TLDR
- Stock futures fell Monday, with tech stocks leading the decline ahead of Nvidia’s earnings report Wednesday
- Alibaba dropped after announcing a $10.4 billion share sale to fund AI spending, with investor Michael Burry also disclosing he exited his position
- Samsung fell 9% in South Korean trading after announcing a $79 billion stock buyback, seen as disappointing by investors
- Steel Dynamics and Nucor rose after U.S.-Canada trade talks collapsed over the weekend, removing fears of reduced steel tariffs
- XPeng missed Q2 revenue and earnings estimates, while Applied Optoelectronics fell 13% on dilution concerns from a $600 million stock offering
Stock markets started the week on the back foot Monday, with futures pointing lower as investors prepared for a busy few days.
Tech stocks led the decline, with traders watching closely ahead of Nvidia’s earnings report due after the close of trading on Wednesday.
Alibaba Shares Fall on Share Sale and Burry Exit
Alibaba dropped sharply after the Chinese e-commerce company announced a $10.4 billion share sale aimed at funding its artificial intelligence ambitions.
Alibaba Group Holding Limited, BABA
The new shares, offered to investors outside the United States, were priced at 112.70 Hong Kong dollars. That was a discount to the stock’s Friday closing price of HK$123.
Alibaba fell 8.5% in Hong Kong trading, while its American depositary receipts slipped around 2%.
Investor Michael Burry added to the pressure. He disclosed he had exited his Alibaba position and moved the money into rival JD.com.
Burry said he opposed the share issuance and expects Alibaba’s return on invested capital to keep declining as AI spending rises. He said he would only consider buying the stock again after a drop of roughly 50%.
Memory stocks also came under pressure. Micron and Western Digital fell, along with chip names including Intel and Marvell Technology.
Applied Optoelectronics dropped 13% after announcing it could sell up to $600 million of common stock through at-the-market offerings, raising dilution concerns among investors.
XPeng reported second-quarter results that missed on both revenue and earnings. The EV maker posted revenue of $2.91 billion and a non-GAAP loss per share of $0.19, both below analyst estimates. Deliveries were essentially flat year over year at 103,295 vehicles.
Steel Stocks Rise After U.S.-Canada Trade Talks Collapse
Steel Dynamics rose around 6% Monday after trade negotiations between the United States and Canada fell apart over the weekend.
Nucor also gained more than 3%. Both stocks had sold off last week on reports that a deal could lower tariffs on Canadian steel and aluminum imports.
The collapse of those talks removed that concern, sending steel stocks higher to start the week.
Samsung Electronics fell 9% in South Korean trading after announcing plans to buy back up to $79 billion in stock. The move disappointed investors who had expected a larger payout from the world’s biggest memory chip maker.
Alvotech was one of the few bright spots, rising 3% after Bank of America initiated coverage with a Buy rating and a $7 price target.
The broader market remains focused on Nvidia’s earnings Wednesday, which could set the tone for tech stocks through the rest of the week.
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