Nvidia eclipses US$2.5trn market cap on jaw dropping earnings

Good morning. Here's what happened overnight and what you need to know today.

1.

Mega megacap: Wall Street stocks hit record highs as Nvidia soared past a market value of USD2.5 trillion ($3.79 trillion) for the first time on Thursday. Shares in Nvidia jumped 11% after the chipmaker announced stronger than expected earnings, a 10-1 stock split and bullish forward guidance. The company reported that revenues had increased 262% in the past quarter, and raised its quarterly cash dividend by 150%. The results pushed Nvidia’s market cap by USD220 billion to aUS$2.5 trillion high on Thursday, making it larger than megacaps Amazon and Tesla combined. The S&P 500 rose 0.3% to 5,320.44 in early afternoon in New York, while the tech-dominated Nasdaq Composite added as much as 0.9%, also hitting a record high, before paring gains. The gains came despite the release of the Fed’s May FOMC meeting minutes, which revealed that Fed officials aren’t opposed to raising interest rates if inflation begins to inch higher once more. (Financial Times)

2.

Antitrust action: The US Justice Department (DoJ) filed an antitrust lawsuit on Thursday to break up the Live Nation-Ticketmaster ‘monopoly’ over alleged anti-competitive conduct in the live entertainment industry. According to the DoJ, Live Nation generates over USD22 billion globally in annual revenue from three business segments: concerts, ticketing, and sponsorship and advertising. The suit alleges that Live Nation-Ticketmaster illegally monopolised the live events industry through a range of anticompetitive activities. In a press release on the lawsuit, Attorney General Merrick B. Garland said that Live Nation relies on unlawful, anticompetitive conduct to exercise its monopolistic control over the live events industry in the US at the cost of fans, artists, smaller promoters, and venue operators. The tactics that the DoJ alleges Live Nation-Ticketmaster has been engaging in include: retaliating against potential new entrants, threatening and retaliating against venues that work with rivals, and using exclusionary contracts to lock out competition, among other accusations. (DoJ press release)(DoJ complaint)(Bloomberg)

3.

The alternatives era: Investment giants Capital Group and KKR have partnered to give wealthy clients access to alternative investments. The two companies explained that while alternatives have been available to high-net-worth individuals and accredited investors for some time, mass affluent investors, which represent more than 40% of the wealth market globally, have not had access to the asset class. The first products that the partnership will offer include public-private fixed income offerings for financial professions and their clients. These strategies will be launched from 2025 in the US. The Wall Street Journal reports that the hybrid funds will hold about 60% in public bonds picked by Capital managers, and 40% in direct and asset-based loans sourced by KKR. The funds will target mass-affluent clients, or those who invest between USD100,000 and USD1 million. Capital Group president and CEO Mike Gitlin said: “Clients should think of this as ‘the best of both worlds’ – a hybrid investment solution that combines Capital’s active management and long-term investment approach with KKR’s private market expertise.”(Capital Group and KKR joint press release)(Wall Street Journal)

4.

Activist agitation: UK activist investor, Palliser Capital, is pushing for Rio Tinto to abandon its listing on the London Stock Exchange (LSE) and focus on strengthening its corporate structure in Australia. Palliser said that Rio Tinto, which is listed on both the LSE and the ASX, argues that the dual listing makes it difficult to do major acquisitions, meaning that the London-listed company is trading at a USD26 billion discount to its Australian counterpart. The FT reports that Rio Tinto is currently the Palliser fund’s largest investment, "worth a few hundred million pounds," holding less than 1% of Rio shares. Speaking at the Sohn Hong Kong investment conference on Thursday, Palliser’s CIO James Smith argued that the dual-listed structure is preventing Rio from chasing all-stock takeovers because of the company’s valuation gap and complex structure, adding that there is nearly a 40% potential upside. He said the move would unlock billions tax credits that Australian investors are eligible for. The comments come as Rio rival, BHP, continues its takeover pursuit of London-listed, Anglo American. (Financial Times)

5.

Under the sea: Alphabet’s Google is building the first Africa to Australia subsea cable, to enable African countries to more reliably connect with each other and the rest of the world. The cable will be called ‘Umoja,’ and follows the construction of Google’s ‘Equiano’ cable that connects Africa with Europe. A Google blog post explains that the Umoja cable route is anchored in Kenya, and will pass through Uganda, Rwanda, Democratic Republic of the Congo, Zambia, Zimbabwe, and South Africa, including the Google Cloud region, before crossing the Indian Ocean to Australia. Google also announced that it signed a statement of collaboration with Kenya’s Ministry of Information Communications and The Digital Economy to accelerate joint efforts in cybersecurity, growing data-driven innovation, digital upskilling, and responsibly and safely deploying AI for societal benefits. (Google blog post)(Bloomberg)

6.

Chip grants: The South Korean government has unveiled a 26 trillion won support package of incentives to bolster its chip manufacturing sector. The package will deliver at least 17 trillion won in low-cost loans, 1.1 trillion won for a chip ecosystem investment fund, over 2.5 trillion won of infrastructure construction, and more than 5 trillion won of grants for research. Announced by President Yoon Suk Yeol on Thursday, the package will focus on providing financial support through state-run Korea Development Bank for chip makers and suppliers to invest in semiconductor infrastructure in the country. The plan will also extend tax breaks which had been scheduled to expire at the end of 2024. Two leading chipmakers, Samsung and SK Hynix, are likely to benefit strong from the support as they continue an uphill battle against stiff competition from the likes of Taiwan Semiconductor Manufacturing Co and Intel. (Wall Street Journal)(Bloomberg)(Reuters)

7.

Canva recalibrates: Canva has unveiled a major overhaul of its platform at its first international Canva Create event in Los Angeles. The company introduced a range of new workplace products and services, including Canva Enterprise. The enterprise announcement comes ahead of Canva's much anticipated IPO, which is expected to happen as early as next year. Since the introduction of Canva's Visual Suite 18 months ago, more than 95 million new users have joined the platform. Melanie Perkins, co-founder and CEO of Canva said: "As demand for visual content soars, navigating organisational complexity is more challenging than ever. We democratised the design ecosystem in our first decade and now look forward to unifying the fragmented ecosystems of design, AI, and workflow tools for every organisation in our second decade." VC and startup correspondent for Capital Brief, Bronwen Clune, commented: “It’s hard not to read it [the enterprise product launch] also as a clear pitch to those with the deep pockets in the US financial markets for whom enterprise is a love language.” (Capital Brief)

8.

Nose dive: Boeing’s CFO Brian West warned investors on Thursday that the company is unlikely to generate cash for the full year as it battles with snowballing production and supply chain issues. During the first quarter of the year, Boeing burned through USD4 billion in cash, with West saying that the figure could be similar “or possibly a little worse” in the second quarter. At an industrials and transportation conference in New York, West said: “We have frustrated and disappointed our customers because of some of the production and supply-chain issues we are up against.” He added that the company should begin to generate cash in H2 2024. The plane maker is dealing with the fallout of widespread quality and safety probes following a mid-flight cabin-door blowout on an Alaska Airlines flight in January. A series of issues tied to production have also plagued the manufacturer, and the deaths of two Boeing whistleblowers have added significant reputational damage to the company. (Wall Street Journal)(CNBC)