👋🏼 Intel CEO Is Out

+ Tesla CEO Elon Musk loses bid to get $56 billion pay package reinstated

December 02, 2024

Good afternoon! Meta is taking internet infrastructure into its own hands with plans to build a 40,000-kilometer subsea fiber-optic cable connecting the U.S., India, South Africa, and Australia. The $10 billion project, still in its early stages, aims to ensure uninterrupted data traffic and bypass geopolitical hotspots that have disrupted global cables.

The move underscores Meta’s need for greater control over its growing AI-driven data demands, especially in India—a key market with over a billion users across its platforms. With India’s low-cost computing power and expanding data center capacity, the country could become central to Meta’s AI ambitions

MARKETS

*Stock data as of market close*

  • The Nasdaq and S&P 500 opened December with fresh records, continuing 2024’s hot streak. The Nasdaq jumped nearly 1%, thanks to Apple’s rally, while the S&P 500 added 0.24%, marking its 54th record close this year. The Dow, meanwhile, dipped 0.3%.

  • Economic data was mixed: manufacturing activity remained weak, while construction spending hit a record $2.17 trillion in October, proving some sectors are still building momentum.

STOCKS
Winners & Losers

What’s up 📈

  • Super Micro Computer surged 28.68% after its special committee found “no evidence of misconduct,” clearing the AI server maker of financial wrongdoing. ($SMCI)

  • Dana climbed 13.30% following a Barclays upgrade to overweight, citing optimism about the company’s plans to sell its off-highway business. ($DAN)

  • Gap rose 6.43% after receiving an upgrade to overweight from JPMorgan, which highlighted a strong holiday shopping season and a multiyear growth outlook. ($GPS)

  • XPeng added 5.31% after announcing record car deliveries last month, boosting investor confidence. ($XPEV)

  • Cloudflare and Okta both jumped 5.23% and 4.24%, respectively, after Morgan Stanley upgraded both cybersecurity stocks to overweight. ($NET, $OKTA)

What’s down 📉

  • Archer Aviation dropped 23.72% as short interest continued to mount, with competitor Joby Aviation falling 9.39% in sympathy. ($ACHR, $JOBY)

  • Upstart Holdings sank 14.47% following a JPMorgan downgrade, citing increased risks in the AI lending space. ($UPST)

  • Stellantis declined 6.29% after CEO Carlos Tavares unexpectedly resigned, citing “different views” with the board. ($STLA)

  • LendingClub dropped 4.93% following a downgrade by JPMorgan alongside Upstart. ($LC)

  • Li Auto slipped 3.72% after reporting a 5.25% month-over-month decline in car deliveries. ($LI)

CHIPS
Intel CEO Pat Gelsinger Out

Intel CEO Pat Gelsinger is stepping down, but not on his own terms.

The board effectively pushed him out after frustrations over slow progress in regaining Intel’s footing in the semiconductor race. CFO David Zinsner and products leader Michelle Johnston Holthaus will serve as interim co-CEOs while the search for a permanent replacement begins.

Gelsinger’s tenure, which began in 2021, was marked by ambitious goals to revamp Intel’s manufacturing and compete with global leaders like Nvidia and TSMC. But his high-cost turnaround strategy failed to deliver results quickly enough for the board or investors. Shares have plummeted 61% during his tenure, and the company continues to face setbacks in both revenue and innovation.

Stuck in the Chips Slow Lane

Intel’s struggles go beyond Gelsinger. The company has long lagged behind in advanced chip production and missed opportunities in the AI boom—an area now dominated by Nvidia. Efforts to expand into foundry services, manufacturing chips for other companies, drained cash reserves without attracting major clients. Meanwhile, competitors gained market share in lucrative AI and data center sectors.

The board’s frustration reportedly came to a head over the lack of compelling products and the slow pace of Intel’s transformation into a contract chip manufacturer. While Gelsinger advocated for staying the course, the board decided it was time for a change, signaling potential strategic pivots ahead.

A Tall Order for the Next CEO

Whoever takes the reins will inherit a daunting task. Intel faces mounting challenges: catching up in AI chips, competing with better-funded rivals, and balancing a capital-intensive foundry business with waning investor confidence. The company also has $50 billion in debt, a stark contrast to its cash-rich days of dominating the semiconductor market.

Some analysts suggest Intel may need to spin off its foundry division to focus on core chip design, while others predict deeper cost cuts. Either way, the new CEO will need to act decisively to stabilize the business—and fast. As Intel grapples with its place in a rapidly changing industry, the stakes have never been higher.

NEWS
Market Movements

LEGAL
Tesla CEO Elon Musk loses bid to get $56 billion pay package reinstated

Elon Musk’s record $56 billion Tesla pay package has hit another roadblock. A Delaware judge upheld her earlier ruling voiding the 2018 compensation plan, despite a recent shareholder vote attempting to reinstate it. Judge Kathaleen McCormick criticized Tesla’s board for its lack of independence in approving the deal, citing undue influence from Musk.

The package, originally worth $2.6 billion and ballooning to $101.5 billion by today’s share prices, was the largest in U.S. corporate history. With the court’s decision, Tesla shareholders have effectively slashed Musk’s prospective payout—though his existing wealth, buoyed by Tesla’s stock rally, keeps him securely at the top of the billionaire leaderboard.

Shareholders Step In, Court Stands Firm

Tesla had hoped a June shareholder vote to ratify the pay plan would override McCormick’s concerns, but the judge wasn’t swayed. McCormick called the vote legally ineffective, refusing to accept what she termed “new facts” created to revise prior rulings. Tesla’s board now faces a dilemma: how to keep Musk incentivized without igniting further shareholder backlash or legal trouble.

In addition to voiding the pay plan, McCormick approved $345 million in attorney fees for the plaintiff’s legal team—a fraction of their initial $5.6 billion request but still among the highest awards in U.S. litigation history. Musk’s legal team has 30 days to decide whether to appeal.

Bigger Battles Ahead

This setback isn’t likely to slow Musk down. Tesla stock has surged 42% since Donald Trump’s election win, fueled by expectations that Musk’s ties to the incoming administration will yield business-friendly policies. However, with Tesla’s incorporation recently shifted to Texas and the legal dispute unresolved, uncertainty looms.

Musk’s influence over Tesla’s board and shareholder dynamics continues to draw scrutiny, and any new compensation plan will likely face similar challenges. Meanwhile, the billionaire’s ventures in AI, electric vehicles, and space exploration keep him at the forefront of industry and political intrigue—whether or not his paychecks match his ambitions.

Calendar
On The Horizon

Tomorrow

The employment data floodgates open tomorrow with the latest update on job openings. This report dives deeper than just unfilled positions—it tracks hiring trends, job departures, and overall labor market activity. With last month’s 7.4 million openings hitting a 3.5-year low, all eyes are on whether the slowdown continues or if the labor market shows signs of a rebound.

After Market Close:

  • Salesforce: The customer service and data analytics giant just rolled out its latest buzzworthy product: Agentforce, an AI tool aiming to streamline business operations. While its potential is undeniable, the jury’s still out on whether it’ll boost profits anytime soon. Investors are also eager to hear how Salesforce plans to keep competitors like Microsoft at bay. Wall Street expects $2.44 EPS on $9.34 billion in revenue. ($CRM)

    Okta: The remote work era should’ve been Okta’s moment to shine, but the stock has stumbled in 2024. Despite a solid balance sheet, steady profitability, and heavy R&D spending, there’s no clear culprit behind the decline. Analysts are eyeing $0.58 EPS and $649.68 million in revenue this quarter—time to prove the skeptics wrong. ($OKTA)

NEWS
The Daily Rundown

  • 💵 Trump Targets BRICS with Tariff Threats: President-elect Trump proposed imposing 100% tariffs on BRICS nations—Brazil, Russia, India, China, and South Africa—if they proceed with plans to develop an alternative currency that challenges the US dollar’s dominance. The move highlights Trump’s strategy to use trade penalties as leverage to maintain the greenback’s global supremacy. While the dollar currently accounts for 58% of global foreign exchange reserves, Russia has been pushing to reduce its reliance on USD in response to Western sanctions, but experts believe the dollar's reserve currency status remains secure.

  • 🛑 Australia Bans Kids from Social Media: In a global first, Australia passed legislation banning children under 16 from creating social media accounts. The law requires tech companies to prevent underage users or face fines of up to $32 million. While the government aims to protect minors from online harm, critics argue that enforcement will be challenging, as tools like VPNs could bypass the restrictions. This new law sets a precedent for stricter youth protections in the digital age.

  • ☕ Coffee Prices Hit a 47-Year High: Coffee futures surged to their highest levels since 1977, with arabica beans up 70% this year to $3.18 per pound and robusta prices nearly doubling. The spike stems from poor weather conditions in Brazil and Vietnam, the world’s top coffee producers. Supply concerns have prompted Nestlé and other major players to raise prices, signaling that consumers may soon pay even more for their morning brew.

    🛍️ Cyber Monday Expected to Shatter Records: Cyber Monday sales are projected to reach a record $13.2 billion, fueled by strong Black Friday momentum, which saw $10.8 billion in online purchases alone. As consumers embrace deep discounts and mobile shopping, spending continues to climb year over year. Meanwhile, in-store traffic fell 8.2%, marking a significant shift toward digital-first holiday shopping behaviors.

  • 🛡️ President Biden Pardons Hunter: In a surprising move, President Biden pardoned his son, Hunter, overturning his earlier pledge not to intervene in the legal process. Hunter had been convicted on federal gun charges, and the decision has reignited debates about political influence and accountability.

  • 🔍 Trump Nominates FBI Critic Kash Patel: President-elect Trump tapped Kash Patel, a staunch ally and outspoken critic of the FBI, to lead the agency. The move signals a clear intention to overhaul the bureau, as Trump also effectively ousts Christopher Wray, the director he initially appointed in 2017.

  • ❄️ Lake-Effect Snowstorm Blankets Northeast: A fierce lake-effect snowstorm dumped up to three feet of snow across parts of New York, Pennsylvania, and Ohio over the weekend. The Buffalo Bills enlisted fans to help clear their stadium ahead of last night’s game. Meanwhile, the Arctic blast is expected to intensify, with nearly 70% of the continental U.S. forecasted to see subfreezing temperatures this week.

  • 🏈 Rivalry Week Sparks Fights: College football’s rivalry week turned heated as multiple games were marred by brawls triggered by post-game flag-planting celebrations. The intense matchups underscored the high stakes of the season but also raised concerns about sportsmanship and escalating tensions on the field.

RESOURCES
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