📈 AMD Chases Nvidia in AI Race

Good morning.

⚡ The Fast Five → Cicso reports another decline, Grubhub selling for $650M, Burberry launches turnaround, 7-Eleven considers $56B buyout, AMD trims workforce to focus on AI

🔎 Market Trends → Stocks end mixed after inflation data keeps December rate cut in view; US Futures Flat as Post-Election Rally Stalls

And now…

⏱️ Your 5-minute briefing for Thursday, November 14, 2024:

MARKET BRIEF
Before the Open

Pre-Market

Fear & Greed

Markets in Review

Markets Mixed as Inflation Report Lands: Gains for Rivian, Woes for Super Micro

The Dow inched up 0.1%, closing at 43,958.2, while the Nasdaq slipped 0.3% to 19,230.7. The S&P 500 stayed almost flat, finishing at 5,985.4. Consumer discretionary stocks led gains, but communication services saw notable declines.

The Big Picture:

Investors digested October’s inflation data, which met expectations, but it was no sigh of relief for the market. Core inflation, excluding food and energy, held steady at 0.3% month-over-month, marking 3.3% on an annual basis. Despite hopes for easing, inflation’s persistence keeps the Fed in the spotlight.

• Fed rate cuts remain likely, with market odds for a 25 basis-point reduction next month jumping to 82% from 59%.

• Bond yields reacted: the 10-year rose to 4.45%, while the 2-year slid to 4.28%.

• Commodities felt the inflation chill as well, with WTI crude oil dipping 0.1% to $68.07 per barrel and gold dropping 1% to $2,580.90 per ounce.

Market Movers:

• Rivian (RIVN) surged 13.7% on news that Volkswagen increased its planned investment in the electric vehicle maker to $5.8 billion by 2027, boosting confidence in Rivian’s growth trajectory. This expanded partnership cements Rivian's position in the EV race, pushing up its valuation.

• Charter Communications (CHTR) climbed 3.6% as it announced an all-stock acquisition of Liberty Broadband (LBRDA), positioning it for greater market share in broadband. Liberty’s shares, however, took a 4.7% hit on the news. While Charter sees growth potential, Liberty’s dip reflects skepticism over the all-stock deal’s value.

• Super Micro (SMCI) fell 6.3% after announcing delays in filing its quarterly report, unsettling investors and making it the day’s steepest Nasdaq loser. Reporting issues cast doubt over operational transparency, prompting some profit-taking.

What They’re Saying:

"Inflation remains stubborn, challenging the Fed's path to lower rates," noted Dallas Fed President Lorie Logan, while adding that risks still lean toward inflationary pressure.

WHAT WE’RE WATCHING
Events

• Today: 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.

• Today: Fed Chair Powell Speaks - “Global Perspectives” panel at Dallas Fed - 3:00pm

• Why You Should Care: As head of the central bank, which controls short term interest rates, he has more influence over the nation's currency value than any other person. Traders scrutinize his public engagements as they are often used to drop subtle clues regarding future monetary policy.

Earnings Reports

• Today: Disney, Applied Materials, Brookfield, Dillard’s

• Tomorrow: Alibaba, Spectrum Brands, Buckle, Soho House

MARKET BRIEF
Leading News

AMD Trims Workforce, Eyes AI Market Upside

Why it matters:

AMD's workforce reduction is a strategic pivot, aiming to close the AI chip gap with Nvidia, as demand for artificial intelligence accelerators intensifies.

Zoom Out:

AMD (AMD) announced a 4% workforce cut this week, impacting roughly 1,000 of its 26,000 global employees. The move signals AMD’s focus on positioning itself as a major player in the booming AI chip industry, dominated by Nvidia (NVDA), whose stock has soared over 200% this year, dwarfing AMD’s performance.

The cuts come as AMD's gaming revenue shrinks, a segment once core to its growth but now struggling amid weaker consumer demand. Instead, AMD is betting big on AI accelerators, particularly for data centers, where its MI300X chips are gaining traction with major players like Meta (META) and Microsoft (MSFT).

Despite Nvidia’s 80% market share in AI chips, AMD is forecasting $5 billion in AI chip sales for 2024, indicating an aggressive push to capture more of this rapidly expanding market. By 2028, the global AI chip market could hit $500 billion—a prize AMD isn’t willing to ignore.

Deep Dive:

• Strategic Shift: AMD’s layoffs target underperforming areas, freeing up resources for AI innovation. CEO Lisa Su sees AI as one of the "largest growth opportunities," where AMD’s chips can complement Nvidia's ecosystem.

• Market Dynamics: Nvidia’s dominance stems partly from its proprietary software stack, widely adopted by AI engineers. While AMD lacks this software edge, its hardware is gaining ground in cost-sensitive enterprises seeking alternatives.

• Growth Metrics: AMD’s server CPU sales climbed to 34% market share in Q3, boosting its data center credibility as it competes with Intel (INTC).

Market Pulse:

"We’re aligning our resources to seize our largest growth opportunities," an AMD spokesperson stated, emphasizing the company’s commitment to “helping impacted employees through this transition.”

Bull’s Take:

AMD’s restructuring is a calculated play to scale in the AI chip market. While it faces stiff competition, AMD’s expanding reach in data centers and potential to tap AI growth could reward long-term investors.

Headlines

• Cisco reports fourth straight quarter of declining revenue (link)

• Grubhub selling to Wonder in $650 million deal (link)

• Burberry launches urgent turnaround plan to save the brand (link)

• Greg Maffei Exits Role as CEO of F1 Owner Liberty Media (link)

• 7-Eleven owner considering US$58 billion management buyout (link)

• GM to recall nearly 80,000 vehicles over transmission issues, NHTSA says (link)

• Boeing starts issuing layoff notices as planemaker trims 10% of workforce (link)

• Amazon's Secret Fertility Tracker Project Launched Under Jeff Bezos Reportedly Halted Amid CEO Andy Jassy's Cost-Cutting Drive (link)

CRYPTO
Fear & Greed

Headlines

• Institutions Go All In on Crypto: Sygnum Survey Reveals 57% Respondents Plan to Boost Allocations (link)

• Polymarket CEO's Home Is Raided by FBI (link)

• DeFi Technologies aims to replicate MicroStrategy's success with upcoming CoreFi Strategy launch (link)

DAILY SHARE
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