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- AMD Acquires ZT Systems
Bulls, Bitcoin, & Beyond
Market Moves Yesterday
S&P 500 @ 5,608.25 ( ⬆️ 0.97%)
Nasdaq Composite @ 17,876.77 ( ⬆️ 1.39%)
Bitcoin @ $60,639.66 ( ⬆️ 2.09%)
Hey Scoopers,
Happy Tuesday! Are you ready for an action-packed newsletter?
👉 AMD takes on Nvidia
👉 Palo Alto Networks stuns Wall Street
👉 Credit card spending moves lower
So, let’s go 🚀
Market Wrap 📉
Equities advanced on Monday, building on the market’s comeback as investors braced to watch the Federal Reserve’s symposium later in the week.
The move marks an extension of the recent recovery rally, the latest turn amid a choppy stretch for stocks. Notably, last week ushered in significant gains for all three major indices.
All 11 sectors of the S&P 500 index ended the session higher, led by the information technology sector, which advanced by 1.4%.
August started turbulently as disappointing macro data fueled recession fears and bolstered concerns that the Fed was behind the curve on lowering interest rates, sparking a global sell-off and pushing the S&P 500 to record its worst day in two years.
However, fresh data subdued an anxious market while boosting hopes that the economy could attain a soft landing. Investors saw good stats on retail sales, initial jobless claims, and strong earnings from Walmart.
Moreover, the annualized inflation rate measured in July’s consumer price index touched its lowest level since early 2021.
Trending Stocks 🔥
Dutch Bros. - Shares of the coffee chain company fell 4% after Piper Sandler downgraded the stock to “neutral” from “overweight” as the investment bank asserted the stock’s risk/reward is adequately balanced.
HP - Shares slid over 3% after Morgan Stanley downgraded the personal computing company to “equal weight” from “overweight,” citing limited upside potential.
Sweetgreen - The salad chain tanked close to 7% after Piper Sandler downgraded the stock to “neutral” from “overweight.”
AMD Announces $4.7 Billion Acquisition
Advanced Micro Devices agreed to buy server marker ZT Systems in a cash and stock transaction valued at $4.9 billion, adding data center technology and bolstering the chipmaker’s efforts to challenge Nvidia. ZT Systems will be a part of AMD’s Data Center Solutions segment.
The transaction includes a $400 million contingent payment based on certain milestones.
ZT makes server computers for large data center owners who are allocating significant resources to develop AI capabilities.
AMD is the second-largest provider of graphics processing units or GPUs, which is key to developing AI software. Last month, AMD acquired Silo AI for $665 million, further expanding its AI portfolio.
In the last 12 months, ZT reported $10 billion in sales and has a 22% market share for servers based on GPUs as it inked a partnership with OpenAI and Microsoft.
AMD is falling behind in the AI race. It expects the new range of accelerator chips to generate $4.5 billion in additional sales this year, while Nvidia’s data center sales are forecast at $100 billion.
Palo Alto Networks Crushed Estimates
Shares of Palo Alto Networks are up close to 2% in pre-market trading after it beat consensus revenue and earnings estimates in fiscal Q4 and announced a $500 million share buyback program.
It forecasts fiscal Q1 earnings per share between $1.47 and $1.49, higher than estimates of $1.43. The tech giant also forecasts revenue between $2.1 billion and $2.13 billion, which is higher than estimates of $2.1 billion.
Palo Alto Networks is now focusing on a “platformization” strategy, bundling its product and solution portfolio, which will result in higher annual recurring revenue (ARR). Earlier this year, Palo Alto Networks cut its full-year guidance as it pivoted toward this strategy.
Moreover, the company crossed $200 million in AI-based ARR, a significant milestone.
Shares of Palo Alto Networks have surged over 18% in 2024 and have returned 400% in the last five years.
Credit Card Spending In Under Pressure
According to Bank of America, total credit card spending per household was down 1% year over year in the week ending August 10. It also fell 0.4% year over year in July.
In the research report, BoA stated, “While still negative, department store, home improvement & furniture spending growth saw the largest increase since last week.”
Further, transit and gas were the two sectors that saw a decline in spending growth.
As inflation and interest rate hikes weigh on households, consumer spending will likely remain under pressure.
Elsewhere, the labor market shows signs of cooling, but BoA expects growth in after-tax wages and salaries to support consumer spending.
Headlines You Can't Miss!
Americans are spending less on travel
China’s youth unemployment soars over 17% in July
Kamala Harris proposes raising the corporate tax rate to 28%
Here’s where global commodity prices might be headed
Analysts are optimistic as “forced” Bitcoin selling might be over
Chart of The Day
The proportion of financial assets invested in public equities is nearing record highs due to investor confidence, a strong U.S. economy, and superior historical performance.
In 2024, 41.6% of U.S. households had financial assets tied to the stock market, while 62% of Americans owned stocks, reaching a 20-year high.
Notably, 87% of upper-income Americans own stocks, while the figures for middle-income and lower-income individuals are lower at 65% and 25%, respectively.
In Q1 of 2024, the value of assets held in equities rose by $3.8 trillion compared to Q4 of 2023.
U.S. stocks have returned 12.3% annually in the last ten years, compared to 4% for real estate investment trusts and 1.4% for investment-grade corporate bonds.
Meme of the Day
DISCLAIMER: None of this is financial advice. The newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions. Please be careful and do your own research.