Wall Street Lunch: The Relentless Nvidia March Higher

Summary:

• Nvidia is on track to add $1 trillion to its market capitalization in 2024.
• JPMorgan Chase considered acquiring Discover Financial before Capital One’s recent transaction.
• Bank of America’s research team highlights Truist Financial as a bullish stock and Adobe as a bearish stock.

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The chipmaker is gaining $22B in value every trading day, on aveage. (0:15) Oral weight-loss drug sees positive trial results. (2:45) JPMorgan Chase tried to buy Discover. (3:27)

Our top story so far

Nvidia (NASDAQ:NVDA) is whisker away from adding $1 trillion to its market capitalization in a little over two months.

Based on the shares outstanding, NVDA will have added $1 trillion to its value in 2024 for a market cap of $2.2 trillion and change if it closes above $901.53.

In midday trading Thursday, the stock is above $915 per share.

Nvidia is averaging about $21.7 billion added to market cap for each trading day this year. The AI chip juggernaut is up more than 79% year to date after it came through with results and guidance in what some on Wall Street called the most important earnings report in years.

In its latest client survey out this week, J.P. Morgan said 79% of clients see Nvidia as overvalued, “though only 28% believe it’s in a bubble.”

Also in the chip sector, Mizuho raised its price targets on Nvidia (NVDA), Arm (ARM), Advanced Micro Devices (AMD) and Broadcom (AVGO) citing increasing opportunities in AI and custom silicon landscapes. But a lot of that was just catching up with the rallies these names have seen.

Mizuho’s analysts said Nvidia is still the biggest winner in AI in the near term, though AMD and Broadcom are also major beneficiaries.

In today’s trading

Growth stocks are leading the charge again today, with the Nasdaq (COMP.IND) up +1.2% and the S&P (SP500) up +0.9%.

In the morning’s economic data, Challenger said that job cuts announced by U.S.-based employers in February totaled 84,638, reaching the highest level for the month since 2009. That’s a 3% increase from January and a 9% rise from February 2023.

Also in the labor market, initial jobless claims came in steady at 217,000.

Those are the last data points ahead of the official February jobs report out Friday morning.

Societe Generale FX analyst Kit Juckes says: “If (payrolls are) weak, I’ll be more inclined to see the strong data for January as a curveball. If they’re strong, I’ll expect forecasters to rethink the Fed path, again. They’ll probably be dull!”

Near term Treasury yields are lower. The 2-year (US2Y) is nearing 4.50%. Global rates were off after the European Central Bank revised inflation projections down.

Among active stocks

New York Community Bancorp (NYCB) unsurprisingly cut its quarterly dividend to a penny per share from a nickel. That’s a cut of 80% after it raised more than $1 billion from investors.

Novo Nordisk (NVO) shares hit an all-time high after the Danish drugmaker reported promising results from an early-stage clinical trial of its experimental oral weight-loss drug amycretin.

Amycretin, a long-acting co-agonist of GLP-1 and amylin, helped patients lose 13% of their weight in 12 weeks in a Phase 1 trial, the company said at its investor day meeting.

And American Eagle Outfitters (AEO) soared in early trading after the mall retailer beat consensus estimates with its holiday earnings.

The company reported Q4 sales were up 12.8% year-over-year to $1.68 billion, with store revenue 10% higher and digital revenue up 19%.

In other news of note

JPMorgan (JPM) discussed a potential acquisition of Discover Financial (DFS) before Capital One (NYSE:COF) announced its $35 billion transaction last month.

JPMorgan began actively exploring a deal in mid-2021, though it ended its efforts in mid-2022 when it couldn’t convince Discover of the merits of a transaction. That’s according to the Financial Times. JPMorgan was interested in gaining control of Discover’s Pulse debit and cash machine network.

A deal between JPMorgan and Discover would likely be more difficult to get past antitrust regulators, as it is already the biggest US credit card lender by loans.

And in the Wall Street Research Corner

Bank of America’s global research team outlined its bullish and bearish stocks to watch.

In the bull camp is Truist Financial (TFC), where charts patterns point to upside to $44-$46.

In the bear camp is Adobe (ADBE), which charts say have downside risk from $506-$498 per share.

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