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 moves : Stocks were mixed Monday as money continued to shift out of high price-to-earnings multiple technology stocks that have outperformed this year and moved into cyclical areas of the market like energy, the financials, and industrials. It’s no wonder why the Dow Jones Industrial Average was higher Monday and the S & P 500 and Nasdaq were lower. For example, Club name Nvidia , the company at the center of the rally in artificial intelligence-related stocks, has quickly lost about 12% since hitting a closing high of $135.58 last Tuesday. It is worth noting that Nvidia has historically been prone to volatility at times. Conversely, the energy and utilities sectors — two of the worst-performing groups in June — charged higher. The oil rally was certainly helping our lone energy stock, Coterra Energy, which was nearly 4% higher on Monday. Next for tech : These rotations, which saw the Nasdaq recently lead and the Dow lag, have a habit of lasting a handful of sessions, making it hard to predict when and where those beloved tech stocks will stabilize. But what could turn the tide is a positive data point on industry spending later this week when Micron reports earnings. “People are picking apart the part of tech that’s been working and the Mag7 members except Apple. I think that this move will be hard to stop until we hear from Micron on Wednesday, which could tell us about actual demand and supply. I think that demand will stay strong,” Jim Cramer said Monday. Don’t chase : Still, the quick pullbacks in some of these AI names that were monster gainers over the past month is another reminder of why investors should be hesitant about chasing parabolic moves. This discipline is part of the reason why we trimmed Broadcom last week after it shot up after earnings. We ended up putting about half of the cash from that sale into Dover , an industrial company that can benefit as a second-order AI stock. Dover makes things that go into data centers, which are being upgraded and constructed at a fast clip to handle AI workloads. Record runs : As money rotated into other areas of the market, non-tech stocks like consumer products giant Procter & Gamble and off-price retailer TJX Companies reached all-time highs Monday. Industrial conglomerate Honeywell reached its highest levels back to late 2022. “Procter & Gamble might have the best consumer packaged goods profile and is barely up versus the rest of the group. I think it still has room to run,” Cramer said. Up Next: No earnings are out after the bell Monday. Cruise line Carnival reports before the opening bell Tuesday — and later in the morning, the Conference Board’s consumer confidence survey is released. (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.
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.
A mockup of Tesla Inc.’s planned humanoid robot Optimus on display during the Seoul Mobility Show in Goyang, South Korea, on Thursday, March 30, 2023. The motor show will continue through April 9. Photographer: SeongJoon Cho/Bloomberg via Getty Images
Bloomberg | Bloomberg | Getty Images
The entire value of the S&P 500 currently stands at $45.5 trillion, according to FactSet. Tesla CEO Elon Musk claimed on Thursday that his company’s Optimus humanoid robots could eventually make the automaker worth more than half of that.
Musk, who characterized himself as “pathologically optimistic” at the 2024 annual shareholder meeting in Austin, Texas, said Tesla is embarking on not just a “new chapter” in its life, but is about to write an entirely “new book.” Optimus appears to be one of the main characters.
Tesla first revealed its plans to work on humanoid robots in 2021 at an AI Day event, trotting out a dancer in a unitard that looked like a sleek, androgynous robot.
In January, Tesla showed off Optimus robots folding laundry in a demo video that was immediately criticized by robotics engineers for being deceptive. The robots were not autonomous, but were rather being operated with humans at the controls.
At the shareholder event on Thursday, Musk didn’t divulge exactly what Optimus can do today. He suggested the robots some day will perform like R2-D2 and C-3PO in Star Wars. They could cook or clean for you, do factory work, or even teach your children, Musk suggested.
As for shareholder value, Musk said Optimus could be the catalyst for lifting Tesla’s market cap to $25 trillion someday.
Speaking to a crowd consisting mostly of fawning fanboys in an auditorium at the Gigafactory, Musk promised Tesla would move into “limited production” of Optimus in 2025 and test out humanoid robots in its own factories next year.
The company, he predicted, will have “over 1,000, or a few thousand, Optimus robots working at Tesla” in 2025.
This is all far-out stuff even for Musk, who is notorious for making ambitious promises to investors and customers that don’t pan out — from developing software that can turn an existing Tesla into a self-driving vehicle with an upload, to EV battery swapping stations.
Getting to a $25 trillion market cap would mean that Tesla would be worth about eight times Apple’s value today. The iPhone maker is currently the world’s biggest company by market cap, just ahead of Microsoft.
At Thursday’s close, Tesla was valued at about $580 billion, making it the 10th most valuable company in the S&P 500.
Musk didn’t provide a timeframe for reaching $25 trillion. He did say that autonomous vehicles could get the company to a market cap of $5 trillion to $7 trillion.
Musk said he agreed with numbers from long-time Tesla bull Cathie Wood, the CEO of ARK Invest. This week, ARK put a $2,600 price target on Tesla’s stock by 2029, betting on a commercial robotaxi business that the company has yet to enter.
Wood’s price target equals a market cap for Tesla of over $8 trillion.
Musk’s comments at the annual meeting followed the shareholder vote to reinstate the CEO’s $56 billion pay plan, five months after a Delaware court ordered the company to rescind the package. The crowd cheered when the proposal was read aloud, and when preliminary results were announced.
Taking the stage following the readout of the shareholder votes, Musk said, “I just want to start off by saying hot d—! I love you guys.”
Tesla shares have dropped 27% this year as the company reckons with a sales decline that’s tied in part to an aging lineup of electric vehicles and increased competition in China. The company has also implemented steep layoffs. Musk has encouraged investors to look past the current state of the business and more toward a future of autonomous driving, robots and artificial intelligence.
Among his boldest claims on Thursday was Musk’s declaration that Tesla had advanced so far in developing silicon that it’s surpassed Nvidia when it comes to inference, or the process that trained machine learning models use to draw conclusions from new data.
Nvidia shares have soared almost nine-fold since the end of 2022, driven by demand for its AI chips. The company is now worth about $3.2 trillion.
One concern swirling around Musk is his focus on Tesla given all of his other commitments. He owns and runs social media company X, is CEO of SpaceX, and founded The Boring Co. and Neuralink. He launched another startup, xAI, in March last year and the company recently raised $6 billion in venture funding.
Musk was asked by a shareholder at the meeting how important he is, personally, to the future of Tesla.
“I’m a helpful accelerant to that future,” he said, emphasizing his role in innovation.
He said that, when it comes to humanoid robots, other companies, including tech startups, are going after the market. Competitors include Boston Dynamics, Agility, Neura and Apptronik.
“What really matters is, can we be much faster than everyone else and our product be done a few years before theirs and be better,” Musk said.
Traders work on the floor of the New York Stock Exchange during morning trading in New York City.
Michael M. Santiago | 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.
Nvidia passes Apple Artificial intelligence chipmaker Nvidiasurpassed the $3 trillion market capitalization mark, pushing past Apple to become the second most valuable company behind Microsoft. Nvidia’s shares have risen 24% since its blockbuster earnings report in May, while Apple’s shares are up only 5% this year as sales growth stalled in recent months.
Baron backs Musk’s pay deal Billionaire investor Ron Baron has publicly defended Elon Musk’s controversial $56 billion Tesla pay package. The Baron Capital chairman and CEO argues the package, tied to “aggressive” performance targets, is justified as without Musk “there would be no Tesla.” Baron previously revealed that his firm has made about 20 times its investment in Tesla since he first bought the stock in 2014. The package, previously voided by a Delaware judge, will face a shareholder vote on June 13.
Elliott retakes SoftBank stake Elliott Management, an activist investor, has taken a $2 billion stake in SoftBank and is pushing for a $15 billion share buyback. This marks the second time Elliott has taken a stake in the Masayoshi Son-led firm. In 2020, at Elliott’s urging, SoftBank launched a $20 billion share buyback and asset disposal program. Elliott believes another buyback would boost SoftBank’s share price and signal confidence in CEO Son’s plans, particularly in AI.
Electric air taxi gets FAA signoff Shares of Archer Aviation soared 6% after the Federal Aviation Administration granted the electric air taxi maker a key certification that would allow the company’s aircraft to eventually carry passengers. Archer, which has won orders and backing from United Airlines, is building electric vertical takeoff and landing aircraft for urban areas, which could reduce carbon emissions. Archer has partnered with automaker Stellantis to produce hundreds of the electric air taxis.
[PRO] Buy the dip While investors are concerned about this biotech company’s potential loss of exclusivity and rising competition, Goldman Sachs sees an upside of more than 60%. The Wall Street bank believes investors should buy the dip and consider its “overlooked” pipeline.
Billionaire investor Ron Baron's support of Elon Musk's $56 billion compensation package almost feels like looking in the rearview mirror. Nonetheless, it's a crucial intervention just ahead of next week's vote on what would be corporate America's biggest compensation package.
Shareholder advisory firms, Glass Lewis and ISS, have told investors to reject the award. In voiding the original package, the judge said the process was flawed because of the close relationship the compensation committee had with Musk. For example, Robyn Denholm, the chair of Tesla, sold some of her Tesla options for $280 million between 2021 and 2022 — a "life-changing" transaction, as she described it. Other members of the team had relationships with Musk going back 15 years or more and regularly vacationed together.
The package has no salary or cash bonus and sets rewards based on Tesla's market value rising to as much as $650 billion over the 10 years from 2018. The court also found the defendants did not prove the package was necessary to retain Musk.
At its height, Tesla reached a market capitalization of $1.2 trillion in November 2021. Since then, the EV market has slowed and competition has intensified. Its current market cap is $560 billion. While Baron remains bullish and has made and expects to make a lot more money from Tesla, other investors expect the company's stock to fall by as much as 30%.
Who would bet against Musk? He took a niche vehicle manufacturer that has flirted with bankruptcy and challenged Detroit, and now plans to reinvent the EV maker into a leader in AI and robotics.
Still, Wall Street has a new favorite in Nvidia. It passed the $3 trillion mark and surpassed Apple to become the second most valuable U.S. company. Before Thursday's record high, UBS noted that Nvidia's year-to-date gain is responsible for a significant chunk of the S&P 500's 2024 rally.
"NVDA accounts for 30% of the market's return YTD," wrote strategist Jonathan Golub in a Wednesday note to clients. "S&P 500 returns drop from 11.3% to 7.8% ex-NVDA. Many stocks have moved in step with the AI theme."
While some caution a bit of profit-taking, the company's 10-for-1 stock split should encourage side-lined retail investors to take a slice of the AI frenzy. Bank of America still sees an upside to the stock.
— CNBC's Brian Evans, Alex Harring, Darla Mercado, Kif Leswing, Rohan Goswami, Leslie Josephs and Yun Li contributed to this report.
Core Scientific’s 104 megawatt Bitcoin mining data center in Marble, North Carolina
Carey McKelvey
AUSTIN — For five years, bitcoin miner Core Scientific has quietly been diversifying out of mining and into artificial intelligence, a market that will require immense amounts of power to handle the training of AI models and the massive workloads that follow.
The move is no longer a secret.
On Monday, Core Scientific announced a 12-year deal with cloud provider CoreWeave to provide infrastructure for use cases like machine learning. Core Scientific said the agreement, which expands upon an existing partnership between the two companies, will add revenue of more than $3.5 billion over the course of the contract.
CoreWeave, backed by Nvidia, rents out graphics processing units (GPUs), which are needed for training and running AI models. CoreWeave was valued at $19 billion in a funding round last month. Core Scientific will deliver about 200 megawatts of infrastructure to CoreWeave’s operations.
Core Scientific, which emerged from bankruptcy in January, has been mining a mix of digital assets since 2017. The company began to diversify into other services in 2019.
“The best way to think about bitcoin mining facilities is that we are essentially power shells to the data center industry,” Core Scientific CEO Adam Sullivan told CNBC.
Sullivan jumped into the role of CEO while the company was still in the throes of bankruptcy, which resulted from the collapse of bitcoin in 2022. Since then, the former investment banker has settled debts with angry lenders and further beefed up the company’s non-bitcoin business as it reentered the public market.
Though Core is up more than 40% since relisting earlier this year, its market capitalization of around $865 million is significantly lower than its valuation of $4.3 billion in July 2021.
Demand for AI compute and infrastructure surged after OpenAI unveiled ChatGPT in Nov. 2022, setting off a rush of investment in AI models and startups. Meanwhile, Core Scientific and other miners like Bit Digital, Hive, Hut 8, and TeraWulf have been looking to bolster their revenue streams after the so-called bitcoin halving in April cut rewards paid out to bitcoin miners by 50%.
Many have been retrofitting their massive facilities to meet the needs of the market.
“Bitcoin miners, often stationed in energy-secure and energy-intensive data centers, find these facilities ideal for AI operations as well,” said James Butterfill, head of research at digital asset firm CoinShares.
Butterfill said the the overlap is leading to a competition for rack space between bitcoin mining and AI activities. While AI operations require up to 20 times the capital expenditure of bitcoin mining, they’re more profitable, according to a report from CoinShares.
“The introduction of AI activities leads to increased depreciation and amortization, which can enhance gross profit margins,” Butterfill said.
According to CoinShares, Bit Digital derives 27% of its revenue from AI. Hut 8 generates 6% of sales from AI, and Hive, which has data centers in Canada and Sweden, gets 4% of its revenue from these services.
Read more about tech and crypto from CNBC Pro
Hut 8 said in its first-quarter earnings report that it had purchased its first batch of 1,000 Nvidia GPUs and secured a customer agreement with a venture-backed AI cloud platform as part of its expansion into new technologies offering higher returns.
“We finalized commercial agreements for our new AI vertical under a GPU-as-a-service model, including a customer agreement which provides for fixed infrastructure payments plus revenue sharing,” said Hut 8 CEO Asher Genoot.
Genoot added that the company expects to begin generating revenue in the second half of the year at an annual rate of about $20 million.
Bit Digital had 251 servers actively generating revenue from its first AI contract as of the end of April, and the company said it earned about $4.1 million of revenue from the operation that month.
Iris Energy expects to generate between $14 million and $17 million in annual revenue from its AI cloud services. Core Scientific’s expanded arrangement with CoreWeave is expected to produce annual revenue of $290 million.
“While we intend to remain one of the largest and most productive bitcoin miners, we expect to have a diversified business model and more predictable cash flows,” Sullivan said.
Bitcoin’s volatility has made mining a challenging business.
Though bitcoin is currently up more than 150% in the past year to around $69,000, the bear market of 2022 sent many miners into bankruptcy or forced them to shutter altogether.
Pivoting to AI isn’t as simple as repurposing existing infrastructure and machines, because high-performance computing (HPC) data center requirements are different, as are the needs of the data network.
“Besides transformers, substations, and some switch gear nearly all infrastructure miners currently have would need to be bulldozed and built from the ground up to accommodate HPC,” Needham analysts wrote in a report on May 30.
The rigs used to mine bitcoin are called Application-Specific Integrated Circuits (ASICs). They’re built specifically for crypto mining and can’t be used to do other things.
Needham estimates that HPC data centers run at $8 million to $10 million per megawatt in capex, excluding GPUs, whereas bitcoin mining sites typically operate at $300,000 to $800,000 per megawatt in capex, not including ASICs.
Core’s Sullivan says there’s a lot of synergy between the two businesses.
“One of the most exciting parts about the bitcoin mining business is we have access to large amounts of power across the United States with access to fiber lines,” he said.
Beyond its partnership with CoreWeave, Core Scientific has also announced that over the next three to four years, it’s working to convert 500 megawatts of its bitcoin mining infrastructure across the country to HPC data centers.
Sullivan said the retrofit is manageable because the company owns and controls all of its data center infrastructure.
“There are components that we have to purchase to retrofit for HPC, but it is things that we can easily acquire,” he said.
In the next one to two years, Needham analysts estimate that large publicly traded bitcoin miners are expected to more than double power capacity, including both their mining and HPC business expansion plans.
Clean energy is a popular choice because it’s the cheapest power source in many markets. Miners at scale compete in a low-margin industry, where their only variable cost is typically energy, so they’re incentivized to migrate to the world’s cheapest sources of power. An industry report estimates the bitcoin network is 54.5% powered by sustainable electricity.
The Electric Power Research Institute estimates that data centers could take up to 9% of the country’s total electricity consumption by 2030, up from around 4% in 2023. Tapping into nuclear energy is seen by many as the answer to meeting that demand.
TeraWulf powers its mining sites with nuclear energy, and is looking to get into machine learning. So far, the firm has two megawatts dedicated to HPC capacity, though it has plans to transition its energy infrastructure toward AI and HPC.
OpenAI CEO Sam Altman told CNBC last year that he’s a big believer in nuclear when it comes to serving the needs of AI workloads.
“I don’t see a way for us to get there without nuclear,” Altman said. “I mean, maybe we could get there just with solar and storage. But from my vantage point, I feel like this is the most likely and the best way to get there.”
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.
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
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.
Dow sinks 600 points The Dow Jones Industrial Average suffered its worst day of the year, dropping over 600 points on Thursday. Boeing led the decline on the Dow. Despite reaching intraday record highs earlier, both the S&P 500 and the Nasdaq Composite ended the day in negative territory. Nvidia‘s blockbuster earnings and guidance failed to prop up markets, with more than 400 stocks on the S&P 500 trading lower. Treasury yields extended gains as the Fed delays rate cuts, while oil prices bounced back after a three-day decline.
Nvidia pops Shares of Nvidia soared as much as 11% after the AI chipmaker’s earnings that beat Wall Street’s estimates. It also issued strong guidance as demand for its artificial intelligence accelerators remains robust. Shares passed $1,000 for the first time, reaching an all-time high of $1,063.20 during intraday trading, and are up about 111% this year.
Musk disapproves China EV tariffs Tesla CEO Elon Musk said he’s not in favor of tariffs on Chinese electric vehicles, which were imposed last week by President Joe Biden. “Neither Tesla nor I asked for these tariffs,” Musk said in response to a question from CNBC’s Karen Tso. “Tesla competes quite well in the market in China with no tariffs and no preferential support. I’m in favor of no tariffs.”
Boeing sinks Shares of Boeing dropped 7.6% after CFO Brian West said the company would continue to burn through cash this year. Delivery of new planes, a major source of revenue, will not improve in the second quarter. Boeing is facing a host of production issues related to safety concerns. The company burned through nearly $4 billion in cash in the first quarter and West believes that figure could be similar or “possibly a little worse” in the second quarter.
Asia-Pacific markets slide Stocks in the Asia-Pacific region fell on Friday as investors assessed inflation data from Japan. TheNikkei 225 fell 1% as inflation slowed for the second straight month. While the Bank of Japan is under pressure to raise interest rates, inflation is expected to push higher in the coming months. South Korea’s Kospi dropped 1% after a report said Samsung Electronics’ new chip wasn’t ready for Nvidia. Samsung shares fell 2.4%. Hong Kong’s Hang Seng dipped 1.3%, mainland China’s CSI 300 index declined 0.4%, and Australia’s S&P/ASX 200 shed 1.1%.
[PRO] What’s next for Nvidia? Wall Street analysts are revising their price targets for Nvidia upwards after its blowout earnings and guidance. Some had feared a slowdown in demand as Amazon and Microsoft wait for Nvidia’s more powerful AI chips. Nvidia’s decision to split its stock could provide more upside for investors.
Nvidia's blockbuster earnings and forecast couldn't stop Wall Street from taking a late dive. Nvidia held up well, its stock closing above $1,000, up 9% on the day after reassuring investors its sales of graphics chips that power artificial intelligence weren't a flash in the pan.
What comes next for Nvidia is a 10-for-1 stock split; Post-split shares will start trading on June 10. Stock split will help retail investors, put off by a share price of a thousand-plus dollars, to buy them at around $100. Nvidia shares are up more than 240% in the last 12 months.
CNBC's Ryan Ermey explains more on the psychology of the move and how the mechanism of the stock split works.
So what's freaking markets? According to the Charles Schwab Trader Sentiment Survey, the bullish outlook among traders fell to 46% from 53% in the second quarter.
"Traders began the year feeling pretty confident that the economy was improving and Fed rate cuts would be quick to follow," said James Kostulias, head of Trading Services at Charles Schwab. "But inflation concerns have jumped significantly."
Before the latest minutes from the Federal Reserve meeting, suggesting concern about stubborn inflation, some strategists had estimated the Fed could cut interest rates at least three times this year as prices cooled. Now, traders are lowering their expectations to just one reduction, possibly in September or November.
As the first-quarter earnings season winds down, investors are shifting their attention to geopolitical concerns.
"The Fed has been pretty clear that they're not going to cut rates, so you don't have this, 'Will they or won't they' [scenario] keeping everybody on edge. We are going to start to see a turn to some of this geopolitical stuff, whether it's elections or the two ongoing wars," said Melissa Brown, managing director of applied research at SimCorp.
While events such as the U.S. and UK elections don't necessarily result in economic impacts, they do increase uncertainty, Brown noted.
"People may go from saying 'I'm just going to buy now,' to, 'Look, I'm gonna wait and see the outcome of this before I decide to commit more money to market,'" Brown said.
The Daily Open will be back on Tuesday as U.S. markets will be closed for Memorial Day on Monday.
— CNBC's Hakyung Kim, Samantha Subin, Ryan Ermey, Jeff Cox, Sophie Kinderlin, Spencer Kimball, Ece Yildirim, Sarah Whitton and Ryan Browne contributed to this report.
A sign is posted in front of Nvidia headquarters on May 21, 2024 in Santa Clara, California.
Justin Sullivan | 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.
Nvidia to split stock, sales to soar Shares of Nvidia rose more than 7%, topping $1,000 for the first time, in after-hours trading after its first-quarter earnings and sales beat analysts’ expectations. The chipmaker expects second-quarter sales of $28 billion, compared with estimates of $26.6 billion. The company plans to split its stock 10 for 1.
Fed inflation worries Minutes of the Federal Reserve’s latest rate-setting meeting showed the central bank was concerned about the “lack of progress” in bringing inflation closer to its 2% target, sending the Dow down 200 points. The minutes also revealed that “various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate.” The Fed policymakers maintained the benchmark borrowing rate within the 5.25%-5.5% range.
Alexa’s AI makeover Amazon plans to upgrade its Alexa voice assistant with generative artificial intelligence and charge a monthly subscription for the service, according to people familiar with the plans. The move comes after Google and OpenAI launched similar products. Subscription for the new AI-powered Alexa will not be included in the $139 per year Prime offering.
Vivek takes Buzzfeed stake Buzzfeed shares shot up 20% after the former GOP presidential candidate Vivek Ramaswamy bought an 8% stake in the online media company. In a filing with the Securities and Exchange Commission, Ramaswamy said he would talk with Buzzfeed’s management about every aspect of the company’s operations, including an acquisition by a third party. The media outlet went public in 2021 and has seen its shares fall 94% since then.
[PRO] Under-the-radar AI plays Hedge funds are loading up on these lesser-known beneficiaries from the artificial intelligence boom while cutting back on their exposure to mega caps, according to Goldman Sachs. The Wall Street investment bank analyzed the holdings of 707 hedge funds with $2.7 trillion of gross equity positions at the start of the second quarter.
There were two major announcements after the markets closed on Wednesday.
First from Prime Minister Rishi Sunak of the United Kingdom, the world's sixth-largest economy with a GDP of about $3 trillion, calling a general election, which barely had any market impact. The pound was largely unchanged.
The second was from a 31-year-old graphics chip company valued at $2.3 trillion, Nvidia, which delivered its much-anticipated earnings — and saw its shares soar to record highs.
There were expectations of a $200 billion swing one way or the other in the company's stock, depending on the outcome of its earnings. In after-hours trading, the stock rose more than 7%. Nvidia's shares are up 92% this year and 200% over the last 12 months. Nvidia is the bedrock of the artificial intelligence revolution, with Google, Amazon, Meta, and Microsoftestimated to be spending $200 billion buying up its AI chips.
"The next industrial revolution has begun," Chief Executive Officer Jensen Huang said in a statement. "We are poised for our next wave of growth."
Dan Niles, founder of Niles Investment Management, has likened Nvidia to Cisco in the 1990s. Cisco was the go-to company for internet gear. From 1994 to its peak in 2000, Cisco's shares rose 4000%. Niles believes Nvidia will go through a similar cycle.
"We're still really early in the AI build," Niles told CNBC's "Money Matters" on Monday. "I think the revenue will go up three to four times from current levels over the next three to four years, and I think the stock goes with it."
"If you look at today for the AI build-out, who's really driving that?" Niles said. "It's the most profitable companies on the planet — it's Microsoft, it's Google, it's Meta, and they're driving this."
Crucially, Nvidia said it expects second-quarter sales to soar to $28 billion, up from the $26.6 billion analysts were expecting. Even with the prospects of increased competition from Advanced Micro Devices and Google building its own custom chip, Piper Sandler analysts expectNvidia to keep at least 75% of the AI accelerator market.
Nvidia's done everything that's been asked of it, now it's over to Wall Street to decide if it's time to crack through more milestones or consolidate.
— CNBC's Kif Leswing, Jeff Cox, Kate Rooney, Hakyung Kim, Lisa Kailia Han, Yun Li and Rohan Goswami contributed to this report.
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.
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.
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.
[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.
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.
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.
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.
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.
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.
Asia markets rise Mainland China’s CSI 300 index rose 0.2% and Hong Kong’s Hang Seng climbed 0.5% as China kept its one- and five-year loan prime rates on hold. It comes after Beijing on Friday laid out measures to boost the property market.. Elsewhere in the Asia-Pacific region, Japan’s Nikkei 225 was the biggest mover, up 1%, while South Korea’s Kospi added 0.5% ahead of an interest rate decision on Thursday. Australia’s S&P/ASX 200 gained 0.6%.
Iran’s president killed in helicopter crash Iranian President Ebrahim Raisi died in a helicopter crash along with Foreign Minister Hossein Amirabdollahian, state media reported Monday. “All the passengers of the helicopter carrying the Iranian president and foreign minister were martyred,” semi-official news agency Mehr News reported. Raisi was returning after inaugurating a dam on Iran’s common border with the Azerbaijan Republic, when his helicopter crashed on landing in northern Iran’s Varzaqan region.
Tesla layoffs continue Tesla is cutting approximately 600 more employees across its manufacturing facilities and engineering offices in California. Elon Musk’s electric vehicle venture is facing increased competition and has already warned employees of plans to cut 10% of its workforce. Musk recently fired his Supercharger team before reportedly rehiring some members, a move reminiscent of the job cuts at Twitter after he acquired the company and later rebranded it as X.
GameStop tanks GameStop shares dropped nearly 20% after announcing plans to sell additional shares. The company warned it expects a first-quarter net loss of up to $37 million and a significant drop in sales. The brick-and-mortar games retailer, which is grappling with e-commerce-based competitors, was taking advantage of rally in GameStop’s stock fueled by the return of “Roaring Kitty” on social media. Wedbush analyst Michael Pachter said GameStop is not in a position to be profitable.
[PRO] Can Nvidia deliver? Wall Street has crashed through one milestone after another and it has done it without the help of the so-called Magnificent Seven tech stocks in the last three months. But all that could change this week when Nvidia releases its earnings. CNBC’s Sarah Min tells us what to expect from the AI darling and how high it could go if it gives the right message to investors.
Let's be honest — we've all thought about it. Quitting work and telling your boss he's a worse manager than Michael Scott or David Brent. More often than not, you're just happy to be moving on. But while they were just shuffling paper, Jan Leike was confronting what could be an existential threat.
Leike was part of OpenAI's safety leadership team. In his departing X post, he said the Microsoft-backed startup's "safety culture and processes have taken a backseat to shiny products," adding, "We urgently need to figure out how to steer and control AI systems much smarter than us."
What OpenAI demonstrated at the start of the week was a huge step in human-computer interaction. The AI agent, with uncanny realism, easily translated from Italian to English. Sal Khan, CEO of Khan Academy, used the bot to guide his son through a math problem. Later on CNBC, Khan said he was introducing a teaching bot, Khanmigo, for all U.S. teachers, funded by Microsoft.
A teacher looking at that demonstration would, rightly, be alarmed at the pace of development and deployment. It is an existential threat to their jobs and to possibly all jobs. Goldman Sachs estimated 300 million jobs could be affected by generative AI, the IMF believes 60% of jobs in advanced economies are exposed to machine learning, about half negatively, and ResumeBuilder says AI-related job losses are on the rise.
Khan believes there is a happy balance between teaching and AI developments. While some are concerned students are getting ChatGPT, Gemini, and Claude to write their essays, the teaching profession is coming up with solutions. Rather than pupils writing essays, they can critique essays written by bots. Khanmigo is said to offer an environment for pupils to work on essays with students, and the AI reports progress to the teacher.
The impact will not only be felt in the classroom — every aspect of a company's workflow needs a reappraisal. ServiceNow CEO Bill McDermott says we are in the midst of a generative AI transformation of the $7 trillion industrial complex. No job will go untouched. According to Goldman Sachs, generative AI could boost global GDP by up to 7% annually over the next decade.
But as Leike wrote, "Building smarter-than-human machines is an inherently dangerous endeavor. OpenAI is shouldering an enormous responsibility on behalf of all of humanity." He added, "OpenAI must become a safety-first AGI company," referring to artificial general intelligence.
Sam Altman, OpenAI's CEO, responded to Leike's thread on X, "He's right, we have a lot more to do; we are committed to doing it."
All this wouldn't be possible without Nvidia — its powerful graphics chips are what's needed to provide the computational capacity to drive these AI models — and it reports earnings on Wednesday after the bell. If Wall Street struggles for momentum, this $2.3 trillion behemoth will be closely watched to see how much demand there is for more of its powerful chips and if generative AI is more than just another dotcom bubble.
— CNBC's Sarah Min, Haden Field, Lisa Kailai Han, Alex Harring, Yun Li, Lora Kolodny, Jordan Novet, Lim Hui Jie and Lee Ying Shan contributed to this report.
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.
Tesla layoffs continue Tesla is cutting approximately 600 more employees across its manufacturing facilities and engineering offices in California. Elon Musk’s electric vehicle venture is facing increased competition and has already warned employees of plans to cut 10% of its workforce. Musk recently fired his Supercharger team before reportedly rehiring some members, a move reminiscent of the job cuts at Twitter after he acquired the company and later rebranded it as X.
AI start-up raises billions CoreWeave, an AI infrastructure startup powered by Nvidia’s chips, raised $7.5 billion in debt financing led by Blackstone, following a recent $1.1 billion equity round. The funds will be used to expand its cloud data centers and meet the soaring demand for AI infrastructure. With a limited supply of Nvidia chips, Microsoft is relying on CoreWeave to supply OpenAI with computing power. It’s also competing with Amazon and Google.
GameStop tanks GameStop shares dropped nearly 20% after announcing plans to sell additional shares. The company warned it expects a first-quarter net loss of up to $37 million and a significant drop in sales. The brick-and-mortar games retailer, which is grappling with e-commerce-based competitors, was taking advantage of rally in GameStop’s stock fueled by the return of “Roaring Kitty” on social media. Wedbush analyst Michael Pachter said GameStop is not in a position to be profitable.
Iran’s president in helicopter ‘crash landing’ A helicopter carrying Iranian President Ebrahim Raisi has suffered a “crash landing,” state media reported on Sunday. Iran’s Vice President Mohsen Mansouri reported that two people from the helicopter flight had made contact with the rescue team but Raisi’s condition was unclear, according to state media. The helicopter came down in Northern Iran as it was crossing mountain terrain in heavy fog.
[PRO] Can Nvidia deliver? Wall Street has crashed through one milestone after another and it has done it without the help of the so-called Magnificent Seven tech stocks in the last three months. But all that could change this week when Nvidia releases its earnings. CNBC’s Sarah Min tells us what to expect from the AI darling and how high it could go if it gives the right message to investors.
Let's be honest — we've all thought about it. Quitting work and telling your boss he's a worse manager than Michael Scott or David Brent. More often than not, you're just happy to be moving on. But while they were just shuffling paper, Jan Leike was confronting what could be an existential threat.
Leike was part of OpenAI's safety leadership team. In his departing X post, he said the Microsoft-backed startup's "safety culture and processes have taken a backseat to shiny products," adding, "We urgently need to figure out how to steer and control AI systems much smarter than us."
What OpenAI demonstrated at the start of the week was a huge step in human-computer interaction. The AI agent, with uncanny realism, easily translated from Italian to English. Sal Khan, CEO of Khan Academy, used the bot to guide his son through a math problem. Later on CNBC, Khan said he was introducing a teaching bot, Khanmigo, for all U.S. teachers, funded by Microsoft.
A teacher looking at that demonstration would, rightly, be alarmed at the pace of development and deployment. It is an existential threat to their jobs and to possibly all jobs. Goldman Sachs estimated 300 million jobs could be affected by generative AI, the IMF believes 60% of jobs in advanced economies are exposed to machine learning, about half negatively, and ResumeBuilder says AI-related job losses are on the rise.
Khan believes there is a happy balance between teaching and AI developments. While some are concerned students are getting ChatGPT, Gemini, and Claude to write their essays, the teaching profession is coming up with solutions. Rather than pupils writing essays, they can critique essays written by bots. Khanmigo is said to offer an environment for pupils to work on essays with students, and the AI reports progress to the teacher.
The impact will not only be felt in the classroom — every aspect of a company's workflow needs a reappraisal. ServiceNow CEO Bill McDermott says we are in the midst of a generative AI transformation of the $7 trillion industrial complex. No job will go untouched. According to Goldman Sachs, generative AI could boost global GDP by up to 7% annually over the next decade.
But as Leike wrote, "Building smarter-than-human machines is an inherently dangerous endeavor. OpenAI is shouldering an enormous responsibility on behalf of all of humanity." He added, "OpenAI must become a safety-first AGI company," referring to artificial general intelligence.
Sam Altman, OpenAI's CEO, responded to Leike's thread on X, "He's right, we have a lot more to do; we are committed to doing it."
All this wouldn't be possible without Nvidia — its powerful graphics chips are what's needed to provide the computational capacity to drive these AI models — and it reports earnings on Wednesday after the bell. If Wall Street struggles for momentum, this $2.3 trillion behemoth will be closely watched to see how much demand there is for more of its powerful chips and if generative AI is more than just another dotcom bubble.
— CNBC's Sarah Min, Haden Field, Lisa Kailai Han, Alex Harring, Yun Li, Lora Kolodny and Jordan Novet contributed to this report.
Sam Altman is now chairman of a public company. But it’s not OpenAI.
On Friday, advanced nuclear fission company Oklo started trading on the New York Stock Exchange. The company, which has yet to generate any revenue, went public through a special purpose acquisition company (SPAC) called AltC Acquisition Corp., founded and led by Altman.
Under the ticker symbol “OKLO,” shares plummeted 54% on Friday to $8.45, valuing the company at about $364 million. Oklo received roughly $306 million in gross proceeds in the transaction, according to a release.
Oklo’s business model is based on commercializing nuclear fission, the reaction that fuels all nuclear power plants. Instead of conventional reactors, the company aims to use mini nuclear reactors housed in A-frame structures. Its goal is to sell the energy to end users such as the U.S. Air Force and big tech companies.
Oklo is currently working to build its first small-scale reactor in Idaho, which could eventually power the types of data centers that OpenAI and other artificial intelligence companies need to run their AI models and services.
Altman is co-founder and CEO of OpenAI, which has been valued at over $80 billion by private investors. He’s said that he sees nuclear energy as one of the best ways to solve the problem of growing demand for AI, and the energy that powers the technology, without relying on fossil fuels. Microsoft co-founder Bill Gates and Amazon founder Jeff Bezos have also invested in nuclear plants in recent years.
“I don’t see a way for us to get there without nuclear,” Altman told CNBC in 2023. “I mean, maybe we could get there just with solar and storage. But from my vantage point, I feel like this is the most likely and the best way to get there.”
In an interview with CNBC Thursday, Oklo CEO Jacob DeWitte confirmed that the company has yet to generate revenue and has no nuclear plants deployed at the moment. He said the company is targeting 2027 for its first plant to come online.
Going the SPAC route is risky. So-called reverse mergers became popular in the low-interest rate days of 2020 and 2021 when tech valuations were soaring and investors were looking for growth over profit. But the SPAC market collapsed in 2022 alongside rising rates and hasn’t recovered.
AI-related companies, on the other hand, are the new darlings of Wall Street.
“SPACs haven’t exactly had the best performances in the past couple of years, so for us to have sort of the outcome that we’ve had here is obviously a function of the work we put in, but also what we’re building and also the fact that the market sees the opportunity sets here,” said DeWitte, who co-founded the company in 2013. “I think it’s very promising on multiple fronts for [the] nuclear, AI, data center push, as well as the energy transition piece.”
The company has seen its fair share of regulatory setbacks. In 2022, the U.S. Nuclear Regulatory Commission denied Oklo’s application for an Idaho reactor. The company has been working on a new application, which it isn’t aiming to submit to the NRC until early next year, DeWitte said, adding that it’s currently in the “pre-application engagement” stage with the commission.
Altman got involved with Oklo while president of the startup incubator Y Combinator. Oklo went into the program in 2014 after an earlier meeting between Altman and DeWitte. In 2015, Altman invested in the company and became chairman.
It’s not Altman’s only foray into nuclear energy or other infrastructure that could power large-scale AI growth.
In 2021, Altman led a $500 million funding round in clean energy firm Helion, which is working to develop and commercialize nuclear fusion. Helion said in a blog post at the time that the capital would go toward its electricity demonstration generator, Polaris, “which we expect to demonstrate net electricity from fusion in 2024.”
Altman didn’t respond to a request for comment.
In recent years, Altman has also poured money into chip endeavors and investments that could help power the AI tools OpenAI builds.
Just before his brief ouster as OpenAI CEO in November, he was reportedly seeking billions of dollars for a chip venture codenamed “Tigris” to eventually compete with Nvidia.
Altman in 2018 invested in AI chip startup Rain Neuromorphics, based near OpenAI’s San Francisco headquarters. The next year, OpenAI signed a letter of intent to spend $51 million on Rain’s chips. In December, the U.S. compelled a Saudi Aramco-backed venture capital firm to sell its shares in Rain.
DeWitte told CNBC that the data center represents “a pretty exciting opportunity.”
“What we’ve seen is there’s a lot of interest with AI, specifically,” he said. “AI compute needs are significant. It opens the door for a lot of different approaches in terms of how people think about designing and developing AI infrastructure.”
Arm reported fiscal fourth-quarter revenue of $928 million Wednesday, marking a 47% year-over-year rise.
The performance was driven by Arm’s licensing business, which grew 60% to $414 million in the quarter. The firm cited “multiple high-value license agreements being signed” for AI chips.
Arm’s royalty revenue, meanwhile, grew 37% year over year to $514 million, with the company citing increasing penetration of its recently introduced Armv9-based chips, which have higher margins.
But it was Arm’s guidance that left investors unimpressed. For fiscal 2025, Arm said it expects revenue to come in between $3.8 billion and $4.1 billion. Analysts were expecting revenue of $3.99 billion for the full year, according to LSEG data.
For the 2025 fiscal first quarter — the current quarter — the company said it expects sales of $875 million to $925 million, compared with estimates of $857.5 million.
Citi analysts led by Andrew Gardiner noted that although Arm’s results for the fourth quarter beat expectations for the third straight quarter, the full-year guidance midpoint was slightly below consensus.
However, they stressed the importance of the strength of Arm’s licensing business looking ahead.
“Licensing upside both in F4Q and for FY25, which is being driven by the combination of AI needs and Arm’s provision of higher value v9 and Compute Subsystem solutions, is a positive leading indicator for future royalties,” they wrote in a note Thursday.
“The key for future royalty growth is upside from licensing today,” they added, reiterating their buy rating on the stock.
Arm is sometimes referred to as the “Switzerland” of the semiconductor industry.
Unlike chipmakers such as Nvidia, which makes and releases its own products commercially, Arm designs the “architectures” upon which chips are built.
It then licenses these designs out to other chip companies such as Qualcomm and Nvidia, charging royalty fees on each sale they make.
The company, founded in Cambridge, England, in 1990, was initially independent and listed in London, before a 2016 deal saw Japanese tech investor SoftBank acquire it for $32 billion.
U.S. name Nvidia subsequently tried to buy the company for $40 billion, but regulators effectively torpedoed the transaction by taking actions to block it over antitrust concerns.
SoftBank floated the company on the Nasdaq in September 2023. Arm’s shares have since more than doubled from its IPO price on the back of seismic demand for chips capable of running powerful generative AI applications such as ChatGPT.
The stock market debut was one of the technology industry’s first high-profile initial public offerings after they effectively ground to a halt in 2022 as higher interest rates knocked investor sentiment.
Correction: This story has been updated to correct the revenue estimates for the 2025 fiscal first quarter.
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. (We’re no longer recording the audio, so we can get this new written feature to members as quickly as possible.) Market check: Stocks surged Wednesday afternoon after the Federal Reserve held interest rates steady at the end of its latest two-day meeting. According to their post-meeting statement, central bankers noted a “lack of further progress” in bringing inflation down to their 2% target. Fed chief Jerome Powell reiterated that concern at his news conference. Powell said that rate cuts would be considered when the Fed feels inflation is on its way to target. “We feel our policy stance is in a good place” and appropriately restrictive, he added. Early in 2024, expectations in the market were for as many as six cuts. Now, there are questions about whether there will be any cuts this year. April, which has historically been one of the stronger months of the year for the market, was rough. Monthly declines in the Dow , the S & P 500 and the Nasdaq broke five-month winning streaks for the three major stock benchmarks. While April overall was terrible, there were some big winners in the Club’s portfolio, including Alphabet up nearly 8%. Before last week’s strong quarter, CNBC learned that Alphabet’s Google had laid off hundreds of employees from so-called core teams. The reorg includes moving some roles to India and Mexico. Crude sinks: U.S. oil prices sank roughly 3% to under $80 per barrel Wednesday. That’s about a seven-week low on West Texas Intermediate crude . The reasons: stockpiles surged on lackluster demand as the U.S. and its international partners continue to push for a ceasefire between the Israelis and Hamas in Gaza. WTI has fallen 9% from its intraday high for the year of $87.67 per barrel. Our lone oil-and-gas stock, Coterra Energy , was down 2% on Wednesday. It’s set to report quarterly results after the close Thursday. Cruise IPO: Viking Holdings shares rose 10% in its debut as a public company Wednesday. The cruise line company Tuesday evening priced roughly 64 million shares at $24 each — toward the higher of the expected range. Viking is the latest in a recent revival of the long-dormant initial public offerings market. The IPO comeback of late has boosted the investment banking arms of Wall Street banks. Morgan Stanley is one of the lead underwriters of the Viking offering. Last month, the Club name delivered a much-needed rebound quarter . Investment banking revenue at Morgan Stanley rose 16% year over year, driven by IPO business. These deals must succeed to entice more private companies to become public, which is crucial to Morgan Stanley. Biggest winners: DuPont was the Club’s biggest winner Wednesday, jumping more than 7% after the chemicals company beat on quarterly earnings and raised guidance. DuPont’s semiconductor business rose 10%, and we see plenty of runway for growth next year thanks to artificial intelligence. GE Healthcare was next, rising nearly 2% after Tuesday’s 14% earnings-driven decline , which we thought was an overreaction. Amazon was our third-best stock, gaining more than 1.5% Wednesday following the e-commerce and cloud giant’s great quarter and what we think was conservative guidance. “There’s no incentive in giving some pie in the sky number,” Jim said during the Morning Meeting . Biggest losers: Starbucks was our biggest loser Wednesday following the terrible quarter and outlook that was out the evening before. Jim blasted the Starbucks CEO in a morning CNBC interview, saying he was “stunned” by Laxman Narasimhan’s lack of awareness of how bad things are at the coffee giant. Estee Lauder was next, dropping 14% after light guidance and worries about China overshadowed quarterly beats. Nvidia was our third-weakest stock Wednesday, dropping more than 5%. The AI chip giant enjoyed a 15% bump last week on all the spending plans from Big Tech. While inching higher Monday, Nvidia also was down 1.5% Tuesday. Club earnings : In a busy week with quarterly reports from 12 portfolio stocks, Thursday brings morning earnings from Linde , Stanley Black & Decker and Bausch Health . After the bell Thursday, Apple is out with its quarter following a bump earlier this week tied to an upgrade from the often-skeptical Bernstein analyst Toni Sacconaghi. Apple has had a rough year, but Sacconaghi sees the pullback as an “attractive entry point.” Jim said the call is ill-advised, and we must wait for the release to see where Apple might go from here. As mentioned earlier, Coterra is also out with earnings Thursday evening, but the post-release conference call won’t be until Friday morning. (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. (We’re no longer recording the audio, so we can get this new written feature to members as quickly as possible.)
Here are Wednesday’s biggest calls on Wall Street: Barclays reiterates Tesla as equal weight Barclays lowered its price target on Tesla to $180 per share from $225 and said it sees a negative catalyst heading into earnings. “Facing an investment thesis pivot and a sea of uncertainty, this Tesla call is extra highly anticipated; expect negative catalyst.” Mizuho initiates Royal Caribbean as buy Mizuho said the cruise company has a “differentiated” offering. ” RCL has a unique mix of quality ship assets, as well as differentiated destinations, the combination of which drives upside potential to estimates.” Citi upgrades Hancock Whitney to buy from neutral Citi said the regional bank holding company is undervalued. “With the market unfairly pricing in a dour credit outlook across the regional bank space, we are stepping off the sidelines and upgrading HWC to Buy.” Raymond James initiates GE Vernova as outperform Raymond James said it’s bullish on shares of the stock. “Combining strengths across a broad spectrum of conventional and renewable generation, as well as grid technology, Vernova is involved in practically everything. Diversification has both advantages and drawbacks.” HSBC upgrades Danaher to buy from hold HSBC said in its upgrade of the life sciences company that it sees a “biotech funding recovery.” “We upgrade Danaher to Buy from Hold as a quality proxy for the Biotech funding recovery.” Wells Fargo upgrades Omnicom to overweight from equal weight Wells said it’s bullish on shares of the media company. “We also think OMC can rerate as, in our experience, Agency data points become themes and those themes impact the multiples.” Loop reiterates Apple as hold Loop said China is still a major issue for Apple. “Issues remain in China and globally frankly. In China, AAPL has been heavily discounting iPhones, and we are seeing a similar aggressive discount program in several other Asian locales.” Wells Fargo reiterates Microsoft as overweight Wells raised its price target on the stock to $480 per share from $460. “Also continue to see MSFT as the best way to play AI, another 2H catalyst.” TD Cowen upgrades Elf Beauty to buy from hold TD Cowen said it sees robust revenue growth for the beauty company. ” ELF could double revenues over the next 3 years, yielding low-to-mid 20s annual growth rate through digital community marketing leadership, awareness flywheel, skincare & international expansion.” Jefferies downgrades Urban Outfitters to underperform from buy Jefferies said in its downgrade of the stock that it sees slowing traffic. “We have some concern regarding URBN’ s near-term positioning due to slowing foot traffic data, promotional headwinds, and increased competition.” Barclays reiterates Broadcom as overweight Barclays raised its price target on Broadcom to $1,500 per share from $1,405. “Ultimately we come away with a valuable second opinion on the future of AI and a greater appreciation for the company’s many ways to win.” Morgan Stanley reiterates Nvidia as overweight Morgan Stanley said it’s bullish heading into earnings in late May. ” NVDA continues to see strong spending trends in AI, with upward revisions in demand from some of the newer customers such as Tesla and various sovereigns.” Wells Fargo reiterates Goldman Sachs as overweight Wells said it gives a “gold star” to Goldman coming out of earnings. “Overall capital markets revenue was up 14% YoY (best of top 5 U.S. banks), driven by higher IB [investment banking] and trading.” Maxim initiates Apple as buy Maxim said shares of Apple are fairly valued. “We are initiating coverage of Apple ( AAPL) with a Hold rating and $178 12-month price target based on applying the average forward P/E multiple of 25.9 from a comparable list of big-tech companies to our FY25 EPS estimate of $6.89.” Maxim initiates Amazon as buy Maxim said it’s bullish on shares of the e-commerce giant. “We are initiating coverage of Amazon (AMZN) with a Buy and 12-month $218 price target based on applying a 17.5x EV/EBITDA multiple to our 2025 forecast.” Truist upgrades Strategic Education to buy from hold Truist said the educational services company is in an attractive sector. “We are upgrading Strategic Education (STRA) to Buy from Hold and increasing our PT to$125 from $110.” Morgan Stanley upgrades Antero Resources to overweight from equal weight Morgan Stanley said the hydrocarbon exploration company has “attractive leverage to rising gas prices.” “With this note, we upgrade Antero Resources to Overweight as we see the company providing attractive leverage to rising gas prices and leading exposure to the growing LNG fairway in the Gulf Coast.” Raymond James upgrades Commerce Bancshares to outperform from market perform Raymond James upgraded the regional bank following its earnings report. “We are upgrading CBSH shares to Outperform from Market Perform following the release of impressive 1Q results that led us to raise our EPS estimates.” Guggenheim upgrades Group 1 Automotive to buy from neutral Guggenheim said investors should buy the dip on the auto dealership company. “Upgrading GPI to BUY from NEUTRAL, best positioned dealer to navigate current landscape somehow trading at lowest multiple.” Benchmark initiates Canoo as buy Benchmark said the electric vehicle company has the ability to “fund growth.” “We are initiating coverage of GOEV with a Buy rating and $5 target price.” Loop reiterates Netflix as buy Loop said it’s bullish heading into earnings on Thursday. “We believe NFLX’s improving engagement is primarily due to an easing competitive environment as traditional media companies have raised prices, scaled back content investment, and resumed licensing content to NFLX.” Jefferies initiates Nuvalent as buy Jefferies said the biotech company is “best-in-class.” ” NUVL leverages strong expertise in structure-based chemistry and deep understanding of unmet pts needs to develop potentially ;best-in-class’ small molecule targeted cancer therapy.” Truist reiterates Amazon as buy Truist raised its price target on the stock to $216 per share from $195. “We remain constructive on AMZN ahead of 1Q24 earnings slated for 4/30, expecting a beat based on 1) our tracking of NA sales using the Truist Card Data; 2) positive checks into the ads business.”
Chipmaking giant Nvidia entered “correction territory,” after shares briefly fell 10% from their most recent all-time closing high.
Shares had recovered by Wednesday’s close when they were only about 8% off the high.
The company, which makes graphics processing units — or GPUs — has been a key beneficiary of the artificial intelligence boom, which boosted demand for its chips.
Nvidia GPUs are commonly used for compute-intensive AI applications, such as OpenAI’s ChatGPT AI chatbot. Its server chips are also a key component of data centers.
Nvidia founder and CEO Jensen Huang displays products onstage during the annual Nvidia GTC Conference at the SAP Center in San Jose, California, on March 18, 2024.
Josh Edelson | Afp | Getty Images
The company’s financial performance has been on a tear in the past year. It reported a 486% jump in non-GAAP earnings per diluted share in the December quarter, citing huge chip demand, thanks to the popularity of generative AI models.
The stock has come under pressure for the past two weeks, however. On Tuesday morning, shares were 10% from their last all-time closing high of $950 apiece, which they hit on March 25. The stock closed at a price of $853.54 on Tuesday, down 2% for the session.
Nvidia’s shares closed up 1.97% on Wednesday.
Nvidia’s share price performance in the past month
Definitions of what constitutes a market correction vary, but it is generally considered to be a sustained drop of 10% or more from all-time highs.
The exact reason for the downward move hasn’t been immediately clear. Investors could be taking profit on the stock, after a wild gain of more than 200% for the shares in the last 12 months. And on Tuesday, rival chipmaker Intelunveiled a new AI chip called Gaudi 3, aimed at powering large language models — the cornerstone technology behind generative AI tools like OpenAI’s ChatGPT.
Intel said the new chip is over twice as power-efficient as Nvidia’s H100 GPU — the U.S. chip giant’s most advanced graphics card — and can run AI models 1½ times faster than Nvidia’s GPU.
Analysts at D.A. Davidson said in a research note that they expect a “shrinking” of the size of AI models, including alternatives like Mistral’s Large model and Meta’s LLaMA system, to drive down demand for Nvidia’s stock over time.
“Although NVDA (Neutral-rated) should deliver a spectacular 2024 (and perhaps into 2025), we continue to believe recent trends set up a significant cyclical downturn by 2026,” D.A. Davidson analysts said in the note Tuesday.
“A combination of shrinking models, more steady growth in demand, maturing hyperscaler investments, and increased reliance by their largest customers on their own chips do not bode well for NVDA’s out years.”
Jamie Dimon, CEO of JPMorgan Chase, testifies during the Senate Banking, Housing and Urban Affairs Committee hearing titled Annual Oversight of Wall Street Firms, in the Hart Building on Dec. 6, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images
Jamie Dimon, the veteran CEO and chairman of JPMorgan Chase, said he was convinced that artificial intelligence will have a profound impact on society.
In his annual letter to shareholders released Monday, Dimon chose AI as the first topic in his update of issues facing the biggest U.S. bank by assets — ahead of geopolitical risks, recent acquisitions and regulatory matters.
“While we do not know the full effect or the precise rate at which AI will change our business — or how it will affect society at large — we are completely convinced the consequences will be extraordinary,” Dimon said.
The impact will be “possibly as transformational as some of the major technological inventions of the past several hundred years: Think the printing press, the steam engine, electricity, computing and the Internet.”
Dimon’s letter, read widely in the business world because of his status as one of the most successful leaders in finance, hit a wide variety of topics. The CEO said that he had ongoing concerns about inflationary pressures and reiterated his warning that the world may be entering the riskiest era in geopolitics since World War II.
But his focus on AI, first mentioned in Dimon’s annual letter in 2017, stood out. The technology, which has gained in prominence since ChatGPT became a viral sensation in late 2022, can generate human-sounding responses to queries. Enthusiasm for AI has fueled the meteoric rise in chipmaker Nvidia and helped propel tech names to new heights.
JPMorgan now has more than 2,000 AI and machine learning employees and data scientists working on 400 applications including fraud detection, marketing and risk controls, Dimon said. The bank is also exploring the use of generative AI in software engineering, customer service and ways to boost employee productivity, he said.
The technology could ultimately touch all of the bank’s roughly 310,000 employees, assisting some workers while replacing others, and forcing the company to retrain workers for new roles.
“Over time, we anticipate that our use of AI has the potential to augment virtually every job, as well as impact our workforce composition,” Dimon said. “It may reduce certain job categories or roles, but it may create others as well.”
“Many key economic indicators today continue to be good and possibly improving, including inflation. But when looking ahead to tomorrow, conditions that will affect the future should be considered… All of the following factors appear to be inflationary: ongoing fiscal spending, remilitarization of the world, restructuring of global trade, capital needs of the new green economy, and possibly higher energy costs in the future (even though there currently is an oversupply of gas and plentiful spare capacity in oil) due to a lack of needed investment in the energy infrastructure.”
“Equity values, by most measures, are at the high end of the valuation range, and credit spreads are extremely tight. These markets seem to be pricing in at a 70% to 80% chance of a soft landing — modest growth along with declining inflation and interest rates. I believe the odds are a lot lower than that.”
“If long-end rates go up over 6% and this increase is accompanied by a recession, there will be plenty of stress — not just in the banking system but with leveraged companies and others. Remember, a simple 2 percentage point increase in rates essentially reduced the value of most financial assets by 20%, and certain real estate assets, specifically office real estate, may be worth even less due to the effects of recession and higher vacancies. Also remember that credit spreads tend to widen, sometimes dramatically, in a recession.”
“There is little real collaboration between practitioners — the banks — and regulators, who generally have not been practitioners in business…. Unfortunately, without collaboration and sufficient analysis, it is hard to be confident that regulation will accomplish desired outcomes without undesirable consequences. Instead of constantly improving the system, we may be making it worse.”
“Russia’s invasion of Ukraine and the subsequent abhorrent attack on Israel and ongoing violence in the Middle East should have punctured many assumptions about the direction of future safety and security, bringing us to this pivotal time in history. America and the free Western world can no longer maintain a false sense of security based on the illusion that dictatorships and oppressive nations won’t use their economic and military powers to advance their aims — particularly against what they perceive as weak, incompetent and disorganized Western democracies. In a troubled world, we are reminded that national security is and always will be paramount, even if its importance seems to recede in tranquil times.”
“One common sense and modest step would be for social media companies to further empower platform users’ control over what they see and how it is presented, leveraging existing tools and features — like the alternative feed algorithm settings some offer today. I believe many users (not just parents) would appreciate a greater ability to more carefully curate their feeds; for example, prioritizing educational content for their children.”
“The acquisition of a major company entails a lot of complexity. People tend to focus on the financial and economic outcomes, which is a reasonable thing to do. And in the case of First Republic, the numbers look rather good. We recorded an accounting gain of $3 billion on the purchase, and we told the world we expected to add more than $500 million to earnings annually, which we now believe will be closer to $2 billion.”
JPMorgan acquired most of the assets of First Republic last year for more than $10 billion after regulators seized the firm amid the regional banking crisis.
The logo of technology company Nvidia is seen at its headquarters in Santa Clara, California, on Feb. 11, 2015.
Robert Galbraith | Reuters
Nvidia is planning to build a $200 million artificial intelligence center in Indonesia in partnership with local telco giant Indosat Ooredoo Hutchison, as the U.S. tech darling continues its push into Southeast Asia.
According to Indonesia’s Communication and Information Technology Minister, Budi Arie Setiadi, the new facility will be based in the city of Surakarta in the Central Java province and will bolster local telecommunications infrastructure, human resources, and digital talent.
Indosat did not respond to a request for comment, while Nvidia declined to comment on the matter.
Last month, Indosat announced that it was ready to integrate Nvidia’s next-generation chip architecture, Blackwell, into its infrastructure, with “the goal of propelling Indonesia into a new era of sovereign AI and technological advancement.”
Indosat Ooredoo Hutchison is Indonesia’s second-largest mobile telco after a 2022 merger between Qatar’s Ooredoo and Hong Kong’s CK Hutchison.
Nvidia’s increased presence in Indonesia represents a broader push into Southeast Asia this year as data demand in the region booms on the back of the growing digital economy.
In January, Singapore telco provider Singtel announced its partnership with Nvidia to deploy artificial intelligence capabilities in its data centers across Southeast Asia.
Singtel said in March that the initiative would provide businesses in the region with access to Nvidia’s cutting-edge AI computing power by this year, without the need for clients to invest in and manage their own expensive data center infrastructure.
Singapore trailed the U.S., which generated 34.77% of Nvidia revenue, Taiwan with 23.91%, and China and Hong Kong, at 22.24% in sales rankings that quarter.
Revenue from the small nation-state that quarter represented a 404.1% increase from the $562 million recorded in the same period the previous year, outpacing Nvidia’s overall revenue growth and putting it as the company’s fourth largest market.
According to Nvidia’s latest blowout quarterly earnings report, data centers comprised the majority of its revenue, generating $18.40 billion on the back of global AI euphoria.
