Meme stocks floundered on Monday as Nvidia led with bombast

Monday wasn't the best session for a host of leading meme stocks. Opendoor Technologies (OPEN), a left-for-dead iBuyer from the covid-era frenzy of 2021, sank over 12% following its meteoric two-month rally. Then the retail-loved stock fell another almost 6% afterhours.

OPEN daily stock chart

The culprit was Eric Jackson, founder of hedge fund EMJ Capital, finding a new favorite stock. Jackson helped to launch the Opendoor revival back in July that has seen that stock emerge a 20-bagger, and on Monday he gave an incredible thesis for Better Home & Finance (BETR). Announcing he was long the stock, Jackson claimed Better Home would become the "Shopify of mortgages".

BETR stock then proceeded to soar from $34 to $94 before closing the day up 46% near $50. The company is similar to Opendoor in that it uses AI to provide borrowers with home loans, while the former simply buys and sells houses via algorithm.

BETR daily stock chart

"I believe BETR is a potential 350-bagger in 2 years. They laugh at BETR now at $34 like they laughed at CVNA at $3.50 and OPEN at 51¢. But this is no meme," wrote Jackson.

Then there was Bitmine Immersion Technologies (BMNR), Tom Lee's leading Ethereum holding vehicle, which sank over 10%. The sell-off came in response to the company selling $365 million worth of shares and warrants. The sale included over 5.2 million shares of common stock at a price of $70.00 and over 10.4 million warrants at a price of $87.50, both premiums to the current price level but of course highly dilutive.

Bitmine will use the proceeds to purchase more Ethereum, of which it already owns more than 2.4 million. Bitmine now holds 2% of all Ethereum and is on its way toward its goal of holding 5%.

Quantum Computing (QUBT), another heavily followed stock for its volatile nature, also lost over 13% in Monday's meme mania.

Nvidia stock news

But the main draw on Monday was Nvidia, which launched over 4% higher on the announcement that it would be investing up to $100 billion in OpenAI. This will allow the ChatGPT creator to deploy "at least 10 gigawatts" of compute capacity to train its next set of large language models (LLMs).

Nvidia said that the partnership would roll out on its new Vera Rubin platform that should commence in the second half of next year.

The market was ecstatic, at least based on the share price dynamic, but Nvidia took its fair share of heat for the circular nature of these AI partnerships. Nvidia's just announced a $5 billion investment in Intel (INTC) on Friday. While that latter partnership seems more palpable as it involves joint chip design, the much larger OpenAI investment basically involves Nvidia handing OpenAI truckloads of money, which Sam Altman's OpenAI turns around and uses to purchase AI hardware from Nvidia with.

Sometimes other data center companies sit between the two, such as Nvidia's other investee CoreWeave (CRWV), but the strange act of giving a customer money to purchase your own products has resulted a severe skepticism among many. Some observers said these investments are the only lifeline keeping Nvidia's revenue growing and that they are reminiscent of the DotCom rally 25 years ago in which Lucent Technologies and Cisco Systems (CSCO) engaged in similar round-tripping before the crash.

Nvidia's gains helped all three indices advance on Monday, but Apple (AAPL) and Oracle (ORCL) were also in on the rally. The market looks ahead to preliminary September S&P Global PMIs on Tuesday.