Finimize - 🎵 Chips meet AC/DC

Apple unveiled Project ACDC | UBS went above and beyond |
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Today's big stories

  1. Apple’s been busy whipping up a chip to power AI software, hoping to leave investors thunderstruck with Project ACDC
  2. The inflation puzzle is still muddying the markets – Read Now
  3. UBS posted its first win since snapping up Credit Suisse

Rock ‘n’ Roll

Rock ‘n’ Roll

What’s going on here?

Apple's been cooking up its own AI chip for data center servers, and paying homage to music’s hall of fame at the same time.

What does this mean?

MacBooks, iPhones, iPads, and Apple Watches hold a space on many of the world’s bedside tables. See, in the last ten years, Apple has risen to the top when it comes to crafting chips for these devices. And now, the brand is moving into the server scene – namely, chips for data centers. According to insiders, Project ACDC – or Apple Chips in Data Center – will focus on the servers that run AI models. Project ACDC has already been bubbling away for a few years, but when the curtain will go up on the finer details is anyone’s guess. Apple has teased plenty of AI goodies ahead of its Worldwide Developer Conference in June, but it’s still plotting with TSMC about producing these chips – and whether the duo has nailed the formula yet is up in the air.

Why should I care?

Zooming out: Riding the wave.

Devout followers of Apple are getting antsy. Rivals like Microsoft have been snagging headlines with bold AI moves, and their share prices have thanked them for it. But – finally able to play its ace – Apple might just steal the spotlight with its new server chip. The company is the master of custom silicon, after all, having designed its own chips for iPhones and iPads since 2010.

The bigger picture: Apple’s hoisting the sails.

The iPhone might seem like the Titanic – too big to fail. Yet, sales have been sluggish recently, and Apple has also been trying to navigate the choppy waters of increasingly attentive regulators in Europe and the US. Still, the firm’s $110 billion share buyback announced last week might be a buoy for investors – as would a super slick new product, particularly in the world of AI.

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Analyst Take

How The Inflation Riddle Could Affect Markets

How The Inflation Riddle Could Affect Markets

Central banks still aren’t confident enough to pull the trigger on interest rate cuts, but financial markets are behaving as if the inflation fight has already been won.

While higher inflation has historically weighed on the performance of both bonds and stocks, the situation today goes against those precedents.

So let’s take a look at what’s making the inflation topic less than straightforward, and what that means for central banks’ decision-making.

That's today's Insight: here’s how the inflation puzzle is complicating interest rates.

Read or listen to the Insight here

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Credit’s Sweet

Credit’s Sweet

What’s going on here?

UBS posted better-than-expected profit for the first quarter of this year, the first positive results of the Swiss company’s Credit Suisse era.

What does this mean?

UBS will be grinning from ear to ear after it announced that it made $1.8 billion in profit last quarter – more than double what analysts expected. That’s a nice break from the two consecutive losses that the Swiss lender ended up with in previous quarters, marking the first quarterly profit since UBS snapped up Credit Suisse. Newfound frugality will have helped, too: the company slashed $1 billion through cost-cutting measures, with $1.5 billion more to come this year. And with UBS’s capital ratio – the percentage of a bank's capital to its risk-weighted assets – coming in better than predicted, investors sent the stock up 8% after the news.

Why should I care?

For markets: Rallying ahead.

European banks have been on a hot streak this year, rallying more than 20%. That’s mainly because investors expect the economy to improve, and are enticed by banks’ track record of rewarding shareholders with hefty buybacks and dividends. And yet, the sector is still trading for cheap based on next year’s estimates.

The bigger picture: Variety is the spice of life.

All eyes are on the US when it comes to tech and AI. That said, some believe European and Asian shares look more attractive, because of their cheaper valuations and the regions' more manageable inflationary pressures. It helps that many expect European interest rates to be trimmed before US ones. And remember, Warren Buffett said “to be fearful when others are greedy and to be greedy only when others are fearful.” So maybe, it’s worth looking elsewhere when others are laser-focused on the states.

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💬 Quote of the day

"The sun, too, shines into cesspools and is not polluted."

– Diogenes (a Greek philosopher)
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🚧 Commodity prices are stuck

Last summer, central banks were gearing up for their victory laps, with their matchup against inflation appearing all but won.

In the US, for example, a heavy barrage of interest rate hikes had flattened consumer price rises to a yearly pace of just 3% in June 2023, compared to 9.1% in June 2022.

But then, well, things kind of stopped in their tracks, and commodities were a big part of the reason why.

Read The Quicktake

🎯 On Our Radar

1. Dishing the dirt. Your daily caffeine habit is not good for the planet.

2. AI might be savvy, but it's far from infallible. If you want to invest with the tech, make sure you do it right.*

3. Deep down. Inside the dangerous world of underwater welders.

4. You should take crypto protection seriously. Here’s what makes the OG blockchain safer than Fort Knox.*

5. Pain in the neck. A chiropractor fulfilled a lifelong dream of working on a giraffe.

*See Streetbeat's disclosures.

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