OpenAI IPO Likely Delayed to 2027, Apple Jacks Up Prices to Absorb AI Shock

**Zaid Admani** (0:00)
Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Friday, June 26th. In today's episode, we'll tell you why Apple and Microsoft are raising prices. We'll also break down why OpenAI might be delaying their IPO. Then stick around to the end of the show to find out which AI company just signed a record Jersey patch deal with the Golden State Warriors. We got a great show for you today.
Let's go.
Thursday was another rocky day for the stock market. And once again, AI was at the center of it. The S&P 500 fell by 0.1 percent, while the Nasdaq fell half a percent. And, you know, early on in the day, it looked like tech stocks were going to rip following the monster micron earnings. Well, the good news from the micron earnings got overshadowed by Apple announcing that they were raising prices on their products across the board. We're going to talk more about why Apple is doing this in a bit, but that news sent Apple stock down 6 percent yesterday, and it dragged down the entire market with it. And it seems like we might be in for another down day. Tech and chip stocks are selling off across the board in pre-market trading. Here's a fun fact. Investors pulled money out of US stocks for the first time since March, with a record $9.3 billion yanked from tech funds in a single week. So that is just the latest signs that the AI trade is starting to cool off. Now, zooming out, the good news is that oil prices keep falling. US crude is now trading under $70 a barrel as more tankers move through the Strait of Hormuz. Now, there was a report yesterday that Iran attacked a cargo ship in the Strait of Hormuz, but the market doesn't seem to be too worried about it. So yeah, a lot of interesting things happening in the markets right now with oil prices falling and the AI trade kind of going through some bumpiness. I wonder what the next couple of weeks look like as we wait for earnings season to kick off again, we're gonna be staying on top of everything. So if you're new here, definitely get subscribed to the podcast and tune in every day to stay in the loop.
Let's run through some headlines, starting with Apple. Apple announced yesterday that they were raising prices across the board. Now, many people expected this was gonna happen, but I think a lot of people were shocked with how drastic the price hikes were. MacBooks, iPads, even the Vision Pro were all going up $200 to $300.
And by the way, just hours later after Apple announced their price hikes, Microsoft came out and said they were hiking prices of the Xbox by $100 to $150. And you know, both of these companies are blaming the increased cost of memory. And we've talked about this multiple times on the show. The data center boom has resulted in a huge surge in demand for memory and storage, and that's now leading to a supply crunch, and prices of memory have quadrupled over the last year. And since memory is needed for every modern-day tech device, everything from phones, laptops and gaming consoles, the prices for those components have gone up. So Apple didn't want to keep eating that cost and take a hit to their margins, so they're passing that on straight to the consumer. Now, this has been great news for Micron, which is one of the major memory makers in the world. We covered their earnings on yesterday's show, and the most eye-popping thing that come from the earnings report was that Micron's gross margins are now at nearly 85%.
And the reason they're that high is because Micron has raised prices substantially. So that means that the extra $200 that people will pay for their MacBook, a big chunk of that will go straight to Micron's bottom line. In fact, it's gotten so tense that Apple and Microsoft are basically accusing the memory companies of price gouging. And look, the supply crunch is expected to last for another couple years. So, you know, this is just the latest example of why there's been such a huge backlash to AI these days. Big Tech's obsession with AI is leading to higher prices across the board. And all this AI spending is driving up costs of tech products like memory chips and laptops, but also things like electricity. The Wall Street Journal is calling it the third wave of inflation. We're actually going to talk more about this on our deep dive episode tomorrow. So make sure you guys keep an eye out for that. Going back to Apple, I'm really curious to see what happens to Apple sales after this price hike. Like are they going to see a significant hit to their revenue? And more importantly, is Apple going to roll back these price hikes after the memory supply crunch thing is figured out? I think that's probably not going to happen. Also, Apple didn't announce any price hikes for the iPhone. I'm sure they're going to raise prices when the iPhone 18 comes out. The market seems to think that Apple will take a hit though. Shares of Apple fell 6% yesterday following the price hike news. Let's shift gears and talk about OpenAI because they might be pumping the brakes on their IPO. OpenAI filed to confidentially go public a few weeks ago. Well, now according to the New York Times, OpenAI is now leaning towards waiting until next year to go public, even though they have hired bankers and lawyers with the original goal of listing as soon as the third or fourth quarter of this year. There seems to be a lot of internal disagreements at OpenAI on when to go public. CEO Sam Altman has been pushing for an IPO and nudging his advisors to find a way to juice OpenAI's valuation to a trillion dollars up from the company's last private valuation of $730 billion. But then earlier in the year, the CFO along with other executives casted doubt on whether the financials at OpenAI were good enough to hit the public market. On top of that, some executives at OpenAI are a little spooked by how the SpaceX IPO played out. Remember SpaceX went public earlier this month at $135 a share, raising more than $85 billion in the process at a $1.77 trillion valuation. Now following the IPO, the stock ripped as high as $202 a share, but now the stock has come back down to earth. No pun intended. At the time of this recording, it's currently trading around $150 a share. And then you add in the broader tech selloff we just talked about with investors starting to ask tougher questions about AI spending and AI margins and whether these companies can actually turn this massive revenue into massive profit. You can see why some OpenAI advisors are nervous about walking into this market. So now these advisors are giving Sam Altman two options. Either he can wait until next year and target a $1 trillion valuation, or OpenAI can hit the public markets earlier with a lower valuation. As of right now, Sam Altman doesn't seem to want to budge from the $1 trillion number. So we'll see what ends up happening. I was really hoping to get a peek at OpenAI's S1 and dive into their financials. I guess I might have to wait a bit longer for that. Now there have been reports that OpenAI is still not profitable and they've burned through $3.7 billion in Q1. So we won't know the full financial picture until they actually go public and file all their paperwork. And look, these numbers will get heavily scrutinized once that happens. And I don't think many people on OpenAI's team want to face the heat right now. Let's talk about some stocks making moves today.