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Public.com presents the rundown, your daily market update in 10 minutes. My name is Zadmani and today is Wednesday, July 15th. In today's episode, we'll tell you why Fed Chair Kevin Warsh isn't ready to declare victory on inflation despite the positive data. We'll also recap blowout earnings from ASML and tell you why PayPal might get acquired soon. Then stick around to the end of the show to find out why New York just became the first state to test temporarily block large data centers. We got a great show for you today. Let's go. Stocks had a decent day on Tuesday with the S&P 500 jumping 0.4% and the NASDAQ climbing 0.9%. The market's got a boost from a couple things yesterday, one being the strong bank earnings and the other being the cooler than expected CPI report. We covered both those things in detail on yesterday's show, so go check that out if you missed it. Now, we got another inflation report this morning. The Producer price index, or PPI, which measures wholesale inflation, declined 0.3% in June compared to May. That was not expected. Economists were expecting PPI to remain flat. Now, I should mention, just like with the CPI report yesterday, a big reason for the decline was lower energy prices. Gasoline prices fell 12% in June and accounted for about two thirds of the monthly decline in wholesale good prices. So I wouldn't declare victory on inflation just yet. I mean, these reports are telling us that inflation cooled during a brief pause in the Iran war when oil prices dropped. But now tensions are ramping back up again and energy prices are climbing. So the July inflation number could look very different than what June did. And this is pretty much what Fed Chair Kevin Warsh is saying as well. Kevin Warsh testified in front of the House of Representatives yesterday and he warned investors that not to declare mission accomplished on inflation yet. He also promised a regime change at the Fed, saying that inflation has acted like a tax on American families and businesses and that the central bank needs to rethink how it approaches monetary policy. So, yeah, I'm really curious to know what Kevin Warsh means by that. I'm sure he'll be asked about this during the Fed meeting later this month. For now, though, the markets are celebrating the cooler inflation data and earnings season getting off to a strong start. So we could be in for a strong few weeks here. We stay on top of everything happening in the market. So if you're new here, it's a great time to get subscribed to the podcast and tune in every day to stay in the loop. Let's run through some headlines, starting with asml. ASML just reported a blowout quarter and it's giving investors one of the strongest signals that the AI infrastructure boom is not slowing down. Now a quick refresher on asml. They're a Dutch company that that make the lithography machines needed to manufacture advanced chips. In fact, they're the only company in the world that makes the most advanced version, called an EUV machine. These EUV machines cost up to $400 million each, and ASML can only produce a few dozen a year. And business continues to boom. Q2 revenues came in at 9.3 billion euros, which was up 21% from a year ago. And profits hit 2.9 billion euros. But both those numbers beating expectations. But what really stood out to me was the guidance. ASML now expects between 43 billion and 45 billion euros in sales this year. The previous forecast was 36 to 40 billion euros. So that's a meaningful increase in their projection. The company also raised their gross margin forecast to as high as 56%. Honestly, I'm kind of surprised that their gross margins aren't higher given the fact that they're the only company in the world making these machines. Demand is so strong right now that ASML says they've received all the EUV orders it needs for 2027. And some of their customers are already lining up to buy machines for 2028. You know, I think ASML is one of the most important AI earnings reports because they sit so far upstream in the AI supply chain. Companies like Nvidia or AMD can tell you that demand is strong today. But ASML is taking orders for machines that chip makers will need two years from now when ASML says that customers are accelerating their plans. And that tells you that these companies are still betting the AI demand will be there in 2027 and 2028. ASML stock is up around 3% this morning at the time of this recording. And the stock has gone up over 65% since the start of the year. Let's stick with the AI theme and talk about Samsung and Deep Seek. Both these companies are trying to cash in on the AI hype and raise investor money. Bloomberg reported that the South Korean company Samsung is in early stages of exploring a potential US listing. Right now Samsung trades South Korean stock exchange making it hard for US investors to invest in the company. But I think Samsung probably saw their fellow South Korean memory maker SK Hynix raised $26.5 billion last week from their US listing and they probably made a few calls to their investment bankers. Now, I predicted this was going to happen last week. It makes Samsung to raise as much money as possible right now while the market is still hot for memory stocks. Plus they probably don't want to fall behind SK Hynix, which again just raised a bunch of money. Now Samsung has come out and denied the report, but I'd keep my eye on it. Now the other AI IPO news to come out of Asia is Deep Sea. The Chinese AI company is preparing to file for an IPO in China as soon as the end of this year and could make their debut as early as 2027. Now remember, deep Seek caused a market meltdown in January of 2025 when they released their cutting edge AI model that required way less computing power. I mean, that was a wild day and clearly an overreaction by the market. But look, Deep Seek has continued to build and they're kind of like the open AI of China. And lately the company has been a ton of money. They raised $7 billion back in May at a $52 billion valuation and now they're talking to investors again to raise another round, but at a $71 billion valuation. So I guess their valuation jumped roughly 40% in like a month and a half. But look, Deepsea needs the money right now to build out their own data center infrastructure, buy more AI chips and hire more AI researchers. So yeah, we're still in the middle of an AI boom, especially when it comes to fundraising. Despite all the talks and fears of an AI bubble, investors have shown that that they are desperate to invest in AI companies any way they can. Let's talk about some stocks making moves today. PayPal stock is getting a boost this morning after Reuters reported the company received a $53 billion takeover offer. This takeover offer is a joint bid with Stripe, which is a payment processing tech startup and also the private equity firm Advent International. These two are teaming up and offering$60.50 per share to buy PayPal for which is a 28% premium for where PayPal closed on Tuesday. Now, PayPal has been struggling for a while now. Their stock is down 35% over the last 12 months and over 80% from its peak back in 2021. You know, the company has been losing ground to Apple Pay, Google Pay, and also Stripe for that matter. Now they're trying to turn things around by changing their CEO recently, but they have become an attractive acquisition target. PayPal is nearly 440 million active accounts they own Venmo as well. They process nearly $2 trillion in payments every year. Now, according to the Reuters report, PayPal has not accepted this takeover offer. But I wouldn't be surprised if we see a bidding war to take over PayPal. I think that's what investors are seeing as well. PayPal stock is up around 20% this morning at the time of this recording. Now, on the flip side, Lucid stock got wrecked on Tuesday and is down again this morning after an EV blog reported the company was considering filing for bankruptcy or or going private. This blog post yesterday sent Lucid stock down as much as 40%. Now, Lucid immediately came out and called the rumors completely false. So the stock pared back some of those losses, but still closed down 16% yesterday. The problem is, even if this bankruptcy report is false, Lucid's financial situation isn't great. The EV company is still unprofitable. It's expected to burn about $6.7 billion through the end of 2028. And they just laid off 18% of their US workforce. And that's why the stock is down 64% this year. I mean, the fact that a single blog post can cut the stock's value in nearly half, that tells you how little confidence investors have in the company right now. Let's wrap the show with a fun fact. New York just became the first state in the US to temporarily block the construction of large data centers. Governor Kathy Hochul signed an executive order pausing permits for new data centers that use 50 megawatts of power or more for up to one year. Now, the idea here is to give the state of New York time to write new rules around electricity, water use and who should pay for the grid upgrades required to build these data centers. And look, New York might just be the first of many states to do this because data centers have suddenly become a hot button political issue. And what's really interesting to me is that data centers have been around forever, but nobody was protesting data centers back in what, 2015, 2016? In fact, some states and local communities used to offer tech companies incentives to build these data centers because they brought in investments and high paying jobs. But these days, AI has completely changed the scale of these data centers. These data centers are larger, they require more electricity. So communities are pushing back over the impact on electricity prices and water use. And by the way, this pushback is bipartisan polling shows that both Democrats and Republicans support these restrictions. I also wonder if the pushback is coming from the broader fears around AI replacing people's jobs because These giant AI data centers are almost like a physical representation of that anxiety. It's one thing to hear that that AI will be taking people's jobs. It's another to see a 5 gigawatt facility getting built down the street. So I'm really curious to see how this plays out over the next few years. And by the way, not every state is fighting the data center boom. Louisiana, for example, is fully embracing it. Meta announced plans to expand their massive data center project in northeast Louisiana to 5 gigawatts of capacity. And the total cost has jumped from $27 billion to more than $50 billion. Meta says they plan to pay for the energy, water and infrastructure to tied to the project. And the local community seems to be pretty happy about this because the investment for Metta has already generated enough tax revenue that some teachers in the area are getting an annual bonus of up to $50,000. So I do wonder how many people would suddenly change their mind about data centers if big tech companies just sent checks in the mail to build them in the community. I think a lot more people would be okay with a data center going up if they got a few thousand bucks in the mail. But yeah, overall I think this data center political story is something to watch. Let me know in the comments on what you guys think. Do you think we'll see more back the data centers and does it impact how you value these AI companies? Well, all right guys, that's the rundown for today. Hope you guys enjoyed today's episode. 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.
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I'm Glen Washington, host of Snap Judgment, the award winning storytelling podcast from kqed. And every week Snap deals a new card like jumping on Rihanna's private plane or the accidental bank robber or even the man who was swallowed by a hippo. What? Pick a card, any card. Tap to listen. Now to Snap Judgment from KQED on Spotify.
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