Investing.com — Shares of Tesla (NASDAQ:) and Netflix (NASDAQ:) are falling, weighing on the Nasdaq, following the latest earnings from the big technology brands. Meanwhile, the US quarterly earnings parade continues and Apple (NASDAQ:) reportedly becomes the latest contender in the race to develop generative artificial intelligence (AI) technology.
1. Tesla margins are falling; Netflix revenues are disappointing
Shares in Tesla and Netflix both fell in premarket trading as investors digested mixed second-quarter results from the electric car maker and the streaming giant.
Before , attention focused on recent price cuts to increase volumes and counter the increasing competition in the electric vehicle market. The decision soared to a record high of $24.93 billion over the three-month period.
But the move also weighed on the gross profit margin of the automotive business, excluding the impact of regulatory credits, which fell to 18.2% from 18.8% in the first quarter and 26.2% last year. While that drop wasn’t as big as many analysts had expected, Tesla’s stock still slumped after CEO Elon Musk later suggested more price cuts could come this year.
Meanwhile, Netflix’s crackdown on password sharing between users appears to be working, with the company reaching 5.9 million subscribers in the quarter, well above Wall Street estimates. It also told analysts that the number of canceled accounts was “low.”
However, this trend was overshadowed by less than expected $8.2 billion. Netflix’s Q3 forecast of $8.5 billion for revenue also missed the forecasts. As a result, Netflix’s shares plummeted.
2. Nasdaq futures are falling
Futures for the Nasdaq were lower on Thursday as results from Tesla and Netflix weighed on the broader technology sector.
At 05:14 ET (09:14 GMT), it lost 141 points, or 0.88%, dragged lower by an after-hours decline in shares of the two big tech players that expanded into premarket trading.
also decreased by 9 points or 0.20% while adding 31 points or 0.09%.
The broad base posted its eighth consecutive session of gains on Wednesday, the longest winning streak since 2019. Meanwhile, the benchmark climbed 0.24% and the index rose 0.03%.
3. Johnson & Johnson, American Airlines highlight busy earnings day
A new set of US corporate earnings will be released on Thursday, with healthcare giant Johnson & Johnson (NYSE:) and airline American Airlines (NASDAQ:) as the top brands to report.
Insurer Travelers (NYSE:), asset manager Blackstone (NYSE:), tobacco group Philip Morris International (NYSE:) and regional lender Fifth Third Bank (NASDAQ:) are also on the earnings calendar.
Earnings have largely been stronger than expected during this latest earnings season, fueling hopes that this could be a sign that the U.S. economy could be capable of a soft landing after a series of aggressive rate hikes by the Federal Reserve. According to FactSet data cited by CNBC, three-quarters of companies that have already reported exceed Wall Street’s estimates.
4. Apple is testing ChatGPT rival – Bloomberg
According to Bloomberg News, Apple is developing a new generative AI program to compete with the likes of OpenAI’s ChatGPT and Google’s Bard.
Employees at the tech giant have already built a framework known as “Ajax,” the report said, referring to people familiar with the matter. A chatbot called “AppleGPT” is also being tested.
Shares in Apple hit a new all-time high in the report, while peers like Microsoft (NASDAQ:), Nvidia (NASDAQ:) and Google-owned Alphabet (NASDAQ:) fell.
California-based Apple, which has remained relatively quiet on the subject of AI despite an increase in the technology’s popularity this year, did not respond to a request for comment from Reuters.
5. TSMC pessimistic about hopes for an AI-driven surge in chip demand
Taiwan Semiconductor Manufacturing Co (TW:) (NYSE:) – aka TSMC – posted that estimates were beaten, but the world’s largest contract chipmaker poured cold water on expectations that the surge in AI will drive a surge in demand for chips will stir.
Net profit at TSMC in the three months ended June 30 fell by more than a fifth to $181.80 billion, though this was still above expectations from analysts polled by Refinitiv.
But in a post-earnings webcast, CEO CC Wei noted that the rush to AI may not be long-lived or sustainable. He noted that “[while] we’ve recently seen an increase in AI-related demand, it’s not enough to offset the overall cyclicality of our business.”
TSMC subsequently lowered its annual revenue forecast, saying it expects the figure to fall 10% in 2023 compared to its previous single-digit decline outlook. US-listed shares in TSMC were lower in premarket trading Thursday.
The move contrasted with upbeat comments earlier this year from Nvidia’s chip industry, one of TSMC’s largest customers. Nvidia previously predicted a surge in semiconductor demand later this year, citing the need for computer parts to power AI programs.
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