Bitcoin Name Gets Boost After Big Nvidia Takeaway
I am also interested in a data center play and an AI name that has pulled back.
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The indices are trading close to flat on Thursday morning as investors digest some economic news and the earnings report from Nvidia NVDA. NVIDIA is trading down about 1.7% after briefly trading in positive territory.
Speculative action is quiet with a very short list of big movers, but names like Snowflake SNOW and Pure Storage PSTG are helping to boost the data center/storage group. The biggest positive takeaway from the Nvidia conference call was the strong demand for data centers.
I took a position in TeraWulf WULF on the data center theme. WULF is focused on zero-carbon digital infrastructure for Bitcoin mining and high-performance computing (HPC). It entered into significant agreements primarily with Fluidstack, an AI cloud platform provider. What is interesting is that Google GOOGL is playing a key financial role and is effectively the largest strategic investor in TeraWulf's expansion.
TeraWulf signed two 10-year HPC colocation agreements with Fluidstack to deliver over 200 MW of IT load. The deals are expected to generate approximately $3.7 billion in contracted revenue over the initial 10-year terms, with potential extensions adding up to $8.7 billion total. Google provided a $1.8 billion backstop for Fluidstack's lease obligations. In exchange, Google received warrants to acquire about 41 million shares of TeraWulf common stock, giving it an approximately 8% potential equity stake.
The stock gapped up on this news on August 14 and has been consolidating well. It looks ready for a push higher.
Another name I added on Thursday is SoundHound SOUN. The stock moved nicely higher on recent earnings and has pulled all the way back to the 50-day simple moving average. That looks like good support, and I'm adding to my position. I highlighted SOUN on August 11 in this column.
Nvidia itself is also on my radar. Given its valuation and growth, I believe it is a safe place to park some idle capital. I'm watching the chart to develop before I start buying more. I have a small current position and will make some incremental buys on weakness. I see key support at around $170, which is the 50-day simple moving average.
I'll keep the position fairly small for now and see how well it holds in the next few weeks. News about a China chip deal could spike it higher at any time, but that does not look likely to occur soon.
It continues to be a good-looking market for stock picking, but stay strategic and be selective.
At the time of publication, DePorre was long WULF, SOUN and NVDA.
