Neuralink, the neurotechnology company founded by Elon Musk, has reached a significant milestone by successfully implanting its brain chip into a second human participant. 

This advancement in their early human trials represents a major step forward in merging human cognition with technology. 

Although specific details about the surgery’s timing and the patient’s identity have not been disclosed, the development is generating considerable excitement.

In a recent interview on the Lex Fridman podcast, Musk provided an update on the progress of the trial, revealing that 400 out of the 1,024 electrodes implanted in the second patient’s brain are currently functioning. 

Musk expressed cautious optimism about the results: “I don’t want to jinx it, but it seems to have gone extremely well. There’s a lot of signal, a lot of electrodes. It’s working very well.” 

The effectiveness of these electrodes is crucial as they are designed to interpret brain signals and translate them into actionable commands.

The primary goal of Neuralink’s brain chip is to assist individuals with spinal cord injuries by enabling them to control electronic devices solely through thought. 

This breakthrough technology promises to enhance the quality of life for those with severe mobility impairments, potentially allowing users to play video games, browse the internet, and operate various electronic devices without physical interaction.

Following FDA approval, Neuralink began accepting applications for the second participant in its trials in May. This approval marked a pivotal moment for the company, transitioning from animal testing to human trials.

‘Super easy’ surgery

Nolan Arbaugh, the first recipient of the Neuralink implant, has shared his positive experience with the device. 

He described the surgery as “super easy” and demonstrated how the implant allowed him to control a laptop cursor, operate an on-screen music player, and play complex games such as chess and Civilization VI. 

This demonstration highlighted the technology’s potential to restore a degree of independence to individuals with paralysis.

Arbaugh discussed the impact of the implant during a podcast with Musk and Fridman. 

He noted that the device enables him to perform tasks on a computer screen merely by thinking about them, thus reducing his reliance on caregivers. 

Although Arbaugh faced some complications shortly after the surgery, including the retraction of a few electrodes, these issues were addressed by modifying the implant’s algorithm to enhance sensitivity. Future implants will feature threads placed deeper into the brain to minimize similar problems.

Ethical and regulatory challenges

Neuralink has encountered controversy, particularly regarding its animal testing practices, which have been subject to federal investigations. 

Despite these challenges, there is significant interest in the company’s trials, with over 1,000 volunteers reportedly signing up for the second surgical trial.

Musk has ambitious plans for the future, aiming to implant Neuralink’s chips in up to eight more patients by the end of 2024. 

This goal reflects the company’s confidence in navigating the technical and regulatory obstacles that lie ahead.

Neuralink’s progress in brain-computer interface technology represents a groundbreaking development in medical science. 

While the road to widespread adoption is filled with challenges, the potential benefits for individuals with severe disabilities are substantial. As Neuralink continues its trials, the world watches with anticipation for a future where technology seamlessly integrates with human cognition to overcome physical limitations.

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Apple recently made a significant entry into the generative AI race, unveiling its Apple Intelligence at the WorldWide Developer Conference in June. 

This move marked a pivotal moment for the tech giant, leading to a rise in its share price and pushing its market cap to a staggering $3.5 trillion at one point.

Despite this milestone, Apple has often been late in adopting new features. However, its dominant market position and unique ecosystem allow it to introduce features on its preferred timeline. This trend continues with its generative AI offerings, which are currently lagging behind competitors.

Apple’s AI Vision

Apple’s approach to AI is distinct, not following the guidelines set by OpenAI. Instead, Apple Intelligence is charting its path, which raises questions about the potential impact of its delayed entry into the AI space.

Historically, Apple’s interfaces have been well-received by users. The upcoming AI interface, Voice, aims to act as a private secretary, assisting users in managing their data, activities, and daily lives. 

One notable feature, Priority Notifications, set to launch this fall, will help users schedule tasks for the following day, ensuring they never miss a meeting or important event.

Apple Intelligence aims to deliver a comprehensive AI experience, incorporating voice, images, videos, and other generative AI functions using the user’s data. 

In line with these advancements, Apple plans to enhance Siri’s capabilities and is in discussions with Google about licensing the Gemini AI models for the iPhone 16, opening new possibilities in essay writing and image creation.

Apple CEO Tim Cook expressed his enthusiasm, stating, “We’re thrilled to introduce a new chapter in Apple innovation. 

Apple Intelligence will transform what users can do with our products — and what our products can do for our users.”

Falling behind competitors

In the second quarter of 2024, Apple’s market share dipped from 16% to 14%, amid fierce competition from tech giants like Huawei and Samsung. This decline pushed Apple from third to sixth place in the Chinese smartphone market.

Huawei’s shipments surged by 41% year-over-year, primarily driven by the launch of its Pura 70 series in April. Huawei claims to have achieved in 10 years what took other regions, like the United States and Europe, 30 years to accomplish in areas like operating systems and artificial intelligence.

Similarly, Samsung’s new Galaxy S24 series boasts innovative AI features, including Circle to Search, Live Translation, and Generative Edit to Galaxy AI.

While Apple is undoubtedly working hard on its AI initiatives, it remains to be seen if these efforts will be enough to regain its lost market share. Apple’s products, although often late to the market, are known for their high quality. However, investors are wary of the company’s lag in the AI race.

Impact on Buffett’s investment

Warren Buffett’s Berkshire Hathaway recently reduced its stake in Apple, raising questions about the reasons behind this decision. Although the exact rationale remains undisclosed, it is plausible that Apple’s slow progress in AI, coupled with its declining market share, may have influenced Buffett’s move.

The recent drop in market share and the intense competition from rivals highlight the challenges Apple faces. As the company continues to develop its AI capabilities, the tech world is keenly watching to see if Apple can reclaim its position as a market leader. Only time will tell if Apple’s AI innovations will be enough to convince investors like Buffett to maintain their confidence in the tech giant.

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The US stock market faced significant declines as trading entered its final hour on Monday, continuing a recent trend of heightened volatility.

The S&P 500 fell by 3.3%, with its losses fluctuating throughout the day.

During the morning session, the index was down as much as 4.3%, but by lunchtime, it had managed to reduce its decline to approximately 1.8%.

S&P 500 and Nasdaq Composite lead declines

The S&P 500’s drop of 3.3% reflects the broader market’s struggles, but the technology-heavy Nasdaq Composite faced even more severe losses.

The Nasdaq was down 3.8% as tech stocks, which have been under pressure in recent days, resumed their sell-off. Additionally, the small cap-focused Russell 2000 index also experienced a sharp decline, falling by 3.7%.

Treasury yields add to market volatility

Adding to the market’s turbulence, the yield on the policy-sensitive two-year Treasury note saw notable fluctuations. It ended the day fractionally higher at 3.89%.

Overnight, the yield had dropped to a 16-month low but managed to climb as high as 3.95% in the afternoon. This reversal in Treasury yields underscores the uncertain environment investors are navigating.

Market sentiment and future outlook

The persistent volatility in the US stock market has been driven by a mix of economic data, geopolitical concerns, and investor sentiment.

The morning’s steep decline followed by a partial recovery and then another downturn indicates a market struggling to find direction amid conflicting signals.

Investors are grappling with various factors, including the Federal Reserve’s monetary policy stance, inflationary pressures, and potential economic slowdowns.

The tech sector, which had previously been a significant driver of market gains, is now experiencing pronounced sell-offs, contributing to broader market instability.

Impact on investors and strategies

For investors, the current market conditions necessitate a careful reassessment of strategies. Diversification remains crucial, as sectors and asset classes react differently to economic shifts.

Tech stocks, which have shown vulnerability, might require cautious revaluation, while bonds and other safer assets could offer some stability amidst the volatility.

As trading concluded on Monday, the US stock market’s sharp declines highlighted the ongoing volatility and uncertainty facing investors.

With the S&P 500 down 3.3%, the Nasdaq Composite falling 3.8%, and Treasury yields fluctuating, market participants are bracing for continued unpredictability.

In the coming days, investors will likely be closely monitoring economic indicators and Federal Reserve signals to navigate these turbulent times.

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Japanese equities traded higher on Tuesday, driving gains across Asia as they recovered significantly from a global market sell-off on Monday that wiped out billions globally.

The Nikkei Stock Average in Tokyo closed 10.2% higher on Tuesday, recovering a major part of the losses that it incurred a day before when it fell by almost 13%.

The decline happened amid a wild sell-off triggered majorly by weak US jobs data hinting at the economy heading towards recession and anticipating a series of rate cuts by the Federal Reserve.

The increase in interest rates in Japan further led to the unwinding of the yen carry trade. Topix closed 9.30% higher.

South Korea’s Kospi Index rallied over 3%, contributing to a broader regional recovery after a three-day decline.

India’s BSE Sensex opened 1% higher from the previous day’s close of 78,759.40- a level it hit after falling 2.7% on Monday.  

The yen stabilised at about ¥144.607 after rising sharply in recent weeks.

In the US, futures tied to the S&P 500 were up 1.5% while the tech-heavy Nasdaq 100 had risen by 2.1% ahead of the New York open.

Futures for the Euro Stoxx 50 and FTSE were up 1%. 

Tomo Kinoshita, a global market strategist at Invesco Asset Management in Tokyo told Bloomberg:

As Japanese equities rebound, the rest of the Asian markets are likely to rebound together today.

As the magnitude of Japan’s stock price decline yesterday turned out to be much more than Europe and the US, the market participants now recognize that Japan’s market correction yesterday was excessive.

Volatility in Japan, world, likely to remain, analysts warn not to cheer just yet

Global markets have been beset with an extreme kind of volatility, especially since Friday when the US jobs data was released. 

The CBOE Volatility Index based on the S&P 500 on Monday breached 60, touching its highest level since the market plunged during the pandemic in 2020. It cooled later to 23. 

Mohamed A El Erian, chief economic advisor at Allianz, said,

As stocks bounce back, led by Japan, many will be tempted to dismiss the volatility of the last few days as typical of the wild west nature of less-liquid, trader-led markets. A better approach would be to focus on the importance of restoring the dual anchors of solid growth and credible central bank policymaking.

The broad consensus among analysts is that the extreme market reaction on Monday was likely driven by a combination of forced or technical selling and algorithmic trading programs responding to a sharp increase in the yen. 

Analysts believe that the fundamentals did not change significantly over the weekend to justify such a dramatic sell-off, indicating that the drop was more technical. 

Despite the rebound on Tuesday, there is an expectation that markets will remain volatile.

Analysts from UBS Chief Investment Office wrote in a research report on Tuesday that short-term volatility in the Japanese stock market remains as the market now believes the US dollar has not yet stabilized against the Japanese yen.

“It is too early to conclude that the Japanese stock market has hit a bottom,” they said, adding that any recovery would likely only occur after Japanese corporates report first-half earnings in October, or even after the US presidential election in November.

Analysts in Asia recommend focusing on defensive stocks with quality and dividend yields during this period of market instability.

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On August 5, Bank of America upgraded Apollo Global Management to “Buy” from “Neutral” following a significant 20% drop in the company’s stock since the start of the month.

BofA analysts attributed this drop to weaker-than-expected Q2 results alongside broader market pressures, including weak economic data and a lower interest rate outlook.

Apollo Global Q2 earnings snapshot

The Q2 financial results for Apollo Global Management fell short of Wall Street expectations, with a reported Non-GAAP EPS of $1.64, missing estimates by $0.11.

This downturn was caused majorly by a decline in profits from the Athene insurance unit, despite record fee-related earnings and robust momentum in the asset management unit.

The total revenue for this quarter was reported at $6.02 billion, marking a significant year-over-year decrease of 56.1%.

Despite the downturn in Q2 earnings, Apollo Global’s foundational business remains robust. Total assets under management as of June 30, 2024, were $696 billion, up from $671 billion at the end of the first quarter, driven largely by an influx of $39 billion during the period.

This growth in Q2 includes strong inflows of $144 billion seen over the past twelve months at the end of June 30. Fee-related earnings saw a healthy increase to $516 million from $462 million in Q1, bolstered by higher management fees.

The Athene challenge

A significant drag on Apollo’s recent performance has been its Athene annuities business, where profits slid 11% year-over-year to $710 million.

This decline was primarily due to lower income from alternative investments.

Despite this, Athene continues to attract substantial capital, securing $6 billion for the second phase of a strategy that complements its primary operations.

The segment remains vital, albeit facing challenges, especially with a decreased net spread in Q2, reflecting a dynamic and challenging landscape.

Attractive price-earnings growth ratio

Looking beyond the immediate financials, Apollo Global is actively enhancing its asset management business and expanding its private wealth channel.

Analysts have highlighted Apollo’s attractive price-earnings growth (PEG) ratio of under 1, which positions it favorably within the asset management sector. The anticipation of being added to the S&P 500 serves as a potential catalyst that could further bolster the stock’s appeal to investors.

The stock’s recent decline has also made its valuation attractive, with a forward PE ratio of 13.4 reflecting a discounted valuation relative to its long-term earnings growth, which is expected to be in the 15-20% range.

Apollo’s upcoming investor day, scheduled for October 1, can be particularly significant as it could reveal further strategic plans and potentially catalyze the stock’s recovery.

As we’ve navigated through Apollo Global’s recent financial upheavals, it’s clear that while the immediate past has been challenging, the underlying business and strategic initiatives hold promise for recovery and growth.

Now, with a deeper understanding of the fundamentals, let’s pivot to what the charts have to say about the stock’s price trajectory.

Is the long-term uptrend coming to an end?

Apollo has been one of the best-performing financial sector stocks since 2016, having yielded a tenfold return (including dividends) to its investors during that period.

APO chart by TradingView
The stock had more than doubled from its October 2023 lows by the end of July this year, but this recent decline might have ended this uptrend at least in the medium term.

The 28-day RSI has turned sharply lower and all medium-term trend indicators have turned negative. Considering that, investors who are looking at this decline as a buying opportunity must wait before initiating any fresh long positions.

The first signs of stability will emerge only if the stock starts trading above its 100-day moving average and the MACD (12,26,9) indicator turns green. Unless that happens, the chances of it falling lower will remain.

Short-term traders having a bearish outlook should try to initiate a short position closer to $105 with a trailing stop-loss above the stock’s 100-day moving average, which is currently at $114.75. If the downtrend persists, the stock can fall to its medium-term swing low near $78 where one can book profits.

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The recent strengthening of the Japanese yen, resulting in a significant drop in the dollar-yen exchange rate, is seen as an overdue and healthy correction rather than a cause for panic, according to Jean-Claude Trichet, former head of the European Central Bank. 

Trichet’s perspective comes amidst shifting monetary policies, geopolitical tensions, and economic data rattling global markets.

Three main drivers behind the yen’s recent surge 

The yen’s recent surge can be attributed to multiple factors. 

Trichet highlighted three main drivers: Japan’s hawkish monetary policy shift, geopolitical tensions in the Middle East, and disappointing US jobs data. 

These elements collectively triggered a correction in the dollar-yen exchange rate, which Trichet described as overdue given the longstanding overvaluation of the yen and the extensive use of yen carry trades.

A carry trade involves borrowing a low-interest-rate currency, such as the yen, and investing it in higher-yielding assets. 

The yen has been a favorite for this strategy due to Japan’s historically low interest rates and low volatility. 

However, the Bank of Japan’s recent decision to raise its benchmark interest rate and taper its bond-buying program sparked a rapid appreciation of the yen, causing the dollar to fall nearly 5% against the yen last week.

The dollar-yen correction also had ripple effects across global markets. 

Safe-haven assets like the Swiss franc and US Treasurys saw increased demand, while stock markets experienced volatility. 

Trichet emphasized the importance of maintaining perspective, suggesting that the correction might be beneficial for the market’s long-term health. 

He pointed out that despite the volatility, there are positives in the US, European, and global economies that mitigate the need for panic.

US economic outlook and Fed policy

The US economic landscape has been a focal point in recent market movements. A weaker-than-expected July jobs report fueled recession concerns, leading to increased market expectations for a Federal Reserve rate cut. 

According to the CME Group’s FedWatch tool, markets now anticipate a 75% likelihood of a 50 basis point cut at the Fed’s next meeting, up from previous expectations of a 25 basis point reduction.

Despite these developments, Trichet cautioned against overreacting to short-term data. 

Trichet told CNBC’s “Squawk Box Europe” that the current data does not support an emergency rate cut, suggesting that the Fed should avoid actions that might induce unnecessary market anxiety. 

He also highlighted the sustained period of disinflation in the US and eurozone as a positive indicator of economic stability.

Trichet emphasizes the importance of prudence and caution

While acknowledging the unexpected nature of the recent market movements, Trichet maintained a cautiously optimistic outlook. 

He stressed the importance of prudence and caution, advising against panic and emphasizing the need for a thorough analysis of incoming data. 

The yen’s appreciation and the resulting market correction, he suggested, could ultimately be seen as a healthy adjustment, provided that broader economic fundamentals remain sound.

The recent dollar-yen correction, driven by Japan’s monetary policy shift, geopolitical tensions, and US economic data, is viewed by Trichet as a necessary adjustment. 

While market volatility is inevitable during such corrections, the overall economic outlook remains positive, with no immediate cause for panic.

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Cadence Design Systems Inc. (NASDAQ: CDNS) has experienced a notable downturn recently, dropping over 23% in the past month, yet analysts at Piper Sandler see this as an opportunity.

Analysts remain optimistic

Upgrading the stock from Neutral to Overweight, they’ve maintained a bullish $318 price target, suggesting a potential 25% upside.

This view is largely based on the belief that the recent dip offers a lucrative entry point into a robust software asset within the semiconductor sector.

Piper Sandler analyst, Clarke Jeffries, highlighted that despite the tepid Q2 performance contributing to this decline—amid broader industry uncertainties—the company is poised for recovery.

Jeffries pointed to specific challenges like the ongoing transition in Verification technologies and pressures from the Chinese market, yet remains optimistic about the ramp-up in Verification deliveries and subsequent financial improvements in the coming quarters.

Analysts at Baird too recently reaffirmed their confidence in Cadence, maintaining an Outperform rating but slightly adjusting their price target from $341 to $338 following the Q2 earnings release.

They attributed this slight adjustment to a recalibration of expectations but foresee stronger estimate revisions in FY25 which could propel the stock further.

Cadence’s Q2 earnings

This sentiment is underpinned by Cadence’s Q2 earnings, where it surpassed expectations with a non-GAAP EPS of $1.28, outpacing estimates by $0.05, and a revenue of $1.06 billion that exceeded forecasts by $20 million.

The company has benefited from robust demand across AI, hyperscale, and automotive sectors, bolstering its financial stance.

Looking at Cadence’s financial health more broadly, the company reported a resilient second quarter with a $6.0 billion backlog, signalling strong ongoing demand for its offerings.

The fiscal outlook for 2024 looks promising with projected revenues ranging from $4.60 billion to $4.66 billion and non-GAAP operating margins expected between 41.7% to 43.3%.

For the upcoming quarters, Cadence expects to earn between $1.165 billion and $1.195 billion in revenue. They also anticipate maintaining strong non-GAAP earnings per share, which highlights their ability to keep performing well financially even when the market is unpredictable.

Recent acquisition and competitive moat

Delving deeper into the fundamental operations of Cadence, the company’s prowess in the EDA sector is notably reinforced by its innovative product offerings and strategic acquisitions, like the recent BETA CAE systems purchase.

This acquisition not only diversifies Cadence’s simulation portfolio but also enhances its footprint across several critical sectors including automotive and aerospace, potentially adding $40 million in revenue for FY24.

Such strategic moves are pivotal as Cadence capitalizes on growing demands in the AI-driven semiconductor market, leveraging its Cadence.AI portfolio and next-generation hardware systems like Palladium Z3 and Protium X3, which are setting new standards in verification and performance.

The business outlook remains optimistic as Cadence continues to solidify its leadership in verification.

Its major partnership deployments and product innovations are expected to drive higher throughput and performance, crucial for AI chip design.

These advancements position Cadence favourably within the dynamic semiconductor industry, expected to grow significantly, fueled by increased R&D spend from key players in AI and other high-growth sectors.

From a valuation perspective, despite the recent stock price dip, at a forward P/E ratio of 42 Cadence still trades at a premium compared to its peers, reflecting high expectations embedded in its future growth trajectory.

With these aspects in mind, we now turn to the technical analysis to explore what the charts suggest about Cadence’s stock price trajectory, particularly in light of recent market movements and analyst upgrades.

This analysis will provide another lens through which to assess the potential investment opportunities in Cadence as it continues to innovate and lead in the semiconductor design space.

Long-term uptrend remains intact

Cadence’s stock has been a remarkable performer in the semiconductor sector, rising sixfold from its 2020 lows in the last four years.

What makes this performance truly remarkable is that the stock has exhibited much lower volatility than its peers in the semiconductor industry, which is highly cyclical.

CDNS chart by TradingView
Though the stock is experiencing bearish momentum in the short and medium term, its long-term uptrend remains intact, so existing shareholders who have bought the stock at lower prices don’t need to panic.

The stock recently found support above its 38.2% Fibonacci retracement from 2020 lows and this year’s high at around $241.

Investors who are bullish on the stocks like the analysts can buy it near $250 with a stop loss at 38.2% Fibonacci retracement at $222.

Traders who are bearish on the stock, but haven’t initiated a short position yet, must refrain from doing so at current levels because the stock has experienced a dramatic decline recently and the RSI on daily charts has reached oversold levels.

Any fresh short position should be considered only if the stock bounces back to above $280 or if it falls below $223.

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Uber Technologies Inc (NYSE: UBER) is thriving despite market conditions, with CEO Dara Khosrowshahi asserting that the company is “really hitting on all cylinders.”

In an interview with CNBC, Khosrowshahi highlighted that Uber’s latest quarterly results exceeded market expectations, signaling robust performance across its platform.

According to Uber’s second-quarter earnings report, the company has shown no signs of weakening consumer demand.

Notably, lower-income users are increasing their spending on Uber’s services at a faster rate than higher-income groups.

Following the earnings announcement, Uber’s stock rose approximately 10% in early trading.

Uber’s counter-cyclical advantage

Khosrowshahi attributes Uber’s ongoing success to its ability to grow faster than the overall market. This growth is supported by Uber’s technological edge and strong market position in mobility services.

Additionally, Uber’s business model proves resilient in challenging economic conditions. A weaker job market tends to increase the number of drivers joining Uber’s platform, which can lead to lower prices for consumers and further drive demand.

Currently, Uber has around 7.4 million drivers, who collectively earned nearly $18 billion in the past year, marking a more than 20% increase from the previous year.

Despite recent stock price declines of over 20% since mid-February, Uber remains a compelling option for investors, though it does not pay dividends.

Is Uber stock a buy after Q2 results?

Khosrowshahi highlighted Uber Eats as a significant growth area, describing the service as a “habit that’s turned out to be much more sticky.”

Although Uber Eats’ performance fell slightly short of estimates in the second quarter, volumes increased by 17%. The company plans to continue investing in lower prices and encouraging restaurants to offer more promotions in key markets.

Oppenheimer analyst Jason Helfstein remains optimistic about Uber’s stock. He has maintained an “outperform” rating with a price target of $90, suggesting a potential upside of nearly 50% from current levels.

Helfstein believes Uber is well-positioned to benefit from trends among affluent consumers, increased travel demand, and rising service spending.

Uber’s strategic focus on expanding its services and leveraging its strong market position continues to drive its growth.

Despite facing challenges in the freight sector and fluctuating stock prices, the company’s diverse revenue streams and ability to adapt to changing economic conditions underscore its resilience.

As Uber navigates these dynamic market conditions, its commitment to technological innovation and market expansion could solidify its position as a leading player in the mobility sector.

Investors and industry watchers will be keenly observing how Uber’s strategies unfold in the coming quarters.

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