Day: November 20, 2024

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As NVIDIA Corp prepares to release its highly anticipated earnings report Wednesday evening, investors are watching closely for the potential ripple effects on the broader market—and particularly on peer stocks like Broadcom Inc (NASDAQ:AVGO).

What To Know: Nvidia’s dominance in AI-driven technology and its pivotal role in the S&P 500’s performance make its results a market-moving event, with implications for key players in the semiconductor industry.

Broadcom, like Nvidia, has leveraged the surging demand for AI infrastructure. It supplies high-performance networking chips and custom silicon that power data centers—critical components for Nvidia’s AI-focused operations.

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A strong earnings beat from Nvidia could reinforce investor confidence in AI growth prospects, lifting sentiment around Broadcom as a beneficiary of the same demand drivers. Conversely, a disappointing Nvidia report could signal a slowdown in AI investments, weighing on Broadcom’s outlook.

Historically, Broadcom’s stock has moved in tandem with Nvidia’s during major market reactions. Nvidia’s implied one-day move of 12.5% adds volatility to the semiconductor sector, underscoring the high stakes.

By now you’re likely curious about how to participate in the market for Broadcom – be it to purchase shares, or even attempt to bet against the company.

Buying shares is typically done through a brokerage account. You can find a list of possible trading platforms here. Many will allow you to buy ‘fractional shares,’ which allows you to own portions of stock without buying an entire share. For example, some stock, like Berkshire Hathaway, can cost thousands of dollars to own just one share. However, if you only want to invest a fraction of that, brokerages will allow you to do so.

If you’re looking to bet against a company, the process is more complex. You’ll need access to an options trading platform, or a broker who will allow you to ‘go short’ a share of stock by lending you the shares to sell. The process of shorting a stock can be found at this resource. Otherwise, if your broker allows you to trade options, you can either buy a put option, or sell a call option at a strike price above where shares are currently trading – either way it allows you to profit off of the share price decline.

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(Bloomberg) — Brazilian financial-technology company Nu Holdings Ltd. is considering plans to shift its legal base to the UK, in a move that would mark a major win in Britain’s push to encourage more tech companies to move to the country.

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The digital challenger bank has been working with the British government on the plans, which were discussed as part of a broader set of agreements between Brazil and the UK on Tuesday on the sidelines of the Group of 20 leaders’ summit in Rio de Janeiro, according to people familiar with the talks.

The change in domicile was not included in a joint announcement by the two governments penned on Tuesday since it was still pending approval from the UK’s HM Revenue & Customs authority, according to two of the people, who asked not to be named discussing private information.

“Nubank continuously reviews its corporate legal structure to align with the footprint of its operations,” a spokesperson for the company said in a statement. “At this time, no decision has been made regarding the redomiciliation of Nu Holdings Ltd. or any other legal entities within our group. As a publicly traded company, we are committed to transparency and will follow standard communication protocols if and when any such decisions are made.”

Nubank — whose holding company is currently based in the Cayman Islands and is listed on the New York Stock Exchange — recently became the most valuable bank in all of Latin America. While its corporate headquarters would remain in Sao Paulo, Brazil, the change in legal domicile to the UK would be seen as a big achievement in efforts by British Prime Minister Keir Starmer’s government to attract more technology firms and investment to the country.

Last month, the UK Department for Science, Innovation and Technology said it was opening an office to speed up approvals of novel technologies. The new body, called the Regulatory Innovation Office, is designed to reduce the time entrepreneurs wait to get inventions to market and streamline the regulatory hurdles they must deal with.

The Labour government has been courting tech companies and investors as it faces a broad decline in sentiment among businesses, after Chancellor of the Exchequer Rachel Reeves unveiled £40 billion ($50.5 billion) of tax increases in its first budget. Measures included raising the national insurance payroll tax for businesses to 15% and reducing the threshold at which companies start paying the tax. The government also raised capital gains tax and scrapped the value-added-tax exemption on public-school fees.

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(Bloomberg) — With Nvidia Corp. due to report an unusually complex quarter as the world’s most valuable company, traders are preparing for a potentially mammoth stock swing.

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The options-implied move for Nvidia shares the day after earnings is about 8% in either direction, according to data compiled by Bloomberg. That would equate to close to a $300 billion swing in market value — bigger than all but 25 companies in the S&P 500 Index. And according to strategists at Bank of America, the report carries more risk for the benchmark than the next Federal Reserve meeting or inflation data.

As the poster child of the artificial intelligence trade, Nvidia’s stock has rallied nearly 200% so far in 2024 and its reports have been the biggest event on the earnings calendar for more than a year. The shares fell 1.9% on Wednesday ahead of the chipmaker’s fiscal third quarter earnings, due after markets close, and there’s more uncertainty than normal about how the results and guidance will play out.

That’s because there are varying views on Wall Street about what to expect from the company’s newest product line, Blackwell. Nvidia has said that the new chips will contribute several billion dollars in revenue in the fiscal fourth quarter, while Chief Executive Officer Jensen Huang described demand for the chips as “insane.” But production delays have made modeling supply — a notoriously difficult task — even harder.

“There’s a big unknown around Blackwell capacity,” said Dan Eye, chief investment officer at Fort Pitt Capital Group. “The CEO has established a lot of credibility, but the bar is very high,” he said, adding that it will likely be challenging for Nvidia to give blowout guidance for next quarter.

The questions around Blackwell have led to a wide spread in analyst expectations for the fiscal fourth quarter that ends in January. Consensus is at $37.1 billion — with the gap between the highest and lowest projections at more than $7 billion, according to estimates compiled by Bloomberg. Nvidia typically provides revenue guidance for the upcoming quarter with its results.

Part of the reason for the gap in analyst forecasts is that some expect customers to delay purchases of Blackwell’s predecessor products, called Hopper, in anticipation of the newer chips.

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