Tech Stocks Jump and Musk Pitches Himself to Trump | Bloomberg Technology

NASDAQ Surge and Tech Stock Outlook

• The NASDAQ stock market is experiencing a surge due to cooling inflation.
• The three biggest drivers of the NASDAQ are Tesla, Nvidia, and Starbucks.
• Tesla is seeing a surge in interest due to its focus on electric vehicles.
• Nvidia is on track for its biggest jump since late May.
• Starbucks, despite not being a technology company, is experiencing a significant rise in stock price due to the appointment of a new CEO.
• Citigroup has issued a warning that tech stocks could face significant pressure due to negative economic data.
• Investors remain bullish on tech stocks despite recent selloffs.
• Callie Cox, a financial analyst, agrees with Citigroup's assessment and believes that tech stocks have been a victim of their own success.
• Cox suggests that investors consider rebalancing their portfolios by selling tech stocks and investing in smaller stocks, mid-cap stocks, and rate-sensitive sectors.
• Investors are concerned about the upcoming earnings season for tech companies, particularly NVIDIA, which has consistently exceeded expectations.
• The AI story is a significant factor in the tech sector, but its momentum has slowed, raising questions about NVIDIA's future guidance.
• While NVIDIA has performed well, it is only one player in the semiconductor sector, and other chipmakers could gain market share in the AI space.
• If NVIDIA's growth slows, investors may become concerned and rebalance their portfolios away from tech stocks.
• Citigroup has expressed conflicting views on the tech sector, suggesting both downside risk and potential for buying the dip in chip stocks.
• Investors are seeking ways to diversify their tech holdings while still benefiting from the sector's growth.
• Callie recommends a slow and steady approach to rebalancing, potentially selling off a small portion of tech holdings over time.
• For investors with a long-term horizon, any sell-off in the tech sector could present an opportunity to buy at a lower price.
• The Federal Reserve is expected to cut interest rates in September, which could lead to a shift in investor behavior.
• Callie Cox, Chief Market Strategist at Ritholtz Management, believes that the rotation into rate-sensitive sectors could continue if growth is maintained and rates come down.
• Cox also notes that tech stocks, which are considered growth stocks, could be seen as a recession trade if the market experiences a downturn.

Elon Musk and Donald Trump: A Meeting with Implications

• Elon Musk sat down with Donald Trump for a wide-ranging interview, during which he pitched himself for a role in a second Trump administration.
• Musk expressed his support for an efficiency commission to ensure that taxpayer money is spent effectively.
• Max Chafkin, a Bloomberg reporter, observed that Musk was deferential to Trump during the interview, which is unusual for him.
• The interview was nearly three hours long and was delayed due to technical difficulties.
• Elon Musk met with Donald Trump, seemingly seeking a job and nodding along to Trump's downplaying of climate change.
• Musk potentially stands to gain from a friendly regulatory environment for Tesla and SpaceX, including subsidies, government contracts, and relaxed regulations.
• Musk's stance on climate change has shifted, becoming more accommodating of right-wing skepticism, despite previously emphasizing the urgency of addressing climate change.
• During the meeting, Trump and Musk discussed electric vehicles and the potential for unionization at Tesla.
• The United Auto Workers (UAW) filed a labor complaint against Trump and Musk, alleging that they illegally intimidated union workers during their conversation.
• Trump's comments about union workers could be politically problematic for him, particularly in swing states where unions hold sway.
• The UAW is attempting to unionize electric vehicle manufacturers, but has not made significant progress yet.
• The meeting between Musk and Trump did not address cryptocurrency, which is surprising given Musk's previous affinity for the crypto community.
• Elon Musk pitched his Boring Company to former President Donald Trump, suggesting he might be open to expanding the company's operations.
• Trump praised Tesla cars, but stated that not everyone needs an electric vehicle.
• Musk blamed a cyberattack for technical glitches during the event, suggesting that Trump's opponents were responsible.
• Brian Palma, a cybersecurity expert, stated that a distributed denial of service (DDoS) attack is a possibility, but there are many reasons why a system could go down.
• Palma confirmed that DDoS attacks are on the rise and are used to disrupt campaigns and elections.
• Palma explained that DDoS attacks can be very powerful and have impacted companies like Microsoft Azure, affecting services like Starbucks app, Outlook, and Minecraft.
• The FBI is investigating allegations made by the Trump campaign team about documents accessed during a cyberattack.
• Bryan Palma, CEO of Trellix, a cybersecurity company, stated that he has not spoken to Elon Musk but is willing to help Tesla if needed.

Google's Pixel Event and AI Competition

• Investors are hoping that Google's Pixel event will help the company recover from a recent $60 billion loss.
• Google is expected to debut new hardware and software, including AI features for the Pixel phones.
• A Polish billionaire has obtained an injunction against Meta, temporarily banning the company from using fake ads featuring his image.
• Sea Limited, a Singaporean company, has raised its outlook on sales of goods, expecting them to rise in the mid-20% range.
• The Pixel phone sales are a small percentage of Google's overall revenue, but the success of the Pixel event is important for showcasing Google's software.
• Google's Gemini large language model is seen as a potential game-changer for high-end Samsung phones, challenging Apple's dominance in the market.
• The delay in the partnership between OpenAI and Apple is seen as a benefit for Google, as it allows them to showcase their own advanced language model capabilities.
• The competition between OpenAI and Google's Gemini is considered a battle between the two biggest large language models, with both companies aiming to integrate their models into devices.
• The integration of generative AI tools into smartphones is expected to lead to hyper-customization, allowing users to personalize their phone experiences beyond traditional assistant functions.
• Both Google and Apple are vying to be the first to achieve on-device generative AI capabilities, with Apple's upcoming phone launch presenting a challenge for them.

Market Trends and Investor Sentiment

• The stock market is experiencing a risk-on attitude, with four consecutive days of gains, following last week's turmoil.
• Bond markets are also seeing a positive trend, with 2-year yields declining by six basis points, driven by the Producer Price Index (PPI) data, which suggests inflation is being tamed.
• The upcoming Consumer Price Index (CPI) print is anticipated to provide further insights into the economic outlook.
• NVIDIA is experiencing a surge in its stock price, with investors focusing on its upcoming earnings report.
• Broadcom's stock is also up by more than 3%, while Tesla's stock is up over 4%.
• The United Auto Workers union has expressed disapproval of the recent comments made by Elon Musk and Donald Trump regarding Tesla's labor practices.

Soma Equity Partners: Focus on AI and Rivian

• Gil Simon of Soma Equity Partners, a firm specializing in concentrated long and short investments in tech, media, and telecom companies, discusses his firm's focus on software and internet companies.
• Simon acknowledges the difficulty in predicting the early AI investment wave and emphasizes the firm's focus on identifying durable beneficiaries of AI advancements in both infrastructure and application layers.
• Simon expresses his firm's bullishness on Rivian, a company that has faced stock pressure this year, and believes it has the potential to become the number two player in the EV market in the West after Tesla.
• Simon highlights the recent deal between Rivian and Volkswagen as a significant validation of Rivian's potential, noting that Rivian's market cap is significantly smaller than Tesla's.
• Simon compares Rivian's growth trajectory to Tesla's, emphasizing Rivian's plan to transition from selling high-priced cars to a mass market with the introduction of the R2 and R3 models in 2026.
• Simon acknowledges the challenges Rivian has faced with previous partnerships, including a failed deal with Mercedes, but believes the Volkswagen deal is different and crucial for Rivian's success.

The Future of Automotive: AI and Legacy Carmakers

• The legacy car industry is struggling to modernize their vehicle production.
• Legacy car companies are good at outsourcing and marketing, but not at vertical integration and software.
• Tesla and Rivian have developed new technology infrastructure that modernizes the customer experience.
• Customers now expect over-the-air updates, mobile phone access, and software updates to their vehicles.
• The Volkswagen deal with Rivian is a turning point for the industry, as Volkswagen seeks to infuse its platforms with Rivian technology.
• Rivian could become a supplier of technology and software to legacy car manufacturers.
• Rivian is a volatile stock, but investors have used the volatility to their advantage by purchasing the stock at lower prices.

Uber and the Rise of Autonomous Vehicles

• Uber is impacted by Tesla's plans for robotaxis.
• The speaker believes that autonomous vehicles will go through Uber's platform, not around it.
• Waymo is the biggest player in autonomous vehicles and is expected to expand its agreement with Uber.
• Companies with autonomous vehicle functionality are partnering with ride-sharing services like Gruber to better utilize their fixed capacity of cars.
• The idea of autonomous vehicles generating revenue for their owners by driving around with strangers is considered naive due to real-world considerations.
• Artificial intelligence is a driving force in the automotive space, particularly in autonomous driving.
• Soma Equity Partners owns many companies that are expected to benefit significantly from AI, including Uber, Amazon, Microsoft, and Data Dog.
• Roblox is embracing AI to help its developers create games and experiences on the platform.
• Soma Equity Partners seeks to invest in companies that are on the forefront of AI adoption.

The IPO Market: Signs of Recovery and Challenges

• The IPO market is open, with companies like Rubric and Instacart performing well despite low volume.
• The IPO market is showing signs of recovery, with IPO volume in the U.S. up 12% in 2024.
• Larger deals, such as Reddit, Stripe, and NVIDIA, are indicating investor interest in tech companies going public.
• Investors are still being cautious, leading to only larger companies going public at this time.
• The regulatory environment is making it difficult for companies to go public, with a 90% decrease in the volume and number of publicly traded companies over the past 30 years.
• Chairman Gensler has enacted almost 40 new rules, making it harder for companies to go public and making the U.S. less competitive.
• SPACs were a symptom of retail investors demanding access to tech returns, which have been largely hoarded by the venture capital industry.
• There needs to be easier access for capital formation for innovative tech companies that improve the standard of living.
• Venture capital is crucial for innovation, as it provides an exit strategy for companies.
• Isabelle Freidheim, Managing Partner of Athena Capital, believes that the post-November market will see larger companies in the short term and more innovative companies in the long term.
• Freidheim expects a recovery in the market, with a backlog of companies seeking to go public and investors eager to invest in solutions for climate change, drug development, payments, and other technologies.

Donald Trump's Cryptocurrency Stance and Government Holdings

• Donald Trump has been vocal about cryptocurrency, promising to create a national Bitcoin stockpile if elected.
• Amanda Wick, a former federal prosecutor specializing in money laundering and cryptocurrency, expressed concern about Trump's statement, stating that it is illegal and not feasible.
• Wick explained that some of the Bitcoin held by the U.S. government belongs to victims of scams, ransomware, and other crimes, and must be returned legally.
• Wick believes that Trump's tendency to say what people want to hear, regardless of feasibility or legality, is concerning.
• The U.S. government currently holds approximately $2 billion worth of cryptocurrency.
• The process of the U.S. government selling seized assets to return funds to victims of scams or ransom is called the Asset Forfeiture Process.
• The process was delayed due to a contracting issue with the U.S. Marshals, but a contract was awarded to Coinbase on July 1st.
• The speaker, Amanda, believes that the perception of the government intentionally holding onto the funds was likely due to the contracting delay.
• The speaker, Amanda, believes that the crypto community is eager for positive indicators from the Biden administration, as they have been negatively impacted for four years.
• The speaker, Amanda, believes that the crypto community needs to decide if they want someone who will give them what they want but may not be able to deliver, or someone who will take their time and deliberate on policy.