEB closed above its 200-day moving average for the eighth straight session. The market wants a tariff-suspension extension framework and rare-earth export-license clarity, and the absence of either today simply moves expectations to Friday's joint communique. For consumers, the lack of a tariff escalation is itself a soft positive for holiday-season pricing.

What to Watch: Friday morning's joint statement, any Boeing order announcement, and language around the Taiwan Relations Act review.

Source: CNBC

The News: Samsung Electronics' largest union warned Wednesday that more than 41,000 workers would walk off the job for an 18-day strike starting May 21 unless management addresses outstanding wage and benefit demands. South Korea's Finance Minister Koo Yun-cheol said Thursday that a sustained walkout could "severely affect" national economic growth, exports, and financial markets. Samsung shares jumped as much as 5% Thursday to a fresh all-time high on hopes that the threat would force a quick settlement; the stock had lost roughly $66 billion in market capitalization on Wednesday on the initial strike news.

Why It Matters: For investors, Samsung produces roughly 40% of global DRAM and 30% of global NAND -- an 18-day production halt would tighten an already-stretched memory market and feed straight into Micron, SK Hynix, and Western Digital margins. Memory contract pricing could rise 8-12% on even a 10-day disruption. For consumers, expect another leg higher in PC and smartphone OEM pricing into back-to-school if the strike materializes.

What to Watch: Negotiating-table outcomes through next Tuesday, any government mediation announcement, and Samsung's quarterly capex guidance update at its July investor day.

Source: Yonhap via Reuters

The News: During the formal day-two session of the Beijing summit, President Xi told President Trump that the Taiwan question is "the most sensitive and explosive issue" in U.S.-China relations and warned of potential "conflict" if handled poorly. The warning, delivered in front of the assembled U.S. delegation and broadcast on Chinese state television, was the most pointed Taiwan rhetoric Xi has directed at Trump since his return to office. The two leaders nonetheless concluded the session with smiles and a state banquet attended by Cook, Musk, Huang, and Bessent.

Why It Matters: For investors, defense contractors (LMT, NOC, RTX) traded higher on the rhetorical sharpening, while Taiwan-exposed semis (TSM ADR) slipped 1.2%. The geopolitical risk premium on Taiwanese fab capacity has been quietly rebuilding for six weeks and Thursday's exchange will likely accelerate corporate diversification of the wafer supply chain into Arizona, Dresden, and Kumamoto. For consumers, no immediate price impact -- but the longer-term cost of "decoupled" semiconductor supply will eventually surface in device pricing.

What to Watch: Pentagon FY27 budget request language on Taiwan support, TSMC's Arizona expansion timeline, and any State Department arms-sale notifications in the next 30 days.

Source: Al Jazeera

Q: What did the buffalo say to his son when he left for college?

A: Bison

Stock in a domestic C-corporation with gross assets under $50 million at issuance that, if held for more than five years, qualifies the holder for an exclusion of up to 100% of capital gains -- capped at $10 million or 10x the original investment, whichever is greater. The exclusion is on Section 1202 of the Internal Revenue Code and is one of the most powerful tax breaks available to founders, early employees, and seed investors.

Usage: "Cerebras's pre-IPO employees holding founder shares from before the company hit $50 million in gross assets just had a very, very good Thursday -- their Qualified Small Business Stock exclusion shields up to $10 million of gains per holder from federal tax."

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