Welcome to the OP Wire, where we break down the key stories driving markets this week. From corporate earnings to geopolitical developments, here’s what you need to know.
Nvidia’s Q3 Earnings: A Bellwether for AI and Tech Sentiment
Chipmaker Nvidia (NASDAQ), a leader in the artificial intelligence (AI) space, is set to release its third-quarter earnings after the market close on Wednesday. Nvidia has been a driving force behind this year’s AI craze, with shares skyrocketing over 200% in 2024, recently surpassing Apple (NASDAQ) to become the world’s largest company by market capitalization.
Analysts project Nvidia will report a staggering 80% increase in revenue, reaching $32.9 billion. However, recent reports suggest that the company’s new Blackwell AI chip is encountering overheating issues when connected in customized server racks. Nvidia is working with suppliers to redesign these racks to address the problem.
Blackwell, which was already delayed by a quarter due to earlier design flaws, remains under scrutiny as Nvidia looks to maintain its dominance in the AI chip market. The earnings report will be pivotal not only for Nvidia but also as a gauge of investor sentiment towards tech stocks and the broader AI trade.
US Markets: Mixed Start to the Week
U.S. stock futures are trading mixed as investors digest a post-election market rally that appears to have stalled. Last week, the three major indices retreated from recent highs after Federal Reserve Chair Jerome Powell reiterated that the central bank is “not in a hurry” to cut interest rates further.
Other Key Earnings to Watch:
– Walmart (NYSE): Expected to provide insights into consumer spending habits as the holiday season approaches.
– Lowe’s Companies (NYSE): Will shed light on trends in home improvement spending.
With 93% of S&P 500 companies having reported earnings so far, 75% have delivered positive earnings surprises, while 61% have beaten revenue expectations, according to FactSet.
Federal Reserve Speakers on Deck
This week, investors will hear from several Federal Reserve officials, including:
– Austan Goolsbee (Chicago Fed President)
– Jeffrey Schmid (Kansas Fed President)
– Beth Hammack (Cleveland Fed President)
Their comments could provide additional clarity on the Fed’s monetary policy trajectory heading into 2024.
Bitcoin Above $90K: Momentum Continues Post-Election
Bitcoin, the world’s largest cryptocurrency, remains above $90,000, trading at $91,996 as of Monday morning. This marks a 30% gain since November 5, buoyed by optimism over President-elect Donald Trump’s pro-crypto stance. Trump has pledged to establish a national Bitcoin reserve and position the U.S. as a global hub for the industry.
Cathie Wood of ARK Invest reiterated her bullish outlook on Bitcoin, forecasting a 2030 price target of $650,000 in a base case and up to $1.5 million in a bull case.
OptionsPlayers Take: With regulatory relief on the horizon, Bitcoin and other cryptocurrencies are poised for significant growth. Join the OP Crypto Chat to learn about stacking this asset class—free trials are available now!
Oil Prices Slip Amid Geopolitical Tensions
Crude prices edged lower Monday, erasing earlier gains. Fighting between Russia and Ukraine intensified over the weekend, with reports suggesting that the Biden administration has authorized Ukraine to use U.S.-made weapons for deep strikes into Russia.
While the war has had limited impact on Russian oil exports, further escalation targeting oil infrastructure could disrupt global markets. Last week, crude prices fell over 3% due to weak Chinese economic data and an International Energy Agency report forecasting a supply glut by 2025.
Final Thoughts
With Nvidia’s earnings, Bitcoin’s momentum, and a busy week of Fed commentary, this week offers plenty of opportunities for OptionsPlayers members to navigate the markets and stack their gains. Stay tuned for updates in our chatrooms and live sessions as we track these market-moving events.
$DIS- Evercore ISI raised the firm’s price target on Disney to $134 from $128 and keeps an Outperform rating on the shares. Management “surprised the Street” with its Q4 print by rolling out of “detailed and healthy” multi-year guidance that calls for adjusted EPS to grow high-single digits in FY25, implying roughly $5.30-$5.45, and double digit growth in both FY26 and FY27. Taking the very low-end of management’s targets implies $6.40 in EPS in FY27, matching the pre-release consensus, but assuming the rough mid-point for FY25 and low-teens growth in FY26 and FY27 gets to $7 of earnings in FY27, the analyst noted.
$PANW- Rosenblatt raised the firm’s price target on Palo Alto Networks to $390 from $345 and keeps a Neutral rating on the shares. The firm says its feedback from the channel indicates a solid quarter for the company. Despite Palo Alto’s steady performance, the current valuation “presents a challenging entry point,” the analyst tells investors in a research note.
$WMT- Piper Sandler raised the firm’s price target on Walmart to $93 from $83 and keeps an Overweight rating on the shares. Heading into the print, the firm raises its Q3 comparable sales estimate to +4% year-over-year as it believes falling gas prices during the quarter were helpful to low/middle income spending. For Q3, early Black Friday sales cadence seems relatively similar to last year, so Piper doesn’t expect promotional activity to significantly sway gross margin one way or the other.
$TSLA- Barclays analyst Dan Levy raised the firm’s price target on Tesla to $270 from $235 and keeps an Equal Weight rating on the shares. The post-election rally in the shares is largely on a stronger narrative and technical factors as Tesla’s fundamentals are relatively unchanged, the analyst tells investors in a research note. The firm says the company’s “Elon Premium” is a key portion of the share rally, exacerbating its “key man risk.” The Trump administration policy changes are likely neutral-to-negative for Tesla’s auto and energy business, but beneficial to its to autonomous vehicle efforts, contends Barclays.
Nvidia (NVDA): Nvidia is facing overheating issues with its Blackwell graphics processing units for AI when used in customized server racks. The company has asked suppliers to redesign the racks multiple times, highlighting ongoing technical challenges with the much-anticipated GPUs.
CareMax (CMAX): CareMax plans to sell its management services organization and core centers’ assets through a prearranged Chapter 11 bankruptcy plan. The restructuring is fully supported and funded by its current secured lenders.
Netflix (NFLX): The Jake Paul vs. Mike Tyson boxing match streamed live on Netflix, attracting 60 million households worldwide and peaking at 65 million concurrent streams. However, the event faced technical issues, with many users reporting problems accessing the livestream.
Spirit Airlines (SAVE): Spirit announced plans to restructure its debt, potentially wiping out existing shareholders. Despite its financial troubles, the airline stated that customers wouldn’t be affected. Analysts suggest the election of Donald Trump could favor the airline industry, with less focus on anti-monopoly regulations.
Box Office – “Red One”: Amazon’s Christmas movie “Red One,” starring Dwayne Johnson and Chris Evans, led the North American box office with $34.1 million. Globally, it has earned $84.1 million. Amazon chose an early overseas release to avoid competition with Paramount’s “Gladiator II,” which debuted internationally this weekend
NQ – Last week we said “Buyers are now in control of this tape following a 6-week range. Does the setup have legs for a continuation move?… If sellers succeed in defending the 21200 prior all-time high, price can retest 21000, 20775, and 20500.” Coming into the week, our focus was on how price responded to that prior all-time high at 21200. Monday was characterized by a “gap and flop”, and following that session, the index failed to show real acceptance above key 21200 level, eventually rolling over with a weekly low being marked at the 20405 level.
For this week, the main focus will be how price responds to the 20450 level, where heavy volume concentrated from the prior 6-week range. If buyers step in to defend this high volume node, price will target 20700, 21000, and 21200. If sellers continue to show strength, price can show follow through into 20200, 20000, and 19700.
Quick Reference:
Upside levels of interest: 20700, 21000, 21200
Downside levels of interest: 20200, 20000, 19700
Notable Economic Data
– Thursday: Jobless Claims
– Friday: Michigan Consumer Sentiment
Notable Earnings
– Wednesday: NVDA
See you all in OP Chat where we inch closer to the much anticipated State of OptionsPlayers letter with its LONG PLAYS and Plans for 2025!
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