Breakfast News: Nvidia's $100B AI Bet

Breakfast News: Nvidia's $100B AI Bet

1. Nvidia Bankrolls OpenAI Expansion

Nvidia (NVDA 0.43%) closed 3.97% ahead yesterday on the news of what CEO Jensen Huang is calling the "biggest AI infrastructure project in history." It will see the chipmaker invest up to $100 billion in OpenAI, to provide "at least 10 gigawatts" of computing capacity to power the next generation of AI models.

• "OpenAI doesn't have the money to afford all the stuff it's pledged to do": Fool analyst Seth Jayson adds: "Nvidia's offer to bankroll the project sort of makes that explicit. $100 billion, by the way, is about 2x Nvidia's FCF-share buybacks [over] 10 years. Just sayin'."
• "By 2030, AI companies will need $2 trillion in combined annual revenue": Consulting firm Bain & Company estimates AI revenue could fall $800 billion short of what's required to power planned data center expansion.

2. Oklo Jumps on Nuclear Milestone

Oklo (OKLO 3.33%) gained another 3.8% yesterday to hit a new closing high of $140.30, following the company's groundbreaking event for its first Aurora nuclear power plant at Idaho National Laboratory. The stock is now up 560% year to date!

• "This opportunity positions us to build our first plant more quickly": CEO Jacob DeWitte spoke of the company's agreement with the Department of Energy, sealed in 2019. It's still waiting for authorization to build the new core.
• "The AI Revolution hits its next stride of growth": Daniel Ives at Wedbush noted a key driver, following President Trump's nuclear cooperation deal signed during his state visit to the U.K.

3. What to Watch on Tuesday

Car parts and service company AutoZone (AZO -1.10%) reported a 0.6% rise in fourth-quarter net sales this morning, year over year, to $6.2 billion, largely in line with expectations. But earnings per share for the quarter – expected to be flat – fell 5.6%. The stock dipped 3% in pre-market trading.

• Superscore of 68 on our Moneyball database: Micron Technology (MU 8.79%) will post fourth-quarter earnings after today's closing bell, with the stock already up 96% year to date. The memory chip maker posted revenue and earnings beats in Q3, boosted by demand for high-bandwidth memory used in AI. Analysts predict a 140% rise in earnings per share from Q4 last year.
• 3 days of record closes for S&P 500, Nasdaq: While Micron should provide news on AI demand, stock futures are barely changed ahead of a monetary policy speech from Federal Reserve chair Jerome Powell due later today.

4. Oil Dips on Supply Surge

Oil prices fell for the fifth day in a row, after an agreement to restart an export pipeline in Iraqi Kurdistan added to growing signs of a potential global supply surplus. Brent Crude dipped under $66 per barrel, with West Texas Intermediate down close to $62.

• "The bearish momentum continues, with Iraqi crude exports reportedly bound for a surge": Gao Mingyu at SDIC Essence Futures echoed market fears, as analysts expect an extra 230,000 barrels a day now a two-year halt due to a payment dispute is ending.
• Secondary sanctions on Russia: Canadian Prime Minister Mark Carney has joined President Trump's push to further isolate Russian President Putin from world energy markets.

5. Would You Rather?

Today we're asking whether you'd rather start a position in Nvidia or Microsoft (MSFT 0.37%) today, and why? Debate with friends and family, or become a member to hear what your fellow Fools are saying.