August 27th Pre-Market Brief

Good Morning

Nvidia walked into earnings last night with a lot of bear arguments stacked against it and came out with all of them gone. Amazon agreed to buy two million of their processors, which puts the custom chip fear to bed.

I think this is Nvidia wants to be the Apple of AI, owning everything from the silicon up through the models, open and closed.

Let's dig in...

Today's Big Picture

1. Nvidia Paid For That Guidance Up Front
Nvidia guided next fiscal year to seventy percent revenue growth against the forty-five percent analysts modeled, the first full year forecast in company history. Promising that meant locking up supply, so commitments to suppliers more than doubled to two hundred seventy-nine billion dollars, most of it memory. The filing listed debt as its own risk factor for the first time, with borrowings due inside five years going from under three billion dollars to fifteen billion in one quarter. Everyone is trading the demand number. The balance sheet is what changed.

2. Warsh Does Not Need To Hike To Tighten
Kansas City Fed President Jeff Schmid said this morning he does not know what the current rate is restricting. He does not vote this year, so the market filed it under noise. What gets missed is that Warsh said in July he welcomes higher bond yields because they do the same work as a rate hike. The Fed can tighten without ever touching the policy rate, and the thirty-year ran to five point three one after that meeting before Treasury stepped in to slow it down.

3. The Chip Tariff Lands On Data Centers
Politico reported this morning that the White House is weighing duties on semiconductors and on finished goods built with them. Laptops, gaming hardware and data center servers all sit inside the net being discussed. Amazon just agreed to take two million Nvidia processors, so a server tariff would hit the exact buildout everyone is celebrating. The plan is early and rolls out in stages, so it is a headline under the rally rather than a cost anyone can price.

Market Overview

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Stock Spotlight (pre-market)

Nvidia $NVDA ( ▼ 1.59% )  
is higher after beating on earnings and revenue and guiding this quarter above estimates. Amazon agreed to buy two million Nvidia processors, which takes the custom chip worry off the table.

Salesforce $CRM ( ▼ 0.03% )  
is higher after beating and raising full year guidance. The company expanded its partnership with Anthropic and booked a two point six billion dollar gain on its stake.

Marvell Technology $MRVL ( ▲ 1.97% )  
is higher with the chip group and reports after the close today. Shares have gained twenty-seven percent in a month while the rest of the group slipped.

HP $HPQ ( ▲ 3.39% )  
is lower despite beating on fiscal third quarter results and guiding the full year above expectations. PC shipments and margins both declined.

Dollar General $DG ( ▲ 0.16% )  
is higher after raising full year earnings guidance to seven eighty to eight dollars, up from seven twenty to seven forty-five. Tariff refunds added about a quarter per share.

Wendy's $WEN ( ▼ 0.88% )  
is lower after Reuters reported Nelson Peltz's Trian no longer plans to bid for the company. Trian was preparing a take-private offer earlier this month.

What to Watch

Want to Know about this years upcoming IPO’s?
MarketBeat did an excellent job on this free IPO guide on IPO’s happening this year

Warsh At Jackson Hole (Tomorrow)
The argument is no longer whether the Fed cuts. Kansas City Fed President Jeff Schmid said this morning that he does not know what current policy is restricting, and told Yahoo Finance that a hike of twenty-five or fifty basis points "probably moves behaviors." Futures still price a September hold, and Warsh has refused to give forward guidance since taking the job.

Hormuz Diplomacy (Today)
Qatar's prime minister is in Tehran today to discuss reopening the strait, and another tanker was struck off the Omani coast this morning. Crude opened lower and turned positive during European hours, which says the tape is trading the talks rather than the tanker. Confirmed crossings fell to five on Tuesday against more than a hundred and thirty a day before the war.

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