The Rundown - Zuck and Jensen Talk AI, Delta Seeks Damages from CrowdStrike Outage

Episode Date: July 30, 2024

Stock market update for July 30, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadmani, and today is Tuesday, July 30th. In today's episode, we tell you why CrowdStrike and Microsoft might get hit with a lawsuit from Delta. Also, Jensen and Zup talked about the future of AI. We'll tell you what they said. We also recap earnings from PayPal and Proctor and Gamble, then stick around to the end of the show to find out what the latest Zillow research says about the price of starter homes. Honestly, it's kind of a depressing stat.

All right, let's go. Stocks were seesawing back and forth on Monday, but ultimately the S&P and NASDAQ finished pretty flat, up less than 1%. I think investors are probably holding off on making any big moves until all the action kicks off this week because the next 72 hours are going to be intense.

Microsoft and AMD are reporting earnings after market closed today, and then on Wednesday the Fed meeting will conclude with a Jerome Powell press conference, and we get meta earnings after market closed, and then on Thursday after the bell, we get earnings from Apple, in Amazon. So it's about to get pretty intense. Don't be surprised if we see some volatility in the markets this week. Now, on yesterday's episode, we put up a poll on Spotify asking which of the

big four tech earnings are you guys looking forward to the most. And to no surprise, 40% of you guys have voted in the poll chose Apple, then followed by Microsoft, then meta, then Amazon. Now, personally speaking, I'm looking forward to Amazon's earnings the most because I feel like we haven't really heard much about their AI strategy yet. And I'm really curious to know what they say in their earnings. We're going to be covering all of those earnings on the rundowns. this week. So make sure you guys are tuning in. Let's run through some headlines. Delta is lawyering up and looking to pursue potential legal action against cybersecurity firm Crowdstrike and Microsoft because of the IT outage a couple weeks ago that forced Delta to cancel nearly

7,000 flights. Now, according to Delta, this IT debacle cost the company between $350 and $500 million, not to mention all the negative publicity they got. I mean, have you seen those videos that people stuck at Atlanta airport, it was brutal. So now Delta is looking to pursue potential damages from Crowdstrike in Microsoft because of this outage. Now, just to be clear, no lawsuit has been filed just yet. Maybe these companies will end up dealing with it outside of court and it doesn't have to go to a lawsuit, but the threat of a lawsuit is now there. By the way, the lawyer that Delta hired is David Boyce. He's best known for representing the U.S. government in their antitrust case against Microsoft a couple decades ago. So there's some history there with Microsoft.

We'll see if this ends up going to a lawsuit, and if it does, I can imagine, other companies all over the world are going to be looking to get damages as well. Not surprising here, but CrowdStrike stock is down nearly 4% in the pre-market on this news. And CrowdStrike shares are down nearly 34% since July 19th when the failure happened. Shares of Microsoft on the other hand, relatively flat. Markets aren't worried about Microsoft taking too much of a hit. Let's talk about AI because two tech titans, Nvidia's CEO, Jensen Huang, and meta-CEO Mark Zuckerberg sat down yesterday at the Sigrath-24 tech conference and talk with each other about the future of AI. Zuck said that META has five years of innovation ahead of itself with their current models.

Meta recently released their Lama 3.1 model. Zuck said that Lama's 4.0 model will be able to act as an advanced task agent. I guess you'll be able to give the AI a task, then come back to it at a later date for a detailed answer. Zuck thinks that one day every business is going to have an AI agent working for it in some capacity. In fact, META actually released a tool called AI Studio that will allow people to create AI characters of themselves

on Instagram, WhatsApp, and Messenger. That sounds pretty cool, actually. Can't wait to mess around with that. And so you might be getting a DM from AI Zaid pretty soon. Jensen Huang is a fan of what Meta is working on, saying that it's good that Meta is helping more and more people gain access to AI. I'm sure he's also happy with the fact that Meta is one of Nvidia's biggest customers and meta plans to spend between $35 and $40 billion on AI in 2024.

Overall, both these guys are pretty bullish on AI. And I got to say, man, Zuck has done an incredible job not only turning around the image of himself by rocking the chains and the swagged out look, but also the image of meta, right? Like remember two years ago when he tried to pivot the entire company to the metaverse, change the name of the company? Now we never hear about the metaverse

and all we hear about is AI and the release is some pretty cool stuff with AI. Like the Lama 3.1 model, it's gotten some pretty good reviews. Now they're launching this AI studio. The last two years have been a master class on how to pivot not just a personal brand but also a company by Zuck.

Let's talk about some stocks making moves today. PayPal, stock is up this morning after delivering a strong earnings report. Revenues last quarter were up 8% and profits were $1.1 billion. Both those numbers beating Wall Street estimates. Now, I think the most encouraging metric was that payment volume grew by 11% to $416 billion. PayPal executives are feeling pretty good about the business right now. They raise guidance for the rest of the year and they also increase share repurchases. Investors love that. PayPal stock is up more than 6% in the pre-market. I'm sure PayPal investors are celebrating right now because they haven't had much to celebrate.

PayPal stock was down 4% this year as of market close on Monday. And it's still down more than 80% from its all-time highs that it's set back in 2021. So they'll take this. On the flip side, stock not doing so great this morning. Procter & Gamble shares of the giant consumer goods company are down in the pre-market after reporting mixed earnings. The company's revenues of $20.5 billion missed Wall Street estimates, and their profits drop 7% to $3.1 billion.

$Procter and Gamble did see strong demands from their grooming, health care, and home care products, but saw a drop in demand for baby and beauty products. And ultimately, investors didn't really see anything in the earnings report to get super excited about, and the stock is down more than 5% in the pre-market. Let's wrap the show with a fun fact. The average price of a starter home is over $1 million in 237 cities in the U.S., according to research by Zillow. Five years ago, there was only 84 cities where that applied to. This probably doesn't come about a But almost half of those cities are in California. I mean, I think that housing affordability is one of the biggest issues right now in the

economy. And just hearing stats like that just bums me out, you know? Now, if you zoom out and look at the U.S. as a whole, the average price of a starter home is around $196,000. That's still up more than 50% from five years ago. And it's a lot more than that in major metro areas. I wonder what's going to happen once interest rates come down. Is it going to help or hurt the housing market?

Ultimately, though, I think we just need to build more houses. All right, guys, that's the rundown for today. Next 72 hours are going to be action-packed. Remember, Microsoft and AMD has come out tonight. We'll be recapping those on the rundown tomorrow. So make sure you guys are subscribed for the podcast. Hit the notification bell so you're notified as soon as the podcast goes up. And don't forget to vote in our Spotify poll.

We put up a poll every single day, and that engagement really does help the show. Thank you guys so much 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. Learn more at public.com disclosures. In partnership with Zaidamani, brokerage services for U.S. listed, registered securities are offered by Open to the Public Investing Incorporated, member FINRA and SIPC.