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In today’s edition,
- iPad Sales Power Apple to New Heights
- AI Innovation Drives Meta’s Stock to New Record
- NBCUniversal: Olympic advertising victory
- Intel: Strategic job reductions
- Tether: Expanding with gold-backed stability
Market Snapshot
This week, Wall Street faced significant challenges, with major indexes closing near two-month lows on Friday. The latest US jobs report for July indicated a slowdown in employment growth, with new jobs increasing by only 114,000, down from 179,000 in June. Unemployment also increased slightly, rising to 4.3% from 4.1%. These disappointing figures fueled fears of an economic slowdown. This led to speculation that the Federal Reserve might cut interest rates by year-end.
Due to these economic concerns, the Nasdaq Composite fell 10% from its July peak, entering correction territory. Market volatility also surged, as shown by a 25% rise in the VIX. This highlighted growing investor anxiety. By week’s end, the S&P 500 and the Dow fell 2.3%. The Nasdaq lost 3.8%.
Stock market closing data for the week of Jul 29th to Aug 2nd, 2024
News Summaries
Apple’s revenue climbed 5% to $85.8 billion in Q3 2024, exceeding analysts’ expectations of $84.5 billion. This growth was due to strong performances in its services sector and a 24% jump in iPad sales after new, advanced models were released. These gains offset a slight drop in iPhone sales. They fell to $39.3 billion from $39.7 billion. Revenue from Greater China also dropped 7%, to $14.7 billion, due to competition and a government ban. However, adjusted for currency changes, this decline in China was less severe, at just 3%. The services business, which includes the App Store and Apple Pay, continued to expand, reaching $24.2 billion, up from $21 billion last year. Apple is optimistic about growth, especially with the iPhone 16 launch. This phone will introduce AI features that encourage upgrades. It’s part of the “Apple Intelligence” strategy. This strategy includes a partnership with OpenAI to offer ChatGPT to users. Additionally, Apple is raising its innovation budget by 8% to $8 billion this quarter. Despite some regional and product challenges, Apple shows financial strength and good planning. This quarter, it returned $32 billion to shareholders through dividends and buybacks.
Meta’s revenue surged 22% to $39.1 billion in Q2 2024, surpassing forecasts. This boost came from increases in ad impressions and ad prices. With strong financial results, the company can afford to keep investing heavily in AI. This includes preparing for their new AI model, Llama 4, which needs almost ten times the computing power of its predecessor, Llama 3. CEO Mark Zuckerberg highlighted that these AI investments are improving Meta’s recommendation engine and its AI chatbot. The chatbot is expected to become the world’s most used by the end of the year. It will take time to monetize these tools. They are, however, boosting user engagement and improving ad targeting. These improvements have reassured investors, leading to a 5% jump in shares after the earnings report. Meta’s proactive strategy in AI infrastructure is aligning the company with industry leaders and strengthening its position in the digital ad market. This strategic focus is expected to deliver significant benefits for years. Since 2024 began, Meta’s stock has gained over 40%. It has outperformed the Nasdaq, which is up about 16%.
NBCUniversal’s advertising revenue for the Paris Olympics surpassed the $1.25 billion record from the Tokyo 2020 Games. High viewership drove the increase. The opening ceremony drew 28.6 million viewers, the most since the 2012 London Olympics. As a result, average prime-time viewership over the first four days reached 33.8 million, up 77% from Tokyo. This spike in viewers encouraged greater demand for the remaining advertising slots. NBC initially reported $1.2 billion in sales but did not provide an updated total after the surge. The strong viewership drew a diverse group of advertisers. It included a return of tech companies, which now account for 15% of revenue. Over 70% of the sponsors are newcomers, highlighting the broad appeal of the event. The Games also introduced programmatic digital spots. They let smaller businesses, like local pizza shops, afford prime-time ads. NBCUniversal projects that, by the 2028 Los Angeles Games, digital ads will be 35-40% of total ad revenue. This reflects a shift to digital platforms. This strategy adapts to modern viewing habits. It uses short social media videos and influencer partnerships to boost engagement.
Intel is making cuts to improve its financial stability. The company plans to reduce its workforce by 15%, which amounts to about 15,000 jobs this year. Furthermore, Intel is slashing capital spending by 20% and has stopped its dividend to preserve cash. These emergency cost-saving strategies are in response to setbacks. These include production issues with its Meteor Lake processors and shifts in market demand, notably a decline in server processor sales due to customers favoring AI chips from competitors like Nvidia. Despite these challenges, CEO Pat Gelsinger is committed to Intel’s long-term strategies. He aims to advance manufacturing and release new chips by 2026. However, the outlook is grim. Revenue fell 1% to $12.8 billion in Q2. A loss is expected in Q3. This situation has shaken investor confidence. Intel’s stock fell 20% in after-hours trading. There are concerns about its ability to regain market share and compete for AI chip demand.
From the World of Crypto
Tether, a leading cryptocurrency company, reported a significant $5.2 billion profit in the first half of 2024. This makes it one of the most profitable crypto companies globally. Its main product, the USDT stablecoin, is the third-largest cryptocurrency in the world with a market cap of $114 billion.
Tether’s financial report indicates that the company holds a significant reserve to back its USDT stablecoin, primarily in the form of U.S. Treasuries totalling $118.4 billion. U.S. Treasuries are government-issued securities that are considered highly secure, making them a reliable choice for backing the value of Tether’s cryptocurrency.
The report also notes that Tether’s total assets exceed its liabilities by $5.3 billion. This excess, or surplus, showcases Tether’s robust financial health and its ability to cover all its financial obligations while still retaining a substantial amount of resources. Such a financial cushion is crucial for maintaining trust among users and investors, especially in the often unpredictable cryptocurrency market.
Recently, Tether launched a new gold-backed stablecoin called aUSDt. This coin lets users turn their cash into tokens backed by physical gold stored in Switzerland, blending the security of gold with the ease of digital transactions.
Tether is also expanding its business beyond just stablecoins. The company has divided into four divisions, branching out into bitcoin mining and market infrastructure. It plans to invest $1 billion in these new ventures over the next year to grow and diversify its operations.
However, Tether faces ongoing scrutiny. There are concerns about how transparent and secure its gold reserves are, especially because there hasn’t been an independent audit. This scrutiny highlights the complex challenges Tether faces as it tries to innovate while ensuring security.
As Tether continues to develop, both the financial and cryptocurrency communities are watching closely. They are eager to see how Tether will manage the risks associated with its expansion and ongoing scrutiny.
