Weekend Update #283
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Equities fell this week in a tech-led selloff as investors weighed valuations against risks of inflation, interest rate hikes, and a fragile ceasefire between the U.S. and Iran. The Federal Reserve’s preferred inflation gauge, PCE, was in line with expectations and lacked a meaningful change in trajectory for equities. Micron reported blowout earnings on Wednesday, which sent shares surging but failed to provide a broader AI-uplift in trading at the end of the week. Apple and Microsoft sparked some inflation fears as both companies announced significant price hikes to offset rising input costs. Nuclear talks between the U.S. and Iran stalled as fighting intensified between Israel and Hezbollah on the southern Lebanon border. On Thursday, it was reported that a Signapore-flagged container ship, Ever Lovely, was attacked by a drone launched by Iran on Thursday, slowing traffic through the Strait of Hormuz. President Trump called this a violation of the ceasefire agreement, and U.S. Central Command later stated the U.S. responded with strikes on Iranian missile and drone storage sites as well as coastal radar installations on Friday.
In economic data for the week, the Personal Consumption Expenditures report for May was a key reading, with inflation coming in-line to cooler-than-expected compared to economist estimates. Headline PCE showed prices rose 0.4% MoM in May and 4.1% YoY, the hottest pace since April 2023 due to higher energy costs. Excluding food and energy, Core PCE rose 0.3% MoM and 3.4% in May. The report was a slight positive for markets given the lack of upside surprise, but rising inflation will keep the Federal Reserve focused on responding to any inflationary risks. The S&P PMI showed business activity rose by the most in 5 months, driven by increased demand for manufactured goods. Initial Jobless Claims for the week ended June 20 were 215,000, slightly better than the 225,000 economists had estimated. The final June report for the University of Michigan’s Consumer Sentiment showed consumers further improved expectations throughout the month as energy price fears eased.
In company-specific news, Micron provided fiscal Q4 2026 guidance for $50 billion in revenue, significantly beating the $43.2 billion consensus estimates predicted, driven by accelerating demand for memory as the AI data center buildout remains in full swing. Qualcomm shares also rose after the company projected $15 billion in data center revenue by fiscal 2029, doubling its revenue targets from those that it provided two years ago. Apple reported it is raising prices on Mac and iPad products by 15-25% and Microsoft reported 25-30% price increases on Xbox products, leading to pressure on shares of both companies on Thursday. Next week will feature a host of economic data releases, with the June jobs report on Thursday set to be a key indicator of potential FOMC moves on interest rates.
Friday’s Close (Weekly Performance)
S&P 500 7,354.02 (-1.95%)
Nasdaq 25,297.62 (-4.60%)
Dow Jones 51,876.11 (+0.60%)
Thank you Blue Room Senior Analyst Jared Fenley.
Consumer sentiment confirmed its early-month reading, rising about 10% above May to 49.5 as gas prices moderated.
Increases were seen across income, wealth, and political affiliation. Expected business conditions over the next five years surged 16% as consumers’ worries over long-term consequences of the Iran conflict appear to be easing.
Still, sentiment remains in unfavorable territory at 13% below the February 2026 reading prior to the start of the Iran conflict, and nearly 20% less than a year ago.
The cost of living remains at the forefront of consumers’ minds. For the third straight month, over half of consumers spontaneously mentioned that high prices are weighing down their personal finances.
Year-ahead inflation expectations inched down from 4.8% in May to a still-elevated 4.6% this month. The current reading substantially exceeds the 3.4% reading seen in February before the Iran conflict began, along with all 2024 readings.
Long-run inflation expectations fell back from 3.9% last month to 3.3% in June, remaining a bit higher than the 2.8% to 3.2% range seen in 2024.
Cristiano Amon
President & Chief Executive Officer
Thank you so much, Brad. Appreciate it. Thank you. Thank you, everyone for joining us. I really appreciate it. This is an exciting day for Qualcomm. Actually, as a matter of fact, June 24, I became CEO of Qualcomm June 30. So, it's been — actually, I picked this week on purpose. This is exactly five years since I became CEO of this company. Thank you. This incredible company that I kind of joined as an engineer about 30 years ago.
And what I'm going to tell you today and tell the reason this is special, it's going a little bit about the transformation. 2021, we put a strategy together. We actually had an investor day 2021 in that year, and we said what we were going to do. And I think we are at a point now that we put everything in place to execute on a strategy and it's time to start the new chapter of Qualcomm. And that's what my intent is to tell you about that today.
This is really exciting days. We have a lot of things packed. We did the best that we could to pack a lot of big pieces of information in a short period of time. Brett, walked you through the schedule. We have Q&A at the end. Many of you will be tempted to run to some memory earnings call starting at 4:30. But I would encourage you to reconsider and stay for the Q&A. It's going to be an awesome Q&A.
So, with that, let me just get to the presentation and before we start to each one of these chapters.
So, this is where we started. And I think it's been a company that has been probably the most focused semiconductor company in the mobile market. And I know, I think the mobile market, to some extent, I think, got out of favor when everyone on earth had a smartphone, but it's going to become very interesting. But the reality is we were the most focused semiconductor company on this one market. And we put together a strategy and start executing that strategy, that's what I told you.
Year-ahead inflation expectations inched down from 4.8% in May to a still-elevated 4.6% this month. The current reading substantially exceeds the 3.4% reading seen in February 2026 prior to the start of the Iran conflict, along with all 2024 readings.
Long-run inflation expectations fell back from 3.9% last month to 3.4% in June, remaining notably higher than the 2.8% to 3.2% range seen in 2024.
And the following five years, this is what we built. We built a diversified edge leader across multiple end markets. We built an automotive business. We built what we call an IoT, and we're going to start — I know there's a lot of things within this IoT segment for us. So we started to break down for you in what we call personal AI and compute, which how wearables and virtual reality, augmented reality evolve into sub-personal AI devices as well industrial networking and robotics. And that is the company that we built. Really focused on the edge to create a diversified edge leader across multiple industries.
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