Category: Uncategorized

Nvidia Delivers Mixed Outlook After Two Years of Blowout Earnings

(Bloomberg) — Nvidia Corp., the chipmaker at the center of an AI spending boom, delivered good-but-not-great quarterly numbers on Wednesday, drawing a muted response from investors accustomed to blowout results. Sales will be about $43 billion in the fiscal first quarter, which runs through April, the company said in a statement. Analysts had estimated $42.3 billion on average, with some projections ranging as high as $48 billion.

The company also warned that gross profit margins would be tighter than anticipated as it rushes to roll out a new chip design called Blackwell. And there’s the risk of US tariffs weighing on results. After fluctuating between gains and losses, Nvidia shares were down less than 1% in late trading on Wednesday.

The mixed outlook comes at a shaky time for the AI industry. Nvidia shares have dipped this year on concerns that data center operators will slow spending. Chinese startup DeepSeek has sparked fears that chatbots can be developed on the cheap, potentially reducing the need for Nvidia’s powerful chips for AI.

Though Nvidia executives addressed most of those issues, it’s become harder for the company to produce blockbuster earnings reports. “Guidance was slightly underwhelming,” Edward Jones analyst Logan Purk said in a report. But early sales of the Blackwell chip should help ease investor concerns after earlier reports of production delays, he said. The company got $11 billion of revenue from Blackwell in the fourth quarter, something Nvidia described as the “fastest product ramp” in its history.

“Demand for Blackwell is amazing,” Chief Executive Officer Jensen Huang said in the statement. Though the company’s fiscal fourth-quarter sales topped analysts’ estimates, they did so by the smallest margin since February 2023. Earnings, meanwhile, had the narrowest amount of upside since November 2022, according to data compiled by Bloomberg. The stock had been down 2.2% this year, following stratospheric gains in 2023 and 2024 that turned Nvidia into the world’s most valuable chipmaker.

Nvidia has been the biggest beneficiary of a massive surge in AI spending, doubling the size of its revenue the past two years. Many of the largest technology companies are pouring tens of billions of dollars into data center hardware, and Nvidia is the dominant seller of processors that create and run AI software.

Along the way, Nvidia and its CEO have become synonymous with the AI revolution — and the biggest bellwether for how it’s progressing. Huang has spent much of the past two years crisscrossing the world as an evangelist for AI technology and believes it’s still in the early stages of spreading throughout the economy.

Sales in the fourth quarter, which ended Jan. 26, rose to $39.3 billion. That matched estimates, though some projections ranged as high as $42 billion. Underlining just how quickly the company has grown: Its latest quarterly sales were bigger than Nvidia’s annual revenue two years ago, when it totaled $27 billion.

Profit was 89 cents a share, minus certain items. Wall Street was looking for 84 cents. “We will grow strongly in 2025,” Huang said during a conference call with analysts. The data center unit, by far Nvidia’s biggest source of revenue, generated sales of $35.6 billion. That beat the average estimate of $34.1 billion. Gaming-related sales — once Nvidia’s core business — amounted to $2.5 billion. Analysts projected $3.02 billion on average. Automotive was $570 million.

The data center division alone now has more revenue than rivals Intel Corp. and Advanced Micro Devices Inc. generate in total, combined. Nvidia made its name by selling graphics processors, but discovered that the technology also has applications for AI. Its chips help software models during the training process, when they learn to recognize and respond to real-world inputs. Nvidia’s components are also used in systems that then run the software, a stage known as inference, and help power services such as ChatGPT.

Heading into the earnings report, analysts had expressed concern about near-term growth in Nvidia’s biggest business, which serves data center customers. The big question was whether supply constraints and a shift to Blackwell would slow growth. The new technology is more sophisticated, bringing manufacturing challenges.

DeepSeek added to the worries after releasing a powerful AI model that it said required far fewer resources to create. The announcement in late January led to a widespread selloff in AI-related shares. Nvidia shed a staggering $589 billion of capital in one day of trading, a record for the markets.

But key Nvidia customers, such as Microsoft Corp., have maintained their capital expenditure plans, suggesting that the AI spending surge will remain strong. During the conference call,

BlackRock Reassesses Australian Exposure Amid Stretched Valuations, Weak Growth

BlackRock, the world’s largest asset manager, is considering shifting its focus away from Australia due to stretched valuations and weak growth, seeking better opportunities in markets like the U.S. and Japan. Katie Petering, who leads BlackRock’s multi-asset investment strategy in Australia and New Zealand, stated that an uncertain global outlook has prompted the firm to reassess its strategic asset allocation and make tactical decisions to diversify its portfolio.

“We’re in an environment where there’s a lot more uncertainty and volatility. So as multi-asset investors, we try and build items in the portfolio that give ballast to the portfolio,” Petering explained during a media roundtable in Sydney.

BlackRock has expressed a “pro-Japan” stance due to recent corporate reforms and inflation, which have bolstered companies with pricing power. The firm is also overweight on U.S. equities. In contrast, Australian asset valuations have become stretched by weak economic growth and a prolonged period of high interest rates.

“In Australia, one thing that we’re looking at is that the local market has probably stretched valuations and there’s probably not as strong a growth outlook as other countries. So we’re considering that,” Petering added.

BlackRock’s Australian share investments include major companies such as BHP, CSL, and the Commonwealth Bank of Australia. Last week, the Reserve Bank of Australia reduced its cash rate from a 13-year high of 4.35% to 4.10%, citing progress on inflation but remaining cautious about further monetary policy easing.

BlackRock supports the central bank’s cautious stance amid a tight labor market and geopolitical uncertainty caused by the threat of the Trump administration’s tariffs. Craig Vardy, BlackRock’s Australasia head of fixed income, noted that the main risk for the RBA is around the labor market, with the 4% unemployment rate causing concern.

“The main risk for the RBA is definitely around the labor market … that 4% unemployment rate obviously is causing them a bit of consternation,” Vardy said. This would reduce the prospect for more rate cuts to stimulate growth for Australia’s households, he added.

Super Micro Computer Inc. Gains 23% After Filing Delayed Financial Reports

Super Micro Computer Inc. saw a significant surge in its stock, gaining 23% in premarket trading following the submission of outstanding financial reports to comply with Nasdaq Inc. rules. This move alleviated concerns about the server maker potentially being delisted. The company reported its 2024 fiscal year results in a filing with the Securities and Exchange Commission, along with financial statements for the quarters ended September 30 and December 31.

Super Micro had been under pressure to avoid delisting after missing an August 2024 deadline to file its annual financial report for the year ending June 30. The company’s auditor, Ernst & Young LLP, resigned in October, citing concerns about governance and transparency. Additionally, Super Micro is facing a US Department of Justice probe following a report from short seller Hindenburg Research.

Nasdaq extended Super Micro’s deadline to February 25, 2025, to provide the delayed filings and regain compliance with listing rules. In December, Super Micro announced an independent review of its business, which found no evidence of misconduct. However, the company pledged to install a new chief financial officer and other top executives.

In a statement, Super Micro confirmed that it had regained compliance with the filing requirements, and the matter is now closed. The company acknowledged that internal controls over financial reporting were not effective and has initiated remediation measures. Despite this, Super Micro warned that it may fail to remediate material weaknesses in its internal control over financial reporting.

Super Micro also highlighted potential risks, including failing to recapture lost businesses or business opportunities due to ongoing reputational harm. Earlier this month, Chief Executive Officer Charles Liang noted some negative business impacts due to the filing delays.

In lieu of audited financial information, Super Micro had provided “business updates” in recent quarters with preliminary sales and profit results. The company recently gave a much stronger-than-expected sales outlook of $40 billion for the fiscal year ending in June 2026.

Western Brands Face Competitive Russian Markets as They Consider Return

MOSCOW (Reuters) – As U.S. President Donald Trump suggests a swift end to the Ukraine conflict, speculation grows that Western brands may consider returning to Russia. However, the markets they vacated have become more competitive, dominated by domestic and Chinese brands.

Henderson, a men’s clothing chain, has benefited from the departure of foreign retailers, securing better locations within shopping centers and growing sales three times faster than the overall 8% annual growth of the menswear market. Despite this, Western brands remain available in some locations, having transformed their sales channels.

Shopping malls’ prime locations, once reserved for Western flagship stores, are now occupied by Russian rivals. Pavel Lyulin, vice president of the Shopping Centres Association of Russia, Belarus and Kazakhstan, notes that these prime spots are highly contested due to long-term contracts.

Moscow is unlikely to welcome returning brands with open arms. President Vladimir Putin has emphasized the preferential treatment of Russian manufacturers if foreign firms return. Kirill Dmitriev, Putin’s special envoy on international economic and investment cooperation, expects some U.S. companies to return as early as the second quarter of this year.

Over a thousand Western companies have exited Russia since the conflict began, with many citing costs, disruptions from sanctions, and payment issues. The retail sector has yet to fully recover, with shopping centers still seeing 20% fewer visitors than in 2019. However, Russian shoppers have embraced local brands, finding them comparable in quality to Western ones.

Stockmann, a retailer that acquired Hugo Boss’ Russian business, has observed an increase in sales of domestic brands. Moscow resident Anastasia Efremova notes that while Russian brands have raised prices, the impact has been minimal, with everything in stock, including spare car parts.

Foreign carmakers’ departure left a gap filled primarily by Chinese competitors, which now account for more than 50% of new car sales. Domestic carmakers account for about 30% of sales, up from closer to 20% before February 2022.

Western companies are currently ruling out imminent returns. Executives from Arla Foods and InterContinental Hotels have stated there are no plans to re-enter the Russian market for now. Renault has also indicated that returning under the terms agreed when exiting in 2022 is “very unlikely.”

Russian brands are confident in their market share and are prepared to compete with international players if they return. Ultimately, consumers want the freedom to choose, as expressed by Moscow resident Laysen Faskhutdinova.

Unlock stock picks and a broker-level newsfeed that powers Wall Street. Upgrade Now

Why stock market worries about tariff uncertainty might be a ‘red herring’: Morning Brief

The stock market is trading near record highs, but the vibes feel off. Last week’s sell-off brought out a laundry list of possible triggers, ranging from weak manufacturing data to rising inflation expectations to, of course, the impact of tariffs on consumers and across the economy.

But according to Neil Dutta, head of economics at Renaissance Macro, talk about the last item on that list simply covers up what the first two suggest: The US economy is slowing down. In an email on Monday, Dutta flagged four concerning developments for the economy that are largely the inverse of what led him to be among the leading voices on Wall Street arguing in favor of a “no landing” scenario back in 2022. The consumer is softening as income growth falls, housing is weak, government spending is slowing, and Wall Street expects the US economy to continue growing at around 2.5%, in line with each of the last three years.

“If 2023 was about being surprised to the upside, there is more risk in 2025 of being surprised to the downside,” Dutta wrote. “Much of what we see in the financial press — tariffs, uncertainty — is a red herring, an ex-post rationalization for an economic slowdown that was already in motion.”

Late last month, Fed Chair Jay Powell said the US economy was in “quite a good place” when outlining the Fed’s rationale for pausing rate cuts. This assessment also helps explain why Powell seemed content not to push back on market expectations paring back their bets for further cuts. Asked about the impact of tariffs on the economy, Powell said “significant” shifts around tariffs, immigration policy, fiscal policy, and regulations each created “additional uncertainty” for the economic outlook.

Still, the Fed chair appeared largely unbothered. In Dutta’s view, however, the Fed’s slowdown in rate cuts has created a “passive tightening of monetary policy [that] is the dominant risk and that has important implications for financial market investors.” In other words, by pausing rate cuts into a slowing economy, the Fed is de facto raising rates. Going forward, Dutta expects long-term rates and stocks to fall as rate cuts and an economic slowdown are priced in and the job market further slows.

What’s notable in Dutta’s call is that he doesn’t dredge up some obscure piece of alternative data the market hasn’t yet priced in or outline an involved three-leg parlay of sentiment, valuations, and positioning. Rather, it looks at the basics: how much people get paid, how much it costs to live, and what the government is doing to help. And none of the trends are great.

Citadel Securities Plans to Enter Crypto Trading Amid Trump’s Support

Citadel Securities, the market-making giant led by Ken Griffin, is planning to become a liquidity provider for cryptocurrencies, capitalizing on President Donald Trump’s endorsement of the industry. This move marks a significant shift from the firm’s previous cautious approach to crypto market-making.

Citadel Securities has historically avoided crypto exchanges popular with retail investors due to regulatory uncertainties in the US. However, the firm now aims to join the roster of market makers on various exchanges, including those operated by Coinbase Global Inc., Binance Holdings, and Crypto.com. The firm intends to establish market-making teams outside the US initially, pending regulatory approval.

The decision to enter the crypto market is influenced by the potential for new regulations that could provide clarity and attract institutional investors. Citadel Securities has collaborated with brokerage firms like Charles Schwab and Fidelity Investments to create EDX Markets, an institution-only crypto exchange that went live in 2023. This platform offers trading in crypto products exclusively for institutional investors.

The financial industry anticipates increased activity in digital assets under the Trump administration, which has pledged to make the US the “crypto capital of the planet.” Trump has taken steps to overhaul regulations that hindered crypto activity during President Joe Biden’s tenure, including issuing an executive order on digital assets and establishing a crypto task force at the US Securities and Exchange Commission.

Citadel Securities, which has expanded from a small group supporting Griffin’s hedge fund to a global trading powerhouse, aims to provide liquidity for digital assets similar to how it operates in other asset classes like equities and fixed income. The firm’s entry into crypto trading could reshape the landscape, especially if the US adopts clearer regulations for digital asset investing.

Palantir Technologies Inc. shares experienced a significant downturn last week, with a four-day drop marking the largest decline since 2022. This downturn followed news that Defense Secretary Pete Hegseth plans to reduce projected US military spending by 8% over the next five years, potentially impacting Palantir’s revenue, which is heavily reliant on government contracts. Despite the selloff, some investors remain optimistic about Palantir’s long-term prospects, citing the company’s strong performance in the artificial intelligence sector and its potential to benefit from increased government spending on tech and AI.

Palantir’s stock fell 4.6% on Monday, contributing to a more than 20% drop over the four-day period. The company, which has seen its market value increase by almost $190 billion in the past year, stands out among tech firms for its significant revenue share from the US government. Over 40% of Palantir’s 2024 revenue is US-government related, with the US Army accounting for 22% of its government revenue. This exposure to government spending has become a major concern, especially with President Donald Trump pledging to cut federal spending.

Despite the risks, some analysts believe that Palantir’s unique software approach will enable the company to gain more IT budget dollars at the Pentagon, and that budget cuts could ultimately be a positive growth catalyst. Palantir remains one of the best-performing components of the Nasdaq 100 Index this year, up about 28%, and has defied naysayers before, rallying on the back of a strong revenue forecast. The company reported “untamed organic growth” for its AI software.

However, the stock’s elevated valuation remains a concern, trading at more than 170 times estimated earnings, making it the most expensive component of the S&P 500 Information Technology Sector. More than half of the analysts tracked by Bloomberg have hold ratings on the shares, with six recommending a buy and five suggesting to sell. Despite the risks, some investors remain confident in Palantir’s long-term potential, particularly with the Pentagon.

Microsoft Cancels US Data Center Leases, Raising AI Capacity Concerns

Microsoft Corp. has canceled some leases for US data center capacity, according to TD Cowen, sparking concerns about whether the tech giant is securing more AI computing capacity than it needs in the long term. The US brokerage reported that Microsoft has voided leases totaling “a couple of hundred megawatts” of capacity, equivalent to roughly two data centers, and has pulled back on converting statements of qualifications into formal leases.

The exact reasons for Microsoft’s lease cancellations are unclear, but TD Cowen suggested that the company may be in an oversupply position. The brokerage also posited that Microsoft could be reallocating some of its in-house investment to the US from abroad. Microsoft reiterated its spending target for the fiscal year ending June but declined to comment on TD Cowen’s note.

The potential lease pullback raises questions about whether Microsoft, a frontrunner in AI among Big Tech companies, is growing cautious about the outlook for overall demand. The company has said it expects to spend $80 billion this fiscal year on AI data centers and has pledged to sustain spending to meet “exponentially more demand.”

European stocks tied to the energy sector dropped on the report, which may suggest that Big Tech companies will need less power to run their data centers. Critics have consistently pointed out a dearth of practical, real-world applications for AI, even as Microsoft, Meta Platforms Inc., Alphabet Inc., and Amazon.com Inc. have pledged to spend billions on the data centers needed to train, develop, and host AI services.

Microsoft executives have played down concerns about AI overcapacity, stating that the company’s plans to spend over $80 billion on infrastructure this fiscal year remain on track as it continues to grow at a record pace to meet customer demand. Rivals have also doubled down on their AI spending commitments, with Amazon, Alphabet, and Meta pledging to spend $100 billion, $75 billion, and up to $65 billion, respectively, on AI infrastructure. Chinese e-commerce giant Alibaba Group Holding Ltd. said it would invest more than 380 billion yuan ($53 billion) over the next three years as it seeks to become a leader in the field.

TD Cowen’s analysts wrote that their channel checks had unearthed a number of signs that Microsoft is gradually retreating, including letting more than a gigawatt of agreements on larger sites expire and walking away from “multiple” deals involving about 100 megawatts each. Microsoft used facility and power delays as justification for the termination of leases, a tactic rivals such as Meta previously employed when curbing capital spending.

Large cloud hyperscalers typically use a mixture of leased and owned data centers across many locations, so investors should expect some degree of “tweaking” of plans, according to Mizuho Securities analyst Jordan Klein. Microsoft’s alliance with OpenAI may also be evolving in ways that mean the software giant won’t need the same kind of investments. In January, Microsoft said it would alter its multiyear deal with OpenAI so the AI startup could use cloud-computing services from rival providers. Microsoft, which had been the company’s exclusive cloud provider, still has a right of first refusal when OpenAI seeks computing horsepower to train and run its AI models.

Nvidia Set to Report Q4 Earnings Amidst Tariff and Export Control Threats

Nvidia (NVDA) is set to release its fourth-quarter earnings report after market close on Wednesday, drawing attention from analysts and investors eager to gauge the impact of tariffs and export controls on its performance. The AI chip leader is expected to report earnings per share (EPS) of $0.84 on revenue of $38.2 billion, marking a 63% increase in EPS and a 73% jump in revenue compared to the same period last year. However, this growth, while substantial, may be viewed as a slowdown by investors given the company’s previous year’s performance, which saw a 486% increase in EPS and a 265% rise in revenue.

The data center segment is anticipated to drive the majority of revenue, reaching $34 billion, with gaming contributing $3 billion. The remainder will come from professional visualization, automotive, and OEM segments. Despite the impressive growth, concerns loom over potential tariffs on chips imported from Taiwan, where many of Nvidia’s processors are manufactured, and further export restrictions on shipments to China, a significant market for the company.

Nvidia’s dominance in the AI chip market is under scrutiny as competitors like Amazon (AMZN), Google (GOOG, GOOGL), Meta (META), and Microsoft (MSFT) invest heavily in developing their own AI solutions. While these companies currently rely on Nvidia for their AI needs, the development of more efficient AI models by entities like DeepSeek could shift the market dynamics, potentially leading to a preference for less expensive chips.

Nvidia CEO Jensen Huang has argued that the development of powerful AI models like those by DeepSeek actually incentivizes the use of high-powered chips, countering fears that such models would reduce demand for top-tier processors. However, the threat of custom AI chips developed by tech giants poses a challenge to Nvidia’s market position. Despite these challenges, analysts believe that Nvidia’s mature ecosystem and the difficulties faced by alternatives in gaining traction suggest that the company remains well-positioned in the AI space.

As the tech sector braces for the earnings report, the market’s reaction will be closely watched, especially in light of the recent volatility in AI stocks and the broader tech sector’s performance at the start of the year. The report will provide crucial insights into how Nvidia is navigating these challenges and maintaining its leadership in the AI chip market.

The generated text has been blocked by our content filters.