Tesla is set to report third-quarter vehicle production and delivery numbers on Wednesday.
Analysts are expecting Elon Musk‘s automaker to report about 463,310 deliveries, according to estimates compiled by FactSet StreetAccount. That would include about 435,900 of Tesla’s Model 3 sedans and Model Y SUVs.
Tesla reported deliveries of 435,059 and production of 430,488 vehicles for the same period a year ago, before it was selling the Cybertruck. More recently, Tesla reported deliveries of 443,956 and production of 410,831 vehicles for the second quarter of 2024.
If Tesla meets analysts’ expectations that would represent a 6.5% year-over-year increase for deliveries after declines in the first and second quarters of 2024.
Deliveries are not defined in Tesla’s financial disclosures, but they are the closest approximation to units sold reported by the company.
In the third quarter, as it did earlier this year, Tesla continued to offer a variety of incentives and financing plans to drive sales volumes, particularly in the largest market for EVs in the world, mainland China.
Tesla hasn’t given specific guidance for the full year of deliveries in 2024, but the company has said it expects a lower delivery growth rate this year versus last. Wells Fargo, pointing to this lack of guidance, said in a note that it’s expecting 1.63 million full-year deliveries for Tesla and third-quarter deliveries at around 440,000, below consensus.
Goldman Sachs last week said it expects Tesla deliveries and production “to come in-line with consensus, largely driven by the strength in the China market.” Goldman Sachs recommended buying call options ahead of the Wednesday report.
Robotaxi day in focus
Shares in the EV maker are up more than 20% over the past month, in anticipation that deliveries could improve year over year and sequentially in the third quarter, and ahead of the company’s robotaxi day on Oct. 10.
Tesla plans to host investors and fans at its “We, Robot” marketing event at a Warner Bros. Discovery movie studio in Los Angeles.
The automaker is expected to show off the design of a “dedicated robotaxi,” which Musk has referred to previously as the CyberCab. Tesla may also provide updates on its humanoid robotics project “Optimus” and other automotive and AI-driven products and services.
Tesla EV sales and revenue fell in the first half of 2024, and the company still has yet to deliver a self-driving system that can function as a robotaxi without a human driver at the wheel ready to steer or brake at any time. Tesla also renamed its premium driver assistance option to Full Self-Driving Supervised, tacking on a disclaimer-style term at the end.
Meanwhile, several rivals in the autonomous vehicle industry have begun producing robotaxis, and operating commercial robotaxi services. Rivals include Alphabet-owned Waymo in the U.S., and Pony.ai and Baidu in China. Amazon-owned Zoox is preparing a launch of a commercial robotaxi service in the U.S. as well.
Tesla brand erosion
Some customer interest in buying Tesla vehicles has been chilled by the brand’s strong association with Musk.
The company’s favorability among both liberal and conservative consumers fell in July, according to CivicScience. Tesla favorability dropped with Democrats to 18% in July, down from 39% in January, and it declined among Republicans to 22%, down from 36% in January.
Musk — who also leads SpaceX, X and xAI — has long shared provocative posts on social media, but in recent years, he’s become less filtered and more vociferous online about his right-wing political beliefs.
In July, he publicly endorsed former President Donald Trump, and he frequently posts screeds on X concerning illegal immigration, election fraud, crime, violence and other flashpoint issues.
He has shared political misinformation and deepfakes with his massive online following on X, according to reports by The Associated Press, CNN, NBC News,The New York Times and others. Before Musk acquired Twitter, now known as X, his feed focused more on Tesla and SpaceX, according to an analysis by The Washington Post.
Among the posts Musk recently spread on X were false claims that Haitian immigrants in Springfield, Ohio, were eating people’s pets. The Springfield Police Division, Ohio Gov. Mike DeWine and other local groups have all said the claims were baseless.
It remains to be seen whether left-leaning customers’ view of Musk will weigh on deliveries this year. Pew Research has found that Democrats have a much more favorable view of battery-electric vehicles and are more likely to buy them than Republicans in the U.S.
Alphabet CEO Sundar Pichai speaks at the Munich Security Conference at the Hotel Bayerischer Hof in Munich, Germany, on February 16, 2024.
Tobias Hase | Picture Alliance | Getty Images
With Wall Street laser focused on cloud computing this week, Google outpaced its rivals in growth, a key sign for investors that the internet company is gaining traction in artificial intelligence.
Google’s cloud business, which includes infrastructure as well as software subscriptions, grew 35% year over year in the third quarter to $11.35 billion, accelerating from 29% in the prior period.
Amazon Web Services, which remains the market leader, grew 19% to $27.45 billion, meaning it’s more than twice the size of Google Cloud but expanding about half as quickly. Second-place Microsoft said revenue from Azure and other cloud services grew 33% from a year earlier.
Five of the six trillion-dollar tech companies reported results this week, with AI chipmaker Nvidia as the outlier. Amazon, Alphabet and Microsoft always report around the same time, giving investors a snapshot of how the cloud wars are playing out.
“While Alphabet has often been criticized as a Johnny-one-note for its dependence on digital advertising, the rapid growth of Google Cloud has begun to diversify the company’s revenue,” analysts at Argus Research, who recommend buying the stock, wrote in a report on Oct. 31.
For a long time, cloud was a money sink for Google, but that’s no longer the case.
Google reported a 17% cloud operating margin in the third quarter, after first turning a profit last year. It was “a real beat to expectations there,” Melissa Otto, head of technology, media and telecommunications sector research at Visible Alpha, said on CNBC this week. She said she isn’t sure if the company can sustain that level of profitability.
The opposite story has been true at Amazon, which has long counted on AWS for the bulk of total profit.
AWS’ operating margin for the the third quarter was 38%, which analysts at Bernstein described as a “whopping” number. Executives have been careful with hiring and have discontinued less popular AWS services. Also, at the beginning of 2024, Amazon extended the useful life of its servers from five years to six, a change that boosted the operating margin by 200 basis points, or 2 percentage points.
Microsoft this week started giving investors more accurate readings of its Azure public cloud. When the company reported Azure revenue growth in the past, the number would include sales of mobility and security services and Power BI data analytics software. Microsoft, which is the lead investor in ChatGPT creator OpenAI, is getting a hefty boost from AI services.
“Demand continues to be higher than our available capacity,” Amy Hood, Microsoft’s finance chief, said on the company’s earnings call.
While Azure growth in the current quarter will moderate a bit, Hood said it should pick up in the first half of 2025 “as our capital investments create an increase in available AI capacity to serve more of the growing demand.”
Amazon is seeing a similar dynamic.
“I think pretty much everyone today has less capacity than they have demand for, and it’s really primarily chips that are the area where companies could use more supply,” Amazon CEO Andy Jassy said on his company’s earnings call.
To help ease the burden, Amazon relies to a degree on its own processors, in addition to Nvidia’s graphics processing units (GPUs). Jassy said clients are showing interest in Trainium 2, the company’s second-generation chip for training models.
“We’ve gone back to our manufacturing partners multiple times to produce much more than we’d originally planned,” he said.
Google is now on the sixth generation of its own custom tensor processing units for AI. CEO Sundar Pichai told analysts that he’d been spending time with the TPU team.
“I couldn’t be more excited at the forward-looking roadmap, but all of it allows us to both plan ahead in the future and really drive an optimized architecture for it,” he said.
Microsoft introduced its own AI chip in the cloud, Maia, a year ago. The company has started to use Maia chips to power its own services, but it hasn’t yet made it available for customers to rent out, a spokesperson said.
Analysts at DA Davidson said in a note this week that they don’t see this as a battle Microsoft can win going up against Amazon and Google. They have a neutral rating on Microsoft.
Oracle, which generally ranks fourth among U.S. cloud infrastructure companies, is expected to report quarterly results in December. In its last report, Oracle said cloud infrastructure revenue jumped 45% to $2.2 billion, up from 42% growth in the prior quarter.
Oracle recently partnered with its three bigger cloud rivals to make its databases available on their services, a move that Chairman Larry Ellison said on the last earnings calls, “will turbocharge the growth of our database business for years to come.”
CEO of Nvidia, Jensen Huang, speaks during the launch of the supercomputer Gefion, where the new AI supercomputer has been established in collaboration with EIFO and NVIDIA at Vilhelm Lauritzen Terminal in Kastrup, Denmark October 23, 2024.
Ritzau Scanpix | Mads Claus Rasmussen | Via Reuters
Nvidia is replacing rival chipmaker Intel in the Dow Jones Industrial Average, a shakeup to the blue-chip index that reflects the boom in artificial intelligence and a major shift in the semiconductor industry.
Intel shares were down 1% in extended trading on Friday. Nvidia shares rose 1%.
Nvidia shares have climbed over 170% so far in 2024 after jumping roughly 240% last year, as investors have rushed to get a piece of the AI chipmaker. Nvidia’s market cap has swelled to $3.3 trillion, second only to Apple among publicly traded companies.
Companies including Microsoft,Meta, Google and Amazon are purchasing Nvidia’s graphics processing units (GPUs), such as the H100, in massive quantities to build clusters of computers for their AI work. Nvidia’s revenue has more than doubled in each of the past five quarters, and has at least tripled in three of them. The company has sginaled that demand for its next-generation AI GPU called Blackwell is “insane.”
With the addition of Nvidia, four of the six trillion-dollar tech companies are now in the index. The two not in the Dow are Alphabet and Meta.
While Nvidia has been soaring, Intel has been slumping. Long the dominant maker of PC chips, Intel has lost market share to Advanced Micro Devices and has made very little headway in AI. Intel shares have fallen by more than half this year as the company struggles with manufacturing challenges and new competition for its central processors.
Intel said in a filing this week that the board’s audit and finance committee approved cost and capital reduction activities, including lowering head count by 16,500 employees and reducing its real estate footprint. The job cuts were originally announced in August.
The Dow contains 30 components and is weighted by the share price of the individual stocks instead of total market value. Nvidia put itself in better position to join the index in May, when the company announced a 10-for-1 stock split. While doing nothing to its market cap, the move slashed the price of each share by 90%, allowing the company to become a part of the Dow without having too heavy a weighting.
The switch is the first change to the index since February, when Amazon replaced Walgreens Boots Alliance. Over the years, the Dow has been playing catchup in gaining exposure to the largest technology companies. The stocks in the index are chosen by a committee from S&P Dow Jones Indices.
Charles Liang, chief executive officer of Super Micro Computer Inc., during the Computex conference in Taipei, Taiwan, on Wednesday, June 5, 2024. The trade show runs through June 7.
Annabelle Chih | Bloomberg | Getty Images
Super Micro investors continued to rush the exits on Friday, pushing the stock down another 9% and bringing this week’s selloff to 44%, after the data center company lost its second auditor in less than two years.
The company’s shares fell as low as $26.23, wiping out all of the gains for 2024. Shares had peaked at $118.81 in March, at which point they were up more than fourfold for the year. Earlier that month, S&P Dow Jones added the stock to the S&P 500, and Wall Street was rallying around the company’s growth, driven by sales of servers packed with Nvidia’sartificial intelligence processors.
Super Micro’s spectacular collapse since March has wiped out roughly $55 billion in market cap and left the company at risk of being delisted from the Nasdaq. On Wednesday, as the stock was in the midst of its second-worst day ever, Super Micro said it will provide a “business update” regarding its latest quarter on Tuesday, which is Election Day in the U.S.
The company’s recent challenges date back to August, when Super Micro said it would not file its annual report on time with the SEC. Noted short seller Hindenburg Research then disclosed a short position in the company and wrote in a report that it identified “fresh evidence of accounting manipulation.” The Wall Street Journal later reported that the Department of Justice was in the early stages of a probe into the company.
Super Micro disclosed on Wednesday that Ernst & Young had resigned as its accounting firm just 17 months after taking over from Deloitte & Touche. The auditor said it was “unwilling to be associated with the financial statements prepared by management.”
A Super Micro spokesperson told CNBC that the company “disagrees with E&Y’s decision to resign, and we are working diligently to select new auditors.” Super Micro does not expect matters raised by Ernst & Young to “result in any restatements of its quarterly financial results for the fiscal year ended June 30, 2024, or for prior fiscal years,” the representative said.
Analysts at Argus Research on Thursday downgraded the stock in the intermediate term to a hold, citing the Hindenburg note, reports of the Justice Department investigation and the departure of Super Micro’s accounting firm, which the analysts called a “serious matter.” Argus’ fears go beyond accounting irregularities, with the firm suggesting that the company may be doing business with problematic entities.
“The DoJ’s concerns, in our view, may be mainly about related-party transactions and about SMCI products ending up in the hands of sanctioned Russian companies,” the analysts wrote.
In September, the month after announcing its filing delay, Super Micro said it had received a notification from the Nasdaq indicating that its late status meant the company wasn’t in compliance with the exchange’s listing rules. Super Micro said the Nasdaq’s rules allowed the company 60 days to file its report or submit a plan to regain compliance. Based on that timeframe, the deadline would be mid-November.
Though Super Micro hasn’t filed financials with the SEC since May, the company said in an August earnings presentation that revenue more than doubled for a third straight quarter. Analysts expect that, for the fiscal first quarter ended September, revenue jumped more than 200% to $6.45 billion, according to LSEG. That’s up from $2.1 billion a year earlier and $1.9 billion in the same fiscal quarter of 2023.