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Tech 5: Tesla Shares Up on Full Self-driving News, Qualcomm Eyes Intel’s Chip Business
Stay informed on the latest developments in the tech world with the Investing News Network's round-up.
1. Rocky start to September for tech sector
US markets began the week with their biggest daily percentage declines since the August 5 rout.
The Nasdaq Composite (INDEXNASDAQ:.IXIC) closed Tuesday (September 3) down 2.85 percent, while the S&P 500 (INDEXSP:.INX) lost 1.83 percent and the Russell 2000 (INDEXRUSSELL:RUT) shed 2.77 percent.
These declines came on the back of new US manufacturing data for August. The S&P Global US Manufacturing PMI posted 47.9 in August, down from 49.6 in July and below 50 for the second consecutive month, while the ISM Manufacturing PMI registered 47.2 percent in August, up 0.4 percentage points from 46.8 percent in July.
In Canada, S&P Global Canada Manufacturing PMI data weighed on the S&P/TSX Composite Index (INDEXTSI:OSPTX), revealing reduced output and demand, as well as a modest reduction in employment in the country.
Wednesday (September 4) saw the Bank of Canada lower interest rates for the third time this summer, while in the US the Department of Labor's JOLTS report revealed job openings were at a three-and-a-half year low in July, down 1.1 million compared to a year ago. Major indexes held relatively steady, although the Nasdaq Composite slid at the opening bell, dragged down by a selloff that erased nearly 9.5 percent of NVIDIA's (NASDAQ:NVDA) value in 24 hours.
The decline came after Bloomberg reported that the US Department of Justice had issued the company a subpoena following a recent antitrust probe — a story that NVIDIA later denied.
NVIDIA performance, August 30 to September 6, 2024.
Chart via Google Finance.
Thursday’s (September 5) economic data readings out of the US and Canada were a mixed bag.
In the US, ADP's national employment report indicated that the labor market continues to cool. The private sector added 99,000 jobs instead of the forecast 145,000, revealing the lowest hiring rate in three years.
In Canada, the S&P Global Canada Services PMI came in at 47.8 for August, up slightly from 47.3 in July, but still below the 50 no-change mark. This indicates a continued, albeit slower, contraction in the sector.
Traders were optimistic ahead of Friday’s (September 6) much-anticipated nonfarm payroll report, which is the US Federal Reserve’s preferred measure of economic health. The major indexes opened slightly higher, but then dropped after the report showed 142,000 new jobs were added instead of the estimated 160,000; there was also a 0.1 percent decrease in the unemployment rate from 4.3 percent in July. The VIX (INDEXCBOE:VIX) edged above 22 as investors worried the economy's resilience may be waning and could struggle to stay afloat until interest rate relief arrives.
In Canada, Statistics Canada's labor force survey showed a modest 22,000 jobs were added last month, while the jobless rate increased to 6.6 percent from 6.4 percent in July.
The data paints a complex picture of the health of the economy on both sides of the border.
2. Crypto price declines continue into September
The crypto market has been facing challenges since the August 5 rout due to a combination of factors, including investor sentiment, regulatory uncertainty and macroeconomic conditions. Bitcoin and Ether have experienced declines, falling 4.2 percent and 6.5 percent, respectively, over the past seven days as of Friday afternoon.
Bitcoin has experienced sharp corrections at the start of each month in Q3, and prices have stalled in recent weeks due to a lack of demand from retail investors and subdued sentiment surrounding exchange-traded funds. Reduced miner profitability, accompanied by an increase in mining difficulty, has also weighed on Bitcoin’s price.
Ether has not fared much better, brought down in part by declining activity on the Ethereum mainnet. Ether exchange-traded funds have also failed to live up to market participants' expectations.
On Tuesday, Bitcoin fell to US$56,160, shedding 2.83 percent of its value in an hour. Ether, which logged its worst monthly performance since 2022 in August, fell by 4.35 percent in the same time period.
A brief surge was observed in both cryptocurrencies shortly after the opening bell on Wednesday, with Bitcoin reaching US$58,393 and Ether jumping to US$2,476, followed by steady declines as the week progressed. Another plunge at midday on Friday sent Bitcoin as low as US$53,304 and Ether to US$2,192, according to CoinGecko.
The recent Bitcoin and Ether price action reflects cautious market sentiment. Concerns about a potential US recession are leading investors to reduce their exposure to riskier assets like cryptocurrencies. While there have been brief rallies, the overall trend remains downward, suggesting a "sell-on-rise" mentality among investors.
3. Broadcom's latest quarterly results fall flat
Broadcom unveiled results for its third fiscal quarter on Thursday, reporting a 47 percent year-on-year increase in revenue to US$13.07 billion — slightly better than the US$13.03 billion expected by analysts.
Adjusted earnings per share also exceeded expectations, coming in at US$1.24, US$0.02 better than the estimate. The company's board approved a quarterly cash dividend of US$0.53 per share to be paid on September 30.
Looking forward to the next quarter, Broadcom has set its revenue guidance at about US$14 billion. Although that's 51 percent higher than the year-ago period, the figure fell short of the US$14.13 billion anticipated by experts.
Despite its 47 percent increase in revenue, Broadcom's revenue from broadband and non-AI networking experienced significant declines in Q3, falling by 49 percent and 41 percent, respectively.
The company’s share price slid by 6.52 percent after Thursday’s close, opening on Friday with a valuation of US$142.86, demonstrating how high the bar has been set for artificial intelligence (AI) companies.
4. Tesla to launch full self-driving in Europe, China
Elon Musk's Tesla got a share price boost this week, creating momentum for a company that has lost over 15 percent of its market value year-to-date. While Tesla has encountered problems with its full self-driving technology in the US — including several investigations from the National Highway Traffic Safety Administration — the company teased this week that full self-driving will be coming to Europe and China in the first quarter of 2025.
The firm announced the news on Wednesday night in a post on X, formerly Twitter. Tesla also outlined upcoming enhancements to its AI capabilities, such as eye-tracking integrated with sunglasses and an auto-park function tailored specifically for the Cybertruck; it didn't specify market availability for most features.
Tesla saw a 6.52 percent bump in its share price on Thursday morning, rising to US$234.08 from the previous day's close, its highest level since July 31. Shares declined from there, closing the week at US$210.73, up 0.97 percent.
5. Qualcomm reportedly interested in Intel design business
According to Reuters, semiconductor company and major Apple (NASDAQ:AAPL) supplier Qualcomm (NASDAQ:QCOM) is considering acquiring part of Intel’s design business. Intel has so far not confirmed the news.
Intel has been the largest recipient of US President Joe Biden’s Chips and Science Act funding, and has been investing heavily in its AI efforts. Its Gaudi chips are a direct competitor with NVIDIA's Hopper architecture. Intel’s 18A, a silicon wafer manufacturing process, represents the company's most advanced chip manufacturing technology, although it has faced development challenges. The 18A system failed to pass recent testing by Broadcom, adding to a series of setbacks this year for the company, whose value has fallen by over 60 percent year-to-date and 11 percent this week.
Intel is also in danger of losing its place in the Dow Jones Industrial Average (INDEXDJX:.DJI).
Intel released its Q2 results on August 1, forecasting Q3 revenue below analyst’s estimates and suspending dividend payments to further fund its chipmaking efforts. The company also said it would be cutting 15 percent of its workforce, sending its shares down a further 24.37 percent in after-hours trading. The company's share price has stayed largely flat since then, although it saw some improvement after reports it was exploring merger or split options.
CEO Pat Gelsinger is expected to present a plan to Intel investors later in September. Options reportedly being considered include separating its product business from its manufacturing unit and scrapping some factory projects.
Intel fell 2.63 percent on Friday to finish the week at US$18.89.
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Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.
Carbonxt Group Limited – FY24 Results Announcement
- Revenues for the group were essentially stable (decreased by 2.2% in FY24 compared to FY23). During the year, the team was able to renegotiate multiple of its current powdered carbon contracts to increase pricing, much of which will be realised in the next fiscal year.
- In May 2024, the group announced a forward sale for $4.2M to a major utility provider and Carbonxt’s largest AC pellet customer, with the cash received prior to year-end.
- Adjustments to optimise existing operations across the group’s two production facilities at Arden Hills and Black Birch, along with forward-looking production planning, have reduced the average cost of production with savings expected to flow through to future periods
- Logistics efforts with carriers and shipping vendors resulted in improvements in shipping rates with additional shipping lanes.
- Annual gross margin was 38%, compared to 30% in FY23.
- Underlying EBITDA for FY24 was a loss of $2.7m, compared to FY23 EBITDA of a $2.3m loss.
- Post balance-date in July 2024, the Company made another material revenue announcement with confirmation of a 4-year, $24m contract extension with a major waste to energy provider.
- In line with strong market conditions for Powdered Activated Carbon (PAC) products in the US market, PAC sales made up an increased percentage of group revenues for the third straight year
Activated Carbon Pellets
- Pellet sales represented 59% of revenue in FY24, down from 66% of revenue in the prior period.
- This decrease was driven by the strategic decision to reduce production of vapor phase CTC pellets, as the forthcoming commissioning of the Kentucky JV facility will be able to produce AC pellets at higher margins for the business in the near future.
- Tolling activities remained strong for the fiscal year, as a result of the management team’s ability to optimize production efficiencies and increase selling volumes of this product line by over 59% from the previous fiscal year.
Powdered Activated Carbon
- The utilization of recovered wood-based char material from local Georgia based lumber sawmills to create a renewable powdered activated carbon continues to support strong margins in our powdered carbon business.
- Powdered carbon sales accounted for 41% of revenue and 61% of sales volume, both an increase from the previous reporting period (34% and 55% respectively).
- The group was able to extend a growing contract with a major waste to energy provider which is expected to see in excess of 25% increase in annualized group revenue, commencing in October 2024. In addition, the group renegotiated multiple of its current powdered carbon contracts to increase pricing, much of which will be realised in the next fiscal year.
- The group is looking in 2025 to invest in additional redundancy for the present mill to provide capacity for up to 5,000 tons per annum of incremental PAC volume. Additionally, renegotiations of the Carbon Concepts lease agreement are ongoing and expect to be concluded in 1H25.
FY24 GROWTH OPPORTUNITIES
Company Outlook
Growth from existing operations will be underpinned by the new contract win with a major waste-to-energy provider, which is expected to see an increase of over 25% in annualized revenue. This does not include any additional contribution from the commencement of the Kentucky investment mentioned below. We expect gross margins to exceed 40% as the portfolio-wide price increases and operational improvements flow through. In turn, with the commencement of the Kentucky plant, we expect to see a step change in the scale of Carbonxt’s business in FY25.
Update on Kentucky JV – NewCarbon Processing LLC.
The construction of the new activated carbon plant in eastern Kentucky, USA is nearing completion. The plant will have an initial capacity of 10,000 tons per annum, with the ability to expand to 20,000 tons per annum for a small additional investment.
The investment in NewCarbon Processing, LLC (“NewCarbon”), is alongside our US partner KCP. Carbonxt currently holds a 35.5% ownership interest in NewCarbon, with options to invest a further USD $4.5m to move to 50% ownership interest.
Click here for the full ASX Release
This article includes content from Carbonxt Group, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
