TheChek News Flow

Cover:

-In 2026, the initial public offering (IPO) landscape has drastically evolved, with upcoming mega-IPOs like SpaceX poised to redefine market expectations. Valued at nearly $2 trillion, SpaceX is expected to raise an unprecedented $75 billion this June, a move that may make CEO Elon Musk the first trillionaire. This trend of massive IPOs is not uncommon; companies like Anthropic, OpenAI, Databricks, and Stripe also eye valuations exceeding $100B. However, historical data indicate that large IPOs frequently underperform, with many yielding negative returns. As private investors anticipate substantial gains, new IPOs, including SpaceX, may exhibit erratic behavior in trading, diverging from typical stock patterns for an extended period. This volatility suggests that, although exciting, it could be wiser for investors to exercise patience rather than hastily engage in a tumultuous market. Facebook's IPO record of $81B in 2012 could soon be eclipsed, as SpaceX aims for a valuation over 20 times that size.

Interview:

-Cummins, a leader in diesel engine technology, is thriving amid the boom in artificial intelligence, particularly in the data center sector. CEO Jennifer Rumsey highlights the company's capability to manage fluctuations in AI demand, drawing from its history in heavy-duty truck engines. Despite a notable stock valuation, investors are questioning the relevance of traditional cyclical investment strategies in this context.

Tech Trader:

-During Nvidia's recent earnings call, CEO Jensen Huang emphasized a new segment reporting approach to counter negative investor sentiment, despite another strong earnings report that saw the stock drop nearly 3%. This change categorizes data center sales between major clients, like Amazon and Microsoft, and other smaller customers, aiming to depict a more diverse revenue stream. The initial results showed first-quarter revenue growth of 115% from hyperscalers, compared to 74% from smaller clients. However, the historical data Nvidia provided does not fully support Huang's case. The company has previously successfully employed similar strategies; in May 2024, they highlighted sales of networking chips, which surged 142% over time, solidifying Nvidia’s position as the leading data center networking-chip provider. This latest tactic mirrors those past efforts to shift investor focus beyond just graphics processing unit sales.

The Trader:

-The market is experiencing a strong performance, with the S&P 500 index rising 1.1% this week for its eighth consecutive gain, while the Nasdaq Composite increased by 0.8%. The Dow Jones Industrial Average surged by 2.4%, driven by significant spending on quantum computing that helped IBM achieve its best week in 25 years. Despite Nvidia's disappointing earnings, overall fundamentals show a healthy economy, highlighted by low jobless claims, robust pending home sales, and an expected GDP growth of 4.3% for the second quarter. This economic strength may prevent the Federal Reserve from cutting interest rates. Corporate earnings have also been impressive, with 84% of S&P 500 companies exceeding forecasts, and earnings growth at 28% year-over-year, marking the strongest quarter since late 2021, particularly in tech and consumer sectors.

-Investors are looking for resilient stocks amid the dominance of artificial intelligence, and outdoor advertising, seen as a "HALO business" with significant assets and low obsolescence, fits this criteria. Billboards will remain prevalent, especially as commuters encounter advertisements frequently, whether on highways or public transport. Two prominent players in this sector, Lamar Advertising and Outfront Media, have reported gains of 20% and over 35% respectively this year, remaining classified as specialty real estate investment trusts. Analysts forecast annual revenue growth of 5% for Lamar and 8% for Outfront by 2025, highlighting robust ad spending in the out-of-home market. Notably, Lamar has already secured 75% of its revenue target for the year, marking strong performance post-COVID. Additionally, Outfront is poised for further growth due to anticipated advertising demand related to the upcoming soccer World Cup, with matches set in major U.S. urban areas.

Features:

-Carpenter Technology, founded in 1889 and based in Philadelphia, produces specialized alloys essential for aerospace, defense, and medical applications. It operates in a limited supply market, with only three U.S. companies able to manufacture these alloys, amid growing demand for aerospace and industrial gas turbines. This imbalance has led to record operating income, with the company's earnings per share reaching $2.77 after a 12% sales increase to $812 million. Carpenter’s competitive edge stems from the lengthy process (up to five years) required to establish new aerospace-grade nickel capacity, deterring OEMs from switching suppliers for minor cost differences. Aerospace and defense sectors, which account for two-thirds of revenue, are expected to maintain strong growth, benefiting from a recovery in commercial aircraft production and increasing demand.

-Kevin Warsh was inaugurated as the 17th chair of the Federal Reserve at a White House ceremony, where President Trump emphasized the importance of the Fed's independence. This contrasts with the pressure faced by Warsh's predecessor, Jerome Powell. Despite Trump's assurances, challenges abound, including persistent inflation and divided opinions among Fed policymakers regarding potential rate hikes. Warsh acknowledged the need for reforms at the Fed, advocating for a focus on price stability and employment. He aims to ensure that policy decisions are data-driven, rather than predetermined, and has proposed reducing the Fed’s sizable balance sheet.

Europe:

-Chrysler-parent Stellantis recently detailed its ambitious turnaround plan during its capital markets day, aiming to grow sales from €154B in 2025 to €190B by 2030, with a target operating profit margin of 7%. The plan includes cost-cutting measures and new model introductions, promising potential benefits for shareholders. Despite a concerning 30% stock drop this year and various challenges like inflated inventories and quality costs, analysts view the strategy positively. The stock recovered slightly post-event, closing at $7.56, though it remains significantly down over the past year and five years. Stellantis' operating profit reached €34B in 2023, but losses were noted earlier in 2025.

Emerging Markets:

-In the competition between emerging market stock ETFs, the iShares Core MSCI Emerging Markets ETF (IEMG) outperforms the Vanguard FTSE Emerging Markets ETF (VWO) due to its exposure to South Korea's booming market. IEMG has seen a 38% increase over the past year and 18% in 2026, while VWO gained 22% and 9%, respectively. South Korea's stock market, driven by semiconductor leaders Samsung and SK Hynix, accounts for approximately 20% of IEMG and has surged nearly 75% this year. The classification of South Korea as an emerging market by MSCI is debated due to its robust economy, which resembles a first-world status, similar to Taiwan's situation.

Commodities:

-Energy was the top-performing sector of the S&P 500 last week, with the State Street Energy Select Sector SPDR ETF rising nearly 7%. Despite only representing about 4% of the index—historically low—its significance is expected to increase due to surging demands driven by AI's electricity needs. Chevron has demonstrated strong performance, gaining 25% year-to-date and 37% over the past year, while offering a nearly 4% dividend. Currently, it trades 11% below its 52-week high and showed a consistent upward trend last week. Technically, Chevron is establishing the right side of a cup base and is above a double bottom breakout. However, it experienced a 14% drawdown following a bearish evening star pattern before rebounding, supported by a bullish hammer formation. Phillips 66, another key player in the energy sector, operates the largest refinery systems in the U.S. and has risen 36% this year. Its weekly chart illustrates a recovery of the two-year cup base above the $174.18 pivot, originally surpassed in late March. Throughout February and March, the stock displayed robust momentum by trading consistently above the overbought RSI level of 70, indicating strong leadership.

Streetwise:

-After several delays, the release of Grand Theft Auto VI by Take Two Interactive Software is now anticipated for November, marking a significant moment for its stock performance. Historically, GTA titles launched rapidly, with multiple releases annually until GTA V in 2013, which introduced a multiplayer mode distinct from its continuing online revenue source, GTA Online. Over the past 13 years, GTA Online has proven to be a financial success, continuously generating income through game sales and in-game purchases. The necessity for a new title stems from advancements in mapping technology and demand for a fresh single-player storyline, which could enhance initial sales. Originally set for a previous year, GTA VI's launch has been postponed multiple times, but the company has reaffirmed the November 19 release date, buoyed by strong fiscal performance from existing franchises and acquisitions like Zynga.

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