The Rundown - Micron Earnings Lift Global Chip Stocks, Southwest Raises Revenue Forecast

Episode Date: September 26, 2024

Stock market update for September 26th, 2024

Public.com presents the rundown. Your daily market update in five minutes. My name is Zaid Admani, and today is Thursday, September 26th. In today's episode, we tell you about another stimulus plan by the Chinese government to help save their economy. Also, we got more drama at OpenAI. More key executives are leaving, and Sam Altman might be getting a $10 billion bag. What is going on over there? Oh, and Zuck might have just had his iPhone moment yesterday.

I'll tell you about all the products that meta showed off at their Metacconnect conference yesterday, and one might be the future of computing. I'm so hype. Then stick around to the end of the show to find out why Southwest Airlines shares are up this morning and the early success of the NFL season. All right, let's go. Well, the S&P 500 took a break from making record highs yesterday and finally had a down day this week. The S&P 500 dropped 0.2% on Wednesday one day after making its 41st record close of the year.

And the NASDAQ was essentially flat, up less than 0.1%. Now, while the markets here in the U.S. have been kind of boring this week, we are getting Costco earnings after the market closed today, so that should be good. But the main story this week has to be China. China continues to make moves. Top leaders in China on Thursday pledged even more stimulus to support the struggling economy. Earlier this week, we talked about China's central bank lowering interest rates and loosening their policy for banks to make lending money easier to help boost their economy.

While China's not stopping there, China's highest decision-making body, which includes Chinese President Xi Jinping, promised additional support and stimulus. And there was no specifics given on what they're going to do, but the rumor is that they're going to inject over $142 billion into top banks to prop up the economy. This would be the first time that the Chinese government has injected capital into banks since 2008. The government also pledged to stabilize the real estate market, which has been a total mess in China. In fact, home prices in China fell at the fastest pace in August. So it's pretty bad over there when it comes to real estate.

the notable thing here is that there seems to be a sense of urgency by Chinese officials to turn the economy around ASAP. Earlier this week when the central bank announced those policy changes, some analysts thought that those policy changes were a good start, but wouldn't be enough to fully turn around the economy. And it looks like Chinese officials feel that way too, and they're going to be going to be heavier on the stimulus. I'm sure we're going to get more details about their stimulus plan soon, but the initial reaction by the markets have been pretty solid. Markets seem to be reassured. In fact, Chinese stocks are having one of the best weeks in a decade. China's flagship indexed the CSI 300, which is like their version of the S&P 500, is up more than 10% this week.

That's the best week since December of 2014. So we'll see if this initial boost is sustainable. But any of you guys with Chinese stocks in your portfolio, like Alibaba, you're feeling pretty good right now. Let's run through some headlines. Let's start with the topic that's been dominating my Twitter feed since last night. The drama at OpenAI. Multiple key executives are leaving the company again, including, Open AI CTO Mira Murati.

Murati posted on X last night about her decision to leave. Along with her, the chief research officer and the VP of training are also leaving the company. Sam Altman, the CEO of OpenAI, posted about that last night. You know, this is just a long list of key people that have left Open AI in the past few months. Ilya Sestakar, the co-founder of the company, left a few months ago and started his own AI company. And then another co-founder of the company, Greg Brockman, has been on leave all year.

So what is going on at Open A5? I mean, people keep leaving. You know, somebody said this on Twitter, that Open AI's drama is like Game of Thrones, but for people that are just way too online. And I think that's spot on because there is a lot of drama. Like, for example, Open AI is doing something pretty interesting. They're restructuring the company from being a non-profit to being a for-profit company. This is according to reporting from Reuters.

And as part of that, Sam Albin might also get a 7% equity in the company. Now, just to do some quick math here, if the rumors are true that Open AI is worth $150 billion, dollars, then Sam Altman's 7% stake in the company would be worth $10 billion. Just as a reminder, OpenAI was founded as a non-profit back in 2015. So I'm not saying this is why Mira Murati and the other executives left. I'm just saying it's interesting timing, you know? Now, before I go full tinfoil hat on you guys, it is possible that Open AI is restructuring the company to make it easier to raise money from investors.

See, before investors' upside was capped, but now with the restructuring, investors upside will be uncapped. So I think it makes it easier for them to raise money. Again, I don't really know if anybody fully knows what's going on at Open AI, except for the people that work there, but it just, it just something feels weird. You know what I'm saying? Like something feels off. I just can't wait for the documentary. Let's stick with the AI theme and talk about meta. Meta kicked off their Meta Connect conference yesterday. I've been hyping up this conference all week on the podcast, and it lived up to the hype. Okay, it did not disappoint. I watched the keynote yesterday when Zuck took the stage, he showed off the new Quest VR headset, the Quest 3S.

Looks pretty nice. Zuck also showed off some improvements to meta AI, like the ability to talk to it. He even took a slight jab at Open AI in the keynote, talking about how the voice feature is going to be available this week and people aren't going to have to wait months for it. He also bragged about how over 500 million people are using meta AI's tools. That is very impressive. Metas AI tools are integrated within Facebook, WhatsApp, Messenger, and Instagram. But I think the key moment yesterday was when Zucks showed off Meta's AI's.

glasses called Orion and oh my god they were so sick okay it's like something that tony stark would wear like a computer on your face definitely go look up the demo on youtube because it looks incredible some people are calling this zucks iPhone moment like this is going to replace iPhones and smartphones i'm not sure about that but i do see the potential here unfortunately these glasses are still in a prototype phase and it might take a couple of years before they're ready for sale i think the rumor has it that right now they cost over $10,000 to make so meta needs to figure out how to like make these cheaper to produce. But it's just great to see a company actually innovate and, you know, show off some cool new tech. Apple. Yeah, meta stock continues to make all-time highs, by the way.

Let's talk about some stocks making moves today. Shares of Micron are soaring after the chipmaker reported earnings and beat revenue and earnings estimates. This was driven largely by the higher demand for their AI chips. On top of the earnings, B, Micron provided strong guidance for the next quarter, with management saying that Micron is in the best competitive position. in the firm's history for fiscal 2025. Just to give you some perspective here, Micron's revenues nearly doubled from a year ago. Micron's shares are up more than 15% in the pre-market.

We got a bonus winner for you today. Southwest Airlines are also surging this morning after the airline raised their revenue forecast for the third quarter and authorized a $2.5 billion share buyback program. They also laid out some changes they plan to make to their business model. The revenue per available seat mile is now expected to be up 2 to 3%. Previously, they expected it to be flat to down 2%. So that's a nice reversal there.

Remember, Southwest has come under a lot of pressure from an activist investor, Elliot management, and it looks like that pressure is resulting in them turning around the business. Now, on the flip side, stock not doing so good this morning, Sonos shares are down after Morgan Stanley downgraded the company with a price target to $11. Morgan Stanley cites financial challenges for Sonos, stemming from the company's mobile app redesign that totally flopped and caused a ton of backlash from their users. This app redesign was so bad that Sonos had to delay the launch of two hardware products this year. Sonos stock is down around 6% this morning and down over 20% this year.

Let's wrap the show with a fun fact. The NFL is averaging 18.6 million viewers through the first three weeks of the season. It's the best average through week three since 2015, and it's up about 10% from a year ago. What's interesting to me is that Amazon Prime Video is averaging just over 14 million viewers for their Thursday night football broadcast. That's 20% more than the average for last year's season. So it looks like Amazon's bet on the NFL is paying off. It just goes to show you that NFL is king when it comes to sports in America.

Well, all right, guys, that's the rundown for today. If you guys enjoy the show, don't forget they hit us with a five-star rating on Apple and Spotify. 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 transit.

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