The Rundown - Apple Rises Despite Slowing iPhone Sales, OpenAI In Talks to Raise $40B at $340B Valuation

Episode Date: January 31, 2025

Stock market update for January 31, 2025. Find us on: YouTube Instagram

Public.com presents the rundown. Your daily market update in five minutes. My name is Zaid Admani, and today is Friday, January 31st. In today's episode, we tell you Trump's latest comments on tariffs that caused a whiplash in the markets. We also recap Apple's latest earnings in why investors were breathing a sigh of relief. Then stick around to the end of the show to find out why NVIDIA's sales in Singapore is raising a ton of questions from U.S. officials. All right, let's go. Well, markets finished Thursday in the green with the S&P 500 adding 0.5%.

And the NASDAQ was up 0.3%. But things got pretty weird in the last hour of trading thanks to comments from Donald Trump. The president said he intended to move forward with 25% tariffs on imports from Canada and Mexico, and that tariffs would start this weekend on Saturday, February 1st. And I gotta say, I don't think the markets were expecting this, because the S&P, tanked the instant he mentioned those comments. Go to public.com and pull up the chart of the S&P 500 and take a look at the last hour of trading on Thursday. The markets did bounce back pretty quickly because Trump said he was still finalizing his decision on how wide-ranging the tariffs would be

by Thursday night and he's going to provide more details on Friday. So there's still some uncertainty on what's going to happen with tariffs against Mexico and Canada. And this is Trump we're dealing with. He might just change his mind completely at the last minute. Now this week we also got GDP numbers. latest date of the U.S. economy grew by 2.5% in 2024, which was better than expected. Strong consumer spending continues to drive economic growth in the U.S. Consumer spending now accounts for about two-thirds of the U.S.'s economy, and spending was up 4.2% in Q4. So Americans, man, we just love to spend. As for this year, the Federal Reserve expects the economy to grow by 2.1%. And there's some solid momentum going into this year.

The economy seems to be in good shape. Unemployment rate seems to be low. The stock market is hovering near all-time highs. But, you know, now we have tariffs potentially going into effect. So I wonder what impact that will have on the economy moving forward. We're going to have to wait and see. You know, if Trump does move forward with tariffs this weekend, like, what is the market's reaction going to be next week? Because I think up until this point, the markets weren't taking tariff threats very seriously.

But they seem to be real. So we'll see how investors react next week. And, you know, next week's going to be another big week because on top of all the tariffs drama, we're also getting big time earnings. Google, Amazon, Uber, Disney, Nova, Nautis, Eli. they're all reporting earnings next week. So we got another busy action-pack week to look forward to. We're going to have a lot to talk about.

So make sure you guys are subscribed to the podcast to stay in the loop. I feel like things are moving so fast, man. Let's run through some headlines. And we have to start with Apple because they reported earnings last night. And I got to say, it was kind of a mixed back. Apple's revenues were up 4% in Q4, which beat estimates. And their profits were up 7%, which also beat estimates. So their top line and bottom line were both looking good.

But digging deeper into their earnings reports, there were some concerns. Like for one, the major concern being their iPhone sales were down 1%. And this was kind of a shocker to Wall Street because I think there was hope that the iPhone 16 with the integration of Apple Intelligence would lead to a ton of sales, a ton of upgrades, but that just didn't end up happening. Apple Intelligence wasn't good enough of a feature for people to upgrade specifically for it. Like honestly, I don't know what was a bigger flop last year. The Apple Vision Pro were Apple Intelligence.

Now, Apple's management did say the numbers of active iPhone users hit all-time highs. So people aren't just ditching their iPhones for Android. It's just that people aren't upgrading their old iPhones to new iPhones right now. Another concern for Apple is their business in China. Apple's revenues were down 11% in China, which is a sign that Apple continues to struggle with competition there. Now, I don't want to just focus on the bad stuff, okay? Apple did have some bright spots. Apple saw 15% sales growth for their iPads and Mac Division.

I was someone who contributed to that. I picked up the adorable and surprisingly affordable M4 Mac Mini. Apple also saw their services revenue, which includes things like the App Store, ICloud, and AppleCare jump 14%. The revenue and profit that Apple's services division makes is becoming a bigger and bigger piece of Apple's overall pie. So like I said, a mixed bag of earnings for Apple. For me, it was slightly disappointing, but it was good enough for investors to breathe aside of relief because Apple stock is up around 3% this morning in reaction to these earnings. Apple really has some catching up to do when it comes to AI, and they really need to innovate when it comes to their iPhone. They kind of release a foldable iPhone or something. Let's shift gears and talk about a company that does seem to know how to do AI. Open AI.

They're in talks right now to raise $40 billion. And this new funding round would be led by SoftBank. Oh boy. According to reporting from the Wall Street Journal, this would value the company at around $340 billion, which would give them a higher valuation than Salesforce. You know, what's crazy is that Open AI just raised like $6.6 billion back in October at a $157 billion valuation. So I'm kind of surprised they're already trying to raise more money. And then the fact that they're able to raise it a higher valuation, given that the AI industry was shook this week because of Deep Seek's AI model, which was just as good as Open AIs and cheaper to run and open source, I thought that investors might be, you know, skeptical of Open AI moving forward. But SoftBank's Masa Sun doesn't seem to be too worried.

He's ready to write a big check. Then again, Masa also famously invested in WeWork at a ridiculous $47 billion valuation in 2019, and WeWork ended up going bankrupt in 2023. Honestly, this makes me kind of nervous about the AI space now. Let's talk about some stocks making moves today. Shares of Atlassian are surging this morning as the SaaS company reported a 21% jump in revenue in Q4 beating estimates. The company makes software like Jira and Tuella, which are used by Amazon. enterprises to build software and track projects.

And Atlassian says that their AI feature is increasing sales of their premium additions by 40%. So investors are feeling good about the company right now, and the stock is up around 20% this morning in reaction to these earnings. I got to say, I had a big Trello phase back in the day. Kind of moved on from that and just use Apple notes for everything, but Trello is pretty great. Now, on the flip side, shares of Decker's are getting crushed this morning, despite the footwear

company reporting solid earnings last night. Decker's is the parent. company of Ugs and Hoka, and the revenue was up 17% in Q4, and their earnings per share was up 18%, both beating Wall Street estimates. You know, I've seen a lot of people rocking Hokas and Ugs lately, so anecdotally, this checks out. But despite the solid numbers, the stock is down around 15% this morning, and it might be because of the company's sales outlook for this year.

The company's expecting revenues to grow around 15% in 2025, and I guess Wall Street was expecting to see more. The footwear space is getting pretty competitive. You know, you got Nike, you got Decker's, you got OnCloud, you got Skechers, which is my personal favorite. There's a lot of options to choose from right now. Let's wrap the show with a fun fact. 20% of Nvidia's revenue comes from Singapore, and that has people, including the U.S. government, asking questions.

The U.S. government has export restrictions on the sale of AI chips to China, but U.S. officials are now probing if deep-seek and other Chinese tech companies are circumventing those restrictions, through Singapore. These Chinese companies are rumored to set up shell companies in Singapore to buy Nvidia chips and then turn around and send those chips to China. Now, Nvidia has pushed back saying they comply with all applicable laws, but you know, it is kind of suss that Nvidia is selling so many chips to Singapore. Well, all right, guys, that's the rundown for today. That's the rundown for this week. What a wild week, man. It started off with a deep seek shock on Monday. Then we had the Fed meeting. We had a ton of earnings. And next week might be just a

crazy because with the tariffs being the potential wildcard, that might throw the markets into a bit of a turmoil. So we'll see what happens. If you're new here, it's a great time to get subscribed. And if you enjoy the show, consider giving us a five-star rating on Apple or Spotify. And if you are on Spotify, don't forget to vote in the Spotify poll. Leave us a comment on Spotify. Follow our Instagram account for clips of this podcast and bonus content. All that engagement really does help us out and it helps other people find the show. Thank you guys so much for listening. Shout out to Mike and Connor all the help behind the scenes, 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 the 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. Respected professionals. Learn more at public.com disclosures. In partnership with Zayidemani, brokerage services for U.S. listed, registered securities are offered by open to the public investing incorporated, member FINRA and SIPC.