Good morning readers. Amazon is set to shake up the Dow Jones Industrial Average, swapping places with Walgreens Boots Alliance. The move, effective February 26, aims to boost investor exposure to the evolving retail landscape. With Amazon's diversified revenue streams, including its dominant cloud business, and a thriving advertising arm, the e-commerce giant represents a significant shift in the index. Meanwhile, Walgreens, facing narrowed losses but still struggling, bids farewell to its Dow tenure, marking a dynamic change in the market's narrative.

Let’s jump into today’s storylines.

In today’s digest:

• All eyes are on Nvidia as it gets ready to report its fourth quarter earnings

• Headline Hustle: Employees at Molson Coors brewery are getting ready to strike for fair pay, Appeals court to revisit Nasdaq board diversity rule challenge, FuboTV sues Disney, Fox and Warner Bro’s over sports streaming venture

• SpaceX is a defense contractor for the U.S. government

• Pulse Points: What’s Trending

TECH

Nvidia set to report earnings, face tough test on Wall Street

Forget the gold rush; the real frenzy is in the AI chips market, and Nvidia is leading the charge.

As we edge closer to the company’s fiscal fourth-quarter earnings report, the world is anticipating the figures that will underline Nvidia's colossal ascent in the tech hierarchy. With a valuation that now shadows traditional titans like Alphabet and Amazon, Nvidia’s journey from a specialist in graphics processing units (GPUs) to the heart of the AI revolution is nothing short of meteoric.

The rise of GPUs

At the core of this anticipation is the heightened demand for Nvidia’s GPUs, notably the H100, essential for AI advancements and the development of groundbreaking models like ChatGPT. This surge in interest has propelled Nvidia’s stock to new heights, with the company’s market cap touching an astonishing $1.8 trillion, positioning it as the world's third most valuable public entity, just behind Microsoft and Apple.

Analysts are betting big, predicting a staggering 240% revenue jump year-over-year to $20.6 billion, with net income expected to soar over 7x to $10.5 billion. This financial leap is bolstered by a gross margin spike to 74%, a testament to the booming data center business driven by its AI chips.

But beneath the surface of these impressive numbers lies a web of intrigue and speculation.

• The focal point of discussions is the sustainability of Nvidia's growth, especially against the backdrop of an almost 4x projected revenue increase in its data center segment.

• With tech behemoths like Microsoft and Google ramping up AI investments, questions linger over the impact of shifting demand dynamics on Nvidia's future.

The company’s more than just AI, though. All eyes are on Nvidia's gaming segment, expected to chart a course of steady expansion. Concerns surrounding supply chain management, particularly its dependence on Taiwan Semiconductor Manufacturing Company, add a layer of complexity to the narrative. The imminent launch of Nvidia's latest AI chip, the B100, promises to further reshape the industry landscape, amplifying expectations for data center operators.

Looking ahead…analysts are assessing the sustainability of Nvidia's current growth trajectory, potential shifts in demand from major customers, and the impact of upcoming product launches on future growth. Despite optimism about the company’s prospects, there's caution regarding long-term demand dynamics and the company's ability to meet short-term demand.

IN THE KNOW

Headline Hustle

🍺 Employees at a Molson Coors brewery in Texas are getting ready to strike. Over 400 Teamsters are striking at the Molson Coors brewery in Fort Worth, Texas, impacting production for the second largest brewer in North America. The strike coincides with strong financial performance by Molson Coors, which reported a 39% increase in underlying earnings for 2023. Despite record profits, the union finds the company's offer of less than a $1 per hour wage increase insulting. Molson Coors asserts its commitment to fair agreements while ensuring contingency plans to mitigate the strike's impact on consumers.

🧑‍⚖️ Appeals court to revisit Nasdaq board diversity rule challenge, raising uncertainty over its mandate.. A federal appeals court has agreed to rehear a challenge by conservative groups against Nasdaq's board diversity rule, focusing on disclosure requirements for women and minorities on listed company boards. The 5th Circuit U.S. Court of Appeals set the rehearing after vacating a prior decision upholding the rule. This rule mandates companies to divulge board diversity details and have a minimum number of women and minorities or provide an explanation. The court's decision follows petitions claiming constitutional violations and regulatory overreach by the SEC.

📺️ FuboTV sues Disney, Fox, Warner Bros. over new sports streaming venture. FuboTV has filed a lawsuit against Disney, Fox, and Warner Bros. Discovery, alleging monopolistic behavior in the U.S. sports streaming market. The lawsuit targets a joint venture announced by the companies to provide live sports content, slated for release later this year. FuboTV CEO David Gandler accuses the companies of colluding to stifle competition and inflate prices. The lawsuit highlights concerns about bundling requirements and high licensing fees imposed on FuboTV, alleging that the joint venture aims to undercut competitors and maintain dominance.

SPACE

SpaceX gets buddy buddy with the U.S. government

In the shadows of commercial spaceflight's dazzling achievements, SpaceX's strategic pivot towards national security is quietly redrawing the boundaries of space and defense collaboration.

The company, once celebrated for its Mars ambitions, now finds itself at the heart of the U.S. defense operations, deepened by a hush-hush $1.8 billion contract inked in 2021 with an unnamed U.S. government entity.

SpaceX’s secret sauce

At the heart of this partnership lies SpaceX's Starshield unit, a secret entity catering exclusively to government clients. Tasked with providing secure communication services and conducting essential observation tasks, Starshield's satellites play a pivotal role in bolstering national security efforts.

The company’s evolution in the national security landscape is emphasized by its rapid satellite manufacturing and launch capabilities. From launching classified military satellites to providing services like the Starlink broadband network to the Pentagon, SpaceX's agility in space operations has earned praise from government leaders seeking enhanced capabilities in a rapidly evolving geopolitical environment.

But as geopolitical tensions escalate and space becomes increasingly contested, SpaceX's role in national security becomes more pronounced. Satellites serve as vital tools for monitoring activities on Earth, facilitating communication, and tracking assets—a role that aligns seamlessly with SpaceX's capabilities.

Zoom out: SpaceX's deepening collaboration with national-security agencies highlights its indispensable role in shaping the future of space operations. As the world grapples with evolving geopolitical challenges, SpaceX's contributions to national security will undoubtedly continue to be scrutinized and debated.

SNIPPETS

Pulse Points

• Walmart reported a 6% increase in quarterly revenue, driven by strong holiday season sales and double-digit growth in global e-commerce.

• Elon Musk announced that a patient with Neuralink's brain technology can control a computer mouse solely through thought.

• Canadian inflation slowed more than expected in January, with consumer prices rising 2.9% year over year, below the 3.3% economists were expecting.

• Adobe launched an AI assistant in its Reader and Acrobat apps on Tuesday, capable of summarizing and answering questions about PDFs and other documents.

• A federal appeals court overturned a $1 billion verdict against Cox Communications, ordering a new trial to determine damages for illegal downloads by its customers.

• President Joe Biden announced that the U.S. will impose significant sanctions on Russia on Friday due to the death of opposition leader Alexei Navalny and the ongoing two-year conflict in Ukraine.

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