Good morning. On Fortune’s radar today:
- Markets: Mostly down.
- Leverage is “very concentrated in the AI ecosystem,” Goldman warns.
- The U.S. wealth paradox: No. 2 on average, No. 28 at the median.
- Trump says no return to war—for now.
- Soccer teams commit more fouls in polluted cities.
- You’d need to cut 10 million jobs for AI to pay for itself.
THE MARKETS
Global stock markets take a step back
- S&P 500 futures were down 0.28% this morning. The index rose 0.79% yesterday.
- In Europe, the Stoxx 600 was flat in early trading and the U.K.’s FTSE 100 was down 0.25% before lunch.
- Asia: South Korea’s KOSPI was down 2.04%. Japan’s Nikkei 225 was up 0.59%. India’s Nifty 50 was up 0.63%. China’s CSI 300 was down 0.41%.
- Brent crude was $71 per barrel this morning, down from a high of $74 yesterday.
- Bitcoin was $58.9K.
Investors with leveraged stock bets are “very concentrated in the AI ecosystem,” Goldman Sachs warns
The inflow of money into U.S. equities is running well above the average this year, according to Christian Mueller-Glissmann and his team at Goldman Sachs. One aspect of that is that “investors are increasingly deploying leverage to participate in the equity rally,” they said in a recent note. “Net margin borrowing”—where traders magnify the effect of their bets by borrowing a multiple of their own money—is now at about $1.4 trillion. That’s the equivalent of 1.8% of all U.S. stocks.
While leveraged investors can make more money on their trades by borrowing against their own stakes, they also stand to lose by a similar multiple if their bets go wrong. That adds an extra level of risk into the market—traders forced to cover their losing bets may end up selling other stocks to raise cash, thus magnifying selling pressure in the markets.
“Outside the U.S., margin purchases of Japanese equities have also climbed above $30 billion, the highest level since the GFC [Great Financial Crisis],” Mueller-Glissmann said in a note seen by Fortune. “Investor leverage remains very concentrated in the AI ecosystem.”
The Magnificent Seven have become a bit of a drag
As this chart from Jim Reid and his folks at Deutsche Bank shows, the big tech stocks have underperformed the S&P 500 so far this year. Reid names four reasons why: 1. Extreme positioning (they were overheld). 2. People are still worried that AI hyperscaler capex won’t be able to generate profits. 3. The Fed got more hawkish about interest rates. And 4. The cost of shipping has gone up since the Iran war.
AI IPO delays are good?
Wells Fargo’s Ohsung Kwon is still bullish on AI stocks, however, and believes that OpenAI and Anthropic pushing back their IPOs is, counterintuitively, a good sign. “The end of tokenmaxxing remains one of the biggest risks to equities,” he and his team told clients in a note recently.
“We believe AI lab IPO plans at least contributed to higher token costs as they pushed to improve monetization. We believe reports of delayed IPOs are bullish for the market, as AI labs potentially pivot to push for adoption again (plus less equity supply). Lower token prices mean more demand for compute, extending the cycle at the expense of AI lab margins.”
- Dell’s AI boom is real, but so is the profit margin hit nobody is pricing in - Mia Osmonbekov
- AI is minting billion-dollar companies faster than before - Beatrice Nolan
ONE BIG THING
Americans are only the 28th wealthiest in the world, UBS says
On average, Americans are the second-wealthiest people in the world, per head, according to UBS’s most recent Global Wealth Report. They carry $696,277 in net worth per adult, on average, behind only Switzerland, where the average wealth per adult is $910,382.
But the word “average” is doing a lot of work here. The U.S. has such a high level of inequality—skewed by billionaires at the top of the pile whose vast wealth moves the “average” up the scale. If instead you look at the median wealth, which shows the wealth of the person in the exact middle of the entire set and therefore the person most representative of a "typical" American, you get a shock: The median American is only the 28th most-wealthy person in the ranking, with $68,998 to their name.
That’s a shock. Americans, per the median, are poorer than the Portuguese, British, Slovenians, and Irish.
- See where your country ranks here.
- America added more than 1,200 millionaires per day in 2025, but the heyday of the ‘everyday millionaire’ is already over - Nick Lichtenberg
IRAN
No more war—for now
President Trump has been advised on the possibility of a return to all-out war in Iran but has rejected the idea, sources told The Wall Street Journal, in favor of continuing talks with Tehran. His dilemma is that while a new round of bombing might further weaken Iran’s military capabilities, it would activate Iran’s best bargaining chip: reclosing the Strait of Hormuz for months. The preferred strategy at the moment seems to be to threaten targeted strikes if Iran departs from the “Memorandum of Understanding.”
One unresolved issue: The Iranians don’t want their nuclear program touched while the White House wants it stopped altogether.
The war has widened a behind-the-scenes rift between Saudi Arabia and Washington, the WSJ reports separately. The Saudis never favored the war, arguing that Iran would close the Strait, choke the world’s supply of oil, and destabilize the region. The Kingdom even briefly curtailed the U.S.’s use of military bases in its country.
MORE FROM FORTUNE
The Supreme Court’s birthright citizenship ruling hands the U.S. economy a $7.7 trillion win - Diane Brady
Nike’s earning numbers exceeded Wall Street’s expectations. But CEO Elliott Hill’s next test is the World Cup - Mia Osmonbekov
Gen Z and millennials aren’t convinced the American Dream exists anymore: Only 40% of them can afford to buy a home - Tristan Bove
Stripe, Visa and over 140 other businesses to launch stablecoin to rival Tether and Circle - Camila Grigera Naón
Netflix could turn NBC into its biggest bet yet—and this time, the math actually works - Jeffrey Sonnenfeld and Steven Tian
‘You can expect prices to be high and stay high’: Domestic airfare is skyrocketing faster than international flight costs, despite using less jet fuel - Sasha Rogelberg
CHART OF THE DAY
In soccer, underdogs commit more fouls when air pollution is worse
From the annals of “things you never even realized were an issue,” comes research from two German academics that shows that when air pollution rises, the underdog team in a soccer match commits more fouls on the pitch. Panmure Liberum’s Joachim Klement speculates that, somehow, smog in the air reduces the judgment of the team that is less able to control its emotions (which is likely to be the under-favored club).
NUMBER OF THE DAY
10 million
The number of knowledge workers whose jobs must be replaced by AI in order to make the cost of building all the planned data centers worthwhile, according to Stephen Clapham, author of Behind the Balance Sheet, the well-respected corporate finance Substack. Using numbers provided by Duilio R. Ramallo of Boston Partners, the all-in cost of a 1GW data center—including rack hardware, depreciation, networking, compute, power, cooling, storage, etc.—is between $51 billion and $77 billion. Given that AI capex is running at a pace that will hit $1 trillion in 2030, corporations must realize savings equivalent to the layoff of 10 million office workers to make that work.
“The conclusion surprised me,” Clapham says. “The results have important implications not just for the hyperscalers, but for Nvidia, OpenAI, Anthropic, and almost every investor trying to profit from AI.”
THE FRONT PAGES TODAY
Trump pulled in at least $2 billion after returning to the White House - NYT
The town that Elon Musk built - FT
Iran says it is selling oil at 20% premium as end of U.S. blockade sees 40 million barrels exported - CNBC
Trump administration lifts restrictions on Anthropic's Fable 5 - Axios
Climate change keeps adding to the list of uninsurable assets, Allianz executive says - Bloomberg
ONE MORE THING
AI has a new enemy: cute baby leopards at the Nashville Zoo
More than 3,700 furry and feathered residents of the Nashville Zoo are on the verge of getting a new, and unwelcome, neighbor—a data center a little bit bigger than a football field, Fortune’s Marco Quiroz-Gutierrez.
The zoo has 350 different species of animals, many of which are protected. The zoo opened in 1997 and hosts a breeding program for the endangered clouded leopard. It also houses rare species like the Amur leopard, of which fewer than 200 remain in the wild.
So the zoo is opposing the data center. “Data centers consume enormous amounts of electricity and water; straining power grids, depleting natural resources, and damaging our watershed. How are we to know this new data center will not lead to irreversible damage to the animals we exist to protect?”, it has said in a petition signed by more than half a million supporters. “No one has shared studies or environmental impact assessments. Just their word.”
Photo courtesy of the Nashville Zoo.
