are headwinds to oil prices. On Sunday, Saudi Aramco (ARMCO) said it would slash its official selling price by $2 per barrel from January levels to $1.50/bbl.
Asian customers benefit from lower Arab Light crude prices thanks to higher competition from rival suppliers. The production of oil in the U.S. is near record levels. Exports from the country are at highs. Demand is also a major issue globally.
Investors should build positions in energy companies whose production cost per barrel is below market. Exxon (XOM) is the best pick. ConocoPhillips (COP) and Chevron (CVX) are also highly profitable producers. Wait for a better entry price in both firms.
While valuations for energy stocks are unfavorable, they are less so for artificial intelligence chip suppliers. Nvidia (NVDA) broke out to a new high of above $517 yesterday. Thanks to the Consumer Electronics Show in Las Vegas, tech investors are snapping up NVDA stock. The company plans to mass-produce an AI chip specifically for the China market. It is easily circumventing any U.S. export laws.
AMD stock jumped yesterday, too. It launched the 7600 XT, a mediocre graphics card for the PC market. Nvidia also announced the RTX 40 series “Super” at high prices. Still, for AMD, the higher relative prices will lift AMD’s profit margins.