Each weekday, the CNBC Investing Club, led by Jim Cramer, shares the Homestretch – a timely afternoon update designed for the final hour of trading on Wall Street. On Tuesday, stocks are experiencing a slight uptick, with the S&P 500 poised to recover nearly all the losses from Monday’s session. The market's positive momentum is attributed to declining oil prices, lower bond yields, and an overall uplift in sentiment regarding artificial intelligence companies.
On Tuesday, OpenAI announced that testing of its new custom inference chip, named Jalapeño, revealed a substantial performance improvement. Initially introduced in June along with Broadcom, this processor represents a significant step in OpenAI's quest to build an integrated technological stack for its models and offerings. Google stands as a prime example of a complete AI enterprise. While many AI firms assert that their architectures and models are superior, Jalapeño has received external validation from SemiAnalysis.
In its Tuesday release, OpenAI noted that Jalapeño can handle a greater number of AI workloads per power unit while delivering quicker responses, unlike current hardware systems that often entail a trade-off between speed and efficiency. OpenAI intends to start integrating Jalapeño into its computing infrastructure by year-end, which should bolster Broadcom's forecast of over $100 billion in AI-related revenue by fiscal year 2027. However, this development does not alter our perspective on the political challenges linked to data center constructions, nor does it affect our recent decision to reduce our stake in Broadcom by 50% on Monday. CEO Hock Tan is likely to face questions regarding sales growth during Broadcom's earnings call on September 2.
It's essential to note that OpenAI's advancements should not be interpreted as the end of its collaboration with Nvidia. Just last week, Nvidia committed to providing up to $105 billion in credit support for OpenAI’s extensive data center initiative in Ohio, which will be exclusively powered by Nvidia technology. OpenAI also indicated that it anticipates broad utilization of accelerators from Nvidia and other partners for both training and inference processes. The topic of competition from custom-designed chips often arises during Nvidia's earnings calls, and we expect CEO Jensen Huang will be questioned about it once more on Wednesday night.
Later Tuesday, Intuit and Zoom will report their earnings after market close. On Wednesday morning, we'll hear results from companies like Kohl's, Abercrombie & Fitch, Williams-Sonoma, and JM Smucker. Additionally, key economic data is on the docket, including the Fed's preferred inflation metric, the PCE price index, the second estimate of second-quarter GDP, and durable goods orders. Subscribers to the CNBC Investing Club with Jim Cramer receive trade alerts prior to Jim executing any trades. He waits 45 minutes post-alert before acting on any buy or sell decisions within his charitable trust’s portfolio, and if he has discussed a stock on CNBC TV, he will wait 72 hours after the trade alert before proceeding.
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