Breakfast News: Nvidia's China Comeback

Breakfast News: Nvidia's China Comeback

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1. Nvidia to Restart China H20 Chip Sales

Nvidia (NVDA 0.66%) plans to resume selling H20 AI chips to China, with assurances from the U.S. administration the goods would get the green light for export licenses, highlighting the thawing tensions between the U.S. and China.

• A $15 billion revenue swing: The reversal of the multi-billion dollar hit from the previous chip restrictions not only adds this back to full-year finances but provides a fresh growth catalyst as Nvidia can reinforce its leadership in the Chinese market.
• Positive "not just for the company but also the AI semiconductor supply chain." Vey-Sern Ling, a managing director at Union Bancaire Privee, outlined the knock-on impact for related stocks, as well as China tech platforms building AI capabilities.

2. Trade Desk Pops 15% on S&P 500 Entry

Trade Desk (TTD 2.21%) jumped almost 15% after the closing bell following confirmation it would be joining the S&P 500, replacing Ansys (ANSS).

• Surprise move outside scheduled rebalancing: Confirmation of regulatory approval for Synopsys (SNPS -0.36%) to purchase Ansys means an immediate replacement is needed, with the deal set to close on Thursday.
• The index effect in action: Index funds hold more than a quarter of the shares of S&P 500 constituent stocks, with any company entering the index usually seeing a spike with the anticipation of fund flows.

3. Bank Earnings Kick Off: JPM, WFC & C

Ahead of the opening bell, JPMorgan Chase (JPM 0.03%) is set to release quarterly earnings. Analysts expect the bank to perform well like last quarter, benefiting from higher trading revenue thanks to recent market volatility.

• First report since the Federal Reserve lifted its $1.95 trillion asset cap: Wells Fargo (WFC -0.46%) will release results before the market opens, hoping to build on the earnings per share (EPS) beat from the previous quarter, with expectations for a slight increase in EPS from $1.33 to $1.41.
• Markets division accounts for over a quarter of total revenue: Citi (C 0.78%) reports pre-market, with investors watching for an update on wealth and services segments, to see how diversified the business is, aside from just capital markets activity.

4. Tesla Goes Live in India Push

Tesla (TSLA 3.57%) launched its Model Y in India at $70,000, the highest price among major markets and almost a third more than the U.S., as it continues to try and diversify its reach in new markets.

• India's steep 70-110% import tariff on cars: The EV penetration is under 5%, with luxury cars making up just 1% of India's total vehicle sales, as high import tariffs make foreign manufacturers even less attractive.
• Tesla sales dropped 13% in second quarter: Tesla aims to grow in India, a market that's relatively untapped by global brands. Challenges in China and the U.S. mean Tesla is reaching out to new geographies.

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