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High on AI

How do you make billions in a day? Ask Jensen Huang. The Nvidia (NVDA) CEO saw his net wealth swell by $10B to $69.2B on Thursday after a dizzying post-earnings rally that turned the heads of nearly everyone on Wall Street. Investors were also celebrating in style as Nvidia shares soared 16.4% during the session to a new record high of $785.38, and they even managed to breach the $800 level in premarket trading this morning as the AI darling nears the $2T valuation milestone.

Snapshot: The latest rally resulted in the biggest single-session increase for a U.S. company in history, with Nvidia adding $277B in market value. Putting it in perspective, the increase alone was larger than some of the biggest blue-chip firms, like Coca-Cola (KO). The powerful advance also fueled the 14th record close for the S&P 500 (SP500) in 2024, and with Nvidia skyrocketing nearly 60% this year, it now accounts for more than a quarter of the benchmark S&P's increase YTD. It's also helped put the stock on the radar of broad-market investors and owners of index funds, not just Nvidia's direct shareholders.

Why is it worth so much? Just like any revolution, the companies that stand to make the most money are the ones providing the tools to achieve the transformation, not necessarily the ones that do it. Nvidia (NVDA) is providing the most advanced GPUs needed to power generative AI platforms and the large language models being developed by Big Tech, and holds an estimated 80% share of that market amid demand that has been off the charts. Remember that each of these chips is worth tens of thousands of dollars, and Silicon Valley cannot eat them up fast enough, with plenty of cash to do so.

SA commentary: "Of course, there will come a time when Nvidia's AI demand will slow down, and growth will become lower than expected, leading to worsening profits and a lower stock price," Investing Group Leader Victor Dergunov writes in Nvidia Q4: It's Good To Be The King. "However, that time is not here yet, and when it will arrive, only time will tell. Nonetheless, Nvidia is priced for perfection and needs to continue delivering solid results to keep its share price moving higher." (72 comments)

Back on the moon

It's the first commercial U.S. company to pull off a lunar landing, and the first American spacecraft to reach the moon's surface since Apollo 17 in 1972. Intuitive Machines' (LUNR) uncrewed spacecraft, called Odysseus, achieved the feat late Thursday, sending shares skyrocketing 37% in AH trading. "On the eighth day of a quarter-million-mile voyage, Intuitive Machines aced the landing of a lifetime," said NASA Administrator Bill Nelson, calling it "a triumph for humanity." Investing Group Leader Dilantha De Silva previously posed some questions surrounding the stock, flagging the need for more data to analyze how the mission's success will translate into financial gains. (3 comments)

Dive into anything

Set to be listed under the ticker symbol "RDDT," Reddit has filed for an initial public offering on the New York Stock Exchange. The social media platform disclosed that it generated $804M in revenue in 2023, up around 21% from a year ago, while its net loss narrowed to $90.8M, from $158.6M in 2022. Content on Reddit, which had over 73M daily active users as of Dec. 31, has become particularly important for training artificial intelligence models. "We believe there is an emerging opportunity in data licensing," noted the company, which just inked a content licensing deal with Google (GOOGGOOGL). Reddit also projected its total addressable market globally from advertising, excluding China and Russia, to be $1.4T by 2027. (32 comments)

Fresh sanctions

As the war in Ukraine enters a third year, Russia has been hit with fresh sanctions from the EU and U.K., with the U.S. expected to follow today. The more than 500 measures, which will target Moscow's military-industrial complex and foreign companies helping provide other goods, also come in response to the recent death of opposition leader Alexei Navalny. In addition to imposing the new penalties, the U.S. warned of more sanctions on Iran for its support of Russia. Recall that the Biden administration's request for $60B in additional funding for Ukraine is yet to be cleared by the Republican-controlled House of Representatives. (14 comments)

Today's Markets

In Asia, Japan closed. Hong Kong -0.1%. China +0.6%. India flat.
In Europe, at midday, London flat. Paris +0.6%. Frankfurt +0.1%.
Futures at 7:00, Dow +0.1%. S&P flat. Nasdaq -0.1%. Crude -1.6% to $77.32. Gold +0.1% to $2,033.10. Bitcoin -0.7% to $51,195.
Ten-year Treasury Yield unchanged at 4.33%.

Today's Economic Calendar

1:00 PM Baker Hughes Rig Count

Companies reporting earnings today »

What else is happening...

What happened as AT&T (T), Verizon, T-Mobile (TMUS) outage hit U.S.?

Fed's Cook wants more confidence in inflation path before rate cuts.

Capital One (COF) deal for Discover (DFS) has $1.4B termination fee.

Goldman: Obesity drugs to expand U.S. GDP by 1% in coming years.

Block (SQ) stock surges after strong annual earnings guidance.

Booking Holdings (BKNG) trades lower as Middle East conflict weighs.

Carvana (CVNA) shares rally as used car retailer nears profitability.

Foundry push: Taiwan Semi (TSM) to remain ahead of Intel (INTC).

UnitedHealth (UNH) subsidiary Change Healthcare hit by cyberattack.

FDA warns against use of smartwatches to measure blood glucose.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

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