The Strait of Hormuz remains closed. Missiles continue to fire across the Persian Gulf and in Lebanon. The price of oil is close to $100 a barrel, and shortages of fertilizer, helium and aluminum are pushing up the price of food and other necessities, fueling cost-of-living pressures. Economists say the global economy remains at risk of recession.
Someone clearly forgot to tell the stock market – or at least the US stock market. The S&P 500 index recently hit a new record high, and is now up 10% since the start of the Iran war. Blame the exuberance on confidence in the transformative potential of AI – and the way in which the vast investment in chips, data centers and energy is fueling a remarkably resilient US economy that appears to have grown at an annualized rate of 4% in April despite higher energy prices.
Not surprisingly, AI companies are taking advantage of sky-high valuations to tap investors for billions of dollars to fund their plans. Last week SpaceX, controlled by Elon Musk, announced plans for what would be the biggest stock market IPO of all time, with plans to raise $85 billion valuing it at $1.75 trillion. Anthropic, owner of the Claude chatbot, filed plans for its own $1 trillion-plus IPO; OpenAI, the owner of ChatGPT, is expected to follow soon. Meanwhile, Alphabet, owner of Google, last week raised $85 billion from the sale of new shares.
