Top 10 Things to Watch
1. Wall Street looks poised for gains this morning as oil prices decline amidst hopes for a U.S.-Iran ceasefire. WTI crude has dropped below $90 a barrel. Even though Iran seems uninterested in a ceasefire, it’s hard to be pessimistic about stocks when oil is falling.
2. Arm is witnessing remarkable demand for its first home-produced chip, the AGI CPU, which is being hailed as an AI agent. Now, Arm not only licenses its instruction set but also designs its own processors. Raymond James has upgraded its stock from hold to buy, while Citi analysts project revenues could hit $15 billion by 2031, exceeding expectations. The stock saw a 12% rise this morning, aligning with Nvidia’s GPU advancements.
3. OpenAI has raised another $10 billion from investors, bringing its total funding this round to over $120 billion, as CFO Sarah Friar mentioned on “Mad Money” recently. The creators of ChatGPT have garnered institutional support from firms like Andreessen Horowitz and D.E. Shaw Ventures, with Microsoft also joining in on this funding segment.
4. In terms of an IPO timeline, Friar didn’t commit to anything specific but indicated that OpenAI is “starting to build on its results.” The potential closure of video generator Sora might factor into the company’s plans. Elon Musk’s SpaceX could file its prospectus with the SEC soon, according to reports.
5. UBS has cut Microsoft’s price target from $600 to $510, citing concerns over its software business. While two bullish polls came in from Bank of America and Citi, Microsoft’s stock still slipped by 2.7%. The worries regarding its co-pilot feature are persistent, especially as OpenAI is integral to Microsoft’s Azure stats, raising concerns about potential diversification.
6. Vertiv has earned a Buy rating from HSBC, with analysts optimistic about long-term prospects for AI expansion keeping profit growth strong. The company provides essential power and cooling solutions for data centers, an area where it continues to find success. Vertiv’s stock has increased nearly 2% this year, building on a remarkable 67% rise already.
7. Meta has rolled out a substantial equity incentive program for its executives. To maximize rewards, the company’s market cap would need to reach $9 trillion by 2031, a considerable jump from the current $1.5 trillion. The Wall Street Journal highlighted that stock-based compensation incurs significant cash costs, and the Investing Club recently explored this topic further.
8. Rothschild & Co. Redburn has downgraded Mondelez, the owner of Oreo, from buy to hold, amid concerns about dwindling chocolate sales in Europe and heightened competition. Analysts believe limitations on SNAP benefits and a rise in GLP-1 usage could pose further challenges. One reason consumers prefer Procter & Gamble is its removal of GLP-1 risk factors.
9. In a positive move, Wolf Research has upgraded General Motors from hold to buy, with analysts stating that the stock appears undervalued at this point and pointing to improving metrics in electric vehicles. GM has held its $96 price target, still 25% higher than its closing price yesterday. CEO Mary Barra has received commendation for her leadership.
10. Merck is acquiring cancer biotech Terns Pharmaceuticals for $6.7 billion to bolster its oncology portfolio ahead of potential patent expiration for its leading cancer drug, Keytruda, in 2028. Personally, I see Merck as a strong player in the drug market, and CEO Rob Davis discussed the company’s evolution beyond Keytruda last month.
