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Sector Update: Energy Stocks Fall Wednesday Afternoon

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-- Energy stocks were lower Wednesday afternoon, with the NYSE Energy Sector Index falling 3.8% and the State Street Energy Select Sector SPDR ETF (XLE) dropping 4.2%.

The Philadelphia Oil Service Sector Index was shedding 1.6%, and the Dow Jones US Utilities Index was down 1.2%.

The White House is of the view that an agreement with Tehran -- a one-page memorandum of understanding to end the war and set a framework for more detailed nuclear negotiations -- is close, Axios reported, citing two US officials and two other sources briefed on the issue. Washington's MoU, if Iran accepts it, will lead to a gradual reopening of the Strait of Hormuz and lifting of the American blockade on Iranian ports, a person familiar with the matter told Bloomberg.

Front-month West Texas Intermediate crude oil sank 7% to $95.14 a barrel, and the global benchmark Brent crude contract slumped 7.4% to $101.72 a barrel. Henry Hub natural gas futures fell 2.5% to $2.72 per 1 million BTU.

US crude oil stocks, including those in the Strategic Petroleum Reserve, fell by 7.5 million barrels in the week ended May 1 following a decrease of 13.4 million barrels in the previous week. Excluding inventories in the SPR, commercial crude oil stocks decreased by 2.3 million barrels after a 6.2-million-barrel drop in the previous week, compared with the 3.4-million-barrel decrease expected in a survey compiled by Bloomberg.

In sector news, Triton Uranium is considering a US listing through a merger with a special purpose acquisition company in 2026, its president Scott Evans told Reuters, as the company seeks to tap rising demand for nuclear fuel and bolster domestic supply. The Canada-based company has begun development work at its Atlas Project in Uranium City, Saskatchewan, where it controls about 46,742 acres of mineral claims, the report said.

In corporate news, Equinor (EQNR) shares fell past 8% after the firm reported Q1 revenue that decreased year on year and missed analysts' estimates.

Vermilion Energy (VET) reported a Q1 loss Wednesday of 0.95 Canadian dollar ($0.70) per diluted share, swinging from earnings of CA$0.10 a year earlier. Its shares dropped over 12%.

Nano Nuclear Energy (NNE) said Wednesday it has signed a memorandum of understanding with Super Micro Computer (SMCI) to explore the integration of Nano's energy systems with Supermicro's AI server and data center platforms. Nano shares surged 22%.

Terrestrial Energy (IMSR) and Riot Platforms (RIOT) said Wednesday they are collaborating to develop a pairing of planned data centers with co-located nuclear plants. Terrestrial shares jumped past 16%.

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Australia

Advanced Micro Devices Set to Command Half of Growing Server CPU Market, BofA Says

Advanced Micro Devices (AMD) is expected to capture about half of the total addressable market for server central processing units, which the company expects will exceed $120 billion by 2030, BofA Securities said in a note emailed Wednesday.The chip maker's updated forecast for server CPU TAM is double its previous estimate amid rising agentic artificial intelligence demand, according to the brokerage.The server CPU market is now expected to grow more than 35% annually, reaching over $120 billion by 2030, AMD Chief Executive Lisa Su said late Tuesday during an earnings call, according to a FactSet transcript.The company previously expected market growth of 18% annually over the next three to five years.BofA expects AMD to capture a roughly 50% share of the server CPU market, with the remaining half split between rivals Intel (INTC) and Arm (ARM)."Rising CPU TAM is good for all CPU vendors, but we expect AMD to maintain/expand share on (the) back of broad portfolio, rising enterprise focus, continued cloud leadership and consistent roadmap execution," BofA analyst Vivek Arya wrote. "Separately, we expect AMD to potentially announce other large customers for GPUs for (2027) and beyond."Shares of AMD surged 18% in Wednesday afternoon trade.The company reported stronger-than-expected first-quarter results late Tuesday, as demand for AI infrastructure pushed data center revenue higher year over year."Inferencing and agentic AI are increasing the need for server CPU compute as these workloads require additional CPU processing for orchestration, data movement, and parallel execution in addition to serving as the head nodes for GPUs and accelerators," Su told analysts during the earnings call. "As a result, we are seeing both stronger near-term demand and deeper engagement with customers on long-term capacity planning."AMD currently represents about 6% of the AI TAM, and that figure is expected to grow toward double digits by 2030, Arya said.Still, AMD remains "exposed to uncertain share allocation between numerous OpenAI suppliers" including Nvidia (NVDA), Broadcom (AVGO) and Cerebras Systems, he said.Following AMD's first-quarter results, BofA raised the company's 2026 and 2027 pro-forma earnings per share estimate by 9% each to $7.28 and $11.80. The brokerage is projecting AMD's 2030 EPS potential at more than $27, above management's $20-plus target.BofA reiterated AMD's buy rating and lifted the price target to $450 from $310.Price: $417.82, Change: $+62.56, Percent Change: +17.61%

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Oil & Energy

OPEC Production Slumps to 36-Year Low on Iran Conflict Impact, Bloomberg Survey Says

OPEC crude production slumped to its lowest level in 36 years last month as an ongoing Iran conflict choked off Persian Gulf exports and forced a wave of supply shut-ins, a Bloomberg survey showed on Wednesday.Output from the Organization of the Petroleum Exporting Countries fell by 420,000 barrels per day in April to an average of 20.55 million b/d. The total marks the group's lowest production ceiling since 1990, led by deepening supply disruptions in Kuwait and Iran.Last week, the producer group also faced another setback when the UAE announced its formal departure. Bloomberg's April survey includes figures for the UAE for the final month before its exit takes effect on May 1.Kuwait registered the group's steepest decline in April, with output falling by 470,000 b/d to an average of 800,000 b/d.Iran followed, after initially sustaining exports in the early phase of the conflict while restricting use of the strait by others, but has since come under mounting pressure from a US-led blockade on shipments.However, despite the continued closure of the Strait of Hormuz, OPEC agreed over the weekend to a nominal increase in output quotas for June.The symbolic move is intended to maintain the alliance's pre-war strategy of restoring production, though analysts noted the hikes remain largely "on paper" given the current maritime blockade.

Research

Research Alert: CFRA Maintains Strong Buy Opinion On Shares Of Arista Networks, Inc.

CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:We keep our 12-month target at $175, based on 48.2x our 2026 EPS estimate. We increase our 2026 EPS estimate by $0.10 to $3.63 and 2027's by $0.17 to $4.42. While ANET was able to raise its full-year guidance, it was lower than we expected due to some notable challenges. It experienced industry-wide supply shortages, particularly in wafers, silicon chips, CPUs, optics, and memory. These shortages increased procurement costs and limited its ability to fully meet strong customer demand. Gross margin was under pressure due to a combination of higher supply chain costs (especially for memory and silicon) and a shift in customer mix toward larger accounts, which tend to have lower margins. It also paid more to secure supply continuity, further impacting margins. Lead times for critical components, particularly high-end chips used in AI platforms, were extremely long, sometimes extending to 52 weeks or more, requiring ANET to make multiyear purchase commitments and increasing the risk of inventory imbalances.

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