Podcast Summary
AI chip releases: NVIDIA and AMD are releasing new AI chips, with NVIDIA planning for Blackwell Ultra and Ruben in 2026, AMD's Instinct MI325X in Q4 2024, and fifth-gen EPIC processors previewed. Goldman Sachs and BFA remain bullish on NVIDIA, while AMD's MI300X poses a threat to NVIDIA's data center dominance.
NVIDIA and AMD, two major chipmakers, are making significant strides in artificial intelligence (AI) technology with their upcoming chip releases. NVIDIA announced plans for the Blackwell Ultra chip and the Ruben platform in 2026, while AMD introduced the AMD Instinct MI325X accelerator, scheduled for release in Q4 2024, and previewed its fifth-gen AMD EPIC processors. These developments come as Goldman Sachs and BFA maintain their bullish stance on NVIDIA, with price targets of $1,500 and $1,320, respectively. However, AMD's MI300X is already seen as a competitive threat to NVIDIA's dominance in data centers. Meanwhile, the NYSE faced a technical issue that triggered volatility halts in several stocks, including Chipotle and Berkshire Hathaway, causing significant market movements. Despite this, the major averages remained relatively stable, with energy being the biggest declining sector due to a sell-of-the-news reaction to OPEC's production decision and slumping oil prices. The ISM Manufacturing Index unexpectedly fell to 48.7, missing the forecasted rise to 49.8, with only the employment component showing strength.
Treasury yields, ISM, commodities: The drop in 10-year Treasury yield can be attributed to the ISM report and falling commodity prices, particularly soybeans. JP Morgan suggests investing in Krispy Kreme, McDonald's, and Sweet Green in the stock market.
The 10-year Treasury yield dropped below 4.45%, with Kathy Jones of Schwab attributing the decline to the ISM and falling commodity prices, including soybeans. In the stock market, JP Morgan recommended investing in Krispy Kreme due to its increased accessibility to the $650 billion global indulgence market and undervalued enterprise value. They also suggested adding to positions in McDonald's and seeing compelling entry opportunities in Sweet Green. Meta Platforms remained a top pick at Mizuho Securities, with analyst James Lee believing product drivers would offset any potential slowdown from Chinese advertisers. However, over 70,000 lawsuits alleging that GlaxoSmithKline's discontinued heartburn drug Zantac caused cancer were allowed to move forward, and the stock fell as a result. SteraCycle rallied after Waste Management agreed to acquire the provider of regulated medical waste and compliance services for $62 a share in cash. Despite cutting Cava Group to neutral from overweight due to valuation concerns, JP Morgan still liked the company's setup.
BD acquisition: BD's $4.2B acquisition of Edward Life Sciences expands its smart, connected care solutions portfolio, despite a 24% premium on shares during strong market performance in May 2023
Despite the 24% premium in the price of Becton, Dickinson and Company's shares following news of a potential sale, the company's acquisition of Edward Life Sciences Critical Care Product Group for $4.2 billion in cash is expected to expand its portfolio of smart, connected care solutions. This news came during a strong month for the stock market, with the S&P 500 and NASDAQ 100 both experiencing their best May performances since 2009. According to Goldman Sachs' equity trading desk, the mantra "sell in May and go away" was wrong again, as the S&P 500 was up 10.7% year-to-date and had been up in 90% of the cases since 1950 when it was up more than 10% by the end of May. The median performance for the last seven months of the year during these episodes was 8.1%, making it a good time for investors to consider staying in the market rather than selling.