Meta Muse’s $27 Billion Potential, Google Locks In Nuclear Power

Zaid Admani (0:00)

Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Tuesday, October 6th. In today's episode, we'll tell you why the stock market is completely ignoring surging bond yields. We'll also tell you why Wall Street thinks that Meta's Muse could become a $27 billion business, and why Google and Amazon are paying to upgrade old nuclear plants. Then stick around to the end of the show to find out what the AI boom is doing to the billionaires list. We got a great show for you today.

Let's go.

Stocks are off to a hot start this week. The S&P 500 climbed 0.7% on Monday, while the NASDAQ jumped 1.1%, closing at record highs. The S&P is also less than 1% away from record highs as well. Not to mention Nvidia also closed at record highs yesterday for the first time since May. So stocks are back to making new highs, and it wasn't just tech taking part of this rally. 10 of the 11 S&P sectors finished higher on Monday. And this was happening despite bond yields continuing to surge. The 10 year treasury yield briefly topped 5.34% on Monday, which is its highest level in 24 years before ending the day around 5.31%. But look, the stock market seems to be ignoring the bond market these days because investors are betting another strong earnings season. And we're about to kick off another round of earnings and companies are sounding optimistic. Of the 116 S&P 500 companies that have issued earnings per share guidance for Q3, 72% issued a positive guidance. What a positive guidance means is that the company expects earnings per share to come in above what analysts were projecting when that forecast was issued. And 72 is the highest number of positive forecasts since Faxset started tracking this data back in 2006 See, here's the thing. Companies typically will lowball their guidance on purpose because they want to under promise and over deliver and get headlines that say that they beat expectations. Now, to be fair, 46 of those 72 positive forecasts are from tech companies, especially software and chip companies. I'm really curious to see how non-tech companies are doing. We're actually going to get an early look at that later this week when PepsiCo and Delta Airlines report their numbers. Those results should give us a better picture of what consumer spending outside of the AI boom is looking like. And both those reports could set the tone for the rest of earnings season. So I'm really looking forward to that. We'll break those numbers down later in the week. Now, before we move on, a quick favor from you guys, if you're listening on Spotify. On yesterday's show, we posted a poll where we asked how you guys are managing your investments. Do you do it yourself? Do you have a financial advisor or is it a mix of both? If you haven't voted in that poll yet, please go back to yesterday's episode and take a few seconds to respond. We'd love to hear from you. And while you're at it, consider giving us a five-star rating as well. Leave us a comment. All this engagement really does help us out and helps other people find the show. All right, let's get to the rest of the show.

Let's run through some headlines, starting with Meta. Meta stock has been one of the best performers over the last month or so. Thanks to the success of their AI agent app called Muse, which continues to be number one on the app store. And Wall Street is starting to get really bullish on Muse. Now, Citigroup estimates that Muse could generate more than $27 billion in annual revenue by 2030 Citigroup thinks that 85% of that will be transaction related revenue where Meta takes a cut from every transaction that happens on Muse. So think like every time Muse buy something for you, Meta will take a small cut. The rest of the revenue would be from subscription. So people upgrading for more usage. I'm surprised they didn't say anything about advertising because that could be a huge revenue source as well. According to Citigroup's estimates, the Muse app has passed 6.6 million downloads and they have about 1.8 million daily active users already. Now obviously this is a pretty optimistic estimate and it's still early, but honestly I'm pretty bullish here as well. If Muse becomes the front page of the internet, kind of like how Google is right now, that could be a massive opportunity. Every time you want to do something online, whether it's checking your emails or buy something, it might be through your AI agent. And that's exactly why Amazon blocked Muse from its website a couple weeks ago. Amazon doesn't want Meta standing between them and their customers. Now I still think we're pretty far away from everyone just using personal AI agents. Like I've been using Muse pretty much every day for the last three weeks now, and I feel like it's getting a bit dumber. Like Muse is starting to make mistakes and not work as well as before. Now that might just be because of compute constraints, but it is pretty frustrating. Now look, if Meta can address these issues and keep the momentum going, there is a ton of upside here. By the way, another winner from the Muse popularity has been AMD and Intel. AMD stock has jumped 32% over the past month, and Intel has jumped more than 20%. The thing is, AI agents like Muse don't just run on GPUs like NVIDIA's chips, they also require CPUs. Like think of it like this, the GPUs do the thinking, while the CPUs do the actual work. Like updating your calendar, checking your emails, or buying something for you. And AMD can capitalize big here because they make both CPUs and GPUs, and that's why they've seen their stock surge over the last month. So I'm keeping my eye on AMD, and I can't wait to hear what they have to say in their earnings report on November 3rd. Let's shift gears and talk about Constellation Energy, because they've announced two massive tech deals over the last week. Constellation Energy is the biggest nuclear power operator in the US, and last week, they announced a 20 year deal with Amazon to provide 690 megawatts of power. This includes new power from upgrading their plant in Maryland. And then this morning, the company just announced a 20 year deal with Google. As part of this deal, Constellation will be upgrading 11 of their existing reactors in Illinois, Pennsylvania and New Jersey, which will allow them to squeeze an extra 890 megawatts worth of power. And Google is planning to buy all of that new power for the next 20 years. On top of that, Google is also buying 270 megawatts from Constellation's existing fleet over the next 15 years, which includes nuclear, natural gas and renewables. And one of the bottlenecks of AI right now is power. Google, Amazon and other big tech companies need as much power as they can get for their AI data centers, which is leading to a comeback in nuclear energy. You know, for nuclear companies like Constellation, locking in a major customer like Google and Amazon allows them to make the investments and upgrades to their existing plants and potentially build new ones. Shares of Constellation Energy are up more than 13% this morning at the time of this recording. But if you zoom out though, the stock had been struggling this year down more than 25% heading into today. So maybe this will be the start of another nuclear rally.