Wall Street Roundup: A tale of two Teslas
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Brian Stewart, Seeking Alpha's Director of News. Welcome back to the podcast. Always great to talk to you on these Wall Street Roundups. Looking forward to it. Thanks. We were discussing what might be the top story of the week. A lot of stories in contention, but perhaps Tesla, everybody's favorite underfollowed stock and favorite underfollowed CEO and favorite underfollowed topic. What

What did Tesla show us this week? A lot of discussion about Musk and Doge and Tesla and whether it can recover. What did we see out of Tesla this week? Yeah, quiet reserves, unassuming Elon Musk somehow found himself in the news this week. There you go. I mean, if you're looking at it from just sort of a drama perspective, yeah.

Obviously, it's can't help but talk about the turn that's happened. It's Musk versus Trump. Now, Elon Musk has come out against the bill, the budget bill that's currently passed the House. It's not working its way through.

through the Senate. Musk's main point of contention seems to be around the electric vehicle provisions in the bill specifically. There was tax incentives to purchase electric vehicles

in the old law and this gets rid of that. Um, Musk is, is taking a broader view in his public commentary, um, talking about the additional, the debt impact from the spending bill, um, which obviously is opposed to the, the Doge goals that he was chasing not too long ago. So I think for, uh,

For Tesla as a stock, it's an interesting turning point, interesting next step in this journey. Tesla obviously has had wide swings so far this year, largely based on kind of the political fate of its CEO. There was...

The narrative being formed was that Musk's return to Tesla after his Doge adventure was good news for the stock and the stock was now going to be able to get back to normal. And then that CEO instantly picks a fight with the president that he had supported just a few weeks ago. So it's difficult to see where the branding situation goes from here. There had been talk that

Tesla, even though it faced a lot of backlash from Musk's political activities recently, that it was building in a Trump premium that fans of Donald Trump would rally to Tesla as a symbol of that side of the political spectrum. If Musk's going to take on Trump, then that premium might disappear, which I mean, maybe that just leaves Tesla as a normal company again, kind of

Xing out the situation that happened earlier this year, or maybe it leaves Tesla with fewer fans. Generally, it remains to be seen. Well, everybody knows the whole world's a stage. But did you anticipate last week? I asked you if you anticipated some of the tariff conversation movements there.

out of the courts, out of Trump. Did anybody expect or was this expected, this jawboning between Musk and Trump? Is this part of the drama? Is this part of the play? Any sense? Is there a clear-cut answer here or is this part of the play that we find ourselves in as the audience?

Just tracking the personalities, I think this is pretty predictable. You've got two people who think pretty highly of their opinion, two people who have their own base of power. They don't rely on each other in any way. Musk being the richest man in the world, Trump being president of the United States, they don't really need to be allies in any sense. They're also both people who don't mind a public spat.

who aren't known for their consistency in terms of their rhetoric and their goals and from moment to moment. So the idea that they would be aligned for a period and then be in opposition for a period, I don't think it's strange at all. I also wouldn't think it was strange if

they've made amends and were aligned again at some point in the future. So I don't see this necessarily as a permanent rift. I don't even know if this will have a lasting impact on Tesla. What might have a lasting impact though, is the actual provisions of the spending bill as it works its way through Congress, where that lands might affect Tesla's business. I think from an investor's point of view, you have to think about it as there being two Teslas

And one Tesla is the car company.

And that business is certainly in flux. There's a lot of uncertainty surrounding that. Obviously, there was some brand damage done. I'm especially thinking about in Europe where sales were down pretty sharply while Musk was doing Doge. Meanwhile, if you're losing the tax support you were getting for selling electric vehicles, that will impact the possibilities for sales moving forward. Tesla was already facing...

some market share pressure from just the proliferation of EVs and EV makers. The other Tesla though is the broader tech company. So autonomous vehicles, robotics, the other projects that Tesla likes to announce and then kind of work towards over time.

If you're still a big believer in that promise and those further horizons that really have nothing to do with the car company, except the car company is the launching pad for those future technologies, then it doesn't really matter what the spending bill has to say about EV support or what Musk's current association is with the president of the United States. You're betting for 5, 10, 15 years in the future, and you're betting on trillion-dollar markets

So I think it really comes down to who you are as an investor. Are you a believer in that long-term vision? Do you think that that's going to happen? Or are you buying into a car company, in which case I think the current situation becomes much more relevant? Do you have the sense that there's more strategy behind this move?

and this job owning and this public disagreement? Do you think from both sides, from both Trump and Musk, do you think that there's more strategy involved in this?

You know, you talk about a tale of two Teslas. Are there a tale of two Musks? Are there a tale of two Trumps in terms of what they're strategizing for behind closed doors and how they're making that known in front of people? There could be, certainly on Musk's part, if he had come to the conclusion or had been convinced by leadership at Tesla that the association with the administration was ultimately near-term losing, they'd already kind of

had the benefit they were going to get from that, or it was just becoming a pure distraction. There could be an upside to making a very obvious rake, not just, hey, I'm going to set this aside and go back to my day job, but literally saying, I am no longer part of this administration. In fact, now we have beef. I could see a strategic component to it. It's hard to say because...

Every action Musk does, you can interpret strategically, you can interpret as aggressive behavior from a person who has the resources to do whatever he wants. So I don't know. I think we're obviously separated from his thinking, so it's hard to make a definitive judgment. And I think in terms of if you're trying to guess from the outside looking in, it's kind of in the eye of the beholder. Eye of the beholder.

Something that has been a thread through these conversations and also through many conversations on our Investing Experts podcast has been this notion about

about AI and who the top players may be at the end of one year, two year, five years, and how the evolution of the AI conversation will advance. Some of those prominent names that we've seen in the past couple of weeks make a lot of market movements be up, be down for consecutive days, and that we've heard a lot of bullish sentiment and some bearish sentiment on our Investing Experts podcast.

Two names have been CoreWeave, which IPO'd a few months ago, and Broadcom. I think that those might be two specific stocks to highlight from the AI conversation.

Broadcom is releasing earnings after we speak today, so it's a bit preemptive, but I think still some insight to be had. And also CoreWeave, they've been down today but had repeated consecutive sessions of gains. How would you contextualize the moves in those two stocks? Do they deserve to be part of the same conversation? What are your thoughts there?

So Broadcom, as you point out, is reporting after the close today. We're recording this on Thursday. So the listeners are going to know more about the specific earnings than we are talking about it now. However, I will note that the stock has been up seven days in a row going into today, Thursday. It was up fractionally when I checked a little earlier. So if it finishes higher, that's eight days in a row. So that's a lot of...

a lot of optimism going into the earnings report. So I think that's,

speaking to the people of the future, it'll be interesting to see to what extent Broadcom was able to fulfill that promise going into it. And I think in terms of beyond the headline numbers for Broadcom, I think look to the commentary from executives about the buying behavior of the big players that Broadcom is associated with. So Apple, Google, those are the kind of clients that Broadcom has. And so if they have any sort of information

on where that is headed in the near term. I think that'll be interesting for the sector as a whole. And CoreWeave, I think, is interesting to keep track of just because it's the most prominent AI-driven IPO that's come out recently. So it's, I think, probably the early stages of a wave of companies that are going to come to market specifically

uh, meant to, or situated to appeal to AI investors. So this is next generation, uh, versus, you know, like stalwarts, like, um, like Nvidia who took advantage of the early wave of AI interest. And so core wave at last check was down about 16% as we're talking on Thursday. Um, but that's coming off of four days of gains, including a 25%, uh,

rise on Tuesday. This is all pretty much momentum play. The stock continues to build new post IPO gains. It's up

nearly 250% since the IPO. It's sitting at about one, just below 140. It IPO'd at 40 back in March. Another interesting aspect of CoreWeave that we've mentioned, and we talked about it before is it didn't have a lot of enthusiasm in that initial run. Like you'll see IPOs that, that pop significantly on the first day and then kind of drift lower or

or kind of move sideways. CoreWeave was a much more delayed response from the market. It came public in kind of a whimper and then built momentum. I think that is an interesting model to look at when you're looking at the way in which AI investors and tech investors generally are looking for new ideas. Speaking of tech investors, another...

stock that saw some movements that's peripherally related to this conversation is On Semiconductor. What would you say about that stock and its place in this conversation around tech stocks? Yeah. So the interesting On Semiconductor rallied earlier this week. It's had some executives speaking at a investor conference. They were very upbeat. They said a recovery is beginning and they think Q2 will be the bottom

I mean, the key to that obviously is to be a bottom. You've got to have trouble. That's happened in the past on semiconductor, has been facing an inventory glut, underutilized capacity. It wasn't well positioned for the coming tech market, the market that emerged. So executives are starting to get to the point where they think that turnaround is going to happen. I think it's noteworthy that they're

Main markets are the industrial and automated markets. So these are old economy kind of customers. So it underlines the idea that even within the tech space, you have to look at these companies as individuals and see what their markets are, who their customers are, what they're targeting, especially as you are looking to determine if there are other players who haven't received their AAC.

AI premium media. That ticket hasn't been stamped yet. So as you're looking around to the next NVIDIA, it's important to get under the hood of these companies and kind of see where they are situated in the market. Along with the tech sector, another thread that has been pretty consistent has been the retail space. And we've been talking about it for the past couple of weeks more prominently.

but a lot to be uncovered around the tariff conversation and a stock that reported this week that saw a nice rise post earnings was Dollar General. What would you say about

what they have going on, what their earnings showed. We had some recent news with China and the U.S. today. What would you say about the tariff conversations, the retail picture, and what Dollar General may have showed investors this past week? So Dollar General jumped 16% on Tuesday on earnings news. It's interesting just because retailers don't tend to move like that, especially kind of an old school one like Dollar General. So it's kind of a tech move for a non-tech company.

The company beat expectations, raised its forecast. It talked specifically about the tariffs, as you had pointed out, noting that it's still an uncertain situation, but it's taking steps to lower its reliance on China. The stock had dropped last August and March.

In the wake of a disastrous earnings report, it lowered guidance at that point and fell precipitously. It's still below where it was before that earnings report came out. But the gains recently, plus the improvement that it's been seeing in the past few months, has put Dollar General stock back to where it was for the first time since that August decline. I think if we're looking more broadly, a takeaway from it,

Whatever dislocation has come from the tariff discussion and wherever we land on the final tariffs, it might be healthy for these companies to diversify their supply chains to some extent. So a company like Dollar General going forward might

keep in mind that it faces these international threats, whether it be from trade wars or something like a COVID that would break down supply chains. And COVID is a bad example because it broke down all supply chains. But imagine if there was an outbreak of a COVID-like virus in a particular country that might affect some companies more than others. And so I think having a little bit more diversity might be helpful. So it might be a sign that

Retailers are adjusting to the new environment and adjusting to the new environment in such a way that the uncertainty becomes baked in. So they are creating supply chains that are more flexible, supply chains that aren't structured around any one particular country or any one particular region.

So you might end up with, even among these seemingly boring, for lack of a better word, stocks like Dollar General, you're getting to the point where they're becoming more nimble in response to these headline risks. And any other stocks you would add to the conversation around market movers this week and what it may portend for investors? Yeah.

Yeah, this one's a little old at this point, but I just thought it was interesting to point out Zscaler. It was up about 10% last Friday on earnings. It's also...

continued to rise since that rally. It's up again today as we're talking, and that would be five days in a row of gains. So it's seen a lot of follow-through after that post-earnings pop. The upside has also helped it reach new highs. It's up about 68% year to date and 84% since it hit its April lows. It's a cloud security company, and it's been boosted by the rollout of its new AI security

So it's just been a theme of the conversations we've been having the last few weeks of these next stages in the AI trade and the way that specific companies are applying AI to their products and the way they're interacting with customers.

And so it's just another example of a company that was able to leverage that kind of innovation and see some benefit from it on the stock price. And macro wise, what are you most focused on or what have you been most focused on this past week? And what do we have to look forward to? Obviously, as I mentioned, we had some news out of China today. I don't know how much that is figuring into things or it's still a wait and see part of things. But where are you at macro wise?

Yeah, I think the tariff conversations and the international situation are obviously going to be huge deciders in the near term kind of day-to-day trading. Like I said before, in the dollar general case, there are signs that companies are becoming more well-tuned to the uncertainty. So not just not being as reliant on

these headlines to boom around. So you might see the market start to ignore some of these headlines or have more muted responses to them, just with the understanding that they might not be indicative of major macro changes and just become kind of a bit of the background noise. Looking further ahead, next week we have CPI data coming out. This will be the latest in inflation. We talk about Trump versus Biden.

Musk earlier. So we also have Trump versus Powell. Trump's been putting a lot of pressure on Fed Chairman Jerome Powell to lower interest rates. Powell has obviously been quiet about it. He's not going to get into a public spat.

with the president. But there were rumors earlier this week that the pressure might get so much that Powell would be forced to resign. That hasn't happened yet. As I've said before, Powell is pretty good at ignoring the outside pressure for him to do things. Whatever criticisms people might have about Powell, they're not going to say that he's overly responsive to

either the market or public pressure. So if anyone is well situated to just sort of ignore pleas from the president of the United States, I think Powell is that person. Just checking the Fed generally, the meeting later this month, so in a couple of weeks from now, there's a 97% chance of no cut based on market trading at this point. Looking further along, there's a July meeting and there's a 69% chance that rates are going to stay the same through that meeting.

So there's a consensus building now that September is the most likely time for a cut, though there's a reasonable chance that there might be one in July. That keeps getting pushed back. Like earlier this year, I think the expectation was we'd be significantly lower on rates this

by now than we are. So there's still the expectation that rate cuts are coming, but over the course of 2025 so far, that prospect is getting further pushback based on the idea that inflation might be stickier than we thought. And so that makes the CPI report pretty important for sealing in that timing and that expectation, just because any sign that inflation has finally

tamed to the degree that the Fed doesn't have to think that hard about it would open the door for those rate cuts to come sooner. There's been some rumors about Powell resigning before his time is up. Do you have any sense or anything worthy to note around when Powell may or may not be out of his role?

I think that in a lot of ways, that's a personal decision on his part. The Fed chairmanship isn't a political position the way like a senator is or a governor. And I don't just mean that they're not directly elected. Typically, after becoming Fed chairman, former Fed chairs just go to academia or write books or

open up consulting businesses. I mean, Janet Yellen is an exception to that. She became treasury secretary, but by and large, Powell's not, he's not putting political capital in his back pocket for some later use, most likely. So I don't know how much political pressure a president could put on him unless Powell himself chooses to

you know, receive that, that pressure. But that said, I could see how it would weigh on somebody to constantly be in the spotlight and constantly have that. The burden of responsibility, again, Powell was,

Fed chair during COVID. And I can't imagine more, more pressure and more responsibility than that. So my, my general feeling, and again, this is completely outsider. I've, I have no information whatsoever about his personal feelings on this is just, this does not seem to be the peak of pressure that Powell has felt in his career so far. I just think this is

is most likely just roll off his back. That said, he's been chair for a while. It's a tough job. He might be getting to the point of his career where he'd rather, like I said, sit in a nice, cushy, endowed chair at a high prestige college and write books from there. So

It really is going to come down to where he stands and what his personal goals are. Maybe he starts leading meditation courses in Bali. Who knows? Sure. That actually sounds nice. I think we pitched that to him. That might make a decision. Honestly, look at what he's survived and somewhat thrived through. It might be nice for him to give lessons on how to maintain your sanity through meditation.

Some insane situations, I would say. Yeah. I mean, Fed chairmanship is a tough gig. I mean, I'm thinking about just going through the names of Greenspan to Bernanke to Yellen, Powell. There's never not a crisis. There's not a boring time to be Fed chair. And you're the public face of...

this institution that, that I think most people don't even understand, you know, the, the rate cut debate is a, is a good one. I mean, it's easy to, I mean, whatever you think he should be doing, it's pretty easy for politicians to always want lower rates. I mean, that's what everyone kind of, you know, it's like giving out candy to kids. Um,

You know, no kid's going to say, no, please, let's have some carrots first. And so, you know, you're kind of the bad parent in that way. Like, you're more likely in the situation to say, no, we have to have dinner first, and then we can have some dessert. So I don't know. It feels like a powerful job. I...

In that respect, I can see why people are drawn to it, but it also feels thankless and just difficult. Just like having to pick your words in public the way that a Fed share does and the way the Fed share

No other position has to do it. I mean, you can move markets just by, you know, leaving out a word that you had included in a similar phrase six months ago. And so it's just, there's just a lot of, you know, even moment by moment, like if he's in public and he's speaking, he has to literally think about every word that comes out of his mouth. Like he, he can't just sort of, you know, and, and in a, a public space,

sparring match with Donald Trump, you know, that's, it's a difficult position to be in because, you know, Trump can say whatever he wants. Meanwhile, um, Powell has to be extremely precise, um,

about what he's saying. And again, not that any Fed chair would ever publicly speak out against the sitting president. I can't remember something like that ever happening. If I was sitting down with a beer with Jerome Powell, I might tell him, yeah, maybe he'll do some meditation in Bali. That might be nice. Anything to highlight about what's coming up next week in terms of

earnings or some stock specific news? So a couple of big names coming out next week. We have Oracle. It's up about 44% since its April low. However, it's still below its 52 week high. It would need about another 50% rally, 15% rally from here.

to reach its previous 52-week high. It's a company that's gotten a lot of attention for the extent to which it's rolling out AI-powered products and using AI in its business. So more commentary from that.

Will be interesting. So this is kind of, I think in the Zscaler camp and that sort of camp of, of next wave AI winners. I mean, Oracle's already on that list, so that's already been talked about. But it'll be interesting to see where they stand. On the same theme, Adobe is reporting next week as well. It's up not as much as Oracle, but up 26% from Zephyr Lowe's. There has been concerns about the monetization of its, of its AI products.

So look for commentary about that, the extent to which the AI innovations that it's putting into place, how directly and when are those going to directly impact the bottom line. Online retailers and the online commerce space. So just on that front, Chewy is reporting next week. And so is Stitch Fix.

So if you've got an eye on that sector, I think those are going to be interesting stocks to talk about.