Happy Wednesday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

• 🟩 | US stocks rose today, with the S&P 500 notching a fresh record close, as the early days of Donald Trump’s second presidency stoked optimism on the Street.

• 📈 | One Notable Gainer: Netflix (NFLX) shares soared nearly 10% after seeing a surge in subscribers last quarter — and subsequently raising prices.

• 📉 | One Notable Decliner: Johnson & Johnson’s (JNJ) stock fell about 2% despite its own earnings beat, as the company cautioned investors on the potential impact of its upcoming talc case, set to begin hearings in February.

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MARKET MOVERS

Oracle, Southwest, NVIDIA

ORCL (+6.8%) Oracle stock climbs 7% as Trump is expected to announce its joint AI venture with OpenAI and Softbank (Quartz)

LUV (-4.2%) Southwest Airlines Cuts 270 Pilot Roles in Denver and Atlanta (Bloomberg)

NVDA (+4.4%) Nvidia Is Again World’s Biggest Company. Stargate, Trump Helped the Stock. (Barron’s)

D (-5.3%) Dominion Energy unveils plans to add unlikely horde of insects to solar facilities: 'An ideal pairing' (YF)

ARM (+15.9%) Buy Arm Holdings Amid Stargate Announcement (Zacks)

OVERHEARD ON THE STREET

AP: Trump praised a new partnership between OpenAI, Oracle, and SoftBank, which plans to invest up to $500 billion in AI infrastructure.

CNBC: Elon Musk criticized Trump’s Stargate AI announcement, claiming the aforementioned companies lack the financial backing to support the pledge.

Reuters: Trump’s withdrawal from the Paris Agreement has caused rare discord with Big Oil, increasing regulatory uncertainty and risking long-term investments.

Bloomberg: Clients of Seth Klarman’s Baupost have pulled $7 billion since 2021 amid a decade of underwhelming 4% annualized returns.

The Verge: Samsung rolled out its Galaxy S25 and S25 Plus, showing incremental updates with smarter A and a new chip, but little else changed.

TOMORROW’S TRADE IDEA, TODAY

Jefferies Says Don’t Eat the Apple

Something Rotten

Here’s something you don’t see every day: investment firm Jefferies just advised its investors to sell off their shares of Apple (AAPL). The firm believes that revenue numbers are going to come in lower than expected on its next earnings report.

Consequently, analyst Edison Lee recently downgraded the stock to Underperform, and slashed his price target to $200.75, representing around 10% downside from current prices.

Low Revenue Expectations

Lee expects the tech giant to miss its expected FY Q1 2025 revenue growth forecast of 5%. He also expects the company’s Q2 guidance to feature a low single-digit revenue target, below consensus estimates.

The sticking point: demand. For some time now, Apple has subsisted on a loyal customer base, willing to upgrade to the latest iPhone model with each new launch.

But several recent smartphone models have been compared more to software updates than original products. And the truly new features — like Apple’s AI “advancements” — haven’t exactly been a hit. (The company recently shut down its AI news summaries after repeatedly reporting false information to users.)

Now, many iPhone users are content to stick with the devices they have, until Apple proves it’s still at the cutting edge of tech. Jefferies expects to see low sales in the short term as a result.

Wall Street Disagrees

Wall Street seemingly disagrees with the Jefferies analyst. 19 analysts covering the sock have given it a Buy rating, and another six rate the stock a Hold. Only three other analysts suggest investors sell the stock. 

But the numbers appear consistent with a downtrend. The stock has fallen more than 12% in the past month alone. And after word of the downgrade broke yesterday, Apple ceded its seeding as the world’s most valuable company to NVIDIA (NVDA).

The company is set to report earnings on January 30th. If Lee is right, it won’t exactly be a cause for celebration. Apple may be chewed to its core, and investors might want to start looking for a healthier snack.

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ON OUR RADAR

CNN: Prince Harry settled his case with The Sun's publisher over unlawful information gathering, receiving an apology and substantial damages from Rupert Murdoch.

Axios: Trump threatened to impose steep tariffs on Russia if Putin doesn't quickly reach a deal to end the war in Ukraine.

CNBC: The Trump administration has placed all federal employees in DEI roles on paid leave.

AP: Starbucks officially decided to restrict restrooms to paying customers, reversing a 7-year policy.

Reuters: Amazon is exiting its Quebec operations, resulting in the loss of approximately 1,700 full-time jobs.

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