NIO stock experienced a gain of over 5% on Friday due to several factors including falling Treasury yields, soft Nonfarm Payrolls (NFP) report, and the company’s cost savings plan. NIO CEO William Li announced that the company will be reducing its workforce by about 10% and trimming non-core investments to focus on improving financial performance. The NFP report for October showed a slower pace of US employment growth, leading to speculation that rate hikes are unlikely. As a result, the S&P 500 and NASDAQ have both rallied over 1% for two consecutive days, and US Treasury yields have also dropped significantly. Recent data from the China Passenger Car Association has revealed that NIO currently holds just over 2% market share for electric and hybrid vehicle sales in mainland China, placing it 9th in the market. Increased competition from companies like BYD and Tesla, who have been engaging in a price war, has impacted NIO’s market position. To combat mounting profit losses and spur growth, NIO is making the necessary decision to lay off employees and cut investments that will not contribute significantly to the company’s financial performance within three years. NIO released its October delivery data, which reported a 60% increase in vehicle deliveries compared to the previous year but only a 3% gain from September. This puts NIO far behind its initial goal of delivering 250K vehicles this year. NIO is also exploring the possibility of selling through a dealer network in Europe, leading to reports of extensive hirings in countries such as Hungary, France, Switzerland, Austria, and Italy. The overall field of artificial intelligence (AI) aims to replicate human cognitive functions and pattern recognition in machines. AI encompasses sub-fields such as machine learning, deep learning, natural language processing, image recognition, and expert systems with the goal of creating artificial general intelligence (AGI). The applications of AI are vast and include generative AI platforms, probabilistic techniques for determining entity quality or perception, and utilizing large databases for scientific research, content aggregation, and personalized content suggestions. Nvidia is a semiconductor company that builds AI-focused computer chips and platforms, while Palantir Technologies specializes in big data analytics. Microsoft has a stake in ChatGPT creator OpenAI and has integrated their technology into Bing. Although some stocks associated with AI saw significant gains following the release of ChatGPT to the public in late 2022, it is uncertain whether the market is experiencing a bubble in AI stocks. Nio’s stock forecast suggests that the market is responding positively to the company’s new strategy, but the recent layoffs may not be the primary reason for the stock’s gain. Factors such as the positive US employment data and falling Treasury yields also contribute to the market’s excitement. The stock’s upward momentum has pushed prices above the 21-day Simple Moving Average (SMA), and bulls now face resistance levels at $9.20 and a range of resistance from $10 to $11.30. To sustain the rally, the 9-day SMA must break above its 21-day counterpart.
