Hedge fund trader Michael Burry of “Big Short” fame is accusing Big Tech “hyperscalers,” as he calls them, behind the AI craze of amplifying their profits with some accounting tricks, based on his own estimates. He points to Big Tech companies like Meta (Nasdaq: META), Alphabet (Nasdaq: GOOGL), Microsoft (Nasdaq: MSFT), Amazon (Nasdaq: AMZN) and Oracle (Nasdaq: ORCL), saying in a post that they are “understating depreciation by extending useful life of assets artificially boosts earnings,” calling it one of the “frauds of the modern era.” Burry targets Oracle and Meta as the biggest offenders, warning that their earnings could be overstated by more than 20% if the practice persist.
The markets remain mixed, though the Nasdaq Composite and S&P 500 have trimmed their losses.
Earnings season is shaping up well for the S&P 500, with most companies beating expectations and the index on track for a fourth straight quarter of double-digit earnings growth, according to FactSet. So far, approximately 91% of companies have reported, 82% of which have topped EPS estimates, the highest share since Q3 2021. On average, earnings are coming in about 7% above forecasts, which is right in line with the 10-year trend.
Technology stocks remain under pressure but the selling is contained. Fintech stock SoFi Technologies (Nasdaq: SOFI) is down 1.4% today after introducing cryptocurrency trading for individual investors. SoFi is revisiting crypto trading for retail investors after shuttering those capabilities previously in favor of pursuing a banking license. SoFi’s customers can now trade digital assets like bitcoin (BTC) and ether (ETH) as well as other altcoins, with a more complete roll-out expected by year-end.
SoFi CEO Anthony Noto stated, “Today marks a pivotal moment when banking meets crypto in one ap. It’s critical to give our members a secure and regulated way to step into the future of money.”
Here’s a look at the performance as of mid-morning trading:
Dow Jones Industrial Average: Up 227.39 (+0.50%)
Nasdaq Composite: Down 136.0 (-0.58%)
S&P 500: Down 9.63 (-0.14%)
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Technology stocks are taking a breather after yesterday’s relief rally as investors react to the latest whims of corporate leaders. Today’s tech selling has sent the Nasdaq Composite and S&P 500 lower while the Dow Jones Industrial Average remains afloat. Nvidia (Nasdaq: NVDA | NVDA Price Prediction) captured the headlines after Japan’s Softbank decided to offload its position in the leading U.S. chip company as Masayoshi Son’s company pivots to concentrate its AI bet on ChatGPT developer OpenAI.
On the economic front, U.S. private-sector employment dipped a bit late last month, according to ADP projections. Businesses trimmed about 11,000 jobs per week last month, a sign that the labor market is cooling off with year-end just around the corner.
Here’s a look at the performance as of morning trading:
Dow Jones Industrial Average: Up 29.38 (+0.08%)
Nasdaq Composite: Down 95.99 (-0.41%)
S&P 500: Down 11.80 (-0.17%)
CoreWeave (Nasdaq: CRWV) stock is reeling today, losing 11% after JPMorgan downgraded shares of the AI-powered cloud computing company to a “neutral” rating on the heels of its Q3 earnings report. The analyst firm blamed supply chain and revenue related risks, slashing its price target on CRWV stock to $110 from $135. CoreWeave
PC maker Dell (Nasdaq: DELL) is also dragging tech lower today with a 3% drop in the stock, seemingly in sympathy with its tech peers. DELL stock is faring better over the longer term and has gained 20.4% year-to-date.
Chip stock Micron (Nasdaq: MU) is surrendering some of yesterday’s gains, falling 2.8% in this morning’s session. Micron was among the tech stocks leading the sector higher in yesterday’s session in which the stock shot above $257 per share. Today MU shares hover below $250.
Plug Power (Nasdaq: PLUG) is bucking the downward trend, tacking on 5.6% in today’s mixed session. The fuel-cell stock is getting a lift after analyst firm TD Cowen reiterated its “buy” rating on shares on signals of strengthening margins.
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Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
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