Palantir Hits It Out of the Park, Trump Deals in the Middle East, Inflation Dies Down
Let's chart my favorite stock, check out agreements in the works in Saudi Arabia and UAE and see why prices seem steady at the stores.
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Pres. Trump's trip to the Middle East got off to a fast start on Tuesday. Surrounded by high-profile CEOs from across the American corporate landscape and regional leaders, the deal making from this spectator's vantage point seemed quite active. In fact, announced deals appeared to cross the tape so fast and so furiously that I think maybe Monty Hall himself would have been impressed. (Fun fact: I bet most readers had no idea that before making the "Let's Make a Deal" game show famous, Monty Hall worked radio broadcasts for the New York Rangers hockey club.)
The headline event on Tuesday was the pledge for up to $1 trillion in commercial deals that Pres. Trump and Saudi Crown Prince Mohammed bin Salman touted together. Both leaders claimed that Saudi Arabia would invest $1 trillion in the United States, which more or less matches Saudi Arabia's gross domestic product. Will the number stand up to scrutiny? Some are asking. The fact is, though, that a hefty amount of Saudi cash is going to be spent on U.S. business.
Among deals that made headlines, GE Vernova GEV will be exporting $14.2 billion worth of natural gas turbines to the Kingdom, while Boeing BA received orders to export $4.8 billion worth of 737-8 passenger aircraft to AviLease, which is a Saudi-based business. In addition, Alphabet GOOGL, Oracle ORCL, Salesforce CRM, Advanced Micro Devices AMD, and Uber Technologies UBER will invest about $80 billion in "transformative technologies" in both nations. Pres. Trump commented, "We will work together. We will be together. We will succeed together. We will win together, and we will always be friends."
Action, Not Words!
The real action on Tuesday was in and across the generative AI space. Artificial Intelligence is what the Middle East is interested in right now and what the nations of that region are willing to spend on right now. Those deals being announced and to be announced made high-fliers on Tuesday of Nvidia NVDA and Advanced Micro Devices.
Nvidia will supply Saudi Arabian AI company Humain with high-end AI-capable chips for a data center buildout that would be powered by hundreds of thousands of these processors. The first phase of the deployment would be delivery of 18,000 GB300 Grace Blackwell chips for an AI supercomputer with Nvidia InfiniBand networking. Global AI, which is U.S. based, will collaborate with Humain in an agreement expected to be worth billions of dollars to build a data center in New York, running on similar Nvidia chips with plans to add more data centers after New York is built.
Additionally, Amazon AMZN and Humain announced together that the two firms would invest more than $5 billion in building an "AI zone" in Saudi Arabia. Humain will use AWS provided technologies to develop a marketplace of AI agents to be available to the Saudi government. Open AI is also said to be considering building out new data center capacity in the kingdom.
On top of all of that, Humain signed a $10 billion deal with AMD to provide chips and software. As Nvidia's closest rival in AI accelerator design, this ties Humain to the world's top two players in the space. All of this demand for high-end design is probably also very good news for the likes of Micron Technology MU as demand for memory will rise and for Taiwan Semiconductor TSM as the preferred foundry for both Nvidia and AMD. Overflow business could also fall to a firm such as Broadcom AVGO.
Separately...
The Trump administration is said to be considering an agreement where the UAE would import more than a million high-end chips as well. The deal, according to Bloomberg News, would allow the UAE to import 500,000 Nvidia H100 chips every year through 2027. One fifth of these chips would be set aside for Emirati AI company G42 with the remainder set aside for U.S. companies operating in that country. According to the report, between 1 million and 1.5 million of these chips could be purchased by G42 alone over the lifetime of the proposed deal. This would be up to a rough four times greater than would have been permissible under the Biden-era AI diffusion rule.
Marketplace
Tuesday was another great day on the street... as long as you were in the right stocks. The rally was real, but not as broad as what occurred on Monday. The Nasdaq Composite popped for a gain of 1.61%, as the S&P 500 gained 0.72%. The strength came from the tech space, obviously. The small to mid-cap indexes all gained from 0.33% to 0.53% as the Dow Transports inched 0.26% higher. The KBW Banks gained an impressive 1.24% as investors continued to pull funds out of debt securities, forcing yields higher. The U.S. Ten-Year Note has found overnight support at the 4.5% yield level as the U.S. Thirty-Year Bond approached the 5% level.
Just six of the 11 S&P sector SPDR ETFs closed out the Tuesday session in the green, led by Technology XLK at +2.16%. Within tech, the Dow Jones U.S. Semiconductor Index gained 4.62%, while the Philadelphia Semiconductor Index ran 3.15%. Health Care XLV was the day's laggard at -3.01%. Within Health Care, it was the providers / managers that took the most severe beating. UnitedHealth Group UNH was roasted for a loss of 17.79%, followed by Elevance ELV and Humana HUM. Those two stocks gave up 9.91% and 9.48% respectively as UNH cancelled forward guidance in the wake of Pres. Trump taking aim at prescription drug prices.
Winners beat losers at the NYSE by a rough 3 to 2, and at the Nasdaq by about 7 to 4. Advancing volume took a 65.7% share of composite NYSE-listed trade and a 65.1% share of composite Nasdaq-listed activity. Aggregate trade decreased on a day over day basis across NYSE-listings, across Nasdaq-listings, and across the membership of the S&P 500.
This decreased volume could potentially signal a pause in this week's rally on Wednesday as long as no new positive catalysts are announced. Technically, the market could actually use a day off in order to set up a confirmation day rally later. How realistic that is I don't know. It seems that recently, it has simply been one positive headline after another for both US business and for the U.S. economy.
Inflation is Dying
On Tuesday, the BLS released its data for April CPI. April was supposed to show a pop from March, but for the most part... that did not really happen. Are these numbers "pre-tariffs?" Yes. That said, tariffs are being whittled down to much more manageable levels, and inflation is in a place where even with an uptick in inflation, the pace of those rising prices likely will not even approach anything close to what Americans have been through since 2021.
In fact, at current levels, tariffs could drive some much-needed revenue for the federal government without actually slowing economic activity or severely damaging labor markets. I guess we'll see soon enough. The impact of those tariffs should start to be visible in the May data, but I am not seeing higher prices at the grocer nor in my weekly strolls through Walmart WMT and Target TGT. Yes, I compare prices in a notebook from week to week for a number of items.
For April, on a month-over-month basis, the consumer price index grew 0.2% both at the headline and at the core, which was below the 0.3% growth expected for both. On a year-over-year basis, headline consumer price index dropped to growth of 2.3%, down from 2.4% in March and below expectations. Core CPI printed at growth of 2.8%, which was both in line with expectations and in line with March. The deceleration in consumer pricing was driven by pressured prices for energy commodities and food. Energy services went the other way, and shelter has remained steady now for several months.
Projections for May? Right now, the Cleveland Fed's Nowcasting model for May CPI stands at growth of 2.4% headline and 2.84% core, which is very close to being in line with April. Hedgeye's model for May now stands at a base case of 2.34%. Unpaid endorsement... I would not be great at what I do without Hedgeye. If I were still running my own GDP and CPI models without a staff, I would be overwhelmed. By outsourcing those responsibilities, I have been able to remain highly efficient as a trader and investor. That said, the numbers you see "expected" at the bottom of these columns for many domestic data-points are often my own projection and not meant to be seen as representative of consensus view.
You Kids See Palantir on Tuesday?
Up 8.14% for the session. I recently showed you the Double Bottom pattern of reversal that produced this breakout and our $153 target price. This is that chart:
What if this Double Bottom is morphing into a Cup with Handle pattern? That would also be quite bullish. Check this out:
Either way you slice it, this stock is as hot as a pistol. Palantir is up 71% year to date this year and was up 340% in 2024. Both years, I gave you PLTR as my "stock of the year" for the coming year in late December, the first time in my career that I had ever named the same stock as my stock for the coming year for two years in a row.
Unlike many of your pals on TV, I have skin in this game and PLTR has been my largest holding throughout. Not trying to be cocky (of course I'm cocky... I'm infantry), but I really want to know: Has any other financial pundit / guru / spokesperson, or adviser ever come close to doing anything like that for you? I don't like to brag (Ok, that is a lie), but PLTR has been a 22-run homer for us, so far. Aaron Judge has never hit one of those. Thank you for reading TheStreet Pro.
Economics (All Times Eastern)
07:00 - MBA 30 Year Mortgage Rate (Weekly): Last 6.84%.
07:00 - MBA Mortgage Applications (Weekly): Last 11.0% w/w.
10:30 - Oil Inventories (Weekly): Last -2.032M.
10:30 - Gasoline Stocks (Weekly): Last +188K.
The Fed (All Times Eastern)
05:15 - Speaker: Reserve Board Gov. Christopher Waller.
09:10 - Speaker: Federal Reserve Vice Chair Philip Jefferson.
5:40 p.m. - Speaker: San Francisco Fed Pres. Mary Daly.
Today's Earnings Highlights (Consensus EPS Expectations)
After the Close: CSCO (.92)
At the time of publication, Guilfoyle was long NVDA, AMD, PLTR equity.
