My top 10 things to watch Friday, Oct. 2
1. Stock futures are flying after the September jobs report came in light on both payroll additions and wage growth. That's exactly what we needed to get relief on bond yields and make it so the Federal Reserve is more likely to keep interest rates steady at its late October meeting. Cherry on top: Brent crude is below $100 this morning on reports of diesel and crude stockpile releases.
2. Nike: No playoffs for these guys. Shares are down another 8% after missing on revenue and issuing a very light sales forecast for fiscal 2027. Management expects to maintain and grow the dividend over time. But I would still call it stretched. Admitted to flooding the zone with Jordans. Little recognition of competition. November investor day is still on. Parade of price target cuts. Hopefully this is the kitchen sink? Glad we exited this one this summer.
3. Morgan Stanley reinstated Nvidia as its top pick in semiconductors. Analysts recently hosted CEO Jensen Huang and CFO Colette Kress for investor meetings and liked what they heard — smart strategy to focus on increasing revenue per gigawatt in a power-constrained environment. "Very undemanding valuation," too, they said. To me, Nvidia remains a must-own AI name. Shares are just shy of their May record highs. Breakout incoming?
4. Couple AI financing headlines: The Financial Times reported that Amazon is trying to put $8 billion worth of Nvidia Grace Blackwell chips into a new investment vehicle — then lease the chips back — to improve its balance sheet. In August, Amazon said it was buying 2 million additional GPUs. Bloomberg said that Broadcom's bankers on Wall Street are working on a $60 billion financing to benefit Anthropic and other companies: $42 billion senior secured, $18 billion of junior debt.
5. Boeing's white-collar union approved a new four-year contract, averting a potential strike. Second piece of good news for the Club name this week, following the Navy fighter jet contract victory over Northrop Grumman. My focus now turns to resolving the 737 Max software glitch in coordination with the Federal Aviation Administration.
6. Analysts are furiously trying to catch up with Accenture after the consulting giant's great quarter yesterday. Wells Fargo, Goldman Sachs and Morgan Stanley all raised their price targets. Of the trio, Goldman is the highest at $260 and the lone buy rating. Add Accenture to the list of companies falsely labeled roadkill in the AI era. Shares are up 70% from their June lows but still work to do to get back to January levels.
7. Seagate and Western Digital are under heavy pressure, down more than 11% and 8%, respectively, following a report that Toshiba plans to double its AI hard disk drive production by investing $380 million to expand its facilities in the Philippines. Seagate and Western Digital are big year-to-date winners in the memory and storage shortage trade. Could this move from Toshiba erode their pricing power?
8. Time for another look at Abbott Laboratories? Rothschild & Co Redburn upgraded the diversified healthcare stock to a buy from hold and raised its price target to $127 from $119. The analysts think that Abbott needs to exit some of its slower-growing businesses, such as nutrition. That would be terrific for this ex-Club holding.
9. More love for CrowdStrike and Palo Alto Networks: TD Cowen raised its price targets on both Club stocks. The analysts see the current cybersecurity business environment remaining strong, making it easier for CrowdStrike to beat second-half fiscal 2027 net new annual recurring revenue estimates. They also see multiple growth avenues at Palo Alto. Have to own cyber in the age of AI.
10. Lots of positive analyst commentary about Linde following Day 1 of the industrial gas giant's investor day. The focus was on space and electronics. Citi said the Club name is engineered to win in both lanes. Deutsche Bank called Linde's space opportunity significant. We did a deep dive on Linde's space business ahead of the SpaceX IPO.
