The Rundown - Google Cloud Powers Earnings Beat, Eli Lilly Tanks Due to Weak Weight-Loss Drug Sales

Episode Date: October 30, 2024

Stock market update for October 30, 2024.

Public.com presents the rundown. Your daily market update in five minutes. My name is Zadadmani, and today is Wednesday, October 30th. In today's episode, we recap the monster earnings from Google that is shocking some investors. We also recap earnings from Eli, Lili, Reddit, Snap, AMD, and Chipotle. Then stick around to the end of the show for some breaking news about a popular AI company that is giving Enron vibes and a fun fact about Disney. All right, let's go.

Guys, stocks keep rolling this week. Both the S&P and NASDAQ finished higher yesterday. We got fresh record highs from the NASDAQ, near record highs from the S&P, thanks to a rally in big tech stocks. And Bitcoin continues to rally this week as well, almost hitting a record high of $74,000. So we're seeing records everywhere right now, and the fund continues this week as we start getting earnings from big tech companies. Google and AMB released earnings last night. We'll dive into those numbers in just a bit. And today we're getting earnings from Microsoft and Meta after the market close,

and then Amazon and Apple report on Thursday after the market close. So I'll be trick-or-treating while listening to Tim Cook's voice on the earnings call. Actually, if you think about it, earnings season is the ultimate trick-or-treat, because you don't know what you're going to get. So, yeah, I'll have a double trick-or-treat on Thursday night. If my kids get a bag of Almondjoy and Apple misses on earnings, it's going to be a tough night for me. Let's run through some headlines.

And we have to start with Google. they reported earnings last night, and man, did they crush it? Google's revenues were up 15% and their profits were up 34%. I mean, Google beat expectations across the board. Their core business, including search advertising, was up 10% to just under $66 billion. Their YouTube ad sales were up 12%. And their biggest surprise might have been Google Cloud, which saw their growth accelerate. Revenues were up 35%.

And operating profit grew 7x from a year ago. I mean, that's insane. Now, Google still trails behind Amazon and Microsoft when it comes to market share in the cloud business, but the growth accelerating is very encouraging. And Google is pointing to their investment in AI as the reason for the cloud growth. Honestly, you have to hand it to Google for shutting up all the haters and doubters. You know, they've been facing a ton of heat lately. There's talks about how Amazon is taking search advertising from them.

There's also AI tools like chat GPT and perplexity that are changing the way people search for information, which could ultimately be a threat for Google's search dominance. That doesn't seem to be the case so far. Google is putting up huge numbers and strong growth. So I guess all that AI spending is starting to pay off for Google. By the way, Google's not slowing down their AI spending either. Google's CAPEX jumped to $13 billion last quarter, which is 62% higher from a year ago. And Google continues to roll out new AI features.

Google had one of their AI tools go mega viral last month on social media called Notebook LM. It's really cool. I've used it a ton since it came out. And by the way, Google's getting better at delivering these. AI answers with more efficiency. CEO Sundar Pichai said that Google has lowered the cost of giving AI answers and search queries by 90% over the past 18 months. Overall, incredible performance by Google.

They shut up the haters and investors were loving it. The stock is up more than 6% this morning in reaction to these earnings. Let's shift gears from big tech to big pharma. Eli Lilly reported earnings this morning and things weren't so great for them. The company missed estimates and slim down its profit outlook. due to underwhelming sales for their weight loss drug Zepbound and their diabetes treatment, Manjaro. I mean, these two drugs have been extremely popular, but I guess not as popular as they had initially

hoped. Revenues for Zepbound came in at $1.3 billion, much less than the $1.7 billion expected. And revenues for Manjaro came in at $3.1 billion, also much less than the $3.8 billion expected. So those are pretty big misses right there. Now, Eli Lilly blamed the shortcomings on inventory problems at wholesalers. The thing is, the bar has been set extremely high for Eli Lillel. now. They've seen their stock jump 55% this year. Their market cap is over $800 billion, making

them the 10th largest company in the U.S. So investors expect a lot from Eli Lilly when it comes to their earnings. And because of this big miss, some investors are jumping ship. Eli Lilly's stock is down around 10% this morning in reaction to these earnings. Let's talk about some stocks making moves today. And we're going to keep rolling with earnings recap. I think we have to talk about Reddit because their shares are going parabolic this morning after the company reported profitability for the first time since going public. Reddit reported a net income of $30 million last quarter. They also provided a Q4 outlook that came in above expectations.

And the bright spot for Reddit was that their ad sales grew by 56% year over year. And it's become the key source of revenue for the company. Reddit also took home around $33 million in other revenue, which was likely them selling their data to big tech companies to help those big tech companies train their AI models. They have deals with Google and OpenAI, which makes chat GPT. But yeah, Reddit out here making moves, surprising a lot of investors. The stock is up more than 20% in the pre-market in reaction to these earnings.

I wonder how much of their traffic they get from just people typing the word Reddit after each Google search. I'm sure there's a connection there somewhere. All right, let's talk some snap. Their shares are also rising after the company beat earnings and announced a $500 million share buyback program. The company pointed to its strong balance sheet and steps towards sustained positive cash flow generation for the buyback. I didn't know that the company had a strong balance sheet. But good to know. Snap's revenues drew by 15% in the quarter

and their daily active users increased by 9% to 443 million. It just blows my mind that over 400 million people are using Snapchat every day. And those numbers are going up. Maybe I'm just really old. I didn't know people still use Snapchat like that. But hey, investors were loving these numbers. Snap shares are up around 10% in reaction to these earnings. Now, not every tech company is having a great day.

Shares of AMD are dipping after the chip giant reported their Q3 earnings. The earnings weren't that bad. AMD's data center revenue, which includes the company's AI chips, grew by 122% in the quarter. AMD also lifted its AI sales outlook to surpass $5 billion. But I think investors were disappointed in AMD's overall forecast for Q4. They're showing strong demands for their AI segment, but other categories like gaming in PC failed to impress investors. As a result, AMD shares are down around 7% this morning in reaction to these earnings. Seems a bit of an overreaction to me, honestly.

And finally, let's talk a little Chipotle. They reported earnings and things weren't so great for them either. Their same store sales grew by 6%, which were shy at the 6.4% that Wall Street was anticipating. Now, it's still pretty impressive given the fact that other restaurant chains like McDonald's and Starbucks are seeing a decline in same store sales. Chipotle also saw a growth in both transaction and average checks. This was because of the hype around the limited time smoke brisket offering. The smoke brisket costs more and people were paying up for it.

The company's also working on speeding up their service time as well using some robots. I don't know why I said it like that. So overall, not a bad quarter for Chipotle, but I guess it wasn't enough to impress investors, and Chipotle's shares are down around 6% this morning in a reaction to these earnings. And this is breaking news as I record the show, super micro shares are down like 35%

because their auditor, Ernest and Young, resigned. The auditor raised concerns about the company's internal controls and accounting practices. Oh man, that's crazy. This news just broke, but I'm sure we'll have more information in tomorrow's episode,

so stay tuned. I'm getting like Enron Flash right now. Let's wrap the show with a fun fact. Twelve years ago today, Disney acquired Lucas films for $4 billion. This deal gave Disney ownership of the Star Wars franchise, and since then, Disney has leveraged this IP to roll out a ton of Star Wars content. There was the sequel trilogy, which honestly wasn't that great. There's been spin-off films. Rogue One is goaded. There's also the Mandalorian series, which is pretty good, and it was a key part of the Disney Plus Streaming Service launch. So overall, I say it was a pretty good.

acquisition by Disney. By the way, Lucas Films was founded back in 1971 by George Lucas, the guy who made Star Wars. He owned 100% of the company, and today he's Disney's largest shareholder. I wonder how he feels about the fact that Disney hasn't made good Star Wars content in like five years, though. Well, all right, guys, that's the rundown for today. Hope you guys enjoyed today's episode. We've got a ton more big earnings coming up, and I almost forgot we have the jobs report coming out on Friday. So the next couple episodes are going to be absolutely packed. If you guys enjoy, oh man, I think I'm starting to lose my voice. already. If you guys enjoyed today's episode, consider giving us a five-star rating on Apple and

Spotify. Leave us a comment on Spotify, vote in the Spotify polls. All that engagement really does help us out. Thank you guys so much for listening. Shout out to Mike and Connor for all the help behind the scenes. And we'll see you guys back here tomorrow. 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 publicly traded security as recommendation to buy, sell, or hold that security. Run-down guests are not financial and financial and investment decisions or consult. Respective professionals. Learn more of public.

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