Market Snapshot

River1 Asset Management
January 29, 2025

NYSE Ticker: RVER

Trading Observations

Now we get the added benefit of ASML pop on numbers, more evidence that DeepSeek not what was advertised (DeepSeek has apparently spent over $500 million on $NVDA chips despite low-cost AI claim, per SemiAnalysis via @FT)
If MSFT + META maintain cap-ex levels when they report tonight, may get semis participating again as well
FOMC also on the docket with no change in rates expected
6100 resistance vs. 5980 support
Short-term overbought persists
NATIONAL SECURITY: U.S. NAVY BANS USE OF DEEPSEEK DUE TO ‘SECURITY AND ETHICAL CONCERNS’ - CNBC

Futures

DOW -71

S&P -13

Nasdaq +20

CNN Fear/Greed Index

10-Year Yield

Oil

BITCOIN

Financials / Retail / Healthcare

SCHW – Up 1% on news Trump’s Social Media platform Truth will create a FinTech brand Truth.Fi where $250M will be custodied at Schwab to start. Meaningless number to Schwab given they have over $10T, but positive headline. DJT up 16% on a plan to make money.

Barclays – Announced a $499 annual fee JetBlue credit card with strong incentives for flyers.

Global Hotel Brands – ALIS Conference was largely positive for the bigger players as they are net unit growth positive with construction increasing.

PII – Baird saying Polaris needs RZR to get hot to get out of this rut as dealer destocking continues due to weak sell through. They cut EPS guidance for 2025 by 65%.

LC – Down 19% - Lending Club down 19% on weak originations. It turns out the market for 20% consumer loans has its limits.

SBUX – Up 3% on earnings. Everyone largely positive on the report. That said the comps were negative 4% vs negative 5% expected, so until those turn around, we can’t imagine much chasing.

Technology

AI Trade/Bounce: what a diff a day makes ... NVDA surged 8.8% but still lot of wood to chop to close that gap from Friday close (got some ?s on outperformance vs AVGO); early AI adopters within internet all hit 52 wk highs (META RBLX RDDT) ....

AI WARS: Microsoft and OpenAI are investigating whether a group linked to DeepSeek obtained data without authorization, people familiar said. OpenAI’s API was allegedly used to exfiltrate a large amount of data, potentially violating terms of service (Bloomberg)

o We are afraid TikTok is data mining? How about an AI App on your phone built in China . ..NOPE!

ASML: +8.8% post strong orders as AI demand fueled orders; expects China sales to fall to about 20% of total revenue this year. Bookings (EU7.1B vs est EU3.5B), GMs beat by 210bps -- the bookings beat was the most impressive vs. expectations (although the B2B was still below 1x). For Q1, targeting sales above at mid with GMs also ahead of consensus. Reit prior 2025 guide ... Sentiment/positioning had been very low since disaster last October .. CEO on Deepseek: "Anyone that lowers cost is in fact good news for ASML, because lower cost means AI can be used in more applications. More applications means more chips" (predicted that more players like DeepSeek will shake up the market, given the huge opportunities in the sector)

DDOG: -1.8% Stifel dwongrading on margin headwinds, full valuation

FFIV: +11% solid beat; sees revs above for next Q; lifting FY (+6.5% from prior +6%). Had seen dip buyers on pullback to 50D

GSAT: -17%, Apple and SpaceX link up to add Starlink Network on iPhones

IBM: #s tonight / 6% implied - positioning 3 out of 10 ... funding short since last print; within Consulting, clients aren’t expanding budgets, and some gen AI projects are coming at the expense of traditional consulting ... issues: valuation, FX, more 2H loaded '25

MSFT: #s tonight / 4% implied move ... positioning feels 6 out of 10; lot of focus on timing for Azure re-acceleration (has been dead $$ for better part of last 12 months); increased focus on capex espc as Nadella busy posting over the weekend. Commentary on Stargate/OpenAI also focus here ... Bogeys: FQ2 Azure growth +32-33%cc (guide +31-32%cc) and FQ3 guide for a v slight acceleration (i.e. +33-34%cc)

META: #s tonight / 7.2% implied move. Positioning 8+ out of 10 as ppl have regrossed since Zuck derisked capex .. Arguably most crowded long within megacaps. Zuck derisked #1 narrative but releasing capex last wk. Now focus on CY25 expense guide / headcount needs, product portfolio outlook (Zuck on Rogan said 2025 most critical yr for AI + Meta) ... Ppl looking for Q4 revenue growth near top end of guide ~19% FXN (guide +12-20%) and Q1 guide +17-18% FXN (high-end). Opex guide ~$115-116b high-end and Capex ~$60-65b (already announced)

NOW: #s tonight / 6.3% implied .. crowded long, 8+ out of 10 ... Bogeys: Q4 cRPO growth ~23% ccy, Q1 guide ~21% ccy ... Checks positive - 4Q appeared to finish ahead of plan driven by large deals, broad-based strength across products / geos, expansions/renewals

QRVO: -5% nasty reversal on FY26 guide - expects muted rev growth in FY26 on “flattish Apple sales and exit from mass-tier Android market”; shrs initially spiked ~15% post beat + raise/margin commentary

RDDT: +3% new feature that allows marketers to import an ad campaign from Meta’s ads manager -> strategy could help bring advertisers to Reddit

TMUS: +4% solid guide ... Q4 postpaid phone ARPU better; prepaid slight ahead. Revs/EBITDAS ahead; capex bit below St. Sees '25 capex inline with ST. Sees '25 postpaid net customers +5.5M to +6M … conf call 8am ET