Apple Earnings Test, AI Credit Jitters, Binance Outflows

Full transcript

Alex: Good morning, and welcome to Daily Tech News for Monday, November second. I am Alex.

Jordan: And I am Jordan. After one of the worst weeks tech stocks have had in years, the market is catching its breath this morning, but the questions have moved. It is no longer just whether A I spending will pay off. It is whether the credit markets will keep funding it. Today we have Apple facing its first earnings test under a new chief executive, fresh signs that lenders are getting nervous about the A I build-out, and the morning after the largest crypto heist ever.

Alex: Let us start with Apple, because tonight is the test everyone has been waiting for. Apple reports its fiscal fourth quarter results after the market closes today, and it will be the first earnings call hosted by John Ternus since he took over as chief executive from Tim Cook in September.

Jordan: The expectations are high, and so is the bar. Analysts expect revenue of about one hundred thirteen point four billion dollars, up nearly eleven percent from a year ago, with profit of about twenty-nine billion dollars. IPhone sales are expected to climb about fifteen percent to roughly fifty-six point five billion dollars, while services are expected to grow almost ten percent to about thirty-one point six billion dollars.

Alex: But there is a catch in those numbers. The quarter ended in late September, so it captures only about nine days of sales of the new IPhone eighteen Pro models. The IPhone Duo, Apple's first foldable phone, went on sale on October twenty-third, so its sales will not show up until the holiday quarter. What investors will really be listening for tonight is the holiday forecast, and anything Ternus says about Duo demand.

Jordan: And Duo demand is a complicated story already. The phone starts at one thousand nine hundred ninety-nine dollars in the United States, online orders sold out within minutes, and Bank of America estimates buyers now face average delivery waits of seventy-nine days, stretching into January. At the same time, some buyers have reported cracks and lines along the inner display's central fold, and Apple has offered replacements.

Alex: Then there is the cost side. Memory chip prices are surging, something Tim Cook had called a one hundred year flood, and analysts expect Apple's profit growth this quarter to be its weakest in six quarters. Ternus has overseen a remarkable product blitz since September, a foldable phone, a smart home hub, and Apple's first touchscreen laptops. Tonight we find out whether he can also tell a convincing story about margins and the revamped Siri.

Jordan: That brings us to the bigger A I story, and it is a shift in tone. Last week we talked about Microsoft borrowing twenty-five billion dollars to fund its build-out. Now the question is spreading from company balance sheets to the lenders behind them. One tally puts total A I spending by the five biggest spenders at close to eight hundred twenty-eight billion dollars for twenty twenty-six, with analysts expecting it to climb toward one point two trillion dollars next year.

Alex: And the funding strain is starting to show in places investors do not usually watch. Reports say OpenAI has cut its fundraising target from about thirty billion dollars to about twenty billion dollars, and lowered its target valuation from about one point four trillion dollars to about one point two five trillion dollars. Those reports are unconfirmed, but they fit a pattern, because some investors appear to be scaling back their commitments.

Jordan: There is also a warning sign from the credit markets. Reports say Barclays is exploring buying protection against default on more than ten billion dollars in A I infrastructure loans, and that some insurers are nearing their exposure limits for data centers. Those discussions are described as early, so this is not a crisis. But it is a new kind of pressure. If data center projects are delayed or cancelled, the pain would not stop with the developers, since construction firms, equipment suppliers, and materials vendors have all borrowed more to meet the surge in orders.

Alex: For now, the stock market is steadying. Tech shares inched higher in overnight trading after last week's sell-off, with Alphabet and Intel each up about one point four percent, Amazon up about one point five percent, and memory maker SanDisk up about three point four percent. Meta and Microsoft were marginally higher. This morning's bounce looks like relief, not yet a recovery.

Jordan: Our security story is fresh, and it is a reminder to patch the systems that give outsiders a way in. Researchers report that hackers probed BeyondTrust Remote Support appliances on November first, targeting a flaw that was disclosed in mid October and has already been exploited in real attacks.

Alex: BeyondTrust Remote Support lets support staff remotely control computers, which makes it a very privileged target. Canada's cyber center warns the flaw can be exploited without credentials and without any user interaction, potentially allowing arbitrary file uploads and a full compromise of the appliance. The United States government added it to its known exploited vulnerabilities catalog on October sixteenth.

Jordan: The new activity is probing, not a confirmed mass compromise. A security firm reported two probes against its decoy systems in the United States and Germany on November first, and neither showed successful exploitation. But the context is serious. Mandiant's findings, as reported, link earlier exploitation in late August to a suspected China linked espionage group that BeyondTrust calls Armory Castle. If you run these appliances, the message is simple. Make sure you are patched past version twenty-six point two point three, and treat any internet facing remote support system as a priority, not a back burner item.

Alex: Finally, a follow-up on Binance, because Sunday gave us the first real read on customer confidence after the record hack. Binance restored withdrawals in phases on Sunday, and by the end of the day it reported net outflows of about three point six billion dollars in crypto assets.

Jordan: The outflows eased after an initial spike, and Binance says it manages about one hundred seventy-one billion dollars in assets. Bitcoin was trading around seventy-eight thousand dollars on Sunday, roughly five percent below where it was before the theft, while most major cryptocurrencies moved less than one percent on the day. So this looks like a controlled exit by some customers, not a run.

Alex: Binance says it has now covered about ninety-five percent of the stolen assets, that customer balances in the affected coins are fully backed, and that it has set aside about six point three four billion dollars to cover the loss. The company says customers will not bear the financial impact, and it plans a technical post incident report once its investigation is complete.

Jordan: So here is the takeaway as the week begins. Apple tonight will tell us whether the holiday season can live up to a very crowded product lineup, and whether rising memory costs eat into the story. The A I build-out is no longer just a technology bet, it is a credit bet, and lenders are starting to ask harder questions. And Binance survived its first day of withdrawals, but three point six billion dollars walking out the door is a reminder that trust, once shaken, is measured in real money.

Alex: Looking ahead, Advanced Micro Devices reports on Tuesday, Americans vote in the midterm elections on Tuesday, and the monthly jobs report lands on Friday. We will be back tomorrow morning with what Apple actually said, and what it means for the rest of tech. Have a good Monday.

Jordan: See you tomorrow.