This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:
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What we’re watching
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What we’re reading
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Economic data releases and earnings
This has been a week of reminders for investors. There are so many to choose from, I almost don’t know where to begin.
First, this is an Nvidia (NVDA) market. It’s a market that will work for the bulls for as long as Nvidia works. If Nvidia is going to chart a course for AI domination, as seen in its new $100 billion OpenAI (OPAI.PVT) deal on Monday, and the stock gets pushed higher, it’s bullish for the broader market.
“I think AI is a real thing,” Robinhood chief investment officer Stephanie Guild said on Opening Bid (video above). “I still think there’s a lot of growth in this country. And you’re starting to see it in other sectors, … in aerospace and defense, for example. So I definitely think it’s something you have to pay attention to. You have to kind of be invested in whether it’s Nvidia or in other kinds of smaller players that benefit.”
Second, if you’re a CEO who ignores the retail investor, you do so at your own risk and general foolishness.
Opendoor (OPEN) and now Better Home & Finance (BETR) continue to see wild moves for the simple reason that a hedge fund manager is making strong bullish cases on X.
I have known that hedge fund manager, Eric Jackson, for more than a decade; I used to edit his columns at TheStreet. I am not surprised he has gained a stock-moving following. He puts in the hard work to find undervalued names.
Jackson shared more about his views on Opendoor during his last appearance on Opening Bid — it’s worth a watch.
Lastly, if you’re a bear, it will be hard to stay that way as long as the Fed is cutting rates. I think Monday’s commentary from new Fed member Stephen Miran on the need for a series of rate cuts is where policy may be headed. This could keep a strong buy-the-dip mentality in markets.
Read more: How the Fed rate decision affects your bank accounts, loans, credit cards, and investments
Having said that, I want to get back to the AI trade.
For the better part of the summer, a black cloud was hanging over this trade, and there was a constant fear that the artificial intelligence buildup was nearing a peak. Suddenly, Wall Street profit estimates for AI companies were deemed too high, valuation multiples too lofty, and sentiment as euphoric as that first sip of coffee at work in the morning.
This entire thesis was proven to be trash throughout the summer, and even more so right now.
