Before the Bell: Can Nvidia revive the AI boom?

Investors brace for Nvidia’s results. Umicore drops more than 14% while Montea jumps 6% on false takeover rumours.

Investors worldwide are holding their breath ahead of Nvidia’s earnings, which will be released this evening. The key question: is the explosive growth in artificial intelligence starting to cool, or will Nvidia spark a year-end rally? The uncertainty is dragging global equity markets lower. The Euro Stoxx 50 fell 1,9% yesterday, while the Bel20 performed slightly better with a 1,5% decline.

Umicore (-14,3%) was the worst performer after GBL halved its stake in the materials and recycling group. Just before the closing bell in Brussels, shares of logistics real-estate player Montea surged 6% on rumours of a takeover. According to the company, however, the rumour is entirely unfounded.

In the U.S., the S&P 500 and Nasdaq fell 0,8% and 1,2% respectively. Audio specialist Dolby Laboratories saw its quarterly earnings per share drop 13,6% on flat revenue. U.S. grocer Kroger is scaling back its partnership with the U.K.’s Ocado Group (-21%), as its robotic distribution centres have failed to prove profitable. And a U.S. court ruled yesterday that Meta is not a monopoly and does not need to divest WhatsApp or Instagram.

This morning, Hong Kong’s Hang Seng Index is down 0,5%, while Japan’s Topix edges 0,1% higher. Xiaomi is losing 5% after announcing it will need to raise smartphone prices next year due to higher memory-chip costs.

All eyes today are on Nvidia and Palo Alto Networks, with both companies reporting after the bell—shortly after 22:00 CET. On the macro front, the U.K. releases inflation data, while the U.S. publishes its trade balance

Kroger changes course

U.S. supermarket chain Kroger is shutting down three of its eight robotic fulfilment centres. The facilities, built using Ocado’s costly automation technology, have not delivered the efficiency gains once promised. The partnership drew significant attention when it was announced in 2018, but with this reversal, investors are questioning Ocado’s technology and sent the stock down more than 21%.

Kroger had hoped to win over more online customers with high-tech distribution centres, but those customers went elsewhere. As a result, Kroger has strengthened its partnership with Instacart, which relies not on robots but on human shoppers who pick groceries in stores. It isn’t the first time Ocado has taken a beating: since the peak during the pandemic, the stock has lost more than 90% of its market value.

Meta won’t have to sell WhatsApp or Instagram

A U.S. court has ruled that Meta is not a monopoly. Back in 2020, the U.S. Federal Trade Commission sued the company—then still named Facebook—claiming it had monopolistic power and acquired WhatsApp and Instagram to eliminate future competition. The judge disagrees, marking the second time the FTC has seen its case dismissed. Earlier this year, another U.S. court ruled that Alphabet does not need to divest its Chrome browser.

Did you know…

Meta paid 1 billion dollar for Instagram in 2012, and 19 billion dollar for WhatsApp? Today, Instagram alone is estimated to be worth more than 400 billion dollar.

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