Meta's Unleashes Llama 3.1 🦙— Bigger, Better, and Free!

Good afternoon! When you’re feeling down, remember that even trillion-dollar giants face rejection. Cloud security firm Wiz recently turned down Google’s ($GOOGL) staggering $23 billion acquisition offer, which would have marked Google’s largest purchase ever. Instead of selling out, Wiz is eyeing the IPO route, banking on their rapid growth and impressive numbers.

Founded in 2020, Wiz has quickly made a name for itself, hitting $350 million in annual recurring revenue (ARR) by 2023 and serving over 40% of the Fortune 100. The company recently raised $1 billion in funding, bringing its valuation to a whopping $12 billion.

MARKETS

• Markets took a significant hit as weaker-than-expected earnings from tech companies diving into AI led to the largest drops in the S&P 500 and Nasdaq since 2022.

• Treasury yields remained unchanged as investors await crucial economic data: Q2 GDP tomorrow and the PCE report on Friday.

• Oil prices bounced back from a rough week, with crude climbing after the Energy Information Administration reported a decline in inventories last week.

STOCKS
Winners & Losers

What’s up 📈

• Enphase Energy ($ENPH) surged 12.80% despite missing earnings estimates as investors celebrated management’s optimistic forecast for the solar company’s future

• Mattel ($MAT) rose 9.80%, fueled by ongoing takeover rumors and reports of a potential competing bid from rival toy maker Hasbro

• AT&T ($T) jumped 5.22% after reporting a stronger-than-expected increase in wireless subscribers, a key metric that competitor Verizon recently missed

• Seagate Technology ($STX) climbed 4.02% on the back of a robust earnings report from the hardware maker

What’s down 📉

• Lamb Weston ($LW) plunged 28.24% after the frozen food supplier announced earnings well below expectations and forecasted a challenging second half of the year

• Visa ($V) dipped 4.01% after missing analyst revenue estimates due to slower consumer spending

• AMC Entertainment Holdings ($AMC) fell 7.68% following the release of preliminary earnings that failed to impress

• Vertiv Holdings ($VRT) sank 13.64% despite beating earnings estimates, with investors concerned about the AI play’s high valuation

• General Dynamics ($GD) dropped 3.32% due to fewer deliveries of its high-end jets last quarter

AI
Meta's Unleashes Llama 3.1 — Bigger, Better, and Free!

Move over, ChatGPT. Meta ($META) just dropped Llama 3.1, and it’s not just big—it’s massive, boasting 405 billion parameters and trained with over 16,000 Nvidia H100 GPUs. Mark Zuckerberg’s latest AI prodigy isn’t just flexing its size; it's outperforming competitors like OpenAI’s GPT-4o and Anthropic’s Claude 3.5 Sonnet on multiple benchmarks. And the best part? It's open-source.

The Open-Source AI Revolution

• In a bold move reminiscent of Linux's rise, Meta is banking on the power of open-source to propel AI forward. Zuckerberg believes that just as Linux became the backbone of most tech, open-source AI will outpace proprietary models. Llama 3.1’s release aims to be a game-changer, inviting developers worldwide to innovate on a grand scale.

• Meta isn’t shy about Llama 3.1's capabilities. From generating hyper-realistic images to complex data retrieval tasks, this model does it all. Integrating with a search engine API, it can fetch and process data seamlessly, like plotting U.S. home sales over the past five years or writing and executing Python code. Meta’s AI assistant, powered by Llama 3.1, is rolling out across WhatsApp, Instagram, and Facebook, with plans to conquer other languages and regions soon.

Partners in AI

To ensure Llama 3.1 reaches every corner of the tech world, Meta is collaborating with giants like Microsoft, Amazon, Google, and Nvidia. This alliance is set to make deploying customized versions of Llama 3.1 easier and more cost-effective—Meta claims it’s roughly half as expensive to run as GPT-4o. Meta’s also upping its game on safety and ethics, rigorously testing Llama 3.1 for cybersecurity and biochemical risks.

They’ve introduced “Imagine Me,” a feature that scans your face to create personalized images—avoiding the deepfake pitfalls by not using profile photos. Zuckerberg is confident that Meta AI will be the go-to assistant by the end of the year, surpassing ChatGPT's 100 million users. Whether on your phone, in your VR headset, or through your Ray-Bans, Meta AI is set to be your next digital buddy. Meta’s Llama 3.1 is not just a leap forward; it’s a bold statement that the AI race is far from over.

NEWS
Market Movements

• Apple ($AAPL) is reportedly creating a foldable iPhone

• General Motors ($GM) announced that it’s restarting its Cruise driverless taxi operations, which it suspended last year after one of the vehicles hit a pedestrian in San Francisco

• Phillip Morris ($PM) raised its annual profit forecast after it said sales of wildly popular Zyn nicotine pouches could hit 580 million cans this year

• The Federal Trade Commission is investigating companies like Mastercard ($MA), JPMorgan Chase ($JPM), and Accenture ($ACN) for “surveillance pricing,” where companies charge different customers different amounts

• Tesla ($TSLA) sets robotaxi reveal date for October 10

• Elon Musk wants Tesla ($TSLA) to invest $5 billion into his newest startup, xAI, pending shareholder approval

• Google’s ($GOOGL) quarterly sales rose 14% from last year, fueled by search and cloud, but its YouTube ad revenue underwhelmed

• New Home Sales hit a 7-month low

• The Bank of Canada cuts its benchmark interest rate for the second straight time

• Britain’s King Charles is set for a $58 million pay raise as Crown Estate profits surge to $1.4 billion. The British monarchy is partially funded by profits from the Crown Estate, which saw a 148% increase this year

MEDIA
Prime Time — Amazon Steals NBA Spotlight from Warner Bros.

Grab your popcorn because the NBA’s TV contract bidding war is getting as spicy as a playoff game in overtime. Picture this: ESPN (owned by Disney) and TNT Sports (Warner Bros. Discovery) wrapping up their current deal that’s been ballin’ since the 2016-17 season, worth a cool $2.6 billion a year for the NBA. But Warner Bros. Discovery (WBD), buried under $40 billion in debt, is starting to feel the burn. CEO David Zaslav casually dropped, “We don’t have to have the NBA,” like it was no biggie, and NBA Commissioner Adam Silver was not amused.

New Lineup, New Cash Flow

The NBA's fresh deal lineup is juicier than a triple-overtime thriller:

• ESPN: Dropping $2.8 billion annually for the “A” package, snagging the NBA Finals.

• NBC: Shelling out $2.6 billion for the “B” package, including the All-Star Game.

• Amazon ($AMZN): Forking over $1.8 billion for Package “C,” landing a conference final every other year.

The Real MVP: Amazon

The NBA has chosen Amazon as its third media partner, joining ESPN and NBCUniversal in an 11-year deal worth about $77 billion. WBD tried to flex its “matching rights provision,” aiming to match Amazon’s offer. But the NBA says, “Not so fast.” They don't believe WBD’s rights extend to an all-streaming package, which was carved out specifically for Amazon. The NBA also prefers Amazon’s reach—200+ million Prime Video homes vs. TNT’s 89 million.WBD insists they've got a right to match the deal, and a legal showdown is likely on the horizon.

What's Next?

WBD might need to lawyer up to claim their matching rights, and the iconic "Inside the NBA" on TNT could face an uncertain future. Meanwhile, Adam Silver’s mission is clear: maximizing reach and accessibility for fans worldwide. Game on.

EARNINGS
Q2 Wrap: Chipotle's Earnings Roll Over Wall Street Projections

Chipotle ($CMG) is rolling in the dough and breaking through the restaurant industry gloom. The burrito behemoth reported Q2 earnings that left Wall Street's expectations in the dust, thanks to devoted fans and a solid value proposition.

By the Numbers:

• Revenue: $2.97 billion (up 18.2% YoY) vs. $2.94 billion expected.

• Adjusted EPS: $0.34 vs. $0.32 expected.

• Same-store Sales Growth: 11.1% vs. 9.23% expected.

CEO Brian Niccol attributed the "outstanding" quarter to successful brand marketing and the beloved Chicken al Pastor. Foot traffic surged 8%, surpassing the 6.3% projection, indicating Chipotle's broad appeal across income groups. While other chains flirt with bundle deals, Niccol is sticking to his guns, shunning promotional pricing.

Portion Patrol and Pricing Strategy

Despite some chatter about shrinking portions, Chipotle insists it's all about generous servings. CFO Jack Hartung confirmed that 90% of stores are hitting the mark, while the remaining 10% are getting a little extra coaching. With a 3% YoY menu price increase, there are no further hikes planned for 2024. The company is keeping a close eye on inflation and consumer behavior but remains confident in its resilience during economic uncertainty.

Expansion and Future Plans

Chipotle opened 52 new restaurants in Q2, with 46 featuring the drive-through Chipotlane. The goal is to open 285 to 315 new locations this year, with an eye on reaching 7,000 restaurants in North America long term. Shares spiked 4.46% in after-hours trading post-earnings, though they've dipped 18% over the past month following a 50-for-1 stock split.

Chipotle's strategy? Stick to what works: tasty, generously portioned burritos and a solid customer base that keeps coming back for more.

Calendar
On The Horizon

Tomorrow's big reveal is the advance real GDP report for Q2—not a perfect snapshot of the US economy, but still quite comprehensive. Last quarter's final reading showed a quarter-over-quarter decline, with Q1's 1.4% growth significantly lagging behind Q4 2023's 3.4%. The downturn was mainly driven by the manufacturing sector, while the services industry and government spending offered some support.

Economists predict a 1.9% GDP growth for this initial Q2 reading—an improvement from last quarter but still slower than the same period in 2023.

In terms of earnings, healthcare and footwear are on the docket.

Before Market Open:

• AstraZeneca ($AZN) is in an aggressive growth phase, with management ambitiously aiming to lead in cancer treatments. Shareholders will be closely watching the company’s R&D spending, bottom line, and oncology pipeline this quarter. Consensus: EPS of $1.20 on $12.75 billion in revenue.

• AbbVie ($ABBV) is under scrutiny for several reasons. With former COO Rob Michael stepping into the CEO role earlier this month, analysts are eager to hear his plans for the company. Additionally, there's significant interest in how AbbVie is compensating for the revenue gap left by Humira after its patent expired. Consensus: EPS off $2.96 on $14.02 billion in revenue.

After Market Close:

• Deckers Outdoor ($DECK) has seen nearly a 30% rise in 2024, though it's been a volatile journey. A recent analyst downgrade sent shares tumbling, and investors will be keen to see updates on sales of the HOKA and UGG brands to determine if the downgrade was justified. The stock's valuation is also a concern given the current economic climate. Consensus: EPS off $3.36 on $805.02 million in revenue.

• Skechers ($SKX) has only risen 5% in 2024 despite a strong previous earnings report. With consumer spending cooling, Skechers needs to prove it can maintain sales in this environment. Wall Street remains optimistic, with the average analyst price target 18% above current trading levels. Consensus: EPS of $0.94 on $2.23 billion in revenue.