🎈 Google fires with Quantum computing

and Gamestop earnings

In partnership with

Good morning investors! All eyes are on today’s inflation report as sentiments remain mixed.

Today we cover:

  • Google’s big win

  • GameStop earnings

  • Tax-free incomes

Poll result: Most of our subscribers think gas prices are ‘too high’ despite being at their lowest level in more than three and a half years. Comments suggest that people want (and expect) prices to go under $2.5 next year.

📊 Economy and News 

Quantum Computing Breakthrough: Alphabet Fires the Next Shot

While much of the tech sector has faced recent struggles, Alphabet has defied the trend, reaching its highest levels in nearly five months. The catalyst? A major leap forward in quantum computing.

Alphabet announced a revolutionary chip, dubbed Willow, which it claims marks a significant breakthrough in this emerging field. According to the company, Willow enabled a quantum computer to solve a complex mathematical equation in just five minutes—a task that would take a classical supercomputer an estimated 10 septillion years to complete.

The Quantum Computing Landscape

Quantum computing has become the latest frontier in technology, promising transformative applications across industries, from cryptography to pharmaceuticals. Alphabet is not alone in this race. Major players such as IBM, Intel, Amazon, Microsoft, and Honeywell are also investing heavily to achieve supremacy in this field. While practical uses remain years away, the industry is abuzz with potential.

Governments around the globe are also vying for leadership. In the U.S., the National Quantum Initiative Act of 2018 allocated $1.2 billion to support quantum research, and lawmakers are now considering an additional $2.7 billion. Meanwhile, China has committed more than $15 billion to its own quantum computing efforts, underscoring the high stakes of this technological arms race.

Global hits:

Interesting: A federal judge in Oregon blocked Kroger’s proposed $25 billion tie-up with Albertsons, ruling that the largest merger in US supermarket history would limit competition and harm consumers..

Also check: Dodge maker Stellantis and China’s CATL team up to build $4.3 billion EV battery plant in Spain.

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📈 Stocks

S&P 500 6,034.91 (-0.30%)
DJIA 44,247.83 (-0.35%)
NASDAQ 19,687.24 (-0.25%)
BRENT CRUDE 72.56 (+0.51%)
* Prices as of Dec 11th, 12:20 AM UTC

GameStop still in the game

Gamestop reported mixed results for Q3 2024. Net sales fell to $860 million from $1.078 billion year-over-year, but the company achieved a net income of $17.4 million, a significant rebound from a $3.1 million net loss in the same period last year.

Cost-cutting efforts reduced SG&A expenses to $282 million (down from $296.5 million), while gross profit margin improved to 29.9%, up from 26.1%, thanks to effective cost management and a favorable sales mix. Liquidity also strengthened, with cash and marketable securities rising to $4.616 billion, bolstered by a $400 million equity offering.

The Detroit automaker cited the increasingly competitive robotaxi market, capital allocation priorities and the considerable time and resources required to grow the business. 

GM said it plans to instead “realign its autonomous driving strategy” to focus on advanced driver assistance systems and autonomous systems for use in personal vehicles.

These are down: Oracle shares had their steepest drop in a year yesterday, down -6%, following the company’s disappointing earnings report. The stock is still up about 69% in 2024, headed for its best year since 1999.

On the other hand, Insurance stocks, including UnitedHealth Group, CVS Health, and Cigna, have dropped over -6% since last Tuesday, following the tragic shooting of UnitedHealth’s insurance CEO, Brian Thompson. The decline reflects heightened scrutiny and negative sentiment surrounding insurers’ business practices, according to Jared Holz, Mizuho’s healthcare equity strategist.

Surprising: Boeing only now resuming production a month after strike that idled two key plants. Elsewhere, the global airline industry will likely rake in more than $1 trillion in revenue next year, as passenger numbers look set to hit an all-time high of 5 billion, for the first time ever.

💵 Personal Finance

Incomes that are tax free - Part IV

We did this series last week and you wanted more, so here are some more tax-free incomes:

Corporate Income Earned in 6 States

It might be a good idea to consider these six states as they levy no corporate income taxes:

  • Texas

  • Nevada

  • Ohio

  • Washington

  • South Dakota

  • Wyoming

Wyoming and South Dakota are our favorites as they have very friendly corporate tax laws. The remaining states on the list above do tax gross receipts.

Disability Insurance Payments

Disability benefits are generally taxable; however, there are some exceptions. You will not pay taxes from benefits you receive from supplemental disability insurance paid for by you, even if bought through your employer, are tax free.

Similarly, benefits you receive from a private disability insurance plan you purchased with after-tax dollars. Also, workers' compensation, including compensatory damages for all kinds of physical injuries and physical sickness, are tax free. However, punitive damages are not included.

There may be some other exceptions as well. It might be a good idea to talk to a tax specialist and learn more about how specific insurance payments are taxed.

Here’s an old but still interesting video on the topic:

💰 Be a Better Investor

“There’s a virtuous cycle when people have to defend challenges to their ideas. Any gaps in thinking or analysis become clear pretty quickly when smart people ask good, logical questions. You can’t be a good value investor without being an independent thinker – you’re seeing valuations that the market is not appreciating. But it’s critical that you understand why the market isn’t seeing the value you do. The back and forth that goes on in the investment process helps you get at that.”

Joel Greenblatt

Resources:

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Nothing in this newsletter is financial advice. Always do your own research and think for yourself.