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CNBC Daily Open: Micron slides, Amazon’s $2 trillion

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A trader works on the floor of the New York Stock Exchange (NYSE) during morning trading on March 4, 2024 in New York City.

Angela Weiss | Afp | Getty Images

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Clinging on
The S&P 500 and the Dow Jones Industrial Average just about finished the session in positive territory. The Nasdaq Composite, on course for an 18.6% gain in the first six months of the year, rose 0.49%. After trading mostly in negative territory, Nvidia made a small gain following the previous session’s 7% surge. The yield on the 10-year Treasury rose as investors parse comments from Fed officials and await key inflation data due Friday. U.S. oil prices rose amid escalating tensions in the Middle East.

Micron slides
Shares of Micron fell almost 8% in extended trading on Wednesday as its revenue forecast failed to top analysts’ expectations. The computer memory and storage maker expects revenue of $7.6 billion in the current quarter, in line with estimates. Micron’s shares have doubled in the past year as its most advanced memory is needed for AI graphics processing units. CEO Sanjay Mehrotra said the company’s AI-oriented products were likely to increase in price and its data center business grew 50% on a quarter-to-quarter basis.

$2,000,000,000,000
Amazon‘s market capitalization surpassed $2 trillion for the first time on Wednesday, joining the ranks of tech giants like Apple and Microsoft. The surge in megacap tech stocks has been driven by investor excitement around generative AI. Amazon’s stock has risen 26% this year, outpacing the Nasdaq’s 18% increase. The stock rose 3.9% on Wednesday. Separately, CNBC’s Annie Palmer reports Amazon plans to launch a discount store in bid to fend off Temu and Shein.

Southwest cuts guidance
Southwest Airlines cut its second-quarter revenue forecast due to difficulties adapting its revenue management to recent booking trends. Despite the revised outlook, the airline still expects record quarterly operating revenue. Activist investor Elliott Management reiterated calls for leadership changes, “Southwest is led by a team that has proven unable to adapt to the modern airline industry.” Higher costs and increased capacity have impacted fares and profits across the industry, while competitors like Delta and United have benefited from the return of international travel. Southwest shares fell 4% before recovering to end the session just 0.2% lower.

Asian stocks fall, yen weakens
Japan’s export-heavy Nikkei 225 and the broad-based Topix fell as the yen weakened to a 38-year low against the U.S. dollar, raising the prospect of intervention. Finance Minister Shunichi Suzuki warned the country was “deeply concerned about FX impact on economy,” per Reuters. Elsewhere, Hong Kong’s Hang Seng index led the rest of the Asia-Pacific region lower, tumbling 2%, and mainland China’s CSI 300 was down 0.6%. Australia’s S&P/ASX 200 dropped 0.58% and South Korea’s Kospi dipped 0.37%

[PRO] Investing in India
India’s unexpected election results haven’t dampened Causeway Capital Management’s bullish outlook. Although portfolio manager Arjun Jayaraman predicts modest short-term returns for the BSE Sensex index, he suggests ETFs that could benefit from higher returns.

The bottom line

There was a surge of activity in the auto industry that may have been overshadowed by Volkswagen's $5 billion investment in the loss-making EV maker Rivian. While VW makes solid cars, its electric vehicles are plagued with glitchy software. As CNBC's Sophie Kiderlin notes this investment will take years to yield returns. Analysts, however, are wary of the current "EV winter" marked by tepid demand and increased competition. Despite these challenges, Rivian's stock surged 23%, reflecting investor optimism.

Elsewhere in the industry, Waymo, Alphabet's self-driving car unit, expanded its robotaxi service to all users in San Francisco. Meanwhile, General Motors's Cruise autonomous vehicle division appointed former Amazon and Microsoft executive Marc Whitten as its new CEO. This leadership change follows a series of collisions that led to investigations and the suspension of Cruise's license in California, heightening public skepticism about driverless technology.

While Waymo is steadily rolling out its services and Cruise is restarting its operations, Tesla has yet to introduce its long-promised robotaxi. Elon Musk's projections for a 2020 launch and fully autonomous driving by 2018 have yet to materialize. Nevertheless, Musk envisions Tesla as a potential $7 trillion robotaxi enterprise. The unveiling of Tesla's robotaxi on Aug. 8 will be closely watched to gauge its competitive edge.

Rivian shareholder Amazon joined the exclusive $2 trillion market cap club, alongside Alphabet, Nvidia, Apple and Microsoft. This milestone comes as Amazon aggressively cuts costs.

While enthusiasm for AI remains high, Wall Street experienced a more measured session as investors sought to lock in profits from the Nvidia-driven surge. Despite the current optimism, strategists caution that the S&P 500 might face a correction over the summer. CNBC's Sarah Min explores the factors behind Citi's projections and a series of recent upgrades.

— CNBC's Hakyung Kim, Brian Evans, Alex Sherman, Samantha Subin, Annie Palmer, Ece Yildirim, Michael Wayland, Sophie Kiderlin, Spencer Kimball, Leslie Josephs, Sarah Min, Sheila Chiang and Lim Hui Jie contributed to this report.

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June 26, 2024

Nvidia passes Microsoft in market cap to become most valuable public company

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Nvidia CEO Jensen Huang attends an event at COMPUTEX forum in Taipei, Taiwan June 4, 2024.

Ann Wang | Reuters

Nvidia, long known in the niche gaming community for its graphics chips, is now the most valuable public company in the world.

Shares of the chipmaker climbed 3.2% in mid-day trading on Tuesday, lifting the company’s market cap to $3.33 trillion, surpassing Microsoft. Earlier this month, Nvidia hit a $3 trillion market cap for the first time, and passed Apple.

Nvidia shares are up more than 170% so far this year, and took a leg higher after the company reported first-quarter earnings in May. The stock has multiplied by more than nine-fold since the end of 2022, a rise that’s coincided with the emergence of generative artificial intelligence.

Nvidia has about 80% of the market for AI chips used in data centers, a business that’s ballooned as OpenAI, Microsoft, Alphabet, Amazon, Meta and others have raced to snap up the processors needed to build AI models and run increasingly large workloads.

For the most recent quarter, revenue in Nvidia’s data center business rose 427% from a year earlier to $22.6 billion, accounting for about 86% of the company’s total sales.

Apple shares were down about 1% during trading on Tuesday, giving it a $3.28 trillion market value. Microsoft shares slid less than a percentage point, giving it a market cap of $3.32 trillion.

Founded in 1991, Nvidia spent its first few decades primarily as a hardware company that sold chips for gamers to run 3D titles. It’s also dabbled in cryptocurrency mining chips and cloud gaming subscriptions.

But over the past two years, Nvidia shares have skyrocketed as Wall Street came to recognize the company’s technology as the engine behind an explosion in AI that shows no signs of slowing. The rally has lifted co-founder and CEO Jensen Huang’s net worth to about $117 billion, making him the 11th wealthiest person in the world, according to Forbes.

Microsoft shares are up about 20% so far this year. The software giant has also been a major beneficiary of the AI boom, after it took a significant stake in OpenAI and integrated the startup’s AI models into its most important products, including Office and Windows. Microsoft is one of the biggest buyers of Nvidia’s graphics processing units (GPUs) for its Azure cloud service. The company just released a new generation of laptops that are designed to run its AI models, called Copilot+.

Nvidia is a newcomer to the title of most valuable U.S. company. For the past few years, Apple and Microsoft have been trading the title.

Nvidia’s ascent has been so rapid that the company has yet to be added to the Dow Jones Industrial Average, a benchmark of 30 stocks that’s historically included the most valuable U.S. companies. Alongside its earnings release last month, Nvidia announced a 10-for-1 stock split, which went into effect on Jan. 7.

The split gives Nvidia a better shot at being added to the Dow, which is a price-weighted index, meaning that companies with higher stock prices — rather than market caps — have outsized influence on the benchmark.

WATCH: The $10 trillion bull fight

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June 18, 2024

Wells Fargo CEO talks up reasons to love the stock — plus, what’s behind the market drop

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Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Market pressure : The major stock benchmarks were moving lower Wednesday, with the Dow getting the worst of it again. Adding pressure on equities, bond yields moved higher following a poor auction of $44 billion worth of 7-year Treasury notes. Nvidia was bucking the overall market decline, but its modest gain was much cooler than the incredible march higher over the past three sessions after last week’s earnings. American Airlines shares sank roughly 15% after a company sales strategy backfired and the carrier cut growth guidance. Sector watch : All of the S & P 500 sectors were under pressure Wednesday, led by energy and utilities. Tech has been flirting with positive territory as Nvidia, which opened lower, reversed to the upside. Fellow Club names Apple and Microsoft were also in the green. Combined, the three account for nearly 49% of the tech sector index. Apple and Nvidia, our two “own, don’t trade” stocks were also the top performers among the entire 33 stock Club portfolio. Deal movers : ConocoPhillips has agreed to buy Marathon Oil in a $17 billion all-stock transaction. Marathon shares rose about 7.5%, while Conoco stock fell roughly 4%. Additionally, Hess shareholders approved the company’s pending merger with Chevron . And, Merck has reached a deal to acquire privately held Eyebiotech for $1.3 billion in cash. Banking news : Here’s a dispatch from our Investing Club reporter Morgan Chittum about what Wells Fargo CEO Charlie Scharf said Wednesday at Bernstein’s 40th annual Strategic Decisions Conference: Scharf said Wells Fargo has been focusing on investment banking in a “very, very targeted way.” There were several mentions of the bank’s quiet hiring spree to beef up its Corporate and Investment Banking (CIB) division, which we reported on last week . Building out lucrative underwriting and advisory fee capabilities is “staring us in the face,” he added, as long-dormant IPO and M & A activity have started to perk up. Expanding Wells Fargo’s Wealth Management franchise, another fee-based revenue stream is “one of the bigger opportunities” ahead, Scharf said. The bank has around 12,000 advisors and is better positioned than in years past, the CEO added. We have been encouraged by Wells Fargo’s push to boost fees business lines. Scharf said Wells Fargo remains focused on efficiency. The bank has cut staff to 225,000 from 275,000. “The conversation around efficiency is less [about] saving money and it’s more about how do we run a better company,” he added. When the Federal Reserve at some point removes its asset cap on Wells Fargo, Scharf said corporate lending and trading will be areas of growth for the bank. He said he dialed back those areas to stay under the Fed’s $1.95 trillion limit. “When you turn a consumer away, they’ll remember that forever,” Scharf said. Businesses understand and can be won back, he added. The CEO believes it’s just a matter of time before the asset cap is lifted and so do we. Scharf said Wells Fargo was able to get a key regulatory penalty removed back in February by stripping away things like certain incentive plans at branches. The so-called consent order was tied to the bank’s 2016 fake accounts scandal that predated Scharf. There are still several other orders outstanding. Quick hits : The FDA granted accelerated approval for Club name Eli Lilly ‘s Retevmo, which is used to treat certain kinds of advanced or metastatic medullary thyroid cancer in children two and older. Twelve years and older was the prior age threshold. Elsewhere, shares of HubSpot were bucking the broader market decline on further speculation that Club name Alphabet is indeed considering an acquisition. CNBC’s David Faber believes that should a deal occur, it would be all-stock. Up next : Salesforce is set to report earnings after Wednesday’s closing bell. AI monetization commentary and what the team has been seeing in terms of cross-selling opportunities will be key watch items. Foot Locker and Best Buy report before the bell Thursday. Costco is out with results Thursday evening. That will do it for Club name earnings, except for Broadcom, which is set to report next month. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street.

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May 29, 2024

Deepfake scams have robbed companies of millions. Experts warn it could get worse

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3D generated face representing artificial intelligence technology

Themotioncloud | Istock | Getty Images

A growing wave of deepfake scams has looted millions of dollars from companies worldwide, and cybersecurity experts warn it could get worse as criminals exploit generative AI for fraud.

A deep fake is a video, sound, or image of a real person that has been digitally altered and manipulated, often through artificial intelligence, to convincingly misrepresent them.

In one of the largest known case this year, a Hong Kong finance worker was duped into transferring more than $25 million to fraudsters using deepfake technology who disguised themselves as colleagues on a video call, authorities told local media in February.

Last week, UK engineering firm Arup confirmed to CNBC that it was the company involved in that case, but it could not go into details on the matter due to the ongoing investigation.

Such threats have been growing as a result of the popularization of Open AI’s Chat GPT — launched in 2022 — which quickly shot generative AI technology into the mainstream, said David Fairman, chief information and security officer at cybersecurity company Netskope.

“The public accessibility of these services has lowered the barrier of entry for cyber criminals — they no longer need to have special technological skill sets,” Fairman said.

The volume and sophistication of the scams have expanded as AI technology continues to evolve, he added.

Rising trend

Various generative AI services can be used to generate human-like text, image and video content, and thus can act as powerful tools for illicit actors trying to digitally manipulate and recreate certain individuals.

A spokesperson from Arup told CNBC: “Like many other businesses around the globe, our operations are subject to regular attacks, including invoice fraud, phishing scams, WhatsApp voice spoofing, and deepfakes.”

The finance worker had reportedly attended the video call with people believed to be the company’s chief financial officer and other staff members, who requested he make a money transfer. However, the rest of the attendees present in that meeting had, in reality, been digitally recreated deepfakes.

Arup confirmed that “fake voices and images” were used in the incident, adding that “the number and sophistication of these attacks has been rising sharply in recent months.”

Chinese state media reported a similar case in Shanxi province this year involving a female financial employee, who was tricked into transferring 1.86 million yuan ($262,000) to a fraudster’s account after a video call with a deepfake of her boss.

Broader implications

In addition to direct attacks, companies are increasingly worried about other ways deepfake photos, videos or speeches of their higher-ups could be used in malicious ways, cybersecurity experts say.

According to Jason Hogg, cybersecurity expert and executive-in-residence at Great Hill Partners, deepfakes of high-ranking company members can be used to spread fake news to manipulate stock prices, defame a company’s brand and sales, and spread other harmful disinformation.

“That’s just scratching the surface,” said Hogg, who formerly served as an FBI Special Agent.

He highlighted that generative AI is able to create deepfakes based on a trove of digital information such as publicly available content hosted on social media and other media platforms.

In 2022, Patrick Hillmann, chief communications officer at Binance, claimed in a blog post that scammers had made a deepfake of him based on previous news interviews and TV appearances, using it to trick customers and contacts into meetings.

AI & deepfakes represent 'a new type of information security problem', says Drexel's Matthew Stamm

Netskope’s Fairman said such risks had led some executives to begin wiping out or limiting their online presence out of fear that it could be used as ammunition by cybercriminals.

Deepfake technology has already become widespread outside the corporate world.

From fake pornographic images to manipulated videos promoting cookware, celebrities like Taylor Swift have fallen victim to deepfake technology. Deepfakes of politicians have also been rampant.

Meanwhile, some scammers have made deepfakes of individuals’ family members and friends in attempts to fool them out of money.

According to Hogg, the broader issues will accelerate and get worse for a period of time as cybercrime prevention requires thoughtful analysis in order to develop systems, practices, and controls to defend against new technologies.

However, the cybersecurity experts told CNBC that firms can bolster defenses to AI-powered threats through improved staff education, cybersecurity testing, and requiring code words and multiple layers of approvals for all transactions — something that could have prevented cases such as Arup’s.

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May 27, 2024

Nvidia crushes sky-high expectations and charts continued AI-driven dominance for years to come

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In what was the most anticipated quarter this earnings season, Nvidia far outpaced lofty expectations on the top and bottom lines. Even better was a big revenue guide and a broader vision from CEO Jensen Huang that reinforced the notion that companies and countries are partnering with the AI chip powerhouse to shift $1 trillion worth of traditional data centers to accelerated computing. Revenue for its fiscal 2025 first quarter surged 262% year-over-year to $26.04 billion, well ahead of analysts’ forecasts of $24.65 billion, according to data provider LSEG, formerly known as Refinitiv. The company had previously guided revenue to $24 billion, plus or minus 2% — so that was a huge beat. Adjusted earnings-per-share increased 461% to $6.12, exceeding the LSEG compiled consensus estimate of $5.59. Adjusted gross margin of 78.9% also beat the Street’s 77.2% estimate, according to market data platform FactSet. The company had guided gross margins to 77%. plus or minus 50 basis points. On top of the strong results, Nvidia announced a 10-for-1 stock split. Although stock splits don’t technically create value, they do tend to have a positive impact on the stock. The company said the split is to “make stock ownership more accessible to employees and investors.” We commend Nvidia for doing this and will continue to press other companies to do the same. Nvidia most recently split its stock in July 2021 on a 4-for-1 basis. In after-hours trading, it was little surprise to see Nvidia shares surging. Nvidia Why we own it : Nvidia’s high-performance graphic processing units (GPUs) are the key driver behind the AI revolution, powering the accelerated data centers being rapidly built around the world. But this is more than just a hardware story. Through its Nvidia AI Enterprise service, Nvidia is in the process of building out a potentially massive software business. Competitors : Advanced Micro Devices and Intel Most recent buy : Aug 31, 2022 Initiation : March 2019 Bottom line What air pocket? Coming into the quarter, it sounded like the only thing that could hold Nvidia back was a product transition-related slowdown from customers delaying orders of the H100 and H200 GPUs (graphics process units) in anticipation of the superior Blackwell chip platform. As you can see from Nvidia’s big beat and upside guide, that was far from the case and demand is expected to exceed supply for quite some time. Should this narrative form again, here’s a good thing to remember for next time so that these concerns don’t shake you out of a strong long-term thesis: Jensen explained on the post-earnings conference call that customers are still so early in their build-outs that they have to keep buying chips to keep up in the current technology arms race. And technology leadership is everything. “There’s going to be a whole bunch of chips coming at them and they just got to keep on building and just, if you will, performance average your way into it. So that’s the smart thing to do,” the CEO said. More broadly, we didn’t hear anything Wednesday evening to change our long-term view about how Nvidia is the driving force behind the current AI industrial revolution. Here’s how Jensen explained the shift that’s happening: “Longer term, we’re completely redesigning how computers work. And this is a platform shift. Of course, it’s been compared to other platform shifts in the past, but time will clearly tell that this is much, much more profound than previous platform shifts. And the reason for that is because the computer is no longer an instruction-driven only computer. It’s an intention understanding computer.” Jensen went on to mention how computers not only interact with us, “but it also understands our meaning, what we intend that we asked it to do, and it has the ability to reason, inference iteratively to process and plan and come back with a solution.” The billions and billions of dollars being spent on accelerated computing is why we own Nvidia for the long-haul and are not trying to trade it back and forth on every headline. By the way, another bearish narrative we often hear is that the custom chips all the big cloud companies are making are a threat to Nvidia’s leadership. Jensen doesn’t see it that way because his platform system has the highest performance at the lowest total cost of ownership. It’s an unbeatable value proposition. NVDA YTD mountain Nvidia YTD The strong results and outlook, upbeat commentary, and stock split were sending Nvidia shares roughly 6% higher to above $1,000 per share for the first time ever. However, we don’t think the gains end here. We’re increasing our price target to $1,200 from $1050 and maintaining our 2 rating , meaning we view it as a buy on pullbacks. Quarterly Results Growth was driven by all customer types, but enterprise and consumer internet companies led the way. Large cloud companies represented a mid-40% of data center revenue in the quarter, so when you see companies like Oracle and Club names Amazon , Microsoft and Alphabet raise their capital expenditure outlooks, understand that a lot of those dollars will flow Nvidia’s way. And, there’s a good reason for it. On the call, Nvidia CFO Colette Kress estimates that for every $1 spent on Nvidia AI Infrastructure, a cloud provider has an opportunity to earn $5 in GPU instant hosting revenue over four years. One customer call out in the quarter was Tesla , expanding its training AI cluster to 35,000 H100 GPUs (graphic processing units). Nvidia said Tesla’s use of Nvidia AI infrastructure “paved the way” for the “breakthrough performance” of full self-driving version 12. (Full self-driving, or FSD, is the way Tesla markets its high level of driver-assisted software.) Interestingly, Nvidia sees automotive as a huge vertical this year, a multi-billion revenue opportunity across on-premise and cloud consumption. Another highlight was Meta’s announcement of Llama 3, its large language model. It was trained on a cluster of 24,000 H100 GPUs. Kress believes that as more consumer internet customers use generative AI applications, Nvidia will see more growth opportunities. The Tesla and Meta clusters are examples of what Nvidia calls “AI Factories.” The company believes “these next-generation data centers host advanced full-stack accelerated computing platforms where the data comes in and intelligence comes out. Nvidia also pointed out that sovereign AI has been a big source of growth. The company defines sovereign AI as a “nation’s capabilities to produce artificial intelligence using its own infrastructure, data, workforce, and business networks.” Kress expects sovereign AI revenue to approach the high single-digit billions of dollars this year from nothing last year. Looking ahead, Nvidia sees supply for the H100 improving but is still constrained on the H200. Even with the transition to Blackwell, Nvidia expects demand for Hopper for quite some time. “Everybody is anxious to get their infrastructure online, and the reason for that is because they’re saving money and making money, and they would like to do that as soon as possible,” the company said. In other words, customers will take whatever they can get. But look for Blackwell revenue later this year, perhaps in a very meaningful amount. The company explained manufacturing of Blackwell has been in production and shipments are expected to start the fiscal 2025 second quarter, ramp in the third, and customers will have full data centers stood up in the fourth quarter. Software was mentioned more than two dozen times on the conference call. And taken together, Nvidia said on the prior quarter’s call that its software and services reached an annualized revenue rate of $1 billion. They are high-margin, recurring revenue businesses, which continue to be key watch areas in future quarters. As for China, the company said it started to ramp up new products specifically made for the region that don’t require an export control license. The U.S. government has put restrictions on sales of the fastest chips for fear they will be used by the Chinese military. However, it doesn’t like China is expected to be a driver of revenue like it was in the past because the limitations to Nvidia’s technology have made the environment more competitive. Guidance The company’s fiscal second quarter guide should dismiss the market’s concerns that some sort of AI spending “air pocket” was forming. For the current Q2, Nvidia projected revenue of $28 billion, plus or minus 2%, above consensus estimates of $26.6 billion Adjusted gross margins are expected to be 75.5%, plus or minus 50 basis points, above estimates of 75.2%. Capital returns Nvidia increased its quarterly dividend by 150%, which is nice but the annual yield is insignificant to the investment case. More impactful is the $7.7 billion of stock the company repurchased in fiscal Q1. (Jim Cramer’s Charitable Trust is long NVDA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Jensen Huang, co-founder and chief executive officer of Nvidia Corp., during the Nvidia GPU Technology Conference (GTC) in San Jose, California, US, on Tuesday, March 19, 2024.

David Paul Morris | Bloomberg | Getty Images

In what was the most anticipated quarter this earnings season, Nvidia far outpaced lofty expectations on the top and bottom lines. Even better was a big revenue guide and a broader vision from CEO Jensen Huang that reinforced the notion that companies and countries are partnering with the AI chip powerhouse to shift $1 trillion worth of traditional data centers to accelerated computing.

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May 22, 2024

CNBC Daily Open: S&P 500 and Nasdaq hit new heights ahead of Nvidia’s earnings

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Traders work on the floor of the New York Stock Exchange during morning trading on May 17, 2024 in New York City.

Angela Weiss | AFP | Getty Images

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Wall Street reaches new highs
The S&P 500 and the Nasdaq Composite rose to fresh record highs as investors await earnings from AI chipmaker Nvidia after the close on Wednesday. The Dow Jones Industrial Average closed 0.17% higher at 39,872.99. Nvidia’s shares rose 0.6% with option traders pricing in swings of as much as 9% up or down in reaction to its earnings. Treasury yields fell and oil prices drifted lower.

Rate cuts several months away
Federal Reserve Governor Christopher Waller said he does not think further rate increases are necessary, but he will need convincing before backing any rate cuts. “I need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy,” Waller said. According to the CME Group’s FedWatch Tool, the first rate cut could come as early as September.

Gasoline reserve release
The Biden administration will release 1 million barrels of gasoline from reserves to reduce prices at the pump ahead of the Fourth of July holiday. OPEC production cuts and fears the Israel-Hamas war could engulf the wider Middle East sent U.S. gasoline futures soaring 19%. “By strategically releasing this reserve in between Memorial Day and July 4th, we are ensuring sufficient supply flows to the tri-state [region] and northeast at a time hardworking Americans need it the most,” Energy Secretary Jennifer Granholm said.

Pixar job cuts
Pixar Animation Studios will lay off about 175 employees, or around 14% of its workforce, a spokesperson for parent company Walt Disney told CNBC. CEO Bob Iger wants Pixar to focus on box office releases and not on short series for Disney+. Pixar and Walt Disney Animation have struggled to generate more than $480 million at the global box office since 2019. Before the pandemic, “Coco” generated $796 million globally, while “Incredibles 2″ tallied $1.24 billion, and “Toy Story 4” snared $1.07 billion worldwide.

Asia-Pacific stocks eke out gains
Hong Kong’s Hang Seng rose 0.18% and mainland China’s CSI 300 index gained 0.7% on Wednesday. Chinese electric car company Xpeng reported an improvement in profit margin and an upbeat outlook for second-quarter deliveries — its Hong Kong-listed shares soared 13%. Japan’s Nikkei 225 was down 0.5% as investors digested a slew of economic data. South Korea’s Kospi and Australia’s S&P/ASX 200 both inched higher. As did New Zealand’s S&P/NZ50, up 0.1%, after the Reserve Bank of New Zealand held rates unchanged at 5.5% for the seventh consecutive time.

[PRO] When Nvidia rises
CNBC’s Ganesh Rao takes a look at six artificial intelligence-related stocks that have historically reacted positively to Nvidia’s quarterly earnings. Five listed in the United States and one in Japan have risen between 6% and 33% in the past after Nvidia revealed bumper earnings.

The bottom line

Few CEOs are strong-willed and have the vision or audacity to redefine their industries. Steve Jobs revolutionized mobile phones with the iPhone, Elon Musk challenged gas-guzzling Detroit's dominance with electric vehicles, and Jamie Dimon, CEO of JPMorgan Chase, has done the same for the often-criticized grey banking industry.

Dimon might seem like an unusual addition to this list of innovators. Yet, he took a bank ranked eighth on Wall Street in 2006 and propelled it to the top spot within five years, surpassing giants like Goldman Sachs, Deutsche Bank, and Citi.

However, Dimon's inclusion here isn't solely due to his bank's impressive growth. Like his peers, he isn't afraid to stand up to his big institutional investors. This was evident at a recent investor day, where the headline revolved around his potential retirement in the next five years.

When pressed on when the bank would repurchase its own shares, Dimon's response was unequivocal: "I want to make it really clear, OK? We're not going to buy back a lot of stock at these prices."

He went on to say, "Buying back stock of a financial company greatly in excess of two times tangible book is a mistake. We aren't going to do it."CNBC's Hugh Son covered this exchange in detail, providing further insight into the share buyback debate.

Unlike CEOs of companies like Apple, Alphabet, and Meta, who have succumbed to pressure and used their vast cash reserves for share buybacks, Dimon resists this trend. Share buybacks primarily benefit large investors by inflating the value of their holdings.

Dimon could have easily agreed, considering his estimated $2.2 billion net worth, largely tied to his bank holdings. Critics might argue it's easy for him to forego additional wealth, given his substantial $36 million compensation package in 2023.

However, it's undeniable that Dimon has successfully navigated nearly two decades of banking crises, recessions, and a volatile political climate. He has built JPMorgan Chase into the largest bank in the United States by assets, with a market capitalization approaching $600 billion, and at 68 he's still going strong.

— CNBC's Jeff Cox, Hakyung Kim, Alex Harring, Sophie Kinderlin, Leslie Josephs, Hugh Son, Spencer Kimball and Sarah Whitton contributed to this report.

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May 21, 2024

CNBC Daily Open: New highs on Wall Street, Fed’s Waller says rate cuts months away

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Traders work on the floor of the New York Stock Exchange during morning trading on May 17, 2024 in New York City.

Angela Weiss | AFP | Getty Images

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Wall Street reaches new highs
The S&P 500 and the Nasdaq Composite rose to fresh record highs as investors await earnings from AI chipmaker Nvidia after the close on Wednesday. The Dow Jones Industrial Average closed 0.17% higher at 39,872.99. Nvidia’s shares rose 0.6% with option traders pricing in swings of as much as 9% up or down in reaction to its earnings. Treasury yields fell and oil prices drifted lower.

Rate cuts several months away
Federal Reserve Governor Christopher Waller said he does not think further rate increases are necessary, but he will need convincing before backing any rate cuts. “I need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy,” Waller said. According to the CME Group’s FedWatch Tool, the first rate cut could come as early as September.

Gasoline reserve release
The Biden administration will release 1 million barrels of gasoline from reserves to reduce prices at the pump ahead of the Fourth of July holiday. OPEC production cuts and fears the Israel-Hamas war could engulf the wider Middle East sent U.S. gasoline futures soaring 19%. “By strategically releasing this reserve in between Memorial Day and July 4th, we are ensuring sufficient supply flows to the tri-state [region] and northeast at a time hardworking Americans need it the most,” Energy Secretary Jennifer Granholm said.

Pixar job cuts
Pixar Animation Studios will lay off about 175 employees, or around 14% of its workforce, a spokesperson for parent company Walt Disney told CNBC. CEO Bob Iger wants Pixar to focus on box office releases and not on short series for Disney+. Pixar and Walt Disney Animation have struggled to generate more than $480 million at the global box office since 2019. Before the pandemic, “Coco” generated $796 million globally, while “Incredibles 2″ tallied $1.24 billion, and “Toy Story 4” snared $1.07 billion worldwide.

Singapore Airlines: one dead, 30 injured
One person died and 30 people were injured aboard a Singapore Airlines flight that was hit by severe turbulence and forced to land in Thailand. Singapore Airlines Flight 321 encountered “sudden, severe turbulence” about 10 hours into a flight from London to Singapore, the airline said. The Boeing 777-300ER plane was carrying 211 passengers and 18 crew members.

[PRO] Stubborn bear
With the S&P 500 index up more than 11% so far this year, Wall Street strategists have been revising their previously pessimistic outlooks for the benchmark. Against this backdrop, CNBC’s Jesse Pound explores why JPMorgan’s Marko Kolanovic is maintaining his negative outlook for stocks.