Podcast Summary
AI revolution, NVIDIA leadership: NVIDIA leads the AI revolution with significant funding, strategic partnerships, and increased demand for data center AI spending, causing the tech industry to follow suit and allocate billions to the company
Elon Musk's artificial intelligence startup, XAI, is causing ripples in the tech industry by securing significant funding and making strategic partnerships with companies like Dell and Super Microcomputer for server provision. NVIDIA, a leading AI chip manufacturer, is also experiencing growth as it becomes the second largest holding in the technology select sector spider fund (XLK), surpassing Apple. This shift in allocation requires the fund to buy $10 billion of NVIDIA shares and shed $11 billion in Apple, making NVIDIA the current leader in the race to a $4 trillion market cap among Microsoft and Apple. The AI revolution is just getting started, and NVIDIA is at the forefront, with the tech world following suit in the race to capitalize on the increasing demand for data center AI-driven spending.
US economic data: Latest data shows potential softening in residential construction and manufacturing sectors, with housing starts, building permits, and Philly Fed index coming in below expectations. Initial jobless claims remain a concern, but expectations for US economic contraction remain low.
The latest economic data shows signs of a potential softening in both residential construction and manufacturing sectors. Housing starts and building permits came in below expectations, indicating a genuine slowdown in residential construction in Q2. The Philly Fed index also unexpectedly fell, signaling weakness in manufacturing. Additionally, initial jobless claims, while slightly decreasing, remain a concern for some analysts, who warn that continued increases could lead to renewed recession fears. Despite these concerns, expectations for a US economic contraction remain low among money managers, leading to bullish sentiment in the market. Among individual stocks, Kroger reported better-than-expected fiscal Q1 results, with modest growth in identical store sales and gross margin. However, the company still sees full-year earnings coming in below consensus.
Tech and Restaurant Sectors: He-bank raised Meta's rating and price target due to AI advancements increasing ad prices, while Darden beat Q4 profits but underwhelmed with full year guidance. Accenture revised revenue outlook for FY24 and provided Q4 revenue guidance above estimates. UBS sees potential for mid to high single-digit small cap outperformance due to interest rate disconnect.
There were some significant developments in the tech and restaurant sectors on Wall Street today. He-bank Capital Markets raised its rating and price target for Meta Platforms due to an increase in ad prices, which the analyst attributed to advancements in artificial intelligence. Meanwhile, Darden Restaurants reported better-than-expected profits for its fiscal Q4, but provided underwhelming guidance for the full year. Accenture also saw a positive reaction after revising its revenue outlook for the fiscal year 2024 and providing revenue guidance for the fourth quarter that was above estimates. Lastly, UBS's equity strategist sees potential for mid to high single-digit outperformance for small caps in the near term due to a disconnect between small cap performance and interest rates. These developments highlight the ongoing trends and shifts in various industries and sectors in the market. Stay tuned for more updates and analysis. For more information, check out the links in the show notes section and visit SeekingAlpha.com for a full suite of news, analysis, ratings, and data on stocks and ETFs.