Chinese AI shakes the Nasdaq, Mag 7 stocks start to report, earnings season ramps up, and more… ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
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| S&P 500 6,101 (-0.29%) Nasdaq 19,954 (-0.5%) Dow 44,424 (-0.32%) Bitcoin 105,337 (+2.13%) |
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1. Futures Down on China’s AI Competition |
Nasdaq futures open the week down close to 4%, rocked by the rapid rise of Chinese AI startup DeepSeek and its flagship LLM, R1. Using older-generation chips from Nvidia (NASDAQ:NVDA) – which itself fell 12% in pre-market trading – DeepSeek developers say they trained their V3 model for less than $6 million in just two months. |
| “Open source models are surpassing proprietary ones”: Yann LeCun, chief AI scientist at Meta (NASDAQ:META), spoke at last week’s World Economic Forum in Davos, saying DeepSeek’s creators “came up with new ideas and built them on top of other people's work.” Why it matters: Hyperscalers Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOG), Meta, Amazon (NASDAQ:AMZN), and Oracle (NYSE:ORCL) plowed an estimated $197 billion into AI in 2024. Fears it might not have been their best use of capital could weigh on high stock valuations. |
2. Investors Turn to Mag 7 Results |
Four of the Magnificent Seven release earnings this week, after helping drive the Nasdaq 100 up by $15 trillion since the end of 2022. Microsoft, Tesla (NASDAQ:TSLA), and Meta report Wednesday, with Apple (NASDAQ:AAPL) following on Thursday. |
| “We know how stocks react if they miss on what everyone wants them to hit”: Bloomberg’s Michael Casper is wary as profit forecasts indicate the slowest quarterly Mag 7 growth for nearly two years. “No small task”: After CEO Mark Zuckerberg shared Meta’s plans to bring online 1GW of compute this year, Fool analyst Jason Moser highlighted the scale of this goal: “How much power is a gigawatt anyway? Well, according to the US Department of Energy it's equal to 100,000 LED bulbs. Or 1.3 million horses. Or half a Hoover Dam. Or 2,627 Tesla Model 3s.” |
3. An Epic Week of Earnings |
Picking out a few more of the many companies reporting this week, Stock Advisor rec Starbucks (NASDAQ:SBUX) will post Q1 results tomorrow, as its "Back to Starbucks" initiative aims to turn round a year of missing earnings expectations. Revised growth plans should be in the pipeline after the company suspended its previous targets. |
| Atlassian Intelligence: Rule Breakers recommendation Atlassian (NASDAQ:TEAM) reports Thursday. With data drawn from its global cloud software reach, management sees a potential advantage for boosting AI-powered productivity. An annual dividend of $6.52 per share is expected: Dividend Investor rec Chevron (NYSE:CVX) will post Q4 earnings Friday, with lower revenue anticipated to lead to a decline in earnings year over year. |
4. What to Watch on Monday |
SoFi Technologies (NASDAQ:SOFI) hit a 52-week high on Friday, ahead of Q4 earnings due before today’s opening bell. The digital financial services company is up 135% in the past 12 months, but it’s ahead of a consensus target from 18 analysts. |
| SoFi has beaten EPS estimates in each of the past four quarters: In the third quarter alone, membership numbers grew 35%. Analysts expect earnings to more than double in 2025, to 29 cents per share. “Share gains will be driven by younger consumers”: Andrew Jeffrey of William Blair investment bank is bullish, but the Wall Street Journal notes 12.2% of the stock is sold short. |
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