🤕 Intel’s Problems are Nothing New

Plus, SpaceX's Starlink has a new competitor

August 06, 2024

Hi All — Happy Tuesday,

We greatly appreciate all the feedback we received from our readers last week on “The Midday Trade.” 

This Sunday, we’ll share those poll results with all of you and provide a look ahead at our plans for the future.

So, sit tight!

With that out of the way, here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

  • 🟩 | US Stocks Rose on Tuesday. All three major indexes rose by roughly 1% as Japanese equities rallied and fears of a US recession calmed slightly.

  • 📈 | One Notable Gainer: Shares of Palantir shot 10% higher after reporting second-quarter earnings that topped estimates, and its revenue far surpassed Wall Street targets.

  • 📉 | One Notable Decliner: Customer acquisition tech company ZoomInfo Technologies saw its stock tumble 18% after missing analysts’ revenue and earnings expectations. It also cut its full-year revenue guidance.

  • 🤕 | Tomorrow's Trade: Intel’s Problems are Nothing New. Scroll down for more.

Plus, this tiny firm's patented "smart cell" technology could turn the drug industry upside down.

S&P 500 Heatmap. Credit: Finviz

All Stock Heatmap. Credit: Finviz

Global ADR snapshot. Credit: Finviz

MARKET MOVERS

LCID (+3%) Lucid Group announced Saudi Arabia's Public Investment Fund will inject up to $1.5 billion in cash into the EV maker (Reuters)

UBER (+11%) Uber reported second-quarter results that showed 16% year-over-year revenue growth, with $10.7 billion in revenue (YF)

SPWR (-44%) Rooftop solar installer SunPower filed for bankruptcy after struggling in the face of high interest rates and allegations of misconduct (CNBC)

LUMN (+93%) Lumen Technologies’ stock exploded higher after announcing it had secured $5 billion in new deals (Barron’s)

PLNT (+6%) Planet Fitness reported second-quarter results that beat Wall Street estimates on both the top and bottom lines (Investing.com)

TOGETHER WITH MONEY & MARKETS

This tiny firm's patented "smart cell" technology could turn the drug industry upside down.

OVERHEARD ON THE STREET

CNBC: OpenAI co-founder John Schulman said he would leave the Microsoft -backed company and join Anthropic, an AI startup funded by Amazon.

Axios: Aurora Innovation raised $483 million last week, more than expected, by selling additional shares in the publicly traded self-driving truck company.

CNBC: China launched its first batch of internet satellites that will form part of a constellation it hopes will rival SpaceX’s Starlink.

TC: PayPal said that it is making its quick guest-checkout solution, Fastlane, available to all U.S. merchants.

NYT: X filed a lawsuit against the Global Alliance for Responsible Media, claiming it violated antitrust laws by dissuading advertisers from the platform.

TOMORROW’S TRADE IDEA, TODAY

Disastrous Earnings

On the first day of August, Intel (INTC) released its Q2 results, and they painted a pretty bleak picture. Sales were down 1% year-over-year, and the company reported a loss of $1.6 billion.

According to CEO Pat Gelsinger, “Our costs are too high, our margins are too low.” His plans to respond by cutting 15,000 jobs and ceasing shareholder dividends.

Intel’s share price has plummeted over 30% since its earnings release.

A Step Behind the Competition

This earnings release gave a stark indicator of Intel’s lost ground in the semiconductor industry. But it wasn’t always that way. The tech company dominated the chip industry in the 90’s and 2000’s, largely thanks to its partnership with Microsoft (MSFT).

Unfortunately, the company focused too much on PCs and missed out on the cell phone chip market. When its peers started to outsource manufacturing, Intel elected to keep everything in-house.

These days, the company is virtually non-existent in the market for specialist AI chips, which Nvidia (NVDA) now dominates.

Playing Catch-Up

Gelsinger wants Intel to become the world’s second-largest foundry by the end of the decade. But that means that the company will be playing a hurried catch-up game in both the design and foundry spaces. Adding to the issue, Intel has underinvested in AI, according to Gartner analyst Alan Priestley.

Intel is attempting to compensate for a lack of investment on the foundry side by investing $100 billion in building new plants and expanding existing sites over the next five years. Much of the company's capital currently comes from private equity and government funding.

While $100 billion is nothing to scoff at, many analysts think this may be too little too late, with Intel being too far behind in the AI race to capture sufficient market share.

Will Intel (INTC) be successful in its AI endeavors?

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TOGETHER WITH MONEY & MARKETS

This tiny firm's patented "smart cell" technology could turn the drug industry upside down.

ON OUR RADAR

AP: The Energy Department awarded $2.2B to strengthen the electrical grid and add clean power.

NYT: A fast-moving brush fire burned homes and forced evacuations in the inland California city of San Bernardino, adding to an intense fire season.

The Guardian: Elon Musk is closing down the main San Francisco office that Twitter, the social network he has renamed X, has occupied since 2011.

CNN: According to a CNN study, 39% of Americans are worried they can't pay their bills, which is higher than the 37% figure during the Global Financial Crisis.

YF: The DOC is set to propose a rule that would ban Chinese software from being used in advanced autonomous vehicles and so-called connected vehicles.

YESTERDAY’S POLL RESULTS

🟩🟩🟩🟩🟩🟩 Bullish 🐂 

⬜️⬜️⬜️⬜️⬜️⬜️ Bearish 🐻 

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