The Silver Linings of a Market Correction, Robotaxis and… Google’s Soft Spot for HubSpot
Welcome to this week's Market Pulse, your 5-minute update on key market news and events, with takeaways and insights from the Sidekick Investment Team.?
Our three stories this week:
1. The Silver Linings of a Market Correction
2. Robotaxis
3. Google’s Soft Spot for HubSpot
Below are the headlines. If you'd like to read the longer articles in full, you can do so in the Sidekick app, which you can download here (available on both iOS and Android).
It’s important to note that the content of this Market Pulse is based on current public information which we consider to be reliable and accurate. It represents Sidekick’s view only and does not represent investment advice - investors should not take decisions to trade based on this information.
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1) The Silver Linings of a Market Correction
"Boring" isn't usually a label anyone wants to hear, but for the Fed Chair, juggling maximum employment and stable prices, a bit of boredom might be a welcome sign of a job well done. Wednesday’s testimony before the Senate Banking Committee [1], typically a platform for signalling policy shifts, resulted in little market reaction and hinted at a period of calm ahead.
But the calm was short-lived. On Thursday, signs of cooling inflation [2] fuelled speculation of a potential rate cut as early as September, prompting investors to shift away from the perceived safety of big tech. Bond yields tumbled and investors pivoted away from tech megacaps into riskier assets. The Russell 2000, representing smaller-cap companies significantly outpaced the Nasdaq 100 by 5.8 percentage points, the largest margin since November 2020.?
With the large indexes flashing red you’d be forgiven to think the CPI reading was bad news for stocks. Yet in reality, while the S&P 500 fell nearly 1%, almost 400 of its shares went up [3]. Of course, a one-day movement does not a trend make but we are encouraged by the rotation.
Specifically, we view the broadening market leadership beyond the Magnificent 7-AI - Megacaps concentration seen earlier this year as a positive sign. If this trend continues in the coming weeks and months, it will confirm a healthier and more sustainable market expansion in the long run.?
2) Robotaxis
Tesla Inc. has reportedly delayed the unveiling of its highly anticipated robotaxi to October, according to Bloomberg [4]. This two-month postponement is intended to allow teams more time to build additional prototypes and refine the design.
CEO Elon Musk had initially set the unveiling for August 8th, and the anticipation surrounding the event had fuelled an 11-day rally in Tesla's stock price, adding over $257 billion to its market capitalisation. However, following the news of the delay, shares tumbled 8.4% on Thursday, marking the steepest decline since January.
领英推荐
The bull case for Tesla rests on the belief that autonomous driving is a revolutionary, winner-take-all technology, and Tesla is poised to dominate. Tesla's data advantage, talent, computing resources, and Elon Musk's vision position it to win not only in autonomous driving but potentially in broader artificial intelligence applications.?
Conversely, bears argue that even if one company gains an edge, it will be difficult to sustain in a highly competitive industry, leading to price erosion similar to other automotive innovations like electric windows and airbags.
Note: We hold Tesla in Flagship.
3) Google’s Soft Spot for HubSpot
HubSpot shares took a hit on Wednesday amid news that Google's parent company, Alphabet, had reportedly abandoned acquisition talks. Meanwhile, Google's stock soared to a new all-time high in intraday trading. According to Bloomberg [5], the two companies never reached a point of detailed discussion about due diligence.
HubSpot is a leading software-as-a-service provider, similar to Salesforce but tailored for small and mid-sized businesses, offering a user-friendly platform for marketing, sales, customer service, and operations[6].
The potential merger was seen as promising in the field of generative AI, where a combined Google-HubSpot could have achieved significant synergies. Beyond familiar applications like Microsoft 365 Copilot and code generation, customer support, marketing, and sales are emerging as key areas for AI integration.
While HubSpot boasts a strong CRM platform, its AI solutions have been slow to gain traction with customers, echoing a similar sentiment observed with Salesforce's offerings. Meanwhile, a growing number of businesses are opting for DIY AI solutions using cloud infrastructure providers, building custom-built support bots or automation tools for niche use cases.
Google, on the other hand, possesses robust AI infrastructure but has struggled to penetrate the commercial application market. This is in contrast to Microsoft, whose dominance with Office 365 and Teams has provided a springboard for the successful launch of Microsoft 365 Copilot.
Note: We hold Alphabet and Salesforce in Flagship.?
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References
Notices
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