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Hey Scoopers,
Happy Friday! Are you ready for an exciting newsletter?
👉 Broadcom disappoints Wall Street
👉 Tesla’s big announcement
👉 Intel might leave the Dow Index
So, let’s go 🚀
Market Wrap
Equities struggled yesterday as investors dumped risk assets while concerns mounted over the outlook for the U.S. economy ahead of today’s labor report.
Private payrolls for August grew by 99,000, the smallest gain in three years and below estimates of 140,000, the latest sign that the labor market is weakening.
All eyes now shift to the August nonfarm payrolls report, which will determine the Fed’s approach toward interest rates. Economists expect nonfarm payroll growth of 161,000 and a slight decline in the unemployment rate to 4.2%.
Despite concerns stemming from the recent labor data, markets remain optimistic that the Fed will begin lowering interest rates by at least a quarter-percentage point after the September policy meeting.
Trending Stocks 🔥
DocuSign - The e-signature software company is down over 1.6% in pre-market despite beating fiscal Q2 estimates. DocuSign reported adjusted earnings of $0.97 per share and revenue of $736 million, above estimates of $0.80 per share and $727 million respectively.
UiPath - The stock gained 9.5% in premarket after it reported earnings of $0.04 per share and revenue of $315 million in fiscal Q2, above estimates of $0.03 per share and $304 million respectively.
Hewlett Packard Enterprise - Shares fell 6% after HPE saw a decline in gross margins from the year-ago period. However, the server maker beat estimates in Q3, citing robust demand for AI products.
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Broadcom Fails to Beat Guidance
Broadcom reported its fiscal Q3 results on Thursday, beating Wall Street estimates for revenue and earnings. However, the stock is down close to 9% in pre-market after its guidance was in line with estimates.
In fiscal Q3 of 2024 (ended in July), Broadcom reported:
👉 Revenue of $13.07 billion vs. estimates of $12.97 billion
👉 Earnings per share of $1.24 vs. estimates of $1.20
In the current quarter, the chip maker forecasts revenue of $14 billion, marginally lower than consensus estimates of $14.04 billion.
Broadcom shares have surged 75% in the last year, valuing the company at a market cap of $711 billion. Moreover, the tech stock has returned over 400% in the last five years.
Broadcom is viewed as a critical player in the AI race as it produces several parts required for large data centers. The company expects to record $12 billion in sales from AI parts and custom chips in fiscal 2024, higher than its previous forecast of $11 billion.
In the July quarter, its semiconductor sales rose 5% to $7.27 billion, higher than its infrastructure software business, which raked in $5.8 billion.
Tesla Stock Jumps 5%
Yesterday, Tesla surprised Wall Street by disclosing plans to launch its Full Self-Driving driver assistance product in Europe and China in early 2025.
The service will be a paid add-on feature for Tesla customers and launch in the two regions, pending regulatory approval.
Tesla stock popped 4.9% after the EV maker updated customers on the international rollout of the Full Self-Driving (FSD) feature, as it is optimistic about getting the required approvals by the end of 2024.
FSD will be a key pillar of Elon Musk’s strategy to make Tesla a more AI-centric company and push toward self-driving technology.
Despite the label on its product, FSD is not capable of making its vehicles fully autonomous. Drivers are still required to sit behind the wheel, keep their eyes on the roads, and take over when needed.
FSD is an upgrade to Tesla’s Autopilot driver assistant, already available in Europe and China. Tesla currently offers a premium option called Enhanced Autopilot in China.
Since 2016, Musk has promised investors that Tesla will deliver technology capable of driving its existing cars entirely by themselves.
The company has failed to deliver on this commitment while competitors, including Waymo in the U.S. and Pony.ai in China, are already operating commercial robotaxi businesses.
Will Intel Stock Continue to Fall?
Shares of Intel fell over 8% in intraday trading earlier this week amid worries that the chipmaker could be in danger of losing its status as a member of the Dow Jones Industrial Average.
Intel was among the first tech companies to join the 30-stock index in 1999. However, last month’s disappointing Q2 results sent the stock to its lowest levels since 2013.
Intel is the worst-performing stock in the Dow Jones Industrial Average index, falling 60% since the start of 2024.
The Dow Jones is a price-weighted index that tracks 30 large, publicly owned companies. Intel is the lowest-weighted component of the index, accounting for 0.3% as of August's end.
In February 2024, Walgreens Boots Alliance was replaced by e-commerce and cloud computing giant Amazon.
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Chart of The Day
Did you know that the CEOs of Nvidia and Advanced Micro Devices are first cousins?
In 2004, AMD was twice the size of Nvidia. However, in the last twenty years, shares of Nvidia have gained 100x while AMD stock is up “just” 12x.
Despite the massive difference in stock returns, the two chip makers trade at a similar price-to-earnings multiple.
Notably, Nvidia is far more efficient and commands a gross margin of 75% and a free cash flow margin of 49%. Comparatively, AMD's gross margins and free cash flow margins are much lower, at 51% and 5%, respectively.
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.