CE 100 Index Loses 2.4% as Peloton Offsets Chipmaker Momentum

Coming into the holiday-shortened trading week, the CE 100 Index lost 2.4%.  All pillars posted declines for the week that ended May 24.

Peloton helped bring the “Be Well” pillar down by 4.5%. The stock’s 19.6% loss came as the company announced a private offering of $275 million aggregate principal amount of convertible senior notes due 2029.  The company also said it would enter into a $1 billion five-year term loan facility and a $100 million five-year revolving credit facility.

This announcement occurred three weeks after Peloton announced the launch of restructuring efforts, including laying off approximately 400 employees — about 15% of its global workforce — and reducing its retail showroom footprint to mitigate costs.

Within the Live segment, which lost 5.2%, Porch Group lost 17.9%, continuing a slide in the wake of reports earlier in the month that Porch sued China Construction Bank (CCB), alleging reinsurance fraud.  In its complaint, Porch alleged that the Chinese lender conspired with employees of Vesttoo, a now-bankrupt Israeli insurance firm, to issue fake reinsurance letters of credit.

Workday Slides on Earnings

Workday shares gave up more than 14%, as the Work segment of the CE 100 Index was 3.5% lower.

The company reported results this past week that detailed fiscal first quarter revenues of just under $2 billion, up 18.1% from a year ago.  Subscription revenues were $1.815 billion, an increase of 18.8% from the same period last year.  Workday also notes that it has more than 50 AI use cases in production and 25 generative AI use cases on its roadmap.  In terms of guidance, the company said that full-year subscription revenue growth should come in at about 17%.

Chipmakers Gain Ground

Nvidia shares helped blunt losses in the Enablers group of the CE 100 Index, which lost the least ground at 0.4%. Nvidia shares surged 15.1%.

As detailed in last week’s earnings coverage, AI helped underpin positive momentum in the name.  The company reported that its revenue for the quarter ended April 28 was up 18% compared to the previous quarter and up 262% from the same period a year earlier, reaching $26 billion.  Nvidia’s outlook for the quarter was $24 billion, Nvidia Executive Vice President and Chief Financial Officer Colette Kress said Wednesday during the company’s quarterly earnings call.

In the earnings release, Nvidia Founder and CEO Jensen Huang said that the company’s revenue growth was driven by companies and countries partnering with the chipmaker to transition from their traditional data centers to “AI factories” that will deliver productivity gains in most industries.

“In Q1, we worked with over 100 customers building AI factories ranging in size from hundreds to tens of thousands of GPUs, with some reaching 100,000 GPUs,” Kress said.  Nvidia’s Data Center revenue was up 23% from the previous quarter and up 427% from the same quarter in 2023.

Looking ahead, Nvidia expects its revenue in the current quarter to total $28 billion, up from the first quarter’s $26 billion.

Qualcomm, also in the Enablers Group, also seemingly got swept up amid investor euphoria over chipmakers, and their shares rocketed 8% higher.

PDD was up 7.8% on the week.  The company posted results this past week. The parent company of Temu said that revenue rose 131% to 86.8 billion yuan.

Revenues from online marketing services were 42.5 billion yuan, up 56%.  Revenues from transaction services were 44.3 billion yuan, soaring 327% year on year.