apples of your eye
apples of your eye
The remarkable rise of the Honeycrisp and Cosmic Crisp apples
botted line
botted line
Reading an article online? It’s now a coin flip whether it was authored by a human or AI
capex concerns
capex concerns
Analysts generally like what they heard from Oracle, but shares are down
Google’s Gemini 3.0 reportedly due to be released in December
Margins, and selling the news: analysts look to explain Oracle’s tumble
AST SpaceMobile drops after Barclays cuts rating to “underweight”
EssilorLuxottica surges to record high after saying Ray-Ban Meta glasses helped boost revenue growth
Novo, Lilly fall after Trump says “the fat loss drug” will go down in price
Report: Apple’s next MacBook Pro will have a touch screen, a decade after everyone else
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Google’s Gemini 3.0 reportedly due to be released in December
Google is aiming to release the latest version of its flagship AI model, Gemini 3.0, in December, according to a report from Sources.news.
The updated model is expected to make significant gains that should boost it to the top of the leaderboards, according to the report.
The Gemini app also spent some time at the top of the iOS App Store leaderboards, propelled by Google’s Nano Banana image generation model, which proved popular with users looking to turn themselves into action figures. Gemini briefly knocked ChatGPT from the top spot, which is now occupied by OpenAI’s other hot app, Sora.
Recently, there have been signs of ChatGPT downloads slowing, which could provide an opening for Gemini to gain market share. Adding some premium Gemini features to the free tier is a plan under discussion within Google, per Sources.news.
Sources.news also reports that a “small, secretive team” inside Google is working to integrate Gemini into Apple’s operating systems.
The Gemini app also spent some time at the top of the iOS App Store leaderboards, propelled by Google’s Nano Banana image generation model, which proved popular with users looking to turn themselves into action figures. Gemini briefly knocked ChatGPT from the top spot, which is now occupied by OpenAI’s other hot app, Sora.
Recently, there have been signs of ChatGPT downloads slowing, which could provide an opening for Gemini to gain market share. Adding some premium Gemini features to the free tier is a plan under discussion within Google, per Sources.news.
Sources.news also reports that a “small, secretive team” inside Google is working to integrate Gemini into Apple’s operating systems.
US stocks end volatile week on a positive note
The S&P 500 and Nasdaq 100 both ended well in the green, while the Russell 2000 suffered a loss.
How to use options to generate income, protect your portfolio, and speculate on market moves.
Margins, and selling the news: analysts look to explain Oracle’s tumble
The somewhat counterintuitive tumble in Oracle shares continued into afternoon trading Friday, despite Wall Street analysts’ more or less favorable reaction to Oracle’s investor day presentation Thursday, where executives said the company’s AI cloud business would eventually sport margins of between 30% and 40%, far better than the figures reported by The Information back on September 7.
And yet, the stock is on its way to its worst day in the last six months. What gives?
Gil Lauria, who covers Oracle for D.A. Davidson & Co. — who has it at “hold” with a $300 price target — has a theory, telling Sherwood News:
“Investors are disappointed that the entire growth acceleration in Oracle is from the Oracle Cloud Infrastructure business, and that Oracle expects the rest of the business to grow low single digits.
The other disappointment came from Oracle acknowledging that the GPU rental business only had 30-40% gross margins, far lower than the 80% gross margins for the rest of the business.”
Other analysts we’ve chatted with on background say they’re not convinced the margin story is the source of today’s slump, suggesting the also plausible explanation that the drop might just be a sign traders bought the stock ahead of the presentation to analysts on Thursday anticipating positive announcements, and now they’re selling simply selling the news.
Gil Lauria, who covers Oracle for D.A. Davidson & Co. — who has it at “hold” with a $300 price target — has a theory, telling Sherwood News:
“Investors are disappointed that the entire growth acceleration in Oracle is from the Oracle Cloud Infrastructure business, and that Oracle expects the rest of the business to grow low single digits.
The other disappointment came from Oracle acknowledging that the GPU rental business only had 30-40% gross margins, far lower than the 80% gross margins for the rest of the business.”
Other analysts we’ve chatted with on background say they’re not convinced the margin story is the source of today’s slump, suggesting the also plausible explanation that the drop might just be a sign traders bought the stock ahead of the presentation to analysts on Thursday anticipating positive announcements, and now they’re selling simply selling the news.
Meta strikes $30 billion deal with Blue Owl to finance Hyperion data center
Meta’s Hyperion mega data center site in Richland Parish, Louisiana, is currently under construction. The city-sized development will be the home to one of the largest data centers in the world, housing around 2 million pricey GPUs, and will scale up to an eventual 5.5 gigawatts.
So, how is Meta planning to pay for this expensive project?
Bloomberg reports that Meta has signed a deal with asset management company Blue Owl Capital to finance $30 billion to pay for the project, marking what could be the largest private capital deal ever.
According to the report, Blue Owl and Meta would co-own the site, with Meta retaining a 20% stake in the project. PIMCO is also part of the financing for the deal, as the anchor lender.
Raising the massive capital to fund all of these huge AI data center projects is pushing companies to use unusual financing arrangements. The Information reported that xAI made such a deal with Valor Equity Partners worth $20 billion to rent the GPUs needed for its Colossus 2 data center.
Bloomberg reports that Meta has signed a deal with asset management company Blue Owl Capital to finance $30 billion to pay for the project, marking what could be the largest private capital deal ever.
According to the report, Blue Owl and Meta would co-own the site, with Meta retaining a 20% stake in the project. PIMCO is also part of the financing for the deal, as the anchor lender.
Raising the massive capital to fund all of these huge AI data center projects is pushing companies to use unusual financing arrangements. The Information reported that xAI made such a deal with Valor Equity Partners worth $20 billion to rent the GPUs needed for its Colossus 2 data center.
Analysts generally like what they heard from Oracle, but shares are down
The big news out from the Oracle AI World conference was broadly positive: that margins on cloud infrastructure can be as high as 35%, and that the company predicts $166 billion in infrastructure revenue by 2030.
And in the wake of that news, today UBS raised its price target for Oracle shares to $380 from $360, saying they are undervalued.
But investors appear to have some concerns about Oracle’s huge capex plans, which are fueled by huge AI infrastructure deals with OpenAI and Meta, as shares dropped over 7% in Friday trading.
Analysts have pointed to Oracle’s high cash burn as it pursues its AI build-out and potential financing needs as flies in the ointment that could blunt the impact of the company’s strong longer-term growth forecasts.
On Friday, Jefferies analysts wrote:
“Questions remain about ORCL’s capex requirements to meet growing demand, as there was no forward-looking commentary on capex at the Analyst Day. Capex will need to ramp in line with [Oracle cloud infrastructure] revenue growth, raising concerns about ORCL’s financing options to support this expansion.”
However, if that’s the reason why the stock is getting hit today, it would mark a distinct change in how investors are evaluating the AI trade. Companies have tended to be increasingly rewarded for their aggressive capex commitments to enhance the boom, based on optimism that investments in this would-be revolutionary technology will bear fruit.
Friday’s dip comes on the back of a strong run leading up to the yesterday’s investor conference, fueled by a flurry of AI headlines. Oracle shares have gained over 18% in the past three months and more than 70% so far this year, well outpacing the Nasdaq’s approximately 7% and 16% rise over the same time periods.
AST SpaceMobile drops after Barclays cuts rating to “underweight”
AST SpaceMobile, which provides cellular services from space, dove in early trading after Barclays analysts cut their rating on the shares to “underweight” (essentially a sell) from “overweight” (or a buy), citing “excessive” valuation on the still money-burning company. The fact that analysts went from “buy” to “sell” — with no momentary stop at a “hold” or “neutral” rating — makes it a fairly rare “double downgrade.”
They wrote:
“Valuation has run ahead of fundamentals... In our last update, we increased our price target from $38 to $60 as we took a more constructive view on pricing; we found it supportive that TMUS/Starlink launched a text only service for $10 per month and believe that AST products which will be richer (text, call, broadband) could see higher prices points. Since then the stock price has doubled from $48 to $95.7.”
With the shares up almost 120% over the last month through Thursday, and a price-to-forward-sales ratio of 140x — the Nasdaq Composite is around 5x — the stock might be due for a cooling-off period.
The remarkable rise of the Honeycrisp and Cosmic Crisp apples
When it comes to apples, America cannot get enough of the crunch factor.
EssilorLuxottica surges to record high after saying Ray-Ban Meta glasses helped boost revenue growth
European eyewear company EssilorLuxottica said during its earnings call yesterday that its Ray-Ban Meta glasses helped boost its revenue growth, something that’s sent the ADR up to a record high.
“Clearly, there is a lift coming from Ray-Ban Meta wearables as a product category,” the company’s CFO, Stefano Grassi, said on the call Thursday. “The contribution from Ray-Ban Meta in wearables, as I mentioned before, is in excess of 4 percentage points overall for the group.”
EssilorLuxottica’s revenue was up 11.7% in the third quarter compared with a year ago.
Meta has a nearly 3% stake in the eyewear company, which it has partnered with on the smart glasses. Meta CEO Mark Zuckerberg has also claimed that its Ray-Ban Metas are a hit, saying that the “sales trajectory that we’ve seen is similar to some of the most popular consumer electronics of all time.” We looked at the numbers and aren’t so sure.
Crypto liquidations reached $1.2 billion in the past 24 hours, according to CoinGlass data, as bitcoin continued its downward trajectory. Bitcoin suffered $458.24 million in liquidations, with the bulk of them — over $334 million — in long positions. Meanwhile, the second-biggest crypto, ethereum, saw the second-biggest figure for liquidations yesterday, with $278 million.
Bitcoin slipped as far as $103,856 early Friday morning, its lowest level since July, and is down 13% in the past seven days. The sell-off dragged the total crypto market cap down to $3.67 trillion, down 5.5%. Underscoring the market anxiety, CoinMarketCap’s fear and greed index is now at 28.
Bitcoin ETFs also suffered, registering $536 million in outflows on Thursday. The Ark 21 Shares Bitcoin ETF took the biggest hit, with $275.15 million in outflows. Since Monday, bitcoin ETFs have seen $864.5 million in outflows.
Maja Vujinovic, CEO and cofounder of digital assets at FG Nexus, told Sherwood News that bitcoin’s slump looks like a classic risk-off chain reaction.
“Credit jitters and trade tensions pushed money into gold at record highs while leveraged crypto longs were forced to unwind. Once the liquidations exhaust and policy fog clears, the same macro buyers chasing safety today are likely to hunt value in BTC again,” Vujinovic said.
Novo, Lilly fall after Trump says “the fat loss drug” will go down in price
Novo Nordisk and Eli Lilly slipped after the bell on Thursday, and continued to trade lower in the premarket session Friday, after President Trump told reporters on Thursday that “the fat loss drug” will go down in price.
Trump said GLP-1s like Novo’s Ozempic will be less than $150 out of pocket. Dr. Mehmet Oz, the Centers for Medicare & Medicaid Services administrator, interjected to say that those deals have not yet been finalized.
The Trump administration has been negotiating with drugmakers to bring down drug prices in the US. Currently, the popular weight-loss drugs made by Lilly and Novo cost between $300 and $500 a month out of pocket through the drugmakers’ direct-to-consumer platforms.
Hims & Hers, which sells compounded versions of Novo's weight loss shot, also fell on Friday. A monthly dose of Hims' compounded GLP-1 is about $200 a month, more than what Trump suggests the brand-name version could cost soon.
JPMorgan economists estimate that the basket of stocks they use as a rough gauge of AI’s market impact is now worth about 44% of the S&P 500’s total market cap, up from 26% in 2022.
Using a basket of 30 AI stocks picked by the bank’s equity analysts as a barometer of AI, the economists find that American households have seen their aggregate wealth go up by about $5 trillion over the last year as a result of AI, they reported in a note published Thursday.
They also estimate the surge in stock market wealth could raise annualized US consumer spending by some $180 billion, due to wealth effects.
JPM acknowledges some uncertainty around this estimate, noting that the spending impact could be lower “if the wealth gains are accruing disproportionately to upper income households with lower [marginal propensity to spend].”
Report: Apple’s next MacBook Pro will have a touch screen, a decade after everyone else
Steve Jobs would NEVER!
Apple’s next iteration of the MacBook Pro could have a touch screen, according to a report from Bloomberg.
Apple will be late to the party, as the rest of the industry adopted touch screens years ago. Apple cofounder Steve Jobs famously resisted the idea of a touch screen Mac, but over the years, the lines between Macs and iPads have been blurring.
The new high-end touch screen MacBook Pros are expected to have a slimmer design, run on Apple’s custom M6 chips, and feature a “hole-punch” at the top of the OLED display, matching the design of the iPhone, which allows the camera and sensors to be surrounded by screen at the top of the display.
This week, Apple released an updated MacBook Pro, iPad Pro, and Apple Vision Pro running on the M5 chip.
The new high-end touch screen MacBook Pros are expected to have a slimmer design, run on Apple’s custom M6 chips, and feature a “hole-punch” at the top of the OLED display, matching the design of the iPhone, which allows the camera and sensors to be surrounded by screen at the top of the display.
This week, Apple released an updated MacBook Pro, iPad Pro, and Apple Vision Pro running on the M5 chip.
Fedspeak in line with market’s view on rate cuts
Comments from Federal Reserve Gov. Christopher Waller Thursday calling for another quarter-point rate cut is in line with views from both financial and prediction markets.
Since the Fed cut interest rates at its last meeting on September 17, positions taken by traders in both markets suggest increased certainty that the central bank will continue to ease at its two-day meeting later this month.
Market-implied odds derived from event contracts offered on Robinhood suggest traders see a 94% chance the central bank cuts its Fed Funds rate target by 0.25 percentage points when it announces its next decision on October 29, as of market close Thursday.
(Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company subject to certain legal and regulatory restrictions. I own stock as part of my compensation.)
Odds implied by prices in the Fed Funds futures markets are an even higher 97%. That’s up from roughly 74% a month ago.
In comments to the National Association of Business Economists earlier this week, Fed Chair Jerome Powell also hit notes supportive of rate cuts.
The Fed chief — who has been the target of a public pressure campaign from President Trump to deliver lower rates — told listeners that a sharp slowdown in hiring in the US is raising worries about economic weakness at the central bank, despite the fact that the Fed’s preferred inflation gauge is still running nearly a full percentage point above its 2% long-term target.
“Rising downside risks to employment have shifted our assessment of the balance of risks,” Powell said.
Since the Fed cut interest rates at its last meeting on September 17, positions taken by traders in both markets suggest increased certainty that the central bank will continue to ease at its two-day meeting later this month.
Market-implied odds derived from event contracts offered on Robinhood suggest traders see a 94% chance the central bank cuts its Fed Funds rate target by 0.25 percentage points when it announces its next decision on October 29, as of market close Thursday.
(Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company subject to certain legal and regulatory restrictions. I own stock as part of my compensation.)
Odds implied by prices in the Fed Funds futures markets are an even higher 97%. That’s up from roughly 74% a month ago.
In comments to the National Association of Business Economists earlier this week, Fed Chair Jerome Powell also hit notes supportive of rate cuts.
The Fed chief — who has been the target of a public pressure campaign from President Trump to deliver lower rates — told listeners that a sharp slowdown in hiring in the US is raising worries about economic weakness at the central bank, despite the fact that the Fed’s preferred inflation gauge is still running nearly a full percentage point above its 2% long-term target.
“Rising downside risks to employment have shifted our assessment of the balance of risks,” Powell said.
More bad news on loans crushes US banks
Regional banks are cratering on Thursday following more news of souring loans.
Zions Bancorp tanked after announcing that it’s taking a $50 million charge-off relating to loans of more than $60 million made to investment funds that purchased distressed commercial mortgage loans. It’s suing the borrowers, alleging that their collateral was not protected in accordance with the terms of their loans. Zions said it “believes this is an isolated situation, it plans to engage counsel to coordinate an independent review.”
Western Alliance Bancorp is also facing significant selling pressure, as it made a loan with an outstanding balance of nearly $100 million to the same investment funds, which it is also suing, alleging fraud. However, Western Alliance also reaffirmed its full-year guidance while disclosing this news.
More signs of credit stress are not what the doctor ordered for financials, which were already on edge in the wake of the high-profile busts at Tricolor and First Brands. The Financial Select Sector SPDR Fund and SPDR S&P Regional Banking ETF are poised for their biggest one-day drops since April.
Adding to the risk-off tone are indications of funding stress in interbank markets. The secured overnight financing rate (SOFR) has traded above the top end of the Federal Reserve’s target range for its policy rate amid anecdotal reports of elevated demand for short-term financing from regional banks. However, this also coincides with the timing of corporate tax payments and US Treasury settlements, which also act as drains on cash.
Partnering with Peacock won’t put the “plus” back in Apple TV
Apple and NBCUniversal inked a deal to bundle their streaming services for a 30% discount.