Before we dive in today, I want to thank everyone who joined Luke Lango, Eric Fry, and myself last night for our AI Impact Event, where we talked about everything AI – and, most importantly, how to profit from the investment opportunities that come with it.
If you missed last night’s event, simply click here for the replay.
If you’re a longtime fan of the Olympics, you might remember the “Magnificent Seven.”
And if you don’t…
The “Magnificent Seven” was the 1996 United States Olympic women’s gymnastics team. Seven, for the team’s seven members, and magnificent because the team won the first-ever gold medal for the United States in the women’s gymnastics team competition.
And the team clinched the win in a spectacular fashion, with one team member performing a near-perfect vault on an injured ankle.
The members were all later inducted into the United States Olympic Hall of Fame.
But you might have heard this phrase used again recently, albeit for something else…
The “Magnificent Seven” is now used to describe the seven current biggest tech stocks (some of which used to be a part of the FAANG or MAMAA groups).
- Amazon.com, Inc. (AMZN)
- Alphabet Inc. (GOOG)
- Apple Inc. (AAPL)
- Meta Platforms, Inc. (META)
- Microsoft Corporation (MSFT)
- NVIDIA Corporation (NVDA)
- Tesla, Inc. (TSLA)
These seven stocks, like the gold-medal-winning “Magnificent Seven,” have achieved greatness in a spectacular fashion: For the first half of the year, the S&P 500 soared 15.9% — and these stocks accounted for 73% of those gains.
Four out of the seven stocks reported earnings over the last two weeks. So, in today’s Market 360, let’s take a look at how their earnings stacked up and what each had to say about artificial intelligence (AI). Then, I’ll share where you can find the best AI stocks.
Let’s dive in…
Tesla, Inc – Reported Wednesday, July 19
For the second-quarter, Telsa reported impressive sales, earnings and operating margins.
The company reported earnings per share of $0.91, beating analysts’ expectations of earnings per share of $0.82. This is up from earnings per share of $0.76 in the same quarter last year. Revenue rose 47% year-over-year to $24.93 billion, up from revenue of $16.93 billion a year ago. This topped analysts’ estimates for $24.47 billion.
However, Elon Musk cautioned investors that further price cuts may be necessary, despite price cuts of 14% to 28% this year on its electric vehicles (EVs). Furthermore, Musk also stated that Tesla would scale back its production in the third quarter to update its factories. He said, “We continue to target 1.8 million vehicle deliveries this year, but expect Q3 production will be a little bit down because we’ve got summer shutdowns for a lot of factory upgrades.”
Finally, Musk said that Tesla is investing heavily into supercomputers to develop autonomous driving based on all the data that its cars collect on the road.
The company’s shareholder deck states that Tesla’s research and development costs rose to $943 million in pursuit of the company’s “commitment to being at the forefront of AI development entered a new chapter with the start of production of Dojo training computers.”
Tesla Dojo is a training supercomputer designed by the company that will be used to improve its Full Self-Driving (FSD) advanced driver-assistance system.
Musk’s comments about Tesla’s autonomous driving development apparently hurt the stock, though, since the company abandoned the LIDAR (Light Detection and Ranging) system. LIDAR is a forward infrared radar. It’s used to see animals and people and to avoid collisions.
So, no matter how much data Tesla has, a LIDAR system is superior to Tesla’s camera system.
The stock fell nearly 10% on Thursday in the wake of its earnings report.
Microsoft Corporation – Reported Tuesday, July 25
Earnings per share rose 21% year-over-year to $2.69, up from earnings per share of $2.23 in the same period last year. Analysts were expecting earnings of $2.55 per share, so the company topped earnings estimates by 5.5%. Revenue climbed 8% year-over-year to $56.19 billion, up from revenue of$51.87 billion, and beating revenue expectations for $55.47 billion.
Revenue from Azure, Microsoft’s cloud computing platform, and other cloud services revenue, increased 26% during the quarter. Analysts expected 25% growth.
In the company’s earnings call, Amy Hood, Microsoft’s finance chief, said:
When it comes to AI, we are seeing a paradigm shift as the world’s large AI models become powerful platforms themselves. With our Azure OpenAI Service, a diverse set of customers, from HSBC, PwC, and RTL Group, to Shell and Wipro, are applying language models to advanced scenarios like content and code generation.
Looking forward, Microsoft called for fiscal first-quarter revenue between $53.8 billion to $54.8 billion. This fell short of the $54.94 billion expected by analysts, so, shares of the company slipped nearly 4% on Wednesday.
Alphabet Inc. – Reported Tuesday, July 25
Second-quarter earnings per share increased 19% year-over-year to $1.44, up from earnings per share of $1.21 a year ago. This beat analysts’ earnings expectations for $1.34 per share. Revenue climbed 7% year-over-year to $74.6 billion, up from revenue of $69.7 billion in the same quarter a year ago. Analysts had called for revenue of $72.82 billion.
I should add that Google Cloud sales, which include infrastructure and productivity apps, increased 28% year-over-year to $8.03 billion, which helped boost Alphabet’s revenue growth.
In regard to AI, Sundar Pichai, CEO of Alphabet and Google, said on the company’s conference call:
To take advantage of the AI opportunities ahead, we’ve been sharpening our focus as a company: investing responsibly with great discipline, and finding areas where we can operate more cost effectively. We’ve made good progress in data center machine efficiency which will pay dividends as we continue to invest in AI.
Bard, Google’s AI chatbot, is now available in now available throughout most of the world and can be used in over 40 languages.
Since the release of its earnings report, shares of the stock have hit a slew of new 52-week highs, including one this morning.
Meta Platforms, Inc. – Reported Wednesday, July 26
For the second quarter, the company reported earnings per share of $2.98, which was higher than analysts’ estimates of earnings of $2.91 per share and earnings per share of $2.46 in the same quarter of last year. Revenue increased 11% year-over-year to $32 billion, topping analysts’ estimates for $31.12 billion.
In a statement, Meta CEO Mark Zuckerberg said:
Moving onto our product roadmap… the two technological waves that we’re riding are AI in the near term and the metaverse over the longer term. Investments that we’ve made over the years in AI, including the billions of dollars we’ve spent on AI infrastructure, are clearly paying off across our ranking and recommendation systems and improving engagement and monetization.
Looking forward, Meta expects third-quarter revenue between $32 billion and $34.5 billion, or 15% revenue growth. This is higher than analysts’ estimates for $31.3 billion.
The stock jumped 9% to a new 52-week high on Thursday and then hit another 52-week high today.
Are There Better AI Plays?
It’s clear that these companies are going “all in” on AI, but here’s the truth: There are other AI investment opportunities with bigger upside potential than the Magnificent Seven.
So, on Thursday, I sat down with my colleagues Luke Lango and Eric Fry for a special AI Impact Event to discuss where to find the biggest winners. We also gave away a free special recommendation. It’s not a normal recommendation… but that’s what makes it so potentially lucrative.
Plus, we shared how to access our handpicked list of nine AI stocks that could go on to disrupt entire industries and, as a result, go up more than any stock over the next 12-36 months.
Analyst, Market 360
P.S. On Thursday, I sat down with my colleagues Luke Lango and Eric Fry to expose a major development unfolding in AI…
A development is about to disrupt the entire financial markets and blindside millions of investors. Hundreds of stocks are about to lose 50% or more of their value in the blink of an eye.
Stocks that have strong market positions today could even find themselves filing for bankruptcy soon. In 2023, a year which has been defined by AI, has seen corporate bankruptcies reach a record 12-year high.
But this is just the beginning.
This is why we dropped everything to hold our AI Impact Event.
If you want to get our step-by-step playbook for avoiding the destruction that’s about to occur and learn about the small unique group of stocks that could jump 10X or more as this AI development unfolds, watch the replay of our AI Impact Event now.
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
NVIDIA Corporation (NVDA)