Reddit Stocks: What meme stocks are trending today? – September 1, 2023

US futures

• Dow Jones Industrial Average is up 0.5%
• S&P 500 is up 0.6%
• Nasdaq 100 is up 0.6%

US futures are climbing higher, with the Nasdaq 100 and S&P 500 both at 4-week highs, following the latest jobs data that was released this morning. August was the worst month for the Nasdaq 100 of 2023, while the S&P 500 suffered its sharpest correction since February.

Markets will be hoping that a new month can bring better fortunes, with both indices on course to close up for a second consecutive week today. However, September has been the worst month for the all three US indices for decades, according to the Stock Trader’s Almanac

Non-Farm Payrolls

Non-farm payrolls rose 187,000 in August, accelerating from the revised previous reading of 157,000. That was higher compared to the 170,000 increase anticipated by economists.

The unemployment rate in August was 3.8%, above with the 3.5% forecast.

Average hourly earnings increased 0.2% month-on-month in August and were 4.3% higher than the year before. Economists had expected a sequential rise of 0.3% and an annual increase of 4.4%.

The other major economic releases to come later are US manufacturing PMIs and employment figures.

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. Lululemon
4. C3.ai
5. Broadcom
6. Dollar General
7. Visa
8. AMC Entertainment
9. Palantir
10. Apple

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. 23andMe
2. Tilray
3. Nikola
4. Tesla
5. Palantir
6. Better Home & Finance
7. NVIDIA
8. Walgreens Boots Alliance
9. Marathon Digital
10. AMC Entertainment

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.

Walgreens lowers guidance as CEO stands down

Walgreens Boots Alliance is down 1.2% and at its lowest level since 2009 after announcing the board and CEO Rosalind Brewer have “mutually agreed” she will stand down with immediate effect.

Ginger Graham, the current lead independent director on the board, is taking over on an interim basis and the company said Brewer will “continue to advise” until a new permanent CEO is found.

Brewer joined as CEO in March 2021, taking over as the company found itself at the forefront of the fight against Covid-19 and saw its stores turn into vaccination hubs. Graham has been on the Walgreens board since 2010 and is the previous CEO and president of Amylin Pharmaceuticals.

Walgreens also said that it “expects full-year adjusted EPS to be at or near the low end” of its guidance range, promising to provide more details when it reports its next set of quarterly results.

Broadcom’s outlook fails to inspire

Broadcom is down 3% today at $894, having tested fresh all-time highs yesterday, after warning sales are still slowing down as demand for devices remains soft, with the boost being seen from AI not enough to stop its outlook disappointing investors.

The chipmaker’s sales goal for the fourth quarter of $9.27 billion was just shy of the average consensus figure, and disappointed some that saw it coming in as high as $9.8 billion. That guidance implies revenue will be up just 3.9% in the final quarter of the financial year, marking the slowest growth since 2020. Revenue was up 4.9% in the third quarter and EPS of $10.54 was ahead of the $10.43 forecast.

Markets may be disappointed by the lack of a tangible boost from AI, despite management describing it as a bright spot.

Analysts largely welcomed the results, with several of them congratulating it on delivering a “soft landing” and pointing toward an eventual recovery and new AI catalysts. As a result, brokers raised their target price on Broadcom this morning, including Wells Fargo to $900, Piper Sandler to $975, Oppenheimer to $990, Bernstein to $1,000 and Jefferies to $1,035.

VMware earnings beat ahead of Broadcom deal

VMware, which is in the process of being bought by Broadcom, is down 1.1% at $166.95 today. It also reported results yesterday and delivered a strong beat in the latest quarter, although its share price is still hinged on the Broadcom deal that is targeting completion next month.

The cloud computing form said revenue rose 2.2% in the quarter to $3.41 billion, which came in soft compared to the $3.46 billion estimate. However, adjusted EPS of $1.83 rose 11.5% and came in ahead of the $1.71 forecast. Remaining performance obligations – a barometer for future growth – rose 6.4% and that was welcomed considering analysts thought they would come in broadly flat.

BMO raised its target price on VMware to $160 this morning while Mizuho upped its view to $165.

Dell hits all-time high on beat and raise

Dell shares are up over 11% this morning and at fresh all-time highs after delivering a raise and beat in the latest quarter after benefiting from increased AI demand and a recovery in its other division providing computers and server products to businesses.

The hardware maker delivered sales and earnings ahead of forecasts in the second quarter. Sales of servers and networking equipment rose 11% as companies upgraded servers for AI, while its division that sells computers reported an 8% rise in sales to suggest the sluggish demand for devices is coming to an end.

“AI is already showing it’s a long-term tailwind, with continued demand growth across our portfolio,” Dell said as it raised its full year guidance.

MongoDB jumps after smashing expectations

Document database company MongoDB is up 4.5% and at its highest level in almost four weeks after smashing expectations and hiking its outlook, underpinned by strong demand for its Atlas database.

The company reported quarterly revenue of $423.8 million and adjusted EPS of $0.93 in the latest quarter. That blew estimates for sales of $390.9 million and earnings of $0.45 out of the water. Its Atlas database, which helps companies store and manage data in the cloud and accounts for over 60% of its revenue, grew sales by 38% from the year before.

MongoDB said it is now targeting annual adjusted EPS of $2.27 to $2.35, marking a big jump from its previous range of $1.42 to $1.56.

Lululemon lifts outlook once again

Lululemon shares are up 2.6% at $391 after the sportswear retailer raised its full year outlook for the second time this year and posted strong double-digit sales growth to show it is still performing at a tough time for the broader retail space.

Sales were up 11% in the latest quarter and met expectations as conditions in North America improved and a strong recovery in China provided a big boost. However, adjusted EPS of $2.20 came in far below the $2.54 estimate.

Lululemon said it is now aiming to deliver annual sales of $9.51 billion to $9.57 billion and EPS of $12.02 to $12.17. The previous guidance was for sales of $9.44 billion to $9.51 billion and EPS of $11.74 to $11.94.

A flurry of brokers raised their target price on Lululemon today, including BMO to $376, Wedbush to $420 Keybanc to $450, Piper Sandler to $455, Stifel to $463, Barclays to $480, JPMorgan to $489 and TD Cowen to $535.

Will Samsung be an AI supplier to NVIDIA?

NVIDIA is up 0.7% today and continues to linger near all-time highs. Analysts at Citigroup said Korean giant Samsung Electronics has struck deals to supply NVIDIA with advanced memory chips to work with AI.

NVIDIA has been relying on SK Hynix for high-bandwidth memory 3 (HBM3) products since last year, but Samsung could begin shipping them to the US company as soon as next month. That comes after Samsung said it was preparing to launch a new HBM3 chip later in 2023 as it tries to compete with SK Hynix, which is the world’s current biggest supplier.

Meanwhile, the chief executive of Google DeepMind, Mustafa Suleyman, has told the Financial Times that the US government should restrict sales of NVIDIA’s advanced chips used for AI applications to companies that are committed to safe and ethical use of the technology, saying it should wield NVIDIA’s dominance to provide chokepoints if necessary.

C3.ai finds support ahead of earnings

C3.ai is up 0.9% today at $31.31 after President Capital Management initiated coverage on the stock with a price target of $35.50, implying there is around 14% potential upside from current levels.

That comes ahead of C3.ai reporting quarterly results next week, with markets eagerly waiting to see how quickly it has been able to capitalise on the interest in AI this year. The stock is trading almost three times as high as it was at the start of 2023 but is down about 33% from the peaks we saw back in June. The bar has therefore come down since the start of August as valuations and AI excitement have tempered, but it is still high ahead of the results.

C3.ai is forecast to deliver a 9.6% year-on-year rise in first-quarter revenue to $71.6 million and an adjusted loss of $0.17 per share.

Palantir’s AI prospects dented by Morgan Stanley

Palantir shares are up 1.1% today at $15.14, rebounding after the 8%-plus losses we saw yesterday when Morgan Stanley downgraded the company to Equal-Weight and warned it may take time for it to reap any rewards from AI.

Like others such as C3.ai and IonQ, Palantir has found itself to be one of the stocks to have got markets excited this year about its AI prospects. It has also been hit by the selloff in August and down about 25% from its peak hit exactly a month ago, but it is trading at more than twice where it stood at the start of the year.

“While bringing product to market was enough to inspire investor optimism in the past six months, we see the focus shifting to investors parsing out the companies that can drive revenue from these offerings in the most timely and effective ways,” said analyst Keith Weiss. “To that end, Palantir still appears very early as the company has clearly communicated that it has yet to determine a monetisation strategy for its solution.”

Morgan Stanley has a price target of $9 on Palantir.

Apple stock hits 1-month high

Apple shares are up 0.7% today and at their highest level since the start of August, having risen 8% since bottoming-out last month as markets regain confidence ahead of the launch of the new iPhone 15 on September 12.

Goldman Sachs said yesterday that reports Apple will raise prices of the new iPhone are justified and shouldn’t hurt demand, especially for its pricier Pro models. “In our view, Apple’s investments in iPhone hardware and across the Apple ecosystem … in recent years have provided consumers with additional value and should help warrant the price increases,” said Goldman Sachs yesterday.

Markets are pinning hopes on the iPhone 15 reviving demand following the decline in sales we have seen this year.

Tesla launches revamped Model 3 in China

Tesla shares are up 0.1% and at a one-month high after unveiling its newly-revamped Model 3 in China, boasting a longer driving range and sleeker design, while cutting prices in the US.

The new Model 3, which is being made in Shanghai, is the first to be launched in China before the US. Notably, the base model is more expensive than the previous one, but still down from the start of the year. It is significant as Tesla has been much slower to launch new models or refresh existing ones at a time when Chinese rivals are churning out new cars.

Tesla also cut prices on the Model S and Model X in the US, and reduced the cost of its full self-driving system by $3,000. Notably, the base models of these models are now priced at under $80,000, a deliberate move to ensure they are eligible for the $7,500 federal tax credit.

VinFast stock: Watch the Three Black Crows

VinFast shares are down 4.9% this morning. The Vietnamese automaker, which has exploded in value since going public in August, has managed to gain ground in early trade for the past three sessions but has ultimately closed down, creating the bearish reversal formation known as three black crows.

VinFast has been highly volatile because it has a tiny free float, making it susceptible to sharp movements on little activity. The company was briefly the world’s third most valuable automaker when its market cap hit $191 billion on Monday but it is on course to the end of the week closer to $80 billion – still a very lofty price tag for a loss-making company that hopes to make just 50,000 vehicles in 2023.

Visa and Mastercard drop from all-time highs

Visa and Mastercard both fell from record all-time highs yesterday. Both stocks have rallied as payment volumes have remained healthy, helped by buoyant demand for cross-border travel, while reports they are preparing to raise fees for merchants could raise sales by hundreds of millions of dollars.

Notably, we have seen buyers try to send both stocks higher over the past two days, but they have faced fierce resistance from sellers that are now finding it enticing to cash-out at these levels. Both have seen strong upper wicks in their candlesticks over the past two sessions before closing down.

Dollar General stock: Buy the dip?

Dollar General is down 1.7% today at $136.16. The discount retailer sank to its lowest level since 2019 yesterday after it lowered its full-year outlook as growth and profitability both suffer from changing consumer habits and challenging conditions. However, it didn’t take long for buyers to buy the dip and help it limit its losses.

Wall Street thinks that buying is justified. Numerous brokers cut their target price in response to the disappointing update, but there is unanimous consensus that the selloff has been heavily overdone. Among those to lower their view but to still see upside from current levels are Barclays at $128, BMO to $135, Truist Securities to $142, Piper Sandler at $144 and Jefferies at $175. Raymond James downgraded the stock to Outperform and lowered its target to $160, while Telsey Advisory downgraded it to Market Perform and cut its target to $145.

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