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https://www.barrons.com/articles/stock-market-movers-3fac9192
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Arm Holdings is set for a blockbuster initial public offering which will test market appetite for an important technology company. However, its targeted valuation suggests it is accepting it won’t be the next
Nvidia
…
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LCG Auctions
Not even
Apple was invincible to this tough August. And if investors are pinning their hopes on the iPhone 15 launch in just a couple of weeks, they could very we…
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Broadcom Inc. shares slipped 4.5% in the extended session Thursday after the chip and software company delivered a revenue forecast for the current quarter that failed to offer upside versus the consensus view.
The company reported fiscal third-quarter net income of $3.30 billion, or $7.74 a share, compared with $3.07 billion, or $7.15 a share, in the year-ago period.
After adjustments, Broadcom
AVGO,
earned $10.54 a share, compared with $9.73 a share in the year-ago quarter. Analysts tracked by FactSet were expecting $10.43 a share.
Revenue increased to $8.88 billion from $8.46 billion in the year-ago quarter, while analysts were modeling $8.85 billion.
See also: Dell’s stock soars as company easily beats on earnings
Chip sales rose 5% to $6.94 billion from the year-ago period, and infrastructure software sales also were up by 5%, to $1.94 billion. The FactSet consensus was for $6.97 billion in chip sales and $1.89 billion in software sales.
The latest results “were driven by demand for next-generation networking technologies as hyperscale customers scale out and network their AI clusters within data centers,” Chief Executive Hock Tan said in a statement.
Broadcom generated $4.6 billion in free cash flow during its third quarter.
The company forecast fiscal fourth-quarter revenue of about $9.27 billion, in line with the FactSet consensus.
Read: Intel offers an upbeat update, and its stock is gaining
Year to date, Broadcom is up 65% and the PHLX Semiconductor Index
SOX,
is up 45%, while the S&P 500 index
SPX
is up 18% and the tech-heavy Nasdaq Composite
COMP
is up 35%.
See also: Nutanix’s stock soars 12% on revenue beat, strong sales guidance
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Dell Technologies Inc. shares
DELL,
were surging 10% in aftermarket trading Thursday after the technology giant posted sizable beats on profit and revenue. The company posted fiscal second-quarter net income of $455 million, or 63 cents a share, compared with $506 million, or 68 cents a share, in the year-prior period. On an adjusted basis, Dell earned $1.74 a share, up from $1.68 a year before, while analysts tracked by FactSet were projecting $1.14 a share. Revenue declined to $22.9 billion from $26.4 billion, whereas analysts were looking for $20.9 billion. “We continue to focus on the most profitable segments of the market where we have a leading position,” Chief Operating Officer Jeff Clarke said in a release. He noted that demand for Dell’s proprietary software-defined storage solution has risen for eight consecutive quarters. “And AI is already showing it’s a long-term tailwind, with continued demand growth across our portfolio,” Clarke continued.
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Salesforce Inc. shares rallied in the extended session Wednesday after the customer-relations management software giant’s earnings outlook topped Wall Street expectations two weeks ahead of its annual confab.
Salesforce CRM shares rallied more than 6% after hours, and held steadily in that range during the conference call with analysts, following a 1.5% rise to close the regular session at $215.04.
The…
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HP Inc.’s stock initially skidded more than 6% in extended trading Tuesday after the computing giant reported mixed results and offered a cautious outlook.
“While we expect another quarter of sequential growth in [the fourth quarter], the external environment has not improved as quickly as anticipated and we are moderating our expectations as a result,” HP Chief Executive Enrique Lores said in an interview.
For the fourth quarter, HP is guiding for adjusted earnings of 85 cents to 97 cents a share, while analysts polled by FactSet are forecasting 95 cents a share. Lores warned that PC pricing has not “recovered as quickly” as expected in what he called a challenging economy, but he said that the availability of AI products in late 2024 should “refresh” consumer and business sales.
HP
HPQ,
reported fiscal third-quarter net earnings of $766 million, or 76 cents a share, compared with net earnings of $1.12 billion, or $1.08 a share, in the year-ago quarter. Adjusted earnings were 86 cents a share.
Revenue declined 10% to $13.2 billion, compared with $14.65 billion a year ago. It was the third straight quarter HP missed analysts’ revenue estimates.
Analysts surveyed by FactSet had expected on average net earnings of 86 cents a share on revenue of $13.4 billion.
Shares of HP have gone up 17% this year, while the S&P 500 index
SPX
has gained 17%.
“HP results provided a look into the bifurcation between AI and everything else in tech,” analyst Daniel Newman, CEO of the Futurum Group, said in an email. “While the company made solid sequential gains, it is still dealing with a macro softness that is likely to persist as tech investment runs to AI and on device AI monetization is showing a longer path to clarity.”
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Nvidia Corp. shares are back on track to try to turn in their best year ever after closing at a record high Tuesday, as the company reached a $1.2 trillion market capitalization for the first time.
Nvidia
NVDA,
shares rallied as much as 5% on Tuesday to an intraday high of $490.81, and closed up 4.2% at $487.84, while the S&P 500 index
SPX,
gained 1.5%. Last week, shares surpassed the $500 mark for the first time.
After an initial show of strength, Nvidia walked back gains following its blowout earnings report last week, when the graphics-processing-units maker topped Wall Street’s data-center sales estimates by more than $2 billion for the quarter, and forecast revenue for the current quarter of more than $3 billion above expectations.
Nvidia also closed above a $1.2 trillion market cap for the first time Tuesday, according to Dow Jones Market data.
In a little more than a year, Nvidia’s market capitalization had increased by close to $1 trillion, adding $925 billion in market cap since 2022’s stock price low, hit on Oct. 14, when shares closed below $113 for the first time since August 2020, according to Dow Jones data.
Last fall, Nvidia’s stock was melting down because it had to replace some $400 million in expected data-center sales to China with equipment that would clear a U.S. ban on AI tech as well as deal with inventory write-downs.
Read from Sept. 2022: Nvidia’s ‘China Syndrome’: Is the stock melting down?
Nvidia shares are up 234% year to date, compared with a 17% gain by the S&P 500, and already ahead of their strong 2016 gain of 224%, and back in the running to overcome their best one-year gain of 308% set back in 2001, according to FactSet data.
Nvidia shares were also the second-most active on the S&P 500 on Tuesday, with more than 69 million shares exchanged, second only to Tesla Inc.’s
TSLA,
more than 132 million shares exchanged by the close.
For their part, Tesla shares posted a 7.8% gain Tuesday, their biggest one-day jump in five months, following a report that Tesla was launching a $300 million AI computing cluster using thousands of Nvidia GPUs.
Also on Tuesday, Nvidia and Alphabet Inc.
GOOG,
GOOGL,
announced that the chip maker’s cutting-edge data-center chips are powering Google Cloud Platform and its PaxML large language model.
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Nvidia Plans to Buy Back Billions in Stock. Other Companies Could Join in Soon.
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Technology advances quickly, so the difference between today’s gadgets and those you could buy in the 1980s is dramatic. That said, the decade did give us early cell phones, portable tape players, VCRs, and personal computers. Twenty-something YouTuber Liam Thompson wanted to see what it would be like to live using only tech from the ’80s for a week.
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Paul Strauss
Source link
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Nvidia Corp.
NVDA,
shares failed to close at a record high Thursday after the AI-chip maker’s stellar earnings report initially boosted shares past $500 for the first time. Shares rose 0.1% to close at $471.74, after trading as high as $502.66 intraday, but fell short of the record closing high of $474.94 set on July 18, according to FactSet data. The earnings report took chipmakers on a ride Thursday, falling from an initial show of strength following the report. Nvidia shares are up more than 222% on a year-to-date basis, compared with a 37% gain in the PHLX Semiconductor Index
SOX,
a 14% rise in the S&P 500
SPX,
and a 29% surge in the tech-heavy Nasdaq Composite
COMP,
over the same span.
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U.S. stock futures jump early Thursday as sparking Nvidia results boost risk appetite.
On Wednesday, the Dow Jones Industrial Average
DJIA
rose 184 points, or 0.54%, to 34473, the S&P 500
SPX
increased 48 points, or 1.1%, to 4436, and the Nasdaq Composite
COMP
gained 215 points, or 1.59%, to 13721.
Well-received earnings from AI chipmaker Nvidia
NVDA,
has triggered a bout of risk-on activity across markets. Futures indicate the tech-heavy Nasdaq 100 will open up 1.4% as Nvidia’s stock jumps 8% in premarket action.
“The market expectations were sky-high, the results went to the moon,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “The Nvidia news has [had] a boosting effect on technology stocks…by confirming that all the talk around the AI-craze was not empty, after all.”
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, agreed: “Nvidia smashing the forecast ceiling has also lifted the mood elsewhere.”
Shares of Palantir Technologies
PLTR,
Advanced Micro Devices
AMD,
and OpenAI investor Microsoft
MSFT,
rose in premarket action.
Dow Jones Industrial Average futures underperformed as shares in Boeing
BA,
fell nearly 2% on news of a defect identified on the 737 Max aircraft.
Falling implied borrowing costs were also helping the mood Thursday. The benchmark 10-year U.S. Treasury yield, which earlier this week hit a near 16-year peak of 4.36% has pulled back to 4.178% after survey’s of economic activity in Europe and the U.S., released Wednesday, suggested a deteriorating global economy.
“The rally in U.S. stocks and the retreat of Treasury yields followed underwhelming economic reports as the market fell back into the ‘bad news is a good’ mode,” said Stephen Innes, managing partner at SPI Asset Management.
“But encouragingly for equity investors, the weaker U.S. data lens more weight to the argument for the Federal Reserve to pause its interest rate hikes,” Innes added.
With that in mind traders will have an eye on the Jackson Hole economic policy symposium, which begins Thursday, and which on Friday is expected to deliver a speech by Fed Chair Jerome Powell.
U.S. economic updates set for release on Thursday include the weekly initial jobless claims and durable goods orders for July, both due at 8;30 a.m. Eastern.
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Nvidia Corp. shares rallied in the extended session Wednesday after the maker of graphics processing units that is leading the AI-hardware charge reported a 141% surge in data-center sales and record results.
Nvidia
NVDA,
shares rallied 9% after hours, following a 3.2% rise in the regular session to close at $471.16, less than 1% below the stock’s record closing high of $474.94, set on July 18, according to FactSet data. A close at such levels on Thursday would mean a new record high for the stock.
The Santa Clara, Calif.-based company reported second-quarter net income of $6.19 billion, or $2.48 a share, compared with $656 million, or 26 cents a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation expenses and other items, were $2.70 a share, compared with 51 cents a share in the year-ago period.
Revenue surged to a record $13.51 billion from $6.7 billion in the year-ago quarter, driven by a 141% leap in data-center revenue to $10.32 billion.
Analysts surveyed by FactSet had forecast earnings of $2.08 a share on revenue of $11.19 billion, and data-center sales of $8.03 billion.
Nvidia forecast third-quarter revenue of $15.68 billion to $16.32 billion.
Analysts had estimated third-quarter earnings of $2.40 a share on revenue of $12.59 billion, with $9.15 billion of that from data-center sales. For the year, Wall Street, on average, expects earnings of $8.29 a share on $44.54 billion in revenue, a 71% increase from fiscal 2023’s $26.97 billion, with $32.41 billion of that in data-center sales.
“Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI,” said Jensen Huang, founder and chief executive of Nvidia, in a statement. “Leading enterprise IT system and software providers announced partnerships to bring Nvidia AI to every industry. The race is on to adopt generative AI.”
Right after the report, Lopez Research analyst Maribel Lopez told MarketWatch that Nvidia’s “numbers prove just how much money there is in the AI hardware opportunity.”
“While cloud companies are selling AI services, Nvidia is walking away with a bulk of the revenue and profits,” Lopez said. “Nvidia’s minting cash with no apparent slowdown in sight.”
Nvidia shares are up more than 222% on a year-to-date basis, compared with a 42% surge in the PHLX Semiconductor Index
SOX,
a 15.5% rise by the S&P 500
SPX
and a 31% gain by the tech-heavy Nasdaq Composite
COMP
over the same span.
Nvidia, which has stood as the largest publicly traded chip maker by market cap since February, having traded that title back and forth with Taiwan Semiconductor Manufacturing Co.
TSM,
since late 2020, closed above the $1 trillion mark officially for the first time on June 14. Nvidia ended Wednesday with a valuation of $1.164 trillion, and one analyst thinks it could be the most valuable U.S. company in a few years.
Nvidia currently stands as the fifth-largest U.S. company by market cap behind Apple Inc.
AAPL,
Microsoft Corp.
MSFT,
Alphabet Inc.
GOOG,
GOOGL,
and Amazon.com Inc.
AMZN,
While all have a big stake in the future of AI, the latter three companies are scrambling to outfit their cloud-service provider data centers with new AI gear amid tight supply.
While Nvidia is considered the overwhelming leader in the AI chip market, Advanced Micro Devices Inc.
AMD,
is considered a distant second. AMD’s data-center numbers declined in the company’s recent earnings report, although the company didn’t have comparable AI chip sales in its results.
Shares of AMD and TSMC were both up more than 3% after hours Wednesday.
See also: Nvidia ‘should have at least 90%’ of AI chip market with AMD on its heels
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“‘You could ask who is really running the show? Jerome Powell or Jensen Huang? Amazingly, it may not be Powell, but Jensen Huang who is driving Fed expectations.’”
Those are the words of Ben Emons, a senior portfolio manager and the head of fixed income at NewEdge Wealth in New York, who identifies reasons why artificial-intelligence leader Nvidia Corp.
NVDA,
is demonstrating central-bank-like powers.
It starts with the idea that the Santa Clara, California-based chip designer — which reports fiscal second-quarter earnings on Wednesday — acts as a bellwether for AI-capital expenditures that are likely to boost productivity across the U.S. economy. And in the bond market, a surge of AI-related expectations is translating into higher real yields, which reflect inflation-adjusted growth in gross domestic product and productivity, he said.
Read: Nvidia’s stock snaps losing streak and sits 1% below record close as earnings optimism builds
Higher real yields in the U.S. are a key reason why 10-
BX:TMUBMUSD10Y
and 30-year Treasury yields
BX:TMUBMUSD30Y
climbed to multi-year highs through Monday. Real yields, as measured by rates of Treasury inflation-protected securities, offer a glimpse of how the market expects the U.S. to perform when inflation isn’t a factor.
Read: Rise in Treasury yields is almost entirely due to one factor, strategist says
“The bigger macro story behind Nvidia as the bellwether of artificial intelligence is the role it plays in the economy, which is proving to be stronger than anyone thought it would be,” Emons said via phone on Tuesday. “People connect AI to productivity and productivity leads to growth, and to some extent this is impacting interest-rate expectations today.”
Amid growing anticipation over Nvidia’s upcoming earnings announcement and Friday’s speech by Federal Reserve Chairman Jerome Powell in Jackson Hole, Wyo., “the probability of a rate hike is creeping higher,” the senior portfolio manager wrote in a note this week. “With each additional dollar increase of NVDA EPS estimates, the probability of a hike by November goes up. NVDA is gaining Fed-like power.”
Need to Know: Nvidia may be the AI stock for now, but here are the picks for later, says Goldman Sachs
A chart provided by Emons shows how the median estimate of analysts for Nvidia’s earnings-per-share in the fiscal second quarter has been rising alongside the market-implied probabilities of a November Fed rate hike.
In addition, the yield on one of Nvidia’s own corporate bonds, issued in 2020 and maturing in April 2040, has been rising in relation to the 10-year TIPS or real yield “because of the company’s broader effect on the economy,” Emons said.
As University of Pennsylvania Wharton School finance professor Jeremy Siegel explained in a separate interview with MarketWatch, real interest rates track real growth. Improving productivity and stronger growth “mean the Fed won’t be able to cut rates as much as it would otherwise be able to.”
On Tuesday, Treasury yields finished mixed, while Nvidia’s shares closed down by 2.8%, as traders and investors await the company’s earnings report on Wednesday followed two days later by Powell’s remarks.
Analysts expect Powell to address what’s known as the real neutral rate of interest — or the inflation-adjusted level which is likely to prevail when the economy is operating at full strength and price gains are stable — as a way of justifying the higher-for-longer theme in U.S. interest rates.
See also: How higher-for-longer rates are playing out as 10-year yield hits 15-year high
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U.S. banks and regional banks fell across the board on Tuesday, after S&P Global Ratings downgraded five smaller players after a review of risk related to funding, liquidity and asset quality with a focus on office commercial real estate.
Adding to the gloom, Republic First Bancorp. Inc.’s stock
FRBK,
tanked by 39%, after Nasdaq told the company that its stock would be delisted on Wednesday, after it failed to file its annual report in time.
S&P’s move comes just days after Fitch Ratings analyst Christopher Wolfe reduced his operating environment score for U.S. banks to aa- from aa due to the unknown path of interest rate hikes and regulatory changes facing the sector.
And Moody’s Investors Service just two weeks ago upset investors when it downgraded some lenders and said it was reviewing ratings on bigger banks, including Bank of New York Mellon
BK,
State Street
STT,
and Northern Trust
NTRS,
For more, see: Bank asset quality, weaker profits spark Moody’s reviews and downgrades as it weighs potential 2024 recession
The S&P 500 Financials Sector has fallen for seven consecutive days, and is on pace for its longest losing streak since April 7, 2022, when it also fell for seven straight trading days.
Individual bank names are also performing poorly, with Goldman Sachs Group Inc.
GS,
and Citigroup Inc.
C,
down for 10 of the past 11 days and Charles Schwab Corp.
SCHW,
down 11 straight days.
Goldman alone has fallen for seven straight days for a total loss of 6.3%. It’s the longest losing streak since Feb. 28, 2020, when it also fell for seven straight days as the pandemic was taking hold.
The KBW Nasdaq Regional Banking Index
KBWR
is down for 11 straight days. and the KBW Nasdaq Bank Index
BKX
is down for seven straight days.
S&P downgraded Associated Banc. Corp.
ASB,
Comerica Inc.
CMA,
KeyCorp
KEY,
UMB Financial Corp.
UMBF,
% and Valley National Bancorp.
VLY,
by one notch and said the outlook on all five is stable.
Read also: More challenges await U.S. banks but analysts think the worst may be over for the year
The rating agency affirmed ratings on Zions Bancorp
ZION,
and maintained a negative outlook, meaning it could downgrade them again in the near-term. And it affirmed ratings and a stable outlook on Synovus Financial Corp.
SNV,
and Truist Financial Corp.
TFC,
“We reviewed these 10 banks because we identified them as having potential risks in multiple areas that could make them less resilient than similarly rated peers ,” S&P said in a statement.
“For instance, some that have seen greater deterioration in funding—-as indicated by sharply higher costs or substantial dependence on wholesale funding and brokered deposits—-may also have below-peer profitability, high unrealized losses on their assets, or meaningful exposure to CRE.”
The steep rise in interest rates orchestrated by the Federal Reserve over the past year has raised deposit costs as banks are now competing for savers seeking higher returns and that’s forced some to pay up on deposits and discourage their clients from heading to other institutions and instruments.
The sector has been skittish this year following the collapse of Silicon Valley Bank and other lenders that led to a run on deposits at a number of regional lenders.
However, S&P said about 90% of the banks it rates have stable outlooks and just 10% have negative ones. None have positive outlooks.
The widespread stable outlooks shows that stability in the U.S. banking sector has improved significantly in recent months.
S&P is expecting FDIC-backed banks in aggregate to earn a relatively healthy ROE of about 11% in 2023.
KeyCorp. and Comerica both fell more than 3% on the news. Of the two, KeyCorp. has more outstanding debt and its 10-year bonds widened by about 5 to 10 basis points, according to data solutions provider BondCliq Media Services.
As the following chart shows, the bonds have seen better selling on Wednesday with buyers emerging around midmorning.
The next chart shows customer flow over the last 10 days.
The next chart shows the outstanding debt of the downgraded banks, with KeyCorp. clearly the leader with almost $16 billion of bonds.
Don’t miss: Capital One confirms roughly $900 million sale of office loans as property sector wobbles
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Wall Street looks ready to build on Monday’s gains, the first in five sessions for the S&P 500
SPX
and Nasdaq Composite
COMP.
That’s as expectations build around Nvidia, which has had a lackluster August, to knock it out of the park with earnings on Wednesday.
Investors have had months to focus on AI darlings such as Nvidia. In our call of the day, Goldman Sachs takes a look at stocks to trade after the big AI trade. A team led by strategists Ryan Hammond and David Kostin complied a basket of companies with the biggest potential long-term earnings per share boost from the impact of AI adoption on labor productivity.
Their analysis indicates that following widespread AI adoption, EPS for the median stock in that basket could be 72% higher than the baseline, versus 19% for the median Russell 1000 stock.
“We estimate the potential productivity-related EPS boost from increased revenues or increased margins, using a combination of company-level estimates of the share of the wage bill exposed to AI automation and the labor cost to revenue ratio,” said the Goldman team.
Since early 2023, when AI emerged as a theme for investors, they note their long-term basket of stocks has outperformed the equal-weight S&P 500 by just 6 percentage points, far less than near-term beneficiaries such as Nvidia
NVDA,
Microsoft
MSFT,
or Meta
META,
“The estimated AI-driven earnings boost is likely to occur over the next few years, but should be reflected in stock valuations sooner. However, the eventual share price impact will depend on the ability of companies to use AI to enhance earnings,” said Goldman.
While unable to pin it exactly, Goldman expects AI adoption will start to a have a “meaningful macro impact” between 2025 and 2030, with regulatory constraints and data privacy concerns likely to slow widespread adoption. Nearly 75% of CEOs see AI take-up impacting companies or cutting labor needs within the next five years, even if they don’t right now.
Firms with the biggest workforce exposure to AI and larger and more innovative ones, will likely adopt generative AI earlier than others, say the strategists. They say to “expect valuation multiples for these companies to increase first as the adoption timeline crystallizes, even if actual adoption and the associated EPS boost is occur later.”
Goldman’s estimates on the potential earnings boost for those long-term AI beneficiaries consist of several factors: the share of each company’s wage bill exposed to AI automation, how much of a company’s wage bill is exposed to AI automation and labor cost as a share of revenue.
“For the typical Russell 1000 stock, 33% of the wage bill is potentially exposed to AI automation and labor costs currently represent 14% of total sales. The potential boost from higher sales would increase earnings by 11% and reduced labor costs would increase earnings by 26%, all else equal,” say the strategists.
Here is a taster of their long-term AI beneficiaries basket:
And a few more:
Read: U.S. stocks may bounce this week, but summer selloff is only halfway done, analysts warn
U.S. stocks
SPX
COMP
are trading mixed. The yield on the 10-year Treasury
BX:TMUBMUSD10Y
is steady at 4.33%.
For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.
Microsoft
MSFT,
has proposed a Ubisoft license to win U.K. regulatory approval for its Activision Blizzard
ATVI,
buyout. Activision shares and Ubisoft
UBI,
surged in Paris.
On the heels of a 7% surge, EV-maker Tesla
TSLA,
is up 1.8%.
Opinion: SoftBank’s Arm is going public, but it faces a rapidly growing threat
Lowe’s shares
LOW,
are up after the DIY retailer’s earnings topped expectations, though it notes lower discretionary demand.
Among Monday’s late earnings news: Fabrinet
FN,
is up 18% after the high-tech manufacturing services company upbeat forecast, with new AI products helping drive results. Videoconferencing group Zoom Video Communications
ZM,
is up 4% after reporting an earnings jump and guidance.
Read: Why Amazon is this analyst’s top internet stock pick
The world’s biggest miner BHP
BHP,
reported a 58% slump in annual profit amid tumbling commodity prices in part due to China’s economic troubles. U.S.-listed shares are up 4%.
Arm Holdings filed its long-awaited IPO, which could be the year’s biggest. The chip designer aims to raise up to $10 billion with a valuation of $60 billion to $70 billion.
Existing home sales for July are due at 10 a.m., with several Fed speakers throughout the day: Richmond Fed President Tom Barkin at 7:30 a.m. and Chicago Fed President Austan Goolsbee and Fed. Gov. Michelle Bowman both at 2:30 p.m.
New video shows the day police raided 98-year old Kansas newspaper owner’s home.
Hitler’s birth house in Austria will be turned into a police station with a human rights training center.
These were the top tickers on MarketWatch as of 6 a.m.:
| Ticker | Security name |
|
TSLA, |
Tesla |
|
NVDA, |
Nvidia |
|
AMC, |
AMC Entertainment |
|
NIO, |
Nio |
|
APE, |
AMC Entertainment Holdings preferred shares |
|
TTOO, |
T2 Biosystems |
|
GME, |
GameStop |
|
AAPL, |
Apple |
|
MULN, |
Mullen Automotive |
|
AMZN, |
Amazon.com |
Is tech dancing to the beat of its own drum? The Chart Report flagged this one from Scott Brown, founder of Brown Technical Insights, showing performance of the Technology Select Sector SPDR ETF
XLK
:
“It’s only been a week, but consensus and conventional wisdom suggest higher yields are bad for Growth/Tech stocks. Meanwhile, Tech is acting like it never got the memo. It’s still too early to tell if Tech is trying to tell us something, but Scott points out that the sector is facing a crucial test this week at the March 2022 highs (around $163). $XLK is solidly above $163 after today’s bounce, but where it ends the week will likely hinge on $NVDA, as the company releases earnings on Wednesday evening,” says Patrick Dunuwila, editor and co-founder of The Chart Report.
“We are the champions.” Spain erupted in celebrations to welcome its Women’s World Cup victors. And England’s Lionesses got a 1,000 soccer-ball tribute.
No, Tropical Storm Hilary didn’t flood Dodger Stadium.
These thirsty beer-drinking thieves are raccoons.
Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.
Listen to the Best New Ideas in Money podcast with MarketWatch financial columnist James Rogers and economist Stephanie Kelton.
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Microsoft will change the terms of its Activision Blizzard buyout offer in a new effort to win approval from the U.K. competition regulator.
The regulator, the Competition and Markets Authority, said Microsoft
MSFT,
will now license Activision’s global cloud streaming to Ubisoft Entertainment, for any game available now or in the next 15 years. Ubisoft, in its own release, highlighted the ability to stream the popular Call of Duty franchise.
Financial terms were not released, but the regulator said Ubisoft will make a one-off payment and also agree a market-based wholesale pricing mechanism.
The license will be exclusive except in the European economic area. Ubisoft would have the ability to require Microsoft to provide versions of games on operating systems other than Windows, such as Linux.
Ubisoft shares
UBI,
jumped nearly 5% in opening Paris trade.
The regulator now says it’s inviting comments on the structure of the new offer. “This is not a green light. We will carefully and objectively assess the details of the restructured deal and its impact on competition, including in light of third-party comments,” said the regulator’s CEO, Sarah Cardell.
Microsoft last year agreed to buy Activision Blizzard for $68.7 billion, or $95 per share. Activision stock
ATVI,
closed Monday at $90.72.
In a blog post, Microsoft Vice Chair Brad Smith said it anticipates the CMA review processes can be completed before the 90-day extension in its acquisition agreement with Activision Blizzard expires on Oct.18. He also said the deal with Ubisoft was carefully structured not to interfere with an existing deal struck with European regulators.
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Arm Holdings Ltd. filed its long-awaited initial public offering late Monday, following last year’s failed bid by Nvidia Corp. to acquire the U.K.-based chip architecture company.
Arm has reportedly been seeking to raise $8 billion to $10 billion at a valuation of $60 billion to $70 billion, making its IPO the biggest of the year so far, and a number of large tech companies, including Amazon.com Inc.
AMZN,
Intel Corp.
INTC,
and Nvidia
NVDA,
are reportedly in the mix to be anchor investors.
In a late Monday filing with the Securities and Exchange Commission, Arm said it was offering to list its U.S. traded shares on the Nasdaq under the ticker symbol “ARM.”
Arm, which is owned by Japan’s SoftBank Group Corp.
9984,
was the target of an unsuccessful $40 billion acquisition by Nvidia last year. After Nvidia scrubbed the deal and paid a $1.36 billion breakup charge following the U.S. Federal Trade Commission’s unanimous decision to block it, Nvidia disclosed it paid Arm $750 million for a 20-year license to its technology.
At the time of the breakup, chips sales had hit record highs in 2021, surging 26.2% to a record $555.9 billion, fueled by pandemic-triggered shortages. But the chip industry has since swung to a glut.
Arm listed Barclays, Goldman Sachs, JP Morgan, Mizuho, BofA Securities, Citigroup, and Deutsche Bank Securities among the IPO’s underwriters.
Recent reports said SoftBank was in discussions to purchase the 25% stake in Arm that it does not outright own, which is held by its Vision Fund 1, ahead of the IPO.
Read from Feb. 2022: Wall Street’s reaction to death of Nvidia-Arm deal: No duh
Arm reported net income of $524 million, or 51 cents a share, on revenue of $2.68 billion for fiscal 2023, which ended March 31, compared with net income of $549 million, or 54 cents a share, on revenue of $2.7 billion, in fiscal 2022, and $388 million, or 38 cents a share, on revenue of $2.03 billion in fiscal 2021.
Arm uses an architecture that is different from the once-standard x86 one built by Intel in the early days of computing.
The company said it has shipped more than 250 billion Arm-based chips since its started in 1990 as a joint venture between Acorn Computers, Apple
AAPL,
and VLSI Technology. In fiscal 2023, Arm said it shipped 30.6 billion chips.
The company said it is going public as the “resources required to develop leading-edge products are significant and continue to increase exponentially as manufacturing process nodes shrink.” Transistors are expressed in scales of nanometers, with design costs running about $249 million for a 7-nanometer chip and about $725 million for a 2-nm chip.
“As the world moves increasingly towards AI- and [machine language]-enabled computing, Arm will be central to this transition,” the company said in the filing. “Arm CPUs already run AI and ML workloads in billions of devices, including smartphones, cameras, digital TVs, cars and cloud data centers.”
Arm said it is working with Alphabet Inc.
GOOG,
GOOGL,
GM’s
GM,
Cruise, Mercedes-Benz
MBG,
Meta Platforms Inc.
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and Nvidia “to deploy Arm technology to run AI workloads.”
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