Nvidia adds $277 billion in market cap

Nvidia’s impressive quarterly results not only propelled the S&P 500 and Dow Jones to record highs but also drove the Nasdaq Composite above 16,000 for the first time since November 2021. With Nvidia’s shares soaring over 16% after reporting robust earnings, the technology sector experienced significant gains, sparking speculation about the market’s next move post-Nvidia. Additionally, Nvidia’s performance had a positive impact on global markets, contributing to the Stoxx 50 index surging 1.7% to reach a 23-year high of 4,855, fuelled by strong corporate earnings and positive economic data. 

Summary for 23.02.2024 

• Most Asian equities climbed this morning, driven by the tech sector’s surge fuelled by optimism surrounding artificial intelligence and robust earnings from Nvidia. Japanese markets were shut for a holiday. Chinese shares extended their rally into a second week, supported by government initiatives to bolster the economy and signs of improved consumer spending. 
• European shares are set to open flat after reaching record highs, with a focus on Germany’s GDP data and earnings from Deutsche Telekom, Allianz, and BASF. Meanwhile, US equity futures remained steady after Nvidia’s surge led the S&P 500 and Nasdaq Composite to new records, while Carvana and Block saw significant gains in extended trading. 
• Oil futures remained stable on Friday, showing little change for the week. Initially, concerns over higher interest rates and demand uncertainties led to a dip, but prices rebounded on geopolitical tensions in the Middle East and lower-than-expected US crude inventories reported by the EIA. 
• Three top Federal Reserve officials hammered home the message Thursday that the US central bank is still on track to cut interest rates this year — just not anytime soon. Fed Vice Chair Philip Jefferson and Governor Lisa Cook said they’re optimistic inflation is still cooling despite a blip in January but made clear they want more evidence it’s headed back to their 2% target before lowering borrowing costs. Governor Christopher Waller said January’s jump in consumer prices warrants caution in deciding when to start cutting rates. 
• China’s new home prices continued to decline, dropping by 0.7% year-on-year in January, marking the seventh consecutive month of decrease. Prices fell at an accelerated rate in some major cities despite government efforts to address the property downturn, with monthly prices also showing a slight decline. 
• UK consumer confidence slipped back in February, suggesting households are not ready to splash out despite growing signs that the economy has emerged from its shallow recession. GfK said its key sentiment indicator dropped 2 percentage points to minus 21, ending a three-month run of improvements. Economists surveyed by Bloomberg had expected a reading of minus 18 on average. 
• S&P Global Ratings revised its forecast for US real GDP growth, now expecting a 1.6% rise from Q4 2023 to Q4 2024, up from 0.8%. The 2024 projection increased to 2.4% from 1.5%, aligning with the 2010-2019 average. The agency cites stronger-than-expected Q4 2023 GDP and a resilient job market for the adjustments. 
• Carvana announced its first-ever annual profit, attributing it to a $1 billion debt reduction pact with bondholders. Market reaction was positive, with shares surging by a fifth in after-hours trading.  The company foresees a significantly higher adjusted core profit for Q1, expecting retail units sold to increase slightly from the previous year. Retail gross profit per unit surged in Q4. 
• Block exceeded expectations in Q4, reporting a revenue of $5.77 billion, mainly driven by Cash App’s performance, with revenue hitting $3.91 billion. The company raised its full-year guidance for 2024, expecting adjusted operating income of at least $1.15 billion and adjusted EBITDA of at least $2.63 billion. Market reaction was positive, with shares up more than 13% in after-hours trading. 
• Moderna reported an unexpected fourth-quarter profit, buoyed by cost-cutting measures and deferred payments, with shares rising over 14%. The company outlined plans for its vaccines in Europe and an experimental RSV shot. Despite a decline in COVID vaccine sales, it aims for growth with upcoming vaccine approvals and launches. 
• Reddit has filed for an initial public offering with the SEC, aiming to debut on the New York Stock Exchange under the ticker symbol “RDDT.” Founded in 2005, the social media platform plans to launch its IPO in March. For the year ending Dec. 31, 2023, Reddit reported a narrowed loss of $1.54 per share and increased revenue to $804 million. 
• Nikola Corporation reported Q4 results with a narrower-than-expected loss per share but missed revenue estimates, causing a slight dip in its shares. Despite this, it delivered 35 hydrogen fuel cell electric trucks, ended with a solid cash balance, and progressed in modular fueller deployment. Investors remain cautious amid mixed performance and strategic advancements. 
• Vale, a major Brazilian miner, reported a 35% decline in fourth-quarter net profit, falling short of analyst expectations due to increased provisions related to the Samarco joint venture and higher taxable income. Despite this, recurring EBITDA grew 37%, and sales revenue rose over 9%, prompting a positive response from analysts. 
• Mercedes-Benz shares rose nearly 5% yesterday after Q4 results, with net profit at €3.16 billion surpassing estimates. Despite fewer vehicle sales, revenue dipped 1.8%. For 2024, stable revenue is expected, but lower EBIT and FCF. The company raised its dividend and announced a €3 billion buyback program. Additionally, it postponed its electrification goal by five years, emphasising commitment to combustion engine models. 
• AXA reported slightly lower-than-expected yearly earnings, attributing it to increased debt costs and technology investments. However, the insurer’s share price rose nearly 3% as it unveiled a new strategic plan, aiming to return up to €6 billion to shareholders in 2024 through dividends and share buybacks, focusing on core business growth. 
• Standard Chartered reported a stronger profit for 2023, driven by higher interest rates, with underlying profit before tax up 22% to $5.68 billion. Despite announcing a $1 billion buyback, the bank downgraded its income outlook for 2024, citing economic risks from inflation and geopolitical instability. 
• Lloyds Banking Group reported a significant increase in pretax profit for 2023 to £7.5 billion. However, its share price dropped 1.7% as it allocated £450 million for potential costs related to a regulatory review into motor finance. The bank’s provision for unpaid loans decreased, indicating greater confidence in the UK economy. 
• Rolls-Royce reported annual profit more than doubling in 2023, surpassing consensus, and anticipates further growth in 2024. Strong performance under CEO Tufan Erginbilgic, driven by cost savings and pricing strategies, led to a 200% increase in shares in 2023. The company aims to become a higher-margin business, forecasting at least a 6% rise in underlying operating profit for the current year. 

• Danone and Nestle announced they would slow price increases in 2024 after two years of hikes, aiming to offset rising input costs. Unilever also signalled easing price hikes. Inflation pressures, attributed to supply chain disruptions and geopolitical events, have led to spats between companies and retailers, prompting a shift towards marketing and innovation focus. 
• Both Bernstein and Melius upgraded Nvidia’s price target to $1,000, with Bernstein maintaining an Outperform rating and Melius keeping a Buy rating. Bernstein’s upgrade follows Nvidia’s Q4 results surpassing estimates, highlighting strong data centre performance and positive guidance. Melius cites a positive revenue outlook and CEO confidence in Data Centre revenue growth for their bullish stance.  Additionally, KeyBanc Capital Markets raised Nvidia’s target to $1,100, maintaining an Overweight rating, driven by robust Data Centre revenue growth and supply improvements, emphasising Nvidia’s leadership in the semiconductor industry. 
• Rivian Automotive faced multiple rating downgrades after disappointing earnings and production guidance. JPMorgan analysts downgraded the shares to Underweight, citing concerns over backlog, growth, pricing, and margin, with a lowered price target of $11. CFRA Research also downgraded the company to Sell, slashing the price target to $10, citing higher-than-expected costs and a weak demand outlook. 
• DoorDash received an upgrade to Overweight from Morgan Stanley, with a price target increase to $145 from $135 per share. Analysts cited strong growth prospects, particularly in the restaurant and grocery sectors, predicting better-than-expected free cash flow driven by leading growth and profit execution. They view the recent pullback as an attractive entry point. 
• UBS downgraded Capgemini SE from Buy to Neutral while raising the price target to €235. Despite management’s optimistic outlook for recovery by 2025, UBS cited concerns about growth hitting a low in Q1 and emphasised factors like workforce reduction and margin targets, leading to a conservative growth estimate for 2025.