“Appear weak when you are strong, and strong when you are weak.” — Sun Tzu, The Art of War
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Good morning!
Google’s on a roll worthy of envy. But as its update to Gemini reshuffles the AI leaderboard, investors remain divided over whether that spells robustness for the next leg of the rally, or if it marks the start of a painful period for the AI trade.
Few would have guessed earlier this year that Google would end up becoming a star. But now it’s added over $500 billion to its market cap this month, pushing it closer to hitting $4 trillion in market value. It finished Tuesday off 2.5% from the milestone.
The rally’s been possible because of its Tensor Processing Units, which are both cheaper and less power intensive to train chatbots on compared to Nvidia’s GPUs. That’s what Google trained its new Gemini 3 model on that everyone including Salesforce’s Marc Benioff is raving about, and that’s what has Nvidia flustered.
Google shares rose 1.6% Tuesday, lifted higher by reports that Meta is considering using Google’s chips.
In comparison, Nvidia shares fell 2.6%, while the S&P 500 added 0.9%.
Nvidia’s meteoric rise over the years has propped up a whole new industry that is now the reason why we’re not in a recession. Along the way, it has supported a new set of players, which investors have enthusiastically bought shares of. That’s why any pause in the Nvidia rally tends to hurt the AI players related to it. For example, chipmaker AMD’s shares fell 4.1% Tuesday.
The flip in market narrative has actually made Google shares look more expensive on a valuations basis compared to Nvidia’s for the first time since 2019.
Naturally, Nvidia felt like it had to say something about Google, which is great, except what it said sounds like a conversation you have with your ex when you’re trying to prove you’re doing better than them.
“We’re delighted by Google’s success — they’ve made great advances in AI and we continue to supply to Google. NVIDIA is a generation ahead of the industry — it’s the only platform that runs every AI model and does it everywhere computing is done.”
That’s not all the refuting it’s done recently either. Nvidia has been sending a private memo to analysts, aiming to defend itself from Big Short Investor Michael Burry pointing out issues with depreciation, stock-based compensation dilution, stock buybacks, and more.
The memo’s circulation doesn’t mean Burry is backing down. “I stand by my analysis. I am not claiming Nvidia is Enron. It is clearly Cisco.” That was in response to Nvidia saying it’s not Enron.
Needless to say, the PR charm campaign isn’t working, given its tepid stock performance recently, with shares down 7.1% over the past month compared to 1.6% for the S&P 500. I believe it might even be making it worse, given the reactions on Twitter and Reddit.
But as a reminder, declines like this are healthy to see for Nvidia as it shows that investors are behaving in a rational way, which is something we always like to see. When you’re as big as Nvidia is, it’s normal to see it being the target of bearish investors.
I will leave you with this funny meme made by a Redditor using Google’s Nano Banana.
Editor’s Note: Due to the Thanksgiving Holiday, we will not be publishing First to Market on Friday. We wish our readers and their families a happy holiday!
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📧✍️Here’s what a reader commented📧✍️
Q: Are you planning to keep holding your Nvidia after last week?
A: I Absolutely I will keep holding the Nvidia stock I bought years ago. There is nothing wrong with the company’s fundamentals that I perceive, and Mr. Huang may currently be the best CEO in the world – mainly because he is not only extremely talented but seems to be able to keep a level and clear head after years of amazing successes one after the other. That is a rare quality in history. However, it’s not a matter of “if” but only”when” Nvidia will falter, so it’s better that it’s stock price falter while the company itself is doing well to let the rest of the market catch up and all take a breather.
Catch up with Fundstrat
Equity markets continued to climb higher, after the grinding selloff since the Oct highs. In our view, the rally into YE remains intact.
Technical
Overall, given that a December FOMC rate cut is still uncertain, I still feel that a choppy market for now makes more sense for FOMC vs. a straight shot back to new highs given the bearish weekly momentum in US Indices.
Crypto
BTC reclaimed $87K and the Coinbase/Binance spread moved back into premium territory prior to US market close (a good sign).
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| Date | Time | Description | Estimate | Last |
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| 11/26 | 8:30 AM | Sep P Durable Gds Orders | 0.5 | 2.9 |
| 12/1 | 9:45 AM | Nov F Oct S&P Manu PMI | n/a | 51.9 |
