Rigetti Computing Inc (Nasdaq: RGTI) stock gives investors a way to invest directly in the quantum computing sector at an early stage. Rigetti designs and builds quantum computers based on superconducting qubits, which are tiny circuits cooled to near absolute zero that store quantum information. Interest in the shares tends to rise and fall with news about the wider quantum sector, government funding, and technical milestones, not with sales. This guide explains what Rigetti does, how its finances work, what could move the business, and which risks matter most, so you can judge the stock on facts rather than sector buzz.

#What Rigetti Computing Does

Rigetti calls itself a full-stack quantum computing company, which means it handles chip design, chip manufacturing, system building, and cloud delivery under one roof. It makes its chips in-house at Fab-1, a dedicated quantum device factory, according to Rigetti's September 2026 announcement with the U.S. Department of Commerce.

The company sells two main things. The first is on-premises systems, which are computers that customers such as national laboratories and quantum computing centers install in their own facilities. These range from the 9-qubit Novera to the 108-qubit Cepheus line. A qubit is the basic unit of a quantum computer, and more qubits generally mean more room for complex calculations. The second is cloud access through Rigetti Quantum Cloud Services, which lets customers run experiments remotely.

Rigetti's largest system, Cepheus-1-108Q, links twelve 9-qubit chips together in a design the company calls chiplet-based. Rigetti says this modular approach gives it a practical way to scale over time, according to its second quarter 2026 results.

#Why Investors Follow Rigetti

Three themes explain most of the attention on the stock.

The first is technical progress. Gate fidelity measures how often a quantum operation runs without error, and it is one of the main yardsticks for whether a quantum computer is getting more useful. Rigetti reports median two-qubit fidelity of about 99.1% on its 108-qubit system and 99.8% on its 9-qubit system, according to its second quarter 2026 results. Its stated goal is roughly 1,000 qubits at about 99.9% fidelity over around three years. That is a company target, not a guarantee.

The second is a growing customer list. Rigetti is delivering a 9-qubit system to the Pittsburgh Supercomputing Center as part of a project with Hewlett Packard Enterprise, and it has a 108-qubit system program for C-DAC in India. It also plans to invest up to $100 million in the United Kingdom, where it already has a 36-qubit system installed at the National Quantum Computing Centre, according to its second quarter 2026 results.

The third is government backing. Rigetti signed a definitive agreement for $100 million in CHIPS Act funding on September 8, 2026, to support three research projects. These cover miniaturized readout electronics, a new cooling architecture to expand capacity, and manufacturing for higher-connectivity chips, according to Rigetti's announcement of the award.

#How Rigetti's Financials Look

Revenue is growing from a very small base. Rigetti reported second quarter 2026 revenue of $5.1 million, up from $1.8 million a year earlier. Operating expenses were $30.3 million, which left an operating loss of $28.1 million, according to its second quarter 2026 results.

The bottom line can mislead. Rigetti reported a GAAP net loss of $52.6 million for the quarter but a non-GAAP net loss of $16.0 million. The gap comes mainly from stock-based pay and from changes in the value of warrants, which are non-cash accounting items. The reverse happened in the first quarter of 2026, when Rigetti posted GAAP net income of $33.1 million despite a $26.0 million operating loss, according to its first quarter 2026 results. Operating loss is usually the cleaner guide to how the business itself is doing.

The balance sheet is a real strength. Rigetti ended June 2026 with $541.3 million in cash and investments and no debt, according to its second quarter 2026 results. That gives it time, though it has an accumulated deficit of about $790 million to show for its history of spending.

#How Rigetti Compares With Other Quantum Companies

Rigetti competes with companies such as IonQ, D-Wave Quantum, and Quantinuum. Each backs a different technology. IonQ and Quantinuum use trapped ions, D-Wave built its business on quantum annealing (a method suited to optimization problems), and Rigetti uses superconducting qubits.

Rigetti says its gate speeds of 50 to 70 nanoseconds are about 10,000 times faster than trapped-ion systems, according to its own company description. Speed is only one measure, and other approaches have strengths of their own. No single design has been proven the winner. DARPA, the U.S. defense research agency, says its Quantum Benchmarking Initiative evaluates all viable approaches rather than picking favorites, according to its program page.

#Near-Term Catalysts to Watch

Several events could shape sentiment in the months ahead.

• Delivery of customer systems. Rigetti's on-premises orders, including the C-DAC and Pittsburgh projects, need to ship on schedule to turn into revenue.

• Fidelity gains. Progress from about 99.1% toward 99.9% on larger systems would support the company's roadmap.

• Use of the Commerce funding. Investors will watch whether the three research projects hit their milestones.

• DARPA's evaluation process. Rigetti took part in Stage A of the Quantum Benchmarking Initiative but was not among the first 11 companies DARPA named for Stage B in November 2025. DARPA has said companies advance on staggered timelines.

#Ways to Get Exposure to Rigetti Stock

Most investors buy RGTI shares directly through a brokerage account, since the stock trades on the Nasdaq. The alternative is a quantum computing or emerging technology exchange-traded fund (ETF), which holds many related companies at once.

Each route has tradeoffs. Owning the shares gives a pure bet on one company, with the full swings that come with it. A fund spreads that risk across several holdings, but it also dilutes the exposure, and some funds hold large technology companies for whom quantum is a small side project. Because outcomes for this sector are so uncertain, many investors keep any position small relative to the rest of their portfolio.

#Key Risks and What to Watch

Revenue is tiny next to spending. Operating expenses in the second quarter of 2026 were about six times revenue. Rigetti's cash cushion is large, but it is being used, and the company raised most of its cash by selling new shares in 2025, according to its second quarter 2026 filing.

Dilution comes with the government deal. The Commerce Department will receive a minority, non-controlling stake in Rigetti as a condition of the funding. Rigetti lists issuing securities to the Department, including dilution to existing stockholders, among its risk factors. Government money can help, but it is not free.

Customer orders can change. Rigetti's own risk language points to the possibility that customers cancel orders, and a small customer base means one delay can move results.

Technology risk is real. Rigetti's current fidelity is below its own target, and DARPA describes its program as a test of whether any approach can reach utility scale (the point where a quantum computer's value exceeds its cost) by 2033. A quantum stock is priced on what might happen years from now.

Paper profits and losses can distort the picture. As shown above, warrant accounting can flip the headline result between a profit and a loss without any change in the business.

#How Does Rigetti Make Money?

Rigetti earns revenue from selling on-premises quantum systems and chips, and from cloud access to its computers. Most current customers are national laboratories, universities, and public-sector research groups rather than everyday businesses.

#Is Rigetti Profitable?

No. Rigetti reported an operating loss in both the first and second quarters of 2026. Headline net income has appeared in some quarters, but this came from non-cash accounting changes, not from selling more than it spends.

#Why Is Rigetti Stock So Volatile?

Rigetti's share price is tied to expectations rather than earnings. With small revenue and a long path to commercial use, news about funding, competitors, or sector sentiment can shift the price sharply in either direction.

#Is Rigetti Bigger Than IonQ or D-Wave?

Each company focuses on a different technology, so size is hard to compare in a simple way. Investors usually look at revenue, cash, technical progress, and customer wins side by side, using each company's filings.

#The Rivers That Power The West Are Running Thin

The rivers and reservoirs that power the American West are running thinner than they have in decades, right as the region's appetite for electricity is exploding. Snowpack across the West sat at roughly half its historic median this spring, cutting the water that normally refills reservoirs and spins hydroelectric turbines through the summer [1].

At the same time, utilities in Seattle, Phoenix and San Francisco are fielding a wave of new interest from data center developers chasing AI computing capacity. Add in 3.7 GW of thermal power plants retired across the West since 2023, and grid operators are trying to keep the lights on with less generation just as demand climbs faster than new supply can be built.

#Lake Powell Creeps Toward The Power Off Switch

The clearest sign of the strain sits behind Glen Canyon Dam in Arizona. Lake Powell, the reservoir that feeds the dam's 1.3 GW of generating capacity, fell below 3,520 feet above sea level in August, its lowest point since the late 1960s.

That still leaves roughly 30 feet of cushion above the 3,490 foot mark known as minimum power pool, the level at which the dam can no longer generate hydroelectricity at all. Federal water managers have already moved emergency supplies from Flaming Gorge Reservoir to slow the decline [2], but the fix carries a cost. Reclamation has acknowledged that holding back releases from Lake Powell could cut hydropower generating capacity at Hoover Dam downstream by as much as 40% as soon as this fall [3].

#AI's Appetite Meets A Shrinking Supply Cushion

Peak demand across the Western Interconnection, the grid serving 80 million people in 14 states plus parts of Canada and Mexico [4], hit a record 168.2 GW in 2024, and WECC's own tracking shows that number reflects only the early stages of data center growth [5].

The North American Electric Reliability Corporation has already flagged the entire Western grid as at risk of energy emergencies because of the dry conditions. A forecasted super El Niño could bring heavy rain and snow to the Southwest this winter, but analysts note that would likely only ease the pressure for a single year, not solve the underlying water shortage.

None of this points to blackouts next week. Utilities are adding gas and battery capacity, and the emergency water transfers should hold Glen Canyon Dam above minimum power pool for now. But the deeper math is unforgiving. A new operating framework for Lake Powell and Lake Mead was only finalized in August, running through 2036, though the first two-year set of guidelines does not resolve how deep future cuts will need to go [6]. Nevada has already sued the Department of the Interior over that framework, arguing it unfairly concentrates cuts on the Lower Basin states while the Upper Basin faces only voluntary targets [7]. Agriculture still consumes the large majority of the river's water regardless of what utilities do. The region's data center pipeline keeps growing irrespective of what the snowpack does.

For investors, the story is less about one stock and more about which parts of the grid absorb the strain. Utilities inside the Western Interconnection, including Pinnacle West, parent of Arizona Public Service, Portland General Electric and Avista, have all fielded new data center interconnection requests in their service territories, though not every one makes it to construction. Gas turbine and backup generation equipment makers such as GE Vernova and Caterpillar have also drawn analyst attention as data center developers turn to on-site power to sidestep grid connection delays. Whether December's reservoir levels come in above or below the 3,490 foot line will say a lot about how much room the region actually has left.

For the last two years, the AI story for investors has mostly been about who builds the technology. Chipmakers, cloud providers and power companies have captured most of the enthusiasm, and Morgan Stanley Research expects roughly $800 billion in AI-related capital spending this year, rising to $1.1 trillion in 2027 [1].

Morgan Stanley strategists Ellen Zentner and Sarah Wolfe argue the next phase of the trade looks different. As the infrastructure buildout matures, the more useful question for investors becomes which companies can actually use AI well enough to cut costs, sharpen decisions and grow margins.

#The Gap Between Access And Real Use

Stanford University's 2026 AI Index found that 88% of organizations now have some access to AI tools [2]. But a separate S&P 500 study by MIT researchers posted on arXiv, found only about one in five companies had AI genuinely embedded in production or core business processes as of 2025 [3].

Morgan Stanley calls the spending needed to close that gap intangible capex. It covers the less glamorous work of making AI actually pay off, things like clean data systems, governance, cybersecurity, staff training and redesigning how work gets done. Firms that skip this step and just bolt AI onto old workflows tend to get the adoption headlines without the productivity gains.

#The Payoff Often Shows Up Late

Even companies doing this work properly may not see results right away. Economists call this pattern a productivity J curve, where spending on reorganizing data and retraining staff comes first, and the payoff in margins or earnings shows up later.

There are early signs that payoff is starting to show. Morgan Stanley Research reviewed more than 10,000 earnings and conference transcripts and found that about 25% of S&P 500 companies cited at least one quantifiable AI impact by July 2026, up from 15% in the third quarter of 2025, as shown above. That is still a minority of the index, but the direction is the signal worth tracking.

#Where Deep Adoption May Emerge Next

For now, measurable AI gains are concentrated in tech and communication services. Morgan Stanley points to three other sectors it is watching for the next wave of deep adopters.

In financials, select banks, insurers and wealth managers can use AI to speed up document heavy workflows and support decisions in highly regulated settings. In health care, embedded AI can ease administrative burdens and support clinical documentation and drug development. In retail, large chains with big customer datasets and complex supply chains can apply AI across merchandising, inventory, logistics and customer service.

The common thread across all three is scale. These are sectors where companies tend to have the structured data, balance sheet flexibility and management appetite to actually redesign workflows rather than layer AI on top of them.

#What Could Slow The Payoff

The risks are real. AI outputs are not always reliable, and outcomes depend on the quality of human oversight built around the models. Regulation and data privacy rules could tighten in ways that slow adoption in the very sectors seen as best positioned. And plenty of AI spending will simply not turn into durable profit, no matter how it gets marketed.

For investors, the takeaway is not to chase every AI announcement or pilot program. It is to look for companies showing real, quantifiable results, and to watch whether that 25% adoption figure keeps climbing in the quarters ahead.

Canterra Minerals Corp. (TSX-V: CTM) (OTCQB: CTMCF) is excited to report the latest prospecting results from its Wilding Gold Project. Wilding adjoins Equinox Gold's Valentine Mine, encompassing 55 km of the gold-bearing corridor that hosts Equinox’s new mine in the central Newfoundland Mining District.

This is significant because Equinox Gold’s Valentine Mine is soon to be Atlantic Canada’s largest gold operation, and Canterra’s prospecting results continue to highlight the exceptional gold potential of its nearby project.

Chris Pennimpede, CEO of Canterra Minerals, expressed his delight, stating:

These exceptional results, including over 500 g/t gold from our known zones, underscore the remarkable gold endowment of our Wilding Project.

With the first significant goal prospecting results from the next 50 km of the corridor and Equinox's Valentine Mine approaching production next door, we're in an enviable position along one of Canada's most exciting emerging gold trends. The timing couldn't be better as the district prepares for its transformation into a major gold-producing camp.

Learn more about Canterra Minerals’ exploration activities.

Wilding Gold Project Highlights include:

• 6 g/t Au 14km from the original discoveries

• 1 g/t Au 4km further demonstrates strong gold mineralization across the 55km strike length Wilding covers

• Exceptionally high-grade results, exceeding 500 g/t Au, were found around the original discoveries. These are the highest-grade gold results ever reported on the project, confirming the strength of the Wilding gold system and comparing favourably with top intercepts from adjacent deposits at Valentine during its exploration phase.

Figure 1. Canterra prospecting highlights with callouts to significant samples at the Wilding Project. Results are derived form prospecting grab samples of both bedrock (outcrop) and transported material (i.e., float/boulders).

Early prospecting, completed just 10 km from the original discoveries, has already returned promising gold values. This suggests that the gold-bearing system stretches well beyond the initial find, giving the company a much larger target to work with.

Figure 2: Canterra’s Central Newfoundland Mining District properties.

What makes these results even more exciting is the presence of pathfinder elements such as copper, tellurium, and arsenic. In geology, these elements often form “halos” around gold mineralization, especially in what is referred to as nuggety orogenic gold systems, which are formed during mountain creation and result in variability in gold deposit grades. For investors, this is significant because these halos serve as a roadmap, helping geologists pinpoint areas most likely to yield high-grade gold.

Canterra is strengthening its district-scale exploration model. In plain terms, this means it is not just chasing isolated gold veins; it is building a case for a large, continuous gold system. With multiple new targets now identified, the stage is set for follow-up exploration that has the potential to unlock even more value for shareholders.

#About Canterra Minerals

Canterra Minerals has consolidated 100% of the copper-gold deposits (excluding the adjacent Valentine mine) in central Newfoundland, a first in the district’s history. Management believes this gives the company leverage over future discoveries in a historically prolific but fragmented mining camp.

Its projects are located near historic mines that produced copper, zinc, lead, silver, and gold. Its gold assets lie along a 55 km trend connected to Equinox Gold’s Valentine Mine. Canterra’s position in this emerging district places it early in the exploration cycle, as Newfoundland experiences renewed interest driven by recent high-grade gold discoveries.

#FAQs for Retail Investors

#Why is a new gold discovery important?

A discovery can significantly increase the potential value of a company’s project, especially if early results point to size, grade, and continuity.

#What does “grade” mean in gold exploration?

Grade refers to how much gold is in the rock, usually measured in grams per tonne (g/t). Higher grades generally mean more valuable rock.

#How do prospecting results differ from drilling results?

Prospecting often involves surface sampling and early tests. Drilling provides a clearer picture of gold at depth, confirming the size and strength of the deposit.

#What does “district-scale potential” mean?

It means the company’s land package is big enough, and geologically favourable enough, to possibly host multiple deposits across a large area.

#What are “pathfinder elements” and why do they matter?

Elements like copper or tellurium often show up around gold systems. They act as clues, helping geologists target where the gold is most likely to be found.

#How long does it take to move from discovery to a producing gold mine?

It can take years — from discovery, to resource definition, to feasibility studies, to permitting and construction. Early discoveries are just the first step in creating value.

#Why focus on North America?

North America offers mining-friendly jurisdictions with strong infrastructure, skilled labour, and clear permitting processes, reducing risk compared to some global regions.

#How can early discoveries affect share price?

Positive results can spark investor interest and drive share prices higher, but results must continue to build momentum through follow-up drilling and studies.

#What is a nuggety orogenic gold system?

A nuggety orogenic system is a type of gold deposit formed during mountain-building events. The gold often occurs in coarse “nuggets” or pockets within veins, rather than being evenly spread out. This can lead to very high-grade results in certain drill holes, but also variability between samples. In short, when a project is described as orogenic, it means the geology matches some of the world’s most productive and profitable gold camps.

#A Rough Week Reopens An Old Argument

AI chip stocks sold off sharply on Monday. On September 14, 2026, Nvidia fell more than 3%, Broadcom dropped nearly 5%, and AMD slid over 4%, dragging the semiconductor sector down sharply as investors weighed fresh doubts about how fast AI development, and AI spending, should really be moving. It is the kind of selloff that makes a quieter, more technical argument suddenly feel urgent. How long do the chips behind all that spending actually last?

That argument belongs to investor Michael Burry, best known for calling the 2008 housing crash. Since late 2025 he has argued that hyperscalers are flattering their earnings by depreciating Nvidia GPUs over far longer periods than the hardware actually lasts.

#The Case For Faster Depreciation

The servers and computing equipment that include Nvidia GPUs are generally depreciated by major cloud companies over roughly five to six years. Burry says the real economic life is closer to two to three years, given how fast Nvidia ships new chip generations, each one two to three times more efficient than the last.

Part of the bearish case rests on technological obsolescence. Newer GPU generations can deliver substantially more performance per unit of power and cost, potentially reducing the economic value of older hardware even while it remains usable.

Run that gap through hyperscaler balance sheets and Burry estimates it adds up to roughly $176 billion of understated depreciation, and overstated profit, across the industry between 2026 and 2028. He has put specific numbers on individual companies too, estimating Oracle's earnings could be overstated by close to 27% and Meta's by around 21% by 2028. He has backed the view with short positions on Nvidia and Palantir.

#Nvidia And Its Customers Push Back

Nvidia and its largest cloud customers have pushed back on that premise. CoreWeave's CEO has said H100 capacity coming off expired contracts was rebooked at around 95% of the original contract price, and Nvidia CEO Jensen Huang has pointed to H100 rental rates that jumped 22% in a single month to $3.28 an hour, evidence he says shows the chips are earning more, not less, as they age. Huang has also highlighted a CoreWeave contract to rent Nvidia's older A100 chips all the way through 2029, nine years after that chip first launched.

The two sides are looking at useful life from different angles. Burry argues that rapid advances in newer GPUs can make older chips economically obsolete faster than current depreciation schedules assume. Nvidia and CoreWeave counter that older GPUs remain heavily used and can still command strong rental prices years after launch. A chip can fall substantially in value and still generate plenty of rental income, so neither measure alone settles how quickly it should be depreciated.

#What This Means For Investors

For a retail investor, the practical point is simple. Some of the reported profit associated with AI infrastructure depends on accounting estimates about how quickly the cost of that equipment is recognized through depreciation. Depreciation schedules are a matter of judgment under accounting rules, not a fixed fact, and companies have moved them in both directions before. Meta extended some useful lives in 2025, Amazon shortened others the same year.

Nobody knows yet which side of this argument will prove right. If older GPUs continue generating strong rental income for years, that would support Nvidia's case that longer useful-life assumptions are reasonable. If it does not, and this week's selloff is a reminder that sentiment can turn quickly, future reported AI earnings could come under pressure if companies shorten useful-life assumptions or recognize impairments as older hardware loses economic value faster than expected. Either way, it is worth watching depreciation assumptions the next time a hyperscaler reports earnings, not just the headline profit number.

#Nvidia's Case for Life Beyond Hyperscalers

Nvidia's stock market narrative has centered on a slow bleed. Various analysts expect its share of the AI accelerator market to erode from near 90% into a range roughly between 70% and 80% by the end of 2026, estimates vary but the direction is consistent, mainly because hyperscalers are building their own custom chips. Nvidia's latest earnings call offered a different way to think about that number.

Management argued that hyperscalers are only part of the picture. A broader group, made up of governments building sovereign AI systems, regional cloud providers, so called neoclouds, and enterprises and startups deploying AI in their own operations, now accounts for roughly half of Nvidia's data center business and is growing 100% a year. If that group keeps expanding, hyperscaler market share matters less than investors assumed.

#Who Is Actually Buying the Chips

Each category already has real customers behind it. On the sovereign side, India's L&T, Yotta and Netweb are building government backed AI factories, Australia's Sharon AI has launched the country's first Cisco Secure AI Factory with Nvidia, and Nvidia has flagged additional sovereign deals across Asia, Europe and Africa.

Regional neoclouds such as CoreWeave, Nebius and Nscale lease out GPU clusters to customers who do not want to build their own data centers. On the enterprise side, Samsung uses Nvidia's cuLitho software to speed up chip manufacturing, Bristol Myers Squibb is investing in a Vera Rubin AI factory for drug research, and Red Hat has packaged Nvidia's software into a deployable AI Factory platform for large companies. Among AI native startups, nearly 20 companies, including Cursor, Figma and Together AI, now exceed $1 billion in annualized run-rate revenue, up from 13 companies in Q4 of last year.

#A Guide That Broke With Precedent

Management's confidence showed most clearly when Nvidia broke its usual habit of guiding one quarter at a time. It told investors to expect roughly 70% revenue growth in fiscal 2028, implying revenue close to $700 billion, well above the roughly $570 billion analysts had penciled in. Sovereign AI and regional neocloud revenue alone grew 35% sequentially and more than tripled from a year earlier.

#The China Front Nvidia Doesn't Control

Nvidia accounted for an estimated 55% of China's AI chip market as of September 2026, down sharply from near monopoly levels a few years ago. Nvidia's own quarterly filing acknowledges the mechanism, stating that being locked out of China's data center market has let rivals build larger developer ecosystems that now challenge the company worldwide.

Four homegrown chipmakers, nicknamed China's little dragons, are driving the shift. Shanghai Enflame Technology, founded by two former AMD engineers, just priced a Shanghai IPO worth close to $900 million, backed by Tencent as its top customer and 20% owner. Enflame's first quarter sales jumped nearly 1,475% year over year, even as its net loss widened to roughly $66 million. Rivals Moore Threads, MetaX and Shanghai Biren have all gone public over the past year too, alongside state backed national champion Huawei, and several are building their own CUDA alternatives to chip away at the software lock-in that has long kept customers on Nvidia hardware.

#The Case for Caution

None of this erases the underlying risk, and it now comes from two directions at once. Custom silicon from hyperscalers is still coming, part of the new customer segment relies on financing structures that are harder to evaluate than a straightforward sale, including a conditional guarantee of up to $105 billion supporting OpenAI-related leases at SB Energy's Ohio data center campus, and inside China, funded domestic rivals are chipping away at a market Nvidia once had almost entirely to itself.

The bull case is that a more diversified customer base outside China makes Nvidia less dependent on any single hyperscaler's spending plans. The bear case is that some of this growth is circular, with Nvidia's own capital helping generate the demand it later reports, while the China opportunity keeps shrinking regardless of how the rest of the business performs. Watch whether the non-hyperscaler segment keeps growing on its own merits, and whether China's share stabilizes near 55% or keeps sliding.

#Refiners Are Picking Winners, And Ships Are Losing

Crude oil has stayed relatively calm this year. Refined products have not. The Russia-Ukraine war and conflict in the Middle East have knocked out refining capacity and disrupted tanker traffic, and refiners responding to the damage are prioritizing production of diesel, gasoline and jet fuel, which carry fatter margins. Fuel oil, the heavy product used to power ships and some power plants, is being left behind.

The result is a fuel oil market heading into a serious deficit. Energy Aspects puts the third quarter shortfall at roughly 218,000 barrels a day, versus just 6,000 barrels a day a year earlier. Marine fuel stocks near major hubs sit about 30% below seasonal norms, and very low sulphur bunker prices in Singapore, the world's largest bunker hub, have jumped roughly 76%. Asia is most exposed because of its reliance on disrupted Gulf flows, while Singapore imports more than half of the fuel oil needed to meet its nearly 1 million barrels a day of demand.

#Where The Barrels Went Instead

The clearest example is diesel. US diesel prices climbed to a national record of about $5.90 a gallon this month, surpassing the previous high set in June 2022, while California climbed to a fresh record of $7.8256 a gallon on September 7, according to AAA, up from $7.8105 the day before. The national average is roughly 59% higher than a year ago, driven by Ukrainian drone strikes on Russian refineries, renewed US-Iran hostilities, and Moscow's diesel export ban through the end of September.

US refiners are among the beneficiaries of the global supply squeeze. Valero's chief operating officer, Gary Simmons, told analysts on the company's July 30 earnings call that the wars have taken roughly 5 million barrels a day of refining capacity offline worldwide. Phillips 66 executive Brian Mandell said on the refiner's August 5 call that refining fundamentals were “very tight and getting tighter” because of the disruptions in Russia and the Middle East. The outages have helped tighten refined-product markets and boost margins for US refiners.

Fuel oil supply has been squeezed from several directions at once. Russian fuel oil exports fell to a record low of 591,000 barrels a day in August, down from an average above 860,000 in 2025. Middle East fuel oil exports dropped 45% year on year to about 447,000 barrels a day between March and August, and Kuwait's Al Zour refinery has shipped almost nothing since March after averaging around 191,000 barrels a day in January and February. Nigeria's Dangote refinery has leaned the same way, ramping up diesel, gasoline and jet fuel exports while cutting back on fuel oil.

#The Costs Ripple Beyond The Refinery Gate

The knock-on effects reach well past fuel buyers. Higher bunker costs raise operating expenses for shipowners, and those costs tend to feed into freight rates, meaning higher shipping costs for whatever cargo those vessels carry. Power generators that burn fuel oil face the same squeeze. On the diesel side, trucking and harvest-season farming both run on the fuel, so record prices add to cost pressures across food and other goods. East Coast distillate inventories have fallen to a record low of 19.3 million barrels, a concern heading into winter given how many homes in the region rely on heating oil.

The open question is how long refiners keep favoring the higher margin products, and whether the wars driving this squeeze ease before Q4 maintenance season adds further strain. Unlike crude, there is no strategic reserve of refined fuels to cushion the gap.

#AI's Power Grab Is Splitting the US Grid in Two

Rhodium Group's Taking Stock 2026 report, released July 29, projects that US electricity demand growth is about to hit its fastest pace since before 2000 [1]. Under the firm's central assumptions, annual demand growth over the next 15 years could more than triple the average pace seen from 2000 through 2023.

The single biggest driver is data centers. Rhodium's model assumes their power demand more than triples by 2040 versus 2025, driving 59% to 77% of total demand growth depending on the year, and making up 17% of all US electricity use by 2040. But the firm is explicit that this is one assumed path, and that the real uncertainty here is large. It notes the gap between the highest and lowest analyst estimates for 2030 data center demand alone is bigger than the entire power use of California and Florida combined.

For investors, that gap matters as much as the growth story itself. It shapes the case for transformers, turbines, transmission lines, and every company building or servicing the grid data centers plug into, but it also means nobody really knows how big that opportunity actually is.

#A Grid Torn Between Gas And Renewables

Once that demand estimate is fixed, Rhodium runs three scenarios for how it gets met, based on different assumptions about fuel prices, technology costs, and economic growth. The outcomes by 2040 could hardly be more different.

A shortage of gas turbines has roughly doubled the cost of building new gas plants through 2030, which limits how fast utilities can add gas capacity even as demand keeps rising. That, plus tax credits set to expire, is why solar, wind, and battery storage are being built at a near record pace. Developers are rushing to build now, through 2027, specifically to lock in tax credits before they disappear. That's a pull-forward effect, some of this construction is happening earlier than it otherwise would, precisely because the credit window is closing.

After that, the paths split sharply. In the scenario with high fuel prices and cheap clean technology, renewable construction speeds back up through the 2030s and the grid ends up 72% clean. In the scenario with cheap gas and expensive clean technology, renewable construction slows to a crawl, gas ends up supplying half of US power, and the clean share falls to 47%.

#Prices And The Political Risk

None of this comes free. Rhodium projects real electricity prices will keep rising faster than inflation no matter which scenario plays out, with the average residential bill up 39% to 48% in nominal terms by 2040, a 9% to 13% increase after inflation. Some states and utilities are already considering rules that make data centers cover more of their own costs instead of spreading them across everyone's bill, or that slow how fast new ones can connect to the grid. Those are political decisions no energy model can predict.

#Who Actually Captures The Upside

Higher prices do not automatically mean fatter profits for utilities. Regulated utilities earn a set return on the capital they invest, not a share of every extra dollar on a bill, so their earnings track approved capital spending more than the price trend itself. If regulators push back on data center related costs, as some already are, that caps the upside even while demand keeps climbing.

Equipment makers sit on the other side of that trade. When new gas turbine capital costs roughly double, as Rhodium's model assumes through 2030, that pricing power flows straight to manufacturers rather than through a regulatory approval process. The same dynamic applies to transformers and other grid hardware the report flags as running short.

Put simply, rising prices are a better signal for equipment and infrastructure builders than for utility profit margins. What actually decides utility upside is whether regulators approve their spending and whether large customers like data centers get charged fairly for the capacity they use, not the price trend itself.

That is the real tension for investors weighing the grid buildout theme. It hinges on assumptions that could move either way, whether tax credits get extended, whether turbine supply catches up, and whether data center growth tracks anywhere near what Rhodium assumes. Watching how much new capacity actually gets built each year is a reasonable way to track which path is winning.

The Energy Information Administration (EIA) now expects US crude oil output to average a record 13.8 million barrels a day in 2026, up from 13.6 million barrels a day in 2025. The agency raised its forecast in its August Short Term Energy Outlook, the fourth straight upward revision this year, and the US now accounts for roughly 18% of world crude supply.

That the shale era is maturing is not really in dispute. Oil executives at Occidental and ConocoPhillips have both said publicly they expect US output to plateau sometime before 2030, and Wall Street banks including Goldman Sachs have made the same call. The debate is not whether growth is slowing. It is whether 2026's specific record reflects that slower, steadier plateau, or something more fragile.

#Where the Extra Barrels Are Actually Coming From

Permian production is on track to average about 6.6 million barrels a day in 2026, essentially flat with 2025. The EIA says falling prices earlier this year pushed close to, or below, reported breakeven levels for many operators there. Recent surveys put Permian breakevens in the low $60s a barrel, and roughly 60% of the basin's premium drilling acreage is already tapped.

The Federal Gulf of America is filling the gap instead, rising toward 2.0 million barrels a day as new offshore projects come online. Alaska adds a smaller amount too. Together they explain most of this year's increase, even as the basin that made the US the world's top producer barely grows.

#What Sets 2026 Apart From the Plateau Story

The plateau argument rests on geology. Tier one Permian acreage is running out, and each new well replaces production faster than it adds it. That part of the consensus looks solid, and the EIA's own Permian numbers back it up.

What is less discussed is how much of this year's headline record depends on price, not geology. Coming into 2026, the EIA expected West Texas Intermediate to average near $50 a barrel, a level low enough to choke off drilling. Instead, renewed attacks on tankers and repeated constraints on the Strait of Hormuz cut oil flows through that chokepoint to under 5 million barrels a day in the second quarter, down from 21.6 million barrels a day before the conflict began. Brent is now forecast near $85 a barrel for the third quarter, and the EIA itself expects the disruption to ease by early 2027.

Even so, prices are not expected to fall all the way back to where the EIA saw them before the conflict. The agency's August outlook still has Brent averaging $69 a barrel in 2027, well above the sub $55 range it was forecasting for next year as recently as January. That higher floor is a big reason the EIA's own 2027 production estimate rose again this month, to 14.19 million barrels a day, a bigger number than its July call. The plateau most analysts expect looks less like a hard ceiling and more like a level that keeps drifting upward as long as prices hold there. Whether it does depends on how quickly Strait of Hormuz flows actually normalize.

Record profit margins are carrying the S&P 500 to new highs. But the people who actually buy things are pulling back, and the gap between corporate performance and consumer confidence is now the widest it has been this cycle.

FactSet data recently published shows the S&P 500's blended net profit margin running at 16.9% for the second quarter. That is the highest level since FactSet began tracking the metric in 2009. It is up from 14.8% in the first quarter and 12.9% a year ago, and it sits well above the five-year average of 12.4%. Alphabet and Amazon are the largest contributors, but even excluding both, the index-wide margin comes in at 15%, also a record. Analysts now project full-year earnings growth of 30% for 2026 and the forward price-to-earnings ratio has actually compressed slightly from 20.4x at the end of June to 20.0x today.

The market hit 7,800 for the first time on Thursday before easing on Friday. Three consecutive weekly gains, a 14% year-to-date return, and a third-quarter earnings outlook that keeps getting revised upward. By the numbers, this is a healthy market.

#Consumer Sentiment Drops as Retail Sales Miss

The other side of the ledger looks different. The University of Michigan's preliminary August consumer sentiment index dropped 8% to 51, ending two consecutive months of improvement and badly missing the 55.0 consensus estimate. Expected business conditions fell 11% for the short run and 17% for the long run. Older consumers, lower-income households, and those without a college degree showed the sharpest declines. Republicans posted the steepest monthly drop, with their outlook now 19% below readings from just before the Iran conflict.

The same day, the Census Bureau reported that retail sales fell 0.6% in July. That was the steepest monthly decline in more than a year and well below the 0.1% gain analysts expected. Even excluding gas stations and auto dealers, sales fell 0.3%. Control group sales, the category that feeds into GDP calculations, dropped 0.4%. Some of the weakness is timing. Amazon shifted Prime Day from July to June this year, pulling forward online spending. But the pattern is broader. Only 8% of consumers expect their income to outpace inflation over the next year, according to the Michigan survey.

#Energy Remains the Market's Swing Factor

Energy prices sit at the center of this divergence. The Iran war and the ongoing disruption to the Strait of Hormuz have kept crude elevated, with Brent trading above $88 per barrel. The IEA's August Oil Market Report, released on August 12, slashed its supply forecast again. Global oil supply is now expected to decline 4.3 million barrels per day in 2026, with 8.3 million barrels per day of Gulf production still shut in. The IEA projects a deficit of 1.8 million barrels per day in the third quarter, more than double its July estimate.

For the S&P 500's energy sector, this has been a windfall. Energy is up 38% year to date, the top-performing sector by a wide margin. But for consumers, elevated gasoline prices remain a direct headwind. The July CPI showed headline inflation at 3.4% year-over-year, and while core CPI eased to 2.5%, energy costs are still 14.7% above year-ago levels. Gasoline is up 24.6% over the same period.

Core inflation is within reach of the Fed's 2% target. The problem is that the energy component is not under the Fed's control. It is a function of geography and geopolitics, not monetary policy. Markets now price a 67% probability that the Fed holds rates in September. The 10-year Treasury yield sits at 4.69%, up 35 basis points from a year ago.

#AI Capex Keeps Rising, but Credit Markets Are Priced for Perfection

The other structural force propping up earnings and market breadth is the hyperscaler capex cycle. After Q2 2026 earnings, combined capital expenditure guidance from Microsoft, Alphabet, Amazon, and Meta now sits at approximately $725 billion for 2026, up from $413 billion in 2025. That number has been revised upward every quarter. Most of the spending is directed at AI infrastructure, data centers, and custom silicon. It is flowing through to semiconductor revenues, industrial suppliers, and power infrastructure companies.

Yet the credit market is not pricing any stress. The ICE BofA High Yield Index option-adjusted spread sits at roughly 281 basis points, in the richest decile of its history against a long-run median of about 450 basis points. Investment-grade spreads trade at 81 basis points. This is a market that expects continued growth with no disruption.

The AAII Investor Sentiment Survey, however, shows individual investors are not buying the optimism. Bearish sentiment has been above its historical average for 27 consecutive weeks. Bullish sentiment is below average for the fourth straight week. As a contrarian indicator, that persistent skepticism has historically been a tailwind for equities. But it also means that the next negative catalyst could trigger a sharper move than current positioning suggests.

#What the Margin Divergence Means for Retail Investors

The counterargument to the bearish consumer read is straightforward: companies are still delivering. Margins are expanding. Earnings growth is accelerating. Valuations are not extreme by historical standards. As long as those trends hold, the market has a fundamental floor.

The risk is that the consumer eventually catches up with the data. Real wage growth has turned negative. Retail sales are contracting. Sentiment is deteriorating across age groups, income brackets, and political affiliations. Consumer spending accounts for roughly two-thirds of US GDP. If spending continues to slow into the third quarter, earnings estimates will need to adjust.

For now, record margins and persistent bearish sentiment form a combination that typically favors equities over the medium term. But the widening gap between corporate performance and consumer health is worth monitoring closely. When sentiment and spending data align this poorly with record earnings, the market tends to resolve the contradiction in one direction or the other. Investors who understand which side of that gap they are positioned on will be better prepared for what comes next.