AI stocks, Tesla, Pepsi and Delta: what’s happened on the US market this week

US stocks marched to new record highs this week despite the government shutdown, spurred on by further AI excitement as chip maker Advanced Micro Devices inked a chip supply deal with ChatGPT owner OpenAI.

The multi-year deal is expected to bring in billions of dollars in annual revenue and gives OpenAI an option to buy up to 10% of the chipmaker.

AMD shares rallied as much as 34% on 6 October to register a new record high, taking gains for the year to 95% compared with a 19% advance in the Nasdaq Composite index.

Minutes released from the latest Federal Open Market Committee meeting indicated a willingness to lower interest rates further in 2025 despite concerns over inflation.

Tesla

After initially rising as much as 5% following a teaser clip on social media, Tesla shares reversed more than 4% on 7 October as investors gave the electric vehicle firm a thumbs down in relation to tepid price cuts in some of its popular models.

The electric vehicle maker announced a $5,000 reduction in the price of its Model Y mid-sized sports utility vehicle and the Model 3 sedan, in response to the elimination of a key US tax credit.

The Model Y will be available from November with prices a shade under $40,000 while prices for the Model 3 start at $36,900 with delivery from early 2026. Tesla had promised ‘more affordable’ vehicles, but the negative market reaction suggests that the latest price cuts aren’t enough.

Following the pricing news, Tesla reported record third quarter deliveries of 497,100 vehicles, smashing analysts’ estimates, driven by a surge in electric vehicle purchases ahead of the expiration of the $7,500 tax credit on 30 September.

Delta Air Lines

The Atlanta-based airline kicked off the US third quarter earnings season with better-than-expected results.

The company cited a strong recovery in corporate travel demand and stronger pricing power for the September quarter, resulting in adjusted earnings per share rising 15% year-on-year to $1.71, compared with the consensus analyst estimate of $1.53.

Revenue increased 4% to $15.2 billion versus market estimates calling for $15.03 billion. Delta’s premium revenue increased 9% from a year ago, in sharp contrast to the 4% decline in the price sensitive main cabin revenue.

Looking ahead to the fourth quarter, the company projected adjusted earnings per share between $1.6 and $1.9, ahead of the midpoint of consensus forecasts.

The positive report had a positive knock-on effect across the sector with shares in United Airlines and American Airlines also rising.

PepsiCo

Food and beverage giant PepsiCo reported third quarter earnings on 9 October with revenue ahead of estimates. It reiterated the full year outlook, helped by resilient demand in its international markets.

The Gatorade and Doritos maker also announced the retirement of chief financial officer Jamie Caulfield and his replacement, Walmart executive Steve Schmitt.

Net sales increased 2.6% to $23.94 billion, besting analysts’ estimates of $23.83 billion, with organic growth up 1.3% in the quarter. Worldwide food and drink volumes shrank 1% reflecting softer demand.

Adjusted earnings per share fell 7% to $2.29 which was better than market estimates of $2.26 per share. Looking ahead, chief executive Ramon Laguarta said PepsiCo would ‘aggressively reduce costs’ in the US snacks business, including closing two plants and cutting 15% of its product lines in the fourth quarter.

PepsiCo has been under pressure from activist investor Elliott which disclosed a $4 billion equity stake in September, urging management to simplify operations by selling weaker businesses.