The Rundown - Qualcomm Explores Takeover of Intel, Samsung & TSMC Consider Megafactories in the Middle East

Episode Date: September 23, 2024

Stock market update for September 23, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadadmani, and today is Monday, September 23rd. In today's episode, we recap last week's epic week in the markets and tell you what to look forward to this week. Also, Qualcomm approached Intel to take them over, and TSM and Samsung are looking to build mega chip factories in the Middle East. Then stick around to the end of the show to find out Motel 6's new owner and how the hotel chain got its name.

All right, let's go. Last week lived up to the hype. The Federal Reserve cut rates by 50 basis points, the first rate cut we've had since 2020, and the markets loved it. The S&P 500 hit record highs on Thursday, pulling back slightly on Friday, but still finishing the green for the week. And the NASDAQ also finished the week higher by 2%. But it wasn't just stocks.

Gold hit record highs. Crypto was up across the board. I mean, it was a great week. So now I'm really looking forward to this week. How are the markets going to react now that we've had? had some time to digest the rate cuts from last week. The initial reaction was great, but will the markets carry that momentum? This is the last full week of September.

And remember, September has historically been the worst month of the stock market. And right now, both the S&P and NASDAQ are up more than 1% in September. So let's hope it stays that way. Things could be a bit slow this week as we wrap up Q3. I think the only notable economic data to come out this week is the PCE inflation report, which is the Fed's preferred inflation gauge. That's coming out on Friday morning. Right now, estimates are expecting PCE inflation to come in at 2.3%.

But what I'm looking forward to the most is the Meta Connect conference, which kicks off on Wednesday. Rumor is that meta will show off smart glasses or AR glasses, some sort of new tech that I'm probably going to convince myself that I need and probably use twice in six months. But yeah, we'll keep an eye on that and meta stock because Metastock has been hovering near all-time highs. In fact, it made all-time highs last week. Let's run through some headlines. Qualcomm has approached Intel for a takeover. This is according to reporting from the Wall Street Journal. If this deal goes through, it would shake up the chip industry and be one of the largest deals in history.

You know, we've talked a lot about Intel over the last few weeks. They've been struggling. The demand for their chips have been replaced by GPUs like those made by Nvidia to power all the AI applications. Intel stock is down 50% this year. Their market cap has dropped below $100 billion. Qualcomm, on the other hand, has been doing great. Their stock is up almost 20% this year. They have a market cap of over $190 billion.

Qualcomm makes mobile chips for smartphones. I feel like every high-end Android phone has a. Qualcomm's Snapdragon processor. And they're also one of the most critical suppliers for iPhones as well. They make the modem

for the iPhone that communicates with cell phone towers. So they're pretty critical for the smartphone industry, and lately Qualcomm has expanded beyond smartphones

to make processors for laptops now. Earlier this year, Qualcomm released her Snapdragon X Elite laptop processor. I know I'm getting kind of nerdy here,

but essentially it's a laptop chip that's built for AI, and it's been getting a lot of buzz in the tech community. In fact, Microsoft's new Surface laptops are powered by

Qualcomm's Snapdragon X elites. But see, companies like Qualcomm and Nvidia, they don't manufacture their own chips. They design the chips and have a company like TSM manufacture the chips. Intel makes their own chips, but they also have a manufacturing arm. That's what makes them so unique. So maybe this deal makes sense for Qualcomm, but I mean, Intel has a lot of issues to figure out. And there's no guarantee that Intel will agree to this takeover, or if the U.S. government will allow this takeover to happen on grounds of antitrust violations.

In fact, most analysts think this takeover is unlikely. So we'll see. But, I mean, Intel has been trying hard to turn to the company. around. They did receive some good news this morning. The asset management firm Apollo is planning to offer Intel a $5 billion investment. And Intel's been doing a lot of cost cutting and corporate reorganization to help turn the business around. We'll see what happens. Intel stock is up around 2% in the pre-market. And sticking with a chip theme, TSM, we just talked about them, and Samsung are talking about building some massive chip factories in the Middle East. This is according

to the Wall Street Journal. Executives from TSM and Samsung have made multiple visits to the United Arab Emirates, UAE, and had talked with officials to build high-end advanced facilities. The big selling point here is that UAE would fund the project. That's a big deal because the average cost of making these chip production plans can reach $20 billion. That's very expensive. And the factories in the UAE could cost about $100 billion. So I can see why TSM and Samsung are talking to the UAE because it's hard to say no to

$100 billion. But the UAE is not the only country trying to attract these chip manufacturers. the U.S. is offering $39 billion in incentives to try and build domestic chip production hubs. A lot of countries are scrambling because of the supply chain disruption that happened from the pandemic and national security concerns. Now, there's still some challenges to overcome before chip production can happen in the UAE. Like, for example, these manufacturing processes require a large amount of super clean water. So getting that in the Middle East could be challenging and expensive.

There's also concerns about the availability of engineering talent and staff to work these factories. It's also become a political issue. The U.S. has blocked exports of advanced chips to China, but China is a trade partner with the UAE. So, you know, it could get kind of complicated, politically speaking. So, yeah, there's a lot to work out here, and it's probably going to take years for these things to get figured out. Let's talk about some stocks making moves today. Constellation Energy shares are rising after Morgan Stanley raised its price target to $313 per share. The hike comes after Constellation agreed to a nuclear power deal with Microsoft to supply the tech giant with energy,

by reopening a nuclear plant in Pennsylvania. We talked about this on Friday's episode, so if you want to recap of that, go check that out. Shares of Constellation are up 3% on this news, and it currently trades around $260 per share. On the flip side, General Motors shares are down after Bernstein downgraded the stock with a price target of $53 per share.

Bernstein called out the various risks to GM's business, including a potential increase in capital spending, inventory buildup, EV delays, and problems with its international business. Shares are down more than 2% on this news. Let's wrap the show with a fun fact. Motel 6 got its name because it used to charge $6 per night, cash only, when it started back in 1962 in Santa Barbara, California.

Now, I bring this up because Motel 6 just got bought by an Indian hotel company, Oyo, for $525 million in an all-cash deal. Oyo has been looking to expand in the U.S., and Motel 6 has over 1,500 locations, so that will increase their footprint. Previously, Motel 6 was owned by a private equity company Blackstone. Blackstone bought Motel 6 back in 2012 for $1.9 billion. I'm actually kind of surprised there's only 1,500 Motel 6 locations. I feel like I see one every like 6 to 10 miles driving on the highway.

Well, all right, guys, that's the rundown for today. Hopefully this week is just as good as last week. If you guys enjoyed today's episode, don't forget to hit us with a five-star rating on Apple and Spotify. And if you're listening on Spotify, don't forget to vote in today's Spotify poll. That engagement really does help us out. Thank you guys again for listening. Shout out to Mike and Connor for all the help behind the scenes. And we'll see you guys back here tomorrow.

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