The Rundown - TSMC Earnings Spark Chip Rally, Rumors Swirl of Uber Buying Expedia

Episode Date: October 17, 2024

Stock market update for October 17, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadadmani, and today is Thursday, October 17th. In today's episode, we tell you why TSM might have reignited the AI rally after blowout earnings. We also tell you about a rumor that Uber is thinking about buying Expedia and how investors are reacting to it. Then stick around to the end of the show to find out why shrinkflation might be coming to an end. All right, let's go. The stock market saw a nice rebound on Wednesday. The S&P 500 was up 0.5%.

The NASDAQ added 0.3%. And the Dow Jones closed at a record high. Still don't care. InVitya also clawed back some of the losses from Tuesday, rebounding by more than 3% on Wednesday. So overall, solid date for stocks. And a broad rally, too, with more than 350 stocks in the S&P 500, closing in the green.

One of the biggest winners yesterday was United Airlines, which saw their stock jump 12% thanks to say. some solid earnings. The airline posted a $1 billion profit in Q3, and they also announced $1.5 billion in share buybacks. The airline is feeling good about themselves right now. They said that they don't have an oversupply of seats anymore, which was a problem they had over the summer, which forced them to lower their ticket prices. Well, now they're going to be able to sell tickets at a higher price. Delta said the same thing on their earnings call last week. I mean, that's great for airline investors, not so great for people that want to fly. So, you know, don't be surprised if we see higher

airfare moving forward. earnings season rolls on this week. We just got earnings from TSM, more on that in a bit, and we're getting earnings from Netflix after the market closed. So that should be a good one. We'll have more info on that for you on tomorrow's show. Really looking forward to seeing how Netflix's ad business is doing. And we got some economic news happening today as well. The European Central Bank cut through interest rates by 25 basis points today. They think that inflation in Europe will reach the 2% target sooner than expected. And back here in the States, U.S. retail sales increased by 0.4% in September, which was better than the 0.3% expected.

And we also saw jobless claims take a dip this week as well. So there's some pretty positive economic data. Let's see how the markets react to it. We might see more record highs. Let's run through some headlines. And we have to start with TSM. Taiwan Semiconductor shares are soaring after the world's largest chip maker reported blowout earnings. TSM's revenues were up 39% and profit was of 54% to over $10 billion last quarter.

And on top of that, the company raised their guidance. TSM now expects revenues to grow by 30% for the rest of the year. The chipmaker is still bullish on AI with expectations for revenues to triple in that category for 2024. And this has to be a huge sigh of relief for AI investors because after poor earnings from ASML earlier this week, semi-conductor stocks took a dive. There was concerns of an overall slowdown in the semi-conductor space. That doesn't seem to be the case, at least according to TSMC. What's interesting is that TSMC is one of ASML's biggest customers.

ASML makes a ton of manufacturing equipment that TSMC then uses to make these AI chips. TSM management says that they expect demand for the broader chip category to improve as more tech products continue to implement AI like the new iPhone 16 did with Apple Intelligence. So good vibes happening at TSMC right now. Their stock is up 9% on this news, and TSMC's earnings, might have just saved the AI rally this week, which took a hit after the ASML earnings. Nvidia, AMD, AMD, Broadcom, or all in the green as of this morning. Invidia might end up hitting all-time highs today and could overtake Apple's most valuable

company in the world. Let's shift gears and talk about Expedia. According to a report from the Financial Times, Uber is thinking about buying Expedia. That would be a pretty big deal. Now, what's interesting is that Uber's current CEO, Dara Kosher Shahi, was Expedia CEO from 2005 to 2017, before becoming Uber's CEO. In fact, Dara still has a seat on the board of directors at Expedia. Expedia's market cap is around $20 billion.

So this would be a pretty significant acquisition for Uber if it happens. And it kind of makes sense because Uber wants to become the transportation super app, and they've been making deals lately to make that happen. Uber recently did a deal with Waymo to have their robotaxies show up on the Uber app. And Uber's chief financial officer said in August that Uber's top priority for deploying capital was investing in growth, including acquisitions. So you can see why these rumors are circulating around, but nothing official has been announced. According to the Financial Times, Uber's interest is at a very early stage, and it's possible

that a deal doesn't happen. But this report was still enough for Expedia stock to spike 5% this morning. Uber stock, on the other hand, is down more than 2%. So markets don't really love this for them. It would be kind of cool to have one super app, though. Let's talk about some stocks making moves today. Traveler's insurance stock is up big after the insurance company reported 3. third quarter profits that beat Wall Street estimates. This is despite the company incurring

heavy catastrophic losses due to the impact of hurricanes this summer. Individuals and businesses are spending more and more on insurance these days, which has been good for travelers' business. Their stock is up 7% this morning, hitting all-time highs in the process. Now, the same can't be said for lucid. Shares of the EV company are down big after the company said they expect bigger losses than originally expected. On top of that, the company is also looking to raise more cash, and they'll be doing that by selling two hundred. 162 million shares. Investors don't like that because when more shares hit the market, that dilutes their ownership of the company. This caused lucid shares to drop more than 15% this morning. It's been

a tough year for lucid. shares were down 22% already this year as of market closed yesterday. And this is anecdotally speaking, but I feel like I haven't seen a lucid on the road in months. Let's wrap the show with a fun fact. The era of shrinkflation might be over. We're finally going to start seeing more chips and less air in the bag soon. PepsiCo just announced that they're going to be adding 20% more chips to the bag and still sell them at the same price. This includes bags of Doritos, Ruffles, Tostitos, and Lays. I think this is a clear sign that consumers were just sick and tired of shrinkflation, where companies were cutting back on sizes but still charging the same price, and it started hurting these companies sales. In fact, PepsiCo reported a 1% drop in their snack sales

last quarter. So now they're starting to make some changes to win back the consumers. So it looks like the era of shrinkflation is coming to an end. And we are now entering an era of growflation. Yeah, let's go with that. Groflation. You heard it here first, folks. Well, all right, guys, that's the rundown for today. Hope you guys enjoyed today's episode. Tomorrow's episode should be a good one to end the week. Netflix earnings are coming out today. We'll be recapping those in detail in tomorrow's show. And the next few weeks should be really fun. More and more and more earnings are going to be coming out. So make sure you guys are subscribed for the podcast. haven't already. Hit that notification bell if you want to be notified as soon as an episode goes

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