AI infra spending surges; car premiums at record levels; operating expenses rise

In this edition of?Insight Weekly, we take a close look at AI infrastructure spending. Investment in the generative AI infrastructure stack is experiencing a significant increase, as both investors and enterprises recognize expanding opportunities throughout the AI value chain. Venture capital inflows into GenAI software and hardware infrastructure have reached unprecedented levels this year, according to data from S&P Global Market Intelligence. With four months remaining until the year concludes, the $13.2 billion recorded so far in 2024 is nearly double the total of $6.8 billion from 2023. This increase in investment reflects a rising urgency among enterprises to integrate GenAI applications across their organizations. The total value of funding and M&A in the data center sector has reached an all-time high, approaching $35 billion year -to -date, according to Market Intelligence data.

Private auto insurers in the US continued to benefit from earned rate increases, driving premiums to record levels in the second quarter of 2024. Insurers recorded direct premiums written of $86.87 billion during the quarter, the highest second-quarter total since 2001, according to a Market Intelligence analysis.

Operating expenses climbed by just over $42 billion for rated US nonfinancial corporations in the second quarter of 2024 after declining in the first quarter, with investment-grade company expenses nearing the 2023 quarterly high, according to the latest Market Intelligence data. Companies rated BBB- and higher by S&P Global Ratings added a combined $38.90 billion in operating expenses from the first quarter to the second quarter, bringing total expenses to $3.022 trillion and accounting for the bulk of expense growth among US companies.

AI Infrastructure Investments in Focus

GenAI rise spurs investor interest in AI infrastructure plays

Venture capital inflows into generative AI software and hardware infrastructure have reached unprecedented levels this year, according to data from S&P Global Market Intelligence.

—Read more on S&P Global Market Intelligence .

Investor enthusiasm in datacenters shows no signs of slowing

While the broader tech M&A landscape struggles to find a stable footing, datacenters are experiencing an unprecedented wave of large deals, resulting in record levels of investment in 2024.

—Read more on S&P Global Market Intelligence .

Deep Dives

In-depth features looking at the impact of major news developments in key industries.

Financials

Bank stocks fall in early September after 2024 closing high at August-end

Markets fell as new data from federal agencies showed signs of a cooling labor market.

—Read more on S&P Global Market Intelligence .

Criticized loans pile up at US banks as credit weakens

As of June 30, US public banks' median ratio of criticized loans to Tier 1 capital came in at 18.60%, up from 15.06% in 2023 and the highest level since 2020.

—Read more on S&P Global Market Intelligence .

US banks invest cautiously in bonds with rate cuts on horizon???

Aggregate securities at US banks were down 0.3% in the second quarter to $5.458 trillion as of June 30.

—Read more on S&P Global Market Intelligence .

Problem loans climb at Sweden's top banks amid CRE sector challenges

Swedish lenders such as SEB, Handelsbanken and Swedbank hold some of the largest exposures to the commercial real estate sector among their European peers.

—Read more on S&P Global Market Intelligence .

Insurance

US private auto insurers' premiums rise to record levels after strong Q2 2024????

Direct premiums written for the business line hit $86.87 billion during the second quarter, the highest total for the quarter since 2001.

—Read more on S&P Global Market Intelligence .

Real Estate

NAV Monitor: US equity REITs trade at a lower discount to NAV in August

The hotel sector traded at the largest median discount to net asset value at 26.5%, topping all real estate investment trust sectors for the fourth consecutive month.

—Read more on S&P Global Market Intelligence .

Private equity

Private equity investments in agriculture plunge as prices, valuations fall

Total deal value was $1.56 billion year to date through Aug. 13, down 48.7% from $3.04 billion in the same period in 2023.

—Read more on S&P Global Market Intelligence .

Credit and Markets

Operating expenses rise by about $42B for rated US companies in Q2 2024

Rated US corporations booked an overall decline in their expense-to-revenue ratio in the second quarter, even as operating expenses increased.

—Read more on S&P Global Market Intelligence .

Treasury yield curve inches toward normalcy as bond market readies for Fed cuts

A key spread within the yield curve, which was deeply negative a year ago, has turned positive.

—Read more on S&P Global Market Intelligence.

Manufacturing downturn spreads from Europe to America, but UK bucks the malaise

The Global Manufacturing Purchasing Managers' Index indicated a fall in worldwide factory output in August for the first time since December.

—Read more on spglobal.com .

Energy and Utilities

RRA Regulatory Focus: Public staff supports reducing Dominion utility's proposed NC rate hike by half

The staff's recommended net operating income adjustments account for the majority of the revenue requirement difference for Virginia Electric and Power.

—Read more on S&P Global Market Intelligence .

US wind installations make gains in Q2 2024, 73 GW in pipeline by 2028

About 1,531 MW of wind capacity was added to the US power grid in the second quarter of 2024, spurred in part by renewed tax incentives in the Inflation Reduction Act as well as the repowering of older wind plants.

—Read more on S&P Global Market Intelligence .

EU hydrogen sector expects new auction rules restricting Chinese machines

An EU official pledged to introduce restrictions on Chinese electrolyzers in upcoming auction rounds. European manufacturers await the new rules with both hope and skepticism.

—Read more on S&P Global Market Intelligence .

Technology, Media and Telecommunications

Enterprise Tech: Global survey examines industrial, enterprise and consumer metaverse adoption

Generative AI is often cited as having impacted metaverse adoption. In the annual S&P Global Market Intelligence survey on metaverse attitudes, adoption and use, respondents were asked about the relationship between AI and their metaverse programs.

—Read more on S&P Global Market Intelligence .

Metals and Mining

Metals & Mining Research: Consensus price forecasts – Imminent US rate cut drives gold prices to new highs

Strongest signal yet of an upcoming US interest rate cut bolsters metals prices in August, but oversupply and lagging demand limit the upside.

—Read more on spglobal.com .

The Week in M&A

$35.57B snack deal revives global large M&A activity

—Read more on S&P Global Market Intelligence .

UK fintech OakNorth looking to buy a US bank, COO says

—Read more on S&P Global Market Intelligence .

China seeks to lift financial market status with merger of top brokerages

—Read more on S&P Global Market Intelligence .

CrossFirst deal puts First Busey among busiest US bank acquirers

—Read more on S&P Global Market Intelligence ?

The Big Number

Read more on S&P Global Market Intelligence .

Trending

?—Read more on electric vehicle adoption trends and follow S&P Global Mobility on Linkedin.

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