European Central Bank President Christine Lagarde warned in Vienna on Monday that Europe cannot rely solely on imported artificial intelligence from the United States and must develop its own capacity or risk giving foreign technology suppliers leverage over every corner of its economy. Lagarde said Europe's first priority must be expanding its own computing infrastructure, noting the continent already lacks sufficient data center capacity to meet existing demand and that on current trends the gap is projected to grow more than sixfold within a decade, with closing it potentially costing as much as €600 billion over ten years, chips included. She said the E.U.'s new gigafactories are a start but fill only a fraction of the shortfall, and that Europe must also develop AI models competent enough for the majority of use cases and hosted on European systems, pointing to French firm Mistral and a company in San Sebastián that adapted a Chinese open model to top independent benchmarks among European models. Lagarde said euro area households hold roughly €440 billion in U.S. technology firms while U.S. hyperscalers issued more than $100 billion in bonds last year, and cited ECB estimates that rapid AI adoption could raise productivity by as much as 4% over a decade. She argued the buildout requires patient equity rather than debt alone, noting European households save roughly €1.4 trillion a year but that markets to channel that capital into homegrown technology do not yet exist at the necessary scale. The remarks came alongside prior Brussels steps, including European Commission legislation to restrict sensitive government cloud contracts to providers meeting European sovereignty standards through the Cloud and AI Development Act, and a roughly €30 billion E.U. tender for up to seven AI gigafactories pairing up to €10 billion in public funding with at least €20 billion in expected private investment, with construction targeted to begin in 2027.
IREN Fair Value Trimmed to US$79.03 as AI Cloud Wins Meet Build Out Risks
IREN's fair value estimate has been trimmed from US$80.93 to US$79.03, a modest adjustment reflecting a mix of growing AI cloud contracts and ongoing questions around execution and supply build out through 2027. The revision lifts revenue growth assumptions to 168.01% from 125.79% and net profit margin expectations to 11.73% from 5.79%, while the future P/E assumption drops to 31.26x from 90.29x and the discount rate rises to 9.41% from 8.83%. On the bullish side, JPMorgan shifted IREN from Underweight to Overweight with a US$65 price target, citing a partnership with Nvidia, new customer signings and higher industry pricing, while H.C. Wainwright raised its target to US$90 after IREN announced US$2.8b of new multi year AI cloud contracts and lifted its 2026 AI cloud annual recurring revenue target to more than US$4b. Northland initiated IREN at Outperform with a US$99 price target, and Freedom Capital upgraded the stock from Hold to Buy. Freedom Capital nonetheless flagged execution on supply additions over the next two years as a central risk, noting the story depends heavily on adding capacity on schedule.
Nvidia-Backed Nscale Files for US IPO After $1.02 Billion Loss
Nscale, the London-based AI data center developer backed by Nvidia and Microsoft, filed publicly for an initial public offering in New York, seeking to raise as much as $3 billion. The company reported a net loss of $1.02 billion on revenue of $140.6 million for the six months ended June 30, compared with a net loss of $368.9 million on revenue of $10.4 million a year earlier, according to its Friday filing with the US Securities and Exchange Commission. Spun off from a cryptocurrency mining operation in early 2024, Nscale was valued at about $14.6 billion in a March Series C round led by Aker ASA and 8090 Industries, with Nvidia and Nokia Oyj also participating. The company has agreed to add more than 30,000 Nvidia chips to an existing rental agreement with Microsoft at its Narvik, Norway gigafactory, and Anthropic has agreed to spend $45 billion to rent AI cloud computing power from its flagship West Virginia data center development. The offering is being led by Goldman Sachs, JPMorgan Chase and Morgan Stanley, with shares expected to trade on the New York Stock Exchange under the symbol NSCL.
Goldman Sachs Warns S&P 500 Earnings Growth Set to Cool
Goldman Sachs Group expects the rapid rise in S&P 500 earnings to cool rather than reverse, saying several temporary forces are currently lifting profits. S&P 500 earnings per share rose 51% year over year in the second quarter, with growth over the past four quarters reaching 26%, a pace the firm said has pushed profits above their longer-term trend, though the index's forward price-to-earnings ratio has eased to 19 from 23 a year ago and now matches its 10-year average. Artificial intelligence spending is a major contributor, with Amazon, Meta Platforms, Microsoft and Alphabet expected to spend about $800 billion on capital projects this year, nearly double 2025 levels, and Goldman expects that earnings boost to fade as spending growth slows and depreciation rises. Semiconductor margins and gains from technology companies' investment holdings are also supporting earnings, and Goldman said weaker chip margins could cut S&P 500 earnings by about 10%, while investment gains that helped second-quarter profits are expected to contribute less in 2027.
