đ€ Big Tech on deck
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Hey Snackers,
Even corporate wants to be something else for Halloween: Campbellâs announced itâs changing the name of its Goldfish crackers to âChilean Sea Bassâ for a limited time to appeal to adults (apparently âPatagonian Toothfishâ didnât sound as classy).
The S&P 500 snapped its six-week win streak on Friday, though tech rallied ahead of Magnificent 7 earnings this week. On Thursday, Tesla stock had its best day since 2013, and on Friday Nvidia surpassed Apple as the worldâs most valuable company.
đ Markets, wrapped: For those who love a market recap, Sherwoodâs launching The Wrap, a five-minute newsletter recapping the dayâs essential stories. Subscribe here.
đ» The Exor-quiz: Do you possess the know-how to score 7/7 on our latest Snacks Seven quiz? Try the first q:
What generates nearly a fifth of the USâs electricity? (Check your answer.)
Expectations are high for Big Tech earnings as Wall Street keeps a close eye on AI
Busy week in Silicon Valley⊠Google, Microsoft, Meta, Amazon, and Apple are on deck to drop Q3 earnings. The Magnificent 7 (which includes Nvidia and Tesla) are expected to report average earnings growth of 18% compared to less than 1% growth for the rest of the S&P 500. FYI: the Mag 7 make up over a third of the S&P 500âs market value. Back in July, big techies reported mixed results as investors looked to see whether AI had revved up growth.
Bankinâ on bots⊠To supercharge demand, techies are infusing AI into various parts of their businesses, from search to cloud to ads. Cloud-computing giants Amazon, Microsoft, and Google have touted new AI functions to drive more sign-ups. In Q2, Microsoft said its OpenAI-fueled Azure cloud service added ~100 customers daily. It invested billions to own nearly half of OpenAI (which expects to lose $5B this year). Meantime, Google said it earned billions in revenue leveraging AI for its cloud biz. And Amazonâs AWS (the largest cloud provider) saw its Q2 cloud revenue jump 19% to $26B as AI integrations fueled hype.
Reel money: Metaâs ad sales grew 22% in Q2 after it used AI to boost ad targeting and recommendation algos on Insta and FB.
AiPhones: Last month Apple debuted an AI-infused iPhone, but underwhelming preorder sales suggest folks arenât quite sold yet.
Itâs time to turn AI into ROI⊠Big Techies have invested $150B+ primarily in AI over the past year, and investors are eager to see returns. Expectations are high. Nvidia reported triple-digit Q2 sales growth, but the stock fell after the gains werenât as feverish as in the past (tough comparisons). The techy Nasdaq hit a record high on Friday, suggesting investors have lofty growth expectations.
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Stories weâre watching
Concerning⊠McDonaldâs is set to deliver quarterly #s tomorrow as it deals with its Quarter Pounder crisis. On Friday the CDC said a deadly E. coli outbreak tied to Quarter Pounders had sickened 75 people in 13 states. One person died and 22 were hospitalized. McDâs stock plunged on Tuesday after the CDCâs first alert, as investors worried it could turn into a Chipotle-level disaster. After some recalls, the CDC on Friday said it believed the risk to the public was very low. Still, the crisis probably wonât help McDâs traffic: its same-store sales fell in Q2, and now itâs trying to lure customers back with deals.
Out with the new⊠Appleâs AI-packed iPhone 16 hasnât started the upgrade wave it hoped for. In the phoneâs first weekend of presales last month, customers grabbed 37M units, down 12% from the iPhone 15âs debut. New features arenât bringing folks into the store, and thatâs weighing on telecoms. Phone upgrades fell for AT&T, Verizon, and T-Mobile in Q3. New data suggests that iPhone sales volumes hit a record last quarter, but that might not help slumping revenues as most of those sales were for older, cheaper models.
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Coming up this week
Guacaccino⊠Chipotle, which reports tomorrow, has been wrapping up meaty results. The burrito bigshot said its traffic jumped nearly 9% in Q2, and itâs opening hundreds of new locations. Starbucks wants a scoop of its success: former Chipotle boss Brian Niccol just started as the coffee chainâs new CEO, and he has his work cut out for him. Starbucks gave early bad news for its earnings (due Wednesday): global same-store sales fell for a third straight quarter, dragged by a 6% drop in North America. Starbs also suspended its annual guidance.
Vitamin sea⊠Anchors are up on cruise-line earnings with Norwegian and Royal Caribbean set to report. Wall Streetâs expecting higher revenues for both, after rival Carnival unloaded a record $7.9B in quarterly sales and a 60% profit surge. The industryâs cruising toward record passenger levels this year as consumers opt for experiences over stuff. Cue: Disney said itâll expand its cruise fleet from five ships to eight next year.
What else weâre Snackinâ
The FTC blocked an $8.5B merger between Coach owner Tapestry and Michael Kors parent Capri, saying it would hurt competition in accessible luxe purses.
Home Depot said its popular $300 12-foot skeleton has pushed it to record sales every Halloween, and itâs inspired a cottage industry of XL decorations.
Teslaâs US EV market share slipped below 50% this summer for the first time as rivals like GM and Honda ramped up production.
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Snack Fact of the Day
US consumers eat 5B+ servings of instant noodles each year
This Week
Monday: Earnings expected from Ford and WMÂ
Tuesday: S&P Case-Shiller home-price index. Consumer confidence. Job openings. Earnings expected from PayPal, BP, Pfizer, McDonaldâs, Royal Caribbean, JetBlue, Crocs, HSBC, Novartis, Phillips 66, Penske, Xerox, AMD, Alphabet, Chipotle, Snap, Visa, Reddit, Mondelez, and Caesars Entertainment
Wednesday: ADP employment data. Earnings expected from Allstate, MetLife, Eli Lilly, Chubb, Caterpillar, Humana, AbbVie, ADP, Garmin, Kraft Heinz, GlaxoSmithKline, GE HealthCare, Microsoft, Meta, Coinbase, Robinhood, Etsy, Carvana, Roku, Starbucks, eBay, MGM, DoorDash, and Amgen
Thursday: PCE price index (the Fedâs fave inflation gauge). Halloween. Earnings expected from Uber, Peloton, Merck, Sirius XM, EstĂ©e Lauder, Kellanova, Mastercard, Altria, Norwegian Cruise Line, Roblox, Bristol Myers Squibb, Shell, Stellantis, AB InBev, Wendyâs, Hyatt Hotels, Amazon, Apple, and Intel
Friday: Employment and manufacturing data. Native American Heritage Month begins. Earnings expected from Chevron, FuboTV, Exxon Mobil, Wayfair, and Charter Communications
Sunday: Daylight-saving time ends at 2 a.m. New York Marathon
Authors of this Snacks own shares of: Alphabet, Amazon, AMD, Apple, Carnival, Disney, Exxon, GM, Kraft Heinz, Microsoft, Norwegian, Nvidia, Reddit, Robinhood, Roku, Snap, Starbucks, Tesla, Uber, and Visa
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