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Cramer, Wall Street is losing the battle of narratives, and that could hurt a wide variety of stocks. God knows this market has no problem with this seemingly endless rise in long-term bond yields. Today is a real surprise, considering that oil has actually fallen in price. The situation on the stock market became very unpleasant, although the collapse in oil prices helped to bounce back from the lows: the Dow closed down 132 points, or 0.17%.
The Nasdaq fell only 0.09%. The 30-year Treasury bond rate is at its highest in 24 years—a pretty serious competitor for stocks. Although bond prices have recovered from the daily low, as buyers, I think, are starting to expect much weaker data. Perhaps we are in for a quick rate cut. The stocks need it.
More than 50% of stocks in the S&P 500 index are trading below their 200-day moving average, their worst performance since March. For 9 consecutive days, the number of S&P 500 stocks breaking 52- week lows has exceeded the number of stocks breaking highs. Only 1% of the index is at its 52-week high.
204 stocks fell 20% from their 52-week highs. In other words, over 40% of S&P stocks are in a bear market. And then there's the extraordinary story of the cancellation of the IPO of Oura, the popular health ring that was oversubscribed four times. This is not enough for the management, they prefer to wait for a better moment.
They blame everything on market conditions. But the Nasdaq 100 is only 1.3% below its all-time high. Could there be better market conditions? Okay, we're seeing slowdowns in the strangest places. I love reading these Federal Reserve notes on certain key regions. Today, the Federal Reserve Bank of Dallas released a report titled: “ Growth in Texas’ Service Sector Activity Has Stalled.” End of quote.
It goes on to say: “The income index, a key indicator of the state’s service sector, fell eight points to minus 0.9, with a reading close to zero indicating no change in activity from the previous month .” If things are weak in Texas , one can only guess how bad things could be in the other 49 states.
Consumer confidence figures were released today—the worst in twelve years. However, rates continue to rise . Now I think that could change if oil stays low or falls even more, but I admit that people have been saying this wrongly since the bond sell-off began. When I say we are losing the narrative war, I mean that something has changed in the context of AI and data centers—the biggest growth story of our era.
The market has been holding onto these topics for what seems like an eternity. But now, looking at the seating chart at today's lunch with the president, which includes Jensen Huang from the world's most valuable company, Elon Musk, the world's richest man, Jeff Bezos, the founder of Amazon, and many other rich people, I'm thinking, "Oh no." That is, who will come out and say: "What a bunch of big money people are profiting from people who lost their jobs because of AI," or "These oligarchs will kill us for higher earnings per share." A year ago, I would have thought these were people who represented the best we have.
Now the critics, not me, but the critics are saying, quote, "Here are the people who want to sacrifice your jobs for higher profits," end of quote. 18 months ago, people might have said that these executives were employing tens of thousands of people by building data centers. Now we're thinking, how much did they raise our electricity prices?
How much water did they spoil? How many cities were simply scammed? Oh, and of course, there's the worst possible narrative change. Two of America's most exciting companies, Anthropic and OpenAI, are now openly admitting that their products are not safe for society. We hear that the document that Anthropic is preparing for a potential IPO is full of dire warnings, such as that Anthropic could cause mass death or the extinction of humanity.
The company could pose, quote, " existential threats or fundamental destabilization of global systems," end of quote. Wow, I can't wait to buy shares in this company. More than 80 pages of the 261- page document are devoted to risks. Meanwhile, OpenAI is looking to raise $30 billion at a $1.4 trillion valuation, about $600 billion higher than...
As for AMD, the stock hit a new all-time high during today's session. We grew by more than 215% year-over-year . We are now up 2.6%, AMD is at $648 or so. We heard some comments from Lisa Su regarding demand. We also received a price target increase from Mizuho . So, let's discuss all of this with Alex Coffey.
Good morning, Alex. Just tell us more about what's pushing us up this morning. Yes, as you mentioned, AMD has been moving up since the premarket, even after CEO Lisa Su gave an optimistic message about AI demand, saying that demand for chips should remain very high for many years to come. Lisa Su said that demand continues to outpace supply, despite AMD's efforts to ramp up production, and the company plans a significant capacity increase in 2027 .
These comments come as Wall Street, Seme, becomes even more bullish on the story. Citi, for example, raised its price target from $575 to $800, while Mizuho raised it from $580 to $705. Both firms point to the rapid adoption of AI agents, including Meta's Muse, as major new drivers of demand for computing power.
Analysts say these agent-based AI applications could require significantly more computing power than traditional chatbots, and AMD is seen as a key beneficiary thanks to its processor business . The result is a growing market sentiment that the next round of AI infrastructure spending could provide another significant boost for AMD.
In real time, the stock is up about 3% and is approaching the $650 per share mark. Okay, great information. Thank you for these details. And, of course, Mizuho raises the price to 705. Incentives from agent AI are obviously the reason for such a move by the bank. Thank you very much for the details, Alex.
Let's discuss trading with Tim Bigham, an options strategist at Pilot AI. Good morning, Tim. How would you approach the AMD deal example today? Yes, good morning, Sam. Looking at a stock that, you know, has broken out to another new all-time high, but the upward moves, to me, are becoming a little less clear-cut.
Sure, all the price targets are going up, everyone is talking positive, but I think the stock probably needs to at least cool down on this rally. So I'm going for a traditional November put option, selling an out-of-the-money call spread to take advantage of today's stock rally, which, to be honest , was a bit smaller than most bulls expected.
I sell the November traditional call spread 750/760, getting about two dollars. I like a risk-adjusted return of almost 25%, and I provide myself with a margin of upside of over 100 points. I'm going after the reporting, taking advantage of the included volatility (IV) and earnings. We've seen a lot of earnings reports, and the reaction to the stocks hasn't been the best.
Of course, Sandisk and Micron are prime examples of this. So I think this AI boom may be starting to cool down. Of course, AI and the chip sector will benefit for many years to come, but I believe the share price already takes this into account, given today's market dynamics. Yes, look at Lisa Su's optimistic comments about the extremely high demand.
As I mentioned, Mizuho raised its forecast for AMD to 705, as well as for Dell to 650, Intel to 114, Sandisk to 2050, SMCI to 400, or, excuse me, to $43. They attribute this, as I said, to the rise of agent AI after the introduction of Meta's Muse model and the success we saw because of it, particularly in terms of demand for processors.
So this is worth considering. What are your thoughts on the overall market today? Obviously, given these historical highs, Jim. Yes, we are finally seeing the S&P break through to new all-time highs. Nasdaq, of course, has done this before. Russell, this " unloved child," I'm starting to like him simply because I think the long end of the yield curve might get some resistance, and that's where Russell would benefit the most.
That's why I prefer the Russell over the S&P or Nasdaq, simply because of that huge lead. I think this is the way to play the market now. It is worth monitoring relative movements, taking advantage of outsiders , selling leaders, and expecting market stagnation, given that indices have reached new historical highs.
Yes, and today there is widespread growth. The only sector currently in the red is healthcare, and Moderna is one of those companies lagging in the S&P. So, all in all, a pretty strong start to the day, Jim. Very grateful. As always, a great shirt. Options Strategy Before we begin, if you want deeper market insight, exclusive analysis, and member content, consider joining the channel sponsorship.
You support us and help us continue to highlight companies that are changing the global economy. Nvidia is approaching a valuation that would have seemed extraordinary just a few years ago . of $6 trillion, and its shares have been rising for five consecutive sessions, approaching record highs. Yet the most interesting part of this rally isn't the stock price itself.
This is growing evidence that the investment cycle in AI is extending into areas that many investors may have underestimated. Raymond James analyst Simon Leopold remains particularly bullish on Nvidia with a price target of $515. His argument was based on a simple idea. Artificial intelligence is becoming an industrial- scale transformation, and Nvidia has established itself as one of the companies making this transformation possible.
But this opportunity comes with a number of difficult challenges. The industry needs more computing power, more memory, more electricity, and networks that are increasingly suffering from overloads. And the companies building this infrastructure are competing for limited resources, spending enormous amounts of money.
So the question is not just how much AI hardware Nvidia can sell . The more important question is how big this entire infrastructure market can become. Let's start with demand. In the technology industry, companies continue to announce ambitious plans to expand their AI capabilities. Large cloud providers are making significant investments.
Specialized cloud companies are attracting capital, and businesses that previously had little to do with semiconductor manufacturing are now becoming big players in the AI infrastructure race. That's why Leopold believes investors should avoid perceiving the market as a competition with only one possible winner.
Different AI models will coexist, and different computing architectures will serve different purposes. Large cloud companies and new infrastructure providers may find their own opportunities. Nvidia's advantage is that their technology is capable of supporting a significant portion of this expanding ecosystem.
In other words, the company's potential market is not limited to one model, one customer, or one category of AI applications. The broader industry could evolve in several directions, while Nvidia will continue to supply the necessary infrastructure. However, more and more complications are arising. Demand for AI equipment is increasingly facing physical supply constraints.
Memory is one of the most obvious examples. Because the systems require huge amounts of advanced memory, production is barely keeping up with demand. This imbalance has contributed to rising costs in the supply chain, and the pressure is not limited to memory. Electricity is becoming a critical factor as data centers expand.
Companies need enough energy to run increasingly large computing clusters. They also need the cooling systems, networking equipment, storage, and facilities needed to house it all. Each additional level creates a new potential “ bottleneck,” and this changes how investors will think about the AI cycle.
The limiting factor may not always be the number of companies willing to buy Nvidia products. This could be the industry's ability to produce, supply energy, and connect all the equipment needed to support these purchases. This distinction is important because an infrastructure constraint can persist even when customer demand remains high, and it helps explain why capabilities are outpacing GPUs.
Let's consider the role of connectivity. For much of the initial AI boom, investors saw processors as responsible for performing calculations. Then the focus shifted to memory as the industry realized how important it was to feed data into these processors. Now another requirement is becoming increasingly important .
All these components must interact effectively. A data center can contain vast amounts of computing power and memory , but these investments lose effectiveness if information is not moved between components quickly enough. High-speed networks, optical connections, and switching systems are becoming an important part of this architecture.
This task becomes more difficult as AI systems become more sophisticated . Generative AI and advanced inference models can leverage different types of computing resources to perform complex tasks, which places additional strain on the network connections of these resources. One industry executive called this a new opportunity that comes after the previous wave of investments in computing power and memory .
According to industry estimates, the potential solutions for AI has also expanded significantly. The figure, discussed at around $14 billion in April 2024, has risen to around $225 billion in later estimates. And these changes illustrate how quickly expectations have changed with the development of AI infrastructure.
This suggests that the next stage of the industry's development could create opportunities for a much wider range of semiconductor companies. Network companies could benefit, memory manufacturers could benefit, storage vendors could benefit, and infrastructure software companies could become increasingly important to businesses trying to manage complex AI systems.
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