Intel\u2019s earnings are significant for two reasons. They suggest the personal-computer market is rebounding, and they signal that investors may not punish AI laggards after all.<\/p>\n
In a key week during which some of the big technology companies have updated on earnings, the chip maker reported a surprise second-quarter profit, and impressed with its third-quarter revenue outlook. The stock surged after hours.<\/p>\n
While management extolled the potential growth from artificial intelligence, Intel has been slower than some of its peers, most notably Nvidia, in joining the movement.<\/p>\n
Fortunately for Intel, a key takeaway from tech earnings season so far is that it\u2019s not all about AI.<\/p>\n
The market has remembered it can also judge the performance of businesses by their fundamentals, and near-term outlooks. The AI boom is undoubtedly here, but the serious benefits lie in the future.<\/p>\n
The world\u2019s energy giants encountered something similar a few years ago. While pouring billions into renewable energy projects\u2014positioning themselves to dominate the industry\u2019s future\u2014they also had to keep profits going strong in the meantime.<\/p>\n
It\u2019s less of an issue for the early AI leaders, such as Microsoft and Nvidia, for which the tangible benefits of the technology are much closer to the present. Although, even Microsoft said growth in its AI services will be weighted toward the second half of the fiscal year that began in July.<\/p>\n
The wait will be longer for those companies that have been slightly slower out of the blocks. <\/p>\n
That all bodes well for Apple, as well as Qualcomm and AMD, set to report earnings next week. <\/p>\n
Apple has been less forthcoming than others on its AI strategy, but investors seem to be reacquainting themselves with fundamentals, which is good for the tech giant. The PC market recovery will also help Apple, and other chip makers.<\/p>\n
\u2014Callum Keown<\/em><\/p>\n *** Join John Howland, vice president and head of the McCloskey Business Unit at OPIS Energy Insights today at noon when he hosts a panel to look at the role of artisanal cobalt mining in the supply chain for batteries and efforts to address concerns about the working conditions for miners. Sign up here.<\/em><\/p>\n Try your hand at the Barron\u2019s crossword puzzle and sudoku games, now running daily along with a weekly digital jigsaw based on the week\u2019s cover story. To see all puzzles, click here. <\/em><\/p>\n The Bank of Japan held its short-term interest-rate target at -0.1% but a significant tweak to its language is being seen by investors as a sign of tighter monetary policy ahead. It was a surprise and moved markets because the BOJ has long been a global outlier in keeping monetary policy ultra loose.<\/p>\n What\u2019s Next:<\/strong> The potential implication for U.S. assets is that Japanese investors may view the yields on domestic bonds as now being more attractive, and therefore alter their positions in U.S. fixed-income assets.<\/p>\n \u2014Callum Keown<\/em><\/p>\n The U.S. economy grew at a 2.4% annual rate in the second quarter, faster than anticipated, but economic activity wasn\u2019t quite as robust as the headline number suggests, given decelerating growth in consumer spending. Food and beverage companies are confirming a trend of weakening sales.<\/p>\n What\u2019s Next:<\/strong> Ernst & Young\u2019s consulting strategy arm\u2019s chief economist Gregory Daco sees more challenges to consumer spending trends this year, including the resumption of student loan repayments and rising debt. He predicts consumer spending will rise 1.9% in 2023, and show muted growth of 0.8% in 2024.<\/p>\n \u2014Megan Leonhardt, Sabrina Escobar, and Janet H. Cho<\/em><\/em><\/p>\n \n Southwest Airlines What\u2019s Next:<\/strong> Southwest is also negotiating contracts with its flight attendants and pilots, after rival airlines Delta,<\/span> \u2014Callum Keown and Janet H. Cho<\/em><\/em><\/p>\n Banking regulators released long-awaited plans to raise overall capital requirements by about 19% at the largest U.S. banks. The plan would move regional banks such as What\u2019s Next:<\/strong> After the FDIC approved the plan, the Federal Reserve voted to propose the new rules and open them to public comment through the end of November. If regulators vote again to complete the changes, they would be implemented in phases between 2025 and June 2028.<\/p>\n \u2014Janet H. Cho<\/em><\/em><\/p>\n There\u2019s more turnover at struggling retailer and meme stock investor favorite What\u2019s Next:<\/strong> GameStop, which reports July-quarter results in September, is expected to report another loss roughly in line with the April quarter and revenue of $1.14 billion, which would be about the same as the July quarter last year, according to FactSet. <\/p>\n \u2014Liz Moyer<\/em><\/em><\/p>\n Do you remember this week\u2019s news? Take our quiz below to test your knowledge. Tell us how you did in an email to thebarronsdaily@barrons.com.<\/em><\/p>\n 1. Elon Musk is getting rid of the brand Twitter less than a year after he spent $44 billion to buy the social media platform. He has already replaced the blue bird logo on the platform with what logo?<\/p>\n a. 420<\/p>\n b. X<\/p>\n c. Y<\/p>\n d. None of the above<\/p>\n 2. Banc of California made an offer to buy this regional bank for just over $1 billion in a deal that could be a harbinger of a regional bank merger wave as smaller institutions look to combine amid tighter regulation.<\/p>\n a. Western Alliance Bancorp<\/p>\n b. Zions Bancorp<\/p>\n c. Comerica<\/p>\n d. PacWest Bancorp<\/p>\n 3. United Parcel Service management reached a tentative agreement with its 340,000 unionized workers represented by the International Brotherhood of Teamsters. What\u2019s in the agreement, which still needs to be ratified?<\/p>\n a. Pay raise of $7.50 an hour over five years<\/p>\n b. Air-conditioned vehicles<\/p>\n c. Martin Luther King Day as a holiday<\/p>\n d. All of the above<\/p>\n 4. Gross domestic product rose by a greater than expected amount in the second quarter, fueled by consumer spending, nonresidential fixed investment, state and local government spending, private inventory investment, and federal government spending. How much did GDP rise?<\/p>\n a. 2.4%<\/p>\n b. 2.6%<\/p>\n c. 2.8%<\/p>\n d. 3.0%<\/p>\n 5. A group of big auto makers has banded together and plans to spend a collective $1 billion to build out the electric vehicle fast-charging network in North America, to encourage more drivers to buy EVs. How many chargers are they planning to build in urban areas and along major highways?<\/p>\n a. 10,000<\/p>\n b. 20,000<\/p>\n c. 30,000<\/p>\n d. 40,000<\/p>\n Answers: 1(b); 2(d); 3(d); 4(a); 5(c)<\/p>\n<\/h4>\n
***<\/h4>\n
\n <\/span>
\n Bank of Japan Holds Rates, But Makes Policy Shift<\/h2>\n\n
***<\/h4>\n
GDP Rose Faster Than Expected, But Consumers Feel Pinched<\/h2>\n
\n
\n which beat expectations, said it is considering whether to add more discounted menu options as lower-income customers trade down to cheaper items and buy fewer combination meals<\/strong>. The burger chain also signaled that second-half sales would slow. <\/p>\n<\/li>\n***<\/h4>\n
Southwest to Revise Schedule as Travel Habits Shift<\/h2>\n
\n will revise its flight schedule next year amid a sluggish rebound in business travel. It will focus more on longer leisure routes and less on short and early-morning or late-night flights. Shares sank Thursday after it forecast weaker third-quarter revenue per passenger mile.<\/p>\n\n
\n Alaska Air
\n sees flat to low single-digit revenue growth in the third quarter, suggesting travel demand is slowing. <\/p>\n<\/li>\n
\n delivered a strong earnings beat and hiked its full-year guidance 33% amid white hot demand for cruising<\/strong>. Short-notice bookings and onboard revenue are also strong.<\/p>\n<\/li>\n
\n Carnival Corp.
\n shares are up 126%, and
\n Norwegian Cruise Line Holdings
\n stock is up 74% so far this year.<\/p>\n<\/li>\n<\/ul>\n
\n United,<\/span><\/p>\n
\n and
\n American
\n offered their pilots big pay bumps. <\/p>\n***<\/h4>\n
Big Banks Face Higher Capital Requirements Under New Proposal <\/h2>\n
\n Regions Financial
\n and
\n KeyCorp
\n under the stringent requirements that had once been applied just to the biggest banks.<\/p>\n\n
\n American Express
\n and
\n Morgan Stanley
\n that rely on types of fee income that the new rules target, The Wall Street Journal reported.<\/p>\n<\/li>\n***<\/h4>\n
More Turmoil in GameStop\u2019s Executive Ranks as CFO Leaves<\/h2>\n
\n GameStop,<\/span>
\n which said CFO Diana Saadeh-Jajeh resigned, effective Aug. 11. The move comes one month after GameStop fired its CEO Matt Furlong as it reported a net loss for its April quarter.<\/p>\n\n
***<\/h4>\n