AI Superpowers: Nvidia Wins in China, Meta Builds in Louisiana, Gigawatts Zap Everywhere
Let's look at the win for NVDA (which just broke through my price target along with Rocket Lab), Meta's pet project and the great power surge; also Trump's upset with Putin....
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How shocking! So surprising, isn't it, that Nvidia NVDA reached a market cap of more than $4 trillion just days ahead of being permitted to resume shipments of the H20 AI-capable chips to Chinese customers? This week, CEO Jensen Huang, who has sort of been traveling back and forth between Washington and Beijing, is in mainland China for the third time this year. Huang had been lobbying U.S. officials to permit the sale and export of high-end chips, already compliant with Biden-era curbs on foreign technology exports, that were designed specifically for Chinese markets. Huang has been ensuring Chinese officials that Nvidia would continue to do business in that nation to the extent permitted.
The ball started moving in Huang's direction back in June when the U.S. and China came to an agreement where China would allow and accelerate approvals of the sale and export of rare-earth minerals and magnets to western manufacturers. China also agreed to create a more open China for American companies trying to do business there. In response, the U.S. would be expected to permit the sale and export of higher-end technologies to China.
On Monday, Chinese regulators finally approved the $35 billion acquisition of Ansys ANSS by chip designer Synopsys SNPS after being held up since last year. Then came the big news: The Trump administration will permit Nvidia to sell and export its H20 chips once licenses are granted by the Commerce Department. The company will resume deliveries of these chips that were designed on the Hopper architecture to be compliant with Biden-era rules. These chips had been top sellers in that nation.
Nvidia had designed new Trump-era compliant chips for export to China on the Blackwell architecture that Huang now claims will still be useful for things like factory automation and logistics. Though these chips were signed off of a later architecture, it appears clear that the earlier designed chips would be more useful for companies currently developing AI-inferencing capabilities.
According to the Wall Street Journal, the decision by the Trump administration to allow a higher-tech chip for export to China is being seen in Beijing as a gesture of good faith. This had been a goal for Chinese negotiators. One would think that this will have to also be good news for high-end Nvidia competitors such as Advanced Micro Devices AMD.
I Am Aware of the Targets ...
I do know that Sarge-folio target prices for both Nvidia and Rocket Lab RKLB have been exceeded. Thank you for the head's ups. Honestly, I appreciate how passionate our readers are. I will get those pieces out as soon as possible. At times like this, managing money (my actual day job) has to be prioritized over writing about it. Those articles are definitely coming.
Anger at Russia
On Monday, Pres. Trump expressed some anger at Russian Pres. Vladimir Putin for speaking one way on the phone and acting another way when ratcheting up attacks on civilian targets inside of Ukraine. The president said that he would be imposing "very severe" secondary tariffs of up to 100% on nations trading with Russia in a meeting with NATO Secretary-General Mark Rutte. The president gave Russia 50 days to come to a peace agreement with Ukraine.
The 100% tariff threatened by the president is actually far less severe than what the Senate is currently talking about in the bipartisan "Sanctioning Russia Act of 2025." What is being discussed in that bill would be secondary tariffs of up to 500% on Russia's trading partners. U.S. trading partners that would be most impacted by these secondary tariffs should they happen would be China, India, South Korea and Turkey.
The Trump administration has also come to the decision to resume the Biden-era policy of providing arms to the Ukrainian armed forces. The major difference now is that European NATO allies will be purchasing these weapons for use in Ukraine. They will no longer be donated by American taxpayers. This weapons package will be worth about $10 billion. The shipments will include Patriot missile defense systems that will be moved within days from European nations and then those nations will see their supplies be replenished from the US in order to expedite the process.
For traders and investors, the MIM-104 Patriot missile defense system was designed by what was then Raytheon, and is currently manufactured by RTX Corp RTX, Lockheed Martin LMT and Boeing BA. The actual Patriot surface to air missile and all of its variants were also designed by Raytheon. RTX Corp remains the primary manufacturer of these missiles, with special variants manufactured by Lockheed Martin.
Marketplace
Financial markets were rather quiet ahead of this morning's June consumer price index data as well as this morning's earnings releases. Treasury yields barely moved. The S&P 500 gained a mere 0.14%. The Nasdaq Composite tacked on just 0.27%, but that was good enough for a new all-time high close. The Dow Transports and Philly Semiconductors sold off moderately. I would imagine the semiconductors will move in the other direction this morning. The small to midcap stocks and banks rallied mildly on Monday.
Seven of the 11 S&P sector SPDR exchange-traded funds close out the Monday regular session in the green. Communication Services XLC led the way, but none of those funds gained even 1% for the day. Energy XLE led the losers at -1.1%. Breadth was positive, but not wildly so. Winners beat losers by a 4-to-3 margin at the Nasdaq and by just better than a 50/50 split at the NYSE. Advancing volume took a 62.9% share of composite Nasdaq-listed trade, but on aggregate trade that contracted by 1.5% on a day-over-day basis. Advancing volume took a 57.2% share of composite NYSE-listed activity on aggregate trade that expanded by 1.4% on a day over day basis.
There's not much to take away from the Monday session as Nvidia and Russia have changed the equation overnight and both banking earnings and June CPI are about to. Remember to take some kind of action at target prices, gang. Make a token sale or adjust the target or both, but do not sit on your hands like a deer in the headlights. Be proactive. Ringing the register might be premature at times and prudent at others, but it is never wrong.
More Power!!
On Monday, Meta Platforms META CEO Mark Zuckerberg announced that his company is building several massive data centers to power the company's efforts to expand its AI footprint. Zuckerberg posted to social media "We're calling the first one Prometheus and it's coming online in'26."
It's no secret that Zuckerberg has been investing aggressively in energy computing power and talent. The company projected $72 billion in capital spending for just this year focusing on AI and data centers. Meta has poached that talent from OpenAI, Alphabet GOOGL and others. What I find amazing, is that Meta is building a facility in Richland Park, Louisiana that Zuckerberg has bragged about as being nearly the size of Manhattan Island in New York City.
This trend is only going one way, gang. According to Carbon Collective (which I read about at Bloomberg News), with most data centers currently housing hundreds of megawatts of capacity, companies like OpenAI and Oracle ORCL are working on plans to develop facilities capable of handling several gigawatts of power which would be enough to power roughly 900,000 annually.
Economics
(All Times Eastern)
08:30 - CPI (Jun): Expecting 0.3% m/m, Last 0.1% m/m.
08:30 - Core CPI (Jun): Expecting 0.3% m/m, Last 0.1% m/m.
08:30 - CPI (Jun): Expecting 2.5% y/y, Last 2.4% y/y.
08:30 - Core CPI (Jun): Expecting 2.9% y/y, Last 2.8% y/y.
08:30 - Empire State Manufacturing Index (Jul): Expecting -10.3, Last -16.
08:55 - Redbook (Weekly): Last 5.9% y/y.
4:30 p.m. - API Oil Inventories (Weekly): Last +7.1M.
The Fed
(All Times Eastern)
09:15 - Speaker: Reserve Board Gov. Michelle Bowman.
12:45 - Speaker: Reserve Board Gov. Michael Barr.
2:45 p.m. - Speaker: Boston Fed Pres. Susan Collins.
7:45 - Speaker: Dallas Fed Pres. Lorie Logan.
Today's Earnings Highlights
(Consensus EPS Expectations)
Before the Open: ACI (.54), BLK (10.81), BK (1.76), C (1.60), ERIC (1.29), JPM (4.48), WFC (1.40)
After the Close: JBHT (1.30), OMC (2.03)
At the time of publication, Guilfoyle was long JPM, WFC, NVDA, AMD, RTX equity.
