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Tech 5: Tech Earnings Season Kicks Off as Tesla and IBM Report Results
Market watchers are now looking ahead to quarterly earnings reports from major tech companies. Stay informed on the latest developments in the tech world with the Investing News Network's round-up below.
1. Bitcoin starts strong, but ends down
The CoinDesk 20 Index (INDEXNYSEGIS:CDI20) started the week up 1.17 percent in 24 hours, with Bitcoin priced at nearly US$70,000 as trading commenced in Asia. The surge corresponded with an increase in open interest for Bitcoin futures, which hit a new record high of US$40.43 billion on Monday (October 21).
Augustine Fan, head of insights at the DeFi infrastructure firm SOFA, told CoinDesk in a Telegram note that day that the current pattern points to growing bullish sentiment in the market.
Meanwhile, the estimated leverage ratio — an open interest-based ratio tracked by CryptoQuant — was showing increased leverage, indicating that traders were starting the week with an appetite for risk.
Bitcoin performance, October 19 to 25, 2024.
Chart via CoinGecko.
However, the upward trend had reversed by Tuesday (October 22), with the weekend's gains disappearing.
As mentioned, rising Treasury yields drove crypto prices down, erasing 2 percent from the sector's total market cap. According to data tracked by CoinGlass, over US$165 million in long positions were liquidated.
Bitcoin exchange-traded funds also recorded their first net outflows in two weeks.
Bitcoin’s price continued to tumble on Wednesday, dropping to US$66,444 following the release of the Fed’s Beige Book data, which shows slow growth in the employment sector and slightly high prices for necessities like food and housing. The data fueled lingering inflation concerns and supported the argument for a smaller rate cut in November.
2. Tesla leaps after quarterly results release
Elon Musk's Tesla showed off its strongest quarterly report in a year after Wednesday's close.
The company produced about 70,000 vehicles and delivered 463,000, exceeding Q2 figures. Its GAAP net income reached US$2.2 billion, surpassing the previous quarter's US$1.5 billion. While total revenue of US$25.18 million saw a slight decrease from Q2, automotive revenue showed year-on-year and quarterly growth, reaching US$20.12 million.
Operating cashflow increased substantially, reaching US$6.3 billion compared to Q2's US$3.6 billion. GAAP earnings per share for Q3 were US$0.62, significantly higher than last quarter and the previous year.
Tesla’s share price has experienced significant swings this year as the company has adjusted timelines for several of its key products, including Full Self-Driving, new vehicle models, its robotaxi program and its humanoid robot Optimus. The National Highway Traffic Safety Administration has also launched several probes into the company’s self-driving technology following a series of traffic accidents involving Teslas.
Tesla performance, October 21 to 25, 2024.
Chart via Google Finance.
Shares ended Wednesday at US$213.65 ahead of the report’s release, down 2.45 percent from the week's start.
However, Tesla jumped by 12 percent in after-hours trading, boosted by the significant difference in cashflow and Musk’s confident forecast of a rise in vehicle deliveries by year's end. The company also confirmed that its timeline for new, affordable models remains on track, with production set to begin in the first half of 2025.
The report sparked a rebound in tech stocks after troubling Beige Book data and a rise in 10 year Treasury yields. For its part, Tesla finished the week up more than 22 percent.
3. IBM's quarterly results fail to impress
Also on Wednesday, IBM (NYSE:IBM) released its Q3 earnings report.
Its performance was driven by a 9.7 percent year-on-year increase in software revenues, with a notable 14 percent contribution coming from Red Hat, a subsidiary acquired by IBM in 2019.
Overall, the tech giant's Q3 revenue saw a modest 1 percent increase year-on-year, reaching US$15 billion, slightly below projected estimates of US$15.07 billion. Adjusted earnings per share showed stronger year-on-year growth of 5 percent, reaching US$2.30. IBM also highlighted its generative artificial intelligence (AI) segment.
"Our generative AI book of business now stands at more than $3 billion, up more than $1 billion quarter to quarter," said Arvind Krishna, the company's chairman, president and CEO.
"Heading into the final quarter of 2024, we expect fourth-quarter constant currency revenue growth to be consistent with the third quarter, with continued strength in Software. We are confident in our ability to deliver more than US$12 billion in free cash flow for the year, driven by continued expansion of our operating margins," he added.
IBM performance, October 21 to 25, 2024.
Chart via Google Finance.
Shares of IBM fell 5.87 percent to US$219.05 at the opening bell on Thursday. The company finished the week 7.77 percent below its peak price of US$233.01, which came on Wednesday.
4. NVIDIA and TSMC resolve chip design issue
On Wednesday, NVIDIA (NASDAQ:NVDA) announced the resolution of a design problem that delayed the production of its newest Blackwell chips, which were revealed in March and expected to be released sometime in Q2.
CEO Jensen Huang said the flaw was “100 percent NVIDIA's fault” and credited its collaborative partner, Taiwan Semiconductor Manufacturing Corporation (TSMC) (NYSE:TSM), for its assistance resolving the issue.
"What TSMC did, was to help us recover from that yield difficulty and resume the manufacturing of Blackwell at an incredible pace," Huang told an audience in Denmark, where he was launching a new supercomputer built by NVIDIA in collaboration with the Novo Nordisk Foundation and Denmark’s Export and Investment Fund.
The market responded by sending the company’s share price up over 2 percent in the final hours of trading on Wednesday. Shares of NVIDIA are up 2.66 percent for the week, and the company even briefly dethroned Apple (NASDAQ:APPL) as the world’s most valuable company on Friday (October 25) afternoon.
Analysts at Morgan Stanley (NYSE:MS) have projected that NVIDIA could produce up to 450,000 Blackwell GPUs in the fourth quarter. TSMC is NVIDIA's primary chip manufacturer, and its advanced manufacturing technology is crucial when it comes to meeting demand from NVIDIA's long list of customers, which includes tech mega corporations Alphabet (NASDAQ:GOOGL), Meta (NASDAQ:META) and Amazon (NASDAQ:AMZN).
TSMC and NVIDIA performance, October 21 to 25, 2024.
Chart via Google Finance.
TSMC’s strong Q3 results, released last week, were largely driven by demand for its manufacturing process, which uses EUV lithography to fabricate chips with higher precision. During a recent presentation for the Potomac Institute for Policy Studies, Rick Cassidy, president of TSMC’s California-based US division, reportedly told listeners that chip yield at an Arizona plant has exceeded that of similar factories in Taiwan by 4 percent.
TSMC is in line to receive US$11.5 billion in US government grants and loans, and it qualifies for a 25 percent tax credit under the CHIPS Act, which will better position it to capitalize on the growing demand for advanced AI chips.
5. Apple exec teases announcement next week
Apple is preparing to drop major news next week, according to Greg Joswiak, the company’s senior vice president of worldwide marketing, who teased a “week of announcement” on X, formerly Twitter, on Thursday morning.
Although no details have been released, Bloomberg reported that the company will likely roll out a line of new AI Macbooks and a newly redesigned Mac mini powered by Apple’s newest M4 chip.
Also next week, Apple is set to update its iOS system with Apple Intelligence, the company's homegrown AI platform. The update will be available for: all Macs with Apple silicon M1 and M2 chips; iPad Pro and iPad Air models with M1 chips or later; and the iPhone 15 Pro, iPhone 15 Pro Max and newly released iPhone 16 series.
The market gave a muted response to the news, which came a day after tech stocks declined on the back of rising 10 year Treasury yields. Some of Apple’s product rollouts earlier this year failed to generate significant consumer enthusiasm, and Apple is lagging behind its competitors in on-device AI capabilities.
By the end of the trading week, Apple's share price had decreased by 1.38 percent, closing at US$231.41.
Don't forget to follow us @INN_Technology for real-time news updates!
Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.
Tech 5: TSMC, ASML Post Quarterly Results; Amazon, Google Sign Nuclear Power Deals
1. Bitcoin price rises to nearly US$70,000
The price of Bitcoin rose above its 200 day moving average late on Sunday (October 13) evening, reaching US$62,640 on the back of optimism over China’s recently announced stimulus plan. The popular cryptocurrency's gains extended into Monday (October 14) morning, and it eventually surpassed US$66,400 for the first time since late July.
Bitcoin performance, October 12 to 18, 2024.
Chart via CoinGecko.
Data from CoinGlass shows over US$100 million in liquidated short positions due to the sudden price jump.
Open interest in Bitcoin futures has surged to an all-time high, indicating strong institutional participation and raising expectations for a continued price rally. Bitcoin exchange-traded funds also saw record inflows of over US$250 million every day this week, further fueling bullish sentiment among sector participants.
Crypto analyst Omkar Godbole has suggested that the recent breakout could signal a significant upswing. The US$70,000 mark is now being eyed as Bitcoin's next major resistance level, while Ether's next hurdle lies at US$2,770.
Bitcoin closed the week at US$68,362, while Ether finished the period at US$2,663.
US election speculation also impacted Bitcoin this week.
On Monday evening, Harris pledged to support a regulatory framework for crypto, although the news was somewhat dampened as she didn't share a detailed plan. Even so, that didn’t stop Ripple Labs co-founder Chris Larsen from donating US$1 million worth of XRP tokens to Future Forward, a super PAC supporting Harris’ run.
2. Chip stocks stumble on export cap reports
A Monday afternoon report from Bloomberg revealed that the US government is considering capping sales of advanced artificial intelligence (AI) chips from American companies to certain countries.
Sources familiar with the matter said the move would be made in the interest of national security, and that officials are focused on countries located in the Persian Gulf, including the United Arab Emirates and Saudi Arabia.
Both nations have invested heavily in AI, with the United Arab Emirates' Mubadala Investment Firm making significant contributions to Anthropic, and Saudi Arabia establishing a US$40 billion investment fund focused on AI.
NVIDIA and AMD performance, October 14 to 18, 2024.
Chart via Google Finance.
Shares of NVIDIA (NASDAQ:NVDA) fell by over 4 percent on Tuesday (October 15), the day after the report’s release.
Only a day earlier, the company reached its highest closing value since June, driven by positive chip industry sentiment. Shares of AMD (NASDAQ:AMD), one of NVIDIA's top rivals, also fell by over 4 percent on Tuesday morning.
According to Bloomberg, officials from the Bureau of Industry and Security, a spokesperson for the White House National Security Council and representatives from Intel (NASDAQ:INTC), AMD and NVIDIA have declined to comment.
3. ASML's Q3 results fall flat
On Tuesday, ASML (NASDAQ:ASML) mistakenly released its Q3 results one day ahead of schedule, revealing that it has lowered its total net sales guidance for 2025 to 30 billion to 35 billion euros.
The company also missed revenue expectations for the quarter by more than half, prompting a nearly 16 percent decline in its share price for the week and erasing roughly US50 billion from its market cap.
"While there continue to be strong developments and upside potential in AI, other market segments are taking longer to recover. It now appears the recovery is more gradual than previously expected. This is expected to continue in 2025, which is leading to customer cautiousness,” said ASML CEO Christophe Fouquet in a press release.
ASML performance, October 14 to 18, 2024.
Chart via Google Finance.
The impact of ASML's results sent shockwaves through the semiconductor industry, as ASML is a key supplier to many of the world's largest chipmakers. Shares of ASML's major customer, Taiwan Semiconductor Manufacturing Company (TSMC) (NYSE:TSM), also fell about 3.3 percent in early trading on Tuesday. Intel, which has already seen its market share dwindle this year, and Samsung (KRX:005930) also saw their share prices fall by over 2 percent each.
Analysts have attributed ASML's lowered expectations to several factors, including slower-than-expected demand for logic and memory chips and potential export controls in China. “Logic foundries are ramping up new nodes at a slower pace than expected, and ASML is seeing little capacity additions in memory so far,” Morningstar's Javier Correonero wrote on Wednesday (October 16), cutting his fair value estimate for ASML shares from 900 euros to 850 euros.
4. TSMC raises revenue growth target
TSMC posted better-than-expected Q3 results on Thursday (October 17), raising its revenue target for the fourth quarter of the year to the US$26.1 billion to US$26.9 billion range.
Its Q3 earnings increased by 39 percent year-on-year to roughly US$23.5 billion, representing growth of nearly 13 percent compared to the previous quarter. Net income also increased by an impressive 31.2 percent. Investors sent the company’s share price above US$200 for the first time this year on Thursday morning ahead of the release.
TSMC and ASML performance, October 14 to 18, 2024.
Chart via Google Finance.
“Our business in the third quarter was supported by strong smartphone and AI-related demand for our industry-leading 3nm and 5nm technologies,” said Wendell Huang, senior vice president and CFO of TSMC. “Moving into fourth quarter 2024, we expect our business to continue to be supported by strong demand for our leading-edge process technologies."
Shares of TSMC's two biggest customers, NVIDIA and Apple (NASDAQ:AAPL), also received a boost following the release of the report. Apple’s share price opened 1.75 percent higher when the markets opened on Friday (October 18), rising 2.66 percent for the week. NVIDIA, which suffered a setback at the start of the week, opened 2.63 percent higher ahead of the report’s release on Thursday morning. NVIDIA's share price is up 1.11 percent for the week.
5. Google, Amazon sign nuclear power deals
Last month, Microsoft (NASDAQ:MSFT) announced plans to source energy for its data centers from nuclear power, signing a multi-year purchase agreement with Constellation Energy (NASDAQ:CEG). Now, Google and Amazon are the latest Big Tech companies to look to nuclear power to meet their growing energy needs.
On Monday, Google signed an agreement to purchase nuclear energy from several small modular reactors (SMRs) that will be developed by Kairos Power. The deal is part of Google’s efforts to reach its ambitious net-zero goals.
The first SMR is set to come online by 2030, with additional deployments scheduled through 2035.
Amazon made a similar announcement on Wednesday, signing three agreements with Energy Northwest, Dominion Energy (NYSE:D) and X-Energy to support the buildout of SMRs in Virginia and Washington.
Don't forget to follow us @INN_Technology for real-time news updates!
Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.
