← The Rundown
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Public.com presents the Rundown, your daily market update in 10 minutes. My name is Zadmani and today is Friday, May 29th. In today's episode, we'll break down Dell's monster earnings and why this old school computer company is suddenly one of the hottest names in AI. We'll also tell you about Anthropic's fundraising round that made them the most valuable AI startup in the world. Then stick around to the end of the show to find out why there might be a $250 with President Trump's face on it. We got a great show for you today. Let's go. Stocks kept moving higher on Thursday despite the hot inflation report. The S P 500 jumped 0.6% while the NASDAQ did even better, up nearly 1%. Now, we covered the PCE inflation report yesterday. It showed that inflation was running at 3.8% in April, but that wasn't enough to slow the market momentum. And I think there are a couple reasons why. For one, the tech rally kept going yesterday. I think, I think it helped that the software company Snowflake dropped blowout earnings, pushing its stock up 36% and that lit a fire under the whole sector. The other catalyst though, and likely the main reason for the overall market surge, was the latest information regarding the Iran war. The US and Iran have reportedly mostly agreed to a 60 day deal to pause fighting and reopen the Strait of Hormuz. And that sent oil prices lower to around $90 a barrel. So the optimism around a peace deal and the reopening of the Strait of Hormuz and of course all the hype around A is pushing up the stock market. In fact, the S P500 is now on track for its ninth winning week in a row. Now, I want to reiterate, we've been hearing about a peace deal for weeks now and this war with Iran is still very much on. In fact, just this week, Iran fired a missile at Kuwait and sent attack drones in the Strait of Hormuz. But the market seems to be convinced that a peace deal is right around the corner. I mean, even the bond market seems to think so. Bond yields are starting to push back after surging over the last couple weeks. The 10 year treasury yield is currently sitting at 4.44% down, down from the 4.66% last week. And the 30 year treasury yield is down under 5% again after jumping to nearly 5.2% last week, which was the highest since 2007. So I gotta say the vibes are pretty good. Right now, maybe a little too good, but we're gonna be staying on top of everything. So make sure you guys are subscribed to the podcast and tuning in every day to stay in the loop. Let's run through some headlines, starting with Dell. Dell just reported an absolute monster earnings report, and the stock jumped more than 30% as a result. See, most people know Dell as the computer company that maybe your dad bought his first laptop from in like 2005. And while Dell still sells computers, they're now mostly an AI infrastructure company, specifically selling AI servers. Last quarter, Dell's revenues jumped 86% from a year ago to nearly $44 billion, blowing past the 32 billion DOL estimate that Wall street was expecting. And here's the stat that made my jaw drop. Their AI server revenue grew 757% from a year ago to over $16 billion. See, these AI servers that Dell makes are essentially machines packed with Nvidia chips, and companies are buying them up to load them into data centers so they can have the computing power to run all their AI workloads. Dell is seeing a huge surge in demand for these servers, and in fact, they raised their full year AI revenue forecast to $60 billion, up from the $50 billion just a few months ago. And beyond just the AI stuff, Dell also landed a $9.7 billion contract with the Pentagon this week to supply software across the US Military. Now, I do want to point out this is raising some red flags because President Trump recently bought Dell stock earlier this year, and he also shouted out Dell multiple times in the past. Once was at a rally in Georgia back in February where he told the crowd to go out and buy a Dell computer. And then again earlier this month at a Mother's Day event at the White House where he said to go out and buy a Dell. Turns out it wasn't bad advice, especially if you bought Dell stock. Dell stock has more than doubled in the past month and has tripled since the start of the year. And to me, the big picture here is that Dell is the latest example of an infrastructure company benefiting from the AI boom. See, the first phase of the AI boom was mostly Nvidia capturing most of the upside along with some of the big tech names. But now it's the infrastructure players like Dell making the servers, or memory makers like Micron capturing the upside. Now, as I've said in the past, the infrastructure industry is a pretty volatile boom and bust industry to be in, but right now, the market is too caught up in the AI mania to care about historical precedent. And to be fair, the demand is there. All we hear about is how there's not enough compute or servers or data centers to meet all the demand. But at some point you would think the supply would catch up. So I'm really curious to see how this plays out the rest of the year. And over the next couple of years. Let's stick with the AI theme and talk about Anthropic. Yesterday, Anthropic, the maker of Claude, announced that they raised $65 billion in new funding, valuing the company at $965 billion. Just a hair shy of the trillion dollar mark, Anthropic did officially pass OpenAI, the maker of ChatGPT, to become the most valuable AI startup in the world. You know, I said this was only a matter of time, just given all the momentum that Anthropic had this year and how good Claude had gotten. I mean, you can see it in Anthropic's revenue growth. Their annualized revenue run rate is on pace for $50 billion this year. Just to put this into context, a year ago their run rate was around $4 billion. So that means that anthropic has literally 10x their revenue in a year, and that's why their valuation has surged. This new valuation for Anthropic is more than double what it was just a few months ago. And according to Pitchbook, this is the fastest a company has ever grown in value in the history of venture capital. Remember, Anthropic was found in 2021. So within a five year period, this company hit nearly a trillion dollar valuation, which is just mind blowing. Now, Anthropic also released a new model for Claude Yesterday called Opus 4.8. Also in their announcement yesterday, they said they plan to release their state of the art Mythos model in just a few weeks. Remember, this model freaked out a ton of people a couple months ago for how good it was and the threat it posed to cybersecurity. I mean, the Treasury Department and the Federal Reserve had to call an emergency meeting with banks. So yeah, the Mythos model is coming out soon to the public, and I can't wait to get my hands on it. Now all that's left for Anthropic to do is ipo, and I'm really hoping that happens this year. Let's talk about some stocks making moves today. Shares of NetApp are up big today after the data storage company reported strong earnings, beating on both top and bottom line. Now, NetApp isn't a household name, but they've been around since the 90s. They're a data infrastructure company that the hardware and software that big companies use to store and manage their data across their own data centers and also the cloud. And NetApp has become one of the low key winners of the AI boom. The company said revenues were up 12% in Q1, hitting a record $1.95 billion and overall profits jumped 26% from a year ago. What stood out to me was that their operating margin improved from 20% up to 27%. So the company is seeing an AI tailwind right now. They even raised their guidance moving forward. See what's going on is as more and more companies embrace AI, they're having to buy NetApp storage infrastructure to hold all that data that goes into training AI models. So investors are feeling bullish about the company's shares are up nearly 20% this morning at the time of this recording. And I do want to point out with this jump, NetApp stock is about to hit all time highs. The last time the stock was at this level was back in October of 2000, which was pretty much at the absolute peak of the dot com bubble. So yeah, just make of that what you will. All right, moving on, let's talk about Gap. Their stock is getting hit hard today after the company reported earnings and cut its sales forecast for the year. The issue with Gaps earnings was Old Navy, which is their largest brand. Old Navy makes up almost 60% of the company's total sales and last quarter Old Navy saw sales growth of just 1% while Wall street was expecting a 3% growth. Now my initial reaction was this might be a case of a consumer slowdown or a pullback in spending. But Gap CEO came out taking responsibility, saying the company just missed the mark on their seasonal products. Demand was particularly soft for items like dresses and swimming shorts, while sales for products like denim and kids categories held up pretty well. So yeah, just poor product choices from Old Navy was enough to dampen sales. But outside of Old Navy things were actually fine. In fact, Gap's namesake brand saw sales jump to 10% in the quarter and Banana Republic, which is my personal favorite, grew sales by 2%. But this poor quarter from Old Navy caused Gap to cut its full year guidance. It now sees total sales growing 1 to 2% this year, down from the previous forecast of 2 to 3%. And that was enough for investors to bail. Gap shares are down around 15% this morning at the time of this recording. Let's wrap the show with a fun fact. There might be a $250 bill coming soon with President Trump's face on it. Treasury Secretary Scott Bessen confirmed this week that the Treasury Department has been working on this new bill to celebrate the US's 250th birthday in July. But look, this $250 bill faces some hurdles. For one, it usually takes a few years to design a new bill. So the Treasury Department is rushing it to meet their deadline. And then on top of that, they might not be able to put President Trump on it because there's actually a law that says that only dead people can go on US currency. So Congress would have to pass a whole new law for Trump to be on this new bill. And look, I'm not going to get into the political stuff, but I will say it does seem a little silly to make a $250bill because, I mean, who uses cash these days? Right now I'm still a little old school, so I keep like 40 bucks in my wallet most times, but I genuinely can't remember the last time I touched $100 bill. So I don't really see the need for a $250 bill. But I could be wrong here. Let me know in the comments of what you guys think. Well, all right, guys. That's the rundown for today. That's the rundown for this week. Hope you guys enjoyed today's episode. If you did and you have like five extra seconds, consider giving us a five star rating on Apple, Spotify, YouTube, wherever you listen to your podcast. All that engagement really does help us out and it helps other people find the show. Thank you guys so much for listening, watching and commenting. Shout out to Mike for all the work behind the scenes and we'll see you guys back here tomorrow.