The electric vehicle market is alive and well. A month before Tesla (TSLA) posted second-quarter delivery figures, shares settled at $180. This set up the perfect post-report rally when Tesla reported 443,956 deliveries on Tuesday.
Investors sent TSLA stock up by over 7% since it beat Wall Street analyst estimates of 439,000. In the current quarter, competition from Chinese EV makers will continue to pressure Tesla’s profit margins. However, the punitive U.S. tariffs should limit its impact on domestic sales. Europe also plans to levy up to 38.1% tariffs against Chinese EVs.
At the European Central Bank event on Tuesday, Fed Chair Jerome Powell said that the U.S. resumed its disinflationary path. This would set up a 25 bps interest rate cut sometime this year.
The market’s reaction to Powell’s remarks will be most notable for Nvidia (NVDA) this morning. Algorithmic trading will likely set a $108 support price for NVDA stock after shares failed to break out above $140 on June 20, 2024. This would weigh on AI-related names, such as Advanced Micro Devices (AMD), Arm Holdings (ARM), Alphabet (GOOG), and Microsoft (MSFT). The latter two firms will eventually slow their AI hardware spending. They will need to pause their AI projects as they measure revenue growth.
If chatbots do not increase customer acquisition and spending rates, it would hurt AI chip suppliers like Nvidia.
