CVNA - Wall Street Breakfast Podcast: Microsoft Unveils Pricing For AI Tool

2023-07-19 06:36:00 ET

Summary

• Microsoft's shares hit an all-time high after the company announced a price for its AI tools for Office software, 365 Copilot, which could boost cloud revenue by 20% by 2025.
• Johnson & Johnson has been ordered to pay $18.8 million in damages to a man who claimed the company's talc-based baby powder caused his mesothelioma, the company plans to appeal.
• Carvana's shares dropped nearly 9% pre-market after the company announced it would report earnings earlier than expected; the company's shares have risen over 700% YTD.

Listen below or on the go on Apple Podcasts and Spotify Microsoft ( MSFT ) hits all-time high after unveiling pricing for AI tool , Copilot. (00:36) J&J ( JNJ ) ordered to pay $18.8M over baby powder cancer claim, jury rules. (01:53) Carvana ( CVNA ) drops after moving up earnings report to July 19. (02:57)

This is an abridged transcript of the podcast.

Microsoft (NASDAQ: MSFT ) hit an all-time high on Tuesday after the company said that its artificial intelligence tools for its Office software, known as 365 Copilot, will cost $30 per user per month , significantly raising the price of the software.

Unveiled at its virtual Inspire conference, Microsoft ( MSFT ) said the $30 per user per month cost will be for its E3, E5, Business Standard and Business Premium customers.

In an interview with the Financial Times , Microsoft’s ( MSFT ) CEO said to think of Copilot as the "third leg" of Office after Word, Excel and Teams.

Wedbush Securities analyst Dan Ives called the pricing information "very bullish" and could allow Microsoft ( MSFT ) to boost cloud revenue annually by 20% by 2025.

Copilot is a voluntary upgrade.

Microsoft has been testing Copilot with at least 600 customers since being unveiled in March.

In addition, Microsoft ( MSFT ) unveiled a more secure version of its Bing search engine chatbot, Bing Chat Enterprise.

Microsoft ( MSFT ) also said it had expanded its artificial intelligence partnership with Meta Platforms ( META ) and LLaMA 2,

LlaMA 2 is Meta's large language model and makes it available on Azure and Windows.

Johnson & Johnson (NYSE: JNJ ) will have to pay $18.8 million after a jury ruled in favor of a man who claimed that the company's talc-based baby powder was responsible for his mesothelioma.

The jury awarded plaintiff Anthony Hernandez Valadez $18.8 million in damages in an Oakland, California courtroom on Tuesday.

The case was the first in two years in talc-based litigation against J&J after thousands of other cases were halted as J&J attempted to separate its liability in a Chapter 11 bankruptcy for its LTL Management unit.

This case was allowed to proceed due to Valadez's ailing health.

Johnson & Johnson ( JNJ ) said in a statement to Seeking Alpha that it will appeal the ruling .

Johnson & Johnson subsidiary LTL Management, which was created to file for bankruptcy as a way to handle talc litigation, refiled for Chapter 11 bankruptcy protection in April after its first attempt failed.

JNJ says the verdict award will not be paid while the bankruptcy proceeding continues.

Carvana (NYSE: CVNA ) is down nearly 9% pre-market after the company said it would report second-quarter results before the market opens today instead of August 3.

Cox Automotive reported on July 14 that the total supply of unsold used vehicles on dealer lots in the U.S. stood at 2.22 million units at the close of June, down 10% from a year earlier, .

CVNA is one of the most shorted stocks on the market, with 55% of shares short-sold. That has dropped from 63% of shares short-sold on July 12. It also compares to 12% for CarMax ( KMX ) and 2.5% for Cars.com ( CARS ).

Last month, the company said it expects adjusted EBITDA for the second quarter above $50M after previously just saying it would be positive.

CVNA, which tends to be volatile, is up more than 700% year-to-date.

Other headlines to look out for on Seeking Alpha:

Gold settles at six-week high; Citigroup raises 2024 gold price forecast

Bloomingdales to Balmain bank on Barbie to bolster sales

Qualcomm, Meta announce deal to bring LLMs to phones, PCs

U.S. home turnover rate in H1 falls to lowest in a decade, Redfin says

Tesla earnings preview: EV sector buckles up for pricing, margin and new model developments

On our catalyst watch for the day , a pre-hearing conference is scheduled in the FTC case attempting to block the sale of Horizon Therapeutics ( HZNP ) to Amgen ( AMGN ). And at 5:30pm Tesla ( TSLA ) will hold its earnings conference call. Options trading on Tesla ( TSLA ) implies a share price swing of 8% following the report. Tesla ( TSLA ) shed 9.8% after its last earnings report. Over the last 90 days, the electric vehicle stocks with the strongest trading correlation to Tesla ( TSLA ) have been Rivian Automotive ( RIVN ) and Lucid Group ( LCID ).

Tesla reports after the bell today and we’ve got a preview article . It’s linked in show notes.

Wall Street's major averages ended solidly higher on Tuesday.

The Nasdaq ( COMP.IND ) rose 0.76% , while the S&P 500 ( SP500 ) added 0.71%. The Dow ( DJI ) gained ground by 1.06%.

Of the 11 S&P sectors, eight posted gains, led by Tech. Real Estate, Utilities and Consumer Staples were the losers.

Though headlines were largely dominated by earnings, traders additionally received economic data in the form of the June retail sales numbers . The headline figure rose 0.2% on a M/M basis, lower than the expected +0.5% rise and the +0.5% reading in May. Core retail sales also rose 0.2% on a M/M basis, versus an anticipated uptick of 0.3%.

June industrial production data also came in, unexpectedly falling for the month in comparison to an expectation for flat.

Treasury yields were mixed on Tuesday. The 10-year yield ( US10Y ) was down 1 basis point to 3.79%, while the 2-year yield ( US2Y ) was up 3 basis points to 4.76%.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are pointing higher. The Dow is up 0.2%, the S&P 500 is up 0.2% and the Nasdaq is up 0.3%. Crude oil is up 0.1% at more than $75 a barrel. Bitcoin is up 0.1% at more than 30,000.

In the world markets, the FTSE 100 is up 1.5% and the DAX is up 0.1%.

On today’s economic calendar, at 830am housing starts and permits.

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