Nvidia Speeds Things Up a Bit
The star of CES 2025 on Monday shows off its Blackwell 'petaflop' superchip and deals with Toyota and Uber; also Mike Wilson gives a warning.
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"Light speed is too slow. Yes, we're gonna have to go right to ludicrous speed!"
- Rick Moranis as Dark Helmet in "Spaceballs" (1987)
What Is a Petaflop?
As likely every single reader knows, Nvidia NVDA CEO Jensen Huang, a.k.a. "The Fonz," delivered Monday evening's keynote address from Las Vegas, kicking off the Consumer Electronics Show 2025. Busy night for Huang. Busy night for Nvidia. Busy night for Nvidia's business partners. On Monday evening, Nvidia unveiled its new RTX 5090 card among several models meant to bring Blackwell architecture to the PC and to gamers.
The Fonz also revealed an AI-focused, Linux-based desktop computer, Project DIGITS, which incorporates a GB10 Blackwell Superchip that will be able to deliver as much as one petaflop of AI performance. What is a petaflop? Good question. I had to "search" the term. Apparently, a petaflop is one unit of computing speed equal to one thousand million (one quadrillion) floating-point operations per second.
Aren't you glad you asked? I ran track against a kid in high school who was almost that fast. My mile time in high school was in the 4:40's, and he, my teammate, was always barely visible to my front, except for the one time he got sick about a hundred yards away from the finish. I put him over my back (he was little) and carried him across the finish. A bunch of kids passed us, but our coach was happy that we both still finished in the Top Ten.
Nvidia also showed off "Nvidia Cosmos," which is the world's first physical AI model and can, or will be used, to boost robotics. The model is trained on 20 million hours of video covering physical dynamic items, using CUDA architecture and is open licensed on GitHub.
More Nvidia Stuff ...
- Toyota TM announced plans to integrate Nvidia's Drive AGX Orin Supercomputer and the safety-focused DriveOS operating system into future vehicles.
- Uber Technologies UBER entered into a strategic partnership with Nvidia aimed at accelerating the development of AI-powered autonomous driving technology.
- Aurora AUR, Continental and Nvidia have entered into a strategic partnership to deploy driverless trucks at scale. The collaboration will leverage Nvidia's DRIVE Thor system-on-a-chip and DriveOS and marry those technologies to the Aurora Driver level 4 autonomous driving system.
...And Foxconn
All of the above, coupled with Foxconn's recently reported record numbers, illustrates the growing demand for memory alongside high-end AI-capable chips. Note that Micron MU ran 10.5% on Monday and is up more than another 5% since the closing bell as I work my way through the zero-dark hours.
Marketplace ... and Inflation
Monday was a strange day on Wall Street. First, equity markets roared out of the gate on the mistaken idea that President Elect Donald Trump was going to go easier on the tariff front than previously advertised. The President Elect shot down that notion and stocks sold off a bit as the day wore on. The yield for the 30-Year Long Bond touched a 14-month high during the session and has edged even higher overnight. The Ten-Year Note paid 4.62% by day's end and is up another two basis points since then.
It wasn't all on the tariff rumors having been shot down that these markets sold off. Fed Gov Lisa Cook spoke from Ann Arbor, Michigan and said, "Since September, the labor market has been somewhat more resilient, while inflation has been stickier than I assumed at that time. Thus, I think we can afford to proceed more cautiously with further cuts."
Just a thought. Maybe Lisa Cook should subscribe to Hedgeye Risk Management's Macro products. That's how I knew U.S. inflation was bottoming in September and was about to accelerate again. That's also how I was able to prepare appropriately. I mean, it's just incredible to me that a "professional" economist charged with putting the largest economy in the world on the correct monetary path could have been surprised by something that seemed fairly clear to those of us who live on "high alert" at the time.
Equities
The major equity indexes still closed in the green on Monday. The S&P 500 gained 0.55%, while the Nasdaq Composite ran 1.24% on tech/semiconductor strength. The small cap indexes closed just a tad into the red as the S&P 600 gave back 0.13% and the Russell 2000 gave up 0.08%. The Dow Jones Industrial Average, antiquated as it is, also closed slightly into the red.
It was a day that growth outperformed as just four of the eleven S&P sector SPDR exchange-traded funds finished higher. Technology XLK and Communication Services XLC led the way, gaining 1.27% and 1.08% respectively. Cherry picking industries within those two sectors, the Dow Jones U.S. Internet Index gained 3.07% led by Meta Platforms META, while the Philadelphia Semiconductor Index gained 2.84%. The semis were led by Micron and ASML Holding ASML. Three defensive sectors, Consumer Staples XLP, the Utilities XLU and the Real Estate Investment Trusts XLRE all surrendered more than 1% for the session.
Breadth across the New York Stock Exchange was almost impossible to translate into anything useful. The Nasdaq was easier to read. Winners beat losers by a smidgen at the Nasdaq as advancing volume took a 68.5% share of composite trade for those names domiciled there. Aggregate Nasdaq-listed trading volume increased by an impressive 16.7% day over day. All of that is somewhat impressive.
Now, the NYSE was just a mess. Losers beat winners by a rough 4 to 3 at the New York Stock Exchange, but advancing volume took a 62.5% share of composite NYSE-listed activity. To top it off aggregate trade across NYSE-listings was up 34.7% day over day. Was it an up day or a down day at the NYSE? Flip a coin.
Mike Wilson's Warning
Mike Wilson of Morgan Stanley MS warned of a strange year ahead for U.S. equity markets. In a note released on Monday morning, Wilson wrote, "We think 2025 could be a year of two halves."
Wilson sees the negative correlation between bond yields and equity performance as well as U.S. dollar valuations tamping down on first half equity performance, especially among multinationals. Then, he sees market friendly Trump policies kicking in and shoring up stock prices during the second half of the year.
Mike Wilson is always a good read and always presents a well thought out case. He did nail the market sell-off in 2022. Whether that was just another case of a broken clock being right twice a day or not remains to be seen. Wilson still sees an approximate 9% return for the S&P 500 for 2025, so he can't exactly be called bearish, but speaking anecdotally as a consumer of financial media, it does seem that he has been bearish more often than not over the years as the market generally moved higher. Still, I'd be slow to dismiss his thoughts.
Economics (All Times Eastern)
08:30 a.m. - Balance of Trade (Nov): Last $-73.8B.
08:55 - Redbook (Weekly): Last 7.1% y/y.
10:00 - ISM Non-Manufacturing Index (Dec): Expecting 53.3, Last 52.1.
10:00 - JOLTs Job Openings (Nov): Last 7.744M.
10:00 - JOLTs Job Quits (Nov): Last 3.326M.
1:00 p.m. - Ten Year Note Auction: Last $39B.
4:30 - API Oil Inventories (Weekly): Last -1.442M.
The Fed (All Times Eastern)
08:00 - Speaker: Richmond Fed Pres. Tom Barkin.
Today's Earnings Highlights (Consensus EPS Expectations)
Before the Open: RPM (1.34)
After the Close: CALM (3.68)
At the time of publication, Guilfoyle was long NVDA equity.
