The wireless business contributes nearly 70% of AT&T’s revenue. The firm is the third-largest US wireless carrier, connecting 72 million postpaid and 17 million prepaid phone customers. Fixed-line enterprise services, which account for about 16% of revenue, include internet access, private networking, security, voice, and wholesale network capacity. Residential fixed-line services, about 11% of revenue, primarily consist of broadband internet access, serving 14 million customers. AT&T also has a sizable presence in Mexico, with 23 million customers, but this business only accounts for 4% of revenue. The firm still holds a 70% equity stake in satellite television provider DirecTV but does not consolidate this business in its financial statements.

ASML is the leader in photolithography systems used in the manufacturing of semiconductors. Photolithography is the process in which a light source is used to expose circuit patterns from a photo mask onto a semiconductor wafer. The latest technological advances in this segment allow chipmakers to continually increase the number of transistors on the same area of silicon, with lithography historically representing a high portion of the cost of making cutting-edge chips. ASML outsources the manufacturing of most of its parts, acting like an assembler. ASML’s main clients are TSMC, Samsung, and Intel.

Two important inflation reports released last week indicated that overall pricing pressures have retreated from peaks in 2022. But both also confirmed that inflation remains above the Fed's target of 2.0% and progress to that level may be hard to achieve. With the Consumer Price Index (CPI) report, there were some positive results. The overall inflation rate in June was 3.0%, lower than the prior month's 3.3%. That good news was further supported by a decline in core CPI, which excludes the impact of food and energy and rose at an annual pace of 3.3% over the past year, lower by 10 basis points month over month. What's propping up that core CPI? Transportation Services (+9.4% YOY) and Shelter (+5.2% YOY), which have prices that don't typically fall sharply. In contrast, prices for Gasoline and New & Used Cars are actually lower YOY. The other inflation report was the Producer Price Index (PPI), which measures pricing trends farther up the supply chain, at the manufacturing level. Here, we also saw a modest increase in the rate of inflation. The PPI final demand annual rate through June was 2.6%, compared to 2.2% in May, and the prices for processed goods for intermediate demand outright declined. The June 2022 CPI rate marked the peak reading for the index that cycle, and we expect pricing pressures to continue to ease as the housing market cools, supplies of new vehicles are replenished, and the price of oil stays below $90 per barrel. The Fed lifted the feds fund rate from 0.0% to above 5.25% over the past 24 months, and the rate hikes appear to be reducing inflationary pressures. We still look for the U.S. central bank to be lowering rates in 2H24 and 1H25 as concern shifts more toward economic growth.

Meta is the world’s largest online social network, with nearly 4 billion family of apps monthly active users. Users engage with each other in different ways, exchanging messages and sharing news events, photos, and videos. The firm’s ecosystem consists mainly of the Facebook app, Instagram, Messenger, WhatsApp, and many features surrounding these products. Users can access Facebook on mobile devices and desktops. Advertising revenue represents more than 90% of the firm’s total revenue, with more than 45% coming from the U.S. and Canada and over 20% from Europe.