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Beijing Nudge Boosts Chip Stocks

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Beijing Nudge Boosts Chip Stocks

Cambricon Technologies [688256:SS], China’s largest artificial intelligence (AI) chip designer, jumped 20% on Monday — the maximum permitted in heavy trading — leading a rally in Chinese chip stocks, after Bloomberg reported that the Chinese government is pressuring companies to replace Nvidia [NVDA] processors with local alternatives. Semiconductor Manufacturing International [0981:HK] surged nearly 20%, and Naura Technology [002371:SZ] climbed 9%.

Which Tech Stocks Offer the Best ROE?

Goldman Sachs says the performance of quality stock factors will hinge on economic growth and interest rates. On Friday, the firm rebalanced its basket of 50 stocks with the highest expected return on equity (ROE). Chief US Equity Strategist David Kostin highlighted that the median stock in the basket has an ROE of 15%, compared to 2% for the median S&P 500 stock. Top picks in IT include Advanced Micro Devices [AMD], with 42% ROE growth; First Solar [FSLR], with 26%; and Analog Devices [ADI], with 17%.

 

Stellantis Drops on New Forecast

The electric vehicle maker [STLA] cut its 2024 forecast, citing reduced production and higher spending on promotional incentives in a slowing auto market. The company now expects an adjusted operating income margin of 5.5–7%, down from its previous double-digit projection. Stellantis also revised its industrial free cash flow outlook, and now anticipates a loss of €5bn–10bn, compared to earlier expectations for positive cash flow. STLA stock dropped as much as 14% in Milan, the steepest fall since March 2020.

How Can AI Be Powered Sustainably?

David Tepper, founder of Appaloosa Management, told CNBC that natural gas will be essential to powering AI, and said expectations that nuclear energy could power AI were “crazy”. His comments come amid growing concerns over AI’s rising energy demands, which are straining the US grid and complicating climate change goals — a much-discussed topic at last week’s Climate Week NYC. Analysts are adjusting forecasts due to the slow pace of renewable energy development, the Financial Times reported.

 

New Funds for Nio

 

Nio [NIO] announced on Sunday that it has entered into agreements with strategic investors, including Hefei Jianheng New Energy Automobile Investment Fund, for investment in NIO China. The investors will contribute approximately RMB3.3bn, while Nio will invest around RMB10bn to subscribe for newly issued shares. Following the transaction, Nio will hold an 88.3% equity interest in NIO China, with the remaining 11.7% shared by the investors and other shareholders.

 

 

 

 

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