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Market Moves Yesterday
S&P 500 @ 5,304.72 ( ⬆️ 0.70%)
Nasdaq Composite @ 16,920.80 ( ⬆️ 1.10%)
Bitcoin @ $67,732.60 ( ⬇️ 2.4%)
Hey Scoopers,
Happy Tuesday! Here’s what we’re covering today.
👉 Nvidia’s massive moat
👉 Amazon’s AI bet
👉 The TAM for AI
So, let’s go 🚀
Market Wrap 📉
Stock futures are up this morning as investors await inflation data, which is due at the end of this shortened trading week.
Equities are on track to end May on a strong note after softer inflation data and better-than-expected earnings reports lifted invested sentiment.
The S&P 500 index has advanced 5.3% in May, while the tech-heavy Nasdaq index has climbed 8%. The Dow Jones Industrial Average is up 3.3% after it topped the 40,000 milestone for the first time ever.
Investors will closely watch the consumer confidence data today and the personal income and expenditures report for April, due on Friday.
Companies, including Costco and Ulta Beauty, are expected to report earnings results this week, which will provide clarity over consumer spending patterns.
Trending Stocks 🔥
Ross Stores - Shares of the discount clothing rallied 8% after it reported revenue of $4.86 billion and earnings per share of $1.46, above estimates of $4.83 billion and $1.35, respectively.
Booz Allen Hamilton- The defense contractor’s shares added over 4% as it posted adjusted earnings of $1.33 per share and revenue of $2.77 billion, compared to estimates of $1.23 per share and $2.72 billion, respectively.
Coinbase - Shares of the crypto services giant jumped 5% after the U.S. SEC approved the launch of spot Ethereum ETFs or exchange-traded funds.
Nvidia’s Rally is Far From Over!
Earlier this month, OpenAI’s head of technology thanked Nvidia’s CEO personally for manufacturing the most advanced chips needed to run AI models.
At Google’s annual developer conference, CEO Sundar Pichai highlighted the company’s long-standing partnership with Nvidia, even confirming that Google Cloud would use the chipmaker’s Blackwell graphics processing units next year.
Last week, Microsoft, which provides servers to OpenAI, announced new AI advancements and features developed on Nvidia’s GPUs.
Nvidia is at the epicenter of the AI revolution, allowing it to deliver market-thumping gains to shareholders despite its market cap of $2.6 trillion.
In fiscal Q1 of 2025 (which ended in April), Nvidia reported revenue growth in excess of 200% for the third consecutive quarter. Moreover, its data center business, which includes the sale of advanced processors to big tech giants, reported revenue of $22.6 billion, while cumulative sales stood at $26 billion in Q1.
Nvidia continues to squeeze out profits from its high margin AI suite, reporting a net income of $14.4 billion, indicating. a margin of 55%. These astonishing numbers have meant the stock has doubled in 2024 after more than tripling in 2023.
However, Nvidia’s growth story is far from over, as Google, Amazon, Microsoft, Meta, and Apple are forecast to allocate $200 billion in capital expenditures in 2024, a huge chunk of which will be diverted toward AI-specific infrastructure. For instance, Meta announced plans to buy and build out computers that will include 350,000 Nvidia GPUs.
Prior to the AI boom, Nvidia was a leading chip manufacturer in the 3D gaming space. Around 12 months back, Nvidia signaled it would outpace sales forecast in fiscal Q2 of fiscal 2024 by more than 50%. While revenue growth rates have since accelerated, they will slow down in the upcoming quarters.
Nvidia stock is up 3.1% in pre-market today. Will it surpass Microsoft as the world’s largest company within the next 12 months?
Amazon Upgrades Alexa
Amazon is upgrading its Alexa voice assistance with generative AI capabilities. The e-commerce giant is also planning a monthly subscription fee for Alexa to offset associated tech costs.
Amazon explained it would launch a more conversational version of Alexa by late 2024, positioning it to compete with other AI-powered chatbots such as Gemini and ChatGPT.
Amazon initially took consumers by storm a decade ago as Alexa’s voice-driven tasks wowed global users. However, given recent leaps in this sector, it might be losing the AI race to other big tech peers.
Two weeks ago, OpenAI launched GPT-4o with two-way conversation capabilities that can go much deeper than Alexa. Google, too, launched a similar voice feature for Gemini.
The AI Megatrend
The AI megatrend is here to stay. According to a Statista report, the AI market size is forecast to expand from $184 billion in 2024 to $826 billion in 2030. The U.S. will be the largest market in the world, accounting for $50.16 billion of the AI segment in 2024.
AI Market Size Estimates
Source: Statista
It's evident that AI is more than a buzzword in corporate America as the disruptive technology continues to infatuate society.
In this earnings season, 199 companies part of the S&P 500 index have cited “AI” on calls, surpassing the record of 182 set in Q2 of 2023.
Comparatively, the average number of company mentions for this term over the past five years is just 80. In this earnings season, the term was mentioned at least 50 times on the calls of 12 companies, including Meta, Microsoft, and, of course, Nvidia.
Headlines You Can't Miss!
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Chart of The Day
The world is in debt to the tune of $315 trillion (and counting). Comparatively, global GDP or gross domestic product stood at $109.5 trillion.
Given there are 8.1 billion people in the world, the average debt per person is about $39,000. Here are a few other numbers surrounding global debt:
👉 Household debt is roughly $59 trillion
👉 Corporate debt is around $165 trillion
👉 Government debt or public debt stood at $91.4 trillion
Meme of the Day
DISCLAIMER: None of this is financial advice. The newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions. Please be careful and do your own research.