Rate Hike Odds Jumped From 1% to 45% in a Month. Nvidia Reports Wednesday. Something Has to Give.

Rate Hike Odds Jumped From 1% to 45% in a Month. Nvidia Reports Wednesday. Something Has to Give.

For most of January, every major forecast had the Federal Reserve cutting rates two to three times this year. That consensus has unwound fast. A post on r/investing attributes the jump in rate hike probability — from 1% to 45% in roughly a month — to Iran driving oil to $107 a barrel and inflation that refuses to move, a reversal that few traders had priced in.

Nvidia reports Wednesday, expecting $79 billion in revenue, according to the same post. Its stock has climbed 640% over three years. The trailing P/E sits around 48, though commenters note the forward P/E is closer to 24 — still a premium valuation that, as one commenter put it, "only makes sense if rates stay low and AI spending doesn't slow down." Both of those assumptions are now in question at the same time.

Wednesday's report may matter less for the revenue line than for what guidance says about AI capital spending momentum. As one commenter observed, expectations are high enough that "great might not be enough" — a beat without blowout forward guidance could still trigger a selloff in a market already rattled by the rate narrative.

Gobble's Take: The market is running two contradictory scripts at once, and Wednesday is when someone has to choose which one is true.

Source: r/investing

Cerebras Closed Its IPO Day at $311 — Its Actual Business Lost Over $75 Million Last Year

Cerebras Systems makes an AI chip described as the size of a manhole cover. It priced its IPO at $185, closed its first day at $311.07, and is now valued at around $95 billion — more than 100 times its $510 million in annual revenue, according to an analysis posted to r/stocks.

The headline profit figure of $238 million is described as misleading: strip out a one-time accounting item and the day-to-day business lost over $75 million last year. The growth story rests on deals with OpenAI and Amazon Web Services, but 86% of last year's revenue came from UAE-based customers, with one university alone representing 62% of sales — a concentration risk if U.S. export rules tighten. Additionally, OpenAI's president Greg Brockman reportedly holds personal stock in Cerebras and owned those shares while negotiating the OpenAI supply contract, a conflict of interest surfaced in the Elon Musk vs. OpenAI lawsuit.

Gobble's Take: A $95 billion valuation on a business losing over $75 million operationally, with 86% of revenue from one region, is a significant amount of faith to price in on day one.

Source: r/stocks

In Case You Missed It

Yesterday's top stories:

• LegalZoom Beat Revenue Estimates. Its Stock Fell Anyway.
• Coca-Cola's Share Price Has Climbed — Analysts Can't Agree on Whether That's Justified
• Home Depot Reports May 19 — What the Numbers Could Signal Beyond the Stock