Mid-Week Wrap-Up - December 4th, 2024

Amazon announces new AI supercomputer

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CMG Venture & Mark Roussin
December 04, 2024

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Good morning investors!

If this is your first time reading, welcome to The Investor’s Edge — a thriving community of over 20,000 subscribers striving to be better investors with an edge in the market.

Every Wednesday we publish “The Mid-Week Wrap-Up” — your ticket to being well informed and staying ahead in the investment game!

This report is designed to help investors of all skill levels break down important stories/topics within the stock market. And best of all, we cut through all of the BS and give you exactly what you need to know in easy to digest, bite sized pieces of content.

This article is designed to truly give you that EDGE in the day ahead!

Grab your afternoon pick me up and let’s dive in.

Market Talk

Markets are higher to start the week, with the Nasdaq doing most of the heavy lifting.

3 Stories Moving the Market

These are some of the biggest stories so far this week that are having an influence on market action.

Amazon Announces Supercomputer, New Server Powered by Homegrown AI Chips

At its annual Reinvent conference, Amazon Web Services (AWS) announced a massive AI supercomputer, "Ultracluster," powered by its homegrown Trainium chips, to be used by AI startup Anthropic.

Expected in 2025, the U.S.-based cluster will be among the largest globally for training AI models, aiming to challenge Nvidia's dominance.

AWS also introduced its new Ultraserver, featuring interconnected Trainium chips, designed to lower AI costs and enhance control over its supply chain.

At the conference, Apple announced that is currently using AWS’s custom AI chips for services like search and is evaluating their potential for pretraining Apple Intelligence models. This announcement marks a rare public acknowledgment of a supplier relationship.

👉 EDGE ALERT: AWS’s announcement of its Ultracluster and continued advancements in custom AI chips like Trainium2 is a significant milestone that could…upgrade to Edge+ to read the full Edge Alert.

Elon Musk’s $56 billion Tesla compensation voided by judge, again

A Delaware judge upheld her ruling voiding Elon Musk's record $56 billion 2018 CEO pay package, deeming it improperly granted due to Musk's control over Tesla's board during the negotiation process. Tesla plans to appeal the decision, which Musk criticized as “absolute corruption.”

Efforts to reverse the ruling by pointing to a shareholder vote ratifying the pay plan earlier this year were rejected, with the judge emphasizing that new facts cannot retroactively change judgments.

The ruling also included a $345 million attorney fee award for the legal team representing Tesla shareholders who sued to nullify the pay plan.

This decision marks a significant legal setback for Musk and Tesla, reinforcing scrutiny over executive compensation practices and corporate governance at the company.

📚 EDGE-UCATION: What is the history of Elon Musk’s pay package?

Here is a timeline of key events regarding Elon Musk's controversial $56 billion pay package:

2018

  • March: Tesla's board approves Elon Musk’s 10-year performance-based compensation plan, tied to ambitious growth milestones in market capitalization, revenue, and profitability.

    • The package, worth up to $56 billion, is the largest compensation package in U.S. corporate history.

  • June: Tesla shareholders approve the compensation plan with a reported 73% of the vote.

2022

  • June: Tesla shareholder Richard Tornetta files a lawsuit in Delaware’s Court of Chancery, alleging that the pay package was improperly granted due to Musk’s influence over Tesla’s board and lack of proper negotiation.

2023

  • November: A trial begins in Delaware to assess whether the pay package was fair and properly approved. Musk defends the package as critical for achieving Tesla's success.

2024

  • January: Chancellor Kathaleen McCormick rules that Musk’s pay package is invalid, stating that he exercised undue influence over Tesla’s board and that the process was "deeply flawed."

  • June: Tesla holds a shareholder vote at its annual meeting to "ratify" the 2018 pay plan. The company argues the vote reflects broad shareholder support for Musk’s compensation.

  • December 2: Chancellor McCormick upholds her earlier ruling, rejecting Tesla’s argument that the shareholder vote should reverse her decision. She reaffirms that Musk’s control over the board invalidated the plan and awards $345 million in attorney fees to the plaintiffs.

  • December 3: Tesla and Musk announce plans to appeal the ruling. Musk criticizes the decision as "absolute corruption."

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Intel shares slide as Gelsinger exit leaves chipmaker without a ‘quick fix’

Intel's stock has dropped 8% this week following the ouster of CEO Pat Gelsinger, who faced a turbulent four-year tenure marked by significant market share losses and a failure to capitalize on the artificial intelligence boom.

Gelsinger, who took the helm in 2021, oversaw Intel’s declining revenue—down in nine of the past 11 quarters—and growing competition from AMD in core PC and data center markets, while Nvidia surged past a $3 trillion market cap as the leader in AI chips.

Intel’s refocus on becoming a foundry has added further pressure, with costly investments dragging margins and leading to billions in quarterly losses.

Interim leadership, including CFO David Zinsner and Intel products CEO MJ Holthaus as co-CEOs, faces a challenging turnaround amid a $10 billion cost-cutting plan and significant structural challenges.

📊 EDGE SCORE: Here’s a look at Intel’s Edge Score - even with this week’s price drop, it’s hard to like Intel here:

Want access to your own Edge Scores? Upgrade to Edge+ today and be one of the first to use the dashboard:

In Other News

In this section we'll be curating a selection of news headlines we think you'll find interesting. If a topic catches your eye, click the provided links to read more about it.

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The Second Half

There’s still a few key earnings to watch this week as well as important economic data, but the main focus will be Friday’s nonfarm payrolls report.

Earnings Reports

We will be watching earnings reports from Dollar General, Lululemon, and Ulta Beauty to end the week.

Here is the calendar of earnings releases scheduled for the rest of the week:

Source: Earnings Whisper

Economic Reports

There are several key economic reports to watch over the next two days, including nonfarm payrolls, unemployment, initial jobless claims and consumer sentiment.

Jerome Powell is also scheduled to speak at 2pm EST today.

Here is the full calendar of events scheduled for the remainder of the week:

What Caught Our Eye Today (Edge+)

November Edge Quick Pick Okta Surges on Earnings Beat, Strong Guidance

Okta’s stellar Q3 earnings, coupled with its solid Edge Score, confirm why it was a solid choice for our Edge Quick Picks in November.

The company’s 14% YoY revenue growth to $665 million and its profitability milestone, achieving $16 million in net income compared to a loss last year, reflect…upgrade to Edge+ to read the rest of this section.

*Note - our next Edge Quick Pick report goes out tomorrow. Don’t miss out on gains like the ones members are seeing from Okta:

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Thank you for reading this edition of the Mid-Week Wrap-Up.

Until next time investors!

Mark & Chris

The Investor’s Edge

Disclosure

This is not investing advice. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.

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