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  • 🔥 Super Micro Just Tanked...

🔥 Super Micro Just Tanked...

+ Costco Earnings + Harris vs. Trump — 2024 Economic Policies

Good afternoon! The tables have turned for the most revered tech reviewer, Marques Brownlee, as he found himself on the receiving end of some tough feedback. After launching his new wallpaper app, Panels, during his iPhone 16 review, fans didn’t hold back, criticizing the steep $49.99 yearly subscription and the app’s broad data permissions. In a twist, the reviewer got reviewed.

Brownlee, ever responsive, addressed the criticism head-on, promising to rethink the pricing model and clean up those privacy concerns. The once untouchable tech critic is now learning what it’s like to be on the other side of the screen.

MARKETS

*Stock data as of market close*

  • All three major indexes rallied Thursday, with the Dow Jones Industrial Average climbing 0.6% (260 points), while the tech-heavy Nasdaq rose 0.6% and the S&P 500 gained 0.4%, reaching a new record high. Strong U.S. economic data and Micron’s upbeat earnings helped fuel the gains, with the S&P 500 now on track for its best first three quarters since 1997.

  • Meanwhile, the Nasdaq Golden Dragon Index, which tracks Chinese stocks listed in the U.S., soared 11%, marking its biggest jump since early 2022. This surge came as investors welcomed China’s latest round of stimulus measures, boosting risk appetite across global markets.

STOCKS
Winners & Losers

What’s up 📈

  • Bilibili ($BILI) surged 15.44% after Goldman Sachs upgraded the stock to "buy" from "neutral," citing the company's shift into a profitability growth cycle.

  • Micron ($MU) climbed 14.73% following the memory chipmaker's strong guidance, driven by increased demand due to the rise of AI.

  • Alibaba ($BABA) rose 10.07% along with other major Chinese stocks after China's top leaders pledged stronger support for the economy.

  • Southwest Airlines ($LUV) jumped 5.42% after raising its third-quarter revenue forecast and announcing $2.5 billion in share buybacks. The airline also introduced business model changes to address pressure from activist Elliott Investment Management.

  • Dell Technologies ($DELL) ticked up 5.26% after its subsidiary, Dell Federal Systems, was awarded a $794.67M contract to provide Adobe Enterprise software licenses and services for the Department of Defense.

  • Wells Fargo ($WFC) increased 5.19% after Bloomberg reported that the bank submitted a third-party review of its risk and control overhauls to the Federal Reserve, aiming to lift an asset cap imposed in 2018.

  • CarMax ($KMX) rose 4.99% after beating sales estimates for its fiscal second quarter and reporting a 5.1% rise in retail used unit sales.

  • Trip. com Group ($TCOM) increased 10.96%.

  • Mobileye ($MBLY) gained 10.51%.

  • Coinbase ($COIN) jumped 7.69%.

What’s down 📉

  • Super Micro Computer ($SMCI) plunged 12.17% after The Wall Street Journal reported that the Justice Department has opened an investigation into the AI server maker.

  • Halliburton ($HAL) slipped 3.67% after Wells Fargo analyst Roger Read lowered the firm's price target from $46 to $39, while maintaining an Overweight rating.

  • Nu Holdings ($NU) dropped 6.50%.

  • Diamondback Energy ($FANG) decreased 6.46%.

  • Shell ($SHEL) ticked down 3.94%.

  • Roblox ($RBLX) declined 5.81%.

  • Affirm Holdings ($AFRM) fell 3.70%.

SEMICONDUCTOR
Super Micro’s Big Plunge

On Thursday, Super Micro Computer shares nosedived 12%, all thanks to The Wall Street Journal breaking the news that the U.S. Department of Justice (DOJ) has launched an investigation into the company. The probe? Allegations from a former employee that the company has been playing loose with its accounting books.

It’s not the kind of headline you want when your stock is riding high on AI demand.

Accounting Drama, Round Two
This isn’t Super Micro’s first time facing financial scrutiny. In 2020, the company settled a $17.5 million case with the SEC over accounting issues. But now, whistleblower Bob Luong claims the server maker overstated revenue—and short-seller Hindenburg Research jumped right in with a report highlighting "glaring accounting red flags."

Hindenburg also pointed to other concerns, including undisclosed related-party transactions and export control failures. The new DOJ inquiry just adds to the pressure.

AI Boom Meets Legal Gloom
Super Micro had been riding the AI wave like a pro, with their servers powering the needs of giants like Nvidia and Meta. The stock was up 42% this year before Thursday's bad news.

Now, with the DOJ in the picture, the company’s glowing reputation has taken a hit—even as CEO Charles Liang assures customers that their AI-driven business remains as strong as ever.

Investors Hit the Pause Button
Despite Liang's statement dismissing the Hindenburg report as “inaccurate,” the damage was done. Shares dropped to $373 before rebounding slightly to finish the day around $400.

While analysts are divided, with some halving their price targets and others seeing potential for recovery, the DOJ probe has definitely left investors rethinking their enthusiasm.

NEWS
Market Movements

EARNINGS
Costco Reports Strong Profit Ahead of Holiday Season

Costco reported better-than-expected earnings this quarter, with a solid $5.29 per share, beating analyst predictions. Shopper traffic increased across the U.S., though visitors tightened their belts a bit, spending slightly less per trip. Still, paid memberships rose, and about 90% of members renewed. While revenue came in slightly below estimates at $79.7 billion (vs. $79.96 billion), the wholesale giant’s ability to keep shoppers spending despite economic headwinds proves it’s still got the magic touch.

But it wasn’t just foot traffic keeping Costco afloat.

Non-Food Sales Surge
The retailer saw strong growth in its non-food items, with online sales surging by nearly 19%. From home furnishings to gift cards, Costco’s e-commerce arm, under new leadership, is flourishing. Gold bullion and appliances were also standout performers, proving that customers are venturing beyond the grocery aisles.

Memberships continue to be a key revenue driver.

Membership Boost on the Horizon
Costco recently hiked its membership fees in the U.S. and Canada, setting the stage for future revenue growth. Right now, Executive members make up almost half of all paid sign-ups, and membership fee income hit $1.51 billion for the quarter. While a slight miss compared to analyst expectations, the higher fees will show up in the next earnings cycle.

As for Costco’s competitors, it’s clear who’s winning.

Leading the Retail Pack
While Walmart and Target saw mixed results, Costco continues to gain market share, especially in the e-commerce space. Consumers are leaning into the value Costco offers, with its private-label Kirkland Signature brand boosting loyalty. Even with economic uncertainty, Costco’s strong positioning keeps it ahead of the curve.

Investors are keeping a close eye on holiday projections.

ECONOMY
Harris vs. Trump — 2024 Economic Policies

With the election in full swing, Vice President Kamala Harris and former President Donald Trump have locked in on a key issue: saving the American middle class. Both candidates are unveiling ambitious economic plans in crucial swing states, hoping to win over voters. Harris’s “opportunity economy” focuses on future industries like AI and biotech, while Trump is banking on tariffs to “rescue” the middle class.

Their strategies signal a high-stakes competition for votes.

Tariffs vs. Tech: Competing Visions
Trump took the stage in Savannah this week, praising tariffs as “one of the most beautiful words.” His solution? Slap new tariffs on companies that manufacture abroad, encouraging businesses to shift production back to the U.S.

Meanwhile, Harris delivered her pitch in Pittsburgh, pledging to outcompete China in industries like biotech, clean energy, and blockchain. She’s promising to strengthen America’s industrial policy and ensure the U.S. leads in key sectors.

Both candidates are betting big on manufacturing, but they might be missing the bigger picture.

Swing States, High Stakes
In states like Georgia and Pennsylvania, the candidates are focusing on union-friendly voters. Manufacturing jobs are a big talking point, but there’s a catch—manufacturing only makes up 10% of Pennsylvania’s workforce. The U.S. economy is increasingly service-driven, accounting for over 70% of its value.

Focusing too much on manufacturing may leave the broader economy overlooked.

The Middle-Class Mirage
Harris and Trump may be selling visions of a middle-class revival, but delivering on these promises is a different story. Harris’s high-tech focus may not trickle down to everyday workers, while Trump’s tariffs could raise prices for consumers.

Both candidates are pulling out all the stops—but can they truly deliver?

Calendar
On The Horizon

Tomorrow

The Personal Consumption Expenditures Price Index—aka PCE, for those in the know—still reigns supreme as the Fed’s favorite inflation tracker. But honestly, does inflation even matter anymore?

Recently, the Fed’s been way more into the other side of its job: employment. A shaky labor market had investors sweating in August, and the stock market definitely felt it. While things have calmed down, reports like this week’s consumer confidence survey show that job worries are still hanging around.

But don’t get it twisted—inflation’s still on the Fed’s radar. Central bankers, in their speeches this week, made it crystal clear they’re keeping a close watch on rising prices, especially the core PCE (the one that skips food and energy).

Tomorrow’s PCE report is expected to show a tiny 0.10% rise for August, down from July’s 0.16%. But if that slowdown doesn’t show up, expect plenty of chatter about what it means for the Fed’s upcoming rate cut decisions.

NEWS
The Daily Rundown

RESOURCES
The Federal Reserve Resource

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