The Rundown - Nvidia & Apple Weigh OpenAI Investment, Dell Stock Jumps on AI Server Sales Growth

Episode Date: August 30, 2024

Stock market update for August 30, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadadmani, and today is Friday, August 30th. In today's episode, we tell you why NVIDIA might not be the most important stock in the world anymore. We also recap the latest inflation data and tell you why Apple and NVIDIA might be investing in OpenAI. Then stick around to the end of the show to find out what age Warren Buffett started investing. He got started pretty young. All right, let's go. Yesterday was a very interesting day in the markets.

Invidia's stock was down in reaction to their earnings, but the rest of the stock market was up. The S&P and NASDAQ were both in the green for most of the day. But then after lunch, the markets gave up most of those gains. The S&P ended up finishing flat for the day, and the NASDAQ was actually down. 0.2%. Now, the good news is, is that more than two-thirds of stocks in the S&P 500 moved higher. But with Nvidia dropping 6% yesterday, that dragged the S&P to a flat.

But honestly, though, if you told me the S&P 500 would finish flat on a day where NVIDIA was down 6%, I'd take that. Maybe the fate of the stock market and our portfolios isn't just dependent on what NVIDIA does, or these other big tech companies. And you know what? I'm okay with that. By the way, the Dow Jones made another record high yesterday, but nobody cares about the Dow.

So. We just got some new info regarding inflation just now. The Federal Reserve's favorite inflation gauge, the PCE report just came out, and according to this report, inflation increased by 0.2% in July or 2.5% on an annual basis. Both those numbers came in line with estimates. So that's more great news when it comes to inflation. And I think we're getting rate cuts next month, everybody. Now it's just a question of how big. Let's run through some headlines. Let's start with Dell. While investors continue to obsess with Nvidia and other AI companies, Dell was quietly crushing it. Dell reported earnings and the

Stock is popping thanks to an 80% jump in AI server sales. We all know that AI chips are in high demand, but AI servers are also highly in demand, especially for a handful of businesses and cloud providers that are investing billions of dollars in infrastructure to handle the AI workload. And Dell is one of the top vendors of AI servers, especially ones that are designed around Nvidia and AMD chips. Dell reported $25 billion in revenue for the quarter, and $3.1 billion of that came from AI servers. That's up 80% in one quarter, which is insane. You know, the AI server business has pretty much rescued Dell because their other business units are seeing a decline in sales. Their PCs and laptop sales were down 4% year over year to $12.4 billion, and their enterprise

PC business was flat at $10.5 billion in revenue. AI legitimately might have saved Dell. Their stock is up 5% in reaction to these earnings and up almost 50% for the year. Quick fun fact about Dell, I went to the same college as Michael Dell, the guy who founded the company. He went to the University of Texas in Austin. And I also happened to live in the same dorm room building as he did. He went on to start a multi-billion dollar business with a net worth of almost $100 billion.

And I host this fantastic podcast. So I say it's pretty comparable. We got a quick update for you on something that we said on yesterday's episode. Now, if you listen to yesterday's episode, you already know that OpenAI is seeking another round of funding that values the company at $100 billion. and that VC firms like Thrive Capital and Microsoft are in talks as investors. But now there's some new reporting that Apple and NVIDIA are also discussing getting in on the financing.

This is according to Bloomberg and the Wall Street Journal. Now Thrive Capital would be leading the round with $1 billion invested. And NVIDIA has discussed investing $100 million. If Apple, Microsoft, and NVIDIA all get in on this funding round, that means the world's three largest tech companies would be backing the chat GPT maker. and arguably the leader in generative AI. I mean, they each have existing relationships with Open AI. You know, Apple announced in June that Open AI would be the first partner for their AI system called Apple Intelligence.

And OpenAI is one of the largest customers of Nvidia's AI chips. And then Microsoft, as we said yesterday, has a longstanding relationship with Open AI. So this could be very interesting. I find that Nvidia investing is like the funniest thing because all the money that Nvidia is going to invest is going to come back to them as revenue because Open AI is going to have to use this money to buy more Nvidia chips. Honestly, it's a pretty smart investment for Invideo. I think Apple's investment is very interesting because they probably want Open AI to succeed here because they don't want meta or Google to win the AI wars.

So we'll see how all this plays out. Let's talk about some stocks making moves today. Shares of Lulu Lemon are rising this morning, even though the company reported earnings that weren't that great, to be honest. In fact, Lulu Lemon reported their first revenue miss in two years with revenues up just 7%. Wall Street was hoping for something slightly more. On top of the revenue,

the company also lowered their sales guidance for the year. But despite those numbers, the stock is up around 4% in the pre-market. It just goes to show you that the market reaction can be unpredictable. Like, Nvidia's earnings were solid across the board. They beat expectations on all accounts. The stock dropped 6%.

Luliman, on the other hand, they missed on earnings, and their stock is up in the pre-market. So, I don't know. It just be like that sometimes, you know? I mean, it hasn't been a great year for Lulu Lemon stock. It's lost around half its value this year. Now, a stock not doing so great this morning is Ulta. Shares at the beauty store are sinking after they reported disappointing

earnings. Altas comparable sales were down 1.2%, which was a huge miss because Washington was expecting sales growth. So that's not great. They also saw their profits decline from a year ago as well. The company also lowered their sales outlook for the year. Now, the management is blaming the decline in sales to cooling beauty demands and heightened competition. in the beauty space. The company says they're working to turn things around by focusing on the rewards program. We'll see if that works. But for now, the markets are not loving it. The stock is down around 8% in reaction to these earnings. Warren Buffett probably not very happy this morning. His company, Berkshire Hathaway, bought like a $250 million stake in the company last quarter.

Let's wrap the show with a fun fact. And we'll make it a quick one for today. We just mentioned Warren Buffett. It's his birthday today. The goat turns 94 years old, which now means that he's been investing for 83 years, because he bought his first stock when he was just 11 years old. That's pretty impressive because, like, back then, you couldn't just buy a stock on your phone like you can these days using the public app. Great app. Go check them out. Shout out to them. Back then, you had to, like, go to a broker, I think. I don't even know how it worked back in 1941, but he did it. And what's crazy is that his company, Berkshire Hathaway, hit a trillion-dollar valuation this week, becoming the first non-tech company to do that in the United States.

What a great way to celebrate a 94th birthday. Well, all right, guys, that's the rundown for today. That's the rundown for this week. August is coming to an end. Summer is unofficially over, and we've got a long weekend to look forward to. Remember, the stock market will be closed on Monday in observation of Labor Day. We're not going to have a show either, but we'll be back here talking markets on Tuesday. Hope you guys enjoyed the shows this week.

If you did and you have like eight seconds, hit us with that five-star rating on Apple and Spotify. And if you have like 15 seconds, maybe write a review for us. on Apple as well. That engagement really does help us out. Thank you guys again for listening and for all the support. Shout out to Mike and Connor for all the help behind the scenes. Have a great long weekend, everybody, and we'll see you guys back here on Tuesday. 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 a recommendation to buy, sell or hold that security. Run-down guests are not financial advisors and are not affiliated

with public holdings or subsidiaries. You should make your own financial and investment decisions or Consult, respective professionals. Learn more at public.com disclosures. In partnership with Zayidimani, brokered services for U.S. listed, registered securities are offered by open to the public investing incorporated, member FINRA and SIPC.