- Ziggma
- Posts
- 💰 NVIDIA's $600B Bet
💰 NVIDIA's $600B Bet
PLUS: Dow surges past 50k
Market Performance
S&P 500: 6,932.30 ⬆️ 1.97%
Nasdaq: 23,031.21 ⬆️ 2.18%
Dow Jones: 50,115.67 ⬆️ 2.47%
Tech's Trillion-Dollar Bet on AI
The world's biggest tech companies are about to spend nearly $700 billion this year on AI infrastructure—and Nvidia CEO Jensen Huang says it's completely justified. In fact, he's calling it "the largest infrastructure buildout in human history."
This is significant because Wall Street is split on whether this spending spree makes sense.
Amazon's stock dropped 6% Friday after announcing $200 billion in capex for 2026. Microsoft is down 17% this year.
Yet Huang insists the math works: "If they could have twice as much compute, revenues would go up four times as much."
What's driving this confidence? Huang points to concrete results—Meta's AI-powered recommendation systems, AWS's product recommendations, and Microsoft's enterprise software improvements.
Even six-year-old Nvidia chips are still being rented at full capacity, reflecting relentless demand.
The bottom line? This massive investment comes with a harsh reality: free cash flow across the big four could plummet nearly 90% in some cases.
Our Takeaway
The AI infrastructure buildout represents either visionary investment or reckless spending—there's little middle ground.
With Alphabet potentially spending $250 billion by 2027 and companies tapping debt markets to fund expansion, the stakes couldn't be higher.
The winners will dominate the next decade of tech; the losers risk becoming irrelevant. For investors, the key question isn't whether AI will transform business—it's whether these companies can convert massive capex into sustainable profits before the market loses patience.
➡️ FREE ZIGGMA RESEARCH: Nvidia (NVDA Stock): 60%+ Earnings Growth, AI Dominance, and a Profound Impact Edge 🔖 Read for free on Substack 🎧 Listen to podcast
Market Overview 📈
Stocks staged a powerful Friday rally as technology shares rebounded from a brutal weeklong selloff and bitcoin recovered from a devastating 50%+ crash.
The recovery was broad-based, with cyclical stocks leading the charge as investors rotated out of high-flying growth names into value plays.
The Dow's historic milestone above 50,000 was powered by industrial and financial heavyweights—Caterpillar surged 7%, and Goldman Sachs climbed 4%.
Small caps rallied even harder, with the Russell 2000 jumping 3.6% as investors sought opportunities beyond mega-cap tech.
Semiconductor stocks led the tech rebound.
Nvidia rocketed 8% higher, Broadcom gained 7%, and AMD advanced 8% as fears about AI spending temporarily eased.
The VanEck Semiconductor ETF jumped 5%, though it remained down for the week.
However, software stocks told a different story.
Despite Friday's bounce, the iShares Software ETF is down 24% year-to-date amid fears that AI agents like Anthropic's Claude Cowork will disrupt traditional software business models.
ServiceNow and Salesforce remain near 52-week lows.
Consumer sentiment improved modestly, with the University of Michigan index rising to 57.3 as one-year inflation expectations dropped to 3.5%—the lowest since January 2025.
Yet sentiment remained more than 11% below year-ago levels, and the divide between stock-owning households and those without portfolios continues to widen.
Despite Friday's relief rally, the S&P 500 still posted a 0.1% weekly decline while the Nasdaq fell 1.8%.
Investors remain caught between enthusiasm for AI's long-term potential and growing anxiety about near-term cash flow pressures.
Stock Moves Deciphered 📈
🛍️ Amazon (AMZN)
Amazon's stock plummeted nearly 6% on Friday despite beating revenue estimates, as the company's staggering $200 billion capital expenditure plan for 2026 spooked investors.
The e-commerce giant earned $1.95 per share, narrowly missing the $1.97 consensus, while revenue of $213.39 billion exceeded expectations of $211.33 billion.
The real concern lies beneath the surface: analysts at Morgan Stanley project negative free cash flow of $17 billion in 2026, while Bank of America sees a potential $28 billion deficit.
📉 Molina Healthcare (MOH)
Molina Healthcare's stock crashed 28% after the health insurer reported a shocking adjusted loss of $2.75 per share in the fourth quarter, blindsiding analysts who expected profitability.
The company was weighed down by premium adjustments in Medicaid and mounting cost pressures in Medicare.
Molina's full-year 2026 revenue guidance of $44.5 billion came in well below the $46.55 billion analysts anticipated, signaling ongoing structural challenges.
Rising medical costs and regulatory headwinds in government-sponsored health programs are squeezing margins at a time when the company needs growth most.
🧬 Illumina (ILMN)
Illumina's stock declined despite delivering strong quarterly earnings, as investors focused on the company's cautious 2026 revenue outlook.
The genomics leader cited uncertainty in research funding and ongoing challenges in the Chinese market as key headwinds for the year ahead.
The company's guidance for its research and applied consumables segment—a core revenue driver—came in softer than anticipated, raising questions about demand sustainability in academic and biotech research markets.
Headlines You Can't Miss 👀
🏨 Hilton hits an all-time high, along with 65 other S&P 500 stocks reaching 52-week highs, including Coca-Cola (dating to 1919 IPO) and Exxon.
💊 Citi upgrades Estee Lauder to buy after a 19% crash, citing improving China trends despite a $100M tariff hit to profitability.
🚗 Once Upon a Farm soars 19% in NYSE debut, with Jennifer Garner's organic kids' snacks company raising $197.9M at $18/share IPO price.
🏦 Deutsche Bank upgrades Ares to buy after private credit selloff, seeing 27% upside despite AI disruption fears and 20% YTD decline.
📺 Oppenheimer upgrades Roku to outperform, citing Amazon DSP partnership, Winter Olympics, and midterm political ads as key catalysts ahead.
🔌 Monolithic Power Systems jumps 5% on strong data center chip demand, with Q4 revenue up 21% YoY to $751M, driven by AI infrastructure.
🎯 Consumer sentiment improves to 57.3, beating estimates as one-year inflation expectations fall to 3.5%—the lowest level in over a year.
Trending Stocks 📊
🚗 Stellantis (STLA)
Stellantis shares plunged 24% after the automaker announced a massive €22 billion ($26 billion) hit from a comprehensive business reset and signaled a potential retreat from its aggressive electrification strategy.
The dramatic write-down reflects the company's acknowledgment that its current portfolio and market positioning require fundamental restructuring.
The announcement raises serious questions about Stellantis's ability to compete in an increasingly electrified automotive market dominated by Tesla, BYD, and emerging Chinese rivals.
💉 Hims & Hers (HIMS)
Hims & Hers stock dropped 2% and hit a 12-month low after Novo Nordisk threatened legal action over the company's planned launch of a cheaper copycat version of Novo's weight loss pill.
The stock initially spiked 15% on Thursday on the product announcement before reversing sharply.
Novo called Hims & Hers' action "illegal," setting up a potential legal battle that could derail the telehealth company's ambitious expansion into the lucrative GLP-1 weight loss market.
🛜 VeriSign (VRSN)
VeriSign's stock tumbled to a 52-week low after the domain registry operator reported slowing domain registrations and missed quarterly earnings estimates.
The company attributed the weakness to a fundamental shift in how new businesses establish their online presence, with an increasing preference for social media platforms over traditional websites.
The secular headwind poses a long-term challenge to VeriSign's core business model. As startups and small businesses opt for Instagram, TikTok, and LinkedIn profiles instead of standalone websites, demand for .com and .net domain registrations continues to erode.
An analyst downgrade following the earnings report accelerated the selloff.
What’s Next?
Key market and macro news 👇
💸 Apollo Global Management Q4 Earnings: Finance/investment management firm reports with consensus EPS of $1.91, representing 1.06% growth year-over-year.
🥤 Coca-Cola Q4 Earnings: Beverage giant reports quarterly results, a critical gauge of lower-to-middle-income consumer spending and discretionary purchasing power. Market monitors for pricing power, volume trends, and guidance on 2026 growth amid inflationary pressures.
🍔 McDonald's Q4 Earnings: Fast-food leader expected to report earnings growth of approximately 8% year-over-year. Key indicator of consumer health and spending patterns; the market closely watches comparable sales, international performance, and franchise profitability trends.
📊 Wholesale Inventories (December): The U.S. Commerce Department releases December wholesale inventory data, which analyzes inventory-to-sales ratios, supply chain health, and business confidence in the economic outlook for the first quarter of 2026.
🏡 Existing Home Sales (January): The National Association of Realtors reports January existing home sales expected to ease to a 4.25 million annualized rate from 4.35 million.
Chart of the Day
Meme of the Day
Great investing starts with great information.
Forward The Market Scoop to anyone who wants to stay ahead of the market through a pertinent and entertaining newsletter format.
DISCLAIMER: None of this is financial advice. The newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions. Please exercise caution and conduct your own research.