Breakfast News: Global Chip War Escalates
December 10, 2024
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Source: Image created by Jester AI.
1. Nvidia Targeted by China
Chinese regulators have opened an investigation into Nvidia (NVDA -0.02%) over potential anti-monopoly violations, in a blow from a country contributing 15% of its revenue as of Q3. The stock fell 2.5% yesterday as a result.
- “This probe appears to be a political action rather than a legal one”: According to a Chinese antitrust expert quoted by the Financial Times, the state media never takes the lead in announcing such an investigation. This potential retaliatory action comes after the U.S. announced harsher export controls on chips to the country.
- A Superscore of 99: Currently, Nvidia tops The Motley Fool’s Moneyball rankings (even after its 3 Stock Advisor recs are beating the S&P 500 by 5,252%, 36,199%, and 86,511%). In fourth place, with an ‘overall strength’ Superscore of 93, is Alphabet (GOOG -0.67%). Speaking of which…
2. Google Reveals ‘Best-in-Class’ Chip
Alphabet has unveiled a new quantum computing chip, which has the ability to solve in minutes problems that take super computers millions of years.
- The "best quantum processor built to date": The chip, dubbed Willow, is the latest development in this area and stands above the rest, according to Hartmut Neven, Google's Quantum AI lab leader. However, it’s still years away from being able to carry out commercial operations.
- The next frontier: Alphabet isn’t the only company investing in quantum computing. Governments, venture capitalists, and other tech companies are putting billions to work, in a bid to gain a future edge.
3. Different Fortunes for SaaS Giants
Software-as-a-service (SaaS) businesses are reporting mixed results this earnings season, but there’s clear demand for AI-driven products in the sector.
- Year-over-year growth but short of forecasts: Oracle (ORCL 0.69%) is down almost 8% in pre-market trading after Q2 results that marginally missed expectations for both revenue and earnings per share. However, strength in AI-powered cloud solutions helped to push up cloud revenue by 24% versus last year.
- Results ahead of own guidance: MongoDB (MDB 1.11%) posted double-digit percentage growth in revenue and earnings. The company released an updated database software with new AI features during its Q3, flagged as being a key tool to help win over new customers.
4. What to Watch on Tuesday
Stitch Fix (SFIX 2.71%) and Dave & Buster’s Entertainment (PLAY -0.34%) are both set to release earnings after the closing bell.
- Making progress: Stitch Fix will be aiming to show better client retention than fiscal Q4, alongside further measures to help boost revenue. Although analysts expect it to report a loss, it should be smaller than the previous quarter.
- Finger on the retail pulse: Dave & Buster’s earnings will provide an insight into what is a challenging consumer environment in retail right now. Yet forecasted revenue is only expected to fall slightly, largely thanks to improved pricing strategies. The Rule Breakers stock has been treading water since the original 2015 recommendation.
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