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Texas Instruments slumps on disappointing Q4 revenue and profit outlook

Texas Instruments is down a little over 8% in premarket trading as investors react to the weaker-than-expected fourth-quarter guidance the company gave in its Q3 earnings yesterday.

The world’s biggest analog chipmaker said that Q4 revenue would come in between $4.22 billion and $4.58 billion, where analysts had expected $4.5 billion on average, per Bloomberg. TI’s profit forecast for the period also disappointed, after the company said that earnings would be in the region of $1.13 to $1.39 per share, compared to reported Wall Street estimates of $1.41.

While its actual third-quarter numbers were broadly solid all told, with adjusted EPS at $1.59 meeting expectations, the Q4 outlook is a clear signal to some that recovery will likely be a little more sluggish than they expected. As the company’s CEO, Haviv Ilan, put it on an analyst call:

“The overall semiconductor market recovery is continuing, though at a slower pace than prior upturns, likely related to the broader macroeconomic dynamics and overall uncertainty.”

Texas Instruments counts more customers than anyone else in the semiconductor business and has a broader range of products, too, making it something of a bellwether for the industry more broadly, with its softer outlook weighing modestly on stocks like Analog Devices, AMD, and Intel.

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The momentum unwind accelerates in megacaps, with MTUM on its longest streak of underperformance since 2023

First, high-flying speculative stocks took a nosedive. Then gold lost some of its shine. Now, the megacap components of the momentum trade are also looking wobbly.

The iShares MSCI USA Momentum Factor ETF, which holds stocks with the best risk-adjusted price performance over the past six months and one year, is trailing the SPDR S&P 500 ETF by more than 1 percentage point today through 11:27 a.m. ET.

As of 11:23 a.m. ET, more than one-fifth of its 125 members are down more than 2%, headlined by big tumbles in Netflix, Carvana, GE Vernova, Rocket Lab, Quanta Services, and Robinhood Markets.

(Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company subject to certain legal and regulatory restrictions.)

The momentum ETF is in the midst of its seventh straight session of lagging the SPDR S&P 500 ETF, its longest such streak of underperformance since Q4 2023.

The negative reactions to GE Vernova and Netflix’s earnings reports — both MTUM constituents — may be the catalyst for the big retrenchment in the space, the same way Walmart’s disappointing outlook sank the group (and the overall market) in the first quarter.

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Matt Phillips37m

Oklo, nuke stocks battered amid speculative stock and momentum unwind

Amid a broader unwind of momentum trades, stocks tied to the nuclear-powered AI trade — Oklo, Nano Nuclear, and Centrus Energy among them — are taking a particularly hard beating.

JPMorgan strategist Arun Jain estimates that retail traders have dumped $24 million in Oklo shares through 11 a.m. ET.

This tumble comes alongside a tough-minded story from the Financial Times examining the prospects of this zero-revenue company, which as of yesterday had a market value of $20.6 billion. (It’s below $18 billion after today’s drop.)

Of Oklo’s plans to build smaller nuclear reactors using liquid sodium as a coolant rather than water, the salmon-toned periodical wrote:

“Some experts point to the failure of sodium-cooled reactors built in the US between 1950 and 1976.

Critics also note proliferation risks because Oklo’s plans would see plutonium move into private industry hands, where it could be at risk of diversion or theft by those who seek to build an atomic bomb. A decision by the US Nuclear Regulatory Commission to reject a previous Oklo application to build a sodium-cooled reactor in 2022 has also raised questions.

‘That NRC deemed Oklo beyond help should be a red flag,’ said Allison Macfarlane, a geologist and former chair at the regulator now at the University of British Columbia.

‘Liquid sodium is highly corrosive, flammable and explosive on contact with air and water,’ she said. ‘Many countries have tried to build these reactors before but they haven’t managed to prove they are commercially viable at scale.’”

“Some experts point to the failure of sodium-cooled reactors built in the US between 1950 and 1976.

Critics also note proliferation risks because Oklo’s plans would see plutonium move into private industry hands, where it could be at risk of diversion or theft by those who seek to build an atomic bomb. A decision by the US Nuclear Regulatory Commission to reject a previous Oklo application to build a sodium-cooled reactor in 2022 has also raised questions.

‘That NRC deemed Oklo beyond help should be a red flag,’ said Allison Macfarlane, a geologist and former chair at the regulator now at the University of British Columbia.

‘Liquid sodium is highly corrosive, flammable and explosive on contact with air and water,’ she said. ‘Many countries have tried to build these reactors before but they haven’t managed to prove they are commercially viable at scale.’”

markets

Retail traders hit the sell button on quantum computing stocks

In a parallel universe, retail traders are doubling down on the long-term potential of quantum computing companies. But in this one, they’re very much heading for the exits after these companies, which are in the early stages of commercialization, have enjoyed a monster run that’s beginning to sour.

JPMorgan strategist Arun Jain estimates that retail traders are net sellers of single stocks today to the tune of $336 million, as of 11 a.m. ET. And quantum stocks Rigetti Computing and D-Wave Quantum are among the names seeing the biggest outflows, with $26 million and $20 million in net sales, respectively.

markets

Intuitive Surgical soars as Q3 earnings beat sparks a wave of analyst upgrades

Intuitive Surgical shares leapt nearly 17% Wednesday morning after the company topped Q3 estimates after the bell on Tuesday.

Adjusted earnings per share came in at $2.40, beating the Street’s estimate of $1.99. Revenue reached $2.51 billion, easily above the forecast of $2.41 billion.

The results were largely powered by strong demand for its da Vinci and Ion robotic surgical systems. Worldwide procedures for both da Vinci and Ion systems grew approximately 20% compared with the same quarter a year ago. Analysts were quick to take action on the strong results:

Piper Sandler maintained its “buy” rating on the stock and raised its price target to $610 from $595.
Wells Fargo reiterated a “buy” rating and lifted its target to $600 from $599.
BTIG kept a “buy” rating and increased its target to $589 from $529.
Evercore ISI maintained an “in-line” rating but raised its target to $540 from $450.
Baird reiterated a “buy” rating and hiked its price target to $655 from $536.

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Matt Phillips2h

Vertiv reports strong earnings as AI data center boom rolls on

AI infrastructure company Vertiv Holdings is up early after reporting much better-than-expected Q3 earnings thanks to the AI boom.

Adjusted earnings per share of $1.24 were better than the $0.98 FactSet consensus expectation. Sales of $2.68 billion were better than the $2.58 billion Wall Street had penciled in.

“We delivered strong sales growth of 29% and built significant backlog, reflecting both accelerating market demand and our increasingly strong competitive position and unique capabilities to enable our customers’ most advanced infrastructure needs at scale,” Vertiv CEO Giordano Albertazzi said.

Vertiv Posts Strong Earnings in ‘AI-Driven Market.’ The Stock Rises.

Vertiv Posts Strong Earnings in ‘AI-Driven Market.’ The Stock Rises.

“We delivered strong sales growth of 29% and built significant backlog, reflecting both accelerating market demand and our increasingly strong competitive position and unique capabilities to enable our customers’ most advanced infrastructure needs at scale,” Vertiv CEO Giordano Albertazzi said.

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