February 5th Market Overview

Happy Wednesday.

We are shaking off the early week trade tensions. Retail traders are breaking volume records on tech purchases. $NVDA leading the charge on fresh AI developments. Trade policy seems to be pretty clear at least for the next month. We all know the market loves predictability.

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Let's dig in...

Executive Summary

• Retail traders set a new record with $3.2 billion in single-stock purchases. This amount beats the March 2020 Covid-era high by $1 billion. Notably, 70% of these flows focused on MAG7 stocks.
  

• $GOOGL plans a huge $75B in CapEx for 2025, up from $58B in 2024. This investment aims to tackle AI-driven cloud capacity issues and expand data centers.
  

• ISM services index falls to 52.8%, below the 54.3% expected. Key metrics reveal strength, with employment increasing to 52.3%.
  

• U.S. Treasury yield drops 10bps to 4.412% after Treasury Department signals auction sizes to remain stable "for several quarters"
  

Market Overview

Key Market Drivers

1. AI Infrastructure Acceleration: Super Micro Computer announces full production of $NVDA’s Blackwell platform, while Google commits to substantial data center expansion
   

2. Service Sector Moderation: ISM services PMI posts 52.8%, maintaining expansion despite missing 54.3% forecast
   

3. Trade Relations: China signals preference for dialogue over tariffs, with Trump indicating patience on Xi discussions
   

4. Retail Trading Records: Single-stock trading reaches historic levels, surpassing previous records by significant margins
   

Stock Spotlight

• $NVDA: ▲ 4% on multiple catalysts:

  • Taiwan RTX 5090 cards commanding 3x MSRP at NT$200,000-300,000

  • CoreWeave launches first GB200 NVL72-based instances

  • Attracts $1.3B in retail inflows

  • Super Micro Computer collaboration strengthens AI data center positioning

• $GOOGL: ▼ 8% on complex earnings:

  • Cloud revenue: $11.96B vs $12.19B expected

  • YouTube ads: $10.47B vs $10.22B expected

  • $75B CapEx planned for 2025

  • Gemini 2.0 launch with industry-leading performance

  • 4.4M developers using Gemini, doubling in six months

  • Cloud deals over $250M doubled YoY

  • AI-related compute demand up 8x over 18 months

• $AMD: ▼ 7% on mixed performance:

  • Revenue: $7.66B vs $7.54B expected, ▲ 24% YoY

  • Data Center: $3.9B vs $4.15B expected, ▲ 69% YoY

  • Client Revenue: $2.3B vs $1.94B expected, ▲ 58% YoY

  • Microsoft confirms MI-300X chips powering GPT-4 Copilot

  • MI350 samples shipping to lead customers this quarter

  • European Commission reviewing $5B ZT Systems deal

Big Name Updates

• $TSLA: ▼ 3.3%, extending weekly decline:

  • Down over 6% this week

  • European market registrations showing pressure

  • CEO Musk plans meeting with India PM Modi

  • Trade war implications weigh on sector

• $AAPL: ▼ 1% on regulatory pressure:

  • China considers formal App Store investigation

  • Focus on fees and policies

  • Bloomberg report triggers market response

• $UBER: ▼ 7% despite strong metrics:

  • Revenue: $11.96B vs $11.77B expected, ▲ 20% YoY

  • Monthly Active Users: 171M, ▲ 14% YoY

  • Total Trips: 3.07B, ▲ 18% YoY

  • Uber One Memberships: 30M, ▲ 60% YoY

  • Q1 guidance raises currency concerns

Other Notable Company News

• $WMT: Plans hundreds of role eliminations

• $WDAY: Announces 8.5% workforce reduction while maintaining strategic investments

• $AVGO: Set to benefit from Google’s increased AI investments through TPU development

• $SNAP: Guides Q1 revenue $1.325B-$1.36B, adjusted EBITDA $40M-$75M

• $PDD: Faces pressure from USPS international shipping halt

• $CMG: Warns new tariffs could add 60bps to cost of sales
  

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Sector Watch

Bond Market

The 10-year yield drops 10 basis points to 4.412%. Treasury Department signals auction sizes will remain unchanged “for at least the next several quarters,” providing clarity on future supply dynamics. The announcement may help calm market concerns about increased government borrowing.

Policy Watch

• Morgan Stanley revises Fed outlook to single 25bps cut in June

• China Foreign Ministry emphasizes dialogue over unilateral tariffs

• Trump indicates willingness to speak with Xi “at the appropriate time”

• U.S. trade deficit expands to $98.4B in December, highest since pandemic

• Treasury maintains stable auction sizes for coming quarters
  

What to Watch

1. AI Infrastructure Expansion:

   • Data center buildout acceleration

   • Cloud provider CapEx trends

   • Competition between $NVDA and $AMD in AI chip market

   • Impact on semiconductor supply chain
     

2. Trade Relations Development:

   • U.S.-China diplomatic discussions

   • Implementation of new tariffs

   • Impact on tech supply chains

   • Corporate responses to policy changes
     

3. Retail Trading Dynamics:

   • Sustainability of record inflows

   • MAG7 stock concentration

   • Impact on market volatility

   • Institutional investor positioning
     

4. Tech Earnings Impact:

   • Cloud revenue trends

   • AI investment patterns

   • Data center demand metrics

   • Enterprise spending outlook