Reddit Stocks: What meme stocks are trending today? – August 22, 2023

US futures

• Dow Jones Industrial Average is up 0.3%
• S&P 500 is up 0.6%
• Nasdaq 100 is up 0.8%

US futures are on the rise today, led higher by tech stocks that are getting a boost as markets grow increasingly bullish ahead of results out tomorrow from Wall Street’s favourite stock of 2023, NVIDIA.

The economic calendar today is headlined by existing home sales for July, which should keep housebuilders like Lennar, DR Horton and NVR on the radar of the markets, and speeches from several Federal Reserve members, including Michelle Bowman, Tom Barkin and Austan Goolsbee, which will keep markets busy trying to guess the future path of interest rates.

Most discussed Reddit stocks

Below is a list of the top 10 most mentioned US stocks on the WallStreetBets thread on Reddit over the last 24 hours, according to data from Quiver Quantitative. Exchange-Traded Funds (ETFs) and other instruments have been excluded:

1. NVIDIA
2. Tesla
3. C3.ai
4. Visa
5. AMC Entertainment
6. Palo Alto Networks
7. Zoom Video
8. Eni
9. Apple
10. Advanced Micro Devices

Most active US stocks before the bell

Below are the most active stocks with a valuation of at least $500 million before the bell, based on trading data taken from Bloomberg:

1. Tesla
2. Nikola
3. Activision Blizzard
4. Lucid Group
5. Macy’s
6. NVIDIA
7. Palantir
8. AMC Entertainment
9. Dick’s Sporting Goods
10. IonQ

US premarket winners and losers

Here are the stocks worth at least $500 million experiencing the sharpest movements in premarket trade, according to data from Bloomberg:

Top US stocks to watch

Let’s have a look at the top stocks to watch today.

NVIDIA stock: Can it meet the AI hype?

NVIDIA shares are up 1.9% before the bell – testing a fresh all-time high of $478.48 - ahead of second quarter results tomorrow, with markets becoming increasingly confident it can clear a high bar as Wall Street analysts grow evermore bullish on the chipmaker.

The average target price set by the 51 brokers that cover NVIDIA has risen to over $524 today from less than $300 back in May, with analysts continuing to bump-up their view as it reaps rewards from AI. The highest target price sits at $800!

NVIDIA is forecast to report record revenue and EPS in the second quarter, driven by sales of chips used in datacentres more than doubling as businesses upgrade their systems so they can handle the breakthrough technology. There are no concerns about demand, so the onus is on how quickly NVIDIA can ramp-up supplies and leverage its monopoly over the market.

Upgraded estimates, plus its huge valuation premium over its rivals, suggests the bar is high ahead of the results but markets are confident it can clear it. It does, however, suggest meeting expectations may not be enough to impress and that it wouldn’t take a lot to disappoint.

You can find out everything you need to know in our NVIDIA Q2 Earnings Preview.

NVIDIA’s results will also keep its rivals under the spotlight this week, with AMD up 1%, Intel up 0.5%, Qualcomm up 0.6% and Broadcom trading 0.8% higher.

ARM IPO: Can it revive the IPO drought?

Another story stirring discussion in the semiconductor space today is British outfit Arm. Its owner, Softbank Group, filed an internal transaction conducted with its investment vehicle Vision Fund ahead of the IPO that gave Arm a valuation of $64 billion, double the price it paid for Arm back in 2016.

That is setting the tone ahead of a long-awaited IPO of Arm, which is expected to list as soon as next month. The exact timing of the IPO will be determined by market conditions but ARM unveiled its preliminary prospectus for the IPO this week, with pricing expected to come in the next week or two. 

Softbank announced it would be selling ARM to US Chipmaker NVIDIA, but the $80 billion sale fell through in February 2022 after numerous governments cited competition issues. Notably, Reuters has reported that a group of tech behemoths that use Arm’s chip designs – from NVIDIA, Intel and TSMC to Amazon, Alphabet and Microsoft – all vying to buy shares in the IPO.

That should help provide some cornerstone investors and support its price when it goes public. That is all the more important considering all other IPO candidates that have been waiting patiently over a volatile few years will be keeping a close-eye on how Arm performs before deciding whether to take the plunge.

You can find out what you need to know in Everything You Need to Know About the Arm IPO.

Microsoft stock: UK warms to Activision deal

Microsoft shares are up 1.2% while Activision Blizzard is up 1.1%, after UK regulators said they would reconsider their position on their $69 billion merger after Microsoft offered to sell streaming rights to Ubisoft Entertainment to address competition concerns.

The surprise change of heart by the Competition & Markets Authority comes not long after it stood by its decision to block the deal after refusing to accept remedies that were offered, but Microsoft’s proposal to ensure all Activision Blizzard games that are released over the next 15 years will be made available on other platforms, ensuring none of them become exclusive, appears to have won them over. This will see Ubisoft, which is up over 8% on the news today, acquire the cloud streaming rights for Activision’s existing games and new upcoming ones.

Notably, the CMA said this will apply globally, apart from in Europe where regulators have already given the deal approval.

Apple stock: Can it rise for 3^rd straight day?

Apple shares are up 0.7% and on course to climb for a third consecutive day. Buyers have returned to the market since the iPhone maker sank to its lowest level in almost three months, following a lengthy decline that began at the start of August in wake of its latest set of results that saw a fall in iPhone sales cause it to miss what was a rather high bar.

Tesla stock: Are buyers gaining upper hand?

Tesla shares are up 4.1% and on course to rise for the third consecutive day since hitting its lowest level in over three months last week. We saw strong buying activity yesterday when it rose over 7% and the sharp premarket move today suggests buyers are starting to gain the upper hand.

The electric vehicle maker is finding support today after Forbes reported it could be preparing a launch event for the long-awaited Cybertruck this fall as videos circulate online of the pickup truck being moved around the US in preparation for deliveries to start. The report also said the Cybertruck could be priced at $50,000, which would be around the same price as the popular F-150 Lightning truck made by Ford. However, the report said the Cybertruck price could eventually fall to under $40,000.

Nikola stock: Is 2023 guidance at risk?

Nikola shares are down 3% today and at their lowest level in over five weeks. The company warned yesterday that its production target for the year could be at risk after it recalled over 200 vehicles as a precautionary measure following potential problems, which also halted sales.

Nikola said the recall could “incur significant expenses” and warned there “can be no assurance as to when we will be able to resume production of our BEV trucks”. It said that this could therefore impact its financial position and cashflows.

US bank stocks: Hit by S&P downgrades

Fresh fears are hitting the banking sector today after S&P Global downgraded several banks and revised its outlook to reflect higher funding risks and falling profitability, following a similar move taken recently by fellow ratings agency Moody’s.

Associated Banc-Corp, Valley National Bancorp, UMB Financial Corp, Comerica Bank and Keycorp were all hit by downgrades for a mixture of a growing reliance on deposits as alternative funding becomes more difficult to obtain while outflows are increasing.

It also downgraded the outlook of S&T Bank and River City Bank to negative from stable, citing their high exposure to the commercial real estate sector.

Moody’s downgraded 10 banks earlier this month and warned six larger players had been put on review for a potential downgrade.

Lowe’s stock: Contractors help deliver beat

Lowe’s is up 2.3% today after beating expectations in the latest quarter as a recovery in demand from professional contractors cushioned the pullback in spending by DIY shoppers. Same-store sales were down 1.6% in the second quarter but this was better than the 2.4% drop pencilled-in by Wall Street. EPS of $4.56 also came in ahead of the $4.49 estimate.

Consumers are still conducting small DIY projects, mostly essential repair and maintenance work, but are spending less on optional upgrades. However, it saw an uptick in demand from contractors, helping it impress at the topline, while better margins thanks to its focus on cost control helped it beat at the bottom. That was a similar story to what its rival Home Depot delivered last week.

Lowe’s, which reiterated its full year outlook, also said it was ‘excited’ about the launch of its new same-day online delivery service that is now available from around 300 stores.

Macy’s stock: Discounts bite

Macy’s is down 1.5% after successfully attracting shoppers by marking-down the price of unwanted inventory, with better than expected footfall helping counter tighter margins.

The company, like many, has suffered as consumers are forced to spend more on necessities but said it “surgically implemented” promotions to clear seasonal goods. That led to a milder decline in sales than expected, with same-store sales down 8.2%, and allowed inventory of merchandise to fall about 10%. Adjusted EPS of $0.26 was down sharply from the $1.00 we saw last year but blew the $0.13 forecast out of the water.

Macy’s said it continues to be cautious when it comes to the outlook but reaffirmed its full year guidance, including its plan to deliver $200 million in cost savings. Comparable sales are guided to fall 6% to 7.5% over the full year.

Dick’s stock: Sunk by weaker outlook

Dick’s Sporting Goods is down 19.6% and at 2023-lows after lowering its outlook for the rest of the year and missing expectations in the latest quarter as it struggles to clear inventory amid a slowdown in demand for sports clothing.

The company said it is now expecting adjusted EPS of $11.50 to $12.30 this year, down from its previous target range of $12.90 to $13.80. Same-store sales were up 1.8% in the second quarter but missed the mark, while earnings also fell short of expectations.

“While we posted another double-digit EBT margin, our Q2 profitability was short of our expectations due in large part to the impact of elevated inventory shrink, an increasingly serious issue impacting many retailers. Despite moderating our 2023 EPS outlook, the enthusiasm we have for our business and the confidence we have in our long-term growth opportunities have never been stronger,” said Dick’s.

Baidu stock: Strong beat turns focus to AI

Chinese internet search giant Baidu is up 4% and rebounding from six-week lows after it delivered a strong earnings beat in the latest quarter thanks to an accelerated recovery in advertising, allaying fears that it could succumb to the shaky Chinese economy and allowing investors to turn their attention to its AI developments.

Revenue rose 15% year-on-year in the second quarter and accelerated from what we saw in the first to RMB34.05 billion while adjusted earnings per ADS jumped 43% to RMB22.55. That was ahead of the RMB33.29 billion in sales and earnings of RMB16.15 forecast by analysts. The performance was driven by a recovery in advertising revenue and strong growth in income from its majority stake in iQIYI.

The company said its AI-driven Ernie Bot has been “well recognised” by its cloud customers and AI developers and recommitted to the huge opportunity on offer. “By adopting an AI-native mindset, we are reinventing our products and offerings for innovative experiences, and to support various enterprises to capture this opportunity. Overall, Baidu is committed to building a new engine around generative AI and LLM to drive sustainable long-term growth,” said CEO Robin Li.

Zoom Video stock: Enterprise demand lifts outlook

Zoom Video is up 1.5% at $68.30 after raising its full year outlook on confidence that its new products outside of its namesake video conferencing tool can keep attracting users and encourage them to spend more with the company.

The company made a very mild lift to its full year revenue target to $4.5 billion but made a notable upgrade to its adjusted EPS target range to $4.63 to $4.67 from the previous range of $4.25 to $4.31. Zoom Video said demand remains strong from businesses, with enterprise customers continuing to grow and the amount being spent by each customer also increasing. This is countering weaker demand from consumers that used its service during the pandemic. It also said its newer non-video products are performing well, with revenue from Zoom Phone now running at an annualised rate of about $500 million.

Revenue in the second quarter was up 3.6% from last year at $1.14 billion and adjusted EPS rose to $1.34 from $1.05.

JPMorgan cut its price target on Zoom this morning to $83 while Bernstein lowered its view to $82. Citigroup raised its target to $66.

Medtronic stock: Beat and upgrade

Medtronic is trading higher today after upping its annual guidance as a recovery in surgeries that were delayed during the pandemic leads to higher demand for its medical devices.

The company said it is now anticipating full year EPS of $5.08 to $5.16, up from its previous goal of $5.00 to $5.10. Its quarterly EPS of $1.20 was also ahead of the $1.11 forecast.

AMC stock: APE spread narrows

AMC Entertainment shares are up 0.3% at $3.13, rebounding from their lowest level since early 2021, following the heavy 24% tumble we saw yesterday when the Delaware Supreme Court rejected proposals to halt its plans to convert APE preferred shares, which are currently trading at $2.12, into ordinary stock and dilute shareholders.

AMC has been facing legal opposition to its plans to convert APE shares into AMC stock but the court’s decision suggests it is set to complete its plan. That is causing the spread between the two sets of shares to narrow. AMC will conduct a 10-to-1 reverse stock split on Thursday August 24, with APE shares set to be converted into AMC shares.

The conversion will also raise fears that AMC could issue more APE shares to raise cash in the future without needing shareholder approval, which in turn would lead to more dilution if they are also converted into AMC shares.

AppLovin stock: Upgrade lifts shares

AppLovin shares are up 3.8% at $40.50 after Jefferies upgraded the stock to Buy and hiked its price target to $50 as it said it has renewed confidence it can gain market share.

Visa stock: Target price rises

Visa shares are trading marginally lower at $239.42 today after JPMorgan maintained its Overweight rating and raised its price target on the payments giant to $296 from $265 this morning, suggesting there is over 24% potential upside from the last closing price. The average target price set by all brokers covering Visa has risen by almost 4% in the past three months and currently sits at $278.

Palo Alto stock: 3-week highs

Palo Alto Networks is up 0.2% and building on the strong gains booked yesterday, when markets lifted the stock by over 14% and to a three-week high after it reported a stronger outlook for billings late on Friday, allowing it to clear a relatively low bar.

How to trade US stocks

You can trade US stocks and indices with City Index in just four easy steps:

1. Open a City Index account, or log-in if you’re already a customer.
2. Search for the stock or instrument you want in our award-winning platform
3. Choose your position and size, and your stop and limit levels
4. Place the trade

Or you can practice trading risk-free by signing up for our Demo Trading Account.