📈 Trump's $500B AI New Deal

Netflix adds record users and shares surge, Walgreens slides on DOJ opioid concerns, Intel stock climbs on takeover talk, Apple stock hit with downgrade, Softbank, Oracle and OpenAI team up on $500B AI infrastructure deal

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Good morning.

⚡ The Fast Five → Netflix adds record users and shares surge, Walgreens slides on DOJ opioid concerns, Intel stock climbs on takeover talk, Apple stock hit with downgrade, Softbank, Oracle and OpenAI team up on $500B AI infrastructure deal

🔎 Market Trends → Wall Street ends higher with hopes for measured US trade policy; US Futures Edge Higher After Strong Market Rally

And now…

⏱️ Your 5-minute briefing for Wednesday, January 22, 2025:

MARKET BRIEF
Before the Open

As of market close 01/21/2025.

Pre-Market

  • Prologis was among the best performers on the S&P 500, up 7.1%.

  • Walgreens Boots Alliance shares slumped 9.2%, the steepest decline on the S&P 500.

Fear & Greed

 

Markets in Review

Markets Climb as Trump’s Agenda Takes Shape

The Dow gained 1.2% to 44,025.8, the S&P 500 rose 0.9% to 6,049.2, and the Nasdaq added 0.6% to 19,756.8. Industrials led the gains, while energy was the sole decliner.

The Big Picture:

Equities rallied Tuesday as investors weighed President Donald Trump’s inauguration promises, including tariffs, immigration reforms, and domestic energy expansion. Markets appear optimistic that a measured approach to trade policy could foster growth without unnecessary disruption.

Trump’s swift action on energy policies bolstered domestic oil and gas sentiment, though crude prices fell on expectations of increased US supply. Meanwhile, a decline in Treasury yields highlights cautious optimism about the administration’s fiscal plans and potential market implications.

West Texas Intermediate crude oil dropped 2.3% to $76.09/barrel, while gold rose 0.3% to $2,755.80/oz. Silver added 1.1%.

Market Movers:

  • 3M (MMM): Gained +4.2%, the Dow’s top performer, after reporting strong Q4 earnings and forecasting higher profits for 2025, driven by industrial demand.

  • Prologis (PLD): Jumped +7.1%, among the S&P 500’s best, as its logistics REIT exceeded expectations for core funds from operations amid booming e-commerce activity.

  • Walgreens Boots Alliance (WBA): Fell -9.2%, the steepest S&P 500 drop, as the DOJ filed a lawsuit over alleged opioid mismanagement.

  • Apple (AAPL): Declined -3.2%, after downgrades from Jefferies and Loop Capital and a report of weaker iPhone sales in China, down 18% year-over-year.

What They’re Saying:

"Trump’s initial policy announcements signal an intent to balance bold domestic initiatives with strategic trade negotiations, which could temper market volatility while unlocking new growth levers," noted Stifel in a client report.

WHAT WE’RE WATCHING
Events

  • There are no events scheduled for today.

Earnings Reports

  • Today: P&G, Johnson & Johnson, Abbott, Progressive, Discover Financial, Las Vegas Sands, Alcoa, Halliburton, Kinder Morgan

  • Tomorrow: Texas Instruments, Elevance Health, McCormick & Company, American Airlines, Alaska Airlines, Intuitive Surgical, GE Aerospace, Union Pacific Railroad, Freeport-McMoRan

MARKET BRIEF
Leading News

The $500B AI Infrastructure Bet That Could Reshape Tech Investing

Why it matters:

A historic public-private partnership signals America's determination to dominate the AI arms race, potentially creating generational investment opportunities in computing infrastructure.

Zoom Out:

The marriage of Silicon Valley innovation and government backing just got a $500 billion dowry. In what might be dubbed the "Manhattan Project" of artificial intelligence, OpenAI, Oracle (ORCL), and SoftBank are pooling resources to construct a network of advanced data centers, starting in Texas.

This isn't just another tech moonshot. The initiative, dubbed "Project Stargate," represents the largest-ever private investment in U.S. computing infrastructure - nearly 6x the size of Microsoft's recent $80 billion data center commitment.

Key Insights:

  • Follow the chips: The partnership includes NVIDIA (NVDA) and Arm Holdings (ARM), suggesting a vertically integrated approach to AI infrastructure. Smart money is watching OpenAI's rumored custom chip development with TSMC (TSM) - a potential game-changer for the semiconductor space.

  • Power play: With projected electricity consumption equivalent to powering 750,000 homes, savvy investors might want to examine utilities with exposure to Texas' power grid, like NextEra Energy (NEE).

  • Risk radar: Environmental concerns and potential regulatory hurdles could create headwinds. Water usage and power consumption remain thorny issues that smart investors shouldn't ignore.

Market Pulse:

"This is the equivalent of building the railroad system for AI," says Oracle's Larry Ellison. "Whoever controls the infrastructure controls the future."

Bull’s Take:

While the sticker shock might raise eyebrows, history suggests that massive infrastructure investments often create multiple layers of investment opportunities - from obvious plays like data center REITs to less obvious beneficiaries like regional banks financing local development. For patient investors, this could be the equivalent of buying Manhattan real estate in the 1800s. Consider building a basket of picks-and-shovels plays across the AI infrastructure value chain, but remember that even during gold rushes, not every prospector strikes it rich.

Headlines

  • Why Apple Stock Got Hit By Downgrades, Price-Target Cuts (link)

  • Walgreens Reverses 40% Sprint As DOJ Slams Opioid Prescriptions (link)

  • Warren Buffett's Pilot Co shuts oil trading business, sources say (link)

  • Why FTAI Aviation (FTAI) Shares Are Sliding Today (link)

  • Intel Stock Keeps Climbing Amid Takeover Talk (link)

  • Netflix shares jump as it adds record number of subscribers’ (link)

CRYPTO
Fear & Greed

 

Headlines

  • Crypto AI Tokens Soar as Bitcoin Awaits Trump Policies Below Record Prices (link)

  • Bitwise suggests bitcoin fair value of over $200,000 as 'portfolio insurance' against global debt crises (link)

  • SEC Forms New Crypto Task Force Spearheaded by Hester Peirce (link)

DAILY SHARE
On the Socials

*Hat-tip to DasAbhyudoy

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