📈 Amazon's Bold Chip Play

Good morning.

⚡ The Fast Five → US plans to reduce Intel's $8.5B grant, Warren Buffet's $325B cash pile, Retailers squeeze earnings before Black Friday, Bill Ackman bets on a consumer stock, Amazon takes on Nvidia

🔎 Market Trends → Wall Street closes higher after business activity data; US Futures Rise to Begin Holiday-Shortened Week

And now…

⏱️ Your 5-minute briefing for Monday, November 25, 2024:

MARKET BRIEF
Before the Open

Pre-Market

Fear & Greed

Markets in Review

Dow Hits Record High as Economic Optimism Lifts Markets

The Dow Jones Industrial Average surged 1% to 44,296.5, a record close. The S&P 500 gained 0.4% to 5,969.3, and the Nasdaq inched up 0.2% to 19,003.7, with industrials leading the pack while tech and utilities lagged.

The Big Picture:

Investors cheered a mix of bullish economic signals, pushing the Dow to fresh highs. Private-sector output hit its highest level since April 2022, driven by resilient services activity, even as manufacturing remains under pressure.

Inflation fears eased as S&P Global's data suggested price growth is cooling, with consumer inflation potentially falling below the Federal Reserve’s 2% target. Meanwhile, consumer sentiment improved, and inflation expectations hit their lowest mark since December 2020—a sign that households feel increasingly optimistic.

In commodities, WTI crude oil rose 1.6% to $71.22/barrel, buoyed by geopolitical tensions and uncertainty around OPEC’s production strategies. Gold and silver gained 1.4%, reflecting modest safe-haven demand amid global unease.

Market Movers:

• Boeing (BA) soared 4.1%, topping the Dow, after securing a $2.38 billion contract for 15 KC-46A tankers. This contract solidifies Boeing’s defense portfolio amid ongoing challenges in commercial aviation.

• Copart (CPRT) surged 10.2% after reporting a strong fiscal Q1, reflecting robust demand in auto auctions. Shares are up 40% YTD, as Copart continues capitalizing on supply chain recovery in the used car market.

• Intuit (INTU) fell 5.7%, leading S&P 500 decliners, after issuing a downbeat Q2 outlook that disappointed Wall Street.

• Palo Alto Networks (PANW) dropped 3.6%, hurt by a downgrade from HSBC citing valuation concerns.

What They’re Saying:

“Inflation appears to be running well below the Fed’s target, signaling more breathing room for consumers and policymakers alike,” explains Chris Williamson of S&P Global Market Intelligence.

WHAT WE’RE WATCHING
Events

• Thurs. Nov 27: Dept. of Labor - Unemployment Claims - 8:30am

• Why You Should Care: Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country's monetary policy.

Earnings Reports

• Today: Agilent, Zoom, Bath & Body Works, Fluence Energy

• Tomorrow: Dell, CrowdStrike, Workday, Autodesk, HP, Best Buy, Burlington, Dick’s

MARKET BRIEF
Leading News

Amazon's Bold Chip Play: Taking on Nvidia in the AI Arms Race

Why it matters:

Amazon’s push to rival Nvidia (NVDA) in AI chips could reshape the $100 billion+ market, reducing reliance on a dominant supplier while driving innovation in the cloud industry.

Zoom Out:

Amazon (AMZN) is no stranger to ambitious projects, and its latest moonshot aims to challenge Nvidia's iron grip on the AI chip market. With Trainium2, Amazon is leveraging its cloud computing dominance and custom chip expertise to build hardware that powers the next wave of generative AI. While Nvidia remains far ahead, Amazon’s strategy is a bet on cost-efficiency, performance, and tighter integration into its cloud ecosystem.

Trainium2 is more than a silicon gamble—it’s a play to secure AWS’s position in the fast-evolving AI landscape, cutting dependency on Nvidia and improving profit margins. But creating chips is only part of the challenge. Building robust software that competes with Nvidia's seamless ecosystem will determine whether Amazon’s gamble pays off.

Deep Dive:

• Trainium2 Performance: Amazon claims its latest chip delivers 30% better performance per dollar than Nvidia’s offerings, a critical metric as cloud customers seek affordable solutions to train AI models.

• High Stakes for AWS: By moving AI workloads onto its proprietary chips, Amazon can free up scarce Nvidia GPUs for high-value projects, giving AWS a competitive edge.

• Software Is the Linchpin: Nvidia’s dominance stems from its user-friendly tools. Amazon's Neuron SDK, still nascent, must bridge this gap to gain traction among developers.

Market Pulse:

"We’re strongly of the view that we can produce a part that competes toe to toe," says James Hamilton, an Amazon engineering leader.

Bull’s Take:

Amazon’s proven track record in disrupting hardware markets (e.g., Graviton CPUs) positions it well to challenge Nvidia in the long run. For investors, this is a signal that Amazon is doubling down on its AI and cloud ambitions—a bullish sign for its AWS-driven growth narrative. Keep an eye on Amazon’s AI chip developments. If Trainium gains adoption among AWS’s top customers, it could signal a significant shift in the cloud computing landscape—and provide a long-term catalyst for Amazon’s stock. NVDA investors should also watch for signs of market-share erosion.

Headlines

• US plans to reduce Intel's $8.5 billion federal chips grant below $8 billion (link)

• Is Warren Buffett Preparing For A Market Downturn (link)

• Software company providing services to US and UK grocery stores says it was hit by ransomware attack (link)

• More retailers squeeze in earnings reports before Black Friday with holidays and tariffs in focus (link)

• Billionaire Bill Ackman makes big bet on major consumer stock (link)

• SEC issues summons for Gautam Adani, nephew on bribery allegations (link)

CRYPTO
Fear & Greed

Headlines

• Crypto liquidations cross $500 million in past day as bitcoin's price falls to $96,000 (link)

• As BTC nears $100K, keep an eye on Thanksgiving (link)

• Will there be a Solana ETF by the end of 2025? (link)

DAILY SHARE
On the Socials