The Rundown - Nvidia Earnings on Deck, Lululemon Loses Key Executive

Episode Date: May 22, 2024

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Public.com presents the rundown, your daily market update in five minutes. My name is Zadadmani, and today is Wednesday, May 22nd. In today's episode, we get you ready for Nvidia earnings, which drop today. Can Nvidia keep the rally going? Also, Microsoft showed off a ton of new AI features and a new laptop that they think can take down the MacBook Air. And then stick around to the end of the show to see how AI might be pushing up the stock prices of utility and natural gas companies. All right, let's go. Well, guys, the stock market keeps making record highs.

This time it was both the S&P and NASDAQ, which both had record closes on Tuesday. You love to see it. And one of the stocks that hit record levels was Invidia, which had their first record closed since March. And it's great timing, too, because they're about to report earnings after the bell today. As you guys already know, Nvidia has been one of the most talked about stocks over the last 12 months or so. They've been the main character of this AI boom. And over the last 12 months, they've pretty much crushed every earnings, even really. with sky high expectations because it seems like every company wants to get their hands on

Nvidia's AI chips to train their AI models. I mean, Nvidia can't seem to make enough of these chips. And as a result, Nvidia stock is up 90% just this year and up more than 5x since the start of 2023. So it's been on an insane ride. Well, we have another highly anticipated earnings coming out today. So we'll see if Nvidia can keep over delivering and keep this momentum going. Sometimes it feels like Nvidia is carrying the weight of the entire market on their shoulders. We'll keep a close eye on Nvidia earnings and we'll recap all of it in tomorrow's show, so make sure you guys are tuning in. Let's run through some headlines and stick with the AI theme and talk about Microsoft.

They are ready to take on Apple and the MacBook Air with some new hardware and some new AI features. Earlier this week, Microsoft showed off their latest computers, the new Surface laptop and Surface Pro, and these computers will have the brand new AI chip from Qualcomm. And this chip is special because it can run AI applications without needing an internet connection. So all the AI magic happens locally on the computer. Microsoft is calling these computers co-pilot plus, and we're going to get more of them from Lenovo, Dell, HP, Asu, Samsung,

later in the year. The specs of the Microsoft Surface computers look pretty awesome. And Microsoft even says it's better than the MacBook Air with better speeds and battery life. But I'm still waiting to see the official reviews before throwing away my MacBook Air. Microsoft also showed off some AI demos that these new computers can do that look pretty cool and kind of creepy, if I'm being honest.

Like Microsoft has this new feature where the computer will take screen screen, of your screen every few seconds to remember everything that you do on your computer and then you can use this recall AI to look up something that you've done in the past. I can see why this can be useful, but also why it can be kind of creepy. But Microsoft says that none of these screenshots are ever stored on the cloud. They're always stored locally. So I guess we'll see. But at this point Microsoft seems like they can't do any wrong. They've been one of the biggest beneficiaries of the AI boom. There's a largest company in the world with the market cap of over $3 trillion. They have a huge

investment in Open AI and they continue to push out AI services like co-pilot for the enterprise and now supposedly they have hardware that can rival Apple. So we'll see if they can start taking any market share from Apple. Because we still don't know what Apple's killer AI features are going to be yet. We have to wait until WWDC, which is happening in June. Let's shift gears and talk about Lulu Lemon. Lulu Lemon's chief product officer is resigning. Sun Show, who played a key role in the launch of Lulu Lemon's women's footwear in 2022 and men's sneakers earlier this year, is said to be leaving because she's pursuing other opportunities. And Lulu Lemon is not expected to replace her.

Instead, they're restructuring and creating a new team of in-house merchandising in-brandings, whatever that means. Wall Street analysts are kind of concerned about this departure. An analyst from Jeffrey sent out a note saying the departure is, quote, not a good sign and emphasized that they believe that Lulu Lemon's business might have peaked because of rising competition, specifically from Allo and Viori. Here's a very interesting tidbit from Jeffrey's analysts. Their analysis showed that 94% of Allo's U.S. locations are within a half mile of Lulu

I'm betting that's not a coincidence. So that means that Lulu Lemon's competition for foot traffic is going to increasingly get tougher. And Lulu Lemon stock has not been doing great this year. They've lost more than a third of their value since the start of 2024. But investors will get a closer look at the company's financial health when they report earnings on June 5th. Let's talk about some stocks making moves today. Starting with urban outfitters, shares of their clothing retailer are up after they beat

earnings and revenue estimates for the quarter. Now, the B was attributed to the company's anthropology and free people's brands, with free people's revenue growing by 16% year over year. And free people's athlete your brand, FP movement, helped drive much of that growth. I feel like everyone's getting into the athlete's game lately. You know, you have Allo, you have Lulu, American Eagle, Viori, free people, which I didn't even know about until just now. I guess I can see why Lulu Lemonstock took a hit this year.

Anyways, Urban Outfitters plans to open 25 Free People movement stores in the next year. So let's see how the Athleteer play works out for Urban Outfitters. The stock is up more than 6% in the pre-market. A stock not doing so great this morning is Target. Target shares are trading lower this morning after reporting disappointing first quarter earnings. Target's revenue dropped by 3% to 24.5 billion and profits dropped by 1% to 942 million. Target continues to see a decline in sales for clothing, home goods and other discretionary items, which is kind of Target's thing, right?

Because inflation continues to be a bit sticky, people are spending more on groceries and less on the target-y-type stuff. scented candles and welcome mats and stuff. And not many people go to Target to shop for groceries. Groceries only account for 20% of Target sales. While their competition like Walmart, it's more than 60%. So as people cut back on spending for discretionary items, Target gets hit harder than other retailers.

And as a result, Target stock is down more than 7% in pre-market trading. Maybe they should release more FLEGERS stuff. All right, let's wrap the show with a fun fact. Today's fun fact is about AI data centers, specifically the electricity demand for AI centers. because that's expected to increase by 80x by 2030. This is according to a report by Wells Fargo. See, AI takes up a shocking amount of electricity.

Like, for example, chat GPT requires nearly 10 times more power than a typical Google search. And as AI continues to dominate every industry, that's going to require more and more electricity to train all these AI models. Some data centers are looking to use natural gas as an energy source. So I guess that could be one reason why utility and natural gas stocks have been a big winner in the last few weeks. I'm telling you, man, AI continues to drive everything in the stock market right now. Well, all right, guys, that's the rundown for today.

Hope you guys enjoyed today's episode. If you did, please consider giving us a five-star rating on Apple and Spotify. And don't forget to vote in today's poll on Spotify. We put up a poll on every episode, and the engagement really does help us out. We've got a big episode coming out tomorrow. Invidia earnings, the most anticipated earnings, every quarter during earnings season. I can't wait. I'm in Scotland right now, and I've already set an alarm for 9 p.m. Scotland time,

because that's when the earnings will come out here. So I'll be diving in before I go to bed, and I'll be recapping it in tomorrow's episode. So make sure you guys tune in because, you know, the fate of our portfolio might depend on it. Thank you guys so much for listening. Shout out to Connor and Mike for all the hard work behind the scenes. 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 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. Run-down 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 Zayidamani, brokerage services for U.S. listed, registered securities are offered by Open to the Public Investing Incorporated, member FINRA and SIPC.