Before the bell: AI chips remain in demand

US big banks disappoint, while TSMC beats expectations.

Yesterday, the average European stock fell by 0.4%, while the Bel20 gained 1%. Heavyweight AB InBev rose 2.8% and pulled the Brussels index higher. In the United States, the S&P 500 slipped 0.5% and the Nasdaq lost 1%. The biggest names in the technology index took the hardest hits, including Nvidia (-1.4%), Microsoft (-2.4%), Amazon (-2.4%) and Meta (-2.5%). At the same time, the first results of the new earnings season — those of the major US banks — were poorly received. Bank of America fell 3.8%, while Wells Fargo took a beating of 4.6%. Notably, quarterly results at both banks exceeded expectations, but investors were disappointed by weak forward guidance. According to Donald Trump, the killings in Iran have stopped. The US would therefore refrain from attacking Iran for now. That news sent the oil price 3.3% lower.

In Asia this morning, the Hang Seng Index in Hong Kong is down 0.5%, while Tokyo’s Topix is up 0.7% for the third day in a row. Today, we will also receive results from major banks and asset managers Goldman Sachs, Morgan Stanley and BlackRock.

Small change, big impact

Electric vehicle maker Tesla is introducing a small change to its pricing strategy that could have major financial implications for the company. From Valentine’s Day onwards, the Full Self-Driving (FSD) option will only be available via a monthly subscription. Tesla owners will then have to pay 99 dollars per month to enable semi-autonomous driving. Tesla therefore expects a surge in demand for lifetime access to the FSD option, which currently costs owners 8,000 dollars. It takes roughly seven years for customers to spend the same amount via the subscription model. Still, a subscription could lower the barrier for more customers and give the company greater freedom to raise prices over time. As a result, this small change could prove highly lucrative for Tesla in the long run.

AI is not dead

In Taiwan, TSMC released its preliminary fourth-quarter figures this morning. The chipmaker reported a revenue increase of 20.5%. Even more impressive was the 35% rise in profit. This marks the eighth consecutive quarter in which TSMC has grown its profits. With these latest figures, the company beat all analyst expectations. The most advanced chips, at 7 nanometres and below, account for 77% of wafer revenue. These chips are used, among other things, in artificial intelligence and 5G applications. Investors therefore continue to watch Asia’s largest company, with a market capitalisation of around 1,400 billion dollars, as a key barometer for the AI sector. We can thus conclude that there is, for now, no end in sight to the rising demand for AI chips.

Did you know…

that we may soon be eating our fries slightly differently? Kraft Heinz has launched a new eco-friendly packaging for fries. It resembles McDonald’s packaging but includes an extra compartment on the outside for sauce. Whether the so-called “Heinz Dipper” will also lead us to consume more sauce is another question altogether.

This article was translated from Dutch and was originally published on Spaarvarkens.be.