The market keeps trying to price the AI boom through the chipmakers, but the real constraint is power, and this week Texas gave us the clearest look yet at who actually profits from it.
Underneath that run a softer-than-it-looks jobs report, SK Hynix’s $29 billion bet that AI memory belongs on U.S. exchanges, and a Tesla quarter that looked like a blowout until you read the fine print.
The through-line is the one capital allocators price every day: where demand is contracted and where it is only hoped for.
Let’s get into it.
1. The Lead · Energy / Infrastructure
The market keeps pricing the AI boom through the chipmakers, but the real bottleneck is power, and Texas is where that trade has already been signed. ERCOT now projects state electricity demand could approach 368 gigawatts by 2032, almost entirely driven by AI data centers, according to Yahoo Finance. Vistra (VST) locked 20-year power purchase agreements with Meta for more than 2,600 megawatts of nuclear output and posted first-quarter 2026 adjusted EBITDA up 20% year over year to nearly $1.5 billion. NRG Energy (NRG) closed a $12 billion acquisition of LS Power’s portfolio, doubling capacity to roughly 25 gigawatts, and raised 2026 core profit guidance to $3.93 to $4.18 billion. Energy Transfer (ET) is already piping gas to Oracle data centers near Abilene, with agreements for more than 6 billion cubic feet per day in new demand volumes over the past year.
368 gigawatts: ERCOT’s projection for Texas electricity demand by 2032, almost entirely driven by AI data centers, the demand these power contracts are built to serve.
The Bull & The Bear
▲ Bull: These are not AI-hype tickers, they are utilities with signed, long-dated contracts and the cash flow to match. The demand is contracted rather than speculative, and nuclear and gas baseload is exactly what data centers require and cannot easily replace. When the whole buildout runs on electrons, you want to own the companies that sell them.
▼ Bear: ERCOT’s 368 gigawatts is a 2032 projection that assumes the data-center boom continues without interruption. Merchant and regulated power both carry execution, permitting, and interconnection risk, and a single-ISO concentration in Texas leaves these names exposed if AI capex cools or the grid simply cannot be built fast enough to honor the contracts.
The Bull Street Take
I am long American energy abundance, and this is the cleanest way to play the AI boom without guessing which model or which chip wins. The picks and shovels of this cycle are electrons, and Vistra, NRG, and Energy Transfer are selling them under contract, not press release. The risk here was never demand. It is whether we can build fast enough to meet it. I would rather own the companies powering the data centers than the ones burning the cash inside them.
Markets in Review · The Tape
Markets in Review
The policy-sensitive 2-year Treasury yield fell 3.5 basis points to 4.13% following the June jobs report, according to CNBC. Stock market futures rose after the release as traders dialed back rate-hike expectations.
The June jobs report did the work for bond bulls on Thursday. A miss on nonfarm payrolls (57,000 vs. the 115,000 consensus) and a plunge in labor force participation sent the 2-year yield to 4.13%, its lowest post-report level in recent weeks, as markets repriced the Federal Reserve’s near-term path.
Equity futures responded positively to the data, reading a soft labor market as reducing the risk of near-term monetary tightening. Fed Chair Kevin Warsh had called the labor picture ‘steady’ just the day before, but Thursday’s numbers challenged that characterization.
On the commodity side, Brent crude continues to trade well off its highs. Benchmark Brent has fallen 39% from its March peak, per CNBC, as Saudi Arabia has ramped oil flows through the Strait of Hormuz following the June 17 U.S.-Iran ceasefire, shipping roughly 34 million barrels through the strait since then.
Go deeper
The 2-year Treasury yield, the most rate-sensitive part of the curve, dropped 3.5 basis points to 4.13% as traders removed a potential September hike from CME FedWatch futures.
Leisure and hospitality shed 61,000 jobs in June, the BLS said, reflecting slower-than-usual seasonal hiring and dragging the headline payroll number well below consensus.
The S&P 500 has cumulatively surged approximately 50% since April 8, 2025, per CNBC, the day before the tariff reversal that sparked the rally.
What they’re saying
‘The slowdown in payroll growth challenges the narrative of renewed labor market strength that has been building in recent months but, importantly, reinforces the view that the Federal Reserve is under little pressure to tighten policy,’ said Seema Shah, Chief Global Strategist, Principal Asset Management
2. The Economy · Labor
The U.S. economy added only 57,000 nonfarm payrolls in June, according to the Bureau of Labor Statistics, badly missing the 115,000 Dow Jones consensus and well below May’s downwardly revised 129,000. The headline unemployment rate fell to 4.2%, but for the wrong reason: the labor force participation rate dropped to 61.5%, its lowest since March 2021 and, excluding the Covid era, its lowest in 50 years, per CNBC. The labor force itself shrank by 720,000 in June alone. ‘What really affects me is not so much the unemployment rate,’ said Dan North, senior economist at Allianz. ‘This is a big leg down in one month.’ Treasury’s policy-sensitive 2-year yield fell 3.5 basis points to 4.13% following the release, according to CNBC, as traders removed a potential September rate hike from the table.
720,000: Workers who exited the labor force in June alone, per the BLS household survey, driving the headline unemployment rate lower even as fewer people were actually employed.
3. Markets · Chips
SK Hynix plans to list on the Nasdaq around July 10, tapping American investor appetite for AI memory chips and aiming to close the valuation gap with rival Micron (MU), according to Fortune and Bloomberg. The $29 billion listing would give U.S. funds direct access to a leading maker of the high-bandwidth memory that AI data centers cannot run without. SK Hynix still trades cheaper than its American peer, near 6.2 times estimated earnings against Micron’s roughly 7 times, even after a year in which memory names have ridden the AI buildout hard. As one analyst told Fortune, we are in a time of extreme enthusiasm about chip stocks, and this listing is built to convert it.
4. Geopolitics · Energy
A cargo vessel triggered a distress alert 30 nautical miles southwest of Al Hudaydah, Yemen, on Sunday, according to the UK Maritime Trade Operations Centre. The incident puts the fragile U.S.-Iran ceasefire signed June 17 back in focus: that deal is still in a 60-day negotiation window to produce a permanent peace. Brent crude has already fallen 39% from its March highs as Saudi Arabia ramped flows through the Strait of Hormuz, shipping roughly 34 million barrels through the strait since June 17, per trade intelligence firm Kpler. Any sustained disruption to the Bab el-Mandeb, the chokepoint linking the Red Sea to the Gulf of Aden, would threaten the relief valve the oil market has been counting on.
5. Autos · EVs
Tesla (TSLA) delivered 480,126 vehicles in the second quarter, up 25% year over year and 34% from the first quarter, beating the roughly 406,000 Wall Street consensus by about 74,000 units and snapping a two-year run of annual declines, per the company’s report. The warning sits underneath the beat: Tesla produced only 451,758 vehicles, so it delivered 28,368 more cars than it built, drawing down inventory rather than selling into pure new demand. That drawdown accounts for close to 38% of the delivery surprise, and the stock still fell about 7.5% on the news, its worst session in nearly a year. A blowout headline that leans on backlog is a strong quarter, but it is not the same signal as demand outrunning supply.
+ Also on the Tape
Autos: Ford (F) was named the top mass-market brand in J.D. Power’s 2026 initial quality ranking, its first time leading mainstream brands since 2010, after cutting warranty costs by $1.5 billion in 2025.
Autos: Hybrid vehicles are pulling ahead of EVs as the breakout segment of the U.S. car market, winning on function and price rather than serving as a bridge to full electrification, according to MarketWatch.
Labor: Initial jobless claims for the week ended June 27 came in at 215,000, down 1,000 from the prior week and below the forecast of 220,000, per the Bureau of Labor Statistics.
The Fed: Fed Chair Kevin Warsh called the jobs picture ‘steady’ on Wednesday while reiterating inflation remains above the 2% target, and futures markets now point to a potential rate hike only as early as October, per CME FedWatch.
Private Markets: In private equity, every deal has four seats at the table and retail investors get the weakest one, argues Oren Klaff on Bull Street: the winning move is getting in before the professional money does, not after it passes.
—> https://bullst.substack.com/p/the-private-equity-trick-investors
The Last Word
You cannot run artificial intelligence on artificial power. Someone has to build the real thing.
Bull Street is for informational purposes only. Nothing here is financial advice. Always do your own research.
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