📈Super Micro's $40B Fever Dream

Google and SoftBank pour $230M into QuEra, Elliot builds $2.5B stake in Phillips 66, Tesla drops 6%, Anduril and Microsoft partner on program for U.S. Army, SuperMicro cuts outlook and sets big future target

Author

Evelio Silvera
February 12, 2025

In partnership with

Good morning.

⚡ The Fast Five → Google and SoftBank pour $230M into QuEra, Elliot builds $2.5B stake in Phillips 66, Tesla drops 6%, Anduril and Microsoft partner on program for U.S. Army, SuperMicro cuts outlook and sets big future target

🔎 Market Trends → Wall Street ends mixed as Coca-Cola gains and Tesla drops; US Futures Flat Ahead of Key Inflation Data

And now…

⏱️ Your 5-minute briefing for Wednesday, February 12, 2025:

MARKET BRIEF
Before the Open

As of market close 02/11/2025.

Pre-Market

  • DuPont de Nemours shares jumped 6.9%, the top gainer on the S&P 500.

  • Fidelity National Information Services shares sank nearly 12%, the steepest decline on the S&P 500.

Fear & Greed

 

Markets in Review

Powell Signals Patience as Markets Await Inflation Data

The Nasdaq fell 0.4% to 19,643.9, while the Dow rose 0.3% to 44,593.7. The S&P 500 held steady at 6,068.5 as investors weighed Fed Chair Jerome Powell’s comments on monetary policy ahead of key inflation data.

The Big Picture:

With the economy still humming, Powell made it clear: the Fed isn’t in a rush to cut rates. Speaking to the Senate Banking Committee, he emphasized the risks of moving too quickly or too slowly—suggesting policy flexibility remains intact.

Markets are now focused on Wednesday’s consumer price index (CPI) report, expected to show a 0.3% monthly rise in inflation, following December’s 0.4% increase. Year-over-year inflation is projected at 2.9%, unchanged from the prior month.

Meanwhile, the 10-year Treasury yield climbed 4.2 basis points to 4.54%, and the 2-year yield edged up 2.2 basis points to 4.29%. Oil rose 1.2% to $73.17 per barrel as supply concerns lingered.

Market Movers:

  • Fidelity National Information Services (FIS) slid nearly 12%, the worst S&P 500 performer, after the fintech firm’s Q4 revenue and 2025 outlook disappointed.

  • Tesla (TSLA) fell 6.3%, the worst performer on the Nasdaq, as concerns about slowing EV demand weighed on sentiment.

  • DuPont (DD) jumped 6.9%, topping the S&P 500, as the materials giant beat earnings estimates and forecasted organic revenue growth in 2025.

  • Coca-Cola (KO) climbed 4.7%, the best performer on the Dow, after strong Q4 results and a bullish 2025 outlook fueled by pricing power and solid demand.

What They’re Saying:

"With monetary policy on hold, fiscal uncertainty rising, and trade policy taking center stage, expect business sentiment to remain constrained," TD Economics noted.

WHAT WE’RE WATCHING
Events

  • Today: Bureau of Labor Statistics - CPI Ex Food and Energy m/m - 8:30am

  • Why You Should Care: Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.

  • Today: Bureau of Labor Statistics - Consumer Price Index m/m - 8:30am

  • Why You Should Care: Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.

  • Today: Bureau of Labor Statistics - Consumer Price Index y/y - 8:30am

  • Why You Should Care: Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.

Earnings Reports

  • Today: CVS Health, Robinhood, Reddit, The Kraft Heinz Company, Cisco, CME Group, Barrick

  • Tomorrow: Unilever, Sony Corporation, John Deere, Duke Energy, Airbnb, Republic Services, Coinbase, Pacific Gas and Electric Company

MARKET BRIEF
Leading News

AI Server Giant's $40B Moonshot Raises Both Eyebrows and Hopes

Why it matters:

Super Micro's (SMCI) ambitious revenue target signals a potential paradigm shift in AI infrastructure demand, though accounting concerns cast a shadow over this otherwise dazzling growth story.

Zoom Out:

In a plot twist worthy of a Silicon Valley thriller, Super Micro Computer has unveiled a $40 billion revenue target for fiscal 2026 – a figure that makes current Wall Street estimates look quaintly conservative. The announcement came amid a peculiar earnings kabuki: the same day management trimmed near-term guidance, sending traders on a white-knuckle ride.

The company's liquid-cooling technology for data centers – think of it as a Ferrari's cooling system for the AI age – sits at the heart of this bold projection. With tech giants pledging a collective $320 billion for AI infrastructure in 2025, Super Micro's expansion plans might be less pie-in-the-sky than they appear at first blush.

Key Insights:

  • The Auditor Exodus: The departure of Ernst & Young and subsequent hiring of BDO USA reads like a red flag, but management's "confident" stance about meeting SEC deadlines suggests the accounting drama may have a happier ending than shorts expect

  • AI's Plumbing Play: Super Micro's servers, powered by Nvidia (NVDA) chips, represent the vital infrastructure behind the AI gold rush – similar to how Levi Strauss outfitted prospectors during the actual Gold Rush

  • The Growth-Trust Paradox: While the slashed 2025 guidance ($23.5B-$25B) might spook investors, it potentially sets up more achievable targets – a classic "under-promise, over-deliver" strategy

Market Pulse:

"The AI infrastructure buildout is still in its early innings," notes CEO Charles Liang, whose measured optimism suggests the $40B target "may prove conservative."

Bull’s Take:

Despite legitimate governance concerns, Super Micro sits at the intersection of two powerful trends: soaring AI adoption and the shift toward liquid-cooled data centers. For investors willing to stomach near-term volatility, this infrastructure play offers exposure to AI's meteoric rise without betting directly on the technology's winners and losers.

Headlines

  • Google, SoftBank Pour $230M into Quantum Computer Startup QuEra (link)

  • Elliott builds more than $2.5B stake in Phillips 66, wants it to sell or spin off midstream unit (link)

  • Juniper Networks denies allegations in US DOJ lawsuit to block $14 billion merger with HPE (link)

  • Anduril and Microsoft partner to advance Integrated Visual Augmentation System (IVAS) program for the U.S. Army (link)

  • Tesla drops 6% after BYD partners with DeepSeek, Musk adds to DOGE distractions with OpenAI bid (link)

  • Key takeaways from Fed Chair Jerome Powell’s congressional hearing (link)

CRYPTO
Fear & Greed

 

Headlines

  • Goldman Sachs doubles down on Bitcoin ETFs, boosting holdings to $1.5 billion in Q4 2024 (link)

  • Fed Chair Powell calls for ‘fresh look’ at debanking amid crypto industry concerns (link)

  • Binance and SEC file joint motion to halt legal dispute for 60 days (link)

DAILY SHARE
On the Socials

*Hat-tip to cryptosum_

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