To kick off the last month of 2020, U.S. stock futures looked to extend the record-breaking November rally in Tuesday’s pre-market trading session. Futures connected to the Dow Jones Industrial Average added 349 points, or 1.2%. In addition, S&P 500 and Nasdaq 100 futures gained 1.1% and 0.9%, respectively.
Shares of AMD jumped 6.3% on Monday after the CEO made encouraging comments about the PC market and its fiscal Q1 2021 performance. CEO Lisa Su is expecting a better-than-normal fiscal Q1 2021 and sees continued growth in PC market in 2021. Su commented, “We’ve now gone through the last six or seven months, we spent a lot of time talking to our customers and sort of their customers’ customers. And I think what you’ll hear is that really we think this is more of a longer lasting situation where the PC has just become a central.”
Zoom, on the other hand, took a 5.1% tumble during after-hours trading on Monday despite its better-than-expected Q3 earnings release. Investors reacted negatively to management’s expectation of margin pressure in fiscal 2021. Revenue increased by 367% year-over-year to $777.2 million and beat the Street’s $693.9 million call, driven by strong demand for video conferencing amid the COVID-19 pandemic. Additionally, its Q4 guidance also surpassed analysts’ expectations. In response, Stephens analyst Ryan MacWilliams reiterated a Hold rating, stating, “We remain constructive on Zoom’s competitive position and especially its Zoom Phone opportunity, though we are awaiting a more reasonable valuation entry point before getting involved here.”
On the deal front, ServiceNow will acquire Element AI, a Canada-based artificial intelligence company, for an undisclosed amount, with the deal expected to be finalized early next year. According to the workflow software provider, the acquisition will support its goal of building the world’s most intelligent workflow platform. This represents its fourth AI acquisition this year, following the purchases of Loom Systems, Passage AI and Sweagle.
Meanwhile, BAE Systems has secured a £2.4 billion ($3.20 billion) contract to provide munitions and engineering support to the UK Ministry of Defense. The contract is for 15 years and will enable BAE to invest £70 million in the refurbishment and upgrading of manufacturing lines, with 75% set to be invested by 2026. In addition, the defense company plans to spend up to £350 million with UK-based companies on raw materials and machine components. “This contract secures the future of a highly technical and critical industry which supports thousands of manufacturing jobs in several areas throughout the UK… By investing in new technology and skills to further develop our expertise, we can continue to deliver essential sovereign capability to the Armed Forces at competitive prices,” CEO Charles Woodburn commented.
Shares of S&P Global and IHS Markit surged by about 3% and 7.4%, respectively, on Monday after it was announced that the former will buy the latter for $44 billion, including $4.8 billion debt. As per the terms of the agreement, “each share of IHS Markit common stock will be exchanged for a fixed ratio of 0.2838 shares of S&P Global common stock.” Once the deal is completed, likely in the second half of 2021, current S&P Global shareholders will hold about 67.75% of the combined company, while IHS Markit shareholders will own roughly 32.25%.
J.B. Hunt Transport Services revealed on Monday that its wholly-owned subsidiary, J.B. Hunt Transport, has acquired Mass Movement assets in an effort to further expand its final mile delivery services. Although the company didn’t disclose the financial terms of the deal, it noted that the transaction was funded through cash on hand. “The acquisition complements our current service and will enhance our ability to meet the growing demand of customers in the commercial health and fitness industry,” J.B. Hunt CEO John Roberts explained.
