Stocks moving in after hours: Microsoft, Salesforce, AMD, Qualcomm, Nvidia
Yahoo Finance Live's Seana Smith and Dave Briggs take a look at several of the day's top trending stocks, including Microsoft's investment in OpenAI's ChatGPT, Salesforce's latest activist investors, and semiconductor stocks.
Video transcript
- All right. Let's take a look at some of the movers, top movers of the day. First up, we got to talk about Microsoft. Shares closing to the upside after the company officially announcing its extended partnership with OpenAI. That's the parent company of ChatGPT. The gains that we're looking at today is just about 1%. Taking a look at what this could mean for the company down the road here, Dave, this deal we know adding to Microsoft's initial investment of about a billion dollars back in 2019.
Analysts are very bullish about this. Dan Ives from Wedbush, we've talked to him about this potential investment when it was just reported. But he's sending out a note today calling it a potential game changer for Microsoft, saying it is a direct shot to Google and other big tech companies, saying that Nadella and co, Satya Nadella is ahead of the rest of big tech. And this investment is a major notch on the AI belt. Doesn't get much more bullish than that.
- No, it doesn't. Let's talk about those two things. One, what the threat is to competitors. Well, we know from some "New York Times" reporting that Sergey Brin and Larry Page have come back to-- the founders of Google have come back. And they're not back at all because of the threat of ChatGPT. They know how big this is. And the theory is that it's actually a threat to Google's search business, which many have balked at because how significant could Bing be?
Well, apparently it's big if you've got the two founders of Google coming back. But what did Satya Nadella say today? We believe large-scale AI-like chat will create transformative impact at the magnitude of the personal computer, the internet, mobile devices, and the cloud. That's a pretty significant statement about what he believes ChatGPT will do. Completely disrupt just about every industry out there.
- Yeah. Exactly. And it's coming at a time-- this investment here, at a time when Office, Azure projected to slow meaningfully. That was the crux of Barclay's note out on this today, saying that it could not have come at a more opportune time. We'll get results from Microsoft tomorrow after the bell, where I'm sure a question or two are going to be on OpenAI.
- That call will be interesting. We certainly won't see ChatGPT in the earnings themselves. But some commentary will be fascinating. We also have coming up on this program a young man who is a Princeton student that has already invented an app that would detect cheating by ChatGPT. It can tell if it's written by human or AI. That's coming up. Also, Salesforce has been in focus all day amid activist investor activity. Elliott Investment Management announced that it's taken a stake in the company. And CNBC reporting Inclusive Capital has also taken a position. We spoke to Patrick Gadson, who has dealt with this company in numerous times, Elliott Management. He knows all about Paul Singer and what they are in this industry. Here's what he said.
PATRICK GADSON: They are the Godzilla of the space. They make entire countries in South America tremble. So they are known to see things all the way through. And many activists are sort of price sensitive when it comes to running campaigns. Elliott is not. They are completely inelastic when it comes to their budget for any proxy contest, any proxy wars. They'll spend tens of millions.
- If you weren't familiar with Paul Singer and Elliott Management, well, now you are. Look at Salesforce, up 3%, I guess because what we just heard there from Mr. Gadson is they don't lose. They have no time frame. And they don't care what they have to spend to win. They're going to get the job done, including with entire countries like Argentina.
- Yeah. Exactly. He said when they walk in the room, you sit up straight and you pay attention. That's simply what you have to do when you're dealing with Elliott Management. When you take a look at Salesforce, clearly the stock has been under pressure, as well as many of its competitors out there, over the last several months. That one-year chart, you're looking at losses of nearly 30%. Some key executive changes have happened over the last couple of months. The co-CEO Bret Taylor leaving the company. A lot of people asking Benioff some questions just in terms of what this means for the direction of Salesforce going forward.
In terms of what the Street is saying to this, Needham saying that the guess is that the outcome is all about margin expansion, question whether more layoffs could potentially be on the table. We know Salesforce was one of the tech companies to announce a significant amount of layoffs earlier this year. So I think the company is under pressure. More and more activist investors paying more attention, taking stakes reportedly, at least when it comes to the smaller company. Elliott Management, though, confirming that stake today. We had Stauber back in October. So it's getting more attention from activists and investors. We'll see what changes are actually made.
- Yeah. And we don't know what they want. But it was an interesting revelation from Gadson. At least his interpretation is that, why do we learn about reports like this? Why are we hearing it? And his theory is it's because something already happened, probably a late Q4 development. In his estimate, that could be a complete breakdown in those talks or they're about to announce something, i.e. board appointments. So his theory is something has happened, either positive or negative, to break that story.
- Yeah. And just taking a look at the track record here, when it comes to Elliott Management, they've dealt with PayPal, AT&T, Dell, Pinterest just to name a few in the past, and forcing numerous changes at those companies. So Benioff under a bit of pressure today and likely for a couple of weeks. All right. Let's talk about the chip stocks here. They are among the leaders in the NASDAQ today. Barclays out with a bullish note upgrading AMD, Qualcomm, and reiterating a buy rating on Nvidia They don't see the group of stocks retesting those October lows. A bullish call here from Barclays.
The Philadelphia Semiconductor Index, that's up more than 30% from a two-year low in mid-October. Analyst Blaine Curtis here of Barclays saying that he's more positive on companies with the data center PC handset exposures. Also, the reopening in China will start benefiting the industry he sees in the second half of the year. You're looking at a one-year chart of the Philly Semiconductor Index. Despite that 30% rally off the lows, still off about 14% this year, with a number of those larger chip stocks in the red over the last 12 months as well.
- And you know where I'm going to go with this. ChatGPT. Because there was a number of analysts who said there's one name that's probably going to benefit the most from this. And that is Nvidia. They are poised to benefit the most from the bounce from ChatGPT, including Citi, which said that is why they believe in Nvidia moving forward. As for that Barclays note, they added this is a frown turned upside down. We still see this correlation as the worst since the tech bubble. But we are modeling estimates below for nearly every name in our coverage, even without a macro downturn. Very good day for chip stocks. Look at that. Up almost 8% for NVIDIA.