Nvidia Joins Exclusive $1 Trillion Club. Why It’s a Key Milestone for AI.

Reaching the milestone can bring differing fortunes. Apple is now closing in on the $3 trillion mark, while Tesla and Meta have both since fallen below $1 trillion.

Whether Nvidia can stay there will very much depend on the AI opportunity living up to the noise.

In another indication of where the hype level currently sits, European start-up Mistral raised $113 million in an initial funding round, the company said Tuesday. The OpenAI rival, founded by former Google and Meta AI researchers, was set up just four weeks ago.

The frenzy means expectations are now sky-high, which raises the likelihood of disappointments. AMD unveiled its new chip Tuesday, designed to take on Nvidia’s dominance.

That ought to have excited investors but reaction has been mixed with the stock down close to 4% Tuesday before regaining ground early Wednesday. The absence of big-name customers lined up to buy the chip may have disappointed, despite the product being in its early stages. Product launches no longer seem to be enough, the AI boom has evolved and the market now wants to see proof of monetization.

A Federal Reserve rate pause would be more good news for tech stocks, which owe their woeful 2022 to the central bank’s aggressive hiking. But these days the sector—and particularly companies exposed to AI—will likely give it no more than a passing nod. They are playing in a different league at the moment.

—Callum Keown

*** Join MarketWatch reporter Jessica Hall and Annie Ackerley, managing director, head of BlackRock’s Retirement Group, today at noon for a discussion about the “silent crisis” of retirement as older adults risk outliving their money. Sign up here.

Try your hand at this morning’s Barron’s Daily crossword puzzle and sudoku games. For all games, including a digital jigsaw based on the week’s cover story, click here.

***

Consumer Prices Cool to a 4% Pace as Energy Prices Fall

The consumer price index climbed by a lower-than-expected 0.1% in May to a 4% annual pace, the slowest since March 2021. The drop was fueled largely by a 3.6% drop in energy costs, along with a drop in prices for airfares and household furnishings.

• Core CPI, excluding volatile food and energy prices, climbed 0.4% in May, matching April’s pace. But core prices slowed to 5.3% year over year in May from 5.5% in April, the Bureau of Labor Statistics reported.

• Rents climbed 0.5% in May, to an 8.7% annual pace, while used car and truck prices climbed 4.4% for the second straight month. Private-sector rent data suggest relief is coming. And the used-car price spike is “not sustainable,” Wells Fargo economists wrote.

• Supermarket prices gained 0.1% in May, from April, while the cost of buying food away from home climbed 0.5%. Grocery prices for fruit and vegetables, some meats, and nonalcoholic beverages such as juice all gained during the month, but egg prices fell 14%, and dairy prices eased 1.1%.

• Packaged product companies including
  Kimberly-Clark,

  PepsiCo,

  General Mills,
  and
  Tyson Foods
  have talked about their ability to raise prices, according to Accountable US, a liberal-leaning advocacy group. And they have signaled their intention to continue to take “price actions” despite the Federal Reserve’s ongoing inflation battle.

What’s Next: May’s cooler-than-expected inflation data helped lift the S&P 500 to a 52-week high on Tuesday, ahead of the Fed’s interest-rate decision today. Futures markets anticipate the probability that the Fed will pause on more rate increases this month.

—Megan Cassella, Karishma Vanjani, and Janet H. Cho

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Retailers Fight Theft, Organized Crime Targeting Stores

More retailers are increasing their efforts to fight a 26.5% increase in retail theft. The biggest challenges retailers face are keeping stores profitable and keeping their employees and customers safe, said Deborah Weinswig, CEO of retail research firm Coresight Research.

• After
  Target
  estimated that inventory shrink, the industry term for missing inventory, would reduce profitability by $500 million, other retailers including
  Home Depot,

  Walmart,

  Dollar Tree,
  and
  Ulta Beauty
  also mentioned higher shrink in earnings calls.

• The National Retail Federation estimates that shrink accounted for $94.5 billion in losses in 2021, driven by organized retail crime, up from $90.8 billion in 2020. Unlike ordinary shoplifters, ORC thieves often resell stolen merchandise at cheaper prices, often on third-party marketplaces.

• Nearly 40% of retailers said they hired more loss-prevention employees in 2022, the NRF found. Others invested in theft-detection technology. Home Depot is spending more on machine learning and data analytics tools to identify at-risk regions or product categories.

• Some retailers closed stores in areas with higher shrink. Others adopted what Dollar Tree CEO Richard Dreiling called “defensive merchandising,” encasing perfumes or razorblades in plastic boxes, tethering electronics to shelves, or locking items into clear drawers only employees can open.

What’s Next: Retailers and business industry groups support the Combating Organized Retail Crime Act, a bipartisan bill introduced last September, to help federal law enforcement prosecute organized retail crime groups and recover lost goods and proceeds.

—Sabrina Escobar and Janet H. Cho

***

Bud Light is No Longer America’s Top-Selling Beer

Modelo Especial has quietly overtaken
Anheuser-Busch InBev’s
Bud Light as the nation’s top-selling beer. It comes after a boycott that followed the promotion of the former market leader by a transgender activist.

• Modelo, which is owned by Constellation Brands in America, captured 8.4% of U.S. retail-store beer sales in the four weeks ended June 3, compared with 7.3% for Bud Light, The Wall Street Journal reported, citing an analysis of Nielsen data by consulting firm Bump Williams. Modelo is actually owned by Anheuser-Busch in other regions outside the U.S.

• Bud Light’s sales dropped about 24% in the week ended June 3, compared with the same week last year, Bump Williams found. Sales of other Anheuser-Busch brands, including Budweiser and Michelob Ultra, have also declined.

• The drop follows an April 1 Instagram post by transgender social-media influencer Dylan Mulvaney, who showed off a personalized can of Bud Light the company sent her as a gift.

What’s Next: The continued decline through May is a worry for Bud Light distributors during what they say is a key period between Memorial Day and the Fourth of July, according to the Journal.

—Janet H. Cho

***

Americans Call $2.2 Million the Threshold to Feel Wealthy

Americans called $2.2 million the threshold to “be wealthy” in
Charles Schwab’s
2023 Modern Wealth Survey, but the perception of wealth has changed over the years. Millennials and Gen Z respondents were more likely to “feel wealthy” than Gen X and Boomers.

• More people are defining wealth in terms of well-being instead of by the amount of money and assets they have accumulated. They cite a fulfilling personal life, a lack of money stress, a healthy work-life balance, and good health. Having time was more important (61%) than having money.

• Nearly half said being able to afford a lifestyle similar to their friends makes them feel wealthy, and more than a third said they compare their lifestyles with what family and friends share online. Millennials and Gen Z were the most likely to agree to both statements.

• The net worth of households expanded this year, rising 2% in the first three months to $148.8 trillion, MarketWatch reported, citing the Federal Reserve’s flow of funds report. The record was $152.6 trillion in early 2022, when Americans were getting government pandemic aid.

• A slowdown in the pace of inflation has lowered the projected cost-of-living adjustment (COLA) for Social Security recipients to just 2.7% for 2024, from 8.7% last year. The Senior Citizens League, a nonpartisan advocacy organization, lowered its estimate from 3.1% last month.

What’s Next: The actual COLA for 2024 won’t be announced until October, when the Social Security Administration compares the average consumer price index from third-quarter 2023 with data from third-quarter 2022.

—Elizabeth O’Brien and Janet H. Cho

***

Amazon Cloud Outage Forces Websites Offline

Amazon’s
cloud computing unit Amazon Web Services experienced an outage on Tuesday, affecting news publishers and other websites. About two hours after customers began experiencing errors, the company said the affected services were “fully recovered.”

• Amazon said it had experienced multiple error rates for AWS services in the Northern Virginia region, where it clusters data centers. News websites including Dow Jones-owned Barron’s and MarketWatch were affected along with the Associated Press.

• The outage was first confirmed shortly after 3 p.m. Eastern time and it was unclear how widespread the problem was. The Boston Globe and New York Metropolitan Transportation Authority also tweeted that their websites were affected.

• AWS experienced a longer outage in December 2021, which affected several U.S. companies for more than five hours. Other major AWS customers include
  Netflix,
  Deloitte, and
  Comcast,
  the Washington Post reported, adding AWS revenue was $21 billion in the first quarter.

• During its last earnings report, Amazon announced plans to open a new AWS Region in Malaysia and it launched a second AWS Region in Australia to continue expanding its cloud services coverage.

What’s Next: The outage comes as Amazon is holding a two-day security conference in Anaheim, Calif., to tout its cloud offerings to companies that might be interested in storing their data on its network of servers around the world. Companies have been cutting back their spending on the unit.

—Liz Moyer and MarketWatch

***

Dear Quentin,

We are three siblings: my brother, my sister, and I. Our mom passed away from a stroke in Arizona. Her estate went to probate court as she had no will. We were all on the same page, and had no issues getting everything done. Her house was sold for $420,000 very quickly. There was $20,000 left in her bank account after paying off her credit cards.

I assumed we were splitting everything three ways. But then my sister in-law informed me that the grandchildren deserve a share. My brother has five kids, and my sister has three children. I have no children. They know they are in the wrong, and they’ve stopped all communication with me. They are stating I should (or will) get $58,000 from my mother’s estate or nothing.

I want to make this right. Should I just take the money?

—Brother, Uncle, Son

Read the Moneyist’s response here.