Dear readers,
Goldman Sachs beat profit expectations by roughly $4 a share on Tuesday, and it still wasn’t the day’s main story. That belonged to memory chips. Yesterday’s question was which AI names are true bottleneck winners and which are merely rebound candidates.
Seoul answered it with a reminder that a bottleneck is only as valuable as the prices it can command. Banks are delivering, chip stocks from Seoul to New York are under pressure, and Wednesday brings the US inflation data as the next test.
Memory Chips: China’s CXMT Challenges the Pricing Story
China’s CXMT has reported progress on a denser memory architecture. CEO Cao Kanyu says server DRAM based on the new design should reach the market before year-end. Analysts say series production is unconfirmed. The market reacted sharply anyway.
SK Hynix lost about 10 percent in Seoul and Samsung 7.4 percent. Together they make up roughly half of the Kospi. The index fell by more than 7 percent at one point and closed below 6,000, well under its June record.
In the US, Micron and Sandisk are each down about 6 percent in afternoon trading, though Sandisk is still up sharply this year. Nvidia, AMD and Broadcom are also lower, with AMD’s drop of a good 3 percent the steepest of the three.
The thesis behind the selling is uncomfortable. The memory boom ran on tight supply and rising prices. If China closes the technology gap, that pricing assumption is in question. SK Hynix is still up 122 percent year to date, but it has lost 15 percent over the past 30 days.
The next checkpoint is Sandisk on October 29. Analysts expect earnings of $46.22 per share, against $1.22 a year earlier. Anyone who has priced in profits of that scale should listen closely to what the company says about pricing in its outlook.
Marvell offers a useful cross-check. It has introduced new interconnect chips for AI data centers, so demand for the infrastructure is not drying up. The problem lies in valuations and pricing pressure, not in order books.
Goldman Sachs: Equities Trading Crushes the Consensus
Goldman opened bank earnings season with a clear beat. Reported diluted earnings came to $17.01 per share, against roughly $13 expected. Donations of about $450 million, worth around $1 per share, weighed on the result.
Revenue rose 23 percent to $18.68 billion. Equities trading made the difference, with $6.44 billion in revenue, up 72 percent. Fixed income, currencies and commodities disappointed at $3.47 billion, down 1 percent from a year earlier.
Return on equity came in at 18.7 percent, and the quarterly dividend is $5 per share. The stock is up a good 1 percent in afternoon trading, after gaining about 3 percent before the open.
One detail tempers the shine. The investment banking backlog is slightly below its level at the end of 2025. Incentive fees in wealth management rose almost eightfold to $587 million, thanks to SpaceX holdings. Income like that can’t be planned.
JPMorgan’s picture was more mixed. Reported earnings were $5.57 per share, or $5.75 adjusted, which missed expectations. Fixed income trading revenue fell 4 percent.
Should investors sell immediately? Or is it worth buying OpenAI?
Wells Fargo beat on earnings but missed on revenue. Citigroup posted its best third quarter in fixed income and currency trading in at least ten years. The KBW bank index sits about 12 percent below its August high. The pattern is that trading is carrying the banks right now, while their stocks are rewarding it only selectively.
Wednesday’s Inflation Data: The Rate Question Sets Valuations
Analysts expect US inflation of 3.6 to 3.7 percent on Wednesday, up from 3.4 percent the month before. Core inflation is forecast at about 2.5 percent. Last month the Federal Reserve raised rates for the first time in three years.
Cleveland Fed President Beth Hammack is calling for small, fast rate moves to prevent an inflation mentality from taking hold. Chicago Fed President Austan Goolsbee warns that the AI investment boom is pushing up prices beyond the technology sector.
Traders put the odds of a pause at the late-October meeting at about 80 percent. A December hike is seen as nearly certain, at a good 84 percent. The ten-year Treasury yield is around 5.2 percent, just below last week’s 24-year high.
The real message lies in the interplay. High yields make financing AI data centers more expensive, which hits exactly the stocks that are falling now. A hot reading would add pressure on chip and growth shares, while a soft one could spark a rebound.
OpenAI: From $70 Billion to $50 Billion, and the Skepticism Stays
The Financial Times reports that OpenAI told investors at the end of September that its annualized revenue was just under $50 billion. Roughly $70 billion had circulated before. The gap of about $20 billion stems from a changed accounting method for cloud partners, which brings OpenAI in line with Anthropic.
On Thursday, October 8, Nvidia lost almost 3 percent and Oracle fell 5.5 percent. Oracle is down a little more than 1 percent now and about 27 percent for the year. Broadcom CEO Hock Tan warned against “casino” expectations, though he considers OpenAI’s business model viable.
Demand isn’t collapsing. OpenAI’s growth in the third quarter was 77 percent. But investors now want proof that the billions in spending will pay off. A new funding round of about $30 billion at a valuation near $1.4 trillion is reportedly in the works, and Anthropic’s IPO is expected in mid-November. Both will test sentiment.
Bitcoin: Leveraged Bets Wiped Out
Bitcoin dropped to about $81,000 at one point, after the Kospi slide had hit risk appetite. Within 24 hours, positions worth $770 million to $810 million were force-liquidated, about 89 percent of them bets on rising prices. Bitcoin has since recovered to around $83,300.
US bitcoin funds saw outflows of a good $680 million last week, their weakest week since late June. Another $65 million left on Monday. The fear index for crypto investors fell to 56 points, from about 80 in early October.
This was a deleveraging, not a panic. Bitcoin now also hangs on the inflation data. Analysts see risk toward $80,000 on a hot reading and a rebound to about $86,000 on a soft one.
The Takeaway
Wednesday’s inflation reading will decide whether rate fear keeps weighing on chip, growth and crypto stocks. If the banks can match Goldman’s strong equities trading in the coming days, earnings season will remain a support for the Dow. For memory stocks, the pricing comments at Sandisk’s report on October 29 are the date to watch. Until then, the lesson from Seoul is that demand alone doesn’t protect a valuation if pricing power is in doubt.
Best regards,
The StocksToday.com Editorial
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