🚪 Sam Altman Fired

Happy Tuesday.

It was a crazy weekend in tech with Sam Altman getting ousted out of OpenAI. He has now joined Microsoft to lead the new AI research team but there are still ongoing discussions over the possibility of a return. For those interested in more, the New York Times did a great job summarizing everything that you can read here.

Some key data bites you should know: 

• TikTok’s owner ByteDance reported a $6B Q1 operating profit, rebounding from a $7B loss in 2021.

• Starbucks $SBUX faced a strike by 5,000 union workers across 200 stores on Red Cup Day, demanding better pay and conditions.

• Blackstone $BX is in the lead to acquire $17B in commercial-property loans from Signature Bank's FDIC-handled sale.

• The US Justice Department is seeking over $4B from Binance in a probe resolution, possibly including charges against founder Changpeng Zhao.

• Thermo Fisher Scientific $TMO announced a $4B share buyback program.

In today’s newsletter:

• 📽️ Zoom Jumps Despite Slow Revenue Growth

• 🇨🇳 Alibaba’s Nightmare Continues

• 📟 Tech Stocks Are Carrying The Market

Let’s dive right in!

📽️ Zoom Jumps Despite Slow Revenue Growth

Last night, Zoom raised its full-year sales forecast to between $4.506B - $4.511B, with adjusted earnings per share anticipated to be $4.93 - $4.95. This revision follows their third-quarter results, which surpassed expectations with a net income of $141.2M and a revenue increase of 3.2% to $1.14B. The company's growth was driven by an uptick in high-revenue customers and the integration of AI technologies.

Zoom is expanding its offerings with additional productivity and AI tools, including the recently launched Zoom AI Companion and the upcoming Zoom Docs, an AI-powered workspace for documentation and project management. The company reported a 5% increase in enterprise customers, totaling 219,700, and a 13.5% rise in customers contributing over $100,000 in annual revenue.

🇨🇳 Alibaba’s Nightmare Continues

Alibaba exceeded expectations in its September quarter, reporting earnings of $2.16 per share on revenue of $31B, with revenues up 9% and earnings per share increasing 21% year-over-year. However, the company's stock has since dropped by over 10% due to the cancellation of its anticipated cloud computing arm spinoff. This move was influenced by expanded U.S. export controls on advanced computer chips and escalating U.S.-China tensions.

To add fuel to the fire, co-founder Jack Ma plans to sell 10M American Depository Shares of Alibaba for approximately $871M. Alibaba, previously Asia's most valuable stock, has seen its value plummet from around $830B in October 2020 to less than a quarter of that, largely due to Beijing's crackdown on the tech sector and a slowdown in the Chinese economy. With the cloud computing spinoff shelved, Alibaba is now focusing on organic growth in its cloud and AI segments.

📟 Tech Stocks Are Carrying The Market

The Enormous Eight, consisting of the leading U.S. tech and growth companies: Alphabet, Amazon, Apple, Meta, Microsoft, Netflix, and Tesla, now represent approximately 30% of the S&P 500's market capitalization. This significant proportion means their individual market movements greatly influence the overall performance of the S&P 500.

While the S&P 500 is up roughly 18.91% year-to-date, the equal-weight counterpart is only up 3.26% year-to-date, clearly demonstrating the impact of big tech on the overall index’s performance. Recently, many of these names reached 52-week highs, potentially signifying a new bull market primarily led by developments in artificial intelligence.

Notable Companies Reporting Earnings This Week:

• Monday:

  • Agilent $A, Keysight Technologies $KEYS, Trip.com $TCOM, Zoom $ZM

• Tuesday:

  • Nvidia $NVDA, Lowe’s $LOW, Medtronic $MDT, Analog Devices $ADI, Autodesk $ADSK, HP $HPQ

• Wednesday:

  • Deere & Co $DE

• Thursday:

  • Futu Holdings $FUTU

• Friday:

  • H World Group $HTHT

All of the companies that are reporting earnings this week can be viewed here.

Buys:

• Tina Smith (D)

  • Company: Tactile Systems Technology ($TCMD)

    • Amount Purchased: $100K - $250K

  • Company: Artivion ($AORT)

    • Amount Purchased: $100K - $200K

• Tommy Tuberville (R)

  • Company: Clorox Company ($CLX)

    • Amount Purchased: $100K - $250K

  • Company: Kroger ($KR)

    • Amount Purchased: $50K - $100K

  • Company: Cleveland-Cliffs ($CLF)

    • Amount Purchased: $30K - $100K

• Jonathan Jackson (D)

  • Company: Lululemon ($LULU)

    • Amount Purchased: $15K - $50K

  • Company: Marriott ($MAR)

    • Amount Purchased: $15K - $50K

Sells:

• Tommy Tuberville (R)

  • Company: Clorox ($CLX)

    • Amount Sold: $211K - $565K

  • Company: Kimberly-Clark ($KMB)

    • Amount Sold: $101K - $265K

  • Company: Louisiana-Pacific ($LPX)

    • Amount Sold: $101K - $265K

  • Company: Nu Holdings ($NU)

    • Amount Sold: $100K - $250K

• Jonathon Jackson (D)

  • Company: Graphic Packaging Holding ($GPK)

    • Amount Sold: $15K - $50K

  • Company: NextEra Energy ($NEE)

    • Amount Sold: $15K - $50K

  • Company: Hershey ($HSY)

    • Amount Sold: $15K - $50K

🤝 Review of the Week