Breakfast | Google and AMD's stock prices plummet after earnings, Morgan Stanley significantly lowers GB200 shipment forecast

Market Overview

Tech stocks boosted the US stock market, with the Nasdaq rising over 1% and small-cap indices also up more than 1%. Several large tech stocks hit new highs, with Palantir soaring 24%, alongside Meta, Google, Netflix, Amazon, and IBM all reaching new highs. Google, which reported disappointing earnings after hours, fell 8%; AMD initially rose 5% after hours but then turned to decline, at one point dropping over 10%.

The China concept index surged over 4% at one point. XPeng and Pinduoduo rose over 8%, while Alibaba and Tencent ADRs increased nearly 4%. The offshore yuan briefly rose over 350 points, breaking above 7.28 yuan. Canadian ETFs rose nearly 2%, and the Canadian dollar moved away from a nearly 22-year low.

The unexpected decline in US job vacancies suggests a softening economy, leading the 10-year US Treasury yield to turn from rising to falling, with the dollar down 1%. Bitcoin fell towards $98,000.

Spot gold broke through $2,845 to hit a new high, while oil prices experienced a sharp drop followed by a V-shaped recovery.

In the Asian session, Hong Kong stocks surged, with the Hang Seng Tech Index rising over 5%, SMIC's stock price hitting a new high, and Xiaomi's market value surpassing 1 trillion yuan during the session.

Google's Q4 Cloud Revenue Disappoints, Falling Over 9%, Heavy Investment in AI, Capital Expenditure Guidance Surprises

In the fourth quarter, Google's total revenue grew 12% year-on-year, marking the lowest growth rate in over a year. Google Cloud revenue grew 30%, both figures indicating a slowdown that exceeded expectations. Digital advertising revenue increased by 11%, and search revenue rose by 13%, both above expectations; capital expenditure in Q4 rose by 30%, 8% higher than expected, with projected spending of $75 billion this year, nearly 30% above expectations and over 40% higher than last year. The stock price fell over 9% after hours.

AMD's Earnings and Guidance Exceed Expectations, Data Center Underperforms, Stock Initially Rises Over 5% Then Drops 9%

On February 4, Tuesday, after US stock trading, chip manufacturer AMD, which is making significant strides in AI, released its Q4 earnings report.

The quarterly revenue was $7.66 billion, exceeding analysts' expectations of $7.54 billion, representing accelerated growth compared to Q3. The projected revenue for Q1 is between $6.8 billion and $7.4 billion, with the midpoint of $7.1 billion also surpassing analysts' expectations of $7.04 billion, leading to an initial rise of over 5% after hours.

However, just a few minutes later, the stock price turned to decline, with losses expanding to over 9%. Although the data center revenue in Q4 reached a new high for the company, it fell short of market expectations.

Morgan Stanley Significantly Lowers GB200 Shipment Forecast for This Year, Cloud Spending Cycle May Peak This Year

Morgan Stanley's Greater China semiconductor research team stated that as major client Microsoft slows its capital expenditures, the forecast for shipments of NVIDIA's GB200 chips in 2025 has been lowered from 30,000-35,000 units to 20,000-25,000 units, with the worst-case scenario falling below 20,000, potentially impacting the supply chain by $30 billion to $35 billion. Morgan Stanley predicts that the cloud computing market growth cycle may continue until the first half of 2025, after which the year-on-year growth rate in Q4 may drop to single digits.

Bitcoin Falls Over 4%, Price Approaching $97,000

David Sacks, the White House cryptocurrency director, stated that government officials are still exploring the feasibility of Trump's ambition to create a national Bitcoin reserve. He met with congressional members to advance the president's digital asset policy"As part of the internal working group of the government, this is one of our priority concerns," Sacks said at a press conference in Washington on Tuesday regarding potential Bitcoin reserves. "We are still waiting for confirmation of some cabinet members in the working group, so we are still in a very early stage. But this is one of the first things we need to consider." When asked how the cryptocurrency industry would participate in the White House's initiatives, Sacks stated, "We will make an announcement at some point to authorize some form of engagement with the industry."

Tariff Storm

The State Council: Starting from February 10, tariffs will be imposed on certain imported goods originating from the United States. A 15% tariff will be imposed on coal and liquefied natural gas; a 10% tariff will be imposed on crude oil, agricultural machinery, large-displacement vehicles, and pickups; for imported goods listed in the attachments originating from the United States, corresponding tariffs will be imposed on top of the current applicable tariff rates, with existing bonded and tax exemption policies remaining unchanged, and the newly imposed tariffs will not be exempted.

According to the Ministry of Commerce of China, starting from February 4, export controls will be implemented on tungsten, tellurium, bismuth, molybdenum, and indium-related items.

Google is suspected of violating antitrust laws, and the State Administration for Market Regulation has decided to initiate an investigation. According to the website of the State Administration for Market Regulation, due to Google's suspected violation of the Anti-Monopoly Law of the People's Republic of China, the administration has legally initiated an investigation against Google.

CCTV YuYuan Tan Tian: China may also dynamically adjust relevant countermeasures based on U.S. measures. This action demonstrates China's firm opposition to U.S. unilateralism and hegemonism, and its resolute stance and attitude in safeguarding its legitimate rights and interests, while also leaving sufficient means for both sides to negotiate solutions to problems on the basis of equality and mutual respect.

Goldman Sachs: The Investment Logic of DeepSeek, AI Shifts from Hardware to Software, Impacting "American Exceptionalism," Overweighting Chinese Tech Stocks

Goldman Sachs pointed out that the investment logic of AI is shifting from hardware to software. The high exposure of the MSCI China Index to AI software is expected to lead to excellent performance in the short term, recommending an overweight position in Chinese tech stocks. Although the weight of A-shares in hard technology is relatively high, there has been active layout in AI software in recent years, so it will also benefit from this.

U.S. December JOLTS Job Openings Unexpectedly at 7.6 Million, Labor Market Shows Signs of Slowing

U.S. December JOLTS job openings were at 7.6 million, the lowest level since September of last year, with expectations of 8 million. The previous value for November was revised from 8.098 million to 8.16 million. The voluntary resignation rate in December was about 2%, showing little change and remaining at a recent low. The hiring rate in December remained at 3.4%, the lowest level in nearly a decade. The layoff rate for the month also remained at a historical low.

Today's Outlook

China's January Caixin Services and Composite PMI.

Eurozone and U.S. January Services and Composite PMI final values.

U.S. January ADP Employment ChangeU.S. December Trade Balance.

Alibaba, Novo Nordisk, Disney, Qualcomm, ARM, and Uber will announce their financial reports