💥 Nvidia's $5.5 Billion Hit

Good afternoon! A heist straight out of a movie is rocking downtown Los Angeles, where thieves tunneled through a brick wall from an abandoned theater into Love Jewels, making off with over $20 million in cash, gold, and jewelry. The family-run store believes the crew spent weeks chiseling their way in before disabling cameras, drinking a bottle of Johnnie Walker, and smashing into safes during a six-hour spree.

The damage was devastating: empty display cases, broken safes, and no insurance to cover the massive loss. This isn't even the first time the store has been targeted via the next-door theater, and now the owners are offering a $100,000 reward for any tips on the crew behind the elaborate break-in.'

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MARKETS

• Stocks stumbled Wednesday after Nvidia warned of a $5.5 billion hit tied to new chip export restrictions, sparking a tech sell-off. The Nasdaq dropped over 3%, with AMD and other semiconductor names following suit.

• Adding to the market jitters, Fed Chair Jerome Powell said tariffs are making the Fed’s job “challenging,” as it tries to manage inflation without tipping the economy. The S&P 500 fell 2.2%, while the Dow slid nearly 700 points.

STOCKS
Winners & Losers

What’s up 📈

• Hertz Global surged 56.44% after Pershing Square disclosed a new $46.5 million stake in the rental car company. ($HTZ)

• Gold Fields climbed 3.35% as gold prices continued to rise, boosting miners. ($GFI)

• Abbott Laboratories rose 2.76% after beating earnings estimates despite missing sales forecasts. ($ABT)

• Newmont gained 2.51% on strong gold prices supporting the sector. ($NEM)

• Travelers added 1.13% after reporting Q1 earnings of $1.91 per share, easily topping the 78 cents expected. ($TRV)

What’s down 📉

• Interactive Brokers dropped 8.95% after Q1 EPS came in at $1.88, missing the $1.92 consensus, despite strong trading volume. ($IBKR)

• J.B. Hunt Transport Services fell 7.68% despite a Q1 beat, as year-over-year revenue and operating income declined. ($JBHT)

• Omnicom Group declined 7.28% even after beating EPS estimates, with investors concerned about revenue misses and macro uncertainty. ($OMC)

• Advanced Micro Devices dropped 7.35% as export restrictions may lead to $800 million in charges, pressuring chip stocks. ($AMD)

• Nvidia tumbled 6.87% after revealing a $5.5 billion charge tied to export restrictions on H20 GPUs to China. ($NVDA)

• ASML slid 7.06% after missing order expectations and warning of demand uncertainty related to China tariffs. ($ASML)

• Palantir Technologies pulled back 5.78% as investors took profits following the recent NATO contract rally. ($PLTR)

• Tesla fell 4.94% after reports that new tariffs could disrupt its Cybercab and Semi production plans. ($TSLA)

CHIPS
Nvidia Sees $5.5 Billion Hit From Chip Restriction To China

The AI chip party just got crashed by a trade war. The Trump administration slapped new export restrictions on Nvidia’s H20 chip, forcing the company to warn of a $5.5 billion writedown tied to unsellable inventory.

Nvidia had designed the H20 to sidestep earlier restrictions, but now it needs a special license to sell to China—a license that isn't coming anytime soon. Shares tumbled nearly 7%, dragging down chipmakers across the globe, including AMD, Samsung, and ASML.

AMD took its own hit, announcing an $800 million charge thanks to similar curbs on its MI308 chip. The pressure on the semiconductor world is spreading fast. ASML, a critical supplier of chipmaking equipment, missed order expectations by almost €1 billion. And the World Trade Organization downgraded its 2025 global growth outlook, blaming—you guessed it—the wave of tariffs and escalating trade tensions.

The Chip War Is Heating Up

This isn't just a bad week for earnings—it’s a full-on strategic shift. Nvidia now finds itself squarely in the middle of Washington’s mission to slow China’s AI ambitions, and the roadblocks aren’t going away. U.S. officials are already weighing new tariffs on critical minerals, semiconductors, and even pharmaceuticals, adding more fuel to an already raging trade fire.

The impact on AI stocks is becoming impossible to ignore. Chips were the lifeline for last year’s bull market, but rising tariffs and global uncertainty are threatening to pull that support out from under the rally.

Nvidia's real problem isn’t today's $5.5 billion write-down, it’s becoming the face of a tech cold war that's only getting colder.

NEWS
Market Movements

• 📱 Temu and Shein Hike Prices as Tariffs Hit Business Model: Chinese e-commerce giants Temu and Shein are raising U.S. prices due to Trump’s 145% tariffs and the end of the de minimis rule on May 2. Temu’s App Store ranking has plummeted 62%, and its U.S. ad spend has dropped 77% since April 11. PDD’s shares are down 22% this month. ($PDD)

• 🏦 Powell Warns of Inflation-Growth Tradeoff from Tariffs: Fed Chair Jerome Powell said tariffs could lead to “higher inflation and slower growth,” making it harder to hit both employment and inflation goals. He noted the Fed may be forced into tough choices if these trends persist, but emphasized the Fed’s independence.

• 👛 Hermès Overtakes LVMH as World’s Most Valuable Luxury Brand: Following a sharp 8% drop in LVMH shares after a weak sales report, Hermès claimed the top spot with a $280 billion market cap. Hermès has avoided the broader luxury slowdown by limiting supply of its signature Birkin bags. Analysts expect luxury sales to decline 2% this year, down from earlier 5% growth forecasts.

• 📉 Meta and Amazon May Lose Major Ad Client: Temu was one of Meta’s top advertisers, but now runs only six U.S. ads across its platforms, down from tens of thousands. That’s a potential hit to Meta’s revenue, which pulled in $7B from Chinese advertisers in 2023. ($META, $AMZN)

• 🚢Tariffs Spark Wave of Canceled Container Ship Routes: U.S. importers are seeing a spike in canceled sailings out of China as shipping giants respond to declining demand caused by Trump’s tariffs. Over 80 blank sailings have been reported, with major routes suspended and ports like Wilmington removed from schedules. The resulting slowdown could cut 640,000–800,000 containers and strain logistics firms like JB Hunt, which just hit a multi-year low. ($JBHT)

• 🏍️ Harley-Davidson Faces Boardroom Challenge: H Partners, holding 9% of Harley-Davidson, is seeking to remove CEO Jochen Zeitz and three board members, citing weak sales and strategic missteps. Shares have declined 30% since Zeitz took the reins in 2020. ($HOG)

• 🥩 Value Steakhouses Defy Dining Downturn: Texas Roadhouse and LongHorn Steakhouse saw foot traffic rise 7.2% and 4.3% respectively in 2024, bucking the trend of declining casual dining visits. Their focus on value is winning over cautious consumers. ($TXRH, $DRI)

• 💼 KKR Buys German IT Firm Datagroup in $508M Deal: Private equity giant KKR will acquire Datagroup for $508 million in cash, offering a 33% premium. Datagroup’s shares surged 31% following the announcement and will delist later this year. ($KKR)

INVESTOR
Hertz Shares Jump 56% as Billionaire Investor Bill Ackman Discloses Stake

Hertz just got a serious jolt. Shares of the rental car giant soared 56% on Wednesday after Bill Ackman’s Pershing Square Capital Management revealed it had quietly built a stake. A securities filing showed Pershing grabbed 12.7 million shares—roughly 4.1% of Hertz’s stock—but CNBC later reported the real exposure is closer to 20% once swaps are factored in.

Investors didn’t wait around for a game plan. The stock, which had been flat this year and down nearly 50% over the past 12 months, posted its biggest one-day gain ever. Pershing didn’t comment on the move, but Hertz’s battered balance sheet and depressed stock price are giving activist investors plenty to work with.

Hertz: From Meme Stock to Misfire

Hertz isn’t new to drama. It became a meme-stock darling during its pandemic bankruptcy saga, delivering a massive rebound when it exited chapter 11. But its post-bankruptcy playbook hit a wall after a high-profile bet on electric vehicles—ordering 100,000 Teslas and even drafting Tom Brady for ads—backfired badly. Customers weren’t biting, operating costs ballooned, and Hertz ultimately had to slash its EV fleet, swallowing a $200 million writedown.

The company’s struggles haven’t stopped there. Hertz is still battling a $272 million legal judgment tied to its bankruptcy-era bondholders, and while it’s appealing to the Supreme Court, it’s brought on advisors to explore options. Debt levels have climbed, and signs of financial strain are flashing in Hertz’s bonds, with some trading at just 50–60 cents on the dollar.

What’s Next? Ackman’s move comes just as tariffs could give Hertz a little unexpected tailwind. Trump’s new 25% tariffs on imported cars are driving up prices, and since rental fleets like Hertz sell as many cars as they buy, higher used car prices could temporarily boost margins. That said, longer-term risks loom—higher costs could eventually weigh on rental demand.

Whether Ackman’s bet is about asset values, a potential turnaround, or a deeper strategic play is still a mystery. But after Wednesday’s fireworks, Wall Street will be tuning in closely to what happens next.

Calendar
On The Horizon

Tomorrow

Thursday’s economic docket includes fresh reads on unemployment and the housing market. Jobless claims have become a top-tier data point for the Fed, offering clues about whether the labor market is cooling—or just catching its breath. As for housing starts, expect the focus to be on how rising tariffs are squeezing construction costs and dampening builder appetite.

On the earnings front, it’s a busy day with updates from several heavy hitters. Reports are due from TSMC ($TSM), Charles Schwab ($SCHW), UnitedHealth ($UNH), Blackstone ($BX), D.R. Horton ($DHI), Ally Financial ($ALLY), Truist Financial ($TFC), and Infosys ($INFY).

Before Market Open:

• American Express is under the microscope, not for what its cardholders have spent—but what they won’t. Known for catering to a wealthier crowd, Amex is often seen as recession-resistant. But with the stock slipping and luxury habits possibly softening, investors want more than just platinum perks—they want a roadmap back to growth.($AXP)

After Market Close:

• Netflix steps into earnings season with the pressure of being first out of the FAANG gate. The streamer is banking on its ad-supported plan to keep subscriptions sticky as wallets tighten. But with YouTube breathing down its neck and competition one autoplay away, strong original content and new live sports offerings will need to deliver more than just binge-worthy moments.($NFLX)

NEWS
The Daily Rundown

• 🧲 China Halts Rare Earth Exports, Escalating Trade War: China began freezing shipments of rare earth metals, cutting off essential materials used in EVs, semiconductors, and military hardware. With over 90% control of global rare earth magnet production, China’s move threatens key U.S. industries just as trade tensions escalate. The U.S. has invested in domestic alternatives, but experts say it won’t match China's scale anytime soon.

•  🥩 Texas Roadhouse Dethrones Olive Garden in Casual Dining: With consistent value and service, Texas Roadhouse has surpassed Olive Garden to become the top U.S. casual dining chain. Consumers are being more selective in the face of inflation, favoring chains that deliver reliably on experience and affordability. The shift marks a broader trend in evolving dining habits.

• 🧾 H&R Block Teams Up With OpenAI to Build AI Tax Prep Tools: H&R Block will use generative AI to improve tax preparation for professionals, targeting a 2026 rollout. The partnership aims to boost accuracy and speed during tax season. It’s another sign of how AI is reshaping traditional financial services.

• 📶 American Airlines to Offer Free Wi-Fi to Loyalty Members: Starting next year, American Airlines will join rivals Delta and United in providing free in-flight Wi-Fi. The perk aims to boost loyalty program sign-ups as carriers brace for declining travel demand. United currently leads the pack with Starlink-powered internet on board.

• 💹 Big Banks Rake in Billions Amid Trade-Driven Market Volatility: Q1 earnings show record equities trading revenue across major banks like JPMorgan, Goldman Sachs, and Morgan Stanley. As tariffs whiplashed markets, trading desks boomed while dealmaking lagged. Executives expect volatility to continue boosting trading in Q2, but some are urging clearer trade policy to ensure long-term investor confidence.

• 👕 Starbucks Updates Dress Code to Spotlight Green Aprons: The coffee chain will now require baristas to wear solid black tops starting May 12 to better showcase its iconic green apron. Employees will receive two branded shirts for free. The change is part of a broader brand refresh aimed at boosting store appeal and consistency.

• 🏛️ Trump Threatens Harvard’s Tax-Exempt Status Amid Funding Freeze: President Trump warned he may revoke Harvard’s tax exemption if it doesn’t change campus policies he described as “terrorist supporting.” This comes after freezing $2.2 billion in federal funds, escalating a standoff that’s already heading for court. With its $53 billion endowment, Harvard says it won’t cave to political pressure.

• 🇪🇺 EU Frustrated by Lack of U.S. Clarity on Tariff Talks: European officials say the Trump administration has not provided clear direction on trade negotiations, stalling progress. Although a 20% tariff was paused, EU offers to increase LNG and defense imports haven’t broken the deadlock. The disconnect is threatening to derail a potential transatlantic trade reset.

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