Tesla's third-quarter revenue increased by nearly 8% year-on-year, which is still below expectations. However, the profit was a pleasant surprise, with EPS increasing by 9%. Cybertruck achieved its first positive gross margin, and Musk expects a 20%-30% growth in car deliveries next year. News indicated that Vision Pro production was reduced and iPhone 16 orders decreased, causing Apple to temporarily drop by 3.4%. However, the decline narrowed later due to the boost from AI new product news
Overnight Market Overview
The Dow and S&P fell by about 1%, marking a third consecutive day of decline, with the Dow dropping 400 points, the largest drop since early September. The Nasdaq fell by over 2% intraday. Nvidia fell by over 4% at one point. Vision Pro and iPhone 16 reported unfavorable news, causing Apple to drop by 3.4% initially, but later narrowed its decline due to positive news on AI products. Tesla reported strong financial results and surged 12% after hours.
Most sectors experienced declines, with the consumer discretionary and technology sectors leading the losses. Only the real estate and utilities sectors, which have "safe-haven" attributes, saw gains. McDonald's fell by 5.12% due to a severe E. coli infection incident, dragging the Dow down by nearly 632 points at one point, and also causing a retreat in Chinese concept stocks, with New Oriental falling by 8.42%.
Most solar energy stocks declined, with SolarEdge falling by 14.99% and photovoltaic inverter supplier Enphase Energy falling by 14.92%.
Coca-Cola, which reported positive third-quarter results, fell by 2%, while Boeing, which suffered a huge loss of $6 billion in the third quarter, fell by 1.8%. CloudMinds' US stocks fell by nearly 3%, warning of the lowest annual profit since 2016, while US budget airline Spirit Airlines, which is in merger talks with Frontier, rose by nearly 47%.
Uber fell by over 2.6% after hours, while Lyft fell by over 0.7%. Elon Musk discussed the prospects of launching ride-hailing services in Texas and California.
Individual Stock News
Tesla Surprises with Profit, Surges 12% After Hours
Tesla reported third-quarter revenue of $25.182 billion, a year-on-year increase of over 7.8%, slightly below expectations; non-GAAP diluted earnings per share (EPS) were $0.72, a nearly 9.1% increase year-on-year, compared to analysts' expectations of $0.60, a 43% decrease from the second quarter.
Gross profit in the third quarter was $4.997 billion, a 19.6% increase year-on-year, a 1% increase from the second quarter; gross margin increased by 195 basis points year-on-year to 19.8%; the gross margin for the automotive business exceeded expectations, rising to 17.1%.
The Shanghai factory is expected to start delivering Megapacks in the first quarter of next year. Production of more affordable models and new vehicles is set to begin in the first half of next year, with car deliveries expected to slightly increase compared to last year. Musk stated that deliveries may grow by 20%-30% next year, with the price of the low-cost car set to be below $30,000. Cybercab is set to go into mass production in 2026, with a target of producing 2 million vehicles per year.
Tesla's AI training computation in the third quarter increased by over 75%, with the Texas factory expected to have a cluster of 50,000 Nvidia H100s by the end of this month.
Apple Falls Overnight
Reports indicated that Apple is reducing Vision Pro production, with a decrease in iPhone 16 orders according to prominent analysts. The first batch of AI features from Apple is expected next week, with the next batch of features integrated with ChatGPT already in developer testing. For AI purposes, Apple will release three M4 chip Mac products next week, with upgrades for all Mac models possibly completed next year
NVIDIA CEO: Blackwell Chip Design Flaw Fixed, Expected to Ship in Q4
Jensen Huang stated that with the help of TSMC, NVIDIA's latest Blackwell AI chip design flaw has been fixed, which previously affected production. "We have a design flaw in Blackwell, it's functional, but the design flaw led to a very low yield. This is 100% NVIDIA's fault."
Arm Threatens to Revoke Qualcomm License, Potentially Affecting Entire AI Computer and Mobile Phone Industry
As a focal point of the dispute, Snapdragon X is currently the only chip approved for use in the Microsoft AI PC ecosystem. Analysts suggest that if Arm ultimately wins the lawsuit and revokes Qualcomm's license, it may force Qualcomm and about 20 suppliers using Snapdragon X processors to halt the shipment of new AI PCs, resulting in losses of up to billions of dollars.
Morgan Stanley Raises Pop Mart's Target Price for the Sixth Time This Year
Morgan Stanley has raised Pop Mart's target price to HKD 81, believing that factors such as the potential in overseas markets like Europe and the United States, an innovative product line, and the recovery of the Chinese market are expected to drive Pop Mart to continue its rapid growth. Goldman Sachs has raised Pop Mart's target price to HKD 70, but due to the current uncertain retail environment and consumer spending power, they hold a conservative outlook on its profit margin prospects.
Boeing Reports Huge $6 Billion Loss in Q3, Largest Since 2020
In the third quarter, Boeing's revenue and free cash flow fell short of expectations. CEO Kelly Ortberg proposed a "Four Pillars" plan, including ending union strikes, efforts to stabilize operations, corporate culture reform, and the goal of manufacturing a brand-new aircraft.
Macro News
China's Ministry of Industry and Information Technology Makes Latest Statements on Auto Consumption, Artificial Intelligence, Low-Altitude Economy, Commercial Aerospace
The Ministry of Industry and Information Technology of China stated that it will take multiple measures to expand auto consumption and optimize policies for access to automobile production. It aims to nurture and strengthen new industries and tracks such as the low-altitude economy, commercial aerospace, and biomanufacturing.
Federal Reserve Beige Book: Most Districts Report Little Change in Overall Economic Activity, Inflation Remains Moderate
Analysis suggests that the Beige Book report indicates that despite unexpected increases in official employment, consumer prices, and retail sales data in September, the U.S. economy continues to slow down. Despite the recent uptick in economic data, Federal Reserve officials have recently cited anecdotes from contacts as reasons to continue cutting interest rates