The Rundown - Adobe Shares Get AI Boost, RH Stock Tanks on Earnings Miss

Starting point is 00:00:00 Public.com presents the rundown, your daily market update in five minutes. My name is Zadadmani, and today is Friday, June 14th. In today's episode, we tell you the two reasons why the stock market made record highs for four days in a row. Also, big weekend coming up for Disney, and a hundred CEOs met with Donald Trump in Washington yesterday. Then stick around to the end of the show to learn how much money we're spending eating out. Number keeps going up.

Starting point is 00:00:26 All right, let's go. The stock market has been on a roll all week, and that didn't stop on Thursday. The S&P and NASDAQ were both in the green closing at record highs again. In fact, the S&P and NASDAQ have closed higher every single day this week, making that four record highs in a row. The Dow, on the other hand, continues to disappoint. It was in the red. I'm not even going to make the Dow joke today. Now, the rally this week has been driven by two things, positive inflation reports and AI.

Starting point is 00:00:55 We've covered the two inflation reports, the CPI and the PPI and the PPI. in the last two episodes. So go check that out if you guys missed it. And as for AI, a ton of major tech companies had huge weeks. Like Apple has added $300 billion to its market cap since announcing their AI plans on Monday. And Apple is now retaking the top spot from Microsoft for the most valuable company in the world.

Starting point is 00:01:16 The first time they've held the top spot since January. Yesterday, Apple's market cap had a record high of $3.28 trillion. And Nvidia continues to push higher too. Their stock has been up over 9% this week and their market cap is just under $3.2 trillion. I feel like we're going to see Apple, Microsoft, and Nvidia constantly swap the top three spots over the next few months. So if you have one of those companies in your portfolio

Starting point is 00:01:39 or even if you invested in the S&P 500, you're feeling pretty good right now. Let's run through some headlines, starting with Disney. This is going to be a big weekend for Disney and Pixar. The new Pixar movie Inside Out 2 is coming out today and Pixar really needs a hit here. If you guys remember, Pixar movies used to dominate the box office and culture. If you think about all the hits back in the day, like Toy Story, Cars, The Incredibles, Finding Nemo,

Starting point is 00:02:07 almost every Pixar movie was a guaranteed hit. But lately, things haven't been going so great for Pixar. Since the pandemic, they haven't had much success. Their last movie, Elemental, which came out last year, had its worst opening weekend in studio history. So now Pixar is pivoting a bit and starting to focus more on pushing out more sequels. and prequels and spinoffs because they tend to do better at the box office than original movies. On one hand, it's kind of a bummer because I love seeing original Pixar movies, but on the other hand, you can kind of see why they're doing this.

Starting point is 00:02:37 Disney executives are focused on profitability right now. While the stock is up more than 10% this year, it's still down more than 49% from its all-time highs back in 2021. So CEO Bob Eiger is focused on making money, and unfortunately in that process, they're killing originality. And the strategy might work because right now, Inside Out 2 is on, track to make over $90 million at the box office over this weekend, which would make it the best opening weekend of the year. Let's shift gears and talk about Donald Trump. Donald Trump

Starting point is 00:03:06 yesterday met with 100 high-profile CEOs, including J.P. Morgan's CEO, Jamie Diamond, and Apple CEO Tim Cook. The meeting took place in Washington, D.C. According to multiple reports, Trump seemed to promise lowering the corporate tax rate to 20%. The current corporate tax rate is 21%. So that would be like a 1% cut, which is like billions of dollars for some of these companies. So it could be meaningful. Trump also promised losing some regulations, especially permits on energy projects. I mean, look, this is typical presidential candidate stuff. I mean, the election is right around the corner. It's like less than 143 days away. So I'm sure we're going to hear more about both presidential candidates meeting with powerful CEOs to win their support.

Starting point is 00:03:47 What I'm curious though is like, how is like the meeting set up? Are they like all in a conference room? Are they in multiple conference rooms? Is it one of those hotel, room ballrooms, who sets out the meeting invite, who gets the most face time with the president, like, is it based on the market cap of your company? That's the stuff that's interesting to me. Let's talk about some stocks making moves today. Starting with Adobe, shares of the software company are up big today after reporting earnings and beating Wall Street estimates on both revenue and profit. Revenues were up 10% to $5.3 billion. And it looks like Adobe's push into AI is starting to pay off. Adobe CEOs said they're starting to see strong demand for their

Starting point is 00:04:23 AI products and the company started to make some money from it too. Adobe's seeing their subscribers upgrade their plans to access AI capabilities like Firefly, which is like their generative AI tool. Now it would be nice to see exactly how much money Adobe is making from AI, but they didn't really break that out because according to them, it's still too early. I got a feeling that if it was really that great, they would have broke it out. But the company did raise their guidance for fiscal 2024. Overall, investors were loving this report and the stock is up more than 14% in the pre-market. a bit of a relief for Adobe investors because up until this spike today, the stock has been down 20% for the year. So it looks like this generative AI might actually start generating some profits.

Starting point is 00:05:04 Yeah, I couldn't come up with anything better. On the flip side, a stock not doing so good this morning, is RH. Shares of the fancy furniture store, formerly known as Restoration Hardware, are down this morning after reporting disappointing earnings where sales and profits came in below Wall Street estimates. Revenues dropped by 1.7% and they reported a net loss. of $3.6 million. Yeah, people aren't buying $4,000 couches these days. Color me shocked. Now, R.H is blaming the slowdown in the housing market for their struggles. With less people buying houses, there's less need to buy new furniture. Shares are down 11% in reaction to these earnings in the pre-market. By the way, I had no idea that restoration hardware changed their name

Starting point is 00:05:43 to RH. I'm not sure if I like it, but, you know, they got bigger problems right now. Let's wrap the show with a fun fact. Today's fun fact is about food. According to the U.S. Department the average U.S. household now spends nearly 53% of their food budget on food away from home. So that's things like eating out at restaurants, doing takeout, or ordering food from delivery apps. 10 years ago, that number was around 45%. So we're spending a lot more money these days buying food from restaurants instead of cooking at home. That's probably one of the reasons why restaurant sales are on track to hit a record $1.1 trillion this year, which would be up 5.4% from last year, which is also a record.

Starting point is 00:06:23 I've noticed this myself. I'm definitely cooking a lot less. Because you know, these days, it's just so much easier with delivery apps. I mean, cooking is fun. Don't get me wrong, except for the cleaning part. All right, guys, that's the rundown for today. That's the rundown for this week. What an action-pack week it was. We had AI news. We had inflation reports. There were some game stop drama. I mean, there was a lot going on. And it looks like it was another good week for the portfolio. If you guys enjoy our show, please give us a five-star rating on Apple and Spotify. And don't forget to vote in today's Spotify poll as well. We put up a poll every single day. So if you're listening to this episode on Spotify, go check out today's poll.

Starting point is 00:06:57 The engagement really does help the show. Thank you guys so much for listening. Shout out to Mike and Connor for all the help behind the scenes. Have a great weekend, everybody, and we'll see you guys back here on Monday. This is the rundown, your real-time resource for news events and trends in the markets. All views presented in this show reflect the opinions of the guests. You should not take any mention of a publicly traded security as recommendation to buy, sell or hold that security. Run-down guests are not financial advisors and are not affiliated with public holdings or its subsidiaries. You should make your own financial and investment decisions or consult, respective professionals. Learn more at public.com disclosures. In partnership with Zaididmani,

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The Rundown - Adobe Shares Get AI Boost, RH Stock Tanks on Earnings Miss

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