Nvidia’s results, Adani’s legal woes, Starbucks – what’s moving markets
2024.11.21 04:16
Investing.com — Wall Street is seen trading lower Friday, weighed by disappointment from Nvidia’s guidance. Starbucks is potentially looking at options for its China business, while the chairman of the Adani Group has been indicted over bribery claims.
1. Nvidia’s revenue forecast disappoints
Nvidia (NASDAQ:) stock retreated in premarket trading Thursday after the AI darling’s projection of its slowest revenue growth in seven quarters, particularly as investors had been used to the world’s most valuable company blowing past all estimates.
Nvidia’s fourth-quarter forecast indicated the company’s revenue growth will slow to roughly 69.5% from 94% in the third-quarter.
This raised questions over whether the artificial intelligence boom is waning.
But Nvidia was at pains to point out that there was no shortage of companies eager to create new AI systems using its chips, but supply chain constraints would lead to demand for its chips exceeding supply for several quarters in fiscal 2026.
“Expect stock to churn near-term as investors digest lack of ‘sizzle’ but we continue to like the stock on its ‘substance’,” said analysts at Bank of America Securities, in a note.
Nvidia is in the middle of launching its powerful Blackwell family of AI chips, which will weigh on the company’s gross margins initially but improve over time.
“The key dynamic here is the transition to Blackwell – where demand was described as ‘staggering’,” said analysts at Morgan Stanley (NYSE:). “Blackwell constraints are likely to be a major factor for at least a year, but we continue to see a strong Blackwell cycle as a driver.”
2. Futures slip lower on Nvidia concerns
US stock futures edged lower Thursday, weighed by disappointing guidance from tech giant Nvidia.
By 03:50 ET (08:50 GMT), the contract was down 60 points, or 0.1%, dropped 17 points, or 0.3%, and fell by 82 points, or 0.4%.
Nvidia, which recently overtook Apple (NASDAQ:) to become the world’s most valuable listed company, issued a revenue forecast which indicated a slower pace of revenue growth than seen in prior quarters. It also flagged supply constraints, especially in its upcoming Blackwell line of next-generation AI chips.
This relative weakness, given the high expectations, from such a highly-weighted company could set the tone for the markets for the rest of the week.
There are data later in the session for investors to digest, while several Federal Reserve officials are also set to speak in the coming days.
3. Adani Group chairman indicted over bribery scheme
Shares in the listed companies in India’s Adani Group plunged Thursday after its billionaire chairman Gautam Adani was indicted in a New York federal court over his suspected role in a $265 million bribery scheme.
The 62-year-old billionaire and the seven other defendants have been accused of paying substantial bribes to Indian government officials to secure solar energy contracts that could generate more than $2 billion in profits.
This resulted in the shares in the conglomerate’s listed companies tumbling between 10% and 20%, with Adani Enterprises (NS:) – the flagship listed unit of the conglomerate – dropping 10%.
An Adani Group spokesperson said the allegations are “baseless and denied.”
These allegations herald a fresh round of regulatory trouble for Adani, and come nearly two years after a short seller report from Hindenburg Research had accused Adani of similar schemes.
The report had sparked scrutiny from U.S. and Indian regulators against Adani, although India’s securities regulator claimed to have found little wrongdoing.
Shares of companies under the Adani Group lost more than a combined $100 billion after the Hindenburg report in early-2023, but they had since recouped most of their losses.
4. Starbucks mulls China business options
Starbucks (NASDAQ:) is considering options for its China business, including a potential stake sale, as it attempts to revitalize sales under new CEO Brian Niccol, according to a report.
The coffee chain has been in talks with advisers over how to grow its Chinese business, including potentially introducing a local partner, Bloomberg reported.
China is Starbucks’ second-largest market after the US, but the company has faced heightened competition in the country over the past few years from other foreign entrants, as well as local offerings.
In addition to its China woes, the company has seen waning sales in the U.S., and turned to Niccol, previously with Mexican restaurant chain Chipotle Mexican Grill (NYSE:), as its CEO earlier this year.
5. Crude rise on heightened Russia/Ukraine tensions
Crude prices rose Thursday, buoyed by fears of supply disruptions stemming from worsening tensions in the Russia-Ukraine war, countering the impact from a bigger-than-expected increase in US inventories.
By 03:50 ET, the US crude futures (WTI) climbed 1.3% to $69.64 a barrel, while the contract rose 1.2% to $73.66 a barrel.
Crude prices have advanced this week as the use of long-range US and UK weapons by Ukraine against Russia, something Moscow had warned for months would be seen as a major escalation.
Still, overall gains were limited by concerns over slowing demand, especially as U.S. grew more than expected, rising by 545,000 barrels to 430.3 million barrels in the week ended Nov. 15.
More worrying for oil markets was a nearly 2.1 mb build in , which spurred some concerns that US fuel demand was cooling as the winter season approached.
