Breakfast News: AI Boom Isn't Over Yet
February 27, 2025
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Wednesday's Markets |
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| S&P 500 5,956 (+0.01%) |
| Nasdaq 19,075 (+0.26%) |
| Dow 43,433 (-0.43%) |
| Bitcoin $84,192 (-5.38%) |
Source: Image created by JesterAI.
1. Nvidia's Huang Still Sees Bright Future
Nvidia (NVDA +0.64%) CEO Jensen Huang talked up the data center revenue potential as part of the latest results, with the segment representing 91% of total sales. Despite recognizing the impact of DeepSeek, it noted higher competition from Huawei even despite the U.S. restrictions on the business.
- "DeepSeek was fantastic because it open-sourced a reasoning model that's absolutely world class": Huang noted reasoning models like DeepSeek will mean more chips will be needed going forward. He also wasn't too concerned about new custom chips from big tech companies, observing just because the chip is designed, it doesn't mean it gets deployed.
- "This is perhaps unheard of": Fool analysts dove into the earnings after the bell, with Seth Jayson highlighting how Nvidia produced as much free cash flow in FY25 as it did revenue in FY24, and Tim Beyers commenting "That's an extraordinary number. Purely as a business, this thing is on one heckuva run."
2. Trump's Tariffs Target Trading Partners
President Trump confirmed a decision has been made on a 25% import tariff on goods made in the European Union (EU), with an announcement imminent. The U.S.'s third largest trading partner has already vowed to retaliate on what they believe to be unjustified barriers.
- More trade policy changes rocking the boat: Trump also took aim at Chinese shipping, with a new proposal to impose levies on Chinese-made ships arriving at US ports. Chevron (CVX +0.69%) has been caught in the crosshairs on a separate issue, with Trump revoking a license to operate in Venezuela due to issues with the local President.
- "For investors, the shake-up could create both risks and opportunities": Fool analyst Emily Flippen has been looking at the potential consequences of the current administration removing de minimis exemptions. Domestic retailers with strong U.S. operations, and companies with operational advantages – like Roku (ROKU 0.34%) – stand to benefit, while businesses that rely on warehouses in China, Canada, or Mexico, including "drop-shippers" – such as Etsy (ETSY 4.09%) – may face headwinds.
3. Big Movers You Might've Missed
Teladoc Health (TDOC 2.17%) dropped over 15% after the market closed following results that saw a larger net loss posted than anticipated. Weakness in the consumer mental health division dragged on overall performance, with higher competition eating away at market share.
- 40+ new restaurant openings planned this year: Sweetgreen (SG 3.56%) fell almost 20% before recovering some of the losses despite posting a first full-year of adjusted EBITDA profitability. Some analysts pointed to the weaker-than-expected guidance and slightly underwhelming growth figures as reasons for the sharp reaction.
- CEO hails "a groundbreaking year": Lantheus (LNTH +2.25%) rocketed over 16% higher during market hours thanks to reaping the benefits of high demand for radiopharmaceutical products. The main product passed $1 billion in annual sales, with full-year revenue for the company expected to be in the $1.5-1.6 billion range.
4. Next Up: Key Earnings to Watch
Dell (DELL 3.28%) releases Q4 results after the market closes. It has been ramping up AI-driven infrastructure, so watch for updates on demand for the PowerEdge AI servers and partnerships with Nvidia.
- Up 1,776% since 2009 Rule Breakers rec: Monster Beverage (MNST 0.63%) will provide earnings after the closing bell, with a focus on how the business is dealing with heightened competition from Celsius (CELH 3.36%) and Red Bull. New product launches and international expansion plans will also be closely monitored.
- A finger on America's pulse: Shareholders will be hoping that elevated mortgage rates haven't dampened demand too much for Redfin (RDFN +0.00%), as it releases results. News on further expansion of the rentals business to diversify revenue could help the stock in the long term.
5. Foolish Fun
First recommended in Stock Advisor back in 2005, Nvidia is up 1,862% over the last 5 years. Across the same period, the S&P 500 is up 102%.
Will Nvidia be a market-beater over the next 5 years? Debate with friends and family, or become a member to hear what your fellow Fools are saying.
