The Rundown - Nvidia Preps New Chip for China, Amazon Buys Iconic Film Studio

Episode Date: July 22, 2024

Stock market update for July 22, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadadmani, and today is Monday, July 22nd. In today's episode, we recap the stock market's performance from last week and get you ready for this week. There's a ton of big time earnings to look forward to. Also, Nvidia is working on a new AI chip specifically for the Chinese market, and Amazon is ready to spend more on content while Apple is looking to cut back. We got all the details for you.

Then stick around to the end of the show. to find out how many computers were impacted by the CrowdStrike outage on Friday. It was a lot less than I thought. All right, let's go. Last week was a bad week for the stock market. Stock snapped a multi-week winning streak with both the S&P and NASDAQ having their worst week since April.

It was especially a bad week for tech stocks, with the NASDAG dropping 3.7%. There might be a vibe shift happening right now on Wall Street as investors are selling off big tech stocks to lock in some profits and rotate more into small cap. The Russell 2000 was up almost 2% last week. So we'll see if this trend continues this week. And this week should be very interesting because we are getting earnings from a ton of big hitters, especially on Tuesday. Coca-Cola, Spotify, Comcast, Tesla, and Google all report

earnings on Tuesday. We're also going to be hearing from Chipotle, Ford, GM, AT&T this week as well. So there's a lot of companies reporting earnings. It should be a fun one. Hopefully the markets can get back on track. And speaking of Spotify, if you're listening to this episode on Spotify, Make sure you guys are following the podcast there and hit the notification bell if you guys want to be notified as soon as an episode goes up every morning. We're going to have a lot to talk about this week. And while you're there, maybe hit us with a five-star rating

and vote in today's poll. That engagement really does help the show. So thank you guys so much. Let's run through some headlines. NVIDIA is working on a new AI chip only for the Chinese market. This is according to Reuters. In an attempt to sidesteped the trade restrictions

that were put in place by the Biden administration, Nvidia is developing an alternative version of their flagship Blackwell chip. And it makes sense for Nvidia to do this because China is a major source of business for Nvidia, accounting for 17% of sales in 2023. But it used to be more. It was 26% two years ago. But because of sanctions, that number has gone down. Response to these sanctions, Nvidia has already built three chips tailored for China

that sidestep these restrictions and it's on track to sell $12 billion worth of these modified AI chips to China. according to research group's semi-analysis. Investors were relieved to hear this news. NVIDIA shares were up 2% in the pre-market this morning after dropping 9% last week. Switching gears, let's talk about Delta Airlines. They're still struggling to get back to 100%

after being hit with the crowd strike debacle last week. Delta's systems were impacted by the faulty update, causing thousands of flights to be canceled over the weekend. And unfortunately, for them, they're still not back to 100%. They're canceling more than 500 flights on Monday as well. It looks like Delta is getting hit harder. than other airlines. United Airlines canceled 260 flights on Sunday, while American Airlines said it's almost fully operational again over the weekend. Now, what I find funny is that Southwest

Airlines was barely impacted at all. Now, it might be because Southwest's systems are so old, still running on like Windows 98 that hasn't been updated in like 25 years, but I'm sure they'll take this dub after dealing with their systems crashing over the holidays back in 2022. They're also having supply chain issues with Boeing. So they're having a tough time. They'll take this dub. Oh, and let's quickly talk about Amazon. They just bought another movie studio, Bray Studios, which is based in London. The studio is known for films such as The Mummy, Alien, Elton John's movie, Rocket Man, and more. We don't know what the purchase price is, but this is another indication that Amazon is continuing to push forward into content. There's rumors that they also

secured NBA rights, so they're not backing down on content. Unlike Apple, which Bloomberg is reporting is reining in on content spent. Apple has spent over $20 billion to make original TV shows and movies, and not that many people have watched, even though I hear the shows are pretty good. So executives are looking to cut back on the content spend at Apple. So the streaming wars are starting to take more casualties. It looks like the two big winners that we're going to have are going to be Netflix and Amazon. Let's talk about some stocks making moves today. Abacrombie and Fitch is up this morning after J.P. Morgan upgraded the stock with a price target of $194 per share. J.P. Morgan sees growth opportunities within Abercrombie's international markets, and it's

Hollister brand. J.P. Morgan thinks that Abercrombie will grow revenues by 19% in the second quarter. We've mentioned Abercrombie a few times on the show this year. It's one of the best performing stocks over the last 12 months, which still blows my mind. And if you guys haven't been to an Abercrombie recently, it's a very different vibe than it was from the early 2000s. They're not selling shirts with giant logos in dimly lit stores that smell like cologne everywhere, okay? They sell simple stuff now, like basic teas. So the rebrands seems to be working. They're crushing it. I mean, it's hard to argue with the results, right? And Wall Street analysts seem to be bullish on the stock as well.

Abercrombie stock jumped more than 3% on the JP Morgan upgrade this morning, and the stock is up more than 70% this year. And a quick fun fact, Abercrombie stock has performed better in the last 12 months than Nvidia. If you don't believe me, go open up the public app and compare the two stocks. Now, on the flip side, shares of Ryanair are down this morning after the European Budget Airline reported disappointing earnings. Their revenues dropped by 1% in the second quarter,

and their profits dropped by 46% due to a combination of higher costs and lower airfare. Not really a good combo if you're trying to run an airline, you know? Unfortunately, Ryanair doesn't expect things to get better anytime soon. They think lower ticket prices will continue into the summer months. That definitely scared some investors because Ryanair's stock on the Dublin Stock Exchange is down 14% this morning. In fact, it hasn't been a great year for Ryanair.

The stock is down over 24% over the last 12 months. So it looks like airlines all over the world are dealing with oversupply and lower airfare. which is hurting revenues. It's not just airlines here in the States. It seems to be everywhere. I think the post-COVID travel boom might be over. On a side note, Ryanair is known to sell like extremely cheap tickets. Like I remember flying from London to Madrid for like 30 euros a few summers ago. So I don't really know how much lower their ticket prices can go, you know? Also, Ryanair's social media team, absolutely incredible. They are extremely unhinged on social media.

Unfortunately, that doesn't really have much of an impact on their stock price. Let's wrap the show with a fun fact. We know a bit more about the largest IT outage in history, which occurred because of a faulty crowd strike update on Friday. Microsoft estimates that 8.5 million Windows computers were impacted, which is less than 1% of all Windows devices. So ultimately, not that many computers were impacted, but the problem is the computers that were impacted were of big corporations that have a huge impact on the economy. Airlines, banks, hospitals, grocery stores. I mean, that's why there was so much chaos. Now, experts still aren't sure how much much this IT outage ultimately cost. A research company from Michigan thinks that it could be over

a billion dollars in damages and lawsuits against CrowdStrike aren't out of the question. So hopefully the lawyers over at CrowdStrike have already taken their summer vacation because they might get pretty busy over the next few weeks. All right, guys, that's the rundown for today. We have an action pack week coming up, a ton of earnings. There's a lot to look forward to. I want to see how the stock market responds this week after taking a beating last week. So I will be locked in this week. And remember, don't forget to subscribe to the podcast. Hit us with that five-star rating and share the podcast if you really enjoy it. Thank you guys again for listening.

Shout out to Connor and Mike for all the help 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 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. Respective professionals.

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