Apple Ends Chip Partnership With Intel | Ulta Beauty & Target Team Up

MarketBites Investment Newsletter for 11/11/2020

Your daily dose of stock market commentary and most important investment and business news. written by investment professionals at Taylor Hoffman Capital Management.

Quote of the Day
“We must use time as a tool, not as a couch.”
– John F. Kennedy

Today’s Top Investment Stories
  1. Apple Drops Chip Partnership With Intel
  2. Ulta Beauty & Target Team Up
What is driving the stock market today? – November 11th, 2020

– U.S. stocks ended a mixed session on Tuesday, as investors speculate this month’s rally got ahead of itself. The tech-heavy NASDAQ declined by 1.37%, as investors continued to sell off “stay-at-home” stocks such as Amazon, Zoom, Peloton, and Facebook. The Dow outperformed the market, as Boeing surged on news that regulators could lift the 737 Max grounding as early as next week. Small caps also closed a strong session with the Russel 2000, climbing 1.88%.

– Chinese tech giants such as Alibaba and Tencent tumbled, as China unveiled regulations to root out monopolistic practices in the internet industry.

Coronavirus tracker: Per John Hopkins, the U.S. reported 127,000 new cases yesterday, while Europe had 227,000 new cases. United States Covid hospitalizations jumped to 59,275, nearing April’s record of 59,940.

– By Raymond Kanyo

Top Story 1: Apple Introduced 3 New Mac Computers With Apple Chips

What is Happening?
Apple announced a new MacBook Air, 13-inch MacBook Pro, and Mac Mini at its virtual “One More Thing” event, all with new Apple M1 processors. Apple believes that this new component will improve battery efficiency, increase processing speeds, better security, and bring more integration across Apple products. Intel traded 1% down on the news, while Apple stayed flat.

Why does this Matter?
The partnership between Apple and Intel dates back to 2005 when Steve Jobs dropped PowerPC in favor of the chipmaker. Apple partnered with Intel to catch up to Windows. Fast forward to 2020, and Apple is dropping Intel in favor of its in-house chips based on Arm Ltd’s tech. The move shows Apple’s confidence in its custom processors, as well as doubts about Intel’s computer chip road map.

Apple is expected to cut all ties with Intel by 2022. This means all future iPhones, Macs, iPads, and Apple Watches will be using the same M1 chips. This will allow Apple devices to better work together, and let iPhone apps run on Macs for the first time.

The Takeaway:
For Apple, the move brings quality control in-house. It further integrates all of its products into one seamless experience. For Intel, the direct impact on sales may be limited, but the change highlights growing problems at the chipmaker. Intel’s arch-enemy, AMD, already sells next-generation (7nm) chips, while Intel lags with older technology (10nm chips).

– By Raymond Kanyo

Top Story 2: Ulta Beauty & Target Agree to In-Store Partnership

What is Happening?

Ulta Beauty and Target have agreed on a deal that will bring an Ulta ‘shop-in-shop’ experience to 100 Target locations in 2021. Ulta’s products will also be featured on Target’s website.

Why does this Matter?

This appears to be a fantastic partnership opportunity for both parties. Ulta will receive the help of a very competent e-commerce player. Target has touted an efficient eco-system for online ordering, and one-day or same-day procurement. As Covid cases were on the rise, Target was deemed an essential-business amidst the most strict virus-related lockdowns, while Ulta’s business model was disrupted by forced closures.

Target will enter a new tier in women’s beauty products. The first 100 locations will have 1,000 square feet of space allotted to Ulta Beauty inventory. Executives from the two firms discussed plans of future digital innovations to assist with the ease of sampling Ulta products. At the very least, analysts see the addition of Ulta Beauty kiosks and trained staff as a profit center for Target.

The Takeaway:
This partnership could very well spur growth for both Target and Ulta Beauty. For Ulta loyalists, the partnership will be exciting, as products will become more accessible than ever before.

– By Jack Dunne

What else is happening:
Boeing faces 2015 safety settlement – (read here)
Analysis of Lyft’s earnings – (read here)
Peloton & Beyonce agree to multiyear content partnership – (read here)
UBS gets bullish on GM – (read here)
Deals & IPOs:
Earnings Calendar:
Air Products & Chemicals ($APD), Fossil Group ($FOSL), Reynolds Consumer Group ($REYN), Tetra Tech ($TTEK), Vroom ($VRM)
Applied Materials ($AMAT), Cisco Systems ($CSCO), Energizer Holdings ($ENR), Palantir Technologies ($PLTR), Unity Software ($U), Walt Disney ($DIS)
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