What Happened?
Shares of video sharing platform Rumble (NASDAQGM:RUM) jumped 10.8% in the morning session after it announced its intention to acquire German AI cloud firm Northern Data in an all-stock deal valued at approximately $1.17 billion. This strategic move aims to expand Rumble's capabilities beyond its video-sharing platform and into the high-growth AI infrastructure market. The all-stock transaction would give Rumble control of Northern Data's Ardent data centers and its Taiga GPU-as-a-service business, which includes a significant inventory of over 20,000 highly sought-after Nvidia H100 GPUs. Under the proposed terms, Northern Data shareholders would receive 2.319 Rumble shares for each of their shares, resulting in them owning about a third of the combined company. The stock's surge came despite Rumble also reporting second-quarter results that missed revenue estimates and showed a decline in monthly active users, signaling that investors are focused on the transformative potential of the AI-focused acquisition.
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What Is The Market Telling Us
Rumble’s shares are extremely volatile and have had 55 moves greater than 5% over the last year. But moves this big are rare even for Rumble and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 10 days ago when the stock dropped 3.4% on the news that a surprisingly weak U.S. jobs report was released, fueling concerns about a slowing economy. The U.S. economy added only 73,000 jobs, falling significantly short of economists' expectations, while figures for May and June were revised down, erasing 258,000 previously reported jobs. The professional and business services industry itself shed 14,000 jobs. This data points to a cooling labor market, fueling concerns of a slowing economy. A weaker economic outlook often leads to reduced corporate spending on key services like IT consulting and professional staffing, which directly impacts the sector's revenue and growth prospects. The report immediately increased investor expectations of an interest rate cut by the Federal Reserve.
Rumble is down 30.2% since the beginning of the year, and at $8.65 per share, it is trading 46.8% below its 52-week high of $16.27 from December 2024.
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