12/2/24

12/2/24

Semiconductor surge sends US stocks higher

The S&P 500 gained 0.2%, the Nasdaq 100 rallied 1.1%, and the Russell 2000 eked out a 0.1% advance on Monday.

Only 180 S&P 500 constituents rose, and many sector ETFs like utilities, real estate, and energy fell more than 1% on the day.

Tech, consumer discretionary, and communication services were the big winners.

New US restrictions on China’s access to semiconductor and other AI-linked technology were not as draconian as the industry feared, sparking a rally across the chip space. The VanEck Semiconductor ETF rose 2.4% on the day, with the likes of Lam Research and Applied Materials having strong showings.

Super Micro Computer was far and away the best performer in the S&P 500, skyrocketing nearly 30% after an internal review cleared management of any misconduct related to alleged accounting concerns flagged by its former auditor and a short-selling research firm.

Intel initially got an extra boost after the CEO who presided over a $150 billion loss in market capitalization retired, but ended up finishing 0.5% lower.

Jeep maker Stellantis, on the other hand, slumped 6.4% after its CEO resigned this weekend.

Natural-gas stocks like Targa Resources also had down days, as prognostications for a warm winter weighed on the commodity’s price.

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Claire Yubin Oh

ANOTHER ONE BITES THE DUST

Electronic Arts set to go private in $55 billion deal — the latest in a long line of disappearing stocks

The “Madden” maker is set to join a growing group of listed companies that are deciding to drop out of exchanges.

Electronic Arts Photo Illustrations

markets

Nvidia jumps as Jefferies hikes price target to $220 from $205

Nvidia is off to a great start this week, buoyed by Jefferies analyst Blayne Curtis hiking his price target on the $4 trillion chip designer to $220 from $205 thanks to the recent announcement of its $100 million investment in OpenAI to enhance and accelerate the build-out of data centers.

Curtis wrote:

“Management made clear the strategic partnership represents incremental demand for NVDA and does not overlap with existing OAI plans with ORCL or MSFT. Raising estimates based on the new partnership. Raising revenue for C26/C27 to $282B/$334B (vs St. $279B/$328B) from $269B/$300B, respectively. Raising EPS for C26/C27 to $6.55/$7.72 (vs St. $6.49/$7.57) from $6.09/$6.71.”

markets

Matt Phillips40m

Disk drive makers rip, analyst cites conviction on cycle upswing

Western Digital and Seagate Technology Holdings — makers of the affordable data storage devices known as hard disk drives — surged Monday amid a general upswing in the AI data center trade and after a specific shout-out to the sector by Morgan Stanley IT analysts.

The analysts ratcheted up their price targets — to $171 from $99 for WDC, and to $265 from $168 for Seagate — and earnings estimates for both stocks, both of which they rate “overweight” (essentially a “buy”).

They wrote:

“While we’ve been hard disk drive (HDD) bulls for the better part of two years, HDD demand has recently inflected — the result of strengthening cloud infrastructure spending ($3T through 2028), accelerating investments in data-enabling technologies, and AI inferencing — both agentic and multi-modal — emerging as an incremental tailwind to data-rich media generation and data retention needs.

At the same time, the market remains up to 10% undersupplied per our recent checks, and as a result, nearline HDD prices are firming and visibility has recently extended into [the first half of calender 2027], an unprecedented 18+ months from now.”

The two disk drive makers are the second- and third-best performers in the S&P 500 this year, with Seagate up roughly 170% and Western Digital up about 160%.

markets

Carnival beats on earnings and revenue, boosts full-year outlook again

Carnival beat earnings expectations and raised its outlook for the third time this year, as the cruise operator also posted record revenue.

Shares were slightly lower in early trading Monday. The stock has been hot recently, having climbed about 57% over the past six months, though it has cooled off in September.

Earnings per share came in at $1.43, just ahead of estimates of $1.32 from analysts polled by FactSet. Revenue hit $8.2 billion, also topping expectations, fueled by resilient travel demand and higher onboard spending.

Looking ahead: Carnival now expects adjusted net income to climb nearly 55% from 2024, better than its June guidance of 44% better. Adjusted EBITDA is projected at $7.05 billion, up 15% year over year and also topping prior guidance of $6.9 billion.

markets

J. Edward Moreno2h

Merus surges after Genmab says it will acquire it for $8 billion

Danish biotech Genmab announced on Monday that it will acquire cancer startup Merus in an all-cash deal worth about $8 billion.

Genmab is buying Merus for $97 per share, a roughly 40% premium over its closing price as of Friday. The deal was approved unanimously by both companies’ boards, Genmab said.

Merus’ experimental drug, petosemtamab, has shown encouraging results in mid-stage trials for metastatic head and neck cancer. The stock jumped more than 30% in premarket trading once the acquisition was announced.

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