AAPL and BABA will bring AI to iPhones in China. (0:15) Fed's Powell in no hurry. (1:12) Corporate sentiment highest on record. (5:08)Show NotesEU aims for an AI continentMoomoo is an advanced investing trading platform that integrates real-time and comprehensive data with no commission on options trading, stocks or ETFs. New users from Seeking Alpha can exclusively enjoy an 8.1% APY* account opening bonus, up to 15 free stocks, and up to $300 in cash rewards. Terms & Conditions apply, visit moomoo.com for more details.
Chapter 1: What is the collaboration between Apple and Alibaba about?
Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis. Good afternoon. Today is Tuesday, February 11th, and I'm your host, Kim Kahn. Our top story so far. Apple is working with Alibaba to bring artificial intelligence features to iPhones in China.
The information reports that the two companies have submitted the AI features to China's cyberspace regulator for approval. Timing of the Apple intelligence launch in China was not immediately clear. However, the company said on its recent earnings call that its next round of language rollouts will be in April.
Chapter 2: What is the EU's Invest AI initiative?
In addition, the European Commission launched an initiative called Invest AI to mobilize 200 billion euros for investment in artificial intelligence, including a new European fund of 20 billion euros for AI gigafactories. The regulator said the large AI infrastructure is needed to allow open, collaborative development of the most complex AI models.
Commissioner Ursula von der Leyen said the unique public-private partnership akin to CERN for AI will enable all our scientists and companies, not just the biggest, to develop the most advanced, very large models needed to make Europe an AI continent.
Chapter 3: What did Fed Chairman Jay Powell discuss in his testimony?
Heading to Capitol Hill, Federal Reserve Chairman Jay Powell addressed the Senate Banking Committee in the first part of his semiannual testimony before Congress, still known to some of us Gen Xers and boomers as Humphrey Hawkins. Powell said the Fed does not need to be in a hurry to adjust its rates further now that its policy stance is significantly less restrictive than it was a few months ago.
He said. If the economy stays strong and inflation doesn't continue to move towards the Fed's 2% goal, "...we can maintain policy restraint for longer. But the central bank also needs to be attentive to risks on both sides of its dual mandate. If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we can ease policy accordingly," he said.
Chapter 4: How does the Federal Reserve's approach affect future rate changes?
Michael Rosner, managing director at Raymond James, says while Wednesday's CPI is an important input into the Federal Reserve's thinking on rates, we may be six to eight months away from the next rate cut, so it's premature to put too much weighting on what this data point means for the Fed.
Barring any major changes on near-term economic data, we don't think the Fed is going to pivot from its wait-and-see approach on rates.
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Chapter 6: How did Coca-Cola perform in its latest financial report?
Among active stocks, Coca-Cola is up after topping Q4 estimates and delivering organic sales growth across all regions. The beverage giant's top-line guidance was also above the company's long-term target and well above the peer average. Bank of America analyst Brian Spillane said the stronger-than-anticipated full-year 2025 guidance makes sense given the strong Q4 organic sales exit rate.
In our view, this magnitude of a premium in terms of relative multiple is warranted as KO's top-line management continues to fuel outperformance, he said. Shopify reported Q4 revenue that shot up 31.3% year-over-year to $2.81 billion. It was the company's seventh consecutive quarter of 25% or greater revenue growth when excluding logistics.
Looking ahead, Shopify sees Q1 revenue growing at the mid-20s percentage rate on a year-over-year basis. And Humana was among the biggest S&P decliners after it warned that its annual Medicare Advantage membership could decline about 10% in 2025 following a decision to exit several loss-making markets and counties.
The company reiterated its full-year outlook for 2025, implying roughly $16.25 of adjusted earnings per share, which stood almost unchanged from 2024, but fell short of the $16.91 per share in the consensus. In other news of note, Archer Aviation announced that it has raised $300 million. BlackRock was one of the leading institutional investors that participated in the financing round.
The new investment has seen us further reinforcing the company's strong financial position and strategically positioning it to accelerate the development of its electrical, vertical takeoff and landing hybrid aircraft platform for the defense market and beyond. The new investment raise brings Archer's total liquidity position to about $1 billion.
Archer also released certain preliminary estimated financial results for Q4, reporting that its GAAP operating expenses will be within the range of $120 to $140 million, and total non-GAAP operating expenses are in line with its guidance range of $95 million to $110 million.
And in the Wall Street Research Corner, B of A's predictive analysis team says corporate sentiment is at the highest level since it began recording that in 2004. The team analyzes earnings call transcripts to calculate sentiment for the S&P 500 companies.
They use the Loughran McDonald's Financial Dictionary to calculate sentiment scores, which takes into account the number of unique positive words minus the number of unique negative words in earnings calls.
Oshan Huang, security equity and quant strategist, notes the indicator has led the S&P 500 EPS year over year, with a 69% correlation with a quarter lead, suggesting a continued upcycle in earnings. Optimism jumped to its highest level since Q1 2021, with 52% of the companies so far expressing optimism during their earnings calls compared to 46% last quarter.
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