TLDR

MARKET RECAP → The tech-heavy Nasdaq Composite (QQQ) closed in the red today as investor jitters mounted ahead of Nvidia’s (NVDA) fourth quarter earnings results after the closing bell. The chip-maker’s meteoric rise—already up 225% year-to-date—and its $1.7 trillion valuation could make anyone wonder, “How much higher can this stock go?” Nevertheless, the king reigns supreme.

THE CHIP CHAMP →💥 Nvidia's (NVDA) Q4 earnings leapfrog expectations with a 769% net income surge and a 265% revenue boost, spotlighting its AI-driven market dominance.

RATE SHOCK → 📈 Mortgage mayhem: Rates rocket over 7%, slashing applications by 10.6% and spotlighting the affordability abyss for buyers and refinancers alike.

GUIDANCE GLOOM → 📉 Palo Alto Networks' shares nosedive 19% after a strategic shift prompts a cut in its full-year forecasts, despite AI growth ambitions.

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Sean Horgan

Head of Investor Relations @MoneyLion

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Today’s Top News

THE CHIP CHAMP

💡 Earnings Smash Expectations: Nvidia shattered Wall Street forecasts, posting $5.15 adjusted per share on a whopping $22.10 billion in revenue, cruising past the anticipated $4.64 per share and $20.62 billion. The tech giant also projected an optimistic $24.0 billion in sales for the current quarter, hinting at continued growth.

🚀 Net Income Skyrockets: The company's net income soared to $12.29 billion, marking a staggering 769% increase from last year's $1.41 billion. This financial triumph underscores Nvidia's dominant position in the tech industry, fueled by its pioneering AI and server graphics processors.

📈 Data Center Dominance: Nvidia's Data Center business, especially sales of its "Hopper" H100 chips, saw a monumental 409% increase to $18.40 billion, now forming the majority of its revenue. While the gaming sector grew by 56% to $2.87 billion, it's clear that Nvidia's AI chips have become the new cornerstone of its business model.

RATE SHOCK

🏠 Surge and Plunge: Mortgage interest rates soared to a chilling 7.06%, the highest since early December, causing a sharp 10.6% drop in total mortgage application volume. This spike dimmed the previously hopeful prospects of a near-term rate cut, directly impacting both refinancing and home purchase applications.

💸 Refinance Retreat: The leap in rates resulted in an 11% decrease in refinance applications from the previous week, erasing the momentum that had refinance volume outpacing last year's figures despite higher rates. This sudden shift underscores the sensitivity of borrowers to rate fluctuations.

📉 Purchase Pressure: Applications for home purchases tumbled by 10%, hitting their lowest point since early November 2023, and standing 13% lower than the same period last year. This downturn highlights the growing affordability challenge for potential homebuyers in a market already strained by high rates and home values.

GUIDANCE GLOOM

📉 Earnings Exceed, Guidance Recedes: Palo Alto Networks saw its shares tumble 19% after beating earnings expectations but slashing its full-year revenue and billings forecasts. The cybersecurity giant adjusted its full-year total billings down to $10.1-$10.2 billion from $10.7-$10.8 billion, with revenue projections also dialed back to $7.95-$8 billion from $8.15-$8.2 billion.

🔄 Strategic Shift Sparks Concern: CEO Nikesh Arora attributed the revised guidance to a strategic shift aimed at accelerating growth and AI leadership, despite anticipating challenges during this transition. This pivot has led to a tempered outlook for the upcoming quarter, falling short of analyst expectations for revenue.

🤖 AI Ambitions Amid Adjustments: Amidst a broader AI frenzy boosting tech stocks, Palo Alto Networks' adjustment of its growth expectations—now forecasting 10-11% billings growth and 15-16% revenue growth, down from 16-17% and 18-19%, respectively—highlights the company's cautious stance as it activates its AI leadership strategy.

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