U.S. Stocks' Midterm Reaction to Hinge on Expectations — Market Talk
2109 ET - U.S. stocks' reaction to the midterm results will likely hinge less on which party wins than on how the outcome compares with what investors have priced in, says Tiger Brokers chief market strategist James Ooi in a note. Either way, greater clarity could ease some of the uncertainty weighing on sentiment, Ooi says. A stronger-than-expected Republican showing could lift sectors that favor policy continuity. Differing priorities between the White House and Congress could slow legislation but also limit sweeping policy changes, the strategist adds. The Texas governor's race also matters, given the state's growing appeal for AI data-center investment, Ooi says. ([email protected])2042 ET - Asian tech stocks are broadly lower Wednesday morning as early races in the U.S. midterms bolster bets on a Democratic "sweep" that could slow the flow of AI spending to Asia's tech-heavy markets."The scale of any Democratic victory, or a surprise Republican Senate win, could trigger significant repositioning," says Chris Weston, head of research at Pepperstone. U.S. futures tied to the Nasdaq index extended declines, down around 1.5% on CME. South Korea's benchmark Kospi index reversed opening gains as chip stocks pulled back. Cryptocurrencies also dimmed, deepening losses as markets weigh the possibility of slower crypto regulation resulting from a Congressional balance of power shift. ([email protected]; [email protected])1828 ET - CVS Health is splitting its retail pharmacies from its insurance and pharmacy-benefit businesses, undoing the company's nearly-$70 billion acquisition of insurer Aetna. The breakup into two publicly traded companies will occur in the first half of 2028. One company, still called CVS Health, will control assets such as Aetna and pharmacy-benefit manager Caremark, while the other will own CVS's mail-order pharmacy and around 9,000 retail drugstores. CVS was set to report its third-quarter results before the market opens on Wednesday. Shares of CVS were up 0.7%, at $92.00, after peaking to about $94.80 after-hours. ([email protected])1734 ET - Advanced Micro Devices' data center business is being driven by more deployments by frontier labs, hyperscalers and cloud providers, Chief Executive Lisa Su says on a call with analysts. The expanded deployments are for inference and training, she says. They helped sales in AMD's data center segment nearly double in the third quarter. During the latest quarter, AMD started shipping MI455X chips to lead hyperscalers, including Anthropic, Meta and Microsoft. Su expects Helios deployments to increase "substantially" in the current fourth quarter, as production continues to ramp and PC manufacturers begin shipping systems. Shares gain 7% after-hours. ([email protected])1730 ET - Advanced Micro Devices says the influx of AI agents is driving more CPU demand. Meta's Muse and OpenAI's Dots illustrate how quickly personal agents are catching on, AMD Chief Executive Lisa Su tells analysts on a call. Along with consumers using the agents, companies are moving quickly to put agents to work across software development, supply chain and IT, Su says. Because the agents work continuously and in parallel across applications, they require more computing and chips, she says. "Adoption is just starting, and we expect demand to grow sharply as agents are deployed more broadly and take on more complex work in head nodes," Su says.([email protected])1728 ET - Arista Networks executives say the heightened threats of AI-fueled cyberattacks is boosting demand for the company's networking security solutions. "As the entire industry responds to AI-powered attack exposure, customers are motivated by the fact that keeping their infrastructure current with security updates will protect, segment and defend against vulnerabilities beyond the network," COO Todd Nightingale tells analysts on a call. Chief Technology Officer Kenneth Duda adds that the company has collaborated with Anthropic, OpenAI, Google, and others on security, and that it has one of the lowest security vulnerability and exposure counts in the industry. "True network security has become a must have, not a nice to have," Duda says. ([email protected])1723 ET - Booking says travel demand started to moderate at the end of the third quarter, as travelers continue to navigate various impacts from geopolitical tensions. The conflict in the Middle East has resulted in elevated airfares and reduced capacity on certain routes, which weighed on long-haul travel during the quarter, Booking Chief Financial Officer Ewout Steenbergen says on a call with analysts. The slowdown at the end of the quarter was mainly driven by international travel, while domestic continues to hold up. "The travel environment is mixed," Steenbergen says. "We're seeing travelers take shorter trips and choose destination closer to home." ([email protected])1722 ET - Booking says more people are using large-language models to book travel, but it is still a small portion of travelers who do so. LLM referrals have accelerated over the past several weeks Chief Financial Officer Ewout Steenbergen says on a call with analysts. However, the referrals still account for significantly less than 1% of Booking.com's total room nights, Steenbergen says. Referrals increased following the release of the latest ChatGPT models, which improved citation rates and drove more traffic to Booking's platforms, he says. Paid referrals are also growing, as Booking's partnership with OpenAI is expanding into additional markets. ([email protected])1715 ET - Arista Networks CEO Jayshree Ullal says the increasingly heterogeneous options for AI chips is driving a shift in the tech industry, benefiting the company's efforts to sell networking solutions to data-center developers. "The industry, we believe, is shifting from compute-centric vertical stack to a holistic network-centric approach," she tells analysts on a call. The move toward decentralized computing for AI inference requires improved networking solutions, she adds. "A well designed network is becoming a foundational cornerstone for optimal token efficiency," Ullal says. Shares jump 14% to $194 after-hours. ([email protected])1646 ET - Advanced Micro Devices is getting the biggest boost from data centers. Data center revenue nearly doubled in the third quarter, while sales in the company's client, gaming and embedded segments remained roughly flat when taken altogether. Demand has been strengthening for AMD's Epyc data-center microprocessors and Instinct GPUs, the company says. AMD expects growth to accelerate in the current fourth quarter, as it scales production of its Helios computing system and Venice server processor family, both designed for data center use. Shares gain 9% in late trading. ([email protected])1642 ET - The governor's race in Texas and ballot initiatives in Ohio will offer investors an early read on the direction of AI regulation following the U.S. midterm elections, BMO analysts say in a research note. Those races are set to show voter sentiment around data centers, they say. The prospects for a continuation of the AI buildout and its contribution to growth could take a hit if there is strong opposition to data centers, the analysts say. "We worry about tech sector valuations in the event of such an outcome," they say, adding, "who knew the midterms could be so exciting." ([email protected])1554 ET - Apple offers a stark view of the supply environment for computing capacity and technological components like storage and memory in a filing accompanying its most recent earnings release. "The Company is experiencing supply constraints and rising costs driven by industry-wide supply-demand imbalances for key components, including advanced semiconductors, memory and storage," Apple says, adding that it "expects these trends to intensify for memory and storage components." When it comes to compute capacity, Apple says demand has "increased substantially across the technology industry, resulting in constrained supply, extended lead times, and increasing costs." 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