November 12th Pre-Market Brief

Good Morning.

knew Jensen Huang’s exit was coming, I just didn’t think it’d happen before the opening bell. Nvidia opened down hard, but buyers stepped in pretty quick.

Let's dig in...

Today's Big Picture

1. Kress Takes Nvidia Into Next week’s Earnings

Finance chief Colette Kress is interim CEO after Huang’s resignation and keeps her CFO job. Nvidia $NVDA also named its first-ever board chair, longtime director Harvey Jones, and will consider inside and outside candidates for the permanent role. Earnings are still set for Tuesday. Stifel expects a beat but cut its price target anyway over the leadership change, so good numbers alone won’t settle the stock.

2. Nvidia’s Interim CEO Built the Deals Wall Street Is Worried About

Investors are selling companies tied to Nvidia’s money, like Oracle $ORCL and CoreWeave $CRWV, and buying rivals AMD $AMD and Broadcom $AVGO. Nvidia’s commitments to other companies total an estimated $400 billion, including a promise to cover $105 billion of OpenAI’s data center rent. Kress oversaw those deals as finance chief, so the person now running Nvidia is the one who built them. The risk to those partners comes later, with whoever gets the permanent job.

3. No Iran Deal Keeps Pressure on the Fed

Trump posted this morning that “we don’t need a deal with Iran,” and oil moved higher. Traders now see a December Fed rate hike as close to certain, up from about two-in-three odds a week ago. The 10-year Treasury yield, which sets the tone for mortgage rates, is back above 5 percent. An Iran deal that lowered oil was the fastest way to ease that pressure, and Trump just said he doesn’t need one.

Market Overview

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Stock Spotlight (pre-market)

Nebius $NBIS ( ▲ 15.44% )  
rents AI computing power out of its own data centers. Third-quarter revenue beat estimates, but full year guidance landed at the low end of its range. It also raised this year’s spending to $27 billion and set next year’s at $40 billion to $45 billion, far above what analysts expected.

Corteva $CTVA ( ▼ 0.25% )  
makes crop chemicals for farmers. Third quarter revenue of $1.59 billion missed the $1.77 billion expected, and profit of 6 cents a share missed the 10 cents forecast. It was the company’s first report since spinning off Vylor.

Tetra Tech $TTEK ( ▲ 5.9% )  
provides consulting and engineering services. Fiscal fourth-quarter earnings of 49 cents a share beat the 47 cents expected. The beat follows a sharp drop in the stock during Wednesday’s regular session.

Strategy $MSTR ( ▼ 7.61% )  
buys and holds bitcoin. MSCI said it will remove the stock from its global indexes at the end of the month, so funds that track those indexes have to sell. JPMorgan has estimated an MSCI exit could force about $2.8 billion in selling.

Alibaba $BABA ( ▼ 1.17% )  
is a Chinese tech giant building its own AI models. Its Hong Kong shares fell overnight on fears Washington will stop Chinese firms from renting Nvidia chips in overseas data centers. The Journal has reported Alibaba got that computing power through Megaspeed, the Singapore company tied to the Huang scandal.

Micron $MU ( ▲ 11.89% )  
makes memory chips for AI servers. Shares are lower along with Sandisk because both count Nvidia among their most important customers.

What to Watch

CoreWeave’s Lenders Get Their First Look at the Nvidia News

CoreWeave’s bonds trade today for the first time since the Nvidia board reports. Nvidia invests in CoreWeave and has stood behind some of its projects. CoreWeave’s most-traded bond yielded about 15 percent Tuesday, and its yields topped 16 percent last week. A move back above 16 percent means lenders see Nvidia’s trouble as CoreWeave’s trouble.

The 30-Year Bond Auction Hits at 1 PM ET

The Treasury sells $25 billion of 30-year bonds with that yield near 5.4 percent this morning. If buyers demand more than that to take the bonds, long-term borrowing costs climb with it.

Cisco and Applied Materials Report After the Close

Applied Materials sells the machines that make chips, so its January outlook shows whether chipmakers are still buying. Cisco booked $4 billion in AI orders from big cloud companies last quarter, and a bigger number says that spending is holding up.

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