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Leading today’s news: White House developing national AI strategy, Ford (F) recalls vehicles over seatbelts and Nvidia (NVDA) Q1 earnings after close.
In response to "one of the most powerful technologies of our time," the Biden administration is taking new steps to "advance responsible artificial intelligence." The first is updating its roadmap, called the National AI R&D Strategic Plan, which outlines key priorities and goals for federal investments in AI research and development. It also released a new request for public input on critical AI issues, like "protecting individuals' rights and safety, and harnessing AI to improve lives." A new report on AI trends in education is being addressed as well, which will cover the risks and opportunities related to teaching, learning, research, and assessment.
As AI systems take many industries by storm, calls have been growing for the need to regulate emerging tools and address the potential downsides of the technology. Just last week, the CEO of OpenAI, the creator of ChatGPT, testified to Congress about the need for government intervention to mitigate the risks of increasingly powerful artificial intelligence models.
SA analyst Logan Kane wrote last week in his article Artificial Intelligence Investing Hype Needs A Reality Check "Hype over AI investing has quickly caused a bubble to form in AI stocks,". "History shows dozens of similar examples with each new technological innovation," citing lessons learned from the dot-com bubble, and similar patterns that have recently played out in cannabis stocks, sports betting and blockchain.
In other market news -
Florida Gov. Ron DeSantis is set to announce a presidential run Wednesday evening, with a little help from Elon Musk.
NBC News reported that DeSantis will confirm his campaign for the U.S. presidency in a discussion with Twitter chief Elon Musk, set to run live Wednesday at 6 p.m. ET.
The two will host an event on the Twitter Spaces (TWTR) live platform, according to the report, and it will be moderated by Musk confidant David Sacks. That will be followed by a launch video and a travel itinerary sending DeSantis to a number of early-campaign states.
It also coincides with a gathering of high-end fund-raisers for DeSantis in Miami Wednesday-Friday, NBC noted.
While former President Donald Trump is leading most Republican polls for the White House, Musk has indicated he doesn't think Trump can win again in 2024.
Ford Motor Company, fresh off its Capital Markets Day is recalling over 175,000 Bronco models due to a seatbelt latch problem, according to an National Highway Traffic Safety Administration notice on Wednesday.
“The first-row seat belt latch plates may be difficult to access from their stowed position,” the notice states. “As such, these vehicles fail to comply with the requirements of Federal Motor Vehicle Safety Standard number 208, ‘Occupant Crash Protection.’”
The recall impacts model years 2021 through 2023 built with the 5-door body style. The NHTSA indicates that dealers will add a sliding clip latch stop to the driver and front passenger seat belts, free of charge, in order to remedy the issue. Owners of the recalled autos are advised to contact the NHTSA hotline.
The U.S. Federal Trade Commission (FTC) is probing if baby-formula makers colluded on bids for attractive state contracts, the Wall Street Journal reported.
The FTC investigating to see if Abbott Laboratories (NYSE:ABT) and other formula makers "engaged in collusion or coordination with any other market participant regarding the bidding," the report added citing documents posted to FTC's website.
The agency is also looking into to check if company coordination affected sales more broadly, outside of the Women, Infants and Children (WIC) formula-supply program, according to the report.
The FTC has asked information from Nestle (OTCPK:NSRGY) (OTCPK:NSRGF) — which manufactures infant formulas called Good Start — a company spokesperson told the news agency, adding that the company has responded to the FTC.
In February, Abbott received a civil investigative demand from the FTC linked to an investigation of the companies participating in bids for WIC formula contracts, the report added.
Nvidia (NASDAQ:NVDA) is scheduled to announce Q1 earnings results on Wednesday, May 24th, after market close. The consensus EPS estimate is $0.92 and the consensus revenue estimate is $6.52 billion. Over the last 2 years, NVDA has beaten EPS estimates 75% of the time and has beaten revenue estimates 100% of the time.
Over the last 3 months, EPS estimates have seen 21 upward revisions and 6 downward. Revenue estimates have seen 17 upward revisions and 8 downward. The company on Feb. 22 reported Q4 Non-GAAP EPS of $0.88, beating estimates by 8 cents. Revenue of $6.05 billion was down 20.8% from last year but ahead of expectations by at least $30 million.
NVDA has a Quant rating of "Hold", with Wall Street analysts rating the stock a "Buy" and Seeking Alpha authors agreeing with our Quant system and rating it a "Hold".
Seeking Alpha author Dair Sansyzbayev wrote in a recently published article, "NVDA stock is massively overvalued and expectations that are priced in are very far from consensus earnings estimates. I see the risk that AI mania might continue, but this will not last infinitely. Given the extent of overvaluation together with the current challenging macro environment, which is expected to worsen, I consider that unfavorable factors vastly outweigh the potential of an AI frenzy to fuel further stock price growth."
Contributor Business Quant highlighted in their latest report that Nvidia’s shares are trading at over 28 times the company's trailing twelve-month sales, which is "extremely high" on a standalone basis. Business Quant claims the high valuation doesn’t seem justified for a business that’s likely to experience "a growth slowdown".
The U.S. mortgage delinquency rate jumped 13% in April from a record low in March, but that spike was exceptional due to a calendar effect, Black Knight said in its First Look report Wednesday.
The M/M climb was largely attributable to April "ending on a Sunday impacting the processing of payments made on the last calendar day of the month," the report said. "More people than you might imagine wait until that very last day" to make a mortgage payment.
Early-stage delinquencies (borrowers 30 days late) suffered the most, surging by 200K, or 25%, in line with the impact of prior similar calendar-related events. Still, serious delinquencies (90+ days late) continued to improve, with the number of such loans falling in 45 states in addition to Washington D.C.
"If historical trends hold true, much - if not all - of that spike will likely reverse itself next month," Black Knight contended.
Also, foreclosure starts of 25K slid 23% in April, representing the lowest level since September 2022 and 45% below April 2019, before the pandemic. And the number of loans in active foreclosure fell by 6K in April and 60K, or 21%, from March 2020.
On the corporate finance front, bankruptcies climbed since the start of 2023, tracking toward more normal levels.
Other market headlines to watch for on Seeking Alpha:
Former rivals, Uber (UBER) and Waymo (GOOGL), partner on robotaxis.
Earnings: Lowe's (LOW) management offers optimistic commentary.
Apple (AAPL) inks Broadcom (AVGO) deal for U.S.-made components.
Meta (META) sells Giphy to Shutterstock (SSTK) at a $262M loss.
'Organized retail crime is definitely a thing' - BJ's (BJ) earnings call.
Panera Brands names new CEO as it moves toward IPO.
Bud Light (BUD) sales continue crashing, Coors Light (TAP) sales rise.
COVID vaccine stocks light up amid fears of new infections in China.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
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Wall Street Breakfast Podcast: America's AI Strategy - Seeking Alpha
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