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J. Edward Moreno6/13/24

Bank of America picks the next member of the stock market’s “trillionaires club”

Only a handful of US companies — all of them tech titans that dominate the S&P 500 — can say they’re worth a trillion dollars. Another lesser-known member of the sector may soon join their ranks, according to Bank of America.

Broadcom, the Silicon Valley chipmaker, has the potential to join the “trillionaires club,” according to BofA analysts, who consider it a “top AI pick” alongside Nvidia. At a market cap approaching $800 billion, it’s about $200 billion shy of joining the likes of Microsoft, Meta, and Apple. While Nvidia has led the AI-fueled chip boom, demand is so high that its rising tide is lifting most boats across the industry.

Broadcom has been one such beneficiary: its stock price has doubled in the past year, riding the boom in AI-linked demand. The company reported better-than-expected earnings on Wednesday, sending its stock up about 13% on Thursday morning.

Following in the footsteps of its bigger peer, Nvidia, management also announced a 10:1 stock split, which will bring down the sticker price of individual shares and make it easier for smaller investors to buy in.

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Oracle jumps as it says AI cloud gross margins can reach 35%, predicts $166 billion in infrastructure revenue by 2030

Oracle shares jumped as executives said the company expects 35% gross margins on large AI infrastructure projects, while speaking at the Oracle AI World conference in Las Vegas, according to Bloomberg.

Reuters also reported that the company said today it expects to see $166 billion in cloud infrastructure revenue by FY 2030.

The stock has had a strong run and is up 87% this year, though investors were momentarily spooked earlier this month after a report of weak GPU rental margins.

Oracle Rallies After Saying AI Cloud Gross Margin Can Be 35%

Oracle Rallies After Saying AI Cloud Gross Margin Can Be 35%

Reuters also reported that the company said today it expects to see $166 billion in cloud infrastructure revenue by FY 2030.

The stock has had a strong run and is up 87% this year, though investors were momentarily spooked earlier this month after a report of weak GPU rental margins.

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Retail traders’ favorite risky, speculative stocks are getting taken to the woodshed

Call it the spec wreck.

Speculative pockets of the market, featuring companies with no to low revenues, are getting clobbered on Thursday.

There’s no material news driving the price action in these groups, which have very different business models but a thing or two in common: most are names that retail traders love and/or had displayed strong positive price momentum that now seems to have flipped on its head. In other words, they’re stocks with common owners, and that has given them common cause to act alike.

In quantum computing, sentiment continues to sour on the pure-play names in the space, with Rigetti Computing off double digits and D-Wave Quantum, IonQ, and Quantum Computing also sharply lower. Per SwaggyStocks, negative references to Rigetti have been running hotter than positive mentions on the r/WallStreetBets subreddit for three consecutive days now. Twice as many puts have traded on Rigetti versus calls through 1:56 pm. ET.

Same story in the crypto-adjacent space, where Riot and MARA Holdings are getting walloped.

Zero-revenue Oklo, whose market cap recently exceeded that of alternative energy giant First Solar has been hammered, along with peer Nuscale. Oklo’s put/call ratio had been averaging about 0.8 over the prior 10 sessions; that’s up to about 1 today.

Cipher Mining and IREN, the crypto-miner-turned-data-center duo, are each seeing elevated selling pressure.

Unfortunately, there’s no turning to pot stocks to blunt the pain: Tilray and Canopy Growth are both off more than 5%, too.

This broad speculative pain is short-sellers’ gain, as many of these stocks have high levels of short interest in light of their unproven business models and elevated valuations. A Goldman Sachs basket of the most-shorted companies in the Russell 3000 is down more than 3% as of 2 p.m. ET.

Max Knoblauch2h

United and rival airlines are getting battered as analyst criticizes the industry’s capacity growth

Shares of United Airlines fell as much as 9.3% in Thursday afternoon trading, amid the company’s third-quarter earnings call.

Traders exchanged about 16 million shares of UAL as of 1:10 p.m. ET, nearly three times the full day average volume over the past 30 days. Potentially spooking investors were comments from Bloomberg Intelligence analyst George Ferguson, who, speaking with Yahoo, criticized United’s capacity growth amid a relatively slower economy.

An airline's capacity is measured by the number of seats on flights that are available for purchase. Increasing capacity involves more flights, which increases costs. That can be worth it if more capacity leads to a higher number of seats purchased.

But Ferguson questioned whether United's 7% increase in capacity in the third quarter was warranted giving that overall US economic growth is somewhere around half that level.

“It looks to us like the market is saturated. Definitely at the basic economy level it looks like there's just far too much capacity and fares are pretty soft there. Some of the premium is probably softening as well,” said Ferguson, who also said Delta’s capacity growth seemed a bit high.

The continuing government shutdown may also be playing a role in airline stock performance. Along with United, JetBlue, American Airlines, Frontier Airlines, and other rivals were also trading lower.

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Matt Phillips6h

Snowflake jumps on Palantir partnership announcement

Snowflake jumped after announcing a partnership deal with AI software and defense data company Palantir Technologies, in which Snowflake’s AI-focused data storage product — called “AI Data Cloud” — is integrated into Palantir’s Foundry and Artificial Intelligence Platform software.

Data storage and management has emerged as a popular market theme this year as an offshoot of the all-things-AI trade.

Providers of relatively cheap, hardware-based storage options like hard disk drives — such as Seagate Technology Holdings and Western Digital — have been some of the S&P 500’s top performers.

Data management software firms like Snowflake and Datadog have also picked up momentum recently. Snowflake has doubled over the last 12 months, while Datadog has seen a 27% gain.

RBC analysts spotlighted Snowflake in a note Wednesday, writing, “We continue to believe Snowflake is well-positioned as an AI beneficiary as organizations turn to the company to prepare their data for AI workloads.”

Snowflake and Palantir Announce Strategic Partnership for Enterprise-Ready AI & Analytics

Snowflake and Palantir Announce Strategic Partnership for Enterprise-Ready AI & Analytics

Providers of relatively cheap, hardware-based storage options like hard disk drives — such as Seagate Technology Holdings and Western Digital — have been some of the S&P 500’s top performers.

Data management software firms like Snowflake and Datadog have also picked up momentum recently. Snowflake has doubled over the last 12 months, while Datadog has seen a 27% gain.

RBC analysts spotlighted Snowflake in a note Wednesday, writing, “We continue to believe Snowflake is well-positioned as an AI beneficiary as organizations turn to the company to prepare their data for AI workloads.”

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Max Knoblauch7h

Nio denies Singapore wealth fund’s accusations of inflating revenue

Court documents indicate that Chinese EV maker Nio has been sued in US courts by Singapore’s sovereign wealth fund, GIC, which alleges the company inflated its revenue, causing “significant losses.”

The news sent Nio shares down 8% in premarket trading on Thursday.

The EV maker “issued materially false and misleading statements and omissions that misrepresented... the Company’s true revenue and earnings figures,” the lawsuit alleges. The suit accuses Nio of unlawfully recognizing more than $600 million in leased battery revenue in fiscal year 2021.

Last month, Nio announced a $1 billion share sale to fund development around smart EVs. The company has yet to post a profit in its 11-year history.

Update (10:35 a.m. ET): Nio has responded to the lawsuit, telling CnEVPost that the complaint stems from false allegations made in a short-selling report by Grizzly Research and is “not a newly occurring incident, nor is it directed at NIO's recent operational performance.”

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