Streaming Wars, AI Servers, and Sticky Inflation: What’s Really Happening

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It’s been a high-stakes week on Wall Street, marked by massive M&A drama and a significant cooling of the "AI fever" that has dominated markets for over a year. While international markets are seeing a bit of a renaissance, U.S. benchmarks are grappling with geopolitical jitters and sticky inflation.

This was particularly evident in the benchmark US 10-Year Treasury yield, which fell to its lowest point in 90 days:

This week’s dip in yields isn't a sign of fear, but a massive green light for institutional buyers to accumulate quality names at a discount, setting the stage for a powerful year-end surge

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The $110 Billion "Streaming Wars" Megamerger

The deal between Paramount Skydance (PSKY) and Warner Bros. Discovery (WBD) is being hailed as the "Great Hollywood Reset." After a grueling three-month bidding war against Netflix, Paramount Skydance emerged victorious this week, valuing the combined media empire at approximately $111 billion (including debt).

This, of course, is a massive power move by David Ellison (son of Oracle co-founder Larry Ellison), who only just completed his acquisition of Paramount Global in August 2025. By swallowing the much larger Warner Bros. Discovery, he is effectively creating a "content superpower" designed to go toe-to-toe with Disney and Netflix.

The Financials: By the Numbers

The deal structure shifted several times before reaching its final form earlier this week:

• Offer Price: $31.00 per share in an all-cash deal.

• Total Valuation: ~$111 billion (inclusive of WBD’s ~$33 billion debt load).

• The Breakup Fee: Paramount has agreed to pay the $2.8 billion penalty that WBD owes to Netflix for walking away from their previous December agreement.

• Regulatory "Insurance": In a sign of confidence, Paramount offered a staggering $7 billion regulatory termination fee if the deal is blocked by the DOJ or FTC.

Unlike the previous Netflix proposal—which would have carved up WBD by taking only the studios and streaming assets—Paramount Skydance is buying the entire company. This keeps the "old" and "new" media assets under one roof:

What’s Next?

The deal is expected to close between September and December 2026. However, it faces two major hurdles:

1. Antitrust Scrutiny: Combining CNN and CBS News is unprecedented and will likely face intense questioning from regulators regarding media plurality.

2. Integration Debt: Paramount Skydance is taking on a massive debt load. They will need to find billions in "synergies" (often a corporate euphemism for layoffs and budget cuts) to make the math work.

Dell Technologies Surges on AI Server Demand

On Friday, Dell Technologies' share price jumped by as much as 21%, as the company reported blowout fourth-quarter earnings that effectively silenced skeptics of the AI hardware trade.

While the broader market has been volatile, Dell’s results provided a "green shoot" for tech investors, proving that the demand for AI infrastructure is not just a trend but a massive, multi-year industrial build-out.

Dell's fiscal 2026 fourth-quarter results were a "beat and raise" story across the board:

• Revenue: $33.4 billion, a 39% increase year-over-year, smashing analyst estimates.

• AI-Optimized Server Shipments: Shipped $9.5 billion in AI servers in Q4 alone.

• The Backlog: The company ended the quarter with a record $43 billion backlog in AI server orders—a clear sign that demand is outstripping supply.

• Dividend & Buybacks: Management signaled extreme confidence by raising the annual cash dividend by 20% and adding $10 billion to its share repurchase program.

Why This Matters More Broadly

Dell’s performance acts as a barometer for the entire technology sector. Here is what this jump tells us about the current state of the market:

• The "AI Halo" Effect: Dell noted that the rush for AI servers is pulling through demand for traditional x86 servers and storage (up 27% this quarter). Companies aren't just buying AI chips; they are modernizing their entire data center "estates" to support those chips.

• Enterprise Adoption is Scaling: Unlike 2024, which was dominated by "Hyperscalers" (like Microsoft and Google), Dell’s growth is now being driven by Sovereign nations and Tier 2 cloud providers. This suggests the "AI revolution" is spreading into the broader global economy.

• The PC Refresh is Real: While AI servers stole the show, Dell's commercial PC revenue grew 16%. This confirms that the corporate PC refresh cycle (driven by the end of Windows 10 support and the arrival of "AI PCs") is finally providing a floor for hardware makers.

• Infrastructure over Software: In the current high-rate environment, investors are favoring companies with tangible backlogs and physical hardware sales (like Dell and Nvidia) over speculative software-as-a-service (SaaS) firms that have yet to monetize AI.

Looking Ahead

Dell issued an aggressive forecast for fiscal 2027, projecting total revenue between $138 billion and $142 billion. Crucially, they expect AI-optimized server revenue to double again to approximately $50 billion next year.

Strategy in Focus: Deep Tech

The headlines this week might look like a mixed bag, but if you look closer at the advanced tech infrastructure space, the narrative is shifting from speculative hype to massive, industrial-scale execution.

While Nvidia (NVDA) saw some "sell-the-news" pressure despite a monster revenue beat, Dell Technologies (DELL) stole the show on Friday. Dell’s stock skyrocketed 17.5% after the company projected that its AI server revenue will more than double in fiscal 2027. This isn't just about chips anymore; it’s about the servers, the cooling, the networking, and the physical data centers that house the "brains" of the future.

This is exactly why narrow exposure to a single "AI poster child" is no longer enough. While retail traders chase the latest viral ticker, institutional capital is quietly flowing into the companies that manage the cloud, storage, and networking bottlenecks.

Our Next-Gen Data Infrastructure Thematic Investing Strategy is built to capture this shift systematically.

Instead of guessing which sub-sector will lead next month, this strategy uses the Surmount library’s TradingStrategy class to maintain a disciplined, diversified hold on 20 industry titans. By rebalancing every 30 days, the strategy strips away the emotional "noise" of a volatile week like this one and focuses on the structural trend: the global hunger for advanced data solutions.

Why This Strategy Wins in a "Sticky Inflation" Market:

• Industrial Scale: Infrastructure companies often have long-term contracts and "moats" that provide more stability than consumer-facing tech.

• Systematic Rebalancing: Our 30-day rebalancing cycle ensures that as winners like Dell pull ahead, your portfolio stays aligned with your target risk levels—locking in gains and maintaining diversification.

• The Full Stack: From high-speed data networking to the liquid cooling systems required for next-gen chips, you aren't just betting on a product; you're betting on the utility of the 21st century.

The "AI fever" isn't breaking; it's just getting organized. Don't just trade the trend—own the infrastructure that powers it.

— Surmount Markets Team