💾 Forging New AI Alliances

Plus, the Department of Transportation handed automakers a new green iniative

Pencils down, it’s time for lunch. Here’s what you missed this morning:

  • 🟨 | Market Snapshot: US stocks were mostly flat to start the week as investors are looking ahead to May’s consumer price index and the Fed’s latest rate decision.

  • 🏢 | In focus: Ed Yardeni, president of Yardeni Research, claims it is most likely that the Fed will not cut interest rates this year. Yardeni says the Fed has the flexibility to hold off cuts, pointing to a relatively strong labor market, a well-performing economy, and easing inflation.

  • 🚗 | Noteworthy: New regulations are coming that will make it increasingly difficult for car manufacturers to produce gas-only vehicles. President Biden’s Transportation Department announced new fuel consumption standards to take effect in 2032, by which time all passenger cars must average 65 miles per gallon or above.

  • 💾 | The Midday Trade: Forging New AI Alliances. Scroll down for more.

TOGETHER WITH BETTERMENT

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STREET STATS

MORNING MOVERS

NVDA: Shares of Nvidia rose following its 10-for-1 stock split that took effect after Friday’s closing bell, making shares of the stock more affordable (YF)

LUV: Southwest Airlines’ stock jumped on news that activist investor Elliot Investment Management took a $2 billion stake in the carrier (Fox Business)

KKR: Global investing firm KKR saw its stock rise after the company announced that it will be joining the S&P 500 (Benzinga)

GME: GameStop’s stock fell on Monday morning despite meme stock booster Keith Gill hosing his first YouTube live stream in nearly three years last Friday (QZ)

PLNT: Shares of Planet Fitness rose after Jefferies upgraded the stock to Buy, citing optimism on the company’s new CEO, Colleen Keating (CNBC)

TOP CALLS

PayPal: Citigroup Maintains Buy on PayPal Holdings, Raises Price Target to $81 (Trade It)

Starbucks: B of A Securities Maintains Buy on Starbucks, Raises Price Target to $112 (Trade It)

Buy on Sea: Loop Capital Maintains Buy on Sea, Raises Price Target to $94 (Trade It)

Geron: Barclays Initiates Coverage On Geron with Overweight Rating, Announces Price Target of $9 (Trade It)

JM Smucker: Barclays Maintains Equal-Weight on JM Smucker, Lowers Price Target to $123 (Trade It)

Sunoco: Barclays Reinstates Overweight on Sunoco, Announces $61 Price Target (Trade It)

THE MIDDAY TRADE

Big Name Partner

Broadcom (AVGO) just won a large contract to produce chips for Google (GOOG), and analysts think the stock might get a nice boost as a result. 

The contract is for its next-generation AI application-specific integrated circuit, or ASIC, accelerator chips. Analyst Harlan Sur expects chip production to be in full swing by 2027 at the latest.

High Demand

According to Sur, the company is seeing more and more orders roll in from Google for its TPU chip, an AI processor under the ASIC umbrella. Sur believes that Google’s TPU demand could bring in over $8 billion in revenue to Broadcom this year alone. That number could reach $10 billion by next year. 

The analyst is also bullish on Broadcom’s partnership with Meta (META), citing the trend of these large tech companies seeking out custom chip designs to pair with their software.

The Stock

Broadcom shares are up over 29% YTD, and Sur has given the stock a $1,700 price target. That represents a 21% upside from Thursday’s closing price. 

Aside from Google and Meta, the company also partners with Apple (APPL). It is currently the second largest AI semiconductor manufacturer, behind only Nvidia (NVDA). It holds the largest market share for cutting-edge customer chip design. 

As AI technology continues to expand, the chips that Broadcom produces will only become more crucial. Given its strong partnerships, both old and new, this stock could see significant growth over the next 3 years. 

TOGETHER WITH BETTERMENT

Make your money rise and grind while you sit and chill, with the automated investing and savings app that makes it easy to be invested.

SURVEY THE STREET

Apple is facing some real legal headwinds.

The Justice Department and the district attorney generals of 16 states have filed suit against the tech giant, alleging it has created a smartphone monopoly.

The antitrust suit is being brought in the New Jersey District Court and looks to stop Apple from blocking innovative apps and making it difficult for consumers to choose competing products.

🍎 Will the District Court Consider Apple a Monopoly

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Plus, Last Friday’s Poll + Results:

🟩🟩🟩🟩🟩🟩 Yes ✅ 

🟨🟨🟨⬜️⬜️⬜️ No ❌ 

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