Aerial photograph shows electric cars for export stacked at the international container terminal of Taicang Port in Suzhou, in China’s eastern Jiangsu Province. The EU and China have reportedly agreed to start talks on the planned imposition of tariffs on Chinese-made EVs.
Str | Afp | Getty Images
China’s commerce ministry said it “does not accept” tariffs imposed by the European Union on Chinese electric vehicles, after the bloc increased tariffs on Chinese EVs to as high as 45.3% on Wednesday.
The extra tariffs will range from 7.8% for Tesla to 35.3% for SAIC Motor, and stack on top of the 10% standard import duty for cars to the EU.
In a statement, the ministry said that “China has repeatedly pointed out that the EU’s anti-subsidy investigation on Chinese electric vehicles has many unreasonable and non-compliant aspects, and is a protectionist practice of ‘unfair competition’,” according to a Google translation.
The EU launched an “anti-subsidy” investigation into Chinese EVs last year, alleging they were illegally subsidized and thereby “causes or threatens to cause economic injury” to the bloc’s EV industry.
China has already filed a lawsuit under the World Trade Organization dispute settlement mechanism. The commerce ministry said “China will continue to take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese companies.”
China’s commerce ministry also highlighted the EU has indicated it will continue to negotiate with China, adding that both sides are conducting a new round of consultations.
It also expressed hope that the EU will “work with China in a constructive manner…, reach a solution acceptable to both sides as soon as possible, and avoid escalation of trade frictions.”
On Oct. 25, Reuters reported the two sides were looking at possible minimum price commitments from Chinese producers or investments in Europe as an alternative to tariffs.
Shares of Chinese EV makers were mostly lower in morning trading Wednesday, with heavyweight BYD trading close to the flatline while Nio and Xpeng lost 3.07% and 0.11% respectively.
A television station broadcasts the Federal Reserve’s interest-rate cut on the floor of the New York Stock Exchange (NYSE) in New York, US, on Wednesday, Sept. 18, 2024.
Michael Nagle | Bloomberg | Getty Images
This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Tesla’s Cybercab and Robovan Tesla shares slumped 8.8% after the company’s “We, Robot” event disappointed investors. At the Thursday night event, CEO Elon Musk unveiled the Cybercab, a two-seater with no steering wheels or pedals, and the Robovan, an autonomous vehicle that has a big capacity. But Musk offered little other details, causing analysts to cast doubt on the company.
More assurances from China In a press briefing held Saturday, Chinese Minister of Finance Lan Fo’an told reporters the space for Beijing to increase its budget deficit is “rather large,” but the government is still discussing stimulus plans, according to a CNBC translation of the Chinese. Lan also announced measures to support employment and the real estate industry.
Banks’ earnings in good shape JPMorgan Chase, the biggest bank in the U.S., reported third-quarter earnings and revenue that beat estimates. Net interest income grew 3% from a year ago and helped revenue to increase 6%. Wells Fargo had a decent third quarter. The bank beat estimates for earnings, but unlike JPMorgan, revenue was below expectations and NII decreased.
[PRO] Earnings will show market direction After the deluge of data such as September’s jobs reports and consumer price index report, earnings will determine the path of markets for the near term. Big banks dominate third-quarter reports this week. It’s Bank of America and Goldman Sachs’ turn on Tuesday, while Morgan Stanley announces its earnings on Wednesday.
It seems like September’s hotter-than-expected inflation reading was indeed a blip.
With a snap of its fingers, the producer price index assuaged worries over inflation remaining stubborn. The index, which measures wholesale prices – and thus generally prefigures changes in the CPI – was unchanged in September from August, defying expectations from a Dow Jones survey of a 0.1% increase.
In fact, last week’s inflation figures looked so promising that Goldman Sachs think the Federal Reserve has just about brought inflation down to its 2% target without crashing the economy, as CNBC’s Jeff Cox reports.
While consumer sentiment dipped slightly in October, according to the University of Michigan’s Survey of Consumers, “long run business conditions lifted to its highest reading in six months,” wrote Joanne Hsu, the survey’s director.
JPMorgan Chase’s third-quarter earnings may be the first taste of that. The biggest bank in America beat estimates on both revenue and earnings. As banks generally reflect the health of the broader economy, it’s a signal things aren’t all bad despite dipping consumer confidence.
Admittedly, earnings reflect what has already happened. Investors care more about what’s going to happen. But consumers are “fine and on strong footing,” as JPMorgan’s CFO Jeremy Barnum told reporters.
That capped off a winning week for Wall Street – their fifth in a row. The S&P and Nasdaq climbed 1.1%, while the Dow did a bit better with its 1.2% increase for the week.
“What we’re seeing … is a broadening of the market,” said Craig Sterling, head of U.S. equity research at Amundi US.
It’s a reminder that subduing inflation is just a stop toward investors’ real endgame of a healthy stock market.
– CNBC’s Jeff Cox, Samantha Subin and Brian Evans contributed to this story.
Jerome Powell, chairman of the US Federal Reserve, during the National Association of Business Economics (NABE) annual meeting in Nashville, Tennessee, US, on Monday, Sept. 30, 2024.
Seth Herald | Bloomberg | Getty Images
This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Winning week for markets All major U.S. indexes rose Friday on the back of encouraging inflation data and positive earnings from big banks. That gave them a winning week. Europe’s Stoxx 600 index climbed 0.55% to end the week higher. Separately, in August, the U.K. economy expanded 0.2% on a monthly basis after stagnating in June and July, according to flash data from U.K. officials.
Tesla’s Cybercab and Robovan Tesla shares slumped 8.8% after the company’s “We, Robot” event disappointed investors. At the Thursday night event, CEO Elon Musk unveiled the Cybercab, a two-seater with no steering wheels or pedals, and the Robovan, an autonomous vehicle that has a big capacity. But Musk offered little other details, causing analysts to cast doubt on the company.
More assurances from China In a press briefing held Saturday, Chinese Minister of Finance Lan Fo’an told reporters the space for Beijing to increase its budget deficit is “rather large,” but the government is still discussing stimulus plans, according to a CNBC translation of the Chinese. Lan also announced measures to support employment and the real estate industry.
Banks’ earnings in good shape JPMorgan Chase, the biggest bank in the U.S., reported third-quarter earnings and revenue that beat estimates. Net interest income grew 3% from a year ago and helped revenue to increase 6%. Wells Fargo had a decent third quarter. The bank beat estimates for earnings, but unlike JPMorgan, revenue was below expectations and NII decreased.
[PRO] Earnings will show market direction After the deluge of data such as September’s jobs reports and consumer price index report, earnings will determine the path of markets for the near term. Big banks dominate third-quarter reports this week. It’s Bank of America and Goldman Sachs’ turn on Tuesday, while Morgan Stanley announces its earnings on Wednesday.
It seems like September’s hotter-than-expected inflation reading was indeed a blip.
With a snap of its fingers, the producer price index assuaged worries over inflation remaining stubborn. The index, which measures wholesale prices – and thus generally prefigures changes in the CPI – was unchanged in September from August, defying expectations from a Dow Jones survey of a 0.1% increase.
In fact, last week’s inflation figures looked so promising that Goldman Sachs think the Federal Reserve has just about brought inflation down to its 2% target without crashing the economy, as CNBC’s Jeff Cox reports.
While consumer sentiment dipped slightly in October, according to the University of Michigan’s Survey of Consumers, “long run business conditions lifted to its highest reading in six months,” wrote Joanne Hsu, the survey’s director.
JPMorgan Chase’s third-quarter earnings may be the first taste of that. The biggest bank in America beat estimates on both revenue and earnings. As banks generally reflect the health of the broader economy, it’s a signal things aren’t all bad despite dipping consumer confidence.
Admittedly, earnings reflect what has already happened. Investors care more about what’s going to happen. But consumers are “fine and on strong footing,” as JPMorgan’s CFO Jeremy Barnum told reporters.
That capped off a winning week for Wall Street – their fifth in a row. The S&P and Nasdaq climbed 1.1%, while the Dow did a bit better with its 1.2% increase for the week.
“What we’re seeing … is a broadening of the market,” said Craig Sterling, head of U.S. equity research at Amundi US.
It’s a reminder that subduing inflation is just a stop toward investors’ real endgame of a healthy stock market.
– CNBC’s Jeff Cox, Samantha Subin and Brian Evans contributed to this story.
Every weekday the CNBC Investing Club with Jim Cramer holds a “Morning Meeting” livestream at 10:20 a.m. ET. Here’s a recap of Friday’s key moments. U.S. stocks jumped Friday, with the S & P 500 on pace for its fifth straight week of gains. The government’s producer price index was cooler than expected, one day after a slightly hotter consumer price index. Bank earnings are the star of the show. During the Club’s Morning Meeting, Jim Cramer said Wall Street is “starting earnings season off with a bang.” Club stock Wells Fargo rose more than 5.5% after quarterly profit exceeded estimates. Check your email inboxes and your texts shortly for our full Wells Fargo earnings commentary. Jim said he would like to buy some more Advanced Micro Devices if he weren’t restricted due to the Club’s trading rules. AMD dropped 1% on Wednesday and then another 4% on Thursday following its Advancing AI meeting. Melius Research said the stock sold off because the market wanted to see another cloud giant in attendance. Jim said the AMD slide was a bit unfair because Jensen Huang, CEO of AI chip leader Nvidia CEO, sucked all the oxygen out of the room during a three-day roadshow. Palo Alto Networks stock is having a great week, up 10% through early Friday, and our best weekly performer. Morgan Stanley raised its price target on the cybersecurity stock to $421 per share from $390. That implies 14% upside from Thursday’s close. We battled the stock, buying some on the dip in early August and then taking some profits later in the month. Jim has been considering adding cyber rival CrowdStrike to the portfolio, pointing out that Bullpen name CrowdStrike didn’t lose customers after its glitch caused a worldwide IT outage in July. Stocks covered in Friday’s rapid fire at the end of the video were: JPMorgan , BlackRock , Tesla , Affirm , and Ferrari . (Jim Cramer’s Charitable Trust is long WFC, AMD, PANW. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Every weekday the CNBC Investing Club with Jim Cramer holds a “Morning Meeting” livestream at 10:20 a.m. ET. Here’s a recap of Friday’s key moments.
Elon Musk, Chief Executive Officer of SpaceX and Tesla and owner of X looks on during the Milken Conference 2024 Global Conference Sessions at The Beverly Hilton in Beverly Hills, California, U.S., May 6, 2024.
David Swanson | Reuters
With Tesla’s hotly anticipated robotaxi event hours away, investors will soon get a glance at what CEO Elon Musk has called the CyberCab.
After a decade of unfulfilled promises to deliver autonomous vehicles, capable of traveling reasonable distances safely without a human at the wheel, there’s a hefty dose of skepticism about what Tesla can do technologically, and when its robotaxi might actually hit the market.
The robotaxi day, or “We, Robot,” event is scheduled to begin at 7:00 p.m. Pacific time at a Warner Bros. studio in Burbank, California and will be livestreamed via X.
Garrett Nelson, an analyst at CFRA, cautioned in a preview on Oct. 4, that conditions at a closed course on a movie studio lot could make a Tesla robotaxi look more advanced than it would be in normal traffic and on public roads. CFRA has a hold rating on the stock.
Tesla shares dipped about 1% on Thursday to $238.77. They’re now down almost 4% for the year and more than 40% below their record reached in 2021.
The event comes a week after Tesla reported third-quarter deliveries of 462,890, lifting the number to 1.35 million for the year so far. For all of last year, Tesla reported deliveries of 1.81 million.
Bullish analysts at firms including Wedbush, ARK and RBC Capital Markets expressed optimism in their reports about the company’s ability to keep growing sales long-term, while delivering higher-tech products, including a long-delayed autonomous vehicle, humanoid robotics and other AI-driven products and services.
Gene Munster of Deepwater Asset Management told CNBC’s “Fast Money” on Wednesday, that he’ll be at the event and expects to test the robotaxi.
Munster, a long-time Tesla bull, said he thinks the company will roll out robotaxis in some cities by the end of 2025. He’s also expecting Tesla to announce plans to produce an affordable EV, possibly just a stripped down version of its Model 3, and an electric van.
He said that while he expects the stock to be down after the event, it could “make new highs” over the next two years as deliveries start to accelerate.
Tesla was once seen as a pioneer in autonomous vehicle development, but has never managed to deliver or demonstrate robotaxi technology. The company is now considered a laggard.
Alphabet’s Waymo in the U.S., and a number of Chinese firms, are all operating commercial robotaxi services today.
Morgan Stanley analysts wrote in a report on Wednesday that if Tesla can launch a “level 4” robotaxi, meaning it can operate without a driver at the wheel, using its current “suite of hardware and software,” it would result in a cost-per-mile advantage relative to peers.
In addition to missed deadlines, Tesla has had safety issues with the its driver assistance systems, which are currently marketed as the standard Autopilot and premium Full Self-Driving (Supervised) options.
Missy Cummings, a professor at George Mason University and director of the Mason Autonomy and Robotics Center, said Tesla leaders should be able to say how they’re solving a problem known as “phantom braking,” which refers to instances when vehicles equipped with ADAS apply their brakes unexpectedly, even while driving at highway speeds, with no visible obstacles around them.
Tesla’s phantom braking problems are the subject of an ongoing investigation by the National Highway Traffic Safety Administration (NHTSA). Cummings, who previously served as a senior safety advisor to the regulator, told CNBC, “If they can’t solve phantom braking for a level 2 car, they can’t solve it for level 4 or 5 vehicle.” Level 2 vehicles include driver assistance systems.
According to data tracked by NHTSA starting in 2021, there have been 1,399 crashes in which Tesla driver assistance systems were engaged within 30 seconds of the crash, and 31 of these collisions resulted in reported fatalities.
Sam Abuelsamid, an analyst at Guidehouse Insights, said Musk or other Tesla executives should be able to say exactly how they plan for their vehicles to operate in different weather, such as fog, rain, snow, and lighting, or in dark tunnels.
He also wants Tesla executives to say whether they will accept full liability for the operation of these vehicles, which he calls “table stakes for a true robotaxi without human controls.”
Finally, Abuelsamid wants to know if Tesla plans to own and operate its robotaxis or lease or sell them to consumers and fleet operators.
“Many companies have made progress on the automated driving technology side,” Abuelsamid said. “But they’ve faltered when it came to figuring out a business model that could be profitable. Tesla has a lot of challenges to overcome and I want to know how all the pieces fall into place.”
A worker unloads a new Tesla Model 3 from a truck at a logistics drop zone in Seattle, Washington, US, on Thursday, Aug. 22, 2024.
Bloomberg | Bloomberg | Getty Images
Tesla posted its third-quarter vehicle production and deliveries report on Wednesday. The stock fell about 3.5% in premarket trading after the report.
Here are the key numbers:
Total deliveries Q3 2024: 462,890
Total production Q3 2024: 469,796
Analysts were expecting deliveries of 463,310 in the period ending Sept. 30, according to estimates compiled by FactSet StreetAccount.
Deliveries are not defined in Tesla’s financial disclosures, but are the closest approximation to units sold reported by the company. It’s one of the most closely-watched metrics on Wall Street.
In the year-ago period, Tesla reported 435,059 deliveries and production of 430,488 EVs. Last quarter, the company reported 443,956 deliveries, and production of 410,831 vehicles.
Tesla is facing increased competitive pressure, especially in China, from companies like BYD and Geely, along with a new generation of automakers, including Li Auto and Nio.
In the U.S., EV competitors like Rivian are maturing, while legacy automakers Ford and General Motors are selling more electric vehicles after walking back more ambitious goals for electrification.
GM this week reported a roughly 60% increase in EV sales for the third quarter from a year earlier. Still, its electric business is tiny compared to Tesla’s, with just 32,100 units sold in the latest period, accounting for 4.9% of the company’s total sales.
Ford plans to report results on Wednesday.
Tesla hasn’t issued specific guidance for 2024 deliveries, but executives have said they expect a lower delivery growth rate this year versus last despite the company having added a new vehicle, the angular stainless steel Cybertruck, to their lineup.
The company also said on Wednesday that it deployed 6.9 GWh of energy storage products in the quarter.
Shares of Tesla climbed 32% in the third quarter, erasing their loss for the year in the process. The stock is now up almost 4% in 2024, trailing the Nasdaq, which has gained 19%.
Tesla’s brand has been under pressure in the U.S. due in part to the antics of CEO Elon Musk, who, in addition to endorsing former President Donald Trump, has shared what the White House called “racist hate,” and false claims about immigrants and election fraud on X, his social media app.
But Tesla still sells more battery electric vehicles in the U.S. than any other automaker, with Hyundai a distant second.
In its third-quarter earnings report later this month, investors will be particularly focused on profit margins.
Tesla has continued to offer attractive financing options and an array of incentives to drive sales volume in recent months in China as well as in the U.S. Prior to earnings, Tesla will host a marketing event on Oct. 10, and is expected to show off the design of “dedicated robotaxi.”
Musk has promised Tesla self-driving cars for years, but the company has yet to deliver. Meanwhile competitors like Waymo and Pony.ai have begun operating commercial robotaxi services.
Billionaire investor Mark Cuban cautioned Tesla CEO Elon Musk on Sunday against forming an alliance with former President Donald Trump, because, he said, the Republican presidential nominee may not ultimately repay his political debts.
“Elon, there will come a time when you need something from Donald Trump,” Cuban wrote in an X post to his fellow billionaire. “You will think you will have earned the right to ask and receive. You have been a loyal, faithful soldier for him.”
“At the point you need him the most,” Cuban continued. “You will find out what so many before you have learned, his loyalty is only to himself.
Cuban’s message came in response to an earlier X post from Musk in which the SpaceX CEO amplified a variety of conspiracy theories about Democrats encouraging immigration into battleground states as “a surefire way to win every election.”
“If Trump is NOT elected, this will be the last election,” Musk wrote.
Musk’s endorsement of Trump is a stark reversal from 2022 when he would openly sling insults at the former president on social media.
Cuban’s warning to Musk, one billionaire to another, hinted at the implicit bid for governmental favor that wealthy political supporters make when they hitch their wagon to a presidential candidate.
The two billionaires are on opposing sides of the presidential race this election cycle. But both business leaders have their eyes on some level of regulatory control.
Trump, Cuban believes, might not follow through on that exchange for Musk.
Cuban has become an outspoken surrogate for Vice President Kamala Harris and her economic agenda. In recent weeks, he has regularly championed Harris as “better for business,” even amid some skepticism about her plan to raise corporate tax rates.
As Cuban ramps up his public support, he is also keeping tabs on a potential new job opportunity at the Securities and Exchange Commission.
“I told her team, put my name in for the SEC, it needs to change,” Cuban said on CNBC’s “Squawk Box” earlier this month.
Meanwhile, Musk is chasing a new job of his own. Musk has repeatedly floated the creation of a so-called government efficiency commission to crack down on federal spending if Trump wins a second term in the White House. And he has raised his hand to helm such an agency.
Earlier this month, Trump endorsed the government efficiency commission idea and suggested Musk could be a “good one” to lead it.
But the Republican nominee hedged that Musk, a busy CEO of multiple companies, might not have the time for the job, but that he could “consult.”
Elon Musk, Chief Executive Officer of SpaceX and Tesla and owner of X looks on during the Milken Conference 2024 Global Conference Sessions at The Beverly Hilton in Beverly Hills, California, U.S., May 6, 2024.
David Swanson | Reuters
The Securities and Exchange Commission has asked a federal judge to sanction Elon Musk if he continues to violate the court’s order to appear for a deposition in a probe of his 2022 Twitter acquisition.
The SEC has been investigating whether Musk or anyone else working with him committed securities fraud in 2022 as the Tesla CEO sold shares in his automaker and shored up a stake in Twitter, ahead of his leveraged buyout of the company now known as X.
In May, the court ordered Musk to appear for a deposition by the financial regulators regarding the Twitter deal.
“Musk has now failed to appear before the SEC twice: first in September 2023, in defiance of a lawful administrative subpoena, and last week, in defiance of a clear court order,” SEC attorney Robin Andrews said in the Friday filing.
Andrews asked the judge to consider sanctions should Musk delay further, according to the filing.
“The Court must make clear that Musk’s gamesmanship and delay tactics must cease,” Andrews wrote.
The filing also revealed, in a footnote, that the SEC intends to ask the court to hold Musk in “civil contempt” for canceling a deposition on Sept. 10, giving the agency only a few hours notice that he would not appear. Musk’s cancellation cost the SEC time and money after it sent personnel to Los Angeles to depose him and he didn’t appear for the investigative interview, the agency said.
Musk’s deposition in the probe has been rescheduled for a date in early October at an SEC office, the filing said.
“Without further action by the Court, nothing deters Musk” from “simply failing to show up for that date,” Andrews wrote.
Musk’s attorney, Alex Spiro, a partner at Quinn Emanuel in New York, wrote in a response that “such drastic action would be inappropriate,” adding that the SEC and Musk had agreed rescheduling would be permissible in light of an emergency.
Additionally, Musk and his companies have “cooperated and are cooperating with the SEC in multiple other ongoing investigations,” Spiro wrote.
In a separate, civil lawsuit concerning the same Twitter deal, the Oklahoma Firefighters Pension and Retirement System has sued Musk in a federal court in New York accusing him of deliberately concealing his progressive investments in Twitter and intent to buy out the company.
The pension fund’s attorneys argue that Musk, by failing to clearly disclose his investments in and intentions to buy Twitter, had influenced other shareholders’ decisions and put them at a disadvantage.
Discovery from that case in New York yielded correspondence between an unnamed person at Morgan Stanley, and the executive who manages Musk’s money, Jared Birchall. In the messages, the Morgan Stanley contact wrote in February 2022 that Musk’s Twitter stock-buying strategy was closely held.
“No one knows what is going on and why but you and me,” the person at Morgan Stanley wrote. “Not compliance, not anyone.”
A worker sweeps the floor at the Nasdaq MarketSite in New York, US, on Monday, Sept. 16, 2024.
Yuki Iwamura | Bloomberg | Getty Images
This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Tech surges After taking a day to digest the U.S. Federal Reserve’s rate cut, investors flocked to tech stocks. On Thursday, Tesla soared 7.4%, Nvidia popped 4% and Apple jumped 3.7%. Lifted by those stocks, the Nasdaq rose 2.5%, its fourth-biggest single-day gain in 2024. Its sharpest rally this year was a 3% increase on Feb. 22.
“Recalibration” Fed Chair Jerome Powell’s use of the word “recalibration” seemed to reassure investors that the central bank’s 50 basis point cut wasn’t thatworrying. It signaled the Fed wasn’t responding to a slowing economy, but shifting focus to ensuring employment doesn’t dip further, wrote CNBC’s Jeff Cox.
Staying its hand The Bank of England decided to hold interest rates steady at 5%. The decision was nearly unanimous: Only one out of nine members in the Monetary Policy Committee voted to reduce rates by a quarter percentage point. Market watchers expect the BOE to cut rates at its next meeting in November.
[PRO] Another big cut? Some experts thought the Fed would lower rates by a quarter percentage point at its September meeting.That call was wrong. A JPMorgan Chase economistnailed the half-point call – and he sees another big rate cut in November.
“Twenty-four little hours / Brought the sun and the flowers / Where there used to be rain,” sings American 1950s star Dinah Washington.
Washington might as well be singing about the market’s behavior. Immediately after the Fed announced the jumbo rate slash on Wednesday, stocks hit fresh highs before falling into the red by the end of that day.
But twenty-four hours later, after investors assessed that the half-point cut probably didn’t portend the start of a recession, major indexes rallied to close at record highs.
The S&P climbed 1.7% to end at 5,713.64, the first time the broad-based index has broken through the 5,700 ceiling. Likewise, the Dow closed at 42,025.19, its first above the 42,000 level, after the index rose 1.26%.
The Nasdaq, buoyed by a rally in names like Tesla, Nvidia and Apple, was the biggest winner among major indexes, surging 2.51%, for its fourth-best day this year.
And while history shows that September hasn’t been nice to stocks, it also tells us that when the S&P notches record highs during the month, the fourth quarter’s likely to remain strong. Since 1950, this pattern has played out in 20 out of 22 occasions, noted Oppenheimer.
Indeed, BMO is so bullish about the market that the bank raised its year-end target for the S&P to 6,100 – an 8.6% climb from Wednesday’s close – the highest projection on Wall Street.
“Much like our last target increase in May, we continue to be surprised by the strength of market gains and decided yet again that something more than an incremental adjustment was warranted,” chief investment strategist Brian Belski wrote to clients in a Thursday note.
At the end of Washington’s song, she croons, “What a difference a day makes / And the difference is you.” Powell can perhaps feel like Washington’s serenading him.
– CNBC’s Alex Harring, Fred Imbert, Hakyung Kim and Lisa Kailai Han contributed to this story.
Correction: An earlier version of this report did not state the time frame for the Nasdaq’s best performance. It has been added to this report.
A man walks past a logo of SK Hynix at the lobby of the company’s Bundang office in Seongnam on January 29, 2021.
Jung Yeon-Je | AFP | Getty Images
SK Hynix, one of the world’s largest memory chipmakers, on Thursday said second-quarter profit hit its highest level in 6 years as it maintains its leadership in advanced memory chips critical for artificial intelligence computing.
Here are SK Hynix’s second-quarter results compared with LSEG SmartEstimate, which is weighted toward forecasts from analysts who are more consistently accurate:
Revenue: 16.42 trillion Korean won (about $11.86 billion), vs. 16.4 trillion Korean won
Operating profit: 5.47 trillion Korean won, vs. 5.4 trillion Korean won
Operating profit in the June quarter hit its highest level since the second quarter of 2018, rebounding from a loss of 2.88 trillion won in the same period a year ago.
Revenue from April to June increased 124.7% from 7.3 trillion won logged a year ago. This was the highest quarterly revenue ever in the firm’s history, according to LSEG data available since 2009.
SK Hynix on Thursday said that a continuous rise in overall prices of its memory products — thanks to strong demand for AI memory including high-bandwidth memory — led to a 32% increase in revenue compared with the previous quarter.
The South Korean giant supplies high-bandwidth memory chips catering to AI chipsets for companies like Nvidia.
Shares of SK Hynix fell as much as 7.81% Thursday morning.
The declines came as the South Korea’s Kospi index lost as much as 1.91% after U.S. tech stocks sold off overnight, following disappointing Alphabet and Tesla earnings. Those reports mark investors’ first look at how megacap companies fared during the second quarter.
“In the second half of this year, strong demand from AI servers are expected to continue as well as gradual recovery in conventional markets with the launch of AI-enabled PC and mobile devices,” the firm said in its earnings call on Thursday.
Capitalizing on the strong AI demand, SK Hynix plans to “continue its leadership in the HBM market by mass-producing 12-layer HBM3E products.”
Memory leaders like SK Hynix have been aggressively expanding HBM capacity to meet the booming demand for AI processors.
HBM requires more wafer capacity than regular dynamic random access memory products – a type of computer memory used to store data – which SK Hynix said is also struggling with tight supply.
“Investment needs are also rising to meet demand of conventional DRAM as well as HBM which requires more wafer capacity than regular DRAM. Therefore, this year’s capex level is expected to be higher than what we expected in the beginning of the year,” said SK Hynix.
“While overcapacity is expected to increase next year due to the increased industrial investment, a significant portion of it will be utilized to ramp up production of HBM. So the tight supply situation for conventional DRAM is likely to continue.”
SK Kim of Daiwa Capital Markets in a June 12 note said they expect “tight HBM and memory supply to persist until 2025 on a bottleneck in HBM production.”
“Accordingly, we expect a favourable price environment to continue and SK Hynix to record robust earnings in 2024-25, benefitting from its competitiveness in HBM for AI graphics processing unit and high-density enterprise SSD (eSSD) for AI-servers, leading to a rerating of the stock,” Kim said.
High-bandwidth memory chip supplies have been stretched thanks to explosive AI adoption fueled by large language models such as ChatGPT.
The AI boom is expected to keep supply of high-end memory chips tight this year, analysts have warned. SK Hynix and Micron in May said they are out of high-bandwidth memory chips for 2024, while the stock for 2025 is also nearly sold out.
Large language models require a lot of high-performance memory chips as such chips allow these models to remember details from past conversations and user preferences in order to generate humanlike responses.
SK Hynix has mostly led the high-bandwidth memory chip market, having been the sole supplier of HBM3 chips to Nvidia before rival Samsung reportedly cleared the tests for the use of its HBM3 chips in Nvidia processors for the Chinese market.
The firm said it expects to ship the next generation 12-layer HBM4 from the second half of 2025.
A Waymo rider-only robotaxi is seen during a test ride in San Francisco on Dec. 9, 2022.
Paresh Dave | Reuters
Alphabet is again investing in its self-driving car unit Waymo — this time with $5 billion.
“This new round of funding will enable Waymo to continue to build the world’s leading autonomous driving company,” Alphabet’s outgoing finance chief Ruth Porat said Tuesday on the company’s second-quarter earnings call, adding Waymo is an “important example” of Alphabet’s long-standing investments.
Porat announced the “multiyear” investment on the call and said more information would be available in the company’s quarterly Securities and Exchange Commission filing, expected on Wednesday.
Alphabet’s “Other Bets” unit, which includes Waymo, delivered $365 million in quarterly revenue, up from $285 million a year ago. But the unit’s losses widened to $1.13 billion from $813 million in the year-earlier period.
CEO Sundar Pichai said on the earnings call that Waymo provides 50,000 weekly paid trips, primarily in San Francisco and Phoenix. It has completed 2 million trips to date. In June, Waymo removed the waitlist and opened Waymo rides to all San Francisco users.
The unit raised $2.25 billion in its first external funding round in 2020. The company raised another $2.5 billion in 2021 in a round that included funding from Andreessen Horowitz, AutoNation, Canada Pension Plan Investment Board, Fidelity Management & Research Company and more.
Alphabet’s increased investment in Waymo comes after General Motors’ autonomous vehicle unit Cruise said it would indefinitely delay the production of the Origin, a self-driving shuttle designed for use in cities. Tesla on Tuesday delayed plans to unveil its CyberCab, a dedicated robotaxi, from August to Oct. 10.
“Alphabet has committed up to $5B to Waymo,” Waymo CEO Tekedra Mawakana said on X. “We are grateful for their immense vote of confidence in our team and recognizing the amazing progress we’ve made with our technology, product, and commercialization efforts.”
Artificial intelligence has been a big boon for San Francisco real estate. But not enough of one to make up for the broader struggle across the market.
The vacancy rate for San Francisco office space reached a fresh record of 34.5% in the second quarter, according to a report Monday from commercial real estate firm Cushman & Wakefield. That’s up from 33.9% in the first quarter, 28.1% in the same period a year ago and 5% before the pandemic.
Meanwhile, the average asking rent dropped to $68.27 per square foot in the quarter, the lowest since late 2015, down from $72.90 a year earlier and a peak of $84.70 in 2020.
San Francisco is reeling from the twin challenges of bringing people back to the office after the Covid pandemic and a slowdown in the tech market that’s led to mass job cuts across the industry. Tech companies have laid off more than 530,000 employees since the start of 2022, according to the website Layoffs.fyi, with major downsizing at Alphabet, Meta, Amazon, Tesla, Microsoft and Salesforce.
Softening the blow of late has been the soaring popularity of generative AI and the decision by fast-growing startups to open large offices in San Francisco.
OpenAI, the market leader with a private valuation that’s topped $80 billion, announced in October that it was leasing about 500,000 square feet of space in the Mission Bay neighborhood, the biggest office lease in the city since 2018. Robert Sammons, senior research director at Cushman & Wakefield, said OpenAI is continuing to look for more space in the city.
Also last year, OpenAI rival Anthropic subleased 230,000 square feet at Slack’s headquarters. And in May of this year, Scale AI signed a lease for a reported 170,000 to 180,000 square feet of space in Airbnb’s office building.
“San Francisco is certainly the center of AI, but AI is not going to save the San Francisco commercial real estate market,” Sammons said. “It will help.”
While richly capitalized AI startups are signing large leases for new space, the bigger trend is that tech companies, law offices and consulting firms are looking to reduce their footprint when existing leases come up, Sammons said, reflecting the widespread move to hybrid work.
In many cases, companies are looking to relocate to higher quality space in more desirable parts of the city, because prices have come down and employers need to be near restaurants and shops to get staffers to come back, Sammons added.
“The best quality trophy space continues to perform well, because tenants want to be in the best locations with the best amenities around them,” Sammons said.
Some of the city’s top employers, including Salesforce, Uber, Visa and Wells Fargo, have brought employees back to offices for part of the week. That’s helped in the financial district, where the vacancy rate is still 34.2% on the north side and 32.7% on the south side at the end of the quarter. In SoMa, which historically was a popular area for venture-backed startups, the vacancy rate is almost 50%.
SoMa is further away from mass transit options and has also been hurt by large retail departures. Vacant office space across San Francisco for the quarter totaled 29.6 million square feet, Cushman & Wakefield said.
The firm said in its report that there are positive signs in the market, with absorption poised to improve in the second half and office job numbers stabilizing following a steep drop-off. But Sammons said it looks like there’s more room for rents to fall and for vacancies to rise. Uncertainty surrounding the upcoming presidential election may be a factor delaying new leases, he said.
“Sometimes tenants postpone making decisions when there are major elections,” he said.
Jim Cramer’s daily rapid fire looks at stocks in the news outside the CNBC Investing Club portfolio. Corning : Shares of the specialty materials company popped more than 10.5% on Monday after pre-announcing better-than-expected earnings. Management is now forecasting higher revenue and earnings-per-share on the high end of previous guidance for the second quarter. The company is set to report on July 30. Shares of Corning, which makes glass for Apple devices, reached their highest levels since February 2022. Tesla : Shares of the electric vehicle leader made a huge, 27% increase last week after the company delivered better-than-expected second-quarter production and deliveries. The stock jumped another nearly 3% on Monday. Cramer called the rally a short squeeze — meaning investors betting Tesla stock would go down were forced to cover as it ripped higher. JPMorgan : The bank caught a rare downgrade, with Wolfe Research taking its rating to peer perform from outperform (hold from buy) on valuation and exposure to lower net interest income given the threat of lower Federal Reserve interest rates approaching. Cramer said he’s concerned heading into JPMorgan’s second-quarter earnings Friday since there was a big sell-off following its Q1 release in April when the bank guided flat NII for 2024. “I don’t want the stock coming in hot,” he added. Domino’s Pizza : The pizza delivery chain was upgraded to an outperform rating from a neutral (buy from hold) at Baird. The analysts also raised their price target to $580 per share from $530. Baird sees the recent 7.4% pullback in Domino’s stock over the last eight sessions as an opportunity. They cited strong fundamentals, product pipeline, and management. Cramer thought this was a fair call since Domino’s CEO Russell Weiner is “crushing it.” ServiceNow : Shares of the enterprise software company took an over 4% dive on Monday after Guggenheim downgraded the stock to sell from neutral. The analysts said the company will get a boost from its generative artificial intelligence business in the second half of this year but won’t see that momentum into 2025. Cramer said the call was contrary to CEO Bill McDermott’s stance that generative AI offerings have been resonating with customers.
Elon Musk attends “Exploring the New Frontiers of Innovation: Mark Read in Conversation with Elon Musk” during the Cannes Lions International Festival Of Creativity 2024 – Day Three in Cannes, France, on June 19, 2024.
Marc Piasecki | Getty Images
Tesla’s stock price rose enough on Friday to wipe out its loss for the year and bring its gain for the week to 27%.
Shares of the electric vehicle maker closed Friday at $251.55. They ended last year at $248.48, and proceeded to fall as low as $138.80 in April.
The latest rally was sparked by a better-than-expected deliveries report for the second quarter on Tuesday. While deliveries still dropped 4.8% from a year earlier, the falloff was less steep than the first-quarter decline, and gave investors reasons for optimism heading into the second half.
In April, Tesla shares hit a 52-week low after a string of troubling developments. Sales in the core automotive business fell in the first quarter, the company downsized through sweeping layoffs and there were reports that Tesla had scrapped plans to soon produce a low-cost family car at its Texas factory.
Tesla is set to deliver second-quarter financial results after the bell on July 23. Automotive gross margins are likely to be in focus.
Since last year, Tesla has been offering extensive discounts and incentives to attract customers to its aging lineup of EVs, including its popular entry-level Model 3 sedans, Model Y crossover utility vehicles and its more expensive flagship Model S sedans and Model X SUVs.
In late 2023, Tesla started selling its angular Cybertruck. A Tesla Cybertruck account on social media site X posted on Thursday that the truck had become the bestselling fully electric pickup in the U.S. in the second quarter.
Ford reported sales of its fully electric model, the F-150 Lightning, totaling 7,902 in the second quarter and 15,645 through June of this year.
Tesla did not respond to CNBC’s request for more information.
Beyond the upcoming earnings report, Cantor Fitzgerald analysts wrote in a note on Tuesday that they expect a marketing event — Tesla’s Robotaxi Day — early next month to be a catalyst for the stock.
“TSLA has previously disclosed plans for a Robotaxi (or Cybercab), which the company plans to unveil on August 8,” they wrote. “Although we don’t expect this segment to launch prior to 2027, we do expect it to be a meaningful business segment for the company over the long term.”
Still, Cantor Fitzgerald expects Tesla to deliver fewer cars this year than last. The firm has a price target of $230 on Tesla and recommends buying the stock.
While Tesla has bounced back, it is lagging behind the broader market for the year. The Nasdaq is up 22% in 2024, and the S&P 500 has gained 17%. Tesla is now up 1.2%.
A recent Axios Harris poll found the company is experiencing brand deterioration that is at least partly due to Musk’s “antics” and “political rants.” A New York Times survey out this week also said Musk’s “polarizing statements” and “political activity” are driving away some “left-leaning consumers.”
Tesla is also still years delayed in delivering software that can turn its existing vehicles into self-driving cars. Musk announced on Oct. 19, 2016, that all Tesla cars being produced at that time had the necessary hardware to make them self-driving. But in late June, he said another hardware and sensor setup is on the way to enable that capability.
A trader works on the floor of the New York Stock Exchange (NYSE) during morning trading on March 4, 2024 in New York City.
Angela Weiss | Afp | Getty Images
This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Micron slides Shares of Micron fell almost 8% in extended trading on Wednesday as its revenue forecast failed to top analysts’ expectations. The computer memory and storage maker expects revenue of $7.6 billion in the current quarter, in line with estimates. Micron’s shares have doubled in the past year as its most advanced memory is needed for AI graphics processing units. CEO Sanjay Mehrotra said the company’s AI-oriented products were likely to increase in price and its data center business grew 50% on a quarter-to-quarter basis.
$2,000,000,000,000 Amazon‘s market capitalization surpassed $2 trillion for the first time on Wednesday, joining the ranks of tech giants like Apple and Microsoft. The surge in megacap tech stocks has been driven by investor excitement around generative AI. Amazon’s stock has risen 26% this year, outpacing the Nasdaq’s 18% increase. The stock rose 3.9% on Wednesday. Separately, CNBC’s Annie Palmer reports Amazon plans to launch a discount store in bid to fend off Temu and Shein.
Southwest cuts guidance Southwest Airlinescut its second-quarter revenue forecast due to difficulties adapting its revenue management to recent booking trends. Despite the revised outlook, the airline still expects record quarterly operating revenue. Activist investor Elliott Management reiterated calls for leadership changes, “Southwest is led by a team that has proven unable to adapt to the modern airline industry.” Higher costs and increased capacity have impacted fares and profits across the industry, while competitors like Delta and United have benefited from the return of international travel. Southwest shares fell 4% before recovering to end the session just 0.2% lower.
Asian stocks fall, yen weakens Japan’s export-heavy Nikkei 225 and the broad-based Topix fell as the yenweakened to a 38-year low against the U.S. dollar, raising the prospect of intervention. Finance Minister Shunichi Suzuki warned the country was “deeply concerned about FX impact on economy,” per Reuters. Elsewhere, Hong Kong’s Hang Seng index led the rest of the Asia-Pacific region lower, tumbling 2%, and mainland China’s CSI 300 was down 0.6%. Australia’s S&P/ASX 200 dropped 0.58% and South Korea’s Kospi dipped 0.37%
[PRO] Investing in India India’s unexpected election results haven’t dampened Causeway Capital Management’s bullish outlook. Although portfolio manager Arjun Jayaraman predicts modest short-term returns for the BSE Sensex index, he suggests ETFs that could benefit from higher returns.
There was a surge of activity in the auto industry that may have been overshadowed by Volkswagen's $5 billion investment in the loss-making EV maker Rivian. While VW makes solid cars, its electric vehicles are plagued with glitchy software. As CNBC's Sophie Kiderlin notes this investment will take years to yield returns. Analysts, however, are wary of the current "EV winter" marked by tepid demand and increased competition. Despite these challenges, Rivian's stock surged 23%, reflecting investor optimism.
Elsewhere in the industry, Waymo, Alphabet's self-driving car unit, expanded its robotaxi service to all users in San Francisco. Meanwhile, General Motors's Cruise autonomous vehicle division appointed former Amazon and Microsoft executive Marc Whitten as its new CEO. This leadership change follows a series of collisions that led to investigations and the suspension of Cruise's license in California, heightening public skepticism about driverless technology.
While Waymo is steadily rolling out its services and Cruise is restarting its operations, Tesla has yet to introduce its long-promised robotaxi. Elon Musk's projections for a 2020 launch and fully autonomous driving by 2018 have yet to materialize. Nevertheless, Musk envisions Tesla as a potential $7 trillion robotaxi enterprise. The unveiling of Tesla's robotaxi on Aug. 8 will be closely watched to gauge its competitive edge.
Rivian shareholder Amazon joined the exclusive $2 trillion market cap club, alongside Alphabet, Nvidia, Apple and Microsoft. This milestone comes as Amazon aggressively cuts costs.
While enthusiasm for AI remains high, Wall Street experienced a more measured session as investors sought to lock in profits from the Nvidia-driven surge. Despite the current optimism, strategists caution that the S&P 500 might face a correction over the summer. CNBC's Sarah Min explores the factors behind Citi's projections and a series of recent upgrades.
— CNBC's Hakyung Kim, Brian Evans, Alex Sherman, Samantha Subin, Annie Palmer, Ece Yildirim, Michael Wayland, Sophie Kiderlin, Spencer Kimball, Leslie Josephs, Sarah Min, Sheila Chiang and Lim Hui Jie contributed to this report.
A mockup of Tesla Inc.’s planned humanoid robot Optimus on display during the Seoul Mobility Show in Goyang, South Korea, on Thursday, March 30, 2023. The motor show will continue through April 9. Photographer: SeongJoon Cho/Bloomberg via Getty Images
Bloomberg | Bloomberg | Getty Images
The entire value of the S&P 500 currently stands at $45.5 trillion, according to FactSet. Tesla CEO Elon Musk claimed on Thursday that his company’s Optimus humanoid robots could eventually make the automaker worth more than half of that.
Musk, who characterized himself as “pathologically optimistic” at the 2024 annual shareholder meeting in Austin, Texas, said Tesla is embarking on not just a “new chapter” in its life, but is about to write an entirely “new book.” Optimus appears to be one of the main characters.
Tesla first revealed its plans to work on humanoid robots in 2021 at an AI Day event, trotting out a dancer in a unitard that looked like a sleek, androgynous robot.
In January, Tesla showed off Optimus robots folding laundry in a demo video that was immediately criticized by robotics engineers for being deceptive. The robots were not autonomous, but were rather being operated with humans at the controls.
At the shareholder event on Thursday, Musk didn’t divulge exactly what Optimus can do today. He suggested the robots some day will perform like R2-D2 and C-3PO in Star Wars. They could cook or clean for you, do factory work, or even teach your children, Musk suggested.
As for shareholder value, Musk said Optimus could be the catalyst for lifting Tesla’s market cap to $25 trillion someday.
Speaking to a crowd consisting mostly of fawning fanboys in an auditorium at the Gigafactory, Musk promised Tesla would move into “limited production” of Optimus in 2025 and test out humanoid robots in its own factories next year.
The company, he predicted, will have “over 1,000, or a few thousand, Optimus robots working at Tesla” in 2025.
This is all far-out stuff even for Musk, who is notorious for making ambitious promises to investors and customers that don’t pan out — from developing software that can turn an existing Tesla into a self-driving vehicle with an upload, to EV battery swapping stations.
Getting to a $25 trillion market cap would mean that Tesla would be worth about eight times Apple’s value today. The iPhone maker is currently the world’s biggest company by market cap, just ahead of Microsoft.
At Thursday’s close, Tesla was valued at about $580 billion, making it the 10th most valuable company in the S&P 500.
Musk didn’t provide a timeframe for reaching $25 trillion. He did say that autonomous vehicles could get the company to a market cap of $5 trillion to $7 trillion.
Musk said he agreed with numbers from long-time Tesla bull Cathie Wood, the CEO of ARK Invest. This week, ARK put a $2,600 price target on Tesla’s stock by 2029, betting on a commercial robotaxi business that the company has yet to enter.
Wood’s price target equals a market cap for Tesla of over $8 trillion.
Musk’s comments at the annual meeting followed the shareholder vote to reinstate the CEO’s $56 billion pay plan, five months after a Delaware court ordered the company to rescind the package. The crowd cheered when the proposal was read aloud, and when preliminary results were announced.
Taking the stage following the readout of the shareholder votes, Musk said, “I just want to start off by saying hot d—! I love you guys.”
Tesla shares have dropped 27% this year as the company reckons with a sales decline that’s tied in part to an aging lineup of electric vehicles and increased competition in China. The company has also implemented steep layoffs. Musk has encouraged investors to look past the current state of the business and more toward a future of autonomous driving, robots and artificial intelligence.
Among his boldest claims on Thursday was Musk’s declaration that Tesla had advanced so far in developing silicon that it’s surpassed Nvidia when it comes to inference, or the process that trained machine learning models use to draw conclusions from new data.
Nvidia shares have soared almost nine-fold since the end of 2022, driven by demand for its AI chips. The company is now worth about $3.2 trillion.
One concern swirling around Musk is his focus on Tesla given all of his other commitments. He owns and runs social media company X, is CEO of SpaceX, and founded The Boring Co. and Neuralink. He launched another startup, xAI, in March last year and the company recently raised $6 billion in venture funding.
Musk was asked by a shareholder at the meeting how important he is, personally, to the future of Tesla.
“I’m a helpful accelerant to that future,” he said, emphasizing his role in innovation.
He said that, when it comes to humanoid robots, other companies, including tech startups, are going after the market. Competitors include Boston Dynamics, Agility, Neura and Apptronik.
“What really matters is, can we be much faster than everyone else and our product be done a few years before theirs and be better,” Musk said.
Dr. Joshua Bederson places Precision Neuroscience’s electrodes onto a brain.
Ashley Capoot
As the lights dimmed in an operating room at The Mount Sinai Hospital in New York City, Dr. Joshua Bederson prepared to make history.
Bederson, system chair for the Department of Neurosurgery at Mount Sinai Health System, is no stranger to long hours in an operating room. The former competitive gymnast has completed more than 6,500 procedures in his career, and he said he visualizes the steps for each one as if he’s rehearsing for a routine.
On this particular morning in April, Bederson was readying for a meningioma resection case, which meant he would be removing a benign brain tumor. Bederson said his primary focus is always on caring for the patient, but in some cases, he also gets to help advance science.
This procedure was one such case.
A small crowd gathered as Bederson took his seat in the operating room, his silhouette aglow from the bright white light shining on the patient in front of him. Health-care workers, scientists and CNBC craned forward – some peering through windows – to watch as Bederson placed four electrode arrays from Precision Neuroscience onto the surface of the patient’s brain for the first time.
An electrode is a small sensor that can detect and carry an electrical signal, and an array is a grid of electrodes. Neurosurgeons use electrodes during some procedures to help monitor and avoid important parts of the brain, like areas that control speech and movement.
Precision is a three-year-old startup building a brain-computer interface, or a BCI. A BCI is a system that decodes neural signals and translates them into commands for external technologies. Perhaps the best-known company in the field is Neuralink, which is owned by Tesla and SpaceX CEO Elon Musk.
Other companies like Synchron and Paradromics have also developed BCI systems, though their goals and designs all vary. The first application of Precision’s system will be to help patients with severe paralysis restore functions like speech and movement, according to its website.
Stephanie Rider of Precision Neuroscience inspects the company’s microelectrode array
Source: Precision Neuroscience
Precision’s flagship BCI is called the Layer 7 Cortical Interface. It’s a microelectrode array that’s thinner than a human hair, and it resembles a piece of yellow scotch tape. Each array is made up of 1,024 electrodes, and Precision says it can conform to the brain’s surface without damaging any tissue.
When Bederson used four of the company’s arrays during the surgery in April, he set a record for the highest number of electrodes to be placed on the brain in real-time, according to Precision. But perhaps more importantly, the arrays were able to detect signals from the patient’s individual fingers, which is a far greater amount of detail than standard electrodes are able to capture.
Using Precision’s electrode array is like turning a pixilated, low-resolution image into a 4K image, said Ignacio Saez, an associate professor of neuroscience, neurosurgery and neurology at the Icahn School of Medicine at Mount Sinai. Saez and his team oversee Precision’s work with Mount Sinai.
“Instead of having 10 electrodes, you’re giving me 1,000 electrodes,” Saez told CNBC in an interview. “The depth and the resolution and the detail that you’re going to get are completely different, even though they somehow reflect the same underlying neurological activity.”
Bederson said accessing this level of detail could help doctors be more delicate with their surgeries and other interventions in the future. For Precision, the ability to record and decode signals from individual fingers will be crucial as the company works to eventually help patients restore fine motor control.
The data marks a milestone for Precision, but there’s a long road ahead before it achieves some of its loftier goals. The company is still working toward approval from the U.S. Food and Drug Administration, and it has yet to implant a patient with a more permanent version of its technology.
“I think these are little baby steps towards the ultimate goal of brain-computer interface,” Bederson told CNBC in an interview.
Inside the operating room
Dr. Joshua Bederson prepares for surgery at The Mount Sinai Hospital.
Ashley Capoot
Bederson’s surgery in April was not Precision’s first rodeo. In fact, it marked the 14th time that the company has placed its array on a human patient’s brain.
Precision has been partnering with academic medical centers and health systems to perform a series of first-in-human clinical studies. The goal of each study varies, and the company announced its collaboration with Mount Sinai in March.
At Mount Sinai, Precision is exploring different applications for its array in clinical settings, like how it can be used to help monitor the brain during surgery. In these procedures, surgeons like Bederson temporarily place Precision’s array onto patients who are already undergoing brain surgery for a medical reason.
Patients give their consent to participate beforehand.
It’s routine for neurosurgeons to map brain signals with electrodes during these types of procedures. Bederson said the current accepted practice is to use anywhere between four to almost 100 electrodes – a far cry from the 4,096 electrodes he was preparing to test.
Electrode arrays from Precision Neuroscience displayed on a table.
Ashley Capoot
Precision’s arrays are in use for a short portion of these surgeries, so CNBC joined the operating room in April once the procedure was already underway.
The patient, who asked to remain anonymous, was asleep. Bederson’s team had already removed part of their skull, which left an opening about the size of a credit card. Four of Precision’s arrays were carefully laid out on a table nearby.
Once the patient was stabilized, Precision’s employees trickled into the operating room. They helped affix the arrays in an arc around the opening on the patient’s head, and connected bundles of long blue wires at the other end to a cart full of equipment and monitors.
Dr. Benjamin Rapoport, Precision’s co-founder and chief scientific officer, quietly looked on. Every major procedure presents some risks, but the soft-spoken neurosurgeon’s calm demeanor never wavered. He told CNBC that each new case is just as exciting as the last, especially since the company is still learning.
Experts help set up the wiring for Precision Neuroscience’s technology.
Ashley Capoot
Bederson entered the operating room as Precision’s preparations neared their end. He helped make some final tweaks to the set up, and the overhead lights in the operating room were turned off.
Ongoing chatter quieted to hushed whispers. Bederson was ready to get started.
He began by carefully pulling back a fibrous membrane called the dura to reveal the surface of the brain. He laid a standard strip of electrodes onto the tissue for a few minutes, and then it was time to test Precision’s technology.
Using a pair of yellow tweezers called long bayonet forceps, Bederson began placing all four of Precision’s electrode arrays onto the patient’s brain. He positioned the first two arrays with ease, but the last two proved slightly more challenging.
Bederson was working with a small section of brain tissue, which meant the arrays needed to be angled just right to lay flat. For reference, imagine arranging the ends of four separate tape measures within a surface area roughly the size of a rubber band. It took a little reconfiguring, but after a couple of minutes, Bederson made it happen.
Real-time renderings of the patient’s brain activity swept across Precision’s monitors in the operating room. All four arrays were working.
In an interview after the surgery, Bederson said it was “complicated” and “a little bit awkward” to place all four arrays at once. From a design perspective, he said two arrays with twice as many points of contact, or longer arrays with greater spacing would have been helpful.
Bederson compared the arrays to spaghetti, and the description was apt. From where CNBC was watching, it was hard to tell where one stopped and the next began.
Once all the arrays were placed and actively detecting signals, Precision’s Rapoport stood with his team by the monitors to help oversee data collection. He said the research is the product of a true team effort from the company, the health system and the patient, who often doesn’t get to see the benefits of the technology at this stage.
“It takes a village to make this sort of thing move forward,” Rapoport said.
CNBC left the operating room as Bederson began removing the tumor, but he said the case went well. The patient woke up afterward with some weakness in their foot since the surgery was within that part of the brain, but Bederson said he expected the foot would recover in around three to four weeks.
Employees from Precision Neuroscience collecting data.
Ashley Capoot
Rapoport was present at this particular surgery because of his role with Precision, but he’s well acquainted with the operating rooms at Mount Sinai.
Rapoport is a practicing surgeon and serves as an assistant professor of neurosurgery at the Icahn School of Medicine at Mount Sinai. Rapoport reports to Bederson, and Bederson said the pair have known one another since Rapoport was in residency at Weill Cornell Medicine.
Dr. Thomas Oxley, the CEO of the competing BCI company Synchron, is also a faculty member under Bederson. Synchron has built a stent-like BCI that can be inserted through a patient’s blood vessels. As of early February, the company had implanted its system into 10 human patients. It is also working toward FDA approval.
Bederson has an equity stake in Synchron, but he told CNBC he didn’t realize how much it would prevent him from participating in research with the Synchron team. He has no monetary investment in Precision.
“I really did not want to have any financial interest in Precision because I think it has an equally promising future and wanted to advance the science as fast as I could,” Bederson said.
Rapoport also helped co-found Musk’s Neuralink in 2017, though he departed the company the following year. Neuralink is building a BCI designed to be inserted directly into the brain tissue, and the company recently received approval to implant its second human patient, according to a report from The Wall Street Journal on Monday.
As the BCI industry heats up, Bederson said the amount that scientists understand about the brain is poised to “explode” over the next several years. Companies like Precision are just getting started.
Dr. Joshua Bederson helps set up Precision Neuroscience’s electrode arrays.
Ashley Capoot
“I really feel like the future is where the excitement is,” Bederson said.
Rapoport said Precision is hoping to receive FDA approval for the wired version of its system “within a few months.” This version, which is what CNBC saw in the operating room, would be for use in a hospital setting or monitored care unit for up to 30 days at a time, he said.
Precision’s permanent implant, which will transmit signals wirelessly, will go through a separate approval process with the FDA.
Rapoport said Precision hopes to implant “a few dozen” patients with the wired version of its technology by the end of the year. That data collection would give the company a “very high level of confidence” in its ability to decode movement and speech signals in real-time, he said.
“Within a few years, we’ll have a much more advanced version of the technology out,” Rapoport said.
In what was the most anticipated quarter this earnings season, Nvidia far outpaced lofty expectations on the top and bottom lines. Even better was a big revenue guide and a broader vision from CEO Jensen Huang that reinforced the notion that companies and countries are partnering with the AI chip powerhouse to shift $1 trillion worth of traditional data centers to accelerated computing. Revenue for its fiscal 2025 first quarter surged 262% year-over-year to $26.04 billion, well ahead of analysts’ forecasts of $24.65 billion, according to data provider LSEG, formerly known as Refinitiv. The company had previously guided revenue to $24 billion, plus or minus 2% — so that was a huge beat. Adjusted earnings-per-share increased 461% to $6.12, exceeding the LSEG compiled consensus estimate of $5.59. Adjusted gross margin of 78.9% also beat the Street’s 77.2% estimate, according to market data platform FactSet. The company had guided gross margins to 77%. plus or minus 50 basis points. On top of the strong results, Nvidia announced a 10-for-1 stock split. Although stock splits don’t technically create value, they do tend to have a positive impact on the stock. The company said the split is to “make stock ownership more accessible to employees and investors.” We commend Nvidia for doing this and will continue to press other companies to do the same. Nvidia most recently split its stock in July 2021 on a 4-for-1 basis. In after-hours trading, it was little surprise to see Nvidia shares surging. Nvidia Why we own it : Nvidia’s high-performance graphic processing units (GPUs) are the key driver behind the AI revolution, powering the accelerated data centers being rapidly built around the world. But this is more than just a hardware story. Through its Nvidia AI Enterprise service, Nvidia is in the process of building out a potentially massive software business. Competitors : Advanced Micro Devices and Intel Most recent buy : Aug 31, 2022 Initiation : March 2019 Bottom line What air pocket? Coming into the quarter, it sounded like the only thing that could hold Nvidia back was a product transition-related slowdown from customers delaying orders of the H100 and H200 GPUs (graphics process units) in anticipation of the superior Blackwell chip platform. As you can see from Nvidia’s big beat and upside guide, that was far from the case and demand is expected to exceed supply for quite some time. Should this narrative form again, here’s a good thing to remember for next time so that these concerns don’t shake you out of a strong long-term thesis: Jensen explained on the post-earnings conference call that customers are still so early in their build-outs that they have to keep buying chips to keep up in the current technology arms race. And technology leadership is everything. “There’s going to be a whole bunch of chips coming at them and they just got to keep on building and just, if you will, performance average your way into it. So that’s the smart thing to do,” the CEO said. More broadly, we didn’t hear anything Wednesday evening to change our long-term view about how Nvidia is the driving force behind the current AI industrial revolution. Here’s how Jensen explained the shift that’s happening: “Longer term, we’re completely redesigning how computers work. And this is a platform shift. Of course, it’s been compared to other platform shifts in the past, but time will clearly tell that this is much, much more profound than previous platform shifts. And the reason for that is because the computer is no longer an instruction-driven only computer. It’s an intention understanding computer.” Jensen went on to mention how computers not only interact with us, “but it also understands our meaning, what we intend that we asked it to do, and it has the ability to reason, inference iteratively to process and plan and come back with a solution.” The billions and billions of dollars being spent on accelerated computing is why we own Nvidia for the long-haul and are not trying to trade it back and forth on every headline. By the way, another bearish narrative we often hear is that the custom chips all the big cloud companies are making are a threat to Nvidia’s leadership. Jensen doesn’t see it that way because his platform system has the highest performance at the lowest total cost of ownership. It’s an unbeatable value proposition. NVDA YTD mountain Nvidia YTD The strong results and outlook, upbeat commentary, and stock split were sending Nvidia shares roughly 6% higher to above $1,000 per share for the first time ever. However, we don’t think the gains end here. We’re increasing our price target to $1,200 from $1050 and maintaining our 2 rating , meaning we view it as a buy on pullbacks. Quarterly Results Growth was driven by all customer types, but enterprise and consumer internet companies led the way. Large cloud companies represented a mid-40% of data center revenue in the quarter, so when you see companies like Oracle and Club names Amazon , Microsoft and Alphabet raise their capital expenditure outlooks, understand that a lot of those dollars will flow Nvidia’s way. And, there’s a good reason for it. On the call, Nvidia CFO Colette Kress estimates that for every $1 spent on Nvidia AI Infrastructure, a cloud provider has an opportunity to earn $5 in GPU instant hosting revenue over four years. One customer call out in the quarter was Tesla , expanding its training AI cluster to 35,000 H100 GPUs (graphic processing units). Nvidia said Tesla’s use of Nvidia AI infrastructure “paved the way” for the “breakthrough performance” of full self-driving version 12. (Full self-driving, or FSD, is the way Tesla markets its high level of driver-assisted software.) Interestingly, Nvidia sees automotive as a huge vertical this year, a multi-billion revenue opportunity across on-premise and cloud consumption. Another highlight was Meta’s announcement of Llama 3, its large language model. It was trained on a cluster of 24,000 H100 GPUs. Kress believes that as more consumer internet customers use generative AI applications, Nvidia will see more growth opportunities. The Tesla and Meta clusters are examples of what Nvidia calls “AI Factories.” The company believes “these next-generation data centers host advanced full-stack accelerated computing platforms where the data comes in and intelligence comes out. Nvidia also pointed out that sovereign AI has been a big source of growth. The company defines sovereign AI as a “nation’s capabilities to produce artificial intelligence using its own infrastructure, data, workforce, and business networks.” Kress expects sovereign AI revenue to approach the high single-digit billions of dollars this year from nothing last year. Looking ahead, Nvidia sees supply for the H100 improving but is still constrained on the H200. Even with the transition to Blackwell, Nvidia expects demand for Hopper for quite some time. “Everybody is anxious to get their infrastructure online, and the reason for that is because they’re saving money and making money, and they would like to do that as soon as possible,” the company said. In other words, customers will take whatever they can get. But look for Blackwell revenue later this year, perhaps in a very meaningful amount. The company explained manufacturing of Blackwell has been in production and shipments are expected to start the fiscal 2025 second quarter, ramp in the third, and customers will have full data centers stood up in the fourth quarter. Software was mentioned more than two dozen times on the conference call. And taken together, Nvidia said on the prior quarter’s call that its software and services reached an annualized revenue rate of $1 billion. They are high-margin, recurring revenue businesses, which continue to be key watch areas in future quarters. As for China, the company said it started to ramp up new products specifically made for the region that don’t require an export control license. The U.S. government has put restrictions on sales of the fastest chips for fear they will be used by the Chinese military. However, it doesn’t like China is expected to be a driver of revenue like it was in the past because the limitations to Nvidia’s technology have made the environment more competitive. Guidance The company’s fiscal second quarter guide should dismiss the market’s concerns that some sort of AI spending “air pocket” was forming. For the current Q2, Nvidia projected revenue of $28 billion, plus or minus 2%, above consensus estimates of $26.6 billion Adjusted gross margins are expected to be 75.5%, plus or minus 50 basis points, above estimates of 75.2%. Capital returns Nvidia increased its quarterly dividend by 150%, which is nice but the annual yield is insignificant to the investment case. More impactful is the $7.7 billion of stock the company repurchased in fiscal Q1. (Jim Cramer’s Charitable Trust is long NVDA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Jensen Huang, co-founder and chief executive officer of Nvidia Corp., during the Nvidia GPU Technology Conference (GTC) in San Jose, California, US, on Tuesday, March 19, 2024.
David Paul Morris | Bloomberg | Getty Images
In what was the most anticipated quarter this earnings season, Nvidia far outpaced lofty expectations on the top and bottom lines. Even better was a big revenue guide and a broader vision from CEO Jensen Huang that reinforced the notion that companies and countries are partnering with the AI chip powerhouse to shift $1 trillion worth of traditional data centers to accelerated computing.
Traders work on the floor of the New York Stock Exchange during morning trading on May 17, 2024 in New York City.
Angela Weiss | AFP | Getty Images
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Rate cuts several months away Federal Reserve Governor Christopher Waller said he does not think further rate increases are necessary, but he will need convincing before backing any rate cuts. “I need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy,” Waller said. According to the CME Group’s FedWatch Tool, the first rate cut could come as early as September.
Gasoline reserve release The Biden administration will release 1 million barrels of gasoline from reserves to reduce prices at the pump ahead of the Fourth of July holiday. OPEC production cuts and fears the Israel-Hamas war could engulf the wider Middle East sent U.S. gasoline futures soaring 19%. “By strategically releasing this reserve in between Memorial Day and July 4th, we are ensuring sufficient supply flows to the tri-state [region] and northeast at a time hardworking Americans need it the most,” Energy Secretary Jennifer Granholm said.
Pixar job cuts Pixar Animation Studios will lay off about 175 employees,or around 14% of its workforce, a spokesperson for parent company Walt Disney told CNBC. CEO Bob Iger wants Pixar to focus on box office releases and not on short series for Disney+. Pixar and Walt Disney Animation have struggled to generate more than $480 million at the global box office since 2019. Before the pandemic, “Coco” generated $796 million globally, while “Incredibles 2″ tallied $1.24 billion, and “Toy Story 4” snared $1.07 billion worldwide.
[PRO] When Nvidia rises CNBC’s Ganesh Rao takes a look at six artificial intelligence-related stocks that have historically reacted positively to Nvidia’s quarterly earnings. Five listed in the United States and one in Japan have risen between 6% and 33% in the past after Nvidia revealed bumper earnings.
Few CEOs are strong-willed and have the vision or audacity to redefine their industries. Steve Jobs revolutionized mobile phones with the iPhone, Elon Musk challenged gas-guzzling Detroit's dominance with electric vehicles, and Jamie Dimon, CEO of JPMorgan Chase, has done the same for the often-criticized grey banking industry.
Dimon might seem like an unusual addition to this list of innovators. Yet, he took a bank ranked eighth on Wall Street in 2006 and propelled it to the top spot within five years, surpassing giants like Goldman Sachs, Deutsche Bank, and Citi.
However, Dimon's inclusion here isn't solely due to his bank's impressive growth. Like his peers, he isn't afraid to stand up to his big institutional investors. This was evident at a recent investor day, where the headline revolved around his potential retirement in the next five years.
When pressed on when the bank would repurchase its own shares, Dimon's response was unequivocal: "I want to make it really clear, OK? We're not going to buy back a lot of stock at these prices."
He went on to say, "Buying back stock of a financial company greatly in excess of two times tangible book is a mistake. We aren't going to do it."CNBC's Hugh Son covered this exchange in detail, providing further insight into the share buyback debate.
Unlike CEOs of companies like Apple, Alphabet, and Meta, who have succumbed to pressure and used their vast cash reserves for share buybacks, Dimon resists this trend. Share buybacks primarily benefit large investors by inflating the value of their holdings.
Dimon could have easily agreed, considering his estimated $2.2 billion net worth, largely tied to his bank holdings. Critics might argue it's easy for him to forego additional wealth, given his substantial $36 million compensation package in 2023.
However, it's undeniable that Dimon has successfully navigated nearly two decades of banking crises, recessions, and a volatile political climate. He has built JPMorgan Chase into the largest bank in the United States by assets, with a market capitalization approaching $600 billion, and at 68 he's still going strong.
— CNBC's Jeff Cox, Hakyung Kim, Alex Harring, Sophie Kinderlin, Leslie Josephs, Hugh Son, Spencer Kimball and Sarah Whitton contributed to this report.
Traders work on the floor of the New York Stock Exchange during morning trading on May 17, 2024 in New York City.
Angela Weiss | AFP | Getty Images
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Rate cuts several months away Federal Reserve Governor Christopher Waller said he does not think further rate increases are necessary, but he will need convincing before backing any rate cuts. “I need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy,” Waller said. According to the CME Group’s FedWatch Tool, the first rate cut could come as early as September.
Gasoline reserve release The Biden administration will release 1 million barrels of gasoline from reserves to reduce prices at the pump ahead of the Fourth of July holiday. OPEC production cuts and fears the Israel-Hamas war could engulf the wider Middle East sent U.S. gasoline futures soaring 19%. “By strategically releasing this reserve in between Memorial Day and July 4th, we are ensuring sufficient supply flows to the tri-state [region] and northeast at a time hardworking Americans need it the most,” Energy Secretary Jennifer Granholm said.
Pixar job cuts Pixar Animation Studios will lay off about 175 employees,or around 14% of its workforce, a spokesperson for parent company Walt Disney told CNBC. CEO Bob Iger wants Pixar to focus on box office releases and not on short series for Disney+. Pixar and Walt Disney Animation have struggled to generate more than $480 million at the global box office since 2019. Before the pandemic, “Coco” generated $796 million globally, while “Incredibles 2″ tallied $1.24 billion, and “Toy Story 4” snared $1.07 billion worldwide.
Singapore Airlines: one dead, 30 injured One person died and 30 people were injured aboard a Singapore Airlines flight that was hit by severe turbulence and forced to land in Thailand. Singapore Airlines Flight 321 encountered “sudden, severe turbulence” about 10 hours into a flight from London to Singapore, the airline said. The Boeing 777-300ER plane was carrying 211 passengers and 18 crew members.
[PRO] Stubborn bear With the S&P 500 index up more than 11% so far this year, Wall Street strategists have been revising their previously pessimistic outlooks for the benchmark. Against this backdrop, CNBC’s Jesse Pound explores why JPMorgan’s Marko Kolanovic is maintaining his negative outlook for stocks.
Few CEOs are strong-willed and have the vision or audacity to redefine their industries. Steve Jobs revolutionized mobile phones with the iPhone, Elon Musk challenged gas-guzzling Detroit's dominance with electric vehicles, and Jamie Dimon, CEO of JPMorgan Chase, has done the same for the often-criticized grey banking industry.
Dimon might seem like an unusual addition to this list of innovators. Yet, he took a bank ranked eighth on Wall Street in 2006 and propelled it to the top spot within five years, surpassing giants like Goldman Sachs, Deutsche Bank, and Citi.
However, Dimon's inclusion here isn't solely due to his bank's impressive growth. Like his peers, he isn't afraid to stand up to his big institutional investors. This was evident at a recent investor day, where the headline revolved around his potential retirement in the next five years.
When pressed on when the bank would repurchase its own shares, Dimon's response was unequivocal: "I want to make it really clear, OK? We're not going to buy back a lot of stock at these prices."
He went on to say, "Buying back stock of a financial company greatly in excess of two times tangible book is a mistake. We aren't going to do it."CNBC's Hugh Son covered this exchange in detail, providing further insight into the share buyback debate.
Unlike CEOs of companies like Apple, Alphabet, and Meta, who have succumbed to pressure and used their vast cash reserves for share buybacks, Dimon resists this trend. Share buybacks primarily benefit large investors by inflating the value of their holdings.
Dimon could have easily agreed, considering his estimated $2.2 billion net worth, largely tied to his bank holdings. Critics might argue it's easy for him to forego additional wealth, given his substantial $36 million compensation package in 2023.
However, it's undeniable that Dimon has successfully navigated nearly two decades of banking crises, recessions, and a volatile political climate. He has built JPMorgan Chase into the largest bank in the United States by assets, with a market capitalization approaching $600 billion, and at 68 he's still going strong.
— CNBC's Jeff Cox, Hakyung Kim, Alex Harring, Sophie Kinderlin, Leslie Josephs, Hugh Son, Spencer Kimball and Sarah Whitton contributed to this report.