AI superpower
The chipmaker at the center of the AI revolution will capture the camera this afternoon, with many making big bets before the release of Nvidia's (NVDA) earnings after the bell. It's one of the most talked-about stocks in the financial world, and for good reason. The company is helping to build out all the infrastructure needed to power generative artificial intelligence, selling advanced processors to all the tech bigwigs that are splashing out on hardware like its the 1990s.
Snapshot: Getting all this infrastructure in place will likely take several years, meaning Nvidia is still primed for exponential growth (at least that is the hope). The potential has excited investors, who have sent the stock soaring since last year. Shares just hit fresh all-time highs on Tuesday at over $950 and have nearly doubled year-to-date. NVDA is also up over 550% since the beginning of 2023 and has become the most popularly traded stock on Wall Street.
Nvidia's consensus EPS estimate for Q1 comes in at $5.58 (+412% Y/Y), with a revenue forecast of $24.6B (+242% Y/Y), up from $7.2B in the prior year. That's a staggering difference, with the AI darling making nearly as much revenue per quarter as it used to do on an annual basis. If there is any guide to how shares will trade after earnings, keep an eye on forward guidance, accompanying commentary, and the outlook for the artificial intelligence boom.
Making moves: The options market is pricing in an 8% move either way after earnings, but it could be way more than that, given that Nvidia (NVDA) soared 24% after its last Q1 report. The firm is also now the third-biggest U.S. company by market cap, with a valuation of $2.3T, meaning its influence extends to broader market indices like the Nasdaq 100 (NDX) (with a weight of 6.5%) and S&P 500 (SP500) (with a weight of over 5%). All of that AI enthusiasm has helped propel the bull run in U.S. stocks, leading the major averages to hit record highs this month. Are more in the making?
Up for sale
The U.S. Department of Energy is releasing 1M barrels of gasoline (42M gallons) from the Northeast Gasoline Supply Reserve to help "lower prices at the pump as Americans hit the road this summer." The reserve was authorized in 2014, two years after Hurricane Sandy damaged refineries, but the cache had never been used and was due to be closed in line with a law Congress passed in March. While gas prices are up about 15% YTD, some say the release will not make a significant difference in the East Coast region, which burned through more than 3M bbl/day of gasoline last June alone. (54 comments)
Time running out
The clock is ticking on BHP's (BHP) ambitious bid to acquire rival Anglo American (OTCQX:AAUKF), as the world's biggest miner has until 12 PM ET to make a binding takeover offer. Anglo American already rejected two proposals from BHP and instead revealed a major company overhaul that included plans to sell or demerge its steelmaking coal, nickel, platinum, and diamond businesses. If BHP decides to stop pursuing a deal, it will have to stay away for at least six months, according to U.K. takeover rules. (4 comments)
Tactical nukes
The defense sector is on watch after Russia’s military started exercises to simulate the use of tactical nuclear weapons, which include the Kinzhal missile, the first hypersonic weapon to be used in the Ukraine war. The exercises, ordered by President Vladimir Putin, were said to be in response to "provocative statements" by Western Europe officials, including French President Emmanuel Macron. Tactical nuclear weapons are less destructive than what are known as strategic bombs that can level a city, but they still have significant power. Russia's estimated arsenal of the warheads stands at around 1,500. (1 comment)
Today's Markets
In Asia, Japan -0.9%. Hong Kong -0.1%. China flat. India +0.4%.
In Europe, at midday, London -0.4%. Paris -0.6%. Frankfurt -0.2%.
Futures at 7:00, Dow -0.1%. S&P -0.2%. Nasdaq -0.2%. Crude -0.5% to $78.28. Gold -0.3% to $2,419.30. Bitcoin -1.1% to $70,198.
Ten-year Treasury Yield +3 bps to 4.45%.
Today's Economic Calendar
7:00 MBA Mortgage Applications
9:40 Fed’s Goolsbee Speech
10:00 Existing Home Sales
10:00 Atlanta Fed's Business Inflation Expectations
10:00 Quarterly Services Report
10:30 EIA Petroleum Inventories
1:00 PM Results of $16B, 20-Year Bond Auction
2:00 PM FOMC Minutes
Companies reporting earnings today »
What else is happening...
EU Council approves AI Act: Will it become a world benchmark?
Disney's (DIS) Pixar lays off staff amid ongoing cost cuts.
Lowe's (LOW) backs guidance on solid start to spring.
Macy's (M) lifts outlook even as comparable sales fall.
Tesla (TSLA) highlights electric Semi potential at conference.
Regulatory review: Mastercard (MA), Visa (V) face no competition.
Lululemon sees consumer tastes shift, revamps product teams.
Children's Place (PLCE) plunges after departure of its CEO.
Apple (AAPL) asks New Jersey court to toss DOJ antitrust lawsuit.
Top Novavax (NVAX) investor ends proxy fight after Sanofi (SNY) deal.
