Wall Street Lunch: Cloudflare Outage Takes X, ChatGPT, PayPal Offline In Global Outage

Listen below or on the go on Apple Podcasts and Spotify

Major apps like ChatGPT and X face disruptions. (0:15). Home Depot blames ‘no storms’ for weak comps. (1:49) Google CEO says nobody immune to an AI bubble pop. (2:37)

This is an abridged transcript of the podcast:

Our top story so far, a major outage at internet security company Cloudflare (NET) has disrupted major apps, including X, ChatGPT and others.

“Cloudflare is aware of and investigating an issue which impacts multiple customers: Widespread 500 errors, Cloudflare Dashboard and API also failing,” the company said in a post on its systems status page. “We are working to understand the full impact and mitigate this problem. More updates to follow shortly.”

Shares of Cloudflare are in the red.

Other apps, such as PayPal, Uber and League of Legends have also been impacted. It’s unclear what the root cause of the issue is, but Cloudflare said it was going to be performing a scheduled maintenance on its Santiago data center today.

The company said it was starting to see some services recover, but “customers may continue to observe higher-than-normal error rates as we continue remediation efforts.”

A Cloudflare spokesperson told Seeking Alpha that the company saw an “unusual” spike in traffic to one of its services around 11:20 UTC.

“That caused some traffic passing through Cloudflare’s network to experience errors,” the spokesperson said. “While most traffic for most services continued to flow as normal, there were elevated errors across multiple Cloudflare services.”

“We do not yet know the cause of the spike in unusual traffic. We are all hands on deck to make sure all traffic is served without errors. After that, we will turn our attention to investigating the cause of the unusual spike in traffic.”

Looking to the markets, amid the recent risk-off move in stocks, traders are watching a key level on the benchmark index.

On Monday, the S&P ended below its 50-day moving average. It was the first time the S&P closed below that momentum indicator in 139 sessions, the longest such streak since 2007 and the second-longest run of this century.

The S&P (SP500) is currently trading around 6,600, with the 50-day MA at about 6,708.

BlueKurtic Market Insights does note, though, that when the index breakings below the 50-day after a 100+ day streak, the market usually stabilizes quickly. On average, it takes 8 days to get back above it, with the average max drawdown about 1%.

Among active stocks, there’s no singin’ in the rain for Home Depot (HD). CEO Ted Decker said the company’s results missed expectations primarily due to the lack of storms in the quarter, which resulted in greater than expected pressure in certain categories.

Comparable sales rose 0.2%, missing the consensus expectation for an increase of 1.4%. EPS of $3.74 missed by 9 cents. But looking ahead, Home Depot expects total sales to increase about 3% for the year vs. prior expectation for +2.8% growth

Roche (OTCQX:RHHBY) unit Genentech announced breast cancer drug giredestrant reached the main goal in a Phase 3 trial, boosting shares of Olema Pharmaceuticals (OLMA), which is advancing a similar treatment.

Medtronic (MDT) is up after it raised a full-year outlook following fiscal Q2 numbers, which exceeded Street forecasts, driven mainly by its cardiovascular division.

In other news of note, Alphabet (GOOG) (GOOLG) CEO Sundar Pichai sounded cautiously optimistic about AI, echoing other hyperscaler predictions (and, indeed, Alan Greenspan). In an interview with the BBC, he said the boom in investment has been “extraordinary” but there is some “irrationality.”

“We can look back at the internet right now. There was clearly a lot of excess investment, but none of us would question whether the internet was profound,” he said. “I expect AI to be the same. So, I think it’s both rational and there are elements of irrationality through a moment like this.”

He also warned that companies across industries would be vulnerable if the AI bubble burst.

“I think no company is going to be immune, including us,” he said, although he expressed confidence that Google would be able to absorb the effects.

And in the Wall Street Research Corner, Goldman Sachs has identified a new group of “AI productivity beneficiaries,” highlighting companies best positioned to see earnings lift from automation-driven efficiency gains.

Strategist David Kostin said the screen focuses on Russell 1000 constituents that rank in the top quartile for both share of wage bill exposed to AI automation and labor costs as a share of sales. Goldman then narrowed the list to companies that discussed AI in the context of productivity on their Q2 or Q3 earnings calls.

Among the names are KeyCorp (KEY), Bank of America (BAC), Twilio (TWLO), IBM (IBM) and Zillow (Z).

Check out all the names in our story on Seeking Alpha, where our Black Friday sale is offering 20% off on all products.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.