ReportWire

Tag: tesla inc

  • Dow, S&P 500 and Nasdaq post gains as big tech stocks rebound

    Dow, S&P 500 and Nasdaq post gains as big tech stocks rebound

    [ad_1]

    U.S. stocks closed higher on Monday, with the Dow flipping positive near the closing bell, as technology stocks bounced back. The Dow Jones Industrial Average DJIA rose about 26 points, or 0.1%, ending near 35,308, according to preliminary FactSet data. The S&P 500 index SPX scored a 0.6% gain and the Nasdaq Composite Index COMP closed up 1.1%, booking its best daily percentage climb since July 28, according to FactSet data. The S&P 500’s information technology sector outperformed with a 1.9% gain, while the communication services segment rose 1%. The rally saw shares of Meta Platforms META, Apple Inc. AAPL, Alphabet…

    [ad_2]

    Source link

  • Elon Musk vs. Mark Zuckerberg: The stupidest story of the summer appears over

    Elon Musk vs. Mark Zuckerberg: The stupidest story of the summer appears over

    [ad_1]

    The stupidest story of the summer may be over. Finally, mercifully.

    Mark Zuckerberg, billionaire and chief executive of Meta Platforms Inc.
    META,
    -1.34%
    ,
    on Sunday appeared to pull the grown-up card — or at least the less-immature card — to scuttle a cage fight with Elon Musk, the even richer billionaire, Tesla Inc.
    TSLA,
    -1.10%

    CEO and X owner.

    From the start, it was a story that appeared to live mostly in Musk’s imagination. Yet it still sparked a media frenzy, as the prospect of two emotionally stunted billionaires publicly pummeling each other was not without some appeal.

    But the proposed MMA-style fight apparently met its demise the same way it was born — through a lot of online bluster.

    Weeks after proposing the fight, then resorting to multiple delaying tactics while noting how out of shape and unprepared he was, Musk apparently reached out to Zuckerberg over the weekend asking for a “practice bout” first.

    Author and journalist Walter Isaacson — who is currently writing a biography of Musk — tweeted a text exchange Sunday that he said Musk had sent him.

    “Wanna do a practice bout at your house next week?” a text apparently from Musk reads. The reply, purportedly from Zuckerberg: “If you still want to do a real MMA fight, then you should train on your own and let me know when you’re ready to compete. I don’t want to keep hyping something that will never happen, so you should either decide you’re going to do this and do it soon, or we should move on.”

    In real news: Tesla cuts prices for some Model Y versions in China, as price war ramps back up

    Zuckerberg later posted a more public burn on Meta’s Threads — the Twitter/X rival that sparked this whole thing to begin with — saying: “I think we can all agree that Elon isn’t serious and it’s time to move on…If Elon ever gets serious about a real date and official event, he knows how to reach me. Otherwise, time to move on. I’m going to focus on competing with people who take the sport seriously.”

    It was unclear what the two billionaires now plan to do with their spare time, if not fight each other.

    In completely unrelated news, fellow mega-billionaire and Amazon.com Inc.
    AMZN,
    -0.11%

    founder Jeff Bezos and his fiancée announced a $100 million donation Friday to Maui wildfire relief efforts.

    [ad_2]

    Source link

  • Nvidia’s A.I.-driven stock surge pushed earnings multiple three times higher than Tesla’s

    Nvidia’s A.I.-driven stock surge pushed earnings multiple three times higher than Tesla’s

    [ad_1]

    Nvidia CEO Jensen Huang,speaks at the Supermicro keynote presentation during the Computex conference in Taipei on June 1, 2023.

    Walid Berrazeg | Sopa Images | Lightrocket | Getty Images

    Following last year’s market route in tech stocks, all of the industry’s big names have rebounded in 2023. But one company has far outshined them all: Nvidia.

    Driven by an over decade-long head start in the kind of artificial intelligence chips and software now coveted across Silicon Valley, Nvidia shares are up 180% this year, beating every other member of the S&P 500. The next biggest gainer in the index is Facebook parent Meta, which is up 151% at Friday’s close.

    Nvidia is now valued at over $1 trillion, making it the fifth-most valuable U.S. company, behind only tech behemoths Amazon, Apple, Microsoft, and Alphabet.

    While Nvidia doesn’t carry the household name of its mega-cap tech peers, its core technology is the backbone of the hottest new product that’s quickly threatening to disrupt everything from education and media to finance and customer service. That would be ChatGPT.

    OpenAI’s viral chatbot, funded heavily by Microsoft, along with AI models from a handful of well-financed startups, all rely on Nvidia’s graphics processing units (GPUs) to run. They’re widely viewed as the best chips for training AI models, and Nvidia’s financial forecasts suggest insatiable demand.

    The company’s powerful H100 chips cost around $40,000. They’re being swept up by Microsoft and OpenAI by the thousands.

    “Long story short, they have the best of the best GPUs,” said Piper Sandler analyst Harsh Kumar, who recommends buying the stock. “And they have them today.”

    Even with all that momentum and seemingly insatiable demand, baked into Nvidia’s stock price is a slew of assumptions about growth, including the doubling of sales in coming quarters and the almost quadrupling of net income this fiscal year.

    Some investors have described the stock as priced for perfection. Looking at the last 12 months of company earnings, Nvidia has a price-to-earnings ratio of 220, which is stunningly rich even compared with notoriously high-valued tech companies. Amazon’s P/E ratio is at 110, and Tesla’s is at 70, according to FactSet.

    Should Nvidia meet analysts’ projections, the current price still looks high compared to most of the tech industry, but certainly more reasonable. Its P/E ratio for the next 12 months of earnings is 42, versus 51 for Amazon and 58 for Tesla, FactSet data shows.

    When Nvidia reports earnings later this month, analysts expect quarterly revenue of $11.08 billion, according to Refinitiv, which would mark a 65% increase from a year earlier. That’s slightly higher than Nvidia’s official guidance of about $11 billion.

    Investors are betting that, beyond this quarter and the next, Nvidia will not only be able to ride the AI wave for quite some time, but that it will also power through growing competition from Google and AMD, and avoid any major supply issues.

    There’s also the risks that come with any stock flying too high too fast. Nvidia shares fell 8.6% this week, compared to a 1.9% slide in the Nasdaq, with no bad news to cause such a drop. It’s the steepest weekly decline for Nvidia’s stock since September of last year.

    “As investors, we have to start wondering if the excitement around all the great things that Nvidia has done and may continue to do is baked into this performance already,” WisdomTree analyst Christopher Gannatti wrote in a post on Thursday. “High investor expectations is one of the toughest hurdles for companies to overcome.”

    How Nvidia got here

    Nvidia’s stock rally this year is impressive, but the real eye-popping chart is the one showing the 10-year run. A decade ago, Nvidia was worth roughly $8.4 billion, a tiny fraction of chip giant Intel’s market cap.

    Since then, while Intel’s stock is up 55%, Nvidia’s value has ballooned by over 11,170%, making it seven times more valuable than its rival. Tesla, whose stock surge over that time has made CEO Elon Musk the world’s richest person, is up 2,279%.

    Nvidia founder and CEO Jensen Huang has seen his net worth swell to $38 billion, placing him 33rd on the Bloomberg Billionaires index.

    An Nvidia spokesperson declined to comment for this story.

    Before the rise of AI, Nvidia was known for producing key technology for video games. The company, reportedly born at a Denny’s in San Jose, California, in 1993, built processors that helped gamers render sophisticated graphics in computer games. Its iconic product was a graphics card — chips and boards that were plugged into consumer PC motherboards or laptops.

    Video games are still a big business for the company. Nvidia reported over $9 billion in gaming sales in fiscal 2023. But that was down 27% on an annual basis, partially because Nvidia sold so many graphics cards early in the pandemic, when people were upgrading their systems at home. Nvidia’s core gaming business continues to shrink.

    What excites Wall Street has nothing to do with games. Rather, it’s the emerging AI business, under Nvidia’s data center line item. That unit saw sales rise 41% last year to $15 billion, surpassing gaming. Analysts polled by FactSet expect it to more than double to $31.27 billion in fiscal 2024. Nvidia controls 80% or more of the AI chip market, according to analysts.

    Nvidia’s pivot to AI chips is actually 15 years in the making.

    In 2007, the company released a little-noticed software package and programming language called CUDA, which lets programmers take advantage of all of a GPU chip’s hardware features.

    Developers quickly discovered the software was effective at training and running AI models, and CUDA is now an integral part of the training process.

    When AI companies and programmers use CUDA and Nvidia’s GPUs to build their models, analysts say, they’re less likely to switch to competitors, such as AMD’s chips or Google’s Tensor Processing Units (TPUs).

    “Nvidia has a double moat right now in that they they have the highest performance training hardware,” said Patrick Moorhead, semiconductor analyst at Moor Insights. “Then on the input side of the software, in AI, there are libraries and CUDA.”

    Locking in revenue and supply

    As Nvidia’s valuation has grown, the company has taken steps to secure its lead and live up to those lofty expectations. Huang had dinner in June with Morris Chang, chairman of Taiwan Semiconductor Manufacturing Co.

    TSMC, the world’s leading manufacturer of chips for semiconductor companies, makes Nvidia’s key products. After the meal, Huang said he felt “perfectly safe” relying on the foundry, suggesting that Nvidia had secured the supply it needed.

    Nvidia has also turned into a heavyweight startup investor in the venture world, with a clear focus on fueling companies that work with AI models.

    Nvidia has invested in at least 12 startups so far in 2023, according to Pitchbook data, including some of the most high-profile AI companies. They include Runway, which makes an AI-powered video editor, Inflection AI, started by a former DeepMind founder, and CoreWeave, a cloud provider that sells access to Nvidia GPUs.

    The investments could give the company a pipeline of growing customers, who could not only boost Nvidia’s sales down the line but also provide a more diverse set of clients for its GPUs.

    Some of the startups are putting numbers out that show the sky-high levels of demand for Nvidia’s technology. Kumar from Piper cited comments from CoreWeave management, indicating that the company had $30 million in revenue last year, but has $2 billion in business contracted for next year.

    “This is the representation of demand for generative AI type applications, or for voice-search applications, or generally speaking, GPU applications,” Kumar said.

    Nvidia is now coming close to the midpoint of its current GPU architecture cycle. The latest high-end AI chip, the H100, is based on Nvidia’s Hopper architecture. Hopper was announced in March 2022, and Nvidia said to expect its successor in 2024.

    Cloud providers including Google, Microsoft and Amazon have said they’re going to spend heavily to expand their data centers, which will mostly rely on Nvidia GPUs.

    For now, Nvidia is selling nearly every H100 it can make, and industry participants often grumble about how hard it is to secure GPU access following the launch of ChatGPT late last year.

    “ChatGPT was the iPhone moment of AI,” Huang said at the company’s annual shareholder meeting in June. “It all came together in a simple user interface that anyone could understand. But we’ve only gotten our first glimpse of its full potential. Generative AI has started a new computing era and will rival the transformative impact of the Internet.”

    Investors are buying the story. But as this week’s volatile trading showed, they’re also quick to hit the sell button if the company or market hits a snag.

    — CNBC’s Jonathan Vanian contributed reporting.

    WATCH: CoreWeave raises $2.3 billion in debt collateralized by Nvidia chips

    CoreWeave raises $2.3 billion in debt collateralized by Nvidia chips

    [ad_2]

    Source link

  • Indian automaker Mahindra says competition from Tesla ‘does not faze us’

    Indian automaker Mahindra says competition from Tesla ‘does not faze us’

    [ad_1]

    Mahindra atom electric car at Auto Expo 2020, on February 5, 2020, in Greater Noida, India.

    Pradeep Gaur | Mint | Hindustan Times | Getty Images

    Mahindra Group isn’t worried about global players like Tesla entering India’s highly competitive electric vehicle market, its CEO and managing director Anish Shah told CNBC.

    “We’ve seen tremendous competition in India over the last 20 years. So Tesla or anyone else coming in does not faze us,” Shah said on “Street Signs Asia” Tuesday. 

    “At one point, Mahindra was written off when all the global majors were coming into India. Today, we continue to have the number one market share in SUVs from a revenue standpoint,” he added.

    Tesla is reportedly discussing plans to enter the EV space in India, which is the world’s third-largest auto market, according to Reuters.  

    CEO Elon Musk met Prime Minister Narendra Modi in June and said he has plans to “make significant investments in India.”

    Despite the global competition, Mahindra has “not just survived but thrived” in the Indian market, said Shah.

    “We have close to a 50% market share in the light commercial vehicle segment. We continue to have 40% plus market share in farm equipment and tractors,” the CEO said, adding the company expects to perform well in the coming years.

    Last week, Mahindra raised $145 million from Singapore’s state-owned investor Temasek for its electric vehicle unit at a valuation of up to 805.8 billion Indian rupees ($9.8 billion), in the latest fundraising by the Indian automaker. Temasek will take up to 3% stake in the EV unit Mahindra Electric Automobile Limited.

    The company said it expects EVs to make up between 20% and 30% of its total SUV sales by 2027.

    Market potential

    Read more about electric vehicles, batteries and chips from CNBC Pro

    Given current global supply chain disruptions and the government’s policy of making India self reliant, the report added, “It is important that India creates its own indigenous solutions and a supporting domestic value chain.”

    Shah highlighted that “supply chain obviously is an important part” for India’s EV market.

    “We do have a research center in India that develops a fair bit of technology as well,” he said. “But the auto industry technology is global. To that extent, there is a dependence similarly with semiconductors. And we’ve seen some of the challenges in that in the last couple of years.”

    [ad_2]

    Source link

  • X, formerly Twitter, commandeers ‘@music’ handle from user with half a million followers

    X, formerly Twitter, commandeers ‘@music’ handle from user with half a million followers

    [ad_1]

    Lorenzo Di Cola | Nurphoto | Getty Images

    Social network Twitter, recently rebranded as X, has commandeered the handle “@music” from open-source software developer Jeremy Vaught, who told CNBC he created the account in 2007, and had built a community of around half a million followers there.

    While Elon Musk-led X gave Vaught no choice but to surrender the desirable username on its platform, he was offered the option to choose from a list of other handles related to the topic of music. His X-assigned account, which is “@musicfan,” is not to his liking but he’s settling for it for now. X ported his followers over to the new account at least, he said.

    The move on the part of the social media company raises questions about the worth of a handle on its platform. X terms of service, last updated in May, say, “We may also remove or refuse to distribute any Content on the Services, limit distribution or visibility of any Content on the service, suspend or terminate users, and reclaim usernames without liability to you.”

    The threat of losing a handle may make it hard for creators to trust the platform enough to build there long-term Vaught told CNBC.

    While he had not monetized his “@music” account, Vaught sometimes took the opportunity to review consumer hardware, mostly from the makers of headphones, ear buds and other accessories seeking his opinion, given his status as a social media influencer.

    Many years ago, Vaught worried whether Twitter’s prior management would try to take over his handle. However, before Musk had acquired and appointed himself to the C-suite there, Twitter decided to leave “@music” alone and established its own “@twittermusic” brand instead.

    It’s not clear what X plans to do with the “@music” account now. On Thursday, the company posted a photo of the musician Ed Sheeran there, holding a copy of his 2014 album “x” which is pronounced “multiply.” Representatives for Sheeran, X, and Musk did not immediately respond to a request for comment.

    Vaught said he has previously invested in another Musk-led company, electric vehicle maker Tesla, though he holds no shares currently. He has also paid a $100 refundable fee to reserve a Tesla Cybertruck, the company’s trapezoidal pickup truck for which Tesla has yet to disclose final specs and pricing.

    Vaught told CNBC he is still using X, though he did set up a new account on Meta’s text-based competitor Threads, and another on Mastodon. “The software development community is active on Twitter to this day,” Vaught explained. “So for that reason alone it’s still the most interesting social that I have.”

    Jeremy Vaught is a software developer and creator of “@music” on Twitter.

    Jeremy Vaught

    Vaught was disappointed that X would take over a handle from a user who invested 16 years into its platform with nothing but impersonal correspondence, more akin to a technical support help ticket.

    “I was definitely proud of having built @music to a half a million followers give or take,” he added. “And I’m a software developer. I had been thinking about what I could build around this to potentially capitalize on my audience.”

    When Twitter rebranded to X abruptly last month, it took over the handle of another long-time user who had the name “@x” on the platform, as NBC News reported, raising questions about intellectual property, and users’ rights on social media.

    When X notified Vaught that he would have to give up his username, it assigned him the handle “@musicfan,” and offered a list of other suggested handles he could choose from. Looking through those, he said he felt uneasy.

    He discovered that “@musicfan” had been created in 2011, according to the site. Vaught said he hopes that X hasn’t taken something away from another user to give to him, but he couldn’t get a definitive answer from Musk’s social media company either.

    “The whole thing is just skeezy,” he said.

    [ad_2]

    Source link

  • Automakers promote advanced tech to compete in China — the world’s top EV market

    Automakers promote advanced tech to compete in China — the world’s top EV market

    [ad_1]

    An XPeng Inc. G9 electric vehicle at the Shanghai Auto Show in Shanghai, China, on Monday, April 24, 2023.

    Qilai Shen | Bloomberg | Getty Images

    Global electric vehicle makers are tapping advanced technology to vie with each other and domestic brands in the intensively competitive Chinese market.

    China is the world’s largest EV market with 5.9 million units sold in 2022, capturing 59% of EVs sold globally, according to Canalys. Counterpoint Research data showed that domestic brands command 81% of the EV market, with BYD, Wuling, Chery, Changan and GAC among the top players.

    “China’s domestic brands are leading the market in the development and implementation of advanced assisted driving systems, capitalizing on their early-entry advantages in the electric and intelligent vehicle sector,” research firm Canalys said in a recent report.

    “These brands have an edge over other joint ventures in the planning and execution of smart assisted driving systems.”

    BofA Securities in a May report said it expects China to still be the world’s largest EV market in 2025, standing at 40%-45% market share.

    “China auto makers are accelerating vehicle platform, technology upgrade or innovation, leading to outstanding user experience. China EV products are much more competitive than before, and China will continue to see EV penetration expanding, in our view,” said the BofA Securities analysts.

    But these global players are now stepping up their efforts.

    On Friday, BMW China announced that it is accelerating the development of hands-free autonomous driving features, also known as Level 3 or L3 functions. BMW China said it plans to roll those out by end of 2023 or early 2024 and will ensure compliance with local regulations.

    L3 autonomous driving has not been widely approved in China, though some companies including domestic EV maker Xpeng has been authorized to test the technology.

    The Chinese market is growing at an unprecedented pace. Toyota will also work together as a group to reform how we work & think to survive in China.

    Tatsuro Ueda

    CEO of the China Region, Toyota

    Last week, Germany’s Volkswagen Group said it is investing approximately $700 million in Xpeng and taking a 4.99% stake in the company.

    “We are now accelerating the expansion of our local electric portfolio and at the same time preparing for the next innovation step,” Ralf Brandstätter, Volkswagen AG board member for China, said in a company statement.

    Volkswagen and Xpeng will co-develop two new EVs that will incorporate its advanced driver-assist software for the Chinese market and aims to roll them out in 2026.

    Intense competition

    Read more about electric vehicles, batteries and chips from CNBC Pro

    For example, BYD is partnering with Nvidia and Horizon Robotics to develop autonomous driving technology. On Monday, Chinese automaker Leapmotor told reporters it developed a new platform and aims to license it to other automakers to make intelligent EVs. On the same day, Japanese automaker Toyota said it will boost its development of EV technology, in a bid to compete in the Chinese market.

    “The Chinese market is growing at an unprecedented pace. Toyota will also work together as a group to reform how we work & think to survive in China,” Tatsuro Ueda, CEO of China for Toyota, said in a company statement.

    “By promoting local development … we will attempt to develop and provide competitive products that can satisfy Chinese customers at a fast pace.”

    [ad_2]

    Source link

  • ‘Where is the phone?’ Huawei keeps quiet about Mate 60 Pro but takes aim at Tesla | CNN Business

    ‘Where is the phone?’ Huawei keeps quiet about Mate 60 Pro but takes aim at Tesla | CNN Business

    [ad_1]

    Editor’s Note: Sign up for CNN’s Meanwhile in China newsletter which explores what you need to know about the country’s rise and how it impacts the world.


    Hong Kong
    CNN
     — 

    Huawei has disappointed legions of fans — and US officials — eager to know more about its Mate 60 Pro smartphone, which has quickly become a symbol of the tech rivalry between the United States and China since it went on sale last month.

    Huawei’s consumer chief, Richard Yu, showed off a slew of new products including a tablet, smartwatch, earphones and even a challenge to Tesla (TSLA) on Monday, without going into detail about its flagship device, which has provoked calls in Washington for more sanctions against the Chinese tech and mobile giant.

    The United States has spent years trying to hobble Huawei’s ability to access the most advanced semiconductors, and the unveiling of its 5G phone in August has taken Western observers by surprise.

    The launch event became the most discussed topic on Chinese social network Weibo, racking up six billion views and 1.6 million posts. Meanwhile, a hashtag titled “#HuaweiConferenceWithoutMentioningMobilePhones,” trended on Weibo, with 24.5 million views.

    “You’re telling me there will be no talk about the phone?” one user wrote on the social network.

    “Where is the phone?” said another.

    Huawei quietly started selling the Mate 60 Pro in August, without a formal launch event or sharing full technical specifications.

    Yu said onstage that the company was “working overtime” to urgently produce devices in the Mate 60 series “to allow more people to buy and use our products.”

    But “today, we will not introduce” those devices, he added.

    At one point, Huawei whetted viewers’ appetite by unveiling a new premium collection called Ultimate Design, introduced by Hong Kong singer and actor Andy Lau.

    The line consists of a luxury smartphone and smartwatch. Few details were released, though the company said the watch was made using bars of real gold — giving it a hefty price tag of 21,999 Chinese yuan ($3,009).

    Ben Sin, an independent tech reviewer, said he was “baffled” as to why Huawei did not discuss its smartphones.

    The company “knows everyone wants to know more about the chip [in the Mate 60 Pro], so them not talking about it is almost like defiance,” he said.

    Analysts who have examined the handset have said it includes a 5G chip, suggesting Huawei may have found a way to overcome American export controls.

    Huawei, formerly the world’s second largest maker of smartphones, has been attempting a comeback in China’s smartphone market after being hit by US export restrictions, which were first imposed in 2019.

    The company’s woes later forced it to sell off its budget mobile brand, Honor, leaving it in bad shape.

    But it is starting to find its way back.

    The firm’s smartphone sales grew in China by 58% in the second quarter of this year, compared to the same period last year, according to Counterpoint Research. Its share of the Chinese market rose from 6.9% to 11.3% over that period.

    Ivan Lam, a senior analyst at Counterpoint, said Huawei benefited from “its high brand exposure to” wealthy Chinese consumers. Because of this, Huawei’s market share in China is expected to further grow in 2024, he added.

    Huawei’s new phone is a boon for the company and may even pose a challenge to Apple’s (AAPL) market share in China, Lam said.

    The Shenzhen-based company has seen a recent “surge in sales” for its Mate 60 series, with weekly sales almost tripling to 225,000 units, according to Counterpoint.

    Yu demonstrated a number of other new products, starting with the latest version of its MatePad Pro, describing it as the lightest and thinnest tablet of its kind in the world. He said the device had been 10 years in the making.

    In addition, the company unveiled a new smart TV, wireless earphones and other gadgets.

    Huawei also took an aggressive swipe at Tesla, saying it would release its first sedan, the Luxeed S7, in November. The car will surpass Tesla’s Model S “in every specification,” said Yu.

    The company plans to release the Aito M9, an SUV, in December. Huawei has partnered with Chinese automakers to produce the two previously announced electric vehicles.

    Yu also announced Huawei was “ready to launch” an updated operating system, HarmonyOS NEXT.

    The system will include “native applications,” Yu said, without elaborating.

    Speculation has mounted that Huawei may be building an operating system that won’t be compatible with any Android apps.

    Huawei did not immediately respond to a request for comment on the matter.

    [ad_2]

    Source link

  • Tesla shares jump after Morgan Stanley predicts Dojo supercomputer could add $500 billion in market value | CNN Business

    Tesla shares jump after Morgan Stanley predicts Dojo supercomputer could add $500 billion in market value | CNN Business

    [ad_1]


    New York
    CNN
     — 

    Tesla’s Dojo supercomputer could fuel a $500 billion jump in the electric vehicle maker’s market value, analysts at Morgan Stanley said in a note Monday.

    Shares of Tesla jumped more than 6% during early trading Monday morning, on the heels of the rosy prediction from Morgan Stanley’s team about the automaker’s supercomputing efforts. The Morgan Stanley team, lead by longtime Tesla analyst Adam Jonas, predicted that the massive drive in value could come from Dojo potentially unlocking new revenue streams through the wider adoption of robotaxis and software services.

    The analysts compared the potential of Dojo at Tesla to the “same forces that have driven” Amazon Web Services to propel Amazon’s profitability to new heights.

    “Investors have long debated whether Tesla is an auto company or a tech company. We believe it’s both, but see the biggest value driver from here being software and services revenue,” the note stated.

    Dojo, an in-house supercomputer that has been in the works at Tesla for some five years, is designed to train AI systems to complete complex tasks like assisting Tesla’s driver-assistance system Autopilot as well as help propel its “Full Self-Driving” efforts.

    The Morgan Stanley analysts see Dojo as being able to open up “new addressable markets that extend well beyond selling vehicles at a fixed price.”

    The analysts added that the latest version of Tesla’s full self-driving system (expected to be unveiled at the end of the year) and Tesla’s next AI day (expected in early 2024, but yet to be announced) will be “worth watching.”

    Shares of Tesla have doubled since the beginning of the year, but are still far off from the all-time intraday high of $414.50 hit in November 2021. The world’s most valuable carmaker had a market cap of some $788.74 billion as of the market close on Friday.

    [ad_2]

    Source link

  • Four takeaways from Walter Isaacson’s biography of Elon Musk | CNN Business

    Four takeaways from Walter Isaacson’s biography of Elon Musk | CNN Business

    [ad_1]



    CNN
     — 

    “You’ll never be successful,” Errol Musk in 1989 told his 17-year-old son Elon, who was then preparing to fly from South Africa to Canada to find relatives and a college education.

    That’s one of the scenes Walter Isaacson paints in his 670-page biography of Elon Musk, who is now the richest person who ever lived. The biography allows readers new glimpses into the private life of the entrepreneur who popularized electric vehicles for the masses and landed rocket boosters hurtling back to Earth so they could be reused.

    But Musk’s public statements and actions have become increasingly unhinged, filing and threatening lawsuits against nonprofits that fight hate speech and allowing some of the internet’s worst actors to regain their platforms.

    Isaacson portrays Musk as a restless genius with a turbulent upbringing on the cusp of launching a new AI company along with his five other companies.

    Musk allowed Isaacson to shadow him for two years but exercised no control over the biography’s contents, the author said.

    Here are four key takeaways.

    Musk’s upbringing and father haunt him

    Isaacson’s book attributes much of Musk’s drive to his upbringing. He recounts the emotional scars inflicted on Musk by his father, which, Isaacson writes, caused Musk to become “a tough yet vulnerable man-child with an exceedingly high tolerance for risk, a craving for drama, an epic sense of mission and a maniacal intensity that was callous and at times destructive.”

    Musk decided to live with his father from age 10 to 17, enduring what Musk and others describe as occasional but regular verbal taunts and abuse. Musk’s sister, Tosca, said Errol would sometimes lecture his children for hours, “calling you worthless, pathetic, making scarring and evil comments, not allowing you to leave.”

    Elon Musk became estranged from his father, though he has occasionally supported his father financially. In a 2022 email sent to Elon Musk on Father’s Day, Errol Musk said he was freezing and lacking electricity, asking his son for money.

    In the letter, Errol made racist comments about Black leaders in South Africa. “With no Whites here, the Blacks will go back to the trees,” he wrote.

    Elon Musk has said that he opposes racism and discrimination, but hate speech has flourished on X, formerly known as Twitter, since he purchased it 11 months ago, according to the Anti-Defamation League. Musk threatened to sue the ADL for defamation last week, arguing that the nonprofit’s statements have caused his company to lose significant advertising revenue.

    Isaacson reported that Errol, in other emails, denounced Covid as “a lie” and attacked Dr. Anthony Fauci, the United States’ former top infectious disease expert who played a prominent role in the government’s fight against the pandemic.

    Elon Musk, similarly, has criticized Fauci and raised many questions about public health policy during the pandemic. But he has said he supports vaccination, even if he doesn’t believe the shots should be mandated.

    Musk’s fluid family and obsession with population

    Musk has a fluid mix of girlfriends, ex-wives, ex-girlfriends and significant others, and he has many children with multiple women. Isaacson’s book revealed Musk had a third child (Techno Mechanicus) with the musician Grimes in 2022, and Musk confirmed the revelation Sunday.

    Musk has frequently stated that humans must be a multiplanetary species, warning space exploration will ensure the future of humanity. He similarly has spoken numerous times that people need to have more children.

    “Population collapse due to low birth rates is a much bigger risk to civilization than global warming,” Musk said last year.

    Musk has referred to his desire to increase the global population as an explanation for his unique family situation.

    The book reports that Musk encouraged employees such as Shivon Zilis, a top operations officer at his Neuralink company, to have many children. “He feared that declining birthrates were a threat to the long-term survival of human consciousness,” Isaacson writes.

    Although the book presents their relationship as a platonic work friendship, Musk volunteered to donate sperm to Zilis. She agreed and had twins in 2021 via in vitro fertilization; she did not tell people who the biological father was.

    Zilis and Grimes were friendly, but Musk did not tell Grimes about the twins, according to the book.

    Musk asked Zilis if her twins might like to take his last name. Isaacson reports that Grimes was upset in 2022 when she learned the news that Musk had fathered children with Zilis.

    “Doing my best to help the underpopulation crisis,” Musk tweeted at the time, trying to defuse the tension. “A collapsing birth rate is the biggest danger civilization faces by far.”

    One of Musk’s children, Jenna, often criticized her father’s wealth specifically and capitalism broadly. In 2022, she disowned her father, which Isaacson reports saddened Musk.

    Isaacson reports that Musk’s fractured relationship with Jenna, who is trans, partly led to Musk’s rightward turn toward libertarianism and questioning what he considers the “woke-mind-virus, which is fundamentally antiscience, antimerit, and antihuman.”

    Musk has called into question the use of alternate gender pronouns and made numerous statements some critics consider to be anti-trans.

    “I absolutely support trans, but all these pronouns are an esthetic nightmare,” Musk posted in 2020.

    But in December 2020 he also posted a tweet, since deleted, that said “when you put he/him in your bio” alongside a drawing of an 18th century soldier rubbing blood on his face in front of a pile of dead bodies and wearing a cap that read “I love to oppress.”

    Late last year, he tweeted: “My pronouns are Prosecute/Fauci.”

    The purchase of his favorite social media platform, gutting the staff and tinkering with policies and branding have taken time and resources away from Musk’s other companies and projects, Isaacson reports.

    “I’ve got a bad habit of biting off more than I can chew,” Musk told Isaacson at one point.

    After a protracted legal battle over his decision to purchase Twitter, Musk said he regained his enthusiasm for taking over the company when he realized that he wanted to prevent a world where people silo off into their own echo chambers and would prefer a world of civil discourse.

    But Isaacson notes “he would end up undermining that important mission with statements and tweets that ended up chasing off progressives and mainstream media types to other social networks.”

    Musk team members, such as his business manager Jared Birchall, his lawyer Alex Spiro and his brother Kimbal, sometimes try to restrain Musk from sending text messages or tweets that could create legal or economic peril, according to the book. Some friends convinced him to place his phone in a hotel safe overnight on one occasion, before Musk summoned hotel security to open the safe for him.

    During Christmas in 2022 with his brother, Kimbal warned Elon about how fast he was making enemies. “It’s like the days of high school, when you kept getting beaten up,” he said. Kimbal stopped following Elon on Twitter after his brother’s tweets about Fauci and other conspiracies. “Stop falling for weird s—.”

    Are robocars, an AI company and a robot called Optimus on tap?

    Musk continues moving forward on new engineering projects. Since 2021, Musk has been working on a “humanoid” robot called Optimus that walks on two legs instead of like four-legged robots coming from other labs. He unveiled an early version of the Optimus robot in September of 2022. Musk told engineers that humanoid robots will “uncork the economy to quasi-infinite levels,” according to Isaacson, by doing jobs humans find dangerous or repetitive.

    Some of Musk’s top engineers are also working on a “robotaxi,” a driverless vehicle that shows up like an Uber. This past summer, he spent hours each week preparing new factory designs in Texas to produce the next-generation Tesla cars that would look similar to Tesla’s cybertruck.

    Musk is also starting his own AI company called X.AI, which he told Isaacson will compete with Google, Microsoft and other companies surging ahead in the past year with public AI projects. Musk had co-founded OpenAi with Sam Altman in 2015 and contributed $100 million to the non-profit. He became angry when Altman converted the project into a for-profit. Musk also ended a friendship with Larry Page when the two disagreed on AI. According to the book, Musk believes he has a better vision for AI and humanity and thinks the data he owns from Tesla and Twitter will be an asset to his next AI plans.

    “Could you get the rockets to orbit or the transition to electric vehicles without accepting all aspects of him, hinged and unhinged?” Isaacson asks in the last chapter.

    [ad_2]

    Source link

  • The ‘narrow breadth’ chorus has fallen silent. What broadening participation in stock-market rally means for investors.

    The ‘narrow breadth’ chorus has fallen silent. What broadening participation in stock-market rally means for investors.

    [ad_1]

    A wider swath of stocks have joined the S&P 500
    SPX,
    +0.15%
    ’s
    upswing after the so-called Magnificent Seven — Apple
    AAPL,
    +0.32%
    ,
    Amazon
    AMZN,
    +1.11%
    ,
    Alphabet
    GOOG,
    +0.08%
    ,
    Microsoft
    MSFT,
    -0.72%
    ,
    Meta
    META,
    -2.11%
    ,
    Nvidia
    NVDA,
    -0.04%

    and Tesla
    TSLA,
    +0.37%

    — single-handedly propelled the large-cap index into a bull market in early June, with the gauge now up more than 28% from its low notched last October and rising to new highs since April 2022, according to Dow Jones Market Data. 

    Hopes that the U.S. economy could pull off a soft landing and avoid a recession despite the Federal Reserve’s aggressive interest-rate hikes, as well as receding inflation pressures and expectations for the end of the Fed’s monetary tightening campaign, have underpinned a notable expansion in market breadth over the past two months, according Adam Turnquist, chief technical strategist at LPL Financial. 

    The S&P 500 Equal Weighted Index
    SP500EW,
    +0.27%
    ,
    which lagged behind the market-cap-weighted S&P 500 index for most of the year, has now kicked back into gear and staged an impressive comeback in July. The equal-weighted index and the S&P 500 each advanced 3.1% this month, according to FactSet data. 

    The equal weighting eliminates the distortion of the megacap components and significantly changes several sector weightings in the S&P 500, including technology, which drops from around 29% on the SPX to only 13% on the equal-weighted index, said Turnquist in a Friday note. Meanwhile, the industrials sector has the biggest increase in weight, jumping from 9% on the SPX to 16% on the equal-weighted index.

    Another way to quantify and compare market breadth is to look at the percentage of stocks on an index trading above their longer-term 200-day moving average (dma), Turnquist said. In general, if a stock is trading above its 200 dma, it is considered to be in an uptrend, and if the price is below the 200 dma, it is considered in a downtrend. Furthermore, a higher percentage of stocks above their 200 dma implies buying pressure is more widespread — suggesting the market’s advance is likely sustainable.

    The chart below shows that 73% of stocks within the S&P 500 are trading above their 200 dma as of July 27, which compares to only 48% at the end of 2022. Moreover, the composition of breadth leadership has turned increasingly bullish. The highest sector readings include technology, industrials, energy, and consumer discretionary.

    “So not only is breadth on the index robust, but cyclical stocks are also leading,” said Turnquist. 

    SOURCE: LPL RESEARCH, BLOOMBERG

    Wall Street often views broadening participation in the stock-market rally as a measure of health and a constructive sign of the sustainability of the bull market. 

    Jimmy Lee, founder and chief executive officer of The Wealth Consulting Group said he is seeing “a lot of money” flowing into areas that are not the Magnificent Seven such as stocks in the industrials, financials, materials, energy and even real-estate sectors.

    The S&P 500’s industrials sector
    SP500.20,
    +0.23%

    climbed 2.9% in July, while the financials sector
    SP500.40,
    +0.44%

    advanced over 4.7% this month. The S&P 500’s energy sector
    SP500.10,
    +2.00%
    ,
    which had been the biggest laggard when the rest of the markets exited the bear market in June, jumped 7.3% month to date after the U.S. oil benchmark
    CL.1,
    -0.20%

    CL00,
    -0.20%

    closed above $80 a barrel for the first time since April. 

    Meanwhile, the tech-heavy S&P 500’s communication-services sector
    SP500.50,
    -0.03%

    rose 6.7% in July, while the consumer-discretionary sector
    SP500.25,
    +0.56%

    gained 2.4% and the information-technology sector
    SP500.45,
    +0.13%

    was up 2.6%, according to FactSet data. 

    See: Stocks are on a seemingly unstoppable hot streak, but this bond-market ‘tipping point’ could see it end in a hurry

    Stephen Hoedt, managing director of equity and fixed income research at Key Private Bank, told MarketWatch in an interview that he doesn’t see “any reason to get bearish here with the fundamentals that are underlying,” which gives investors reason to rotate toward the more cyclical areas such as energy, financials and industrials, while broadening the market away from just being concentrated in the megacap technology names. 

    “The growth has been a surprise this year for everyone, so that’s what the market got wrong coming into this year. When I look at growth, nominal GDP growth translates directly into earnings and we’ve seen earnings continue to surprise on the upside,” Hoedt said. 

    Hoedt pointed to the direction of the 12-month forward earnings estimate for the S&P 500 as an important indicator. “As long as the direction of the 12-month forward earnings number for the S&P 500 is going up, it’s really, really difficult to be bearish on the stock market,” he said. “It seems to me that we may start to see another inflection higher in forward earnings revisions that take into account this stronger growth environment that we’re in.” 

    However, the broadening of the stock-market rally and the bullish sentiment were also driving some on Wall Street to believe stocks are overbought and due for a correction. 

    Lee said there’s still too much pessimism out there and too much concern that some investors haven’t chased the market yet. “In the second half of this year, when the Fed does stop raising rates and if the economy stays out of recession, you can see major money — trillions of dollars moving from the money market into equities and other risk assets,” he told MarketWatch in a phone interview on Friday.

    “When that happens, it’s probably going to push valuations even further. So I would imagine when that happens is when you can expect more of a correction to occur, but I think that we still have more room to go before that happens.” 

    U.S. stocks ended higher on Monday, finishing up July on a positive note. Three major stock indexes rallied this month, with the S&P 500 up 3.1% and booking its fifth monthly gain. The tech-heavy Nasdaq Composite
    COMP,
    +0.21%

    gained 4.1% month to date, while the Dow Jones Industrial Average
    DJIA,
    +0.28%

    advanced 3.4%, according to Dow Jones Market Data. 

    [ad_2]

    Source link

  • X logo officially replaces Twitter’s famous bird on mobile app, building headquarters

    X logo officially replaces Twitter’s famous bird on mobile app, building headquarters

    [ad_1]

    This illustration photo taken on July 24, 2023 shows the Twitter bird logo upside down in the background of Elon Musk’s screen advertising an “X” as a replacement logo, in Los Angeles.

    Chris Delmas | AFP | Getty Images

    X, formerly known as Twitter, has officially retired its famous blue and white bird logo.

    The icon on the mobile app changed to an “X” late Friday night in the latest phase of a sweeping rebrand the platform’s owner Elon Musk announced earlier this month. The company previously introduced the logo on the web and launched the domain X.com, though Twitter.com also remains live.

    Musk, who acquired the platform for $44 billion late last year, wrote in a post Sunday that the company would soon “bid adieu to the twitter brand and, gradually, all the birds.” The transition from Twitter to X reflects Musk’s vision to turn the platform into what he has called an “everything app.”

    He shared a video of a large new X logo glowing on top of the company’s headquarters early Saturday.

    City officials in San Francisco opened an investigation into the company Friday for allegedly installing the sign without proper approval, according to the Department of Building Inspection’s website. The department filed two active complaints Friday with the descriptions “Structure on roof without permit” and “Unsafe sign” at the address for X’s headquarters.

    In one complaint, a city official said they visited the building and asked company representatives for access to the roof. The official was denied access and told the structure is “a temporary lighted sign for an event.”

    San Francisco’s Department of Building Inspection and X did not immediately respond to CNBC’s request for comment.

    The Tesla CEO has long been enamored with the letter “x.” SpaceX, Musk’s rocket manufacturer, also features an X as its logo, and Musk recently launched a new artificial intelligence startup called xAI, with the lofty goal to “understand the true nature of the universe.”

    But undoing years of branding behind Twitter’s blue bird is a move that business analysts consider risky. The company has already struggled to retain advertisers as Musk’s changes to the site have led some to fear it’s not a safe place for brands to market.

    Musk recently hired former NBCUniversal advertising executive Linda Yaccarino as CEO, seen as a move to help reassure advertisers.

    In an email to employees Monday obtained by CNBC’s Sara Eisen, Yaccarino wrote that X will develop experiences in video, audio, messaging, banking and payments that will “delight” users. She added that she and Musk plan to work across every team to keep the “entire community up to date.”

    “Time to update.,” Yaccarino wrote in a post about the mobile app’s logo change Friday.

    Disclosure: NBCUniversal is the parent company of CNBC.

    [ad_2]

    Source link

  • These stock watchers nailed the market’s melt-up, but now they’re bracing for a fall. Here’s what to watch.

    These stock watchers nailed the market’s melt-up, but now they’re bracing for a fall. Here’s what to watch.

    [ad_1]

    Similar to the buzzy intrigue behind the mashup viewing of the tonally different Barbie and the Oppenheimer movies, the market is rallying to its own oddball double feature: higher interest rates and economic uncertainty.

    What could go wrong? That is what some stock-market specialists are wondering.

    On Friday, the Dow Jones Industrial Average
    DJIA,
    -0.13%

    notched a 10th consecutive positive close, marking the longest win streak for the blue-chip benchmark since Aug. 7, 2017, according to the team at Dow Jones Market Data.

    To say that it has been a remarkable run-up is, perhaps, an understatement for some assets. Carvana
    CVNA,
    -2.38%
    ,
    a left-for-dead used-car retailer, whose stock had surged by 1,100% at its peak so far this year, before retreating somewhat, is a perfect example of the fervor surrounding risky assets.

    It feels as if buyers are crazed, even as the Federal Reserve is set next week to raise interest rates a quarter of a percentage point, marking the 11th time (since March of 2022) that the central bank has increased benchmark interest rates after pausing in June to assess the inflation backdrop.

    Read: U.S. inflation slows again, CPI shows

    The Wall Street Journal this week described the investing environment as hitting a “fever pitch” with “risk-on” assets the most popular they have been since late 2021—right before stocks entered the longest bear market in decades.”

    The surprising velocity at which the bearish miasma from earlier this year has dissipated is also noteworthy, considering the concerns around stubbornly high inflation and incessant fear of a Fed-induced recession.

    At Friday’s close of trade, the Dow was off a mere 4.3% from its January record high reached in 2022, the S&P 500 is about 5.4% shy of its Jan. 2, 2022 closing high. Soberingly, the tech-weighted Nasdaq Composite Index
    COMP,
    -0.22%

    remains off nearly 13%.

    Now, however, may be time to take profits, some pros seem to caution.

    Stifel’s chief equity strategist Barry Bannister told MarketWatch via email that the lagged effects of the Fed’s barrage of tightening, combined with stingy lending — among other factors — would likely be triggers for a market pullback, if not an economic retrenchment.

     “In total, those leading indicators will keep economic growth soft,” Bannister said, also referencing flagging manufacturing.

    In large part, that is why he’s calling for sideways action or a possible retreat of about 3% for the S&P 500
    SPX,
    +0.03%

    to 4,400.

    Bannister’s recent call is worth heeding because he nailed the first part of a two-pronged prediction for 2023, when he referred to it as a year of two halves.

    Back in January, he wrote:

    2023 may be a year of 2 halves, with the S&P 500 peaking mid-2023. The S&P 500 in late 2023 may give back some or all of 2023 gains.

    The Stifel analyst sees a heightened recession risk for 2024.

    Meanwhile, Michael Gayed, who also runs the Lead-Lag Report and is a portfolio manager at Tidal Financial Group, warned of the perils of investors’ rabid buying, in a recent report. Similar to Bannister, he also predicted a strong first half of 2023 followed by a retreat in latter part of the year.

    Jacques Cesar, a former managing partner at Oliver Wyman who now works on market valuation for the firm, shared a similar sentiment to those two…but with some nuances, in an interview with MarketWatch.

    “Right now, we are in a melt-up,” he said. “And Rule No. 1 about a melt-up, don’t short a melt-up,” he said, referring to making bearish bets that the market will fall soon.

    “Is the market too high? Yes,” Cesar said. “But is there a signal to short? Absolutely not,” he said.

    The market valuation pro, says investors find themselves in a Russian nesting doll of market conditions: “We are in a sub-cyclical bull in a cyclical bear in a suprasecular bull.”

    His assumption is that the current melt-up in markets will reverse but cautions that predicting the precise timing is impossible.

    Useful signs to look for will be decelerating market pricing and then reversing coupled with trading volume picking up as stocks slide.

    Cesar also predicts a pullback in 2024, if not a recession, and said that downturn will be followed by a return to a suprasecular, long-term bull run in 2025.

    Although, there won’t be an apparent trigger for the market and economic slump, Cesar says eroding consumer savings. built up during the pandemic, will be depleted by the end of 2023.

    As for inflation, Cesar says it has been dropping like a stone and pointed to the New York Fed’s Underlying Inflation Gauge as an early (but perhaps unheeded) signal that pricing pressures have been steadily receding.

    So much so that disinflation, a slowdown in the rate of inflation, may be a corporate concern in coming quarters.

    He said companies, which enjoyed healthy pricing power during the inflationary period, will be hurt in the short-term by disinflation in the short term.

    “As you go into disinflation, the margins get squeezed,” he said.

    Bannister says oversold parts of the market like banks
    KRE,
    -1.26%

    KBE,
    -1.20%
    ,
    industrials
    XLI,
    -0.47%

    and basic materials
    XLB,
    +0.01%
    ,
    might be better opportunities for investors in the third quarter than growth-oriented tech plays like Tesla
    TSLA,
    -1.10%
    ,
    for example.

    In the end, bulls (and bears), similar to moviegoers are wading back into a market that had been written off at the start of the year. The major cinematic question? Will they will be partying with Barbie or getting blown up with Oppenheimer?

    [ad_2]

    Source link

  • How EV range is determined and why the process is flawed

    How EV range is determined and why the process is flawed

    [ad_1]

    Chevrolet Bolt at EPA’s National Fuel and Emissions Lab

    How far an electric vehicle can drive on a single charge is one of the most closely watched numbers in the automotive world.

    The official government process used to test and certify those ranges has potential flaws.

    The U.S. Environmental Protection Agency has been testing vehicles since 1971, but only started testing EVs in 2012. EV technology is still quite new and is changing rapidly. EPA Engineers say these are exciting times, but it can also feel like the “wild west.”

    The EPA only tests a small portion of the total vehicle fleet. The fact that it can test any vehicle at any time forces automakers to meet EPA standards.

    Some in the auto industry say the EPA ratings are more accurate than those issued by other governmental bodies, at least for American roads. But independent groups have found that their own tests yield results that are different from official EPA range ratings.

    Critics say the agency’s labels are inconsistent with those used for gas vehicles, in part because the tests don’t account for how people actually drive. Ranges on labels seem bigger than they are. Automakers can also use methods to inflate their range numbers.

    Watch the video to learn more.

    [ad_2]

    Source link

  • Here’s why Wall Street has fallen out of love with Tesla — for now

    Here’s why Wall Street has fallen out of love with Tesla — for now

    [ad_1]

    Late on Wednesday, Tesla Inc.
    TSLA,
    -1.10%

    reported that quarterly sales were up 47% from a year earlier. But the stock tumbled 10% on Thursday.

    Tesla’s shares are still up 113% this year. The company is among a group of 13 in the S&P 500 that stand out with high growth expectations for sales, earnings and free cash flow through 2025.

    But less than half of analysts polled by FactSet rate Tesla a buy. Emily Bary explains what they are worried about.

    Traders have placed large short bets against Tesla and two of its rival EV makers — Rivian Automotive Inc.
    RIVN,
    -2.09%

    and Nio Inc.
    NIO,
    +2.52%
    .
    Claudia Assis looks into how well those trades have been working out.

    Cody Willard explains why he remains confident that Tesla and Rivian will dominate the EV market over the long term.

    Related coverage:

    Here’s what may propel U.S. stocks for years.

    Chipotle Mexican Grill is among 14 stocks named by Michael Brush for consideration by investors looking to ride along with long-term improvement of U.S. labor productivity.


    AP

    The S&P 500
    SPX,
    +0.03%

    has returned 19% this year, following its 18% decline in 2022. On the same basis, with dividends reinvested, the benchmark index is still down 2% since the end of 2021.

    What is going on? Michael Brush believes that a high level of corporate investment in new technology and equipment is setting the stage for a long phase of earnings growth for U.S. companies. He shares four developments behind the coming productivity boom and 14 stocks expected to benefit from it.

    A signal for the stock-market’s health


    Getty Images

    The Dow Jones Industrial Average
    DJIA,
    +0.01%

    is up 6% this year. The venerable index has trailed the S&P 500, but its closing level of 35,255.18 on Thursday was only 4% shy of its record close a 36,799.65 on Jan. 4, 2022. Joseph Adinolfi explains Dow Theory, which according to technical analysts is sending a strong bullish signal for the stock market.

    Other opinions about market sentiment:

    Even if you have resisted the idea of a Roth IRA, you may soon be forced to have one

    This year if you are age 50 or older and are already maxing-out your contribution to a 401(K), 403(B) or other qualified employer-sponsored tax-deferred retirement plan at $22,500, you can make an additional “catch up” tax deductible contribution of $7,500 for a total of $30,000. But starting in 2024, the catch up contribution will no longer be tax deductible if you earn at least $145,000 a year. You can still make the contribution with after-tax money into a Roth 401(K) account that your plan administrator may already have set up for you.

    Alessandra Malito provides more details and news about employers’ efforts to delay the rule’s implementation.

    Beth Pinker writes the Fix My Portfolio column. This week she digs into Roth IRA conversions, through which you can simplify your taxes down the line.

    A hot vote in Spain

    The center of Madrid on July 15, 2023. A brutal heat wave could affect turnout for the country’s general election on July 23.


    Uncredited

    Barbara Kollmeyer reports from Spain about a highly contested election on Sunday, with controversy over the government’s policies during the pandemic, parties’ social policies and the possibility of a coalition government that might rattle financial markets.

    Meta vs. Alphabet

    Shares of Meta Platforms Inc. and Alphabet Inc. trade only slightly higher than the S&P 500 on a forward price-to-earnings bases, while Nvidia Corp., Microsoft Corp. and Apple Inc. trade much higher.


    FactSet

    Leslie Albrecht looks at Meta Platforms Inc.
    META,
    -2.73%
    ,
    which is Facebook’s holding company and has a hit on its hands with the new Threads social-media platform, and Google holding company Alphabet Inc.
    GOOGL,
    +0.69%
    ,
    to consider which stock is a better buy.

    Brett Arends: ‘I used to work at Nvidia. The stock I got is now half my portfolio. Should I sell?’

    The Ratings Game

    In The Ratings Game column, MarketWatch reporters track analysts’ thoughts about various stocks. Here’s a sampling of this week’s coverage:

    You don’t know every bad factor causing air travel to be nothing but harassment

    Getting there is half the fun.


    Getty Images

    The U.S. flying scene — from shortages of equipment and labor (and runways) to ill-staffed air-traffic control towers — is a well-known nightmare for U.S. travelers. But there is more to the story. Jeremy Binckes looks into other factors that may surprise you and cause great inconvenience this summer.

    The Federal Reserve is expected to raise interest rates again next week

    The Federal Open Market Committee will meet next Tuesday and Wednesday, to be immediately followed by a policy announcement. Economists expect the central to raise the federal-funds rate by another quarter point. The question is whether or not this will end the Fed’s inflation-fighting rate cycle.

    More coverage of the Fed:

    How much would you pay for 100% downside protection in the stock market?


    MarketWatch illustration/iStockphoto

    Over the past 30 years, the SPDR S&P 500 ETF Trust
    SPY,

    has returned 1,650%, for an average annual return of 10%, with dividends reinvested, according to FactSet. But it hasn’t been a smooth ride. The ETF, which tracks the benchmark S&P 500, fell 18% last year and 37% during 2008, for example. And there have been even larger declines if the analysis isn’t confined to calendar years.

    But can you ride through market declines? Many studies have shown that most investors who try to time the market sell after a decline has started and buy back in well after a recovery is under way, which means their long-term performance can suffer significantly.

    In this week’s ETF Wrap column (and emailed newsletter), Isabel Wang describes a new buffered fund that can give you 100% downside protection over a two-year period, in return for a cap on your potential gains in the stock market. Here’s the price you would pay for the protection.

    The World Cup games have started

    Hannah Wilkinson scored the home team’s first goal against Norway during the first World Cup game in Auckland, New Zealand, on July 20.


    Getty Images

    The Women’s World Cup began Thursday with an upset victory by New Zealand over Norway.

    James Rogers reports on what is expected to be a much easier environment for FIFA and corporate sponsors than that of last year’s Men’s World Cup in Qatar.

    U.S. Soccer Federation President Cindy Parlow Cone participated in MarketWatch’s Best New Ideas in Money podcast and spoke about the long-term effort to achieve equal treatment for women soccer players.

    More coverage of the World Cup:

    Want more from MarketWatch? Sign up for this and other newsletters to get the latest news and advice on personal finance and investing.

    [ad_2]

    Source link

  • Volvo Cars will use Tesla’s Superchargers but not its autonomous driving tech. Its CEO explains why

    Volvo Cars will use Tesla’s Superchargers but not its autonomous driving tech. Its CEO explains why

    [ad_1]

    Volvo Cars CEO Jim Rowan photographed in Nov. 2022. The company wants every car it sells to be fully electric by the year 2030.

    Anders Wiklund | AFP | Getty Images

    Volvo Cars does not plan to use autonomous driving technology from Tesla and will instead focus on developing its own systems, according to the company’s CEO.

    Back in June, the Gothenburg-headquartered carmaker said it had inked an agreement with Elon Musk’s firm that would give its electric vehicles access to 12,000 Tesla Superchargers in the U.S., Mexico and Canada.

    Speaking to CNBC’s “Squawk Box Europe” on Thursday morning, Volvo Cars chief Jim Rowan was asked whether this meant the business would consider using Tesla’s autonomous driving tech in the future.

    “We’ve already made that decision in terms of what we want to control internally, in terms of our technology stack,” Rowan said.

    “And we’ve chosen that we want to be in full control of our ADAS [advanced driver assistance systems], all the way up to full AD [autonomous driving] software,” he added.

    “So we will continue to write that, we will continue to invest in that, and we’ll continue to develop that.”

    In a sign of how the company’s strategy is taking shape, Volvo Cars announced late last year that it had taken full ownership of Zenseact, a business specializing in AD software.

    Read more about electric vehicles from CNBC Pro

    Rowan was speaking to CNBC after Volvo Cars reported second-quarter results. The company said earnings before interest and taxes were 5 billion Swedish krona (around $487.5 million) compared to 10.8 billion Swedish krona in the second quarter of 2022.

    “During the quarter, the company reported a continued strong sales performance in electric cars,” it said in a statement accompanying its earnings report. “Sales of fully electric Volvo car models increased by 178 per cent year-on-year during the quarter and accounted for 16 per cent of its total share.”

    Volvo Cars’ longer-term electrification strategy is centered around every car it sells being fully electric by the year 2030. This would mean a phase-out of vehicles using internal combustion engines, a category that includes hybrids.

    Supply chain challenges

    The past few years have seen the automotive industry suffer issues related to supply chains and the cost of materials crucial to the production of electric vehicles.

    During his interview with CNBC, Rowan gave an overview of the current state of play. “Last year we saw lithium spike quite dramatically, that’s now come down substantially from its peak,” he said.

    “It went from about 10 to about $110 per kilo and now it’s down … below, somewhere between 30 and 40 [dollars],” he added. “So we’re starting to see that normalize, and I think that will keep reducing through the course of this year.”  

    Rowan also described semiconductors as being “patchy” in 2022 but “much, much better this year.”

    This had been shown in Volvo Cars own output, he said. “We manufactured over 50% more cars this quarter than we did in the same quarter last year.”

    He added that 2022 had also been affected by Covid lockdowns. “If you remember, Shanghai was locked down for almost 60 days — we had a lot of the suppliers in Shanghai, and that was an effect there,” Rowan said.

    “So we’re seeing that bounce back really quickly for us.”

    [ad_2]

    Source link

  • Why Tesla investors should care about Elon Musk’s multiplying ventures

    Why Tesla investors should care about Elon Musk’s multiplying ventures

    [ad_1]

    Tesla CEO Elon Musk and his security detail depart the company’s local office in Washington, January 27, 2023.

    Jonathan Ernst | Reuters

    Elon Musk‘s multiple ventures and the relationships between them are facing increased scrutiny as the Tesla CEO continues to add more to his plate.

    During Tesla’s second-quarter earnings call on Wednesday, Truist analyst William Stein asked Musk about yet another tech venture he has started up and incorporated in Nevada: xAI. Musk recently said that the artificial intelligence startup aims to compete with Google Bard or OpenAI’s ChatGPT someday, and plans to collaborate with Tesla on software and silicon alike.

    Stein asked him, “For investors that think there might be quite a bit of value in the AI features and products of Tesla, it might be concerning to see you pursuing another endeavor where AI is the focus. Can you talk about how xAI might overlap, might perhaps compete with Tesla or in other ways perhaps it enhances the value of what Tesla does?”

    Musk claimed that xAI and its focus artificial general intelligence on would bring some value to Tesla, and talked about recruiting as an example.

    “There were just some of the world’s best AI engineers and scientists that were willing to join a startup but they were not willing to join a large, sort of relatively established company like Tesla.” He added, “So I was like, OK well, better it’s a startup that I run than they go work somewhere else. That’s kind of the genesis of xAI.”

    In addition to the xAI example, he said he was only able to entice a top materials science engineer away from his job at Apple by promising the engineer could work concurrently for SpaceX and Tesla. The engineer in question, Charles Kuehmann, joined Tesla in late 2015 and now holds the title of vice president of SpaceX and Tesla materials engineering, reporting directly to the CEO.

    The issue of Musk and his multiple ventures also came up earlier this month, when Sen. Elizabeth Warren, D-Mass., urged the Securities and Exchange Commission to investigate its Twitter ties and related corporate governance issues.

    Musk led a $44 billion buyout of the social media company last year and appointed himself CEO there temporarily. He is now the controlling shareholder, CTO and executive chair of Twitter while holding down the CEO role both at Tesla and at his aerospace and defense company, SpaceX. He’s also the founder and funder at the brain-computer interface startup Neuralink and tunneling venture The Boring Co.

    Tesla is the only public company among the bunch. And it has never disclosed to shareholders exactly how much talent, time and money it has spent helping Musk at his other ventures, or why sending people over to Twitter would comprise a reasonable use of Tesla resources. Musk previously enlisted Tesla, SpaceX and The Boring Co. employees to assist him with his Twitter takeover, as CNBC reported.

    At least one senior Tesla employee has jumped ship to Musk’s X Corp., the parent company of Twitter. Court filings revealed that Dhruv Batura, who had worked at Tesla since late 2013 and was a senior manager of business operations finance there, is now a senior director of finance at X Corp. Batura was posting job ads for X Corp. on Twitter on the day of Tesla’s second-quarter earnings report.

    In a May 2023 proxy filing, Tesla did disclose a few details about its related party transactions. Among these, Tesla revealed that “Twitter is party to certain commercial and support agreements with Tesla. Under these agreements, Twitter incurred expenses of approximately $1.0 million in the aggregate in 2022 and $0.4 million in 2023 through February.” Tesla hasn’t said what, exactly, Twitter is buying from the company.

    Risks include lack of focus, employee burnout

    According to London School of Economics professor of organizational behavior, Randall S. Peterson, “Musk is making a convoluted argument in saying ‘I am helping Tesla by keeping these great people from joining a competitor.’ It’s a counter-factual you cannot ever really test or challenge in an investigation.”

    Most startups fail, Peterson noted, and people who want to create startups were probably not likely to join Tesla’s direct competitors in the automotive industry.

    Peterson said Musk’s many ventures can create risks for Tesla, and shareholders should seek more details.

    “It’s hard to focus on and excel at any one thing when you run multiple companies,” Peterson said. “That’s a risk around the CEO himself. Would most companies’ shareholders tolerate their CEO running several other companies at the same time? The answer to that is probably no. So that raises a question of what the Tesla board is doing, whether they are independent at any level, or are so enamored of Musk that they not only tolerate his unusual way of working, but might be missing significant fundamental problems as long as the money keeps coming.”

    Boards at companies that have ended up in crisis, like Enron and the Royal Bank of Scotland, failed to rein in their CEOs despite signs of problems for many quarters, he noted.

    Another risk, Peterson said, is that Musk’s employees may feel pressure to work on many projects at once for him concurrently, outside of Tesla. In a quest to please him or rack up new work experience, employees may fail to recuperate from their work and burnout. Burnout, he said, can lead to high attrition or poor performance.

    Finally, the professor noted, Musk may be creating distractions that impede focus among his employees, even if his intention is to cross-pollinate among his businesses.

    “You need to be super-focused to be the best at something, both as an individual and as a corporation. That’s the reason we have seen a trend away from conglomerates which were big in the 70s to companies that are more focused today,” the professor said.

    Still, Musk appears to be doubling down on unapologetic collaborations between companies in his growing empire.

    On Wednesday’s call, he was asked to give an update on Tesla’s progress developing a humanoid robot dubbed Optimus. Musk waxed on in a futuristic vein, saying that Tesla may one day collaborate with Neuralink to make robotic, prosthetic arms and legs to help amputees return to full mobility or dexterity.

    Tesla did not immediately respond for a request for comment. Twitter responded with an automated reply containing a crude symbol.

    — CNBC’s Rohan Goswami contributed reporting.

    [ad_2]

    Source link

  • Dow posts longest winning streak in nearly 6 years; Nasdaq slumps over 2%

    Dow posts longest winning streak in nearly 6 years; Nasdaq slumps over 2%

    [ad_1]

    U.S. stocks finished mostly lower Thursday, with the Nasdaq and S&P 500 dragged down by disappointing earnings, while the Dow Jones Industrial Average rose for a ninth straight day for its longest winning streak in nearly six years.

    How stocks traded

    • The S&P 500
      SPX,
      -0.68%

      fell 30.85 points, or 0.7%, to close at 4,534.87.

    • The Dow
      DJIA,
      +0.47%

      rose 163.97 points, or 0.5%, to finish at 35,225.18. The winning streak is its longest since a nine-day run that ended on Sept. 20, 2017, according to Dow Jones Market Data.

    • The Nasdaq Composite
      COMP,
      -2.05%

      ended at 14,063.31, down 294.71 points, or 2.1%.

    What drove markets

    After lagging behind the S&P 500 and Nasdaq for most of the year, the Dow Jones Industrial Average has climbed over the past two weeks. The blue-chip gauge is now heading for its longest streak of daily gains since Sept. 20, 2017, according to Dow Jones Market Data.

    It’s the latest milestone as value stocks and other lagging sectors of the market appear to be playing “catch up,” said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest Wealth Management, during a phone interview with MarketWatch. Although the Dow’s year-to-date gains are still well behind those of the S&P 500, with the blue-chip gauge up 6.6% since Jan. 1, FactSet data show.

    On Wednesday, the S&P 500 and Nasdaq closed at their highest levels in nearly 16 months.

    “We’re finally seeing the rotation to value,” he said. “The Dow is playing catch up with the S&P 500 and the Nasdaq.”

    See: Stock-market bubble trouble? Check out the 3-year view on Nasdaq, S&P 500 returns.

    Technology stocks were lagging following earnings from Netflix Inc.
    NFLX,
    -8.41%

    released late Wednesday, which showed that revenue fell short. Shares fell 8.4%.

    Tesla Inc.
    TSLA,
    -9.74%

    shares fell 9.7% after the electric vehicle maker beat Wall Street expectations for its second quarter but not in the blowout fashion that some market observers were expecting.

    “Netflix missed sales estimates and issued lower-than-expected Q3 guidance, while Tesla’s results showed shrinking profitability with squeeze on margins,” said Henry Allen, strategist at Deutsche Bank.

    Semiconductor shares also took it on the chin, with the PHLX Semiconductor Index
    SOX,
    -3.62%

    falling 3.6%. The drop came after Taiwan Semiconductor Manufacturing Co. 
    TSM,
    -5.05%

    topped second-quarter earnings expectations but reported margins that contracted, while providing a somewhat downbeat outlook.

    Meanwhile, shares of IBM Corp.
    IBM,
    +2.14%

    and Johnson & Johnson
    JNJ,
    +6.07%

    drove the Dow higher after both companies beat earnings expectations.

    Bad news for Netflix seemed to infect other megacap technology names, as Alphabet Inc. Class A
    GOOGL,
    -2.32%

    and Alphabet Inc.
    GOOG,
    -2.65%

    retreated, as did shares of Apple Inc.
    AAPL,
    -1.01%

    and Microsoft Corp.
    MSFT,
    -2.31%

    after the latter hit a record this week.

    Investors also digested earnings from American Airlines Group Inc.
    AAL,
    -6.24%

    and Blackstone Inc.
    BX,
    -0.61%

    which reported before the opening bell. After the close, investors will hear from Capital One Financial Corp.
    COF,
    -2.52%
    ,
    CSX Corp.
    CSX,
    -0.27%

    and First Financial Bancorp
    FFBC,
    -0.54%
    ,
    along with a few others.

    In U.S. economic data, weekly jobless benefit claims data showed the number of Americans applying for first-time unemployment benefits fell to a two-month low. Meanwhile, the Philadelphia Fed’s gauge of manufacturing activity came in at negative 13.5 in July, up from 13.7 during the prior month.

    Existing home sales fell in June, while leading index of economic indicators dropped 0.7% in June, falling for the 15th month in a row.

    Companies in focus

    [ad_2]

    Source link

  • CNBC Daily Open: Markets care more about expectations than numbers

    CNBC Daily Open: Markets care more about expectations than numbers

    [ad_1]

    Goldman Sachs headquarters in New York, US, on Thursday, July 6, 2023.

    Michael Nagle | Bloomberg | 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.

    What you need to know today

    Cautious rise
    U.S. stocks
    edged up slightly Wednesday as traders digested earnings reports, with Tesla, Netflix and IBM reporting after the bell. Asia-Pacific markets traded mixed Thursday. China’s Shanghai Composite fell 0.33% as the country’s central bank left its one- and five-year loan prime rates unchanged. But Hong Kong’s Hang Seng Index managed to add 0.26%, reversing two straight days of losses.

    Tesla’s record revenue
    Tesla booked record revenue of $24.93 billion, a year-on-year increase of 42% thanks to price cuts. However, that meant operating margin dropped to 9.6%, the lowest for the last five quarters. Still, net income increased 20% from last year to $2.7 billion. Both profit and revenue beat Wall Street’s expectations. But shares sank 4.19% in extended trading after CEO Elon Musk failed to give concrete information on Cybertruck and robotaxi plans during Tesla’s earnings call.

    Netflix’s crackdown worked
    Netflix’s second-quarter revenue rose 3% to $8.19 billion from a year earlier and net income increased 3.47% to $1.49 billion. Subscribers jumped 5.9 million last quarter as Netflix stopped password sharing. Netflix also removed its cheapest ad-free plan in the U.S. and U.K. Its shares plunged 8.26% in after-hours trading, but that’s a sign investors are selling shares to lock in profits, CNBC’s Alex Sherman wrote.

    Not all that is Goldman glitters
    Goldman Sachs’ profit fell 58% to $1.22 billion, or $3.08 a share, missing estimates. Goldman’s decline in trading and losses related to GreenSky sapped around $3.95 from per share earnings. Revenue fell 8% to $10.9 billion, marginally beating expectations.

    [PRO] Conviction over Chinese AI firms
    Investor excitement over generative artificial intelligence isn’t limited to the U.S. technology companies. Goldman Sachs just named its top picks of Chinese firms that are likely to benefit from AI — two are on its conviction list, meaning that the bank expects them to have the biggest potential jump in price.

    The bottom line

    It’s all about expectations.

    Prior to the start of the second-quarter earnings season, investor relations departments and analysts massaged expectations downwards. The most obvious example is Goldman Sachs — its woes in consumer banking, from its attempt to sell GreenSky to its talks to offload its Apple credit card and savings account products, were well publicized.

    When Goldman reported a disappointing second quarter, then, it didn’t take investors aback. Its shares even rose almost 1% on the news. Astounding, if you think about the bank’s 58% fall in profits. But not that surprising, given that investors were prepared and were probably heaving a sigh of relief there wasn’t more bad news.

    Elsewhere, the strategy of managing expectations seems to be working. More than three quarters of S&P companies that have reported results have exceeded expectations, according to FactSet data. That reinforced hopes that the economy can elude a recession as inflation falls and rates remain high.

    Major indexes eked out small gains on that sentiment. The Dow Jones Industrial Average rose 0.31%, its eighth straight day of gains and longest winning streak since September 2019. The Nasdaq Composite was essentially flat and the S&P 500 climbed 0.24%.

    Thus far in July, the S&P has added 2.6%. By contrast, the small-cap Russell 2000 Index has risen almost 5% in the same period, CNBC’s Darla Mercado and Gina Francolla noted. It’s a sign that more firms are participating in the market rally, potentially giving stocks more room to grow.

    Tom De Luca, senior researcher at Vanguard, concurs. “Investors are saying loud and clear that they expect the current stock market rally to continue,” said De Luca. “Right now, short-term optimism is higher than we’ve seen since December 2021, right before the start of the 2022 bear market.”

    [ad_2]
    Source link

  • CNBC Daily Open: Expectations can matter more than numbers

    CNBC Daily Open: Expectations can matter more than numbers

    [ad_1]

    A person walks towards Goldman Sachs headquarters in New York, US, on Thursday, July 6, 2023.

    Michael Nagle | Bloomberg | 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.

    What you need to know today

    Cautious rise
    U.S. stocks
    edged up slightly Wednesday as traders digested earnings reports, with Tesla, Netflix and IBM reporting after the bell. Europe’s Stoxx 600 Index added 0.3% as oil and gas stocks rose 1.1%. The U.K.’s FTSE 100 had a much better day, advancing 1.8% after the country’s inflation figures came in cooler than expected. More on those stories below.

    Tesla’s record revenue
    Tesla booked record revenue of $24.93 billion, a quarter-on-quarter increase of almost 7% thanks to price cuts. However, that meant operating margin dropped to 9.6%, the lowest for the last five quarters. Still, net income increased 20% from last year to $2.7 billion. Both profit and revenue beat Wall Street’s expectations. Shares sank 4.5% in extended trading.

    Netflix’s crackdown worked
    Netflix’s second-quarter revenue rose 3% to $8.19 billion from a year earlier and net income increased 3.47% to $1.49 billion. Subscribers jumped 5.9 million last quarter as Netflix stopped password sharing. Netflix also removed its cheapest ad-free plan in the U.S. and U.K. Its shares plunged 8.66% in after-hours trading, but that’s a sign investors are selling shares to lock in profits, CNBC’s Alex Sherman wrote.

    Not all that is Goldman glitters
    Goldman Sachs’ profit fell 58% to $1.22 billion, or $3.08 a share, missing estimates. Goldman’s decline in trading and losses related to GreenSky sapped around $3.95 from per share earnings. Revenue fell 8% to $10.9 billion, marginally beating expectations.

    Some relief in the UK
    U.K. inflation in June cooled to 7.9% year over year, below economists’ projection of 8.2%. May’s consumer price index reading was 8.7%, so that’s a significant drop in the rate of price increases. On a monthly basis, prices increased by only 0.1%. The yield on the two-year U.K. government bond plunged 20 basis points on the news.

    [PRO] The Dow Theory
    The Dow Jones Industrial Average has a lesser-known sibling: the Dow Jones Transportation Average. Both indexes recently closed at a 52-week high, in a sign the rally is broadening. CNBC Pro’s Bob Pisani explains the “Dow Theory” and why it might matter to traders.

    The bottom line

    It’s all about expectations.

    Prior to the start of the second-quarter earnings season, investor relations departments and analysts massaged expectations downwards. The most obvious example is Goldman Sachs — its woes in consumer banking, from its attempt to sell GreenSky to its talks to offload its Apple credit card and savings account products, were well publicized.

    When Goldman reported a disappointing second quarter, then, it didn’t take investors aback. Its shares even rose almost 1% on the news. Astounding, if you think about the bank’s 58% fall in profits. But not that surprising, given that investors were prepared and were probably heaving a sigh of relief there wasn’t more bad news.

    Elsewhere, the strategy of managing expectations seems to be working. More than three quarters of S&P companies that have reported results have exceeded expectations, according to FactSet data. That reinforced hopes that the economy can elude a recession as inflation falls and rates remain high.

    Major indexes eked out small gains on that sentiment. The Dow Jones Industrial Average rose 0.31%, its eighth straight day of gains and longest winning streak since September 2019. The Nasdaq Composite was essentially flat and the S&P 500 climbed 0.24%.

    Thus far in July, the S&P has added 2.6%. By contrast, the small-cap Russell 2000 Index has risen almost 5% in the same period, CNBC’s Darla Mercado and Gina Francolla noted. It’s a sign that more firms are participating in the market rally, potentially giving stocks more room to grow.

    Tom De Luca, senior researcher at Vanguard, concurs. “Investors are saying loud and clear that they expect the current stock market rally to continue,” said De Luca. “Right now, short-term optimism is higher than we’ve seen since December 2021, right before the start of the 2022 bear market.”

    [ad_2]
    Source link

  • Tesla books record revenue of $24.9 billion with margin declining after price cuts

    Tesla books record revenue of $24.9 billion with margin declining after price cuts

    [ad_1]

    Chief Executive Officer of SpaceX and Tesla and owner of Twitter, Elon Musk attends the Viva Technology conference dedicated to innovation and startups at the Porte de Versailles exhibition centre on June 16, 2023 in Paris, France.

    Chesnot | Getty Images

    Tesla reported earnings after the bell, showing a record for quarterly revenue but lower margins thanks to price cuts and incentives. The stock price is essentially unchanged in after-hours trading.

    • Revenue: $24.93 billion, versus $24.47 billion expected according to Refinitiv.
    • Earnings: 91 cents per share adjusted, versus 82 cents per share expected as per Refinitiv.

    Net income (GAAP) was $2.70 billion, an increase of 20% from last year. Operating income, however, was off 3% from the year-ago quarter at $2.40 billion.

    By way of comparison, during the first quarter of 2023, Tesla reported net income of $2.51 billion on revenue of $23.33 billion. During the second quarter last year, Tesla reported net income of $2.27 billion on $16.93 billion in revenue.

    On the company’s earnings call, CEO Elon Musk said, “We continue to target 1.8 million vehicle deliveries this year, but expect Q3 production will be a little bit down because we’ve got summer shutdowns for a lot of factory upgrades.”

    Early this month, Tesla reported 466,140 total vehicle deliveries for the second quarter and said it had produced 479,700 electric vehicles. Deliveries are the closest approximation of sales that Tesla reports.

    Those deliveries were higher than Wall Street expected, and were partly driven by incentives and discounts. Correspondingly, operating margins came in at 9.6%, the lowest for at least the last five quarters. Total gross margin came in at 18.2%, also a low for the same period.

    Tesla explained in a shareholder deck that its lower margins in the second quarter resulted from reduced average sales prices “due to mix and pricing” of the cars it has been selling, and the cost of ramping up production of battery cells it designed in-house, known as the 4680 cells, among other factors.

    Revenue from Tesla’s core automotive business rose 46% year-over-year to $21.27 billion, about a 6.5% increase sequentially. Its energy generation and storage revenue — from solar installations, and backup batteries — rose 74% year-over-year to $1.51 billion. With more vehicles on the road, Tesla’s “services and other” revenue, including fees for out-of-warranty vehicle repairs, rose 47% to $2.15 billion.

    Tesla’s research and development costs rose to $943 million (from $771 million in the first quarter) with the company writing in a shareholder deck that it is focused on “being at the forefront of AI development,” and has started production of its Dojo “training computers.”

    Tesla’s crossover, the Model Y, became the best-selling vehicle worldwide in the first quarter of 2023.

    Tesla said in an investor deck that Cybertruck “factory tooling” is on track but the company is only producing “release candidate” builds so far. The news could disappoint fans who are eagerly awaiting start of deliveries of the angular, sci-fi inspired pickup that Elon Musk first promoted in 2019. In recent days, Tesla posted a photo via its social media account on Twitter showing factory workers crowded in around a Cybertruck in their Austin, Texas facility. The tweet said, “First Cybertruck built at Giga Texas!”

    On the earnings call, Musk that the Cybertruck would include lots of “new technology,” with 10,000 “unique parts and processes.” Giving the caveat that it is “always difficult to predict the ramp initially,” Tesla will be making the Cybertruck, “in high volume next year, and we will be delivering the car this year.”

    Musk also said Tesla will be spending more than $1 billion on Dojo over the next year. Dojo is a supercomputer that Tesla is developing for AI machine learning and computer vision training purposes. Tesla hoovers up video clips and data from its customers’ and company vehicles to improve existing software, and to develop new features that become part of its driver assistance systems.

    “You see a lot of AI companies doing you know LLMs and what not and I’m thinking, if they’re so great why can’t they make a self-driving car? Because it’s harder!”

    Musk has been promising Tesla would deliver a self-driving car since at least 2016, and at that time promised a Tesla would be able to complete a cross-country trip with no driver intervention in 2017. So far, that still hasn’t happened. The company’s driver assistance systems, marketed as Autopilot or Full Self-Driving capability in the US, requires a human driver ready to steer or brake at any time.

    More futuristically, Musk spoke about combining a Neuralink brain implant with a robotic arm or leg made by Tesla. Speaking of amputees, he said, “We believe we can give [them] a cyborg body that is incredibly capable — six-million-dollar man in real life, but it won’t cost six million dollars.” He joked, “Sixteen-thousand-dollar man.”

    [ad_2]

    Source link