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  • 🤯 Google's Willow Stuns World

🤯 Google's Willow Stuns World

+ Oracle's Cloudy Day + Inflation — Still Hanging Around Like That Guest Who Won’t Leave

December 10, 2024

Good afternoon! Reddit is testing a new chatbot, Reddit Answers, to summarize threads and comments, aiming to keep users from Googling with “reddit” at the end of their queries. Currently rolling out to select U.S. users, the bot uses AI models from Reddit, Google, and OpenAI, building on $200M+ in licensing deals struck earlier this year.

With competitors like Meta, X, and Microsoft launching bots to boost engagement, Reddit is diving into the AI race. The goal? Capture relevance and revenue in an AI-driven world, as companies look to bots as the next frontier for monetization.

MARKETS

*Stock data as of market close*

  • Stocks dipped Tuesday, with the S&P 500 slipping 0.3%, the Nasdaq down 0.25%, and the Dow losing 0.35%. Bond yields followed suit, climbing to 4.15% for the 2-year and 4.22% for the 10-year, as traders shifted focus to Wednesday’s CPI report.

  • After a blistering rally this year, markets took a breather. The inflation data will likely set the tone for the Fed’s next move, as investors weigh whether rate cuts remain on the table or if inflation could throw a wrench into the year-end playbook.

STOCKS
Winners & Losers

What’s up 📈

  • Walgreens Boots Alliance popped 17.74% on reports that private equity firm Sycamore Partners is considering acquiring the company. ($WBA)

  • Alaska Airlines soared 13.16% after announcing plans to increase profit by $1 billion by 2027, with new nonstop routes to Tokyo and Seoul. ($ALK)

  • Alphabet climbed 5.59% after unveiling its Willow quantum chip, signaling a major breakthrough in quantum computing. ($GOOGL)

  • Boeing gained 4.50% as it resumed production of its 737 Max planes after a seven-week strike. ($BA)

  • Norwegian Cruise Line rose 1.69% following a Goldman Sachs upgrade to "buy," citing low valuation and strong prospects for 2025. ($NCLH)

What’s down 📉

  • Yext plummeted 17.14% after issuing a weaker-than-expected financial outlook for the fourth quarter. ($YEXT)

  • MongoDB dropped 16.92% despite solid quarterly results, as investors reacted to news of the CFO and COO’s departure. ($MDB)

  • SiriusXM tumbled 12.25% following disappointing revenue forecasts and a restructuring announcement. ($SIRI)

  • Super Micro Computer sank 8.20% as investors took profits following its recent rally. ($SMCI)

  • eBay slid 2.93% after a Jefferies downgrade to “underperform,” citing declining ad revenue and increased spending. ($EBAY)

CHIPS
Google’s Quantum Chip Willow Stuns the World

Five minutes. That’s how long it took Google’s latest quantum chip, Willow, to solve a problem that would’ve kept the world’s best supercomputers grinding away for 10 septillion years—yes, septillion. While that might sound like a flex without a purpose, it’s a major leap toward making quantum computing commercially useful.

Qubits, But Make Them Work

Quantum computing isn’t just sci-fi anymore. Google’s Willow chip tackled the tech’s Achilles’ heel: scaling without drowning in errors.

Unlike regular bits (your standard 1s and 0s), qubits can exist in multiple states at once, offering ridiculous speed-ups for tasks like drug discovery, nuclear simulations, and—ironically—building better quantum computers. Willow’s big win? Adding more qubits without breaking the system. For the first time, more power didn’t equal more chaos.

Stocks and Supercomputers

Wall Street loved the news. Alphabet’s stock popped 5.6% on Tuesday, its biggest rally since April. Analysts cheered the milestone as a signal that Google is still a tech powerhouse, even as rivals like IBM and Amazon race to claim the quantum crown. Meanwhile, smaller quantum players like Rigetti Computing rode Alphabet’s coattails, with Rigetti shares skyrocketing 45%.

But don’t expect quantum computing to replace your MacBook anytime soon. Willow is still experimental, and mainstream adoption is years off. Still, this win positions Google as a frontrunner in what could be the next trillion-dollar tech race.

The Quantum-verse Ahead

What’s next? Google’s looking to solve a “real-world, beyond-classical” problem—one no classical computer could handle. Think unlocking new drugs or optimizing supply chains at a scale we can barely imagine. And let’s not ignore the cybersecurity elephant in the room: quantum computers could crack today’s strongest encryptions, which is why Apple’s already working on quantum-proofing iMessage.

For now, quantum remains a playground for big brains and bigger budgets, but with breakthroughs like Willow, it’s clear the future of computing is arriving at warp speed.

NEWS
Market Movements

EARNINGS
Oracle's Cloudy Day

Oracle’s stock just hit a rough patch, sliding 6.7%—its steepest drop this year—after posting earnings that left Wall Street less than thrilled. Despite a stellar 69% rally in 2024 (its best since the dot-com era), the database titan missed some lofty expectations.

The Numbers Game

  • Revenue: $14.06 billion (+9% YoY), just shy of the $14.1 billion estimate.

  • Adjusted EPS: $1.47, a penny below expectations.

  • Cloud infrastructure: A bright spot, with revenue jumping 52% to $2.4 billion.

Even with these solid gains, Oracle’s guidance for next quarter came in lighter than hoped, with projected revenue of $14.3 billion missing Wall Street’s $14.65 billion target.

What Went Right (and Wrong)

Oracle’s cloud business has been the growth engine, riding the AI wave with big-name clients like Meta and TikTok. But here’s the rub: Scaling up to meet demand isn’t cheap. The company shelled out nearly $4 billion in capital expenditures this quarter to build its data centers, raising some eyebrows on Wall Street.

Still, Oracle isn’t crying over spilled capex. Meta recently signed a deal to use Oracle’s infrastructure for its Llama AI models, and the company projects 50% growth in its cloud business for next year.

The Bigger Picture

While this quarter wasn’t perfect, analysts see Oracle’s long-term AI play as promising. Piper Sandler even upped their price target to $210, citing strong cloud momentum. So, while investors may be feeling the sting today, Oracle’s future still looks bright—if it can keep up with its competitors in the cloud race.

Oracle’s earnings might have stumbled, but its cloud ambitions are still flying high. For now, Wall Street’s patience seems to be holding.

INFLATION
Inflation — Still Hanging Around Like That Guest Who Won’t Leave

The CPI report dropping tomorrow is expected to show inflation holding firm at an annualized 2.7% for November. Core CPI—excluding food and energy—looks to stay steady at 3.3%, which means the Fed’s dream of a 2% inflation target isn’t quite ready for prime time.

Why This Matters

The Fed has been slicing interest rates like it’s carving a holiday turkey, with two cuts already in the books this year and whispers of another quarter-point trim next week. Futures markets are betting heavily (88% odds) that Jerome Powell will deliver. But with inflation progress slowing, some analysts wonder if the Fed should tap the brakes on its rate-cutting spree.

What’s Driving Prices Up?

Goldman Sachs pointed to the usual suspects: car prices (+2% in November), airfares (+1%), and that ever-irritating auto insurance (+0.5% for the month). Sure, inflation is way down from its 9% peak in 2022, but persistent price increases still feel like a splinter under the skin for many consumers, especially those on tight budgets.

Looking Ahead

Economists are split on what 2025 holds. On one hand, easing in housing rentals and autos might give inflation some breathing room. On the other, Trump’s proposed tariffs could shake things up, keeping core CPI stubbornly high at 2.7% for the year. Add potential tax cuts and immigration policy shifts to the mix, and you’ve got a recipe for more inflation drama.

So, what’s next? Tomorrow’s CPI report could either solidify the Fed’s plan to cut rates—or throw in a curveball. Stay tuned for the 8:30 a.m. ET drop, because this report might just dictate whether 2025 starts with cautious optimism or a side of economic uncertainty.

Calendar
On The Horizon

Tomorrow

Still talking about inflation? Unfortunately, yes. Tomorrow’s CPI report is the last data drop before the Fed huddles up next week to decide on its next rate move.

While inflation’s grip has loosened compared to the peaks of recent years, the final stretch is proving tricky, with shelter prices refusing to play nice. November’s inflation is expected to rise 0.2%, matching October. If the number creeps higher, a December rate cut might be wishful thinking for investors.

After Market Close:

  • Adobe should be thriving in the AI boom, but its stock is down this year despite steady earnings and revenue. The challenge? Slowing growth and rising competition from AI-powered tools that make it easier for creators to bypass Adobe’s pricey software.Investors are looking for reassurance that Adobe can keep its edge in this crowded field. With earnings expectations at $4.67 per share and $5.54 billion in revenue, management will need to show it’s not just keeping pace but leading the pack. ($ADBE)

NEWS
The Daily Rundown

  • 🌐 World’s Biggest Ad Agency Forms to Compete with AI: Omnicom is acquiring Interpublic Group for $13.25 billion, creating the largest ad agency globally. Clients such as Apple, Chanel, Disney, and Mattel will now operate under one roof, with projected revenues of $25 billion. This merger underscores the ad industry’s need to counter Big Tech's dominance as companies like Google and Amazon leverage AI to reshape advertising. Omnicom’s CEO expressed optimism about favorable antitrust conditions under the incoming administration.

  • 🎥 OpenAI Debuts Hollywood-Disrupting Video Tool: OpenAI launched Sora Turbo, a text-to-video tool capable of generating high-resolution 20-second clips. Though Tyler Perry previously paused plans for a studio expansion after seeing an early demo, OpenAI is releasing the tool with safeguards to encourage exploration of its possibilities. Hollywood remains wary of its potential impact.

  • 💰 Merger Mania Hits Wall Street: Monday saw over $35 billion in deals, led by Omnicom’s acquisition of Interpublic Group. The wave of mergers underscores corporate America’s push to consolidate and adapt amid competitive pressures.

  • ⚖️ Daniel Penny Acquitted in Chokehold Case: Daniel Penny was found not guilty in the death of Jordan Neely, who died after Penny placed him in a chokehold on a New York City subway. The case reignited debates about public safety and accountability.

  • 🏆 Golden Globes Nominations Announced: The 2025 Golden Globes revealed Emilia Pérez as the top film contender, while The Bear led TV nominations. The list reflects a mix of critical acclaim and fan favorites heading into awards season.

  • 📊 Politics Impact Economic Sentiment: The University of Michigan consumer sentiment survey highlights how political views shape economic optimism. Following Donald Trump’s election, sentiment among Republicans soared to 81.6—their highest since his first term—while Democrats' optimism dropped to 70.9, marking their lowest since the peak of Covid. Political divisions continue to heavily influence perceptions of the economy.

  • 🌍 Syria’s Future Uncertain After Rebel Takeover: Syria’s government claims it is still functioning following the overthrow of the Assad regime, but the UN reports the public sector has ground to a halt, hampering humanitarian aid. Meanwhile, Israel seized land on the Syrian side of the Golan Heights, citing security needs. Prime Minister Benjamin Netanyahu described the measure as temporary, pledging peace to neighbors while vowing strong action against threats.

  • 🚨 UnitedHealthcare CEO Suspect Arrested: Luigi Mangione, a 26-year-old Ivy League graduate, was captured at a McDonald’s in Altoona, PA, carrying a manifesto, a ghost gun, and multiple fake IDs. Authorities believe he’s behind the fatal shooting of UnitedHealthcare CEO Brian Thompson. Mangione, who allegedly held grievances against corporate America, faces murder charges in Manhattan, marking a significant break in the case.

  • 🙃 Sympathy Complicates UnitedHealthcare CEO Case: Public sympathy for the suspect in the UnitedHealthcare CEO’s killing surprised law enforcement, complicating the investigation. Authorities noted online discussions expressing understanding for grievances against corporate America.

RESOURCES
The Federal Reserve Resource

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