The Rundown - Amazon's Cloud Sales Get AI Boost, Starbucks Badly Misses Quarterly Expectations

Starting point is 00:00:00 Public.com presents the rundown, your daily market update in five minutes. My name is Zeta Admani, and today is Wednesday, May 1st. In today's episode, we recap the stock markets' performance in April, and what to look forward to in May. Also, Amazon and AMD earnings dropped last night, and the market's reactions were wildly different. And stick around to the end of the show to find out why arcade games at Dave & Busters are about to get a lot more competitive.

Starting point is 00:00:25 All right, let's go. brutal day for the stock market on Tuesday. Stocks drop big to close out the month of April. The Dow and S&P both dropped by 1.5% and the NASDAQ dropped by 2% yesterday. And for April as a whole, it was a month to forget. All three indices fell more than 4% and snapped a five-month winning streak

Starting point is 00:00:45 that started back in November of last year. I'm just happy that April is finally over and we can move on to May. Even though the weather's about to get extremely hot and humid here in Houston, we have something to look forward to in May. Because a quick fun fact about May, nine of the last 10 have been positive for the stock market. So we can definitely use that right now.

Starting point is 00:01:03 And May is about to start off with a banger because we have the Fed meeting wrapping up today with a Jerome Powell Press conference at 2.30 p.m. Eastern. Wall Street is not expecting any surprises or rate changes. But the real question is, what is the Fed going to do with interest rates now? Starting this year, the markets were pricing in like six to seven rate cuts. But I mean, with the way things are looking now, we might legitimately get zero rate rates. cuts this year because of multiple data points now is showing that inflation is still hovering around three three and a half percent which is higher than the fed's two percent target so i'll be watching

Starting point is 00:01:35 jerome powell's press conference today we're going to do an instant reaction on instagram so go check out public dot com's instagram page to watch that instant reaction and we'll also be recapping jpao's comments on the rundown tomorrow so make sure you guys tune in all right let's run through some headlines let's start with amazon's earnings amazon investors were pretty happy after amazon delivered solid one earnings last night. Amazon's revenue was up 13% to $143 billion and their profits triple to $10.4 billion. Both those numbers came in higher than Wall Street estimates. And check this out, Amazon's operating income grew 200%, which is much faster than revenue, which is a sign that Amazon's cost-cutting efforts over the last year are starting to pay off. A few more interesting

Starting point is 00:02:19 tidbits from this report. Amazon's cloud service AWS's revenue was up 17% to $25 billion, and Amazon's advertising business increased by 24% to $11.8 billion. Remember earlier this year, Amazon started showing ads on Prime Video. So keep an eye out for Amazon's ad business because analysts continue to hype that up as a potential area for growth. Overall, Monster Q1 for Amazon. Stock is up more than 1% after the earnings drop. Honestly, I'm kind of surprised the stock didn't jump more.

Starting point is 00:02:49 I think the only disappointing thing to come out of this earnings call was that Amazon didn't announce a dividend. I think there were some investors that were thinking that Amazon was going to follow in the footsteps of Google and meta and announce a dividend as well. But no dividend announcement from Amazon. Let's shift gears and talk about the other big earnings that dropped yesterday, AMD. And the market reaction for AMD earnings wasn't as positive. AMD's Q1 revenues and profits both came in line with Wall Street estimate. But they did miss the mark on their revenue forecast moving forward.

Starting point is 00:03:17 That was partly due to softer than expected demand for their video game hardware. Now, there was some positive stuff to come out of these earnings. AMD says they sold a billion dollars of their AI chip, the MI-300, which launched in Q4 of last year, making it their fastest selling product ever. And AMD expects $4 billion in sales for its AI chips, which competes directly with Nvidia. But I think investors were expecting more than $4 billion in sales. So investors kind of disappointed in AMD. And that was enough to send the stock down 7%. Another AI chip company sliding today is Super Micro, takeer symbol SMCI.

Starting point is 00:03:50 They reported earnings and they slightly missed. revenue expectations. Super Micro reported a 200% growth in revenue, but that still wasn't enough. Wall Street wanted to see more. But Super Micro did lift their sales guidance moving forward. But look, shares of Super Micro have been up 200% this year. So seeing a pullback today of like 9% to 10% may have just been inevitable. I think the expectations were sky high going into these earnings. Let's talk about some stocks making moves today. Shares of Pfizer are up more than 1% this morning after the pharma giant reported Q1 earnings and raised their profit outlook for the year. Pfizer's expecting to make more profit due to their cost cutting plans, which the company says

Starting point is 00:04:30 will lead to about $4 billion in savings by the end of this year. Pfizer also expects to make $8 billion in 2024 from its COVID-19 products. That's actually more than what analysts were expecting. Other products at Pfizer are also showing upside, with its pneumonia vaccine revenue beating estimates for the quarter coming in at $1.7 billion. It's been a brutal time for Pfizer investment. investors. Pfizer stock is down more than 13% for the year, down more than 34% over the last 12 months. In fact, the stock is trading at near 10-year lows. Speaking of stocks that are low, Starbucks stock

Starting point is 00:05:02 is getting crushed this morning. The stock is down more than 12% after the company reported earnings missing on both revenues and profits. Starbucks cut its full year 2024 outlook. The miss in earnings was due to a 4% decline in same store sales, which was a surprise to investors. Same store sales measures the growth in Starbucks locations that have been open for more than a year. And those sales are going down. On top of the decline in same store sales, store traffic was down 6%. Starbucks management points to U.S. consumers being more wary of economic pressures, and that might be a reason why they're cutting back on $6 coffees. Starbucks also points to increase competition in China, with competitors in China lowering their prices to compete with Starbucks. So tough quarter for Starbucks, tough year for Starbucks.

Starting point is 00:05:46 Let's wrap the show with a fun fact. Today's fun fact. is about Dave and Busters. You'll soon be able to bet on arcade games at Dave and Busters, according to CNBC. Dave and Busters is going to roll out the ability for customers to make a friendly $5 wager on hotshot basketball or ski ball or other arcade games. The betting function is expected to launch in the next few months and it's going to work through the company's app. Now look, I'm not going to lie, I personally love Dave and Busters.

Starting point is 00:06:14 I always have a blast every time I go. And I feel like these arcade games are pretty competitive, even without any money on the line. So can you imagine what it's going to be like when people start betting on these things? I mean, I guess this is a smart way for Daven Busters to get more people to stop by. I mean, there has been a huge surge in betting in the U.S. over the last decade. Sports betting is becoming a huge industry. And we talked about on yesterday's show how U.S. state lotteries were bringing in record numbers. So Americans are gambling more. And Daven Busters, I guess, just wants a piece of that. So we'll see how this plays out. Man, can you guys imagine the stories that might come from

Starting point is 00:06:45 this? Like, there's probably going to be some kid that pays for college by spending his weekends at David Busters dominating the hot shot basketball. All right. Well, that's the rundown for today. I hope you guys enjoyed that episode. We've got a big episode coming tomorrow, recapping the Fed meeting and getting you guys ready for Apple earnings, which drop on Thursday after the close.

Starting point is 00:07:06 So another big episode coming up. If you guys enjoyed today's episode, hit us with that five stars on Apple and Spotify. And also tap that notification bell on Spotify. If you guys want to be notified as soon as an episode drops. Thank you guys so much for listening. Shout out to Mike and Connor for all the work behind the scenes. We'll see you guys back here tomorrow.

Starting point is 00:07:22 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. Rundown 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 Zayid Mani.

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The Rundown - Amazon's Cloud Sales Get AI Boost, Starbucks Badly Misses Quarterly Expectations

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