Market Update for Tuesday, June 9th
1. U.S. stocks appear poised to increase, particularly for the S&P 500 and Nasdaq, as they aim to bounce back following Friday’s steep losses. The drop in oil prices and bond yields seems to be supporting stock values. However, I can’t shake off my worries about the significant influx of equity from the upcoming SpaceX IPO and others, along with the sale of major stocks meant to cover AI expenditures.
2. SpaceX products are generating considerable interest. A report from Bloomberg indicated that various institutional investors have placed orders totaling $10 billion, which means it’s greatly oversubscribed. While institutional orders are set to close after the market’s close on Wednesday, retail investors will still have the opportunity to place their orders afterward. SpaceX shares are expected to start trading on Friday.
3. OpenAI has made a move into IPO territory quietly. The minds behind ChatGPT revealed a valuation of $852 million that they calculated back in March. To me, this feels like it’s setting the stage for a valuation exceeding $1 trillion. We discussed how club members should consider future opportunities presented by OpenAI, SpaceX, and Anthropic.
4. The Financial Times noted that Anthropic secured a whopping $35 billion in debt from Apollo Global Management and Blackstone to support its ambitions in artificial intelligence. This funding will enable the startup to acquire the chip developed by Google. Anthropic filed its IPO paperwork just last week.
5. TD Cowen has revised Alphabet’s price target upwards, from $450 to $475. Analysts believe that market expectations will increase in the upcoming quarters, anticipating consistent growth in Google Cloud’s profit margins. Still, they worry about potential dilution from the company’s intention to sell $85 billion worth of stock.
6. Bloomberg also reported that Amazon has sold $10 billion of Canadian dollar high-grade corporate bonds, marking the largest ever Canadian dollar-denominated corporate bond issue. Is that all Amazon really needed? Meanwhile, Oracle is due to report its earnings tomorrow evening.
7. In another development, China is looking at a massive investment of $295 billion over the next five years to establish AI data centers nationwide. This move is part of a broader strategy to enhance its competitiveness against the U.S., focusing on building interconnected digital hubs that would broaden access to computing resources.
8. UBS anticipates that Micron will announce its earnings significantly ahead of its guidance, thanks to improved pricing. They have upheld a buy rating and set a price target of $1,625. Micron is slated to release its quarterly results on the night of June 24th.
9. Apple’s stock is still facing pressure this morning. Following the announcement of AI upgrades to Siri at its developer conference, the company’s shares dipped into the negative territory. Nevertheless, Morgan Stanley has raised its price target for Apple from $330 to $360.
10. Lastly, GSK revealed intentions to purchase the U.S. pharmaceutical company Nuvalent for $10.6 billion, which resulted in a nearly 39% surge in Nuvalent’s stock. The club has positions in both Eli Lilly and Johnson & Johnson, which I feel positive about. The healthcare sector hasn’t been in favor this year, yet both Lilly and J&J have managed to outperform expectations.
