Amazon Nvidia Surge on OpenAI Deal as Broader Market Stalls

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•  03 Nov 2025
 

•   AMD  
   
  +0.11%
•   AMZN  
   
  -0.23%
•   MSFT  
   
  +0.41%
•   NIO  
   
  +0.13%
•   NVDA  
   
  -0.03%

November opened with a tale of two markets. $AMZN rocketed 4% after locking down a seven-year, $38 billion cloud computing deal with OpenAI, giving the AI giant access to hundreds of thousands of Nvidia processors through AWS. $NVDA added 2% on the news, and the Magnificent Seven index climbed 1.5% as AI infrastructure euphoria returned.

Here's the catch: while tech titans partied, 350 companies in the S&P 500 actually declined. The headline index squeezed out a 0.2% gain to 6,852 points, but the equal-weighted version slipped. When a handful of stocks carry the entire market, that's concentration risk talking.

The Fed added to the mixed signals. Chicago Austan Goolsbee worried more about inflation than jobs, while San Francisco Mary Daly left the door open for a December rate cut. Then Jerome Powell threw cold water on expectations, calling another rate cut "far from a given." Treasury yields climbed three basis points to 4.11% as traders recalibrated.

$MSFT announced an $8 billion UAE investment deploying tens of thousands of Nvidia chips, while data center player $IRES jumped 11% on a $9.7 billion Microsoft contract with 20% paid upfront. The AI infrastructure build-out is real and multi-year, but valuations are stretched and the rally keeps narrowing.

Ed Yardeni, the veteran analyst who nailed the recent rally, now sees 5% downside risk through December. His take: if you've got cash, buy the dips but don't try timing the market. UBS thinks the rally has room to run if growth stays stable and the Fed doesn't pivot hard.

$PLTR rose 3% ahead of earnings after gaining 165% year-to-date. $AMD added 1.3% following its best month since 2001, up 26% in October on OpenAI supply deals. Chinese EV makers showed mixed results: $NIO up 1.2% on record deliveries, while $TSLA gained 2.6% despite a 5% China sales decline that could mark its first annual drop there.

This week brings earnings from Qualcomm, Arm, Uber, Shopify, Spotify, Airbnb, DoorDash and dozens more. For traders, the setup demands discipline. Concentrated mega-cap strength can mask weakness, and there's little margin for error at these valuations. The AI story has legs, but separating real winners from momentum trades requires homework on competitive positioning and unit economics, not just following the hype.

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