Breakfast | Tech giants plummet after earnings: Tesla plunges 8% after hours, Google drops 2%!

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Overnight Market Update

Overnight, the three major U.S. stock indexes closed slightly lower, with the Dow down 0.14% at 40,358.09 points, the S&P 500 down 0.16% at 5,555.74 points, and the Nasdaq down 0.06% at 17,997.35 points.

"Big Tech Seven" with mixed performance. Amazon rose 2.11%, Apple rose 0.47%, Microsoft rose 0.43%, "metaverse" Meta rose 0.26%, while Nvidia fell 0.77%, Tesla fell over 2.04% pre-earnings, and Google Class A rose 0.07% pre-earnings.

Among AI concept stocks, BullFrog AI rose 19.7%, "Nvidia concept stock" Serve Robotics rose 7.18%, Oracle rose 2.1%, Snowflake rose 1.11%, Palantir rose 1.23%, and CrowdStrike rose 1.88%.

Chinese concept stocks collectively declined. The Nasdaq Golden Dragon China Index (HXC) fell 1.84%, and the KraneShares CSI China Internet ETF (KWEB) fell 1.74%.

Among popular Chinese concept stocks, Nio fell 4.48%, XPeng fell 6.67%, ZEEKR fell 0.8%, Li Auto fell 3.47%, Bilibili fell 3.26%, JD.com fell 2.46%, Tencent Holdings (ADR) fell 2.53%, Alibaba fell 0.7%, Baidu fell 2.06%, NetEase fell 0.14%, and Pinduoduo fell 0.86%.

Regencell Bioscience (RGC), using Traditional Chinese Medicine (TCM) to treat neurocognitive disorders, surged nearly 344%.

Blue Chips and Hot Stocks

Tesla plunged 8% after hours due to car price cuts and AI investment impacting profitability. Q2 profits exceeded expectations but decreased by double digits. The release of the Robotaxi autonomous taxi service was delayed from August to October.

Specifically, Tesla reported an adjusted EPS of $0.52 for Q2, below the expected $0.60; revenue of $25.5 billion, exceeding the expected $24.63 billion; net profit of $1.478 billion, below the expected $1.806 billion; gross margin of 18%, exceeding the expected 17.4%.

Google initially rose over 3% but later fell 2%. Q2 revenue and profits exceeded expectations, with cloud revenue surpassing $10 billion for the quarter. However, YouTube ad revenue fell short of expectations. Capital expenditures for AI investments reached $13.186 billion, exceeding the $12 billion in the previous quarter, raising concerns about profit margins.

Specifically, Google reported an EPS of $1.89 for Q2, above the expected $1.84; revenue of $84.74 billion, exceeding the expected $84.37 billion; net profit of $23.619 billion, above the expected $22.87 billion.

Lei Jun discussed Xiaomi's car project again, stating that many technologies between the Ultra production car and the prototype are the same. Once the technology is verified as reliable, a race version of the production car will also be developed. The Ultra production car is expected to be launched in the first half of next year, but it might be a bit "pricey"

Financial Report Highlights

UPS's US stocks plummeted by over 13% at one point during the trading day, closing down by 12%. The main reason was that the company's second-quarter earnings fell short of expectations, leading to a downward revision of its full-year revenue guidance, resulting in the largest drop in stock price since its listing. Specifically, the company's second-quarter revenue was $21.8 billion, a 1% year-on-year decrease; adjusted earnings per share were $1.79, lower than the expected $1.99. The estimated revenue for the fiscal year 2024 has been revised down to around $93 billion, from the previous estimate of $92-94.5 billion.

Coca-Cola opened with a more than 2% increase but gave back most of the gains, ending with a slight increase and a slight decline after hours. The company's Q2 revenue grew by 2.9% year-on-year, exceeding expectations, while net profit declined by 28.8%, prompting an upward revision of the full-year guidance.

General Motors fell by over 7.5% at one point during the trading day, closing down by 6.42%. Thanks to strong demand for its main vehicle models, General Motors set a new quarterly revenue record in Q2, with adjusted net profit increasing by 37% year-on-year, and an upward revision of the full-year profit guidance. However, the company announced a delay in the launch of the Buick electric vehicle planned for 2024 and a 6-month postponement of the opening of the electric pickup truck factory to 2026, leading to a decline in stock price.

Spotify surged by nearly 16.2% at one point during the trading day, closing up by 11.96%. The company's Q2 revenue increased by 20.2% year-on-year to €3.81 billion, with monthly active users growing by 14% to 626 million. Earnings per share were €1.33, far exceeding analyst expectations. The company expects an operating profit of €405 million in the third quarter, well above market expectations.

NXP Semiconductors fell by over 10% at one point during the trading day, closing down by 7.58%, mainly due to weakness in the automotive industry and poor revenue guidance for the third quarter.

Porsche Automobil Holding SE (ADR) ended the day with a 3.9% decline in US stocks, marking a record decline in European stocks. The company announced an expected full-year revenue of €39-40 billion, lower than the original forecast of €40-42 billion, due to a shortage of special aluminum alloy supply, which will lead to a write-down of production volumes as a result of flooding at a European factory of a key supplier.

LVMH dropped by over 5% at one point during the trading day, mainly due to a slowdown in sales in the second quarter exceeding expectations, with a 14% decline in Asian markets such as China. Organic revenue growth in the second quarter was 1%, below the expected 2.89%. EBITDA for the first half of the year was €943 million, compared to an expected €921.5 million.

Chips and Artificial Intelligence

Meta has released its latest AI model, Llama 3.1 405B, to improve reasoning to help handle complex mathematical problems or instantly synthesize an entire book, making it Meta's largest model to date. Meanwhile, NVIDIA AI Foundry will provide customized services for the Llama 3.1 model to global enterprises.

Insiders revealed that Elon Musk's brain-machine interface company Neuralink is set to launch a tender offer to repurchase shares as early as next month. With the soaring valuation of Neuralink, some employees and investors are preparing to sell their shares.

Cryptocurrency

Ethereum spot ETFs are gaining popularity, with a trading volume exceeding $500 million on their debut. The first batch of nine Ethereum ETFs collectively traded over $500 million in the first few hours after opening. Among them, the Ethereum ETF issued by BlackRock saw a half-day trading volume exceeding $100 million, ranking 38th on the US ETF first-day trading list

Macro: Taking You Around the World

Democratic leaders in both houses of the United States announced their support for Harris to become the presidential candidate. The new theme in the market is the Harris trade. Harris advocates for tax cuts for the middle and low-income groups, while increasing taxes for the wealthy, which is beneficial for the consumption sector; hopes to promote U.S. exports, benefiting large multinational companies; supports the development of clean energy, benefiting electric vehicles and photovoltaic stocks.

In June, the total sales of existing homes in the United States fell by 5.4% month-on-month and year-on-year, with sales speed dropping to a new low for the year, while house prices continued to hit new highs and the inventory for sale rose to the highest level since May 2020. The Philadelphia Fed's service sector activity in July slowed significantly to the lowest level in over a year. The Richmond Fed's manufacturing index in July also fell more than expected to -17, compared to the expected -6 and the previous value of -10