My top 10 things to watch Thursday, July 20
1. Very confusing day. Quarterly releases from Tesla (TSLA) and Netflix (NFLX) were both very good but the market is overbought. Megacaps stumble. Just a breather. Getting defensive and giving the Dow a chance to shine. The 30-stock average on Wednesday completed an eight-session winning streak for the first time since September 2019. However, the Dow’s year-to-date gains still lag way behind the S&P 500 and the star of 2023, the Nasdaq.
2. Tesla shares down nearly 4%. Wall Street nitpicking on margins. Production is fabulous. Best selling car in Europe. More aggressive ramp for Cybertruck. Ready to roll with full self-driving. Cars won’t depreciate. Tesla will have to use Club name Nvidia (NVDA) tech because more computing power is needed. Can’t believe Musk has so much free cash flow despite all of that. Long-term Tesla shareholders must hold on. Short termers will take profits.
3. Taiwan Semiconductor Manufacturing Company (TSM) is NOT a reflection on Nvidia even as everyone thinks so. I say that because the weakness at TSMC is because of lower-end Chinese CPUs, not the high-end GPUs that Nvidia is known for. China’s weakness is the issue with Taiwan Semi, and it is surprising.
4. Elon Musk says Nvidia has all the GPUs that everyone needs. I know it will be tough to believe in AI after the TSMC chief’s “frenzy” comment and how it is not sustainable. It’s pretty easy to see that the demand is picking up but not as fast as CPUs are falling down.
5. Netflix shares down more than 5%. The video streaming giant has not worked out ad tier yet but an ad subscriber is worth much more than a usual sub. Revenue per user is that great. Advertisers love it., Can handle the Hollywood strike better than others. Bears fixated on how is it possible that there isn’t more growth in U.S., but everyone has it who wants it and now the question is will they pay more. Netflix can raise the price and it will drive people to ad tier, which is perfect for them. Long-termers will hold it. Short-termer will sell it.
6. IBM (IBM) tells a good story as always, but I think that its hybrid strategy goes only so far. Much better to own Oracle (ORCL). IBM still not growing but growing faster than it was. The stock down modestly.
7. Club name Johnson & Johnson (JNJ) reports better-than-expected quarterly earnings-per-share (EPS) and revenue. Boosts full-year guidance on adjusted EPS to $10.70 to $10.80 and revenue to $99.3 billion to $100.3 billion. Is it that talc litigation is what really matters? J&J has been ordered to pay $18.8 million in a California case. Does that put the company’s $8.9 billion settlement offer in jeopardy?
8. Mizuho raises price target on Club holding Salesforce (CRM) to $260 per share from $250. Keeps buy rating. Cites rollout to most CRM customers new GPT artificial intelligence capabilities. We wrote about it Wednesday in story that also looked at what Club names Apple (AAPL) and Microsoft (MSFT) are doing.
9. Kenvue (KVUE), formerly Johnson and Johnson’s consumer health division, beat estimates in its first quarterly report since its IPO in May. J&J still owns a largo part of Kenvue.
10. American Airlines (AAL) beat on quarter EPS and revenue. Boosts outlook. United Airlines (UAL) beat on both top and bottom lines in the second quarter. Forecasts strong Q3.