The Magnificent 7 is dead! Long live the BATMMAAN stocks

American has another $1 trillion stock: Broadcom.

12/13/24 11:58AM

Updated 12/17/24 6:49AM

Broadcom shares have soared in both of the last 2 trading sessions, adding more than $300 billion to the semiconductor company’s market cap, after it reported that its AI revenue had jumped 220% in the past year, pushing Broadcom’s valuation through the $1 trillion milestone to join the members of the “Magnificent 7” in the exclusive club.

Though not a household name in the same way as Apple, Tesla, and Microsoft, Broadcom has quickly become a favorite of investors as it benefits from booming demand for generative-AI infrastructure.

The news means that the Magnificent 7 moniker might be a little outdated — we’d suggest that the “BATMMAAN” stocks might be a better acronym for the behemoths that now account for nearly $19 trillion worth of collective market value, dominating America’s stock market.

While most of the companies on this list are wildly different in their core competencies — Amazon’s e-commerce efforts are a world away from Broadcom’s chipmaking business — each has been swept along by the demand for AI in various ways. For example, Meta, Alphabet, Apple, Microsoft, and Tesla have each espoused the benefits of AI in their social-media platforms, search engines, smartphones, software, and vehicles. Amazon, Nvidia, and Broadcom, meanwhile, have focused on the physical hardware behind much of the AI boom — think servers, data centers, and chips.

Matt Phillips1h

Seagate soars after earnings as Wall Street gushes

Hard disk drive maker Seagate Technology Holdings soared Wednesday, with a nearly 20% gain shortly after 2 p.m. ET that put the once-staid maker of hard disk drives on track for one of its best days of the last decade.

Seagate reported strong earnings results after the close of trading on Tuesday, prompting a parade of positive published comments from Wall Street analysts.

The Street gushed over high sales prices and customer orders for datacenters and cloud computing providers stretching out to 2028. Analysts were also heartened by the roll-out of Seagate’s next generation hard disk product, known as heat-assisted magnetic recording (HAMR), which has now been “qualified” or approved for use by major US cloud service providers. Some examples:

Bernstein Research: “Demand remains strong, supply remains disciplined with pricing better than expected.”
Morgan Stanley: “We continue to be amazed by the strength of this [hard disk drive] cycle; even with better-than-expected supply, HDD shortages are intensifying given [cloud service providers] data storage demand.”
Citi: “Nearline capacity fully allocated through [2026], and demand visibility is strengthening based on [long-term agreements] with major cloud customers through [2027] (with pricing to be negotiated). Multiple cloud customers now currently discussing demand for [2028] to ensure supply.
Mizuho: “Nearline cloud capacity sold out for [calendar year 2026] with leading cloud customer allocations locked in for [2027] and multiple customers already working to fill [2028] demand.”
Wedbush: “The company has qualified HAMR at all US customers as minimizing any concerns around STX's execution on its newer/higher capacity platforms. In turn, we believe this result in our view bodes well for STX's continued ramp of HAMR.”

Seagate’s remarkable surge raises the prospect of a re-acceleration of the share price gains of Seagate and Western Digital, the duopoly that dominates the market for hard-disk drives, the low cost data storage products that are none-the-less crucial for management the torrent of data that AI usage is producing.

The two companies were some of the best performers in the S&P 500 last year, rising 219% and 282% respectively. If anything, the rally seems to be picking up steam with Seagate up 62% year to date, and Western Digital up about the same amount not even a month into 2026.

Bernstein Research: “Demand remains strong, supply remains disciplined with pricing better than expected.”
Morgan Stanley: “We continue to be amazed by the strength of this [hard disk drive] cycle; even with better-than-expected supply, HDD shortages are intensifying given [cloud service providers] data storage demand.”
Citi: “Nearline capacity fully allocated through [2026], and demand visibility is strengthening based on [long-term agreements] with major cloud customers through [2027] (with pricing to be negotiated). Multiple cloud customers now currently discussing demand for [2028] to ensure supply.
Mizuho: “Nearline cloud capacity sold out for [calendar year 2026] with leading cloud customer allocations locked in for [2027] and multiple customers already working to fill [2028] demand.”
Wedbush: “The company has qualified HAMR at all US customers as minimizing any concerns around STX's execution on its newer/higher capacity platforms. In turn, we believe this result in our view bodes well for STX's continued ramp of HAMR.”

Luke Kawa

Federal Reserve keeps rates unchanged; Waller joins Miran in dissenting in favor of rate cut

The US central bank held its policy rate steady at its January meeting.

Fed Chair Jerome Powell Holds An News Conference On Interest Rates

Max Knoblauch3h

Carvana tumbles on report from short seller Gotham City Research

Used car retailer Carvana is down more than 16% on Wednesday, with shares on pace for their worst day since April.

A new report from short seller Gotham City Research, which had teased its publication in a post on X earlier in the day, appears to be dragging shares down. In the report, Gotham alleges Carvana’s 2023-24 earnings were overstated by more than $1 billion. (For perspective, Carvana’s earnings in those two years totaled just over $550 million.)

Gotham’s report also alleges that Carvana’s earnings are “far more dependent” on auto loan companies DriveTime and Bridgecrest than the market currently takes into account and that DriveTime’s subsidies fuel over 73% of Carvana’s earnings before interest and taxes. In its post teasing its findings, Gotham said Carvana would “age as one of the biggest Corporate Scandals of America over time.”

Per the report:

“We see problems with accounting, disclosure, and business practices that will lead to regulatory trouble. At best, we believe CVNA is far less profitable than believed, as a standalone business. At worst, CVNA is more like Tricolor, rather than Amazon. Either way, shares face massive downside risk to the share price.”

Carvana did not immediately respond to a request for comment.

Wall Street thinks the next bottleneck in AI is chip equipment

Buying snarls in AI has so far led to big gains; analysts say semiconductor equipment stocks, known as semicaps, are where things will clog up next.

Matt Phillips3h

Matt Phillips7h

Corning reports better-than-expected Q4 results

Glassmaker Corning, which saw its shares explode higher Tuesday after announcing an up to $6 billion deal to supply fiber-optic equipment for Meta AI data centers in coming years, issued its Q4 numbers before the start of trading Wednesday.

The company reported:

Non-GAAP core earnings per share of $0.72 vs. consensus expectations of $0.71 from analysts, according to FactSet.
Core sales of $4.41 billion vs. a $4.36 billion consensus estimate from analysts.

The company expects Q1 2026 core sales of $4.2 billion to $4.3 billion, compared to a consensus estimate of $4.26 billion from Wall Street, with core EPS between $0.66 and $0.70, the midpoint of which is a penny higher than the Street’s estimate of $0.67.

Investors traded the stock, which rose 16% on Tuesday after the Meta news, down 3.4% before markets opened. Through the end of Tuesday’s session, shares had nearly doubled over the last six months.

The Magnificent 7 is dead! Long live the BATMMAAN stocks

More Markets

Seagate soars after earnings as Wall Street gushes

Carvana tumbles on report from short seller Gotham City Research

Wall Street thinks the next bottleneck in AI is chip equipment

Corning reports better-than-expected Q4 results

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