September 1, 2024

Notable market news this past week (1-Sep-24)

Here is the Skeptivest roundup of the latest market headlines for the week

‍

Nvidia stock price falls 7.9% in the past 5 days despite the company’s 2Q earnings exceeding expectations

• Good But not good enough? The company posted a record $30b revenue, but the stock price fell nearly 7% due to concerns about future growth as the company. Of course, we should keep in mind share price is still up 147% this year.
  ‍
• The ultimate AI vibe check: The reaction underscores what might be an overextended valuation and the extreme expectations on the AI leader. It’s no question that much of the “AI bull run” we have seen the past year has been driven by Nvidia. Despite the dip in share price, Nvidia’s earnings and orders has demonstrated that actual AI demand has not been slowing down globally.
  ‍
• Strong confidence from inside and outside the company: Despite the correction, CEO Jensen Huang announced a monstrous US$50billion stock buyback. Wells Fargo, Citi, and Bernstein analysts have all raised price targets following what they considered a showing of “Robust AI demand strength”.

‍

 ☕️ Quick fire happenings to note

🌏 Global macro

• ‍The first US national Security Adviser trip to China in 8 years: Jake Sullivan, the U.S. National Security Adviser visited China this week to engage in high-level talks aimed at easing tensions between the two nations. During his trip, Sullivan met with Chinese President Xi Jinping and other top officials to discuss critical issues like Taiwan, trade, and military relations. The meetings also focused on paving the way for a potential summit between President Biden and President Xi later this year. Both sides agreed to enhance communication to prevent conflicts, particularly in the Taiwan Strait and the South China Sea. This visit marks a significant step in managing the complex U.S.-China relationship ahead of the upcoming U.S. elections.
  ‍
• De-escalation hopes amidst extreme violence in the Middle East? Israel launched 100 warplanes to destroy thousands of Hezbollah rocket launchers inLebanon, which Hezbollah claimed was retaliation for Israel killing one of its top commanders. Despite ongoing tensions, the situation has remained quiet since the incident. Negotiations are also ongoing for a cease-fire betweenIsrael and Hamas in Gaza, while Iran has vowed to retaliate for Israel’s killing of a Hamas leader in Tehran.
  ‍‍
• Typhoon Shanshan's arrives in southern Japan: The typhoon has led to the evacuation of 4 million people, bringing hurricane-force winds and severe storm surges. The typhoon has caused significant disruptions, including power outages for hundreds of thousands of homes, the suspension of train services, and the cancellation of over 700 flights. Major companies like Toyota and Sony have halted production facilities, affecting their global supply chains.

🏦 Individual stocks/companies  

• ‍Apple is reportedly in discussions to invest in OpenAI: Apple intends to join a funding round with Microsoft and Thrive Capital that values the AI startup at over $100b, according to the Wall StreetJournal. Previously, Apple collaborated with OpenAI to integrate ChatGPT for advanced tasks within its “Apple Intelligence” platform This investment, notable given Apple’s rare involvement in startup funding, would enhance its commitment to AI and secure access to OpenAI’s technology.
  ‍‍
• IBM pulls back from R&D in China: The company has decided to close its research and development (R&D) operations in China, affecting around 1,000employees. This move is part of a broader trend among U.S. tech companies to reduce their presence in China due to escalating geopolitical tensions and increased competition from local firms. Read our deep dive on IBM here (+44% since first covered).
  ‍
• Telegram founder Pavel Durov arrested in Paris: The founder was charged with enabling criminal activities with the platform. He was released on bail set at €5m but must remain in France and report to the police twice a week. The charges include complicity in administering an online platform for illicit transactions, which could lead to a 10-year prison sentence. Telegram claims it is working to improve its content moderation practices. This comes asa massive setback for Telegram, which was considering an IPO in the next two years.   

🇸🇬 Singapore related

• ‍Singtel in talks to build data centre in Johor: Through its regional data centre business Nxera, Singtel is reportedly in discussions with Malaysian authorities to establish a data centre in Iskandar Puteri, Johor.This move would make Singtel the latest international company to look to Johor including global giants like Nvidia and fellow GLC Keppel Data Centres.
  ‍

• Bank of Singapore bullish on Singapore REITS again: The private bank’s equity researchers believes the outlook for S-REITs is improving as interest rates decline. This shift is expected to benefit investors seeking stable income and capital appreciation.

‍

‍