Apple’s Foldable iPhone Is Coming, Qualcomm Lands Amazon AI Deal

0:00public.com presents the rundown your daily market update in 10 minutes. My name is Aidudmoney and today is Tuesday September 8. In today's episode we'll preview Apple's iPhone event this week and break down why Amazon just took a $4 billion stake in a company that makes Android chips. Then stick around to the end of this show to find out why Microsoft is about to put a monthly time limit on cloud gaming. We got a great show for you today. Let's go. Stocks are coming off a quiet but winning week. The S&P 500 was up 0.1% last week. Well, the NASDAQ was up just 0.4%. So pretty small moves and overall the stock market has been kind of quiet for the last few weeks, which is pretty normal for August. But we are now in September. Labor day is over and there is a lot for investors to consider moving forward. The big news last week was the August jobs report which came in way stronger than expected.

1:00The US economy added 162,000 jobs in August which is roughly triple the 55,000 that economists were expecting. And the reason that's key is because with the labor market looking strong, it could give the Federal Reserve a reason to hike interest rates at their meeting next week. New Fed share Kevin Warch has been talking tough on inflation. He wants to get it back to the Fed's 2% target. And that's why traders are now pricing in a 60% chance of a rate hike at the next meeting. So we'll see what happens on September 16th. Now the other big news I can play into this is the rising oil prices. Fighting in the Middle East is escalating again. Iran fired missiles at US Navy ships over the weekend. The US responded by striking Iranian oil tankers and now energy facilities in Saudi Arabia are being attacked again, which is forcing Saudi Arabia to halt operations at some sites. So all that chaos is pushing up oil prices again, Brent crude is trading around $100 a barrel while WTI is trading around $94 a barrel. Now I gotta say for most of the summer, I feel like Wall Street was more obsessed with AI

2:01earnings and kind of looking past the war and all the macro stuff. But earning season is over. School is back in session and investors are realizing that there are still some real macro headwinds. So you know it's possible to macro headlines like oil prices, inflation and rate hikes could have the most impact on how the stock market does in the last four months of the year. Now we should learn more about the macro picture this week. The August wholesale inflation report drops on Thursday morning and then the CPI inflation report drops on Friday morning. We'll cover both those reports and beyond just the macro stuff, there's also an Apple event on Wednesday where they're going to show off the new foldable iPhone. And who knows maybe one of these AI companies might surprise us too this week. So we'll have a lot to cover this week. Definitely get subscribed for the podcast if you haven't already and tune in every day to stay in the loop. Let's run through some headlines starting with Apple. Tomorrow is the annual iPhone event and this one could be the biggest one in years. Now for one Apple has a new CEO now John Turner's took over

3:03from Tim Cook back on September 1st. And for this event, Tim Cook will actually be sitting in the audience and not opening the keynote with his iconic folksy good morning intro. And the other reason this event is going to be important is because Apple is expected to release their first foldable iPhone. There's been a lot of hype building about this phone. It was a great write-up in Bloomberg this morning from friend of the show Martin Gurman about the development of the foldable phone. Apparently it was something that Tim Cook pushed for after I tripped the China in 2020 where he saw a ton of people using foldable phones. So Apple's been working on this for a few years now and they're very late to this market. Samsung has been selling foldable phones since 2019 and Google and other Android manufacturers have been doing it for years as well. Now foldables are still a niche product. They accounted for less than 2% of global smartphone sales last year. Likely because they're very expensive. But they are the fastest growing segment in smartphones. And by the way, this new foldable iPhone is also going to be very expensive. The estimates are anywhere between $2,000 and $2500 for this phone. Personally, I think Apple will likely price it on the higher end. I wouldn't be

4:06surprised if it comes out at $2,500 because regardless of what the price is, Apple fanboys will buy this. In fact, Morgan Stanley estimates that Apple will sell 7 to 8 million units in the second half of this year. So that'll be an extra of $14 plus billion in revenue for Apple. You know, I feel like most people don't really upgrade their iPhones very often these days. Every new iPhone pretty much looks the same as the previous year's iPhone and the cameras have gotten so good now that it doesn't really make sense to upgrade for like three to four years. But the iPhone fold might give people a reason to upgrade sooner because it's a new product. So that could be a boost to Apple's revenues in the second half of the year. Let me know in the comments on what you guys think. What do you think the price for this iPhone fold will be? Are you going to buy it? And what do you think the Apple will name it? Are they going to go with something basic like the iPhone Ultra or will they go outside the box? Jaffa dots in the comments on Spotify and YouTube. Let's shift gears and talk about Qualcomm because the company just landed a major AI chip deal with Amazon. Most people know

5:07Qualcomm as the company that makes a snap dragon processors that are inside Android smartphones. But lately the company has been trying to diversify away from smartphones and become a serious player in AI data centers. Back in June the company showed off a data center CPU called Dragonfly and they said they were targeting $15 billion in data center revenue by fiscal 2029. The company announced back then that Meta would start buying their data center chips in 2028 and now they just locked in Amazon. Qualcomm and Amazon web services are going to work together to create multiple generations of custom chips for AWS data centers. The focus is going to be mainly on AI inference. Now the details behind this deal are unique just like with every AI deal these days. In order to land this deal with Amazon Qualcomm is giving Amazon a warrant to buy up to 25 million shares of the company for about $160 each. That's about $4 billion worth of stock that Amazon could buy of Qualcomm. Now those shares only vest as Amazon actually buys more chips with Qualcomm over the

6:08next decade. So essentially the more that Amazon spends on Qualcomm chips the more of Qualcomm that Amazon will owe. It's just the latest example of unique financial engineering when it comes to AI deals. And it also shows you that the AI chip opportunity is way bigger than just Nvidia GPUs. Especially now that AI agents are exploding CPUs are becoming the bottleneck for data centers and looks like Qualcomm is trying to grab some market share while they can. Qualcomm stock popped more than 10% initially after this news came out. It's up around 4% right now at the time of this recording. Surprisingly though if you zoom out on the stock chart the stock has been flat for the year. Let's talk about some stocks making moves today. Shares of bloom energy are jumping this morning after the company was selected to join the S&P 500. Bloom Energy makes fuel cell systems that generate electricity on site for businesses and data centers. We've actually talked about this company before because it's one of the big winners of the AI boom. As you guys know data centers need a ridiculous amount of electricity and blooms fuel cells can provide power directly

7:14at the data center site instead of waiting years for a new power grid connection. So that's surge in demand from data centers has sent Bloom stock up nearly three eggs this year and starting on September 21st the company will join the exclusive S&P 500. So that means that all the ETFs that are tracking the S&P 500 which is trillions of dollars will have to buy Bloom stock and that's why Bloom stock jumped seven percent on Friday when this S&P 500 news was announced and it's up another six percent this morning at the time of this recording. Now on the flip side shares of the farmer company Novartis are tanking this morning. The Swiss farmer company stock is down around 10 percent after another experimental drug failed a late stage clinical trial. This drug was called Dell Desaran. It was being tested to treat a rare muscle wasting disease and it failed trials after showing no statistically significant improvement over a placebo. The bigger problem for Novartis here is that they acquired this drug as part of a 12 billion dollar acquisition of avidity bioscientists last year. This was supposed to be one of the drugs that helped justify

8:16that acquisition and now it just failed late stage trials. I gotta say man Novartis is going through a rough stretch right now. This is now their third major clinical setback in the past week. Another one of their potential blockbuster cholesterol drugs failed a late stage trial a few days ago and the company also paused eight trials of an experimental cell therapy after three patients died. So I think that could be contributing to why Novartis stock is down double digits this morning. Investors might be questioning the company's entire drug development pipeline. Let's wrap the show with the fun fact. Microsoft is putting a time limit on Xbox Cloud Gaming. Starting in November, Game Pass Ultimate subscribers who paid $23 a month will only get 15 hours of Cloud Gaming per month. Game Pass Premium subscribers will get 10 hours a month and Game Pass Essential subscribers will only get 5 hours a month. Back in my gaming days I could do 5 hours in a single session. Now if you run out of hours Microsoft will let you buy more hours and Microsoft

9:17says it only about 4% of Game Pass subscribers currently exceed those limits. I'm kind of surprised to hear that honestly. But regardless this is still a pretty dramatic change for Game Pass subscribers after having years of essentially unlimited Cloud Gaming. I think the main reason that Microsoft is doing this is because of AI. The AI boom has made compute very valuable and Cloud Gaming is basically a video game running inside a Microsoft data center that gets streamed back to your phone or computer. The longer you play the more it costs Microsoft to run that game. So every rack being used for Cloud Gaming could instead be used for AI. So I think that's why Microsoft could be putting a cap on Cloud Gaming. And I think it's fair to say that Cloud Gaming was just a flop. Microsoft has been hyping up Cloud Gaming for years now and honestly I used to be a big fan of Game Pass. But then Microsoft started raising prices and I just kind of lost interest. To be fair I also had a second kid which completely killed all my gaming free time as well. Shout out to my son he actually turns 3 today. Can't wait till he's old enough or we can game together and I can kick his button to you know looking back I wonder if Microsoft really regrets the 69 billion dollar

10:20Activision acquisition that they did back in January of 2022. That deal was announced 10 months before chat GPT came out and it didn't close until 2023. I bet Sathya Nadella probably wishes he used that 69 billion dollars to buy more Nvidia chips and not a gaming company. Well all right guys that's the rundown for today. I hope you guys enjoyed today's episode. Thank you guys so much for listening, watching and commenting. Shout out to Mike and V for all the work behind scene. And we'll see you guys back here tomorrow.