CHICAGO, IL - MARCH 05: Benny, the mascot for the Chicago Bulls entertains during a break between the Bulls and the Boston Celtics at the United Center on March 5, 2018 in Chicago, Illinois.

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Stocks continue to climb as surprise drop in private payrolls solidify rate cut expectations

Despite a lackluster performance in many megacap tech names, all major US indexes climbed higher.

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Despite most BATMMAAN stocks trading lower, with only Tesla and Alphabet rising, the S&P 500 and Nasdaq 100 gained thanks to a broad-based rally, with the Invesco S&P 500 Equal Weight ETF climbing higher. The Russell 2000 outperformed as a surprise decline in private sector jobs further solidified expectations of a rate cut at next week’s Fed meeting.

Stocks that moved higher:

Robotics stocks iRobot, Richtech Robotics, Serve Robotics, and WeRide got a lift on the heels of a report from Politico that Commerce Secretary Howard Lutnick is going “all in” to support the industry.
Marvell Technology soared thanks to CEO Matt Murphy’s positive commentary on next year’s sales outlook during yesterday’s earnings call. POET Technologies also skyrocketed as investors believe that Marvell’s acquisition of Celestial AI validates its technology and bolsters its sales outlook.
Uber rose after announcing that users in Dallas can be matched with robotaxis starting today.
D-Wave Quantum was up big after Evercore ISI initiated coverage on the annealing quantum specialist with an “outperform” rating and price target of $44.
Jeep-maker Stellantis climbed following an upgrade UBS as the bank expects Stellantis to bounce back thanks to a renewed focus on gas-powered cars and trucks as the White House is poised to ease fuel efficiency rules.
American Eagle soared on better than expected sales and a boosted full-year outlook as same-store sales are poised to be up in the low single digits for this fiscal year.
Electric aircraft maker Archer Aviation announced Miami as the location of its third planned US air taxi network, joining already-announced future networks in New York City and Los Angeles.
Dollar Tree rose after Q3 adjusted EPS came in at $1.21 (vs. $1.10 estimate) and same-store sales grew 4.2%.
Zara-owner Inditex got the stock’s biggest intraday jump in years after the world’s largest listed clothing retailer reported robust November and third-quarter results.

Stocks that moved lower:

Netflix sank on a report that buying Warner Bros. Discovery wouldn’t drastically boost its market share since most subscribers already have HBO Max.
Boeing fell as the FTC said that the merger with its key supplier, Spirit AeroSystems, cannot proceed unless Boeing significantly divests Spirit assets.
Microsoft ticked down after The Information reported that multiple divisions within the tech giant have lowered their sales quotas for AI products as traditional customers resist paying more for largely unproven tech. The stock pared some of those losses after CNBC reported that Microsoft issued a statement saying it hadn’t lowered sales quotas or targets.
Hard disk drive makers Seagate Technology Holdings and Western Digital also slumped amid worries that software clients don’t want to pay more for AI-optimized products.
Micron slipped as the company announced the decision to exit its consumer chip business (which goes by the brand name “Crucial”).
GitLab sank after a management oopsie added to the sting of its third-quarter results, released after the close yesterday.

Matt Phillips4h

Seagate, Western Digital stumble amid reports of customer resistance to AI

Hard disk drive makers Seagate Technology Holdings and Western Digital slumped Wednesday following a report from The Information that Microsoft is facing pushback from software clients who don’t want to pay more for AI-optimized products.

Microsoft contested the report, issuing a statement saying it hadn’t lowered sales quotas or targets. But the story hit squarely on the core issue facing the market right now: whether AI will ever produce enough revenue to pay for the massive investments hyperscalers are making.

As the tumble for hard disk makers shows, this is a market-wide issue. Share prices of hard disk makers have boomed amid expectations that the soaring demand for data storage related to AI investment will juice sales of these cheap storage devices for the foreseeable future.

Seagate and Western Digital are still the second- and third-best-performing stocks in the S&P 500 this year, with gains of roughly 200% and 250%, respectively.

Luke Kawa4h

Micron announces exit from consumer business to focus on AI demand

With a lot of AI mouths to feed amid a supply crunch for memory chips, Micron has made the decision to exit its consumer chip business (which goes by the brand name “Crucial”).

“The AI-driven growth in the data center has led to a surge in demand for memory and storage. Micron has made the difficult decision to exit the Crucial consumer business in order to improve supply and support for our larger, strategic customers in faster-growing segments,” said Sumit Sadana, EVP and chief business officer.

Memory chip prices have been surging thanks to demand from the AI boom, with South Korean memory giant SK Hynix saying that it’s already sold out all of next year’s production.

Per the press release, Micron will cease shipments of Crucial-branded items at the end of February 2026.

The product line has been a bit of a misnomer for the memory chip specialist as of late. Sales of Crucial-branded products fall under its mobile and client business unit, and the brand enjoyed a 25% jump in revenues year on year as of its most recent quarter. While impressive growth, that pales in comparison to the more than 200% surge in revenues for its cloud memory business unit, which focuses on high-bandwidth memory chip sales to hyperscalers.

Operating margins in the mobile and client business unit were 29% in its most recent quarter, compared to 48% for the cloud-centric division.

Max Knoblauch4h

Boeing falls as FTC requires it to divest Spirit AeroSystems assets to complete its $8.3 billion merger

The FTC said on Wednesday that the $8.3 billion merger between Boeing and its key supplier, Spirit AeroSystems, cannot proceed unless Boeing significantly divests Spirit assets.

Boeing shares fell more than 2% on the FTC’s proposed order, which said that Boeing should divest Spirit businesses that supply aerostructures (wings, doors, etc.) to rival Airbus. The assets, including personnel, will be divested to Airbus, the FTC statement said.

The moves would resolve antitrust allegations that Boeing’s acquisition of Spirit — which was spun out of Boeing in 2005 — would allow the plane maker to raise costs on Airbus or degrade its access to certain necessary parts. Boeing, the FTC alleged, could also have the ability to see sensitive information about its competitors.

The public now has 30 days to submit comments on the proposed order.

FTC Requires Boeing to Divest Several Spirit Assets to Proceed with Merger

The public now has 30 days to submit comments on the proposed order.

Luke Kawa5h

D-Wave Quantum rises as Evercore ISI initiates with “outperform” rating, calling it a “leading play” in industry

D-Wave Quantum is up big on Wednesday after Evercore ISI initiated coverage on the annealing quantum specialist with an “outperform” rating and price target of $44, implying upside of nearly 96% from where the stock closed on Tuesday.

Analyst Mark Lipacis called it a “leading play as the computing industry sees its next Tectonic Shift to a Quantum Computing Era,” highlighting three key things the firm offers to investors:

First quantum company with commercial revenues;
It’s a full-stack play, with services, software, and hardware;
And the ample cash hoard to develop its technology and potentially pursue M&A opportunities.

After its Q3 earnings report, CEO Dr. Alan Baratz told us that bolstering the firm’s gate model system (as opposed to its annealing system, which is its strength) was a priority.

“With the roughly $830 million in the bank, we have the resources to be able to invest more in that program, both internal investment and through acquisition,” he said. “We have one customer who has said, when you have a gate model system, I want it. So it expands our TAM [total addressable market], and it allows us to further grow our revenue.”

While commercial opportunities for publicly traded quantum computing companies have been relatively limited to date, particularly outside of D-Wave, Evercore’s Lipacis argues it’s not too early to invest in the industry.

“Each successive Tectonic Shift in Computing surprised investors with new workloads, and created stock performance of 100x-to-1,000x for full-stack ecosystem leaders,” he wrote. “To be clear, with over 40 quantum companies competing and no clear-cut leaders, we expect a shakeout, but to capture full-alpha, history shows you need to get in 10-years before the Tectonic Shift actually happens.”

He thinks that D-Wave will capture 12% of a quantum computing market that BCG estimates will be between $15 billion to $30 billion by 2035.

Max Knoblauch6h

Jeep maker Stellantis climbs following UBS upgrade as White House poised to ease fuel efficiency rules

Analysts are beginning to believe in the Stellantis comeback. Shares of the Jeep maker climbed on Wednesday following an upgrade to “buy” from “hold” from UBS.

UBS also bumped its Stellantis price target by 45% to $13.94.

The bank expects Stellantis to bounce back thanks to a renewed focus on gas-powered cars and trucks — an effort that may be bolstered by an expected rollback of fuel efficiency standards by the Trump administration on Wednesday.