PayPal Gets a $53B Takeover Offer, ASML Says the AI Boom Is Accelerating

**Zaid Admani** (0:00)
Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Wednesday, July 15th. In today's episode, we'll tell you why Fed Chair, Kevin Warsh, isn't ready to declare victory on inflation, despite the positive data. We'll also recap blowout earnings from ASML, and tell you why PayPal might get acquired soon. Then stick around to the end of the show to find out why New York just became the first state to temporarily block large data centers. We got a great show for you today.
Let's go.
Stocks had a decent day on Tuesday with the S&P 500 jumping 0.4% and the NASDAQ climbing 0.9%. The market's got a boost from a couple things yesterday, one being the strong bank earnings, and the other being the cooler than expected CPI report. We covered both those things in detail on yesterday's podcast show, so go check that out if you missed it. Now, we got another inflation report this morning. The producer price index or PPI, which measures wholesale inflation, declined 0.3% in June compared to May. That was not expected. Economists were expecting PPI to remain flat. Now, I should mention, just like with the CPI report yesterday, a big reason for the decline was lower energy prices. Gasoline prices fell 12% in June and accounted for about two-thirds of the monthly decline in wholesale good prices. So I wouldn't declare victory on inflation just yet. I mean, these reports are telling us that inflation cooled during a brief pause in the Iran War when oil prices dropped. But now, tensions are ramping back up again and energy prices are climbing. So the July inflation number could look very different than what June did. And this is pretty much what Fed Chair Kevin Warsh is saying as well. Kevin Warsh testified in front of the House of Representatives yesterday and he warned investors not to declare the mission accomplished on inflation yet. He also promised a regime change at the Fed, saying that inflation has acted like a tax on American families and businesses and that the central bank needs to rethink how it approaches monetary policy. So yeah, I'm really curious to know what Kevin Warsh means by that. I'm sure he'll be asked about this during the Fed meeting later this month. For now though, the markets are celebrating the cooler inflation data and earnings season getting off to a strong start. So we could be in for a strong few weeks here. We'll stay on top of everything happening in the market. So if you're new here, it's a great time to get subscribed to the podcast and tune in every day to stay in the loop.
Let's run through some headlines. Starting with ASML. ASML just reported a blowout quarter and is giving investors one of the strongest signals that the AI infrastructure boom is not slowing down. Now a quick refresher on ASML, they're a Dutch company that make the lithography machines needed to manufacture advanced chips. In fact, they're the only company in the world that makes the most advanced version called an EUV machine. These EUV machines cost up to $400 million each and ASML can only produce a few dozen a year. And business continues to boom. Q2 revenues came in at 9.3 billion euros, which was up 21% from a year ago. And profits hit 2.9 billion euros, both those numbers beating expectations. But what really stood out to me was the guidance. ASML now expects between 43 billion and 45 billion euros in sales this year. The previous forecast was 36 to 40 billion euros. So that's a meaningful increase in their projection. The company also raised their gross margin forecast to as high as 56%. Honestly, I'm kind of surprised that their gross margins aren't higher, given the fact that they're the only company in the world making these machines. Demand is so strong right now that ASML says they've received all the EUV orders it needs for 2027 And some of their customers are already lining up to buy machines for 2028 I think ASML is one of the most important AI earnings reports because they sit so far upstream in the AI supply chain. Companies like NVIDIA or AMD can tell you that demand is strong today, but ASML is taking orders for machines that chip makers will need two years from now. When ASML says that customers are accelerating their plans, that tells you that these companies are still betting the AI demand will be there in 2027 and 2028 ASML stock is up around 3% this morning at the time of this recording. And the stock has gone up over 65% since the start of the year.