Breakfast News: Week in Review

The Motley Fool Breakfast News — every morning at 7:30 Eastern

Catch up quickly on what happened in the market this week.

1. SpaceX Borrows Big for AI as Yields Hit 2002 Levels

On Wednesday, the 10-year Treasury yield touched 5.365%, its highest level since April 2002. That afternoon, Federal Reserve minutes showed that most officials expect another rate hike by year-end. Rising bond yields raise the cost of funding the artificial intelligence build-out. Tech giants increasingly pay for it with borrowed money. AI-linked stocks fell on fears that higher borrowing costs could slow it. The borrowing continued anyway.

Chips, with financing: Broadcom (AVGO +0.39%), recommended by both Team Rule Breakers and Team Hidden Gems, designs custom AI chips for OpenAI. OpenAI needs cash up front for that much hardware. Broadcom has held early talks on more than $50 billion of financing to help OpenAI pay for it. Space Exploration Technologies (SPCX +1.25%) plans to borrow about $40 billion for Nvidia (NVDA -0.52%) chips.
The bubble call: Billionaire investor Ray Dalio called AI a “classic bubble” nearing its breaking point.
What it means for Broadcom holders: The debt would likely sit with the buyers and their lenders. Broadcom gets paid for the chips. But part of its future growth depends on lenders staying willing as rates climb.

Everyone involved needs AI compute to earn more than their debt costs. With the 10-year Treasury paying over 5%, that bar rose this week.

2. Google’s 20-Year Nuclear Deal Sends Constellation Up 12%

Tuesday’s Breakfast News flagged reports that Alphabet (GOOG +0.87%) was nearing a multiyear nuclear power deal. Hours later, Google had signed a 20-year contract with Constellation Energy (CEG +4.56%). Constellation, recommended by both Team Hidden Gems and Team Rule Breakers, jumped more than 12%.

New power from old plants: The deal's 890 megawatts will come from upgrades at six existing plants. The work includes modernized turbines and digital controls. Google said the contract gives Constellation the revenue certainty to upgrade 11 reactors without raising costs for other customers.
A second, bigger deal: The companies also agreed to a separate 15-year supply deal for 2.7 gigawatts, roughly triple the new capacity.
A long line of buyers: Amazon (AMZN +3.29%), Microsoft (MSFT +2.38%), and Meta (META -0.31%) have also signed 20-year nuclear deals with Constellation or its rival Vistra (VST +3.42%).

In a week when money got more expensive, Constellation locked in two decades of revenue behind its upgrades. Contracts that long make future cash flow far easier to predict. That leaves the upgrade work itself. As the largest nuclear operator in the United States, Constellation is well placed to do it.

3. C.H. Robinson, Uber, and Skydance Pay Up for Scale

C.H. Robinson (CHRW +0.69%) agreed to buy rival freight broker RXO (RXO +0.52%) in a $5.8 billion cash-and-stock deal. That values RXO, a Stock Advisor recommendation from Team Hidden Gems, at a 29% premium to Friday’s close. C.H. Robinson shareholders got the bill as their stock fell about 12%. Its CEO expects about $300 million in yearly savings within two years of closing, and investors want proof.

Greedy when others are fearful: A Supreme Court ruling this year opened freight brokers to lawsuits when a contracted truck crashes. Team Hidden Gems’ Lou Whiteman says C.H. Robinson “is being greedy when others are being fearful.”
Uber keeps shopping: Uber (UBER +1.81%), a Rule Breakers recommendation, agreed to buy workplace catering platform ezCater for $2.3 billion in cash. EzCater’s average order tops $400, and Uber expects the deal to lift margins. Uber has also offered $14.8 billion for Delivery Hero, funded with cash and new debt.
Skydance closes: Skydance (SKYD -1.29%) completed its $110 billion Warner Bros. Discovery merger, seven months after outbidding Netflix (NFLX -1.77%). The combined company’s shares fell by about 5% on day one.

All three buyers are paying to get bigger, and their shareholders carry the risk until the deals prove out.

4. Meta’s Muse Helps Push AMD Back Above $1 Trillion

A week ago, Meta's push to sell its Muse agent to businesses sent four software stocks lower. This week, AI agents like Muse lifted a chipmaker. Advanced Micro Devices (AMD -2.03%) hit a record on Tuesday, pushing the company back into the trillion-dollar club. AMD is recommended in Stock Advisor by Team Rule Breakers and in Rule Breakers.

Agents run on CPUs: An agent carrying out tasks for hours needs a central processing unit (CPU). Graphics processing units (GPUs) handle the model's reasoning. Meta and OpenAI both say their new agents run on AMD-powered computers.
One customer, big slice: Morgan Stanley (MS +1.38%) estimates Meta’s agent alone could make up 20% of AMD’s 2026 chip sales.
No lock on the lead: Meta calls itself largely CPU-agnostic, and OpenAI uses multiple suppliers. Rival chips, including Nvidia’s new Vera CPU, are competing for the same market. In this week's Debate, Team Rule Breakers’ Jason Moser called such agents quite replicable. He argued that Muse will be displaced as the industry leader by the first quarter of next year.

Even if Muse lost its lead, AMD could still win, since every agent needs CPUs. The real risk is buyers switching to a rival chip.

5. The Ugly Numbers Our Teams Looked Past at Salesforce and BBB

Three of this week’s updates asked members to look past an ugly number.

Expensive and worth it: Salesforce (CRM +0.58%) traded at 100 times earnings when Rule Breakers recommended it in January 2009. Skeptics said the price already assumed too much. That recommendation is up around 3,300%.
Red ink by design: Wall Street analysts are focused on a widening net loss at Mexican grocer BBB Foods (TBBB +4.75%). Team Hidden Gems and Team Rule Breakers see a founder-led discounter taking share. The company opened 155 stores last quarter, and new stores burn cash for months before earning.
A winner and a loser: Team Hidden Gems’ April 2025 buy of school bus maker Blue Bird (BLBD +0.18%) is up about 65%. The team's May 2026 buy is down about 22%. Electric buses haven’t sparked the upgrade cycle the team expected. Blue Bird gets paid for whichever bus a district picks, including propane models that cost much less than electric.

One had no ugly number to explain.

One drug bankrolls the whole pipeline: Team Hidden Gems recommends Krystal Biotech (KRYS +1.32%). It sells a gene therapy gel for a rare skin disease. In the second quarter, operating profit grew nearly twice as fast as revenue.