Before the bell: Have Europe’s carmakers dodged a bullet?

Palantir: the devil’s stock. Kimberly-Clark wants to overtake Unilever.

The old Dow Jones index slipped while the Nasdaq was once again the strongest US market. The moves were only a few tenths of a percent, but they continue to confirm the same picture we’ve been seeing for months: technology stocks with even the slightest link to artificial intelligence keep climbing, while everything else struggles or drifts lower. In individual names, that meant another 2.8% gain for Nvidia and 4.7% for Amazon, after the latter secured a 38 billion dollar cloud-services order from OpenAI, the company behind ChatGPT. To deliver that contract, Amazon Web Services will have to buy a large number of AI chips from Nvidia. Yet one European sector unexpectedly came back to life—an industry that has been bleeding cash for years. Volkswagen (+2.3%), Mercedes (+2%), Renault (+4.1%) and other carmakers will soon be able to source chips from Nexperia again, now that China has lifted its export ban. Belgian chip suppliers Melexis (-1.9%) and X-Fab (-4.5%) did not share in the rally, even though car sales are clearly picking up again. Sooner or later, manufacturers will have no choice but to rebuild their inventories at a faster pace. The only question: will they ever stop playing games with those inventories?

In Tokyo, investors are taking profits this morning, and Chinese markets are also lower, but by less than 1%. Earnings season is now fully underway in Europe. Kinepolis announces the acquisition of 14 cinemas in the United States. In Brussels, logistics REIT Montea and healthcare-property group Care Property Invest report after the bell. Elsewhere, BP, Ferrari, Philips and Volvo Cars publish results. On Wall Street, Uber, Pfizer and Shopify report before the bell, followed by chipmaker AMD after hours.

Low-ball bid, courtesy of Trump

Kimberly-Clark (-14.6%)—like Procter & Gamble a major producer of diapers (Huggies) and known for Kleenex tissues—wants to expand its consumer-goods portfolio through the takeover of Kenvue. The US company is a 2023 spin-off from Johnson & Johnson and a giant in generic medicines. Kimberly-Clark appears to be making a generous offer of 21 dollar per share in cash and stock, well above Friday’s close of 14.37 dollar. But Kenvue started trading at 40 dollar. The stock collapsed partly because the Trump administration launched baseless attacks, claiming that Tylenol could cause autism, which put pressure on sales. Kimberly-Clark claims that after the deal it would become the world’s second-largest consumer-goods group, just behind the Dutch company Unilever. Kimberly-Clark shareholders would own 54% of the combined entity, but investors sent the stock sharply lower.

The devil’s stock

Palantir posted very strong quarterly results after the bell yesterday in New York: revenue surged 63% to 1.2 billion dollar and EBITDA came in at 600 million dollar. Net profit per share was 21 cents, above the expected 17 cents. Palantir specialises in data analysis and thrives by building artificial-intelligence applications on top of it. A large share of revenue comes from government contracts, especially defence and law enforcement. Defence plus AI—two themes that are as hot as it gets. The US government is Palantir’s most important customer. Critics argue that using AI in weapons systems is dangerous and irresponsible. But the Trump administration is not standing in the way; several key Palantir executives are vocal Trump supporters. The company already has a market value close to 500 billion dollar and trades at 138 times sales and 270 times earnings—based on optimistic projections. The stock still gained another 3.3% after hours.

Did you know…

that Umicore announced after the bell yesterday that it is selling 80% of its ten-year research programme into silicon–carbon composite anode materials to South Korea’s Hyosung? The group will take on the costly industrialisation effort, estimated at 1 billion euro. Some analysts speculate about an even larger deal involving the rest of Umicore’s anode activities.

This article was translated from Dutch and was originally published on Spaarvarkens.be.