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- 📈 Oracle’s Cloud Slip
📈 Oracle’s Cloud Slip
Mondelez seeks sweet acquisition of Hershey, Lilly approves $15B buyback, Rivian stock hits a high, AMD shares fall, Oracle slips on earnings miss
Evelio Silvera
December 10, 2024
Good morning.
⚡ The Fast Five → Mondelez seeks sweet acquisition of Hershey, Lilly approves $15B buyback, Rivian stock hits a high, AMD shares fall, Oracle slips on earnings miss
🔎 Market Trends → Wall Street closes down as tech stocks fall; US Futures Flat After Downbeat Session
And now…
⏱️ Your 5-minute briefing for Tuesday, December 10, 2024:
MARKET BRIEF
Before the Open
As of market close 12/9/2024.
Pre-Market
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Fear & Greed
Markets in Review
Markets Pull Back, but Long-Term Outlook Stays Bright
The S&P 500 and Nasdaq each dipped 0.6%, closing at 6,052.9 and 19,736.7, while the Dow lost 0.5% to 44,401.9. Financials led declines, while health care and real estate eked out gains.
The Big Picture:
Stocks retreated Monday as investors digested an uptick in consumer inflation expectations ahead of key inflation reports later this week. Markets remain fixated on whether the Fed will stay the course on its gradual easing path, with core inflation data on deck to guide sentiment.
Oil prices rose 1.4% to $68.14/barrel, buoyed by tightening global supply dynamics. Meanwhile, gold climbed 0.9% to $2,683/oz, and silver surged 2.7% to $32.46/oz, signaling renewed interest in precious metals as inflation hedges.
Looking ahead, analysts at Oppenheimer forecast the S&P 500 to reach 7,100 by the end of 2025, citing consumer resilience and improving economic fundamentals.
Market Movers:
Comcast (CMCSA): Dropped -9.5%, after warning of broadband subscriber losses, reflecting increased competition in the streaming era.
AMD (AMD): Fell -5.6% as BofA downgraded the chipmaker, citing competitive risks in AI and limited market-share growth against Nvidia (NVDA) and custom chipmakers like Marvell (MRVL).
Hershey (HSY): Jumped +11%, leading the S&P 500, on reports of a possible acquisition by Mondelez (MDLZ), which slipped -2.3% as investors weighed deal execution risks.
Enphase Energy (ENPH): Gained +6.8% after announcing its battery systems will join NextEnergy’s tariff program in the Netherlands, unlocking European market opportunities.
What They’re Saying:
"The pullback is healthy—investors are recalibrating short-term expectations while keeping an eye on inflation and earnings. Long-term, the case for equities remains strong," said a strategist at Oppenheimer.
WHAT WE’RE WATCHING
Events
There are no events scheduled for today.
Earnings Reports
Today: AutoZone, GameStop, Dave & Buster's, Academy Sports and Outdoors
Tomorrow: Adobe, Barnes & Noble Education
MARKET BRIEF
Leading News
Oracle Stumbles but Cloud Momentum Keeps Investors Watching
Why it matters:
Despite a rare miss, Oracle’s (ORCL) cloud business remains a juggernaut, showing resilience in a tech-driven market. With shares still up 80% this year, the broader narrative isn’t derailed—just paused.
Zoom Out:
Oracle shares slid 7% in after-hours trading Monday after earnings and revenue missed Wall Street’s targets. Adjusted earnings per share hit $1.47, just shy of the expected $1.48, while revenue of $14.06 billion also narrowly missed estimates.
The disappointment stems from a softer-than-expected forecast, with Q3 revenue projected to grow 7%-9% compared to analyst expectations of ~10% growth.
Still, Oracle’s cloud services business, which represents 77% of total revenue, surged 12% YoY, signaling robust demand for its infrastructure supporting AI workloads.
Deep Dive:
Cloud remains king: Revenue from Oracle’s cloud infrastructure unit soared 52% YoY to $2.4 billion, as companies like Meta (META) increasingly rely on its computing power for projects like large language models.
AI tailwinds persist: Larry Ellison emphasized Oracle Cloud’s competitive edge: “faster and less expensive than other clouds.” With NVIDIA’s (NVDA) cutting-edge GPUs integrated, Oracle is primed to capture more AI-driven growth.
Valuation matters: Even with the stumble, Oracle’s 80% YTD gain positions it for its best year since 1999, reflecting optimism around its long-term trajectory in cloud and AI.
Market Pulse:
"Oracle’s ability to outpace competitors in cloud AI infrastructure underscores its positioning for the next tech cycle," said one analyst.
Bull’s Take:
Oracle’s short-term volatility doesn’t change its long-term thesis: a growing player in the high-demand AI infrastructure market. With cloud infrastructure booming and AI spending accelerating, this dip might just be a buying opportunity for those with a bullish outlook. Watch for $14 billion revenue support in Q3 and sustained cloud growth as signals for the stock’s next leg up. If Oracle delivers on AI, today’s miss could look like a speed bump in hindsight.
Headlines
Hershey’s stock explodes higher on report Mondelez offered to buy it (link)
Lilly Approves $15 Billion in Share Buybacks, Raises Dividend (link)
Ahead of Earnings, Analysts Say ‘Robust’ Costco May See Stock Split (link)
Rivian stock jumps to highest since August as Benchmark initiates at Buy (link)
Why Investors Were Slamming the Phone Down on T-Mobile US Stock Today (link)
AMD Stock Falls. Competition From Nvidia Is Just 1 Risk, Analyst Says. (link)
Activist investors urge Macy’s to create a real estate unit among other changes to boost stock (link)
CRYPTO
Fear & Greed
Headlines
DAILY SHARE
On the Socials
*Hat-tip to ConsultingHumor