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Every Wednesday we publish “The Mid-Week Wrap-Up” — your ticket to being well informed and staying ahead in the investment game!

This report is designed to help investors of all skill levels break down important stories/topics within the stock market. And best of all, we cut through all of the BS and give you exactly what you need to know in easy to digest, bite sized pieces of content.

This article is designed to truly give you that EDGE in the day ahead!

Grab your afternoon pick me up and let’s dive in.

Market Talk

The major indexes were higher to start the week, though once again the Nasdaq and mega caps are leading the way. Meanwhile, treasury yields and oil prices were significantly lower.

3 Stories Moving the Market

These are some of the biggest stories so far this week that are having an influence on market action.

Elon Musk ordered Nvidia to ship thousands of AI chips reserved for Tesla to X and xAI

Elon Musk aims to make Tesla a leader in AI and robotics, necessitating significant investments in Nvidia processors.

Despite his claim during Tesla's first-quarter earnings call that the company will increase its Nvidia H100 chips from 35,000 to 85,000 by year-end and spend $10 billion on AI, Nvidia emails suggest Musk may have exaggerated.

Internal correspondence indicates Musk redirected 12,000 H100 GPUs intended for Tesla to his social media company X (formerly Twitter) and xAI, causing concern among Tesla shareholders about his focus and resource allocation.

These revelations highlight tension between Musk and some Tesla shareholders, who worry about his commitments given his roles at multiple companies, including SpaceX, Neuralink, The Boring Co., and his AI startup xAI. Critics argue Musk is only a part-time CEO at Tesla, which is facing declining sales, increasing competition, and reputational damage in the U.S., partly due to Musk's controversial behavior.

These issues, combined with concerns over Tesla’s growth and Musk’s $56 billion pay package, have intensified shareholder unease.

Nvidia announces new AI chips months after latest launch as market competition heats up

Nvidia has introduced its next generation of AI chips, named "Rubin," just months after announcing the "Blackwell" model in March.

Nvidia CEO Jensen Huang revealed the Rubin architecture ahead of the COMPUTEX tech conference in Taipei.

The Rubin chips signify an accelerated pace in Nvidia's AI chip development, moving from a two-year to a one-year update cycle. This rapid advancement highlights the intense competition in the AI chip market.

The Rubin platform includes new GPUs and a central processor called "Vera," although specific details were not provided during the announcement.

📚 EDGE-UCATION: What are AI chips?

AI chips, or artificial intelligence chips, are specialized hardware designed to accelerate the processing of artificial intelligence tasks, such as machine learning and deep learning.

These tasks often involve complex computations and large datasets, making standard processors (CPUs) less efficient for such purposes.

AI chips come in various forms, each optimized for different types of AI workloads:

1. Graphics Processing Units (GPUs): Originally designed for rendering graphics, GPUs are highly parallel processors that are well-suited for the large-scale matrix and vector operations common in AI tasks. Companies like Nvidia and AMD produce GPUs widely used in AI.

2. Tensor Processing Units (TPUs): Developed by Google, TPUs are custom-built for accelerating machine learning workloads, particularly those involving neural networks. They are optimized for TensorFlow, Google's open-source machine learning framework.

3. Field-Programmable Gate Arrays (FPGAs): These are reprogrammable chips that can be tailored to specific AI applications. They offer flexibility and can be optimized for specific workloads, but typically require more expertise to program.

4. Application-Specific Integrated Circuits (ASICs): These are custom-designed chips optimized for a particular application. ASICs can offer superior performance and efficiency for specific AI tasks but are expensive and time-consuming to develop.

5. Neural Processing Units (NPUs): Specifically designed to accelerate neural network computations, NPUs are found in various devices, including smartphones and edge computing devices.

AI chips are crucial for accelerating tasks like image and speech recognition, natural language processing, and other forms of data analysis that require significant computational power. Their development is central to the progress and scalability of AI technologies.

Paramount and Skydance agree to terms of a merger deal

Paramount and Skydance have agreed to merge, with an official announcement expected soon.

The agreement, pending approval from Paramount's controlling shareholder Shari Redstone, involves Skydance, supported by RedBird Capital and KKR, buying nearly 50% of class B Paramount shares for $4.5 billion and injecting $1.5 billion into Paramount to reduce debt.

The total deal is valued at $8 billion, up from a previous $5 billion offer.

Post-merger, Skydance and RedBird will own two-thirds of Paramount, while class B shareholders will retain one-third equity.

The deal, not requiring a shareholder vote, follows a competing bid from Apollo Global Management and Sony Pictures.

The Second Half

The second half of the week has a handful of key earnings, but the PCE report will be the major catalyst to end the week.

Earnings Reports

There is only earnings report left this week that we here at The Investor’s Edge we will be watching: Lululemon:

Here is the calendar of earnings releases scheduled for the rest of the week:

Economic Reports

Here is the calendar of events scheduled for the remainder of the week:

All eyes will be on the nonfarm payrolls report Friday as investors look for more clues on the state of the labor market. There will also be other jobs reports, including jobless claims, unemployment and labor participation.

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Thank you for reading this edition of the Mid-Week Wrap-Up.

Until next time investors!

Mark & Chris

The Investor’s Edge

Disclosure

This is not investing advice. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.