Top Stock Market Highlights of the Week: Tesla, Advanced Micro Devices and China Banks
Welcome to this week’s edition of top stock market highlights.
Tesla (NASDAQ: TSLA)
Tesla’s next innovation is a two-door robotaxi that has no steering wheels or pedals.
This new product was unveiled recently by CEO Elon Musk at an event on October 10.
He believes that this vehicle will represent the path towards long term growth for the electric vehicle (EV) manufacturer.
These robotaxis, also called “Cybercabs” will commence production in 2026 and be available for customers to purchase for less than US$30,000.
They will also cost just US$0.20 per mile to operate, according to Musk.
His long-term plan is to operate a fleet of Cybercabs that passengers can hail through an app.
Existing Tesla owners can also make money on the app by listing their vehicles as robotaxis.
Investors, however, are doubtful as to whether Musk can deliver on this timeline.
Back in 2019, Musk had confidently proclaimed that Tesla would have operational robotaxis by 2020, which did not materialise.
The company is at risk of reporting its first-ever year-on-year decline in deliveries as incentives have failed to spur buying interest in its EVs.
By cutting prices, Tesla is also sacrificing profit margins just to drive up sales volume.
Tesla intends to market its Cybercabs as Full Self-Driving (FSD) but investors will be watching to see the success of this technology.
Musk needs to display a prototype and provide plans on how its Cybercabs can overtake rivals such as Alphabet’s (NASDAQ: GOOGL) Waymo, which already operates uncrewed robotaxis in several US cities.
For now, Tesla is relying only on cameras and artificial intelligence (AI) to achieve FSD to help keep costs low.
However, FSD technology has yet to be properly commercialised, with two fatal accidents involving the technology denting investor confidence.
Advanced Micro Devices (NASDAQ: AMD)
Advanced Micro Devices, or AMD, has announced its latest new AI chip called Instinct MI325X that should directly challenge Nvidia’s (NASDAQ: NVDA) dominance.
Nvidia is well-known for having more than 90% control of the data centre AI chip market with its graphics processing units (GPUs).
The new AMD AI processor, which was presented at Computex 2024 in Taipei, should threaten Nvidia’s upcoming Blackwell chips.
It’s good news for customers, though, as this new product could signal healthy competition which could translate into lower overall prices.
AMD is releasing its MI325X chip to cash in on an AI chip market that is projected to be valued at US$500 billion by 2028.
This new chip will go into production before the end of 2024.
AMD’s CEO, Lisa Su, has resolved to increase its spending on AI chip design and this new release is part of a longer-term plan to introduce new chips every year.
Investors can expect the MI350 to be released next year and the MI400 chip in 2026.
Other than developing new cutting-edge chips, AMD also wants to shift AI developers away from Nvidia by improving its software to make it easier to transition to AMD’s accelerators.
Developers would have more options to work with either AMD or Nvidia for content creation and predictive modelling.
China banks
There’s bad news for Chinese savers.
China banks look set to cut deposit rates on around RMB 300 trillion of deposits this week after the Chinese government’s slew of stimulus policies further dents their profitability.
Major banks such as the Industrial & Commercial Bank of China (HKSE: 1398) and China Construction Bank (HKSE: 0939) plan to lower the rates on some of their deposit products.
The interest rate on a one-year time deposit may fall by at least 0.2 percentage points (ppt) while those on longer tenors may come down by at least 0.25 ppt.
These cuts will represent the second such reduction this year and follows the People’s Bank of China’s (PBOC) move to slash policy rates to lower borrowing costs and help stimulate the economy.
Although China’s banks have leeway in setting their own rates, they are usually guided by the central bank’s moves as the PBOC will set a ceiling and floor for rates.
Chinese banks first implemented a deposit rate cut back in 2022 and followed this up with three more cuts last year in a bid to boost lending.
Even with these reductions, the banking sector saw net interest margins decline and hit a record low of 1.54% at the end of June 2024.
This level is lower than the 1.8% threshold needed for these banks to maintain a reasonable level of profitability.
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Disclosure: Royston Yang owns shares of Alphabet.
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