← The Rundown
The Rundown
Regional Bank Issues Lead to Market Selloff, Micron Exits Data Center Business in China
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Public.com presents the rundown, your daily market update in under 10 minutes. My name is Zayd Admani, and Today is Friday, October 17th. In today's episode, we'll tell you why some investors are freaking out about regional banks and the latest comments from President Trump regarding China. We'll also tell you what Oracle's CEO said about the company's profit margins. Then stick around to the end of the show to find out why your next Uber driver might be training. ChatGPT we got a great show for you today. Let's go. Well, guys, stocks sold off on Thursday with the S and P and Nasdaq both dropping about half a percent. And a big reason for the sell off yesterday was concerns around bad loans being made by regional banks. Zion's bank in Utah disclosed they were taking a $50 million charge to to cover bad loans they made. And then another regional bank out of Arizona, Western alliance, disclosed similar exposure with around $100 million in potentially bad loans. That double dose of bad news yesterday by these regional banks had investors freaked out there might be a systematic credit issue. But as of right now, the problem seems to be isolated to a handful of regional banks. The big banks like JP Morgan, bank of America say they don't have any bad loans or credit risk, but it's definitely something that investors are going to be paying closer attention to. Whenever you start hearing about bad loans and banks, everyone instinctually freaks out. You. On top of that, the timing wasn't great. The markets were already on edge this week about the China trade talks and the government shutdown. So the regional bank stuff definitely didn't help. In fact, volatility in the markets this week have been at the highest level since May. Now, we did get some big news this morning regarding the China trade news. President Trump just said this morning that the 100% tariffs on China that he threatened a week ago won't happen, that he still plans to meet with China's President Xi in two weeks. So Trump seems to be fully walking back the threats that he made a week ago that sent markets into a turmoil. So those comments by President Trump should provide a nice boost to the markets today. We'll see how the markets end up finishing off the week. You know, I did say on Monday's show we were in for a wild roller coaster of a week and it definitely delivered. We'll see if this volatility carries over into next week, which is a big week for earnings. We're going to be hearing from Tesla, Netflix, intel, just to name a few. So we're staying on top of all the developing stuff. Make sure you guys are tuning into the podcast every day. To to stay in the loop, let's run through some headlines, starting with Oracle. Oracle is trying to convince investors that its massive bet on AI will actually pay off and be profitable. The company's co CEO Clay McGore told analysts this week that Oracle's AI cloud division, which is a division that rents out Nvidia GPUs to customers like OpenAI, will eventually reach gross profit margins between 30 and 40%. That's a stark contrast to what the information reported a few weeks ago. According to internal documents obtained by them, Oracle's GPU rental margins have been hovering around 16% over the past five quarters, which is pretty low for a tech company. According to that report, Oracle is having a hard time turning a profit on all the expensive Nvidia chips they've bought, especially the older ones. Some of the older GPUs are barely breaking even, and even for the newer Nvidia Blackwell chips, they're so costly to deploy right now for Oracle that Oracle actually lost money on them last quarter. But then again, Oracle's leadership thinks this massive investment in AI will pay off in the long term. They're just kind of going through a build out phase right now. To their credit, Oracle has signed a ton of major deals with companies like OpenAI and Meta, and they're projecting that their overall cloud revenue could grow from $10 billion today to $166 billion by 2030, thanks mostly to those AI infrastructure deals. We'll have to see if that actually plays out, but I think it's clear to say that investors are starting to be a bit more skeptical about about Oracle's ambitions. Now, sticking with the AI theme, let's talk about the memory maker, Micron. They are exiting the data center business in China. According to a report from Reuters, the US Memory chip maker plans to stop supplying server memory chips to Chinese data centers. Micron made about 12% of their revenue from China last year, about $3.4 billion. So this isn't a small market for them now. The company says they'll still sell chips for automotive and mobile products in the country, just not for the servers or AI data centers. The Chinese government actually put a ban on Micron products back in 2023 from their products being used in critical infrastructure, and Micron has been struggling in China since. But thankfully for Micron, there's still so much demand for their memory products for AI chips that I don't think that Micron is too concerned about losing the Chinese market. Micron's revenues hit a record high this year and their stock prices jumped more than 130% so far. Let's talk about some stocks make moves today. Shares of the railroad giant CSX is moving higher this morning despite the company reporting a 22% drop in profits last quarter. Now, I think investors were more focused on the new CEO Steve Angel's comments, saying that he was open to strategic opportunities. Which is CEO speak for I'm probably going to sell the company. The railroad industry is going through a consolidation period right now. Earlier this year, Union Pacific and North Folks Southern announced an $85 billion merger creating the US's first railroad network connecting the east and West Coast. So Steve angel might be thinking about consolidation. I mean, he has a track record of doing mergers. When he was the CEO of Prax Air, he orchestrated a 70 billion dollar merger with Lindy to create one of the biggest industrial gas companies in the world. So investors are betting that angel is going to merge the railroad company soon. And shares of CSX are up nearly 3% this morning on that news. I kind of want to do a deep dive on the railroad industry, mostly because I played a lot of railroad tycoon as a kid and I'm just kind of interested to see how like the business works. Let me know in the comments if you guys ever played railroad tycoon. Now on the flip side, shares of Novo Nordisk are sliding this morning after President Trump said that prices of the blockbuster weight loss drug Ozempic would be lowered. Now, currently ozempic costs around $1,000 a month out of pocket, but President Trump wants to price closer to $150 a month as part of his Most Favored nation policy. Policy aims to make Americans pay no more for drugs and patients in other wealthy countries. As a result, shares of Novo Nordisk are down around 4% this morning in pre market trading. Let's wrap the show with a fun fact. Your Uber driver might soon be training AI models. Uber just launched a pilot program in the US that lets drivers make extra cash by doing small micro tasks inside the Uber Apple when they're not driving. The micro tasks are essentially data labeling jobs to help train AI models. You know, it includes things like uploading photos or recording yourself speaking in a local language or even snapping a menu written in Spanish. All that data is then used to train AI models and make them better. Data labeling is a big part of training AI. And Uber has quietly been building an AI data labeling business. This year. They even bought a startup called Segments AI to help scale it. We covered that earlier this month and now they're turning their massive driver network into an on demand AI workforce. You know, on one hand this seems like a pretty smart business move by Uber. They can make money from all these AI companies labeling their data and Uber drivers can now make extra money while waiting for passengers. But it all seems a little dystopian, you know. Now Uber says their goal is to build the ultimate flexible work platform. I wonder if at some point Uber will start offering discounts to passengers for completing data labeling tasks during their ride. I'm only half joking. They might legit offer this pretty soon. Let me know in the comments on what you guys think about this. Do you think this is a good idea from Uber? And would you do a task on the Uber app to save a few bucks on your Uber ride? 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 7 extra seconds, consider giving us a 5 star rating on Apple, Spotify, wherever you listen to your podcasts. And if you are listening on Spotify, don't forget to vote in today's Spotify poll. Leave us a comment on Spotify. All that engagement really does help us out and it helps other people find the show. Hope you guys have a great weekend. As a reminder, we're going to have a Deep Dive episode tomorrow. It's going to be about amd and then on Sunday we're posting an interview with the CFO of figma. So two good episodes coming out this weekend. Keep an eye on your podcast feed for those and keep sending in those listener questions. We're going to make a list and try to answer as many as we can in a future episode. Thank you guys again for listening, watching and commenting. Shout out to Mike and Connor for all the work behind the scenes and we'll see you guys back here tomorrow for the Deep dive.
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