OP Wire 1/30 (OP – Lite)

By Steve

U.S. stock futures climbed higher today following fresh earnings reports from major tech players, including Microsoft (NASDAQ: MSFT) and Meta Platforms (NASDAQ: META). Despite concerns surrounding a low-cost AI model from China’s DeepSeek, executives at these companies doubled down on AI spending, reinforcing their commitment to long-term growth in the sector. Meanwhile, Tesla (NASDAQ: TSLA) outlined plans to reduce costs and launch a more affordable electric vehicle to counter slowing demand. On the monetary policy front, the Federal Reserve opted to keep interest rates steady, taking a wait-and-see approach on future cuts.

1. Stock Futures Climb as Market Digests Earnings & Fed Comments

After a turbulent start to the week, U.S. stock futures rebounded as investors analyzed key earnings reports and the Federal Reserve’s latest policy stance.

As of early Thursday morning:

Dow futures gained 162 points (+0.4%)
S&P 500 futures climbed 31 points (+0.5%)
Nasdaq 100 futures jumped 168 points (+0.8%)

Wednesday’s session saw markets slip as the Fed held rates steady and signaled no immediate plans for cuts, pushing bond yields higher and weighing on equities. Tech stocks, particularly Nvidia (NASDAQ: NVDA), led the decline, with Nvidia falling 4.1% amid concerns that DeepSeek’s budget AI model could challenge the AI spending spree among U.S. tech giants.

2. Microsoft & Meta Defend AI Spending

Despite concerns about the necessity of massive AI investments, Microsoft and Meta’s leadership reaffirmed their commitment to AI infrastructure.

Microsoft CEO Satya Nadella stated that AI costs are decreasing over time, supporting long-term growth.
Meta CEO Mark Zuckerberg emphasized that heavy capital expenditures on AI will be a “strategic advantage”over the competition.

While Microsoft’s stock dipped in after-hours trading due to weaker-than-expected guidance for its Azure cloud business, Meta shares surged on stronger-than-expected revenue. However, the company warned that next-quarter sales might not meet expectations.

3. Tesla Targets Lower Costs & Affordable EV Rollout

Tesla continues its push for affordability, announcing plans to roll out a low-cost EV in early 2025 as it fights declining demand.

Key earnings takeaways:

Profit margins fell short of Wall Street estimates (13.59% vs. expected 16.2%).
Average production costs hit an all-time low due to falling raw material prices.
Tesla plans to test a paid autonomous vehicle service in June, positioning AI-driven self-driving technology as a future revenue driver.

Despite these cost-cutting measures, Tesla’s decision not to reiterate its 20-30% sales growth projection for 2025 raised some eyebrows among analysts.

4. Apple (AAPL) Reports After the Bell Today

Apple’s earnings are next up, with investors watching closely for:

iPhone sales trends, especially in China
Updates on AI-integrated features like Apple Intelligence
Spending on AI infrastructure compared to its Big Tech peers

Apple’s cautious AI approach contrasts with Microsoft and Meta’s aggressive spending. Analysts believe Apple’s focus on consumer-facing AI gives it an edge without requiring billions in AI-related capital expenditures.

5. Fed Holds Rates Steady, Signals Patience on Cuts

As widely expected, the Federal Reserve left interest rates unchanged at 4.25%–4.50%. Chairman Jerome Powell indicated the Fed is in no rush to cut rates unless inflation drops further or economic conditions change significantly.

Powell also pushed back against political pressure from the Trump administration, stating that the Fed’s decisions are based purely on economic data.

Meanwhile, the European Central Bank (ECB) is expected to cut rates today in response to slowing Eurozone growth, marking its fifth cut since 2024.

What’s Next?

Apple (AAPL) reports earnings today after the bell—expect insights on iPhone sales, AI plans, and competition in China.
What’s Next Wall Street Show airs Friday! Don’t miss the latest market insights, including key earnings reactions and expert trading tips.
Traders in OP Chat are scalping WMT puts and rolling gains into June put positions and INTC LEAPS—a strategy similar to the BABA play that delivered strong returns.

Stay focused, stack your gains, and see you in chat!

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