Big OpenAI News, IPO Pricing Support These 2 Holdings
OpenAI’s acquisition builds on our thesis for this chip holding.
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When we raised our price targets last week for Bank of America BAC and Morgan Stanley MS, we explained why this week could bring support for that decision and lay the seeds for us to revisit those targets yet again down the road. We’re referring to the IPO pricings for digital health company Hinge Health (HNGE) and marketing tech firm MNTN Inc. (MNTN).
Both offerings were priced on Wednesday night at the upper end of their target ranges, with Hinge Health pricing 13.7 million shares at $32, the high end of the targeted $28 to $32 range. MNTN Inc. sold 11.7 million shares in its IPO at $16, also the upper end of the targeted $14 to $16 range.
Now we’ll want to gauge the post offerings reception of these deals by following how they trade in the coming days. If they perform even close to what we’ve seen with the recent IPO from CoreWeave CRWV, up more than 150% from its $40 IPO price, we may be on the cusp of a more vibrant IPO market.
At the same time, M&A activity continues to percolate this week. Building on the activity we discussed last week with you, on Thursday AT&T T clinched a deal to acquire Lumen Technologies' LUMN consumer fiber operations for $5.75 billion in cash, U.K. chemicals company Johnson Matthey has agreed to sell its catalyst technologies business to Honeywell HON, and Sanofi SNY will acquire Vigil Neuroscience, a clinical-stage biotech company in a $470 million deal.
OpenAI, io Products and Marvell Shares
And let’s not forget Wednesday's M&A news that OpenAI will acquire io Products in a $6.5 billion deal that brings former Apple AAPL design head Jony Ive to OpenAI, where he will be working on devices tailored for the generative AI era.
We’ll look for more details on that in the coming quarters, but from a high-level, such devices add to our view that AI device adoption will drive network capacity utilization levels much higher, leading to incremental capital spending efforts. We continue to see Marvell MRVL benefitting from that.
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At the time of publication, TheStreet Pro Portfolio was long BAC, MS, AAPL and MRVL.
