Nvidia Leads the Drop

🧑‍💻 Mag 7 stocks, led by Nvidia, hit the hardest amid the selloff.

April 22, 2025


In this issue of the peel:

  • 📉 Markets hit a road bump as investors continue waiting for more tariff deals to come in.

  • 🧑‍💻 Mag 7 stocks, led by Nvidia, hit the hardest amid the selloff.

  • đź’¸ Jerome Powell and the Fed face pressure as inflation stirs stagflation fears.

Market Snapshot

Banana Bits

Apple Is Coming for the Smart Home — And Fast

Apple’s rumored Face-ID door lock and smart display hub are more than just new products. It’s a clear signal: they’re going all-in on smart home automation.

The tech giant is doubling down on the smart home, the $158B industry that’s growing 23% annually.

And with Apple’s entry, investors are looking for the next breakout company - and potential acquisition target.

They’re chasing Google (acquired Nest, $3.2B) and Amazon (acquired Ring, $1.2B).

History shows: when Apple plays catch-up, they go big.

And there’s one startup perfectly positioned to benefit.

With 10+ patents, distribution in over 100 Best Buy stores, and a Home Depot launch in 2025, RYSE is built for a breakout.

Early investors in Ring and Nest saw life-changing returns.

Now, RYSE is open at just $1.90/share.

Past performance is not indicative of future results. Email may contain forward-looking statements. See US Offering for details. Informational purposes only.

Macro Monkey Says

The Rate Debate  

In the latest episode of “Keeping up with the Washington Elites,” Powell and Trump are sparring back and forth with each other. The issue at hand? Cutting rates. 

At the heart of the matter is a classic economic tug-of-war. Those in favor of rate cuts (including the President) make the case that high interest rates are no longer necessary and may even risk tipping the economy into a recession. 

With consumer sentiment dipping and global trade uncertainties mounting, Trump wants the Fed to pivot and cut rates fast. For him, it’s about reigniting economic momentum. 

Powell, on the other hand, always known for his slow and steady approach, is playing the long game. The Fed has kept interest rates steady, citing persistent inflation and a need for more data before making any moves. 

While they’ve acknowledged slowing growth, the central bank is wary of acting too soon and fueling another inflationary surge. Some would say he’s a bit too reactionary and would rather see more proactive decision-making, i.e., when the Fed called inflation “transitory” back in 2020, which turned out to be anything but. 

The Fed meets again in May and has a tough and polarizing decision on its hands. Inflation has shown signs of moderation, with the core PCE index holding steady at 2.8% in recent months. This stability suggests that the Fed's previous rate hikes have been effective in curbing inflationary pressures. Additionally, the labor market remains resilient, with low unemployment rates indicating a robust economy.​

Fed Data at a Glance

However, concerns persist about the potential for economic slowdown. Recent data indicates that consumer spending has decelerated, and there are signs of weakening in the manufacturing sector. 

Furthermore, global economic uncertainties and geopolitical tensions could negatively impact economic growth. These factors have led some economists to advocate for rate cuts to preemptively support the economy.

The Takeaway?

Powell’s seat is warm, maybe a bit hot. But for now, he’s the guy at the helm, but not yet wobbly. As the economy navigates tariffs, inflation, and potential recession fears, the Fed’s resolve will be tested at the May 6-7 meeting. The best market advice I can offer? Stay nimble.

Career Corner

Question

What do I bring to a superday? A backpack? A folder with my profile, paper, and pen?

Answer

At a minimum, folio with paper, pen, and extra copies of your resume. A backpack is fine; just leave it in the reception area, and don’t drag it with you to every interview.

Head Mentor, WSO Academy

What's Ripe

MicroAlgo (MLGO) 74.9%

  • In a classic example of a meme stonk, MicroAlgo jumped 75% on pretty much no news—just pure speculation. Add this one to your list of get-rich-quick market schemes.

Forge Global Holdings (FRGE) 41.5% 

  • Forge’s stock is trading up on M&A news that investors seem to be pretty happy about. ​They’ve entered into a non-binding letter of intent to acquire Accuidity Capital Management, a Boston-based institutional asset manager. 

  • The deal could enhance Forge's offerings in the private market sector, and based on the stock reaction, has a pretty good chance of going through.

What's Rotten

Nvidia (NVDA) 4.5%

  • Huawei is looking to replace Nvidia following reports that the company is preparing to mass-produce its advanced Ascend 910C AI chip, providing a domestic alternative to Nvidia's H20 chip in China. 

  • Huawei's move is seen as a strategic effort to fill the void left by Nvidia in the Chinese market amid escalating U.S.-China trade tensions.

Caterpillar (CAT) 2.8%

  • Caterpillar's stock declined as investors reacted to a combination of falling commodity prices and escalating tariff concerns. 

  • The downturn in oil, copper, and natural gas prices has raised fears of reduced demand for heavy machinery, impacting Caterpillar's core markets. 

  • Additionally, uncertainties surrounding global trade policies are causing companies to delay or cancel equipment orders, further pressuring Caterpillar's sales outlook.  

Thought Banana

The Chip Wars

Nvidia's shareholders have been down bad in the last 6 months. The stock has been on a downward spiral even after crushing earnings and raising expectations. 

The culprit this time is Chinese company Huawei, which is preparing to mass-produce its Ascend 910C AI chip. The key here is that Huawei’s chip is reportedly comparable in performance to Nvidia's H100 chip. This development is significant, especially as U.S. export restrictions have limited Nvidia's ability to sell its advanced chips, like the H20, to China.

Nvidia has been a dominant player in the AI chip market, thanks to its powerful hardware and the CUDA software ecosystem that many AI applications rely on. However, the U.S. government's restrictions have made it difficult for Nvidia to sell its top-tier chips in China, leading to a potential $5.5 billion hit from unsold inventory. 

With Nvidia constrained, Huawei is stepping in to fill the gap. The Chinese government is encouraging domestic companies to adopt Huawei's chips, and Huawei's expanding ecosystem is making it a more viable alternative. 

While Huawei's chips may not yet match Nvidia's in every aspect, the combination of government support and growing capabilities positions Huawei as a formidable competitor in the Chinese market. 

The Takeaway?

Huawei's rise in China’s AI chip arena isn’t just about technology—it’s about timing, strategy, and geopolitics. 

With Nvidia limited by export restrictions, Huawei’s state-backed momentum is quickly transforming it from a local player to a national champion. While it may not be a one-for-one replacement yet, in a market as vast and insulated as China’s, being “good enough” with government support could be more than enough to dominate.

The Big Question: With Huawei rising and U.S. export bans biting, has Nvidia’s AI dominance peaked—or just paused?

Banana Brain Teaser

Previous

If (1/x) - (1/(x+1)) = 1/(x+4), then x is?

Answer: ±2

Today

Seed mixture X is 40% ryegrass and 60% bluegrass by weight; seed mixture Y is 25% ryegrass and 75% fescue. If a mixture of X and Y contains 40% ryegrass, what % weight of the mixture is X?

Send your guesses to [email protected]

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Buy when there’s blood in the street, even if the blood is your own.

Baron Rothschild

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Happy Investing,
Chris, Vyom, Ankit & Patrick