Delta Air Lines Is Gambling on an AI 'Super Analyst'
About two weeks ago, something on a Delta Air Lines (DAL) flight caught my attention... It was a normal flight by my standards. But there was something new about the in-flight safety video.
Delta Air Lines Is Gambling on an AI 'Super Analyst'
By Ethan Goldman, junior analyst, Chaikin Analytics
About two weeks ago, something on a Delta Air Lines (DAL) flight caught my attention...
It was a normal flight by my standards. But there was something new about the in-flight safety video.
This specific video celebrated Delta's 100-year anniversary.
Back in 1925, Delta started off as the world's first aerial crop-dusting company. It called itself "Huff Daland Dusters."
The video emphasized Delta's commitment to its heritage and the 100 years ahead of it.
So you can imagine my interest when I saw headlines that Delta is trying out a new concept...
The company is ramping up an AI pricing system. In fact, it hopes to use AI to price 20% of its tickets by the end of 2025.
Imagine planning a trip with a friend. You both buy seats next to each other. In normal conversation, you find out that you paid more than your friend for the same ticket.
It seems like Delta's new AI "super analyst" determined you could pay a higher fare. And it charged you more because of that.
By the end of this year, you'll likely have a one in five chance of that happening.
This practice is dubious from a consumer's perspective. Privacy advocates have rallied against it as well.
But it could be lucrative for Delta and its shareholders...
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First, let's put Delta's stock in some context.
Take a look at the five-year chart below with some data from the Power Gauge...
As you can see, DAL shares have been on a wild ride over the past five years.
You'll recall that COVID-19 pandemic slowed travel to a snail's pace in 2020. That explains the low point at the beginning of the chart.
Since late July 2020, Delta's stock is up about 115%. But it hasn't been a steady march higher.
The rapid and deep swings of Delta's stock gave the Power Gauge reason to worry. As you can see, Delta spent a lot of time in "bearish" territory over the past five years.
COVID-19 changed the way companies do business. Coupled with the recent advancements in AI, it's easy to see why Delta is making the pricing decision.
Delta's AI bid panning out in its favor remains unknown. Industry guru Gary Leff thinks the airline industry is waiting for Delta's results.
If Delta proves that this plan works, other airlines will likely follow suit.
This strategy relies on Delta's customers buy in. Delta passengers may find alternatives if they feel the squeeze of AI on their dollars.
Now, the Power Gauge recently flipped to "very bullish" on Delta. And the stock's Chaikin Money Flow is ticking higher. That means the so-called "smart money" on Wall Street has been buying more of the stock.
But as you can see on the chart, Delta's relative strength versus the S&P 500 Index has been weak for most of this year. The stock has been underperforming the broad market in recent months.
Folks, Delta is clearly making a gamble on AI-powered pricing.
If it wins, we'll see the beginnings of a clearer future for Delta's next 100 years.
But if it loses... other airlines will be ready to absorb the disillusioned passengers. They'll take a lesson from Delta's blunder.
And if you choose Delta sometime around the end of this year, pay close attention to your fare. You might not be paying the same ticket price as your friends.
Good investing,
Ethan Goldman
Marc Chaikin: 'Ask Me Anything'
In August, Marc Chaikin is doing something he has never done before. After a wild six months for stocks, Marc knows you may have many lingering questions. So, he'll be going on camera – NOT to discuss a specific opportunity, but instead to devote his time to answering YOUR most pressing questions.
But to do that, we need to hear from YOU. If something is keeping you up at night (whether it worries or excites you), we want to hear from you. Marc will answer as many questions as possible during his "Ask Me Anything" event next month.
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks are somewhat Bullish. Major indexes remain all bullish.
* * * *
Sector Tracker
Sector movement over the last 5 days
Information Technology
+1.97%
Utilities
+1.58%
Industrials
+0.84%
Financial
+0.73%
Real Estate
+0.65%
Consumer Discretionary
+0.33%
Communication
+0.17%
Consumer Staples
+0.1%
Materials
-1.42%
Health Care
-2.48%
Energy
-3.56%
* * * *
Industry Focus
Capital Markets Services
43
19
1
Over the past 6 months, the Capital Markets subsector (KCE) has outperformed the S&P 500 by +2.43%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #4 of 21 subsectors and has moved up 2 slots over the past week.
Top Stocks
AMG
Affiliated Managers
AMP
Ameriprise Financial
BK
The Bank of New York
* * * *
Top Movers
Gainers
IVZ
+15.28%
RF
+6.12%
VST
+6.05%
DELL
+5.94%
CEG
+4.33%
Losers
MOH
-10.41%
ELV
-8.38%
NFLX
-5.1%
WST
-4.83%
VTRS
-4.21%
* * * *
Earnings Report
Earnings Surprises
MMM 3M Company
Q2
$2.16
Beat by $0.15
RF Regions Financial Corporation
Q2
$0.60
Beat by $0.04
AXP American Express Company
Q2
$4.08
Beat by $0.20
SCHW The Charles Schwab Corporation
Q2
$1.14
Beat by $0.04
TFC Truist Financial Corporation
Q2
$0.91
Missed by $-0.02
* * * *
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