Markets
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Luke Kawa

Nvidia, AMD reportedly granted export licenses for chip sales to China in exchange for giving US government 15% of revenues

The Financial Times is reporting that Nvidia and Advanced Micro Devices have formally secured permission to export AI chips tailored for China to the world’s second-largest economy. As part of the deal, the companies have agreed to send 15% of the revenues generated from these chip sales to the US government, per the FT, citing people familiar with the situation including a US official.

That part of this arrangement is highly unusual, and has been met with critiques from trade policy experts.

After the close on Friday, the FT reported that Nvidia had received an export license that would allow the chip designer to send its H20 processor to China once again.

In mid-July, both companies received assurances that they’d be granted export licenses to restore their access to what Nvidia CEO Jensen Huang calls a $50 billion data center market, sparking big rallies in their stocks.

In its second-quarter earnings report last week, AMD posted better-than-expected guidance for the current quarter, but noted that its license application was still under review and that this outlook did not include any revenues from MI308 sales to China.

Per Reuters, Chinese demand for Nvidia’s H20 chips is also so intense that the chip designer has already ordered an additional 300,000 chips from TSMC.

In their Q1 earnings reports, Nvidia and AMD took $4.5 billion and $800 million write-downs, respectively, related to the loss of their China business in light of export controls put in place in April.

Nvidia’s calendar 2025 sales estimates are up just 0.7% in the past month, suggesting that analysts have been slow to incorporate the impact of renewed access to the Chinese market into their forecasts. For AMD, however, estimates are up 3.6% over the same period, which may have been indicative of Wall Street expecting some boost from sales to China or may have also reflected optimism around its new line of AI chips.

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Luke Kawa

Retail traders are selling everything but the Magnificent 7, per JPMorgan

JPMorgan strategist Arun Jain with the skinny on retail trading activity through 11:30 a.m. ET today:

“Retail investors are selling into today’s strength in both ETFs and Single Stocks. In ETFs, they are trimming their broad-based exposure—a major departure from their typical pattern.”

SPDR S&P 500 ETF and ProShares UltraPro QQQ suffered particularly large outflows, per Jain.

The exceptions to the selling pressure are the Magnificent 7 stocks, he writes, with Nvidia, Tesla, Meta, and Microsoft enjoying “small net purchases” while Micron, TSMC, Exxon, and Chevron the most-dumped names.

Retail trading 4/8

Last week, Jain noted that retail traders had been “skipping the dips, selling into rallies, and positioning more defensively” with markets jittery amid the ongoing Mideast war.

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Luke Kawa

Avis shorts facing $1.1 billion in losses as car rental company racks up 155% gains in its recent rally

Whatever traders are doing with Avis — buying, or just renting — it’s causing short sellers an immense amount of pain.

Shares of the car rental company have traded violently on Wednesday, from up nearly 7% at their highs to down almost 4% at their lows, after a face-ripping rally of 155% over the previous 11 sessions.

Per exchange data, roughly half the shares were sold short as of mid-March. S3 Partners, which tracks higher-frequency measures, said that short interest as a share of float had recently been trimmed to about 43%, down from as high as 53% at the start of the year.

Per Matthew Unterman, managing director at S3, Avis shorts are down $1.1 billion on paper over the past 30 days.

This isn’t Avis’ first rodeo: shares went parabolic in Q4 2021 as part of a meme stock moment in which it briefly became the most valuable company in the Russell 2000 small-cap index.

In any event, cheers to u/Bright_Leopard_4326, who admonished other members of the r/ShortSqueeze subreddit for not paying enough attention to the potential for a boom in the stock 10 days ago, when shares were trading below $150.

AVIS short squeeze
Source: r/ShortSqueeze
Persian Gulf

Even with a fragile ceasefire in place, the energy crisis is far from over. Here’s what to watch for.

In a Q&A with Sherwood, commodities analyst Rory Johnston lays out how to better understand the oil market’s situation.

Matt Phillips4h
Luke Kawa
5h
Everything has a reason to go up now that oil’s down*

*Exceptions include energy and chemicals stocks.

BRITAIN-LONDON-FIREWORKS-NEW YEAR-CELEBRATION
markets
Matt Phillips

Data center trade revived on Iran war ceasefire

Data center stocks leapt early Wednesday, as the Iran war ceasefire reinvigorated risk-taking aimed at the booming AI build-out.

A wide range of stocks related to building and powering data center shells, filling them with chips, servers, racks, and memory, and then connecting those racks to one another and users around the world bounced hard in early trading.

Memory stocks like Micron, Western Digital, Seagate Technology Holdings, and Sandisk — favorites of retail traders given their massive performance in recent years — climbed.

Traders seemed to price in durable demand for memory and other chips, with the companies that make the machines that actually make semiconductors rising sharply as well. Dutch semiconductor machinery giant ASML rose, as did Applied Materials, Lam Research, and KLA Corp.

Fiber-optic cable and connecting companies like Lumentum, Coherent, Corning, and Applied Optoelectronics — which had been on a run before the outbreak of Mideast hostilities — regained momentum.

And the construction and engineering companies — MasTec, Vertiv Holdings, Quanta Services, and Comfort Systems USA — that have been feasting on the cash pouring into data center building and engineering also jumped.

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