TOP STORY
📈 AI Stocks Soar After Trump Announces "Project Stargate"

😅 There is a LOT to unpack this week, but the most significant event by far was Trump’s inauguration.

✍️ On his first day back in office, Trump signed 26 executive orders - more than any other president in history. While most of the orders were related to immigration, social policies, and foreign policies, a handful had a big impact on the stock market.

🤖 The most significant was Project Stargate - a $500 billion private sector investment plan to make the US a leader in AI - causing AI stocks, and the broader market, to climb this week:

• S&P 500: +1.8%

• Nasdaq 100: +1.5%

• TSX: +1.6%

• Global X AI & Tech ETF ($AIGO): +4.2%

🪙 Bitcoin has also climbed +2.7% since Trump’s inauguration, aided by Trump’s executive order to establish a ‘Presidential Working Group” on Digital Asset Markets.

📉 Despite this, $TRUMP coin has plummeted over -50% since Trump took office.

🤿 So let’s dive deeper into how policy is changing under Trump and what it means for the stock market at large…

🤖 What is Project Stargate?

🤔 So what exactly is the Project Stargate? It may sound like something from Star Wars or Star Trek, but in fact, it’s a massive funding project for AI infrastructure in the US.

🤝 Unveiled at the White House by Trump on Tuesday, the project is a joint venture between OpenAI, Oracle, and Softbank to invest billions into AI infrastructure (such as data centers) in the US. Softbank CEO Masayoshi Son will lead the project as Stargate’s Chairman.

💰 The commitment is massive - with the executives pledging to invest an initial $100 billion and up to $500 billion over the next four years (over half the size of the US's entire annual defense budget) with the goal to “keep AI in this country”.

👷 The joint venture’s first project to construct data centers in Texas is reportedly already underway.

📝 The Executive Order

The two biggest blockers hindering AI growth according to Forbes are 1) Electricity Supply and 2) Regulation, and Trump aims to fix both of these problems with recent executive orders.

🔋 The first was an executive order declaring a National Energy Emergency with the aim to increase domestic fossil fuel extraction to meet the massive energy demands for the data centers planned by Project Stargate.

❌ The second was the repeal of Biden’s October 2023 Executive Order on AI that had established safety guardrails and other requirements for federal use of AI.

🤖 Trump also signed an executive order on AI leadership, stating it is the policy of the US to “enhance America’s global AI dominance” - and directing advisors (including AI Czar David Sacks who we wrote about a few months back) to develop an action plan to achieve the policy.

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TOP STORY CONTINUED
📈 Project Stargate’s Stock Market Impact - Oracle Takes the Spotlight

These big policy moves unsurprisingly had a big impact on the stock market.

🏆 The biggest winner was Oracle ($ORCL), which saw a +13% stock jump this week as the company’s expertise in data center technology positions it as one of the most important players for Project Stargate.

🤩 Not only that, along with Project Stargate, OpenAI announced something perhaps even more significant for Oracle - Microsoft will no longer be the exclusive cloud computing provider for OpenAI, opening the door for OpenAI to work with Oracle.

Along with Oracle, which is a joint partner of Project Stargate, Nvidia, Microsoft, and Arm Holdings were also listed as ‘technology partners’ for the project - giving each of them a boost this week:

Microsoft ($MSFT): +2.3%

Arm Holdings ($ARM): +8.9%

Nvidia ($NVDA): +4.5%

While not listed as a technology partner, Mizuho Securities analyst Vijay Rakesh also believes Broadcom ($AVGO) (whose stock is only up +3.2% this week) will be one of the biggest winners:

😬 “They Don’t Actually Have the Money”

The one person notably missing from Stargate? Elon, who took to X to publically criticize the project - saying it doesn’t have the funds secured:

Elon’s criticism may be surprising, given his public support for Trump, but Musk has also been a very public opponent of OpenAI CEO Sam Altman, going so far as to sue OpenAI back in March of last year.

And Elon isn’t the only one critizing the project. The Financial Times also reported that Stargate has not yet secured the funding and claims that the project will only serve OpenAI:

Elon went even further, saying that he “has it on good authority that SoftBank has well under $10B secured” and called Sam a “swindler.”

Microsoft CEO Satya Nadella clapped back saying he’s personally “good for $80 billion” and Sam Altman said Musk’s allegation that SoftBank was short of capital was “wrong, as you surely know.”

Regardless of who you believe, it seems there is strong intent by the parties to make Project Stargate happen, and with the support of the President, it definitely seems more material than Elon is making it out to be, even if all the details haven’t been fully fleshed out. It’s also interesting to see a potential rift forming between Trump and his ‘first buddy’ Elon as Trump hangs out with and supports Elon’s biggest rival.

Now before a quick recap at some of the other top stories, a word from our second sponsor this week RBC Direct Investing!

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ALSO IN THE NEWS
🗞️ Other Key Headlines this Week

📈 Netflix Soars 14% to New All-Time-Highs After A Record-Breaking Q4

• Netflix reported a blow-out Q4 earnings, adding 18.9 million subscribers

• The subscriber gain was the biggest in Netflix’s history (beating even its pandemic record), aided by the return of Squid Game and its first major live sporting event (the Jake Paul vs Mike Tyson fight)

• This is the last time Netflix will report quarterly subscriber numbers as management seeks to get investors to prioritize sales and profits over subscribers

• Netflix plans to boost revenue by increasing the prices of its most popular plan in the US from $15.45 to $17.99 per month (along with price increases in Canada, Portugal, and Argentina).

🚫 High-Profile Short Seller Hindenburg Research Abruptly Shuts Down

• Hindenburg Research, known for its activist short-selling reports on companies like Nikola and the Adani Group, has announced its closure after 8 years.

• Hindenburg became one of the most feared names in corporate America after it exposed Nikola for faking a video showing one of its electric trucks was operational when it was really just rolling down a hill (leading to Nikola’s CEO going to jail).

• The closure marks a turning point for high-profile short sellers who have long been viewed with contempt by executives and politicians who accuse them of ‘shaking public confidence in the market.’

💰 Multiple Billionaires Look to Buy TikTok, Decision Expected in 30 Days

• Trump is in discussions with various parties about the sale of TikTok to a US entity and expects to make a decision within 30 days.

• Many rumors have swirled around potential buyers including Elon Musk, Kevin O’Leary, Perplexity AI, Amazon, and even YouTuber Mr. Beast.

• Notably, while many speculated Oracle would be a potential buyer Trump said the deal he was putting together did not include Oracle.

• ByteDance, TikTok's parent company, is exploring options to retain a minority stake while complying with U.S. regulations to avoid a complete divestiture.

💉 Novo Nordisk Jumps 9% After New Weight-Loss Drug Shows Strong Early Results

• Novo Nordisk stock jumped 9% this week after announcing promising results from early trials of its new weight-loss drug, Amycretin, with patients experiencing up to 22% weight loss over 36 weeks.

• This is a much-needed win for the company whose stock has fallen 25% over the past year (in contrast to competitor Eli Lily which has risen +23%)

📉 Electronic Arts Crashes 19% With Its Worst Day Since the Dot-Com Bubble

• Electronic Arts (EA) shares plunged nearly 19% after the company cut its financial outlook after its soccer franchise EA SPORTS FC (the rebranded version of FIFA) underperformed expectations

• EA revised its net bookings expectation from $7.5-$8B down to only ~$7B, which analysts called a ‘big stumble.’

• EA’s 19% stock drop marks EA's most significant single-day stock decline since the dot-com bubble in the early 2000s

FROM THE BLOSSOM COMMUNITY
⭐️ Featured Discussions this Week

🤩 This week kicked off the #MyStory challenge on Blossom, so there were a TON of amazing posts to choose from of folks in the community sharing incredible stories about their personal and investing journeys. It was tough to choose, but here are a few that really stood out!

👏 PS shout out to Wealthsimple for their support of this contest. They have an awesome 2% RRSP match promotion going on right now that I recommend checking out if you have an RRSP outside of Wealthsimple! (and make sure you post your own #MyStory on Blossom to get entered to win a Blossom x Wealthsimple prize pack 🎁)