Nvidia earnings could be more important for the wider market than the chip maker itself.
There's potential for Nvidia's Wednesday report to take more wind out of the broad rally sparked by President-elect Donald Trump's win at the polls. Disappointing guidance could bring back nerves about elevated valuations, especially in the tech sector.
If there is a problem, it is likely to be that there is so much demand for Nvidia's Blackwell chips it can't ramp up supply fast enough, especially if reported issues with overheating mean a redesign of the servers housing the processors is needed. Such worries have contributed to a small dip in the stock which means Nvidia has just lost its title to Apple as the world's largest company by market value.
Supply issues can be fixed but there is the potential for at least one constrained quarter of Nvidia sales. In a market where short-term money is chasing a small number of artificial-intelligence stocks--just look at the moves in troubled server maker Super Micro Computer or AI software favorite Palantir--that could easily set off a panic.
That's not to say Nvidia itself would be in trouble. The company easily recovered from a dip following its previous earnings report, when guidance underwhelmed the market, and there's always the possibility it could dismiss any supply problems and roar higher. But after Nvidia drove 20% of the S&P 500's return over the past year, any disappointment will reverberate.
-- Adam Clark
***
Offering Tech Companies More Power for Their AI Ambitions
As the tech industry clamors for more power for their artificial intelligence ambitions, Ohio-based utility American Electric Power and Bloom Energy have a deal to use fuel cells to power data centers. The partnership could offer the tech industry a way around the yearslong wait to connect to major electricity grids.
-- AEP is the fifth-largest utility company by market value, and Bloom makes
the fuel cell-based power generating platform. The technology uses a
chemical reaction to convert fuel to electricity. It means the companies
can power a data center even when the transmission grid is too congested.
-- In the Mid-Atlantic and Midwest power grid area where AEP is based, there
is a five- to seven-year backup for projects waiting to plug into the
grid. Bloom's cells can use several fuels. In this case, they'll use
natural gas. Eventually, Bloom expects to use carbon-free hydrogen as
fuel in its cells.
-- Bloom's fuel cells can generate as much as 60 kilowatts of electricity
each and can be stacked together almost like Legos. Four of the cells can
power a Home Depot. AEP will purchase up to one gigawatt of Bloom's fuel
cells, but only has a contract for 100 megawatts now.
-- Shares of Nvidia, which makes chips used in AI data centers, fell after
The Information reported that servers connecting dozens of its Blackwell
AI chips had overheating issues, and that Nvidia had revised its server
rack designs several times. Nvidia told Barron's the engineering
iterations are normal and expected.
What's Next: A full gigawatt is enough to power between 500,000 and one million homes if the power runs constantly. The largest AI data centers being planned today are already over 500 megawatts.
-- Avi Salzman and Janet H. Cho
***
Elon Musk's Businesses Stand to Benefit Under Trump Policies
Tesla stock rose on Monday after Bloomberg reported that President-elect Donald Trump could create a federal framework for self-driving vehicles that would make it easier to get self-driving licenses and let autonomous cars drive across state lines. Potential competitors to Tesla's Cybercab robotaxi are Uber Technologies and Lyft.
-- Wedbush analyst Dan Ives said Tesla CEO Elon Musk's significant influence
with Trump could be a major boost for Tesla's autonomous driving vision.
Musk, a big supporter of Trump during the campaign and advisor during his
transition, has bet Tesla's future on self-driving and artificial
intelligence.
-- Tesla uses AI to train its cars to drive themselves, but its Full Self
Driving mode still requires constant human supervision. Bernstein analyst
Toni Sacconaghi said regulation can't advance or ensure that Tesla's
no-human-required technology will work, adding that consumers and states
will reject the technology if it doesn't work.
-- Trump is widely expected to try to eliminate EV tax credits, which could
discourage consumers from buying an EV over a traditional car or hybrid.
Analysts think that Tesla would be the least affected EV maker because it
has the global scale and cost structure to stay profitable without
credits.
-- Trump's nominee to head the Federal Communications Commission is Brendan
Carr, who wants to end the rules that shield internet platforms like Meta
and Alphabet from liability for user-generated content. Musk owns the
social media platform X, but Carr also favors rules that would expand
Musk's Starlink internet service.
What's Next: Tesla didn't respond to Barron's request for comment about Trump's potential priorities. Musk's other project, a humanoid robot, is finally here in miniature form. Tesla started selling a seven-inch-tall robot action figure for $40. It comes with a charging stand and a mallet-like "CyberHammer."
-- Al Root, Bill Alpert, and Janet H. Cho
***
Tesla Sells Toy Robots. Life-Size Versions Are Coming, Too.
Sometimes you have to start small. Electric vehicle maker Tesla's humanoid robot is finally here--but buyers will have to downsize their expectations a bit.
-- The Tesla Bot Action Figure, which went on sale Friday on the company's
website, is a 7-inch toy rather than the life-size bot. It sells for $40
and comes with a charging stand and a mallet-like "CyberHammer."
-- Like all hot holiday gifts, getting a hold of the toy could be tough. The
action figure sold out immediately, and since then several eBay
advertisements have popped up offering them for $1,000 or more. The toy
"will ship once received from Tesla," one ad notes.
-- Tesla CEO Elon Musk first revealed his plan for a humanoid robot, also
known as Optimus, back in 2021, using a person dressed in a robot suit
dancing onstage. He said on X in July that the full-size Tesla Bots are
expected to go on sale in 2026, and has called Optimus key to his vision
of Tesla solving autonomy.
-- Musk has said that long-term, the Bots will sell for between $20,000 to
$30,000 once they reach scale, making the $40 toy version a relative
bargain.
What's Next: Some analysts say Optimus could eventually account for huge revenue for Tesla. Deutsche Bank analyst Edison Yu wrote in a September note that he expects the company to sell 1.5 million of the life-size bots by 2035.
-- Anita Hamilton
***
As Thanksgiving Holiday Travel Gears Up, Spirit Airlines Files Bankruptcy
This year is shaping up to be another record for Thanksgiving holiday air travel, according to projections by AAA. It expects 5.84 million people to fly domestically, out of a total of 79.9 million people who are expected to travel 50 miles or more from home from the Tuesday before Thanksgiving through the Monday after.
-- Nearly all of those holiday travelers--an estimated 90%--will travel by
car. This year's overall estimate is 2.1% higher than the 78.2 million
AAA projected to travel over the five-day holiday in 2023. Drivers will
see gas prices average below $3 a gallon for the first time since 2021.
-- As for air travel, the domestic flight travel estimate is up 2% from the
same time last year. International flight reservations are up 23%, partly
because ticket prices are down 5%. Domestic and international cruise
bookings are up 20% from Thanksgiving 2023.
-- Discount carrier Spirit Airlines filed for bankruptcy, seeking to
reorganize its debt after failing to merge with Frontier Airlines and
after cutting jobs, scaling back flights, and selling aircraft. A federal
judge in January blocked Spirit's proposed merger with JetBlue Airways on
competition grounds.
-- Jim Corridore, a senior analyst at PitchBook, still sees some hope for
Spirit, given it's lowering its debt and a new Trump administration may
be less hostile to mergers. A deal with a smaller carrier is still
possible, or it could attract a private equity leveraged buyout, he said.
What's Next: Spirit said it expects to keep operating as normal during the bankruptcy process, and said people can book travel and fly without interruption and keep using tickets, credits, and loyalty points just as before. It expects to emerge from bankruptcy proceedings in the first quarter of 2025.
-- Janet H. Cho and Adam Clark
***
As President-elect Heads for White House, Crypto Is Surging
(MORE TO FOLLOW) Dow Jones Newswires
November 19, 2024 06:51 ET (11:51 GMT)
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