What an AMD deal with Tesla would mean for Nvidia and Intel

AMD is cutting into Nvidia’s early lead in artificial intelligence for cars.

Jim Keller, a former AMD

AMD, -2.00%

chip designer, now works at Tesla

TSLA, -2.13%

(Keller also previously worked at Apple

AAPL, -1.39%

) The news is that Tesla is working with AMD on a new custom artificial intelligence chip at the expense of Nvidia

NVDA, -2.36%

To be sure, a Reuters report said there’s no formal agreement.

Still, let’s explore the dynamics among AMD, Nvidia and Intel

INTC, +0.40%

Chart

Please click here for an intraday annotated chart of AMD. The most important information for investors to glean from the chart is that the VUD indicator stays strongly green as AMD’s stock price traces an explosive move up. The VUD indicator is the most sensitive measure of supply and demand in real time. Typically when AMD moves up on news, the VUD indicator first becomes green and then turns orange. Green indicates net buying; orange indicates net selling. This happens because as the momo (momentum) crowd runs up the stock, the “smart money” typically sells into the strength.

Read: The YouTube channels for investors to watch now

Please note from the chart that during the latest AMD price move, the VUD indicator stayed green throughout. There was no selling by the smart money into the strength, as has been the case in the past.

Ask Arora: Nigam Arora answers your questions about investing in stocks, ETFs, bonds, gold and silver, oil and currencies. Have a question? Send it to Nigam Arora.

Not a surprise

At The Arora Report, the news is not a surprise. It was anticipated for the following reasons:

• It is a good practice for companies to not become totally dependent on chips from one company. Companies often seek to diversify.

• It is only a matter of time before Tesla will be competing with electric cars from BMW

BMWYY, +0.59%

Daimler

DDAIF, +0.24%

GM

GM, +0.58%

Ford

F, +0.17%

and Toyota

TM, -0.19%

It behooves Tesla to develop its own intellectual property. Here Tesla is using AMD intellectual property to design a custom chip. In the process, Tesla will build significant intellectual property of its own.

• AMD had a relationship with an ex-staffer now at Tesla.

Financial impact

There is no significant financial impact on AMD and Nvidia.

Sentiment

Stocks often move on sentiment. The news boosts sentiment on AMD. The sentiment on Nvidia should be dented, but expect the effect to be mild as Wall Street analysts rush to defend Nvidia. Many Wall Street analysts have “buy” ratings on Nvidia, hence they are predisposed to defending Nvidia.

Bad day for Intel

The simple fact that, in spite of its significant efforts, Intel was not able to get in Tesla but AMD did, makes for a bad day at Intel.

Should you buy AMD, Nvidia or Intel?

The best way for investors to decide on which stocks to buy is to focus on potential risk-adjusted returns.

In plain English, it means returns in excess of those commensurate with the risk taken. For example, Nvidia could go to $250 but it could also fall to $90. As such, risk in Nvidia is fairly high. In contrast, the probability of getting the same return as Nvidia in Intel is lower but the risk is also lower. Intel also pays a nice dividend.

Nigam Arora on Tesla: Is the stock too expensive? Try these alternatives

The Arora Report provides clear signals based on risk-adjusted potential on these stocks to buy, sell or hold including buy zones, target zones, stop zones and appropriate quantities. All of the stocks mentioned here move on the news, and sentiment can shift on a dime. For this reason, it is important for these positions to be reviewed regularly, investors to stay nimble and have protective measures in place. The objective of investors should be to consistently make money and avoid the yo-yo of making money and then losing it.

Disclosure: Subscribers to The Arora Report may have positions in the securities mentioned in this article or may take positions at any time. All recommended positions are reviewed daily at The Arora Report.

Nigam Arora is an investor, engineer and nuclear physicist by background, has founded two Inc. 500 fastest-growing companies, is the developer of the adaptive ZYX Global Multi Asset Allocation Model and the ZYX Change Method to profit from change in trading and investing. He is the founder of The Arora Report, which publishes four newsletters. Nigam can be reached at Nigam@TheAroraReport.com.

Nvidia: Decline In Cryptocurrency Revenue Threatens Share Price – NVIDIA Corporation (NASDAQ:NVDA)

Contribution To Revenue Is Substantial

Recently estimated to produce 10% of revenue for Nvidia Corp. (NASDAQ:NVDA), the extent to which the company benefits from cryptocurrencies may already be declining. In turn, this decline in income and profitability may be expected to prompt a fall in share price.

Nvidia CEO Jen-Hsun Huang stated at the time of Nvidia’s most recent earnings call that cryptocurrency is “a very important market.” The company produces graphics cards customized exclusively for mining. Using their P106-100 GPU, this specification is not appropriate for gaming. Nvidia provides these mining cards direct to board partners such as Galaxy, ASUS, Gigabyte, Colorful, EVGA, Palit, MSI and PCP.

Jefferies analyst Mark Lipacis ventures that Nvidia is three times more vulnerable to a decline in cryptocurrency revenue than is Advanced Micro Devices, Inc. (NASDAQ:AMD), based on sales of GPU products with SKUs linked to the cryptocurrency market. Referencing the Jefferies estimate that 10% of overall company revenue derives from this segment, that would place cryptocurrencies as generating $691 million in gross revenue for Nvidia.

Deals Relative Financial Advantage To AMD

Thus an overall pullback in cryptocurrency-fueled demand for high-end graphics cards will deal relative financial advantage to AMD, the less exposed to this sector of the two GPU market competitors. This at a time when AMD is poised to claim a greater share of the data center market, as exemplified by its recent partnership agreement with Baidu Inc. (NASDAQ:BIDU) to trial AMD Radeon Instinct GPUs in Baidu data centers.

Meanwhile Nvidia’s data center revenue at most recent reporting is trailing expectations. Consequently Nvidia is already confronted with a competitor gaining momentum at the premium end of the GPU market. A reduction in demand for cryptos would further add to AMD’s relative momentum.

While Jefferies dealt with Nvidia’s potential vulnerability to a cryptocurrency downturn, RBC Capital Markets goes a step further and holds that demand for the company’s graphics cards for cryptocurrency mining is already actually in decline in Nvidia’s current financial quarter.

Need For Nvidia Chips Reduced

Additionally, RBC asserts that changes in Ethereum payment verification procedures, moving from the “proof of work” method to “proof of stake” processing, may soon arrive to “dramatically lessen the need for powerful chips from Nvidia.”

The chart below shows how Ethereum’s share of the cryptocurrency market has increased exponentially to approximately 30% since early 2017, just as that of bitcoin has collapsed, exacerbating the potential negative affect of a change in Ethereum payment procedures. An escalated deterioration in revenue from Ethereum as a result of a change in its payment verification procedures would deal a significant hit to Nvidia at a time when overall cryptocurrency market activity is weakening.

Shares of CryptoCurrency Market(Source: Autonomous NEXT)

Increasing the probability that Nvidia will face a decline in revenue derived from falling cryptocurrency demand, major banks are aligning themselves in opposition to cryptos. Large investment and commercial banks, with the enormous political and regulatory influence they wield, will not stand idly by as their profit base is eroded by the free transfer of anonymous cryptocurrencies.

Opposition Has Negative Implications For Nvidia

In illustration, just days ago bitcoin lost 10% of its value when Jamie Dimon of JP organ Chase & Co. (NYSE:JPM) denounced it as a fraud. On September 14, the currency lost more than $500 in a single day. On the same day, Ethereum fell below $250 to a six-week low.

Chart^NYB data by YCharts

Of note when making projections for Nvidia’s future revenue, JPMorgan has been trialling the use of blockchain technology to fight the advent of cryptos. This is the serious financial heft and technological resource of a major institution seeking to build a firewall against the growth of bitcoin et al, with consequent negative implications for Nvidia’s revenue.

While one may or may not agree with Dimon’s take on, and ability to obstruct, the future growth of cryptocurrencies in the long term, Nvidia has a clear vulnerability to a downturn in the cryptocurrency segment in the short- to medium-term. Nvidia investors may wish to consider whether their long term view of the future of cryptocurrencies, and its effect on Nvidia’s revenue, aligns with their own investment time horizon.

Central Banks And Governments Oppose

As a further very powerful factor which Nvidia may expect to ultimately act to depress the rise of cryptocurrencies, and therefore reduce the company’s revenue derived from that market, cryptos will no doubt have the regulatory force of central banks and governments thrown at them, as those institutions fear erosion of their power base, the fiat currencies.

In the course of this process, cryptocurrency markets will be jolted hard and often by many new regulatory challenges. Unquestionably, that assault is only just beginning. Reinforcing this belief, Mohammed El-Erian, chief economic adviser at Allianz Global Investors, stated recently regarding cryptocurrencies that “current pricing assume(s) massive adoption, and I don’t think governments will allow the amount of adoption that’s currently priced in.”

There are further substantial considerations operating against cryptos, and by extension the revenue Nvidia derives from them, with consequent implications for share price. A crackdown by the Chinese government on cryptocurrency exchanges prompted two of the largest Chinese exchanges to issue statements that they will close by the end of October. China is a leading center of bitcoin activity, providing approximately 20% of global bitcoin trade and mining, and consequently of crypto card demand.

As the world’s largest market for graphics cards, China is a market to which Nvidia must give its greatest care and attention to preserve broad market share and the organic process of word-of-mouth referral. If the importance of crypto cards diminishes, this fact could shift competitive emphasis in China to segments where AMD has stronger market positioning, such as gaming.

A report from cybersecurity company FireEye, Inc. (NASDAQ:FEYE) recently identified that North Korean hackers have been attacking crypto exchanges in their efforts to sidestep U.N. sanctions by accumulating reserves of cryptocurrencies for Kim Jong Un’s regime. Of concern for Nvidia, should future hacking activity take place on a sufficiently large scale, it would undoubtedly depress market price of the cryptocurrencies targeted, with a likely spillover affect onto the asset class as a whole, weakening demand for crypto cards.

Conclusions

The cryptocurrency market produces 10% ($691 million) of Nvidia’s gross revenue through the sales of market specific, high margin graphics cards. The challenges faced by this emerging asset class are very substantial, and have strong negative implications for the revenue Nvidia derives from this business segment.

It is probable that cycles of volatile and depressed cryptocurrency market participation will weaken demand for these Nvidia products, hitting the company’s bottom line and affecting share price. A downturn in crypto graphics products will yield relative financial advantage to AMD, the less exposed to the business segment of the two GPU competitors, just as AMD is enjoying new-found momentum in high-end GPUs.

With related Nvidia product sales already believed to be in decline, the cryptocurrency sector faces the great challenges of the staunch opposition of governments, major institutions, investment banks, technology changes in Ethereum payment verification, extreme market volatility which risks alienating market participants, and the systemic disruption of North Korean hackers compromising crypto exchanges.

The consequent vulnerability Nvidia has to this demand sector is therefore in play, substantial and clear.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

NVIDIA Corp. (NASDAQ:NVDA): Could Become Bigger Than Intel

NVIDIA is leading the first cloud upgrade cycle with graphics chips that can handle AI

There is no stopping the stock of NVIDIA Corp. (NASDAQ:NVDA), the graphics chip designer that dominates gaming and, increasingly, Artificial Intelligence (AI).

nvidia stockThe shares are up 76% in 2017, with analysts pounding the table for it and one even nick-naming a dog for it. The latest price target of $250 per share would take the market cap to $150 billion, within sight of mighty Intel Corp. (NASDAQ:INTC), whose value has stalled out at $178 billion.

But this is not a bubble stock. Nvidia sales are growing 50%, year-over-year, each quarter, and it brings 25% of those revenues to the net income line. The company’s debt is just 25% of assets, and has been declining through 2017. Operating cash flow came in at nearly $1 billion for the most recent quarter.

The price to earnings ratio of nearly 54 looks high, but if earnings keep growing you may be paying less than 30 times 2018 earnings if you buy now.

All About the Cloud

If NVIDIA were still suck in its original niche of gaming chips, this would not be happening. But graphics processing can easily be adapted to deep learning, sucking up huge amounts of data and offering quick analysis. That’s the heart of artificial intelligence, which is now being built into clouds.

Systems like Amazon.Com Inc.’s (NASDAQ:AMZN) Alexa, Microsoft Corp. (NASDAQ:MSFT) Cortana, International Business Machine Corp. (NYSE:IBM) Watson, Apple Inc. (NASDAQ:AAPL) Siri and Google Assistant from Alphabet Inc. (NASDAQ:GOOGL) aren’t just voice interfaces. They are front ends to artificial intelligence. They require the support of more processing power than the cheap, low-end silicon clouds were originally built with can deliver.

Now that these clouds are built, the race is on to upgrade them, to add capability that offers instant answers to complex questions. It’s not just the data center market that’s booming, but AI based on graphics chips turns out to be at the heart of self-driving cars, the next hot market.

All this has put NVIDIA in a very sweet spot.

Next Page


Article printed from InvestorPlace Media, https://investorplace.com/2017/09/nvidia-bigger-than-intel/.

©2017 InvestorPlace Media, LLC

Nvidia reveals Need for Speed Payback system requirements and a new 4K trailer

Last month, Nvidia delivered a showroom-fresh 4K, 60 fps trailer for EA’s upcoming racing game Need for Speed Payback. This month, it’s done much the
same thing—but this time we’ve got some system requirements too. 

Origin still lists Payback’s required hardware as “coming soon,” but Nvidia’s breakdown is pretty clear, and at this point I think it’s fair to acknowledge that they know what they’re talking about. Obviously there are no AMD display cards listed, but the “or equivalent” part should be easy enough to figure out, at least until EA gets around to nailing down specifics. Here’s what’s what: 

Minimum Requirements For 720p30 At Low Settings:

  • OS: 64-bit Windows 7 or later
  • CPU: Intel i3 6300 @ 3.8GHz or AMD FX 8150 @ 3.6GHz with 4 hardware threads
  • RAM: 6 GB
  • Disc Drive: DVD ROM drive required for installation only
  • Hard Drive: 30GB
  • Video: Nvidia GeForce GTX 750 Ti or GTX 1050, or equivalent
  • DirectX: 11 Compatible video card or equivalent
  • Input: Dual analog controller
  • Online Connection Requirements: 192 KBPS or faster Internet connection

Recommended Requirements For 1080p60 At High Settings:

  • OS: 64-bit Windows 10 or later
  • CPU: Intel i5 4690K @ 3.5GHz or AMD FX 8350 @ 4.0GHz with 4 hardware threads
  • RAM: 8GB
  • Disc Drive: DVD ROM drive required for installation only
  • Hard Drive: 30GB
  • Video: Nvidia GeForce GTX 1060, or equivalent
  • DirectX: 11 Compatible video card or equivalent
  • Input: Dual analog controller
  • Online Connection Requirements: 512 KBPS or faster Internet connection     

Nvidia didn’t get into the necessary kit needed to make the magic happen in 4K, but added that a GeForce GTX 1070, 1080, or 1080 Ti “will enable you to further increase graphical fidelity, or up the resolution, giving you an experience in line with the one shown” in the new 4K gameplay trailer.   

Need for Speed Payback is set to come out on November.

Nvidia: Nevermind AMD ‘Noise,’ They’ll Be Fine, Says RBC

RBC Capital Markets chip analyst Mitch Steves this evening reiterates an Outperform rating on shares of Nvidia (NVDA), and a $205 price target, urging investors to “ignore the noise” about competitor Advanced Micro Devices (AMD) having apparently won some business with Nvidia customer TeslaMotors (TSLA).

CNBC reported late this afternoon that AMD is working with Tesla to develop a chip for “A.I.” functions of a self-driving car. Tesla is already a customer of Nvidia’s.

Noting that the report is thus far “unsubstantiated,” Steves concludes that Nvidia may no longer be the sole source of chips for Tesla, but that’s okay because they can remain the “market leader” even as AMD picks up some share:

Nvidia no longer the sole provider of chips). While we think this makes sense from a strategic perspective it will unlikely result in a single source dynamic (where Tesla only works with AMD). Instead, we view this announcement as similar to dynamics we anticipate to occur in the Data center: AMD winning some share while NVDA remains as the de-facto standard and market share leader. Recall, NVDA has content at multiple companies ranging from Uber to Toyota. Importantly, we anticipate seeing more positive announcements from AMD particularly around the Data Center but Nvidia will likely remain as the market share leader. Net Net: we view the announcement as a near-term concern that should not impact the story over the next several years. AMD will likely gain some share both in auto and DC but we believe Nvidia will remain as the market share leader.

The graphics processing unit, or “GPU,” sold by Nvidia, will probably remain the main chip for Tesla, he opines:

It is important to note that the announcement is with AMD and not with a systems company (such as INTC/Mobileye). This suggests the value for AI/self-driving remains with the GPU. We think Tesla will use Nvidia chips for the majority of the AI workloads, while some AMD chips will be develops for specific computing jobs. This would allow the company to vertically integrate the chips (keeping more IP in-house) and does not suggest that NVDA will lose content in the future. Overall, we think Nvidia remains as the primary workhorse/engine while AMD chips are used for specific applications to avoid giving Nvidia 100% of the AI content in self-driving vehicles

And the big takeaway, according to Steves, is that “the value of AI chips is continuing to increase which is causing companies to look in some instances to dual source.”

Nvidia stock is down $6.67, or 3.6%, at $179.17, in late trading.

See also: AMD and Tesla: ‘Double Slap’ at Intel, Says Rosenblatt, September 20th, 2017.

NVIDIA Ansel made these awesome in-game photos possible

This week we took a look at a bunch of images captured in the wild by gamers, all made possible with NVIDIA Ansel. The NVIDIA Ansel system allows a gamer to stop time by capturing the environment in which they’re playing a game. Through this system’s abilities, users can re-live the moment they were in, and share that moment from angles never before possible.

Today we’re literally hitting Twitter to bring you a sampling of what NVIDIA Ansel can produce. This is not a collection cherry-picked by any game developer nor NVIDIA. This is SlashGear going out and finding some examples of what everyday average gamers are sharing using Ansel for whatever content they want to share.

The image at the head of this article was captured by StevieLad87. He’s captured a lovely hawk in the game ARK: Survival Evolved! ARK is one of those games where there’s no end to the subject matter worthy of capture – it’s a lush environment full of interesting oddities.

Above is a set of images captured in Mass Effect Andromeda. These are fairly tame, standard angles. Below you’ll begin to see some interesting bits, both from Paragon.

Next you’ll see a fine variety of shots from The Witcher 3. This game goes DEEP with the subject matter – it’s no wonder this photographer/gamer found such radical images to snap.

Conan Exiles is next with a spherical image captured with NVIDIA Ansel. This image is hosted by Kuula and posted on Twitter, allowing it to be viewed from whatever angle the viewer wishes. Look at that lens flare on the fire!

The next set of images might be my favorite of the bunch. These images were captured in PES 2018 (Pro Evolution Soccer). What’s amazing about these photos is the scale. The person capturing these images would never have been allowed to see the game from these angles if Ansel didn’t exist. Backing all the way out of the stadium to see the massive manifestation of the great game – that’s magical.

NVIDIA Ansel is available in NVIDIA’s GeForce Experience, the same application that makes it easy to optimize games played on computers with NVIDIA GPUs. A wide variety of games are available with integrated NVIDIA Ansel image-capture functionality. Some of these are: Agents of Mayhem, ARK: Survival Evolved, Conan Exiles, Dark and Light, Dishonored 2, For Honor, Kona, Hellblade: Senua’s Sacrifice, Mass Effect: Andromeda, Middle-earth: Shadow of War, Mirror’s Edge Catalyst, Obduction, Paragon, Raiders of a Broken Planet, Snake Pass, Tekken 7, Tom Clancy’s Ghost Recon: Wildlands, War Thunder, Watch Dogs 2, The Witcher 3: Wild Hunt, and The Witness.

NVIDIA Ansel is supported in the Unreal Engine as a plugin, in the Unity Engine, and it’ll be coming to Amazon Lumberyard soon. Users out in the wild can experience NVIDIA Ansel by downloading NVIDIA’s GeForce Experience right this minute.

Apple Inc. (AAPL), AT&T Inc. (T) and Nvidia Corporation (NVDA)

U.S. stock futures are in a holding pattern this morning, as Wall Street awaits the results of the Federal Open Market Committee’s two-day policy meeting. While a rate hike isn’t on the table, the Federal Reserve is expected to detail how it plans to wind down its massive balance sheet. Fed Chairwoman Janet Yellen will hold a press conference following the announcement today at 2 p.m. Eastern.

Wednesday’s Vital Data: Apple Inc. (AAPL), AT&T Inc. (T) and Nvidia Corporation (NVDA) and

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="With that in mind, it’s no surprise that futures on the Dow Jones Industrial Average, S&P 500 and Nasdaq-100 are all trading within a 0.04-point range this morning.” data-reactid=”23″>With that in mind, it’s no surprise that futures on the Dow Jones Industrial Average, S&P 500 and Nasdaq-100 are all trading within a 0.04-point range this morning.

In the options pits, options traders were also reluctant to take up positions ahead of the Fed’s decision on monetary policy. Volume nosedived to about 12.1 million calls and 10.8 million puts on Tuesday. Over on the CBOE, the single-session equity put/call volume ratio expressed a bit of concern, rising to a two-week high of 0.67. The 10-day moving average held pat at 0.61.

InvestorPlace – Stock Market News, Stock Advice & Trading Tips

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Taking a closer look at Tuesday’s volume, Apple Inc. (NASDAQ:AAPL) saw call volume fall off its recent highs following comments from CEO Tim Cook on the iPhone X’s lofty price tag. Meanwhile, AT&T Inc. (NYSE:T) also drew low call volume amid a flurry of news including rumors it may sell its Latin America pay TV business. Finally, Nvidia Corporation (NASDAQ:NVDA) stock struggled to makes gains despite another bullish analyst comment from RBC Capital Markets.” data-reactid=”26″>Taking a closer look at Tuesday’s volume, Apple Inc. (NASDAQ:AAPL) saw call volume fall off its recent highs following comments from CEO Tim Cook on the iPhone X’s lofty price tag. Meanwhile, AT&T Inc. (NYSE:T) also drew low call volume amid a flurry of news including rumors it may sell its Latin America pay TV business. Finally, Nvidia Corporation (NASDAQ:NVDA) stock struggled to makes gains despite another bullish analyst comment from RBC Capital Markets.

Wednesday’s Vital Options Data: Apple Inc (AAPL), AT&T Inc (T) and Nvidia Corporation (NVDA) and

Apple Inc. (AAPL)

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="While both the financial and tech media are buzzing about the $999-plus price tag for the new iPhone X, CEO Tim Cook told ABC’s “Good Morning America” he wasn’t all that concerned. “It’s a value price, actually, for the technology you’re getting,” Cook said. In downplaying the price, Cook remained unworried about the potential impact on iPhone sales, stating, “Apple has never been about selling the most of anything … Our objective is not big revenues.”” data-reactid=”41″>While both the financial and tech media are buzzing about the $999-plus price tag for the new iPhone X, CEO Tim Cook told ABC’s “Good Morning America” he wasn’t all that concerned. “It’s a value price, actually, for the technology you’re getting,” Cook said. In downplaying the price, Cook remained unworried about the potential impact on iPhone sales, stating, “Apple has never been about selling the most of anything … Our objective is not big revenues.”

While Cook’s objective might not be big revenue, AAPL investors certainly disagree. The stock has dipped from its pre-iPhone X perch above $160, and the shares are struggling to challenge this area so far this week.

AAPL options traders have taken note, and call volume is falling as a result. On Tuesday, some 249,000 contracts traded on AAPL, numbering less than half the stock’s daily average volume. Furthermore, calls only made up 61% of the day’s take, down sharply from the 67% range heading into the iPhone event.

Options trading can be a leading indicator for AAPL stock, and in this case, the sentiment is pointing toward at least a short-term decline for the shares.

AT&T Inc. (T)

AT&T shares leapt more than 2% yesterday, as T stock reacted to consolidation rumors in the wireless market and news that the company is considering selling its Latin America pay TV unit. The latter would certainly help pay down AT&T’s hefty debt load, while the former would spell trouble for the company.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Rumors emerged yesterday that T-Mobile US Inc (NASDAQ:TMUS) is seriously considering a takeover bid for Sprint Corp (NYSE:S). According to sources, the talks are only in the preliminary stages, but a T-Mobile/Sprint tie-up could be bad news and increased competition for AT&T at a point when the company needs it the least.” data-reactid=”50″>Rumors emerged yesterday that T-Mobile US Inc (NASDAQ:TMUS) is seriously considering a takeover bid for Sprint Corp (NYSE:S). According to sources, the talks are only in the preliminary stages, but a T-Mobile/Sprint tie-up could be bad news and increased competition for AT&T at a point when the company needs it the least.

Options traders, at least, can see the writing on the wall. Volume rose to 247,000 contracts on Tuesday — roughly 2.5 times the daily average — while call activity fell to just 56% of the day’s take. That said, T’s October put/call open interest ratio has fallen from its perch at 1.58 on Monday to today’s reading of 1.39.

These call adds are likely due to T’s break above its 50-day moving average, and it will be interesting to see if this bullish trend continues.

Nvidia Corporation (NVDA)

NVDA’s recent rally may be weighing on bullish investors. The stock failed to gain ground yesterday despite bullish commentary from RBC Capital Markets. RBC reiterated its “overweight” rating and boosted its price target to $205 from $175. It was the second such price target boost this week for NVDA, after Evercore SI lifted its target to $250 from $180 on Monday.

Even NVDA options bulls look a bit fatigued. Volume on Tuesday rose to only 171,000 contracts, well shy of recent peaks in activity. Furthermore, calls made up just 63% of the day’s take — also down from recent highs.

That said, NVDA stock is trading at all-time highs right now, and the shares are lingering in overbought territory. As such, some short-term options speculators may be betting on a pullback to support for NVDA, which could emerged in the $180 to $185 region.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.” data-reactid=”63″>As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.

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The post Wednesday’s Vital Data: Apple Inc. (AAPL), AT&T Inc. (T) and Nvidia Corporation (NVDA) appeared first on InvestorPlace.

Wednesday’s Vital Data: Apple Inc. (AAPL), AT&T Inc. (T) and Nvidia Corporation (NVDA)

U.S. stock futures are in a holding pattern this morning, as Wall Street awaits the results of the Federal Open Market Committee’s two-day policy meeting. While a rate hike isn’t on the table, the Federal Reserve is expected to detail how it plans to wind down its massive balance sheet. Fed Chairwoman Janet Yellen will hold a press conference following the announcement today at 2 p.m. Eastern.

Wednesday’s Vital Data: Apple Inc. (AAPL), AT&T Inc. (T) and Nvidia Corporation (NVDA) andWith that in mind, it’s no surprise that futures on the Dow Jones Industrial Average, S&P 500 and Nasdaq-100 are all trading within a 0.04-point range this morning.

In the options pits, options traders were also reluctant to take up positions ahead of the Fed’s decision on monetary policy. Volume nosedived to about 12.1 million calls and 10.8 million puts on Tuesday. Over on the CBOE, the single-session equity put/call volume ratio expressed a bit of concern, rising to a two-week high of 0.67. The 10-day moving average held pat at 0.61.

Taking a closer look at Tuesday’s volume, Apple Inc. (NASDAQ:AAPL) saw call volume fall off its recent highs following comments from CEO Tim Cook on the iPhone X’s lofty price tag. Meanwhile, AT&T Inc. (NYSE:T) also drew low call volume amid a flurry of news including rumors it may sell its Latin America pay TV business. Finally, Nvidia Corporation (NASDAQ:NVDA) stock struggled to makes gains despite another bullish analyst comment from RBC Capital Markets.

Wednesday’s Vital Options Data: Apple Inc (AAPL), AT&T Inc (T) and Nvidia Corporation (NVDA) and

Apple Inc. (AAPL)

While both the financial and tech media are buzzing about the $999-plus price tag for the new iPhone X, CEO Tim Cook told ABC’s “Good Morning America” he wasn’t all that concerned. “It’s a value price, actually, for the technology you’re getting,” Cook said. In downplaying the price, Cook remained unworried about the potential impact on iPhone sales, stating, “Apple has never been about selling the most of anything … Our objective is not big revenues.”

While Cook’s objective might not be big revenue, AAPL investors certainly disagree. The stock has dipped from its pre-iPhone X perch above $160, and the shares are struggling to challenge this area so far this week.

AAPL options traders have taken note, and call volume is falling as a result. On Tuesday, some 249,000 contracts traded on AAPL, numbering less than half the stock’s daily average volume. Furthermore, calls only made up 61% of the day’s take, down sharply from the 67% range heading into the iPhone event.

Options trading can be a leading indicator for AAPL stock, and in this case, the sentiment is pointing toward at least a short-term decline for the shares.

Next Page

Nvidia at all-time high as Merrill Lynch gushes over A.I.

Nvidia shares are surging as Wall Street is growing more bullish on the company’s artificial intelligence opportunity.

Bank of America Merrill Lynch raised its price target for the chipmaker to the second highest among analyst firms, citing the company’s product leadership in the gaming, data center and AI markets.

The move came two days after Evercore ISI analyst C.J. Muse raised his price target to a Street-high price target on a similar thesis.

“Our positive view on Nvidia is based on its underappreciated transformation from a traditional PC graphics chip vendor, into a supplier into high end gaming, enterprise graphics, cloud, accelerated computing and automotive markets,” analyst Vivek Arya wrote in a note to clients Sunday.

“Similar to other large successful tech industries, we expect the $30bn AI chip market to also feature one dominant supplier – we think NVDA.”

Nvidia shares opened up 3 percent on Monday. The stock reached an all-time high on Friday, closing at $180.11.

Arya reiterated his buy and “top pick” ratings for Nvidia shares. He raised his price target for the stock to $210 from $185, representing 17 percent upside from Friday’s close. He now has the second highest price target on the stock out of more than 30 analysts, according to FactSet. Evercore’s Muse is the highest with a $250 12-month forecast.

Bank of America predicts data center capital spending will rise 21 percent in 2018 from an estimated 16.5 percent in 2017. Arya also said Google’s AI product is a specialized chip compared with Nvidia’s more general purpose processor, which is easier to program for different tasks.

“Incumbency matters and Nvidia has a much wider AI/machine learning ecosystem that will be tough to match,” he wrote.

Nvidia’s stock is up 187 percent in the past 12 months through Friday compared with the S&P 500’s 17 percent gain. That performance ranks No. 1 in the entire S&P 500, according to FactSet.

“Separately we note NVDA’s first mover advantage and growing influence in the multi trillion $ healthcare industry where AI/deep learning is being used for predictive analytics, image scanning and pathology assessments,” the analyst wrote. “Indeed about 50% of submitted papers at last week’s Medical Imaging Computing conference (MICCAI) were on deep learning.”

Can Nvidia and AMD Beat the Bitcoin slump?

Unless you’ve been in a coma for the last few years, you know that both Nvidia Corporation (NASDAQ:NVDA) and Advanced Micro Devices, Inc. (NASDAQ:AMD) introduced cryptocurrency-mining specific GPUs. Recently, in a direct contradiction to earlier momentum, Bitcoin and the cryptocurrency markets are receiving a thrashing. Now deep into correction territory, the crypto investor’s focus has shifted from hitting new plateaus to salvaging whatever they can. Hardened veterans understand that extreme volatility comes with the territory, but what about chip makers, Nvidia and AMD? ?

Bitcoin

Source: Shutterstock

As a quick refresher, mining is an algorithm-heavy process where computers compete to verify blocks of transactional data. The first to verify the data receives a cryptocurrency unit, such as Bitcoin, as a reward.

As you might expect, mining is an intensive process. Furthermore, the competition becomes all the more fierce as the mined cryptocurrency rises in value. If you have a slow computer, you are virtually guaranteed to waste a lot of electricity for nothing. To gain an edge, miners elect to use ultra-powerful GPUs. The top sellers are AMD and Nvidia.

Naturally, as Bitcoin prices soared to the moon, interest also shifted to NVDA stock and AMD stock. While not direct investments towards cryptocurrencies, their respective associations cannot be denied. AMD admitted as such in June of this year, and for good reason. Their primary focus is on their core gaming sector, but nobody turns down free money.

But now, as Bitcoin prices erode, the association is an unfavorable one. After the “king of cryptos” first hit $1,000 and then went on to collapse, it took down Nvidia and AMD. Potential miners got a case of the weak knees and fled to the nearest exit.

Could the same thing happen again?

Nvidia and AMD can Weather the Bitcoin Storm

Before I say no, I fully disclose the fact that I’m a strong advocate for cryptocurrencies. As evidence, I was one of the first people, along with my colleague Dana Blankenhorn, to speak consistently about Bitcoin and the blockchain on InvestorPlace. Furthermore, I’ve been buying this crypto slump, and will continue to do so.

Despite my obvious propensity for the digital markets, I still believe, for lack of a better phrase, that “this time is different.” I don’t think current shareholders of either NVDA stock or AMD stock have anything to worry about regarding cryptocurrencies. Here’s why:

First, when GPU sales for Nvidia and AMD took a hit after Bitcoin’s mercurial boom-bust cycle in 2013 and 2014, the concept of digital coins was very much a new phenomenon. GPUs weren’t marketed specifically for crypto mining; rather, it just happened that miners used Nvidia or AMD devices. Moreover, these chips weren’t necessarily efficient or effective for mining. Competing technologies ultimately hurt GPU sales at that time, not slumping Bitcoin prices.

Second, no correlation appears to exist among Nvidia and AMD stock, and Bitcoin. For the second half of this year, NVDA stock is up 17%, whereas AMD shares lost 2.5%. What might surprise lay investors is that Bitcoin is actually up 25% since July 1. Yet the most famous digital coin lost 36% over the last two weeks!

These performance metrics are simply all over the place. This dynamic clearly indicates that other factors besides cryptocurrencies impact Nvidia and AMD stock.

Finally, I’m not convinced that lower crypto prices weaken Nvidia and AMD processor demand. Corrections weed out the speculators and “Johnny-come-latelys.” This helps true proponents get more bang for their mining buck through competition elimination.

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