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https://finnhub.io/api/news?id=54fd8973dc75e1b22a82751813497225aab0af48e22c4ac87efa19d9e93117f8 | Stocks to watch in after hours: AMD, Twitter, WTI crude oil, Peloton | Seana Smith checks out several stocks and sectors trending in the after-hours trading session, including the semiconductor industry following President Biden's export restrictions on China. | 2022-10-07T14:04:42 | Yahoo | Stocks to watch in after hours: AMD, Twitter, WTI crude oil, Peloton
Seana Smith checks out several stocks and sectors trending in the after-hours trading session, including the semiconductor industry following President Biden's export restrictions on China.
Video Transcript
SEANA SMITH: Let's take a look at some of the biggest movers of the week. Investors have been on quite a roller coaster ride here. So let's kick it off with some of the biggest moves that we've seen play out in the markets. Let's start with the chip stocks because it has been a rude awakening for investors who thought that the sector may have bottomed. Signs of slowing demand and supply chain issues have some worried about a prolonged downturn.
You can see the Semiconductor Index moving to the downside here on the five-day chart. Samsung reported a 32% dive in operating income. AMD lowered its revenue guidance for the third quarter. That was enough to drag down some of its competitors. Intel and Nvidia both moving to the downside. You can see the move over the last 48 hours or so.
Also part of this are regulations from the Biden administration, clamping down on China's access to chip technology with new export rules. AMD dropping 14% today, the biggest drop that we have seen in this stock since March 2020, closing the week at 58.44.
Next up, let's talk about Twitter, this stock up just about 12% over the past five days, a revived chance of Elon Musk's takeover. But this deal is very far from being over. They now seem to have stalled, in part over a debt financing contingency. This is according to reports. Yesterday, a Delaware judge granted Musk's request to delay his trial with Twitter, giving both sides until October 28 to complete the deal. Over the past five days, you can see it up just about 12%, closing at 49.18, so below that deal price that Musk initially wanted to pay for Twitter at 54.20 a share.
Let's talk about oil, recording the biggest weekly rally that we have seen since March, as worries over supply offset some of those demand concerns. On the supply side, OPEC+ announcing its biggest output cut since the start of the pandemic, the move coming ahead of the impending European sanctions on Russian oil imports. It's a massive reversal from what we've seen in crude as of late. Over the past three months, you can see crude off just over 10%, coming off the worst quarter that we have seen since 2020, but really rallying on the news that we got this week.
Let's round it out with Peloton, the stock surging more than 20%. Two big announcements-- we started off the week with a partnership with Hilton. And then we heard about another round of cuts. CEO Larry Barry McCarthy announcing plans to cut about 12% of the workforce, its fourth round of layoffs this year, saying, quote, "He needs to do it to save the company."
One of the ways that they're trying to save the company and increase business is through new partnerships. The agreement with Hilton will put its bikes in 5,400 Hilton-owned hotels throughout the US. You can see Peloton moving to the upside for the past five days, up just around 25%. You can see it did close the day in negative territory, but for the week, closing at $8.69 a share. | NVDA |
https://finnhub.io/api/news?id=004cf610bc2156cfbc6a7852ce715e2195c1b65d4becc2b299a22c8e8e5dfab5 | 15 Most Valuable Companies In History | In this article, we will take a look at 15 of the most valuable companies in history. If you want to see some more of the most valuable companies in history, go directly to 5 Most Valuable Companies In History. Many of the most valuable companies in history dominate their industries. Some of the most […] | 2022-10-07T13:57:00 | Yahoo | 15 Most Valuable Companies In History
In this article, we will take a look at 15 of the most valuable companies in history. If you want to see some more of the most valuable companies in history, go directly to 5 Most Valuable Companies In History.
Many of the most valuable companies in history dominate their industries. Some of the most valuable companies in history dominated oil and gas. Some are leaders in information technology and computing. All of the companies created a lot of value for their shareholders.
In terms of what creates the most valuable companies in history, the size of the country's economy that a company is from is a key component. If a company's parent country is a small country, it is harder for that company to reach the scale needed to be considered among the most valuable in history. If the company's parent country is a nation with a huge economy, on the other hand, there are likely more markets that have the scale to allow companies to grow to reach very valuable status.
In the 16th century, the Dutch were the leading economic power. As things changed, the British became the leading economic power in the 18th and 19th century. As a result, some Dutch and British companies have made it to the list of 15 Most Valuable Companies In History.
In the 20th century, the United States became the leading economic power. Immediately after World War II, the United States had around half the world's GDP and much of the world's wealth. With much of the world's wealth, many American companies had the capital necessary to expand overseas and gain substantial market share. With much of the world as potential markets, American companies can gain more revenue and potentially more profits. As a result of the dominance of the United States economically, many American companies make this list.
Another factor that helps companies make it to the list of 15 Most Valuable Companies In History is the era that they operate.
In terms of eras, modern day companies are more likely to be more valuable given the growth in the global economy. Because economies have advanced so much over the past 100 years, the markets today are much larger than the markets 100 years ago. With globalization, modern day companies also have opportunities at a larger market.
The emergence of technology has also created many valuable companies, some of which also make the list of the 15 Most Valuable Companies In History.
With technology, companies can grow very quickly and potentially capture a monopoly on very valuable markets that many people use. Microsoft is one example with Windows. Given that technology may not cost all that much to produce after it's first created, some tech sectors can also have higher margins than other industries. With higher margins and larger markets, it can be easier for some tech companies to be considered very valuable.
In terms of the composition of the 15 Most Valuable Companies In History, the majority are tech companies and many exist today.
Pixabay/Public Domain
Methodology
For our list of 15 Most Valuable Companies In History, we used peak market cap to rank the companies since some of the most valuable companies no longer exist today. Some have also fallen in market cap from their peaks. For companies that existed hundreds of years ago, we used subjective measures to rank them.
For the peak market cap, we used data from Ycharts.
15 Most Valuable Companies In History
15. NVIDIA Corporation (NASDAQ:NVDA)
Peak Market Capitalization: $834.40 billion
NVIDIA Corporation (NASDAQ:NVDA) is a leader in GPUs which is in some ways better suited for some AI applications than traditional CPUs. Given the huge anticipated growth in AI, investors sent NVIDIA Corporation (NASDAQ:NVDA) to a peak market capitalization of over $830 billion before the stock eventually fell to its current valuation of around $300 billion.
If the company maintains its lead in the AI chip market, however, NVIDIA Corporation (NASDAQ:NVDA) could have upside. In terms of hedge funds, Fisher Asset Management was one of the top hedge fund holders with a holding of almost 7.6 million shares at the end of Q2.
14. Alibaba Group Holding Limited (NYSE:BABA)
Peak Market Capitalization: $858.50 billion
Given its market share in e-commerce and the cloud in China, Alibaba Group Holding Limited (NYSE:BABA) achieved a peak market capitalization of over $850 billion before its stock fell due to the Chinese government beginning to reign in the tech giants in the nation. With China's economy weaker and the broader weakness in the market, Alibaba Group Holding Limited (NYSE:BABA) has a market capitalization of around $220 billion. There is a chance that Alibaba Group Holding Limited (NYSE:BABA) stock could be delisted if China and the United States can't agree on accounting terms.
13. PetroChina
Peak Market Capitalization:$1 trillion
PetroChina achieved the $1 trillion mark briefly when it debuted in 2007. As a result, PetroChina became the first company to break through the $1 trillion mark. Since its IPO, however, PetroChina stock hasn't done very well and the company actually withdrew its listing on the NYSE.
12. International Business Machines Corporation (NYSE:IBM)
Peak Market Capitalization: $1 trillion
International Business Machines Corporation (NYSE:IBM) was worth $258.6 billion in 1967, which assuming the growth in the stock market, could easily be considered worth $1 trillion or even more today. As a result, International Business Machines Corporation (NYSE:IBM) is ranked #12 on our list of 15 Most Valuable Companies In History.
Back then International Business Machines Corporation (NYSE:IBM) was one of the most dominant mainframe computing companies with substantial market share.
Today, International Business Machines Corporation (NYSE:IBM) is overshadowed by bigger companies in computing but still has potential upside if the economy doesn't slow as much as expected.
11. Meta Platforms, Inc. (NASDAQ:META)
Peak Market Capitalization: $1.078 trillion
At its peak, Meta Platforms, Inc. (NASDAQ:META) was worth $1.078 trillion as the market anticipated substantial future earnings growth from the company given its billions of daily users and many different ways of monetizing those users.
Given competition from TikTok as well as the worsening economy, however, Meta Platforms, Inc. (NASDAQ:META) is worth around $375 billion as of October 7.
There is potential upside in Meta Platforms, Inc. (NASDAQ:META) if it can maintain its user base and grow earnings. Although the market isn't very optimistic about the metaverse, Meta Platforms, Inc. (NASDAQ:META) could also benefit if the metaverse does become a huge market as CEO Mark Zuckerberg expects. Renaissance Technologies owned almost 5.5 million shares at the end of Q2.
10. Tesla, Inc. (NASDAQ:TSLA)
Peak Market Capitalization: $1.239 trillion
Although it isn't the largest auto maker in the world, Tesla, Inc. (NASDAQ:TSLA) achieved the highest peak market capitalization of all auto makers with a peak value of $1.239 trillion. With a market capitalization of over $750 billion as of October 7, Tesla, Inc. (NASDAQ:TSLA) is still by the most valuable car company in the world.
As the electric vehicle leader, investors expect substantial earnings growth in Tesla, Inc. (NASDAQ:TSLA)'s future. Given its CEO in Elon Musk, many expect Tesla, Inc. (NASDAQ:TSLA) to be among the leaders in autonomous driving. ARK Investment Management was one of the top holders of Tesla, Inc. (NASDAQ:TSLA) at the end of the second quarter.
9. Amazon.com, Inc. (NASDAQ:AMZN)
Peak Market Capitalization: $1.888 trillion
Amazon.com, Inc. (NASDAQ:AMZN) has been one of the best growth stocks over the last twenty years. As a result of its growth, Amazon.com, Inc. (NASDAQ:AMZN) has achieved the number one position in both e-commerce and the cloud, both of which are huge markets. With its positions, Amazon.com, Inc. (NASDAQ:AMZN) achieved a peak market capitalization of $1.888 trillion. That ranks the company as #9 on our list of 15 Most Valuable Companies In History.
Although its market cap is around $1.25 trillion as of October 7, the stock could still have upside if it continues its earnings growth.
8. Alphabet Inc. (NASDAQ:GOOG)
Peak Market Capitalization: $2.001 trillion
Alphabet Inc. (NASDAQ:GOOG) has also been one of the best growth stocks since its IPO in 2004. Thanks to its leading market share in search and also its smart acquisition of YouTube, Alphabet Inc. (NASDAQ:GOOG) has become one of the most profitable companies in the world. As one of the world's leading tech giants, Alphabet Inc. (NASDAQ:GOOG) also achieved a peak market cap of $2 trillion. TCI Fund Management owned almost 2.5 million shares at the end of Q2.
7. Saudi Aramco
Peak Market Capitalization: $2.43 trillion.
Saudi Aramco is the world's biggest oil company and also the leading company in Saudi Arabia. Given its huge oil reserves and substantial profits, Saudi Aramco is also one of the most valuable companies in history with a peak market capitalization of over $2.4 trillion. Given the higher oil prices, Saudi Aramco reported that is net income rose 90% to $48.4 billion in Q2 2022.
6. Microsoft Corporation (NASDAQ:MSFT)
Peak Market Capitalization: $2.576 trillion
Microsoft Corporation (NASDAQ:MSFT) has also been one of the best growth stocks in history since its founding in 1975. As a result, Microsoft Corporation (NASDAQ:MSFT) achieved a peak market capitalization of $2.576 trillion, which ranks it #6 on our list of 15 Most Valuable Companies In History. Although it's valued under $2 trillion now due to the broader market decline, Microsoft Corporation (NASDAQ:MSFT) could have upside if it continues to grow its earnings.
Click to continue reading and see 5 Most Valuable Companies In History.
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Disclosure: None. 15 Most Valuable Companies In History is originally published on Insider Monkey. | NVDA |
https://finnhub.io/api/news?id=76d2c5de84bc06590853bf68df10eca92492b23ef14daea262e08adb353f1519 | Semiconductor stocks 'have a way of smelling' future market downturns ahead of time: Analyst | Bank of America Senior Semiconductor Analyst Vivek Arya assesses the outlook of semiconductor stocks amid waning demand and export restrictions on China | 2022-10-07T12:57:45 | Yahoo | Semiconductor stocks 'have a way of smelling' future market downturns ahead of time: Analyst
Bank of America Senior Semiconductor Analyst Vivek Arya assesses the outlook of semiconductor stocks amid waning demand and export restrictions on China
Video Transcript
RACHELLE AKUFFO: Well, chip stocks are falling today after the Biden administration announced clamping down on China's access to chip technology. Meanwhile, the world's top maker of memory chips, AMD and Samsung, are sparking fears that a slump in semiconductor demand could be much worse than expected.
Let's bring in Vivek Arya, Bank of America senior semiconductor analyst to take a look at all of this. So Vivek, welcome back to the show. What should we take from this? When we look at some of the chipmakers that are down the most year-to-date, led by NVIDIA, what is it that concerns you about the trend you're seeing right now?
VIVEK ARYA: Yeah, thank you very much for having me. I think the semiconductor industry is one that makes us feel very profitable and productive for three years in a row, and then just makes us feel awful in that fourth year. And it seems like we are in that fourth year. The specific things that are causing the headwinds this year are threefold.
First, there is just enormous pressure on the consumer because of all the inflationary issues, because of all the turmoil in Europe, because of the lockdowns in China. Secondly, we have the specter of rising rates, which is never good for valuations in high beta, high multiple sector. And then on top of it, as you mentioned, there are some additional restrictions on semiconductor companies in terms of shipping to China.
And look, China is the largest customer for semiconductors, then it's never good to have friction between the largest designer of semis, which is the US, and the largest customer. So I think where we are today, when I put it all in the context, is the semiconductor stocks have a way of smelling the turn in the economy 6 to 9 to 12 months before it happens.
So last November when semiconductor stocks peaked, there was no talk of recession. The same way, there is no talk of an upturn or the next cycle today. So our assumption is that compare stock to get easier for the sector next year. And if that is the assumption, and if that's the right assumption, we think semiconductor stocks can try and find a bottom sometime in Q4. And meanwhile, the valuations are starting to look very interesting for what is a very profitable industry.
SEANA SMITH: So Vivek, that's interesting just in terms of what you said to export restrictions, and then taking that in coupling that with your predictions here, your expectations for this space going into 2023. So it sounds like you view it as a challenge here in the near term, but you don't think it's going to have a significant impact in terms of sales. Is that right?
VIVEK ARYA: Yeah. So let's talk about those restrictions. So first of all, as I mentioned, friction is never good between the largest designer and the largest buyer of semiconductors. But when you take a step back, the majority of chips that are shipped to China are actually for a lot of consumer applications.
They are for smartphones, they are for PCs, they are for a lot of low end consumers, speakers, and so forth. Like the largest buyers of semis in China are not supercomputing or military companies. They are companies like Oppo, Vivo, Xiaomi, Lenovo, ZTE. So it's not really supercomputing.
In fact, if I take the entire supercomputing and military end use market for semiconductors globally, it is not more than 5% or 10% of in demand. And even if you assume half of it is in China, which is a very big number, it still says that there is not more than a 5% or so headwind.
Second point I would mention is that we have to be careful when we use the term restriction. So what is happening is that there is a set of rules that now forces a lot of semiconductor companies to first go and ask for approvals. So they are not actually banned outright from shipping. They have been given this extra step to go and verify that the end customer is not a military end use customer or a supercomputing customer that might be on an entity list.
Which is why we think that, yes, it's a headwind and it doesn't help when the sector is already facing a lot of the macro pressures. But in terms of specifically this incremental headwind, we don't think it's more than 5% to 7% incremental. And that, it's only apply to very specific set of companies.
RACHELLE AKUFFO: And Vivek, I want to draw your attention to something that we saw from Truist Securities in talking about Tesla perhaps being a dark horse when it comes to AI and perhaps a rival for NVIDIA, saying that they actually see it-- obviously, though, NVIDIA is the leader in this space. They see a path for Tesla to build its own business to compete with it. What's your take on perhaps the role that some of these non-traditional chipmakers like Tesla might play in this space?
VIVEK ARYA: Sure. Absolutely. Look, first, when it comes to the field of artificial intelligence, we are still in the first innings. You know, that means if I take all the servers that were shipped in the world in the last year, less than 15% of them actually had an AI accelerator in them. And the majority of them used an NVIDIA product.
And then if I couple that with the automotive industry, where Tesla participates, the entire automotive industry is only 8% of the semiconductor market. So I think we have to keep a lot of these things in context of what the sizes of these markets are.
So we really like NVIDIA. And the reason is that their specific technology of AI accelerators, it's not just a chip. They're not just designing a chip. They're actually designing a complete end-to-end system and a stack of software and a big number of developers, 3 and 1/2 million developers that have been trained on using this product.
So I would say that Tesla use case is a very, very specific one, maybe less than 1% of the entire semiconductor industry. But it is a rising tide, many companies will participate, but we think NVIDIA is on a different-- not say different planet, but I think in a different solar system when it comes to the application and the benefits of AI.
SEANA SMITH: Vivek Arya, always great to get your perspective of Bank of America. Thanks so much for joining us today.
VIVEK ARYA: Thank you. | NVDA |
https://finnhub.io/api/news?id=05fd2f4f6196b6cd885bcb0373c6a4018efebc1e089902d5a4ebf012567aa0cb | UPDATE 1-Chip industry grapples with new U.S. curbs on China sales | Companies around the world on Friday began to wrestle with the impact of wide-ranging U.S. curbs on selling chips and chip manufacturing equipment to China. South Korean memory chip maker SK Hynix Inc said on Friday it would seek a license under new U.S. export control rules for equipment to keep operating its factories in China. American officials on Friday published a sweeping set of rules that restrict the export of some U.S.-made semiconductor manufacturing equipment to China, but provided exemptions for companies from the United States and its allies to seek a license. | 2022-10-07T10:56:18 | Yahoo | UPDATE 2-Chip industry grapples with new U.S. curbs on China sales
(Adds closing prices, info on semiconductor manufacturing equipment makers)
By Stephen Nellis and Jane Lanhee Lee
Oct 7 (Reuters) - Companies around the world on Friday began to wrestle with the impact of wide-ranging U.S. curbs on selling chips and chip manufacturing equipment to China.
The sweeping rules have hit chip stocks, with the Philadelphia Semiconductor Index (.SOX) falling nearly 6% by the end of the day. American semiconductor equipment makers Lam Research Corp, Applied Materials Inc and KLA Corp were all down more than 4%.
Applied Materials said it was assessing the new rules, while Lam and KLA did not immediately respond to requests for comment.
South Korean memory chip maker SK Hynix Inc said on Friday it would seek a license under new U.S. export control rules for equipment to keep operating its factories in China.
American officials on Friday published a sweeping set of rules that restrict the export of some U.S.-made semiconductor manufacturing equipment to China, but provided exemptions for companies from the United States and its allies to seek a license.
"SK Hynix is ready to make its utmost efforts to get the U.S. government's license and will closely work with the Korean government for this," the company said in a statement. "We're also ready to operate our fabrication plants in China smoothly, while complying with the international order."
Officials on Friday also introduced rules against selling a broad swath of chips for any use in "supercomputer" systems in China. Supercomputers can be used in developing nuclear weapons and other military technologies. U.S. companies Nvidia Corp and Advanced Micro Devices Inc both said last month they had been told to stop exporting their top-tier chips to China.
The rules define a supercomputer as any system with 100 or more petaflops of so-called double precision computing power, or 200-plus petaflops of single precision computing power, within a 41,600 cubic feet area. A petaflop is a measure of a computer's processing speed.
Nvidia, which said last month the rules could affect $400 million of its current-quarter sales in China, said Friday it did not expect any further impact on its business.
"These regulations impose on the broader industry controls on processors meeting certain thresholds that we were already subject to. We don't expect the new controls, including restrictions on sales for highly dense systems, to have a material impact on our business," the company said in a statement.
AMD did not respond to a request for comment. (Reporting by Stephen Nellis in San Francisco and Jane Lanhee Lee in Oakland; editing by Jonathan Oatis and Richard Chang) | NVDA |
https://finnhub.io/api/news?id=65d550c8642a898d29e196704a00d01fea1c24b0a18221ef48bb6be1e6021325 | Chip industry grapples with new U.S. curbs on China sales | (Reuters) -Companies around the world on Friday began to wrestle with the impact of wide-ranging U.S. curbs on selling chips and chip manufacturing equipment to China. South Korean memory chip maker SK Hynix Inc said on Friday it would seek a license under new U.S. export control rules for equipment to keep operating its factories in China. American officials on Friday published a sweeping set of rules that restrict the export of some U.S.-made semiconductor manufacturing equipment to China, but provided exemptions for companies from the United States and its allies to seek a license. | 2022-10-07T10:05:44 | Yahoo | Chip industry grapples with new U.S. curbs on China sales
By Stephen Nellis and Jane Lanhee Lee
(Reuters) -Companies around the world on Friday began to wrestle with the impact of wide-ranging U.S. curbs on selling chips and chip manufacturing equipment to China.
The sweeping rules have hit chip stocks, with the Philadelphia Semiconductor Index (.SOX) falling nearly 6% by the end of the day. American semiconductor equipment makers Lam Research Corp, Applied Materials Inc and KLA Corp were all down more than 4%.
Applied Materials said it was assessing the new rules, while Lam and KLA did not immediately respond to requests for comment.
South Korean memory chip maker SK Hynix Inc said on Friday it would seek a license under new U.S. export control rules for equipment to keep operating its factories in China.
American officials on Friday published a sweeping set of rules that restrict the export of some U.S.-made semiconductor manufacturing equipment to China, but provided exemptions for companies from the United States and its allies to seek a license.
"SK Hynix is ready to make its utmost efforts to get the U.S. government's license and will closely work with the Korean government for this," the company said in a statement. "We're also ready to operate our fabrication plants in China smoothly, while complying with the international order."
Officials on Friday also introduced rules against selling a broad swath of chips for any use in "supercomputer" systems in China. Supercomputers can be used in developing nuclear weapons and other military technologies. U.S. companies Nvidia Corp and Advanced Micro Devices Inc both said last month they had been told to stop exporting their top-tier chips to China.
The rules define a supercomputer as any system with 100 or more petaflops of so-called double precision computing power, or 200-plus petaflops of single precision computing power, within a 41,600 cubic feet area. A petaflop is a measure of a computer's processing speed.
Nvidia, which said last month the rules could affect $400 million of its current-quarter sales in China, said Friday it did not expect any further impact on its business.
"These regulations impose on the broader industry controls on processors meeting certain thresholds that we were already subject to. We don't expect the new controls, including restrictions on sales for highly dense systems, to have a material impact on our business," the company said in a statement.
AMD did not respond to a request for comment.
(Reporting by Stephen Nellis in San Francisco and Jane Lanhee Lee in Oakland; editing by Jonathan Oatis and Richard Chang) | NVDA |
https://finnhub.io/api/news?id=daab989fd8d723f978f8d2e2961ecb94bd8faffde99c5bc1dbf91bb2f6b05381 | Why Chip Stocks Were Falling Today | The near-term weakness in semiconductors will open up long-term investment opportunities for value investors. | 2022-10-07T10:00:07 | Yahoo | Why Chip Stocks Were Falling Today
The near-term weakness in semiconductors will open up long-term investment opportunities for value investors.
The near-term weakness in semiconductors will open up long-term investment opportunities for value investors.
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As a pandemic-inspired boom ends, entrepreneurs and giant corporations alike are counting on customers to keep accumulating more stuff than they can squeeze into their homes. | NVDA |
https://finnhub.io/api/news?id=76282a7034749064567a4301886222ab2e7bb3f11ecc2d751fa8edbb96fb13d8 | AMD: Another Man Down | AMD reported a big miss on Q3 revenue due to a weak PC market, which again should not come as a surprise. Learn why the read-through is negative for most chipmakers, from Intel to Nvidia. | 2022-10-07T09:56:44 | SeekingAlpha | AMD: Another Man Down
Summary
- AMD pre-announced a big miss on Q3 revenue due to a weak PC market, which again should not come as a surprise.
- The read-through is negative for most chipmakers, from Intel to Nvidia.
- On the bright side, AMD's Data Center business posted strong growth and will likely continue to take share from Intel even if demand slows.
- I expect more bad news and choppy price actions in the near term.
Huge Q3 miss on the top line
Advanced Micro Devices, Inc. (NASDAQ:AMD) announced preliminary 3Q22 results that were materially below management's previous expectations communicated in August. Q3 revenue is now expected to be ~$5.6 billion (+29% YoY), ~$1 billion less than previous guidance of $6.7 billion +/- $200 million (+55% YoY at the midpoint). Additionally, Q3 gross margin will come in at 50% vs. previously guide of 54%. OPEX will be $100 million lower thanks to lower variable compensation expenses. Management will hold a conference call on 11/1.
The 16% difference between reality and expectations on the revenue side is largely a result of a soft Client segment (microprocessors, processing units and chipsets that go into desktop and notebook PCs) that is currently going through heavy inventory corrections. Like many companies dealing with a broad-based slowdown in the PC market, AMD is not immune. Q3 Client revenue of ~$1 billion (18% of revenue) represents a YoY decline of 40%. As mentioned in my article on Microsoft (MSFT), PC makers from ASUS to Lenovo have all noted weakness in end demand.
On the bright side, Data Center (29% of revenue) growth remained positive with revenue up 45% to $1.6 billion. While the server market (expected to still grow 10% in 2022 and 5% in 2023) is not immune to an overall slowdown, AMD stands well to take market share from Intel as ARM-based products continue to threaten the x86 architecture. Additionally, Intel's delay in Sapphire Rapids until 1Q23 is also a positive for team Red.
In terms of Gaming (29% of revenue), Q3 is usually the best season, driven by strong console demand. However, it's worth noting that historically, console unit sales tend to start declining in the 4th year of the typical 7-year cycle, so the Gaming business could experience some pressure in 2023 (year 4).
Last, growth in the Embedded segment (23% of revenue) was primarily due to the Xilinx acquisition in early 2022.
Industry heavyweights also feeling the pain
In July, Intel (INTC) reported a Q2 net loss of $454 million as revenue fell 22% YoY, the largest decline in more than a decade as management noted PC inventories were being cut at a record rate. The Client Computing Group (CCG) segment saw revenue down 25% YoY to $7.7 billion, while operating income was down 73% YoY. For 2022, Intel expects revenue to decline by 9-13% YoY, gross margin to contract by 9.1 points, and EPS down 57% to $2.30.
Samsung (OTCPK:SSNLF) also recently reported a disastrous 3Q22 where operating profit fell by 32% to $7.7 billion, noting a weaker-than-expected consumer electronics market with elevated inventory levels and order cuts even from data center clients. Per the below graph, South Korean chip inventory build is at a record high. Aside from supply-demand dynamics, management highlighted increasing geopolitical risks, as a U.S. ban on AMD and Nvidia (NVDA) chips sold to China will impact memory earnings.
Then there's Nvidia, which reported a 33% decline in 2Q22 Gaming revenue to $2 billion (30% of total sales) driven by challenging crypto prices and weak GPU demand post-Covid. Q3 revenue outlook of $5.9 billion (-17% YoY) at the midpoint was also materially below the $8.4 billion consensus before the 8/24 warning, due to ongoing softness in Gaming and Professional Visualization. Data Center and Auto were the only bright spots, where DC revenue grew 61% to $3.8 billion in Q2, but a slowdown should be reasonably expected going forward.
Good news and bad news
The bad news is overall PC softness is likely to stretch into 1H23, so it shouldn't be surprising to see further weakness in AMD's Client segment in the next few quarters. Just like the memory business (see recent analysis on Micron (MU)), the current PC downturn will lead to aggressive price competition to get rid of excess inventory. This will weigh on margins even if sales volumes recover in the near term.
The good news, however, is that the PC problem looks increasingly de-risked, as investors have a better grasp of the magnitude of the slowdown. Despite falling PC sales, AMD has been steadily gaining market share, where its desktop unit share reached 20.6% and Mobile unit share in the notebook market reached 24.8% in 2Q22. In the server market, AMD's Epyc products have also taken a meaningful share from Intel's Xeon offerings with a ~14% share vs. a little over 1% in 2018. Given server is a higher-margin business, it should provide AMD with some cushion on the bottom line.
Final thoughts
Shares of AMD are down 50% YTD (vs. -35% (SOXX)), so markets have digested the majority of bad news while looking for early signs of a recovery in the broader semiconductor space. As painful as the current downturn may be, AMD remains a convincing share-gain story as its biggest rival Intel continues to struggle with timely delivery of new technology. That said, investors will probably have to deal with more bad news and choppy price actions in the near term as the Fed embraces a hawkish attitude on the back of inflation.
This article was written by
Analyst’s Disclosure: I/we have a beneficial long position in the shares of NVDA, SOXX, MSFT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Comments (37)
Down the road the CPU industry will regroup, but I believe you will need to be a long term investor, unless the companies intentionally low ball there expectations so that they come out looking better than the would otherwise. Maybe less so for the memory business since that is needed in a wide variety of products.
So I sold 20 Put Contracts at $80 strike, expiring Jan 17, 2025 and collected $44,000 in premium, expecting to buy back the Puts on a little bump in the underlying.
I am now now down $3.00 per share on the LEAP puts, another $6,000.
Can't get much on covered calls unless I lower the strike well below $80 and take a loss, haven't done that yet.
Looking at buying 20 LEAP long call contracts expiring Jan 17, 2025 at $60 strike and just waiting it out.
Any of Ya'll see a way out of this mess?
Yes, just wait. I only bought 500 shares at $78. I'm probably going to buy more. It's a great company, they just released a really good set of new products, with more on the way. They're gaining market share like crazy, and probably will continue to for at least 2 years. It gets more uncertain in 2024 and especially 2025, when Intel is supposed to leapfrog TSMC's transistor tech. But interest rates should be back down before then, and AMD stock much higher. The reason AMD stock is down now, doesn't have anything to do with the company, Powell and the Dems screwed up the economy bad, but we'll get over it, in a year or two.
I've done good in oil this year, which helps me stick with AMD.
www.protocol.com/...
Once in a bear market, the real rapid correction starts, that will happen early next year when Market goes from
- Show me increasing losses or I BUY
to
- Show me increasing profits or I SELL (and that is after a massive sell between December end and January)
"Intel has once again delayed the launch of its 4th Generation Xeon Scalable server processors, codenamed Sapphire Rapids. Although the company has previously disclosed the need to alter Sapphire Rapids design due to security bugs, documents obtained by Igor's Lab suggest these problems were severe. In total, Intel is said to have needed to address almost 500 distinct bugs affecting its next-generation Xeon chips, contributing to the delay of the launch to spring of 2023."If Intel can't even get its data center processors out the door, no one is going to care whether Intel is developing silicon photonics for some future product(s).
\ | NVDA |
https://finnhub.io/api/news?id=321dad739cfa409ca37313d457caecf3fe8ae8b8636d96221723aebe58e549dc | Nvidia says it does not expect new U.S. export hit its business | Nvidia said the it had already been made subject to rules, which it disclosed to investors last month, saying that they could impact $400 million of its sales in China for its current fiscal quarter. "We don’t expect the new controls, including restrictions on sales for highly dense systems, to have a material impact on our business," the company said in a statement. | 2022-10-07T09:50:44 | Yahoo | Nvidia says it does not expect new U.S. export hit its business
(Reuters) - Nvidia Corp on Friday said it does not expect new U.S. export control rules against sending chips to Chinese supercomputing systems to have a material affect on its business.
Nvidia said the it had already been made subject to rules, which it disclosed to investors last month, saying that they could impact $400 million of its sales in China for its current fiscal quarter.
"We don’t expect the new controls, including restrictions on sales for highly dense systems, to have a material impact on our business," the company said in a statement.
(Reporting by Stephen Nellis in San Francisco) | NVDA |
https://finnhub.io/api/news?id=9c345c2ce15acb936371d356263f2f3c5e81ef8767bbc705387e681b6070c9de | AMD Stock: Does Q3 Earnings Miss Impact The 5 Year Outlook? | Investors are panicking after AMD missed on its third quarter results. Read more to see bull and bear cases for AMD over the next five years. | 2022-10-07T09:23:21 | SeekingAlpha | AMD Stock: Does Q3 Earnings Miss Impact The 5 Year Outlook?
Summary
- Investors are panicking after AMD missed on its third quarter results.
- I model bull and bear cases for AMD over the next five years.
- Overall, AMD is likely to be a good buy today.
- I do much more than just articles at Tech Investing Edge: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »
Thesis
Advanced Micro Devices, Inc. (NASDAQ:AMD) is not one of the widest-moat semiconductor companies available, and there's little room for more of the multiple expansion that drove a large part of the stock's returns over the past decade. Nevertheless, AMD remains in an improving competitive position with strong secular tailwinds at its back and will likely be a market-beating investment from the current valuation. That doesn't change even after a wide miss on Q3 earnings expectations.
Author's Note: Investors who are unfamiliar with the semiconductor industry and AMD's position in it can read my semiconductor deep dive for more information.
Q3 Earnings Pre-Announcement
On October 6th, it was reported that AMD will miss its Q3 estimates by a wide margin of about 17%, largely due to weak PC demand. Client (PC) revenue was down 53% since last year, but AMD's other segments (data center, gaming, and embedded) were still up year-over-year. That includes strong 45% year-over-year growth in data center, which passed client revenue this quarter to become AMD's largest segment.
Given the weak near-term outlook and the panic that investors might be feeling as a result, it's worth stepping back to consider a longer-term thesis. In this article, I'll look at where AMD could be in five years and whether investors should expect strong returns going forward.
Is AMD Expected To Continue Growing?
As most readers probably already know, AMD has done extremely well over the last decade because investors underestimated its ability to compete in logic semiconductor design with its chief rival Intel (INTC). They also underestimated the growth of emerging applications for semiconductors like the data center.
Unlike Intel, AMD is fabless, meaning that it outsources manufacturing to Taiwan Semiconductor Manufacturing Company Limited (TSM) ("TSMC"). Because TSMC is able to manufacture more advanced (smaller) nodes than Intel, AMD was able to work with TSMC to leapfrog Intel in many capabilities. Market share gains against Intel have allowed AMD to become a leader in logic chip design for PCs, and also in higher growth use cases like the data center.
Earlier this year, AMD passed Intel in market share of desktop CPUs and has gained market share rapidly since 2016. Going forward, AMD will likely continue to gain some share in PCs, but now that it has over 50% share there's less room for rapid growth in this mature market.
The big growth story going forward is now the data center segment. Even in Q2 (which had stronger client segment growth), data center was growing over twice as fast as the client/gaming segments (the embedded segment growth is currently boosted by an acquisition but will likely grow slower than data center going forward):
Adjusting for AMD's recently announced Q3 results, data center is now the largest segment in addition to being the fastest growing. Data center becoming the largest segment could actually set AMD up for faster growth in the future, as the data center chip market is expected to continue growing rapidly, at a 9.4% CAGR through 2025. On the other hand, the client segment is expected to struggle in the short term and grow more slowly over the next five years because the PC market is mature.
According to Seeking Alpha, analysts expect AMD to grow revenue at a 10.76% CAGR through 2025, which presumably will be driven in large part by success in the data center. In my opinion, this estimate is likely too conservative relative to the 30% revenue CAGR that AMD achieved over the last five years. Although AMD is growing off of a larger revenue base in a potentially weaker economy, I still believe that growth between 15% and 19% is achievable over the next five years. Assuming that growth lands somewhere in the 11-19% range, AMD is still positioned for respectable growth going forward, even as client revenue has fallen off a cliff.
AMD Stock Key Metrics
With respect to Seeking Alpha's factor grades, AMD actually does very well, especially considering that hardly any stocks have good momentum during this market crash.
AMD currently has a P/E of 27. If AMD manages to grow revenue at an 11% CAGR, then its EPS CAGR may be closer to 15%, especially if the company continues to beat analyst estimates as it often has in the past. If the revenue CAGR nears 20%, then the bottom line could grow at a much faster 25-30%. That puts AMD's PEG somewhere between 1 and 2, which is the range that I would consider fairly valued for a mature but high quality company.
Using past and future 5 year EPS CAGR from Finviz, here's a comparison of AMD's valuation and growth expectations relative to peers:
|Ticker||P/E||CAGR Last 5 Yrs||CAGR Next 5 Yrs||PEG|
|AMD||29||45%||26%||1.1|
|NVDA||43||43%||23%||1.9|
|TSM||16||12%||24%||0.7|
|ASML||34||31%||30%||1.1|
|MU||6||84%||-4%||-|
|KLAC||15||30%||11%||1.4|
Source: The Author (EPS CAGR forecast from Finviz)
Aside from Nvidia, the semiconductor industry appears fairly valued relative to its estimated growth, with PEG ratios between 0.7 and 1.4. AMD is right in the middle of the pack at 1.1. Thus, investors are primarily choosing between these companies based on their qualitative market position, as quantitatively they all look quite similar.
Where Will AMD Stock Be In 5 Years?
While the semiconductor industry (SOXX) has crushed the market over the last 10 years with a return of 593%, AMD and its peer Nvidia (NVDA) are in a league of their own, with 10 year returns of 2378% and 4067%, respectively. However, investors shouldn't expect this level of returns over the next five years.
Over the last 10 years, AMD's P/S ratio expanded from 0.3 to 4.34. That 14x multiple expansion accounts for over half of AMD's total return during the past decade. Ten years ago, AMD was not consistently profitable and thus had a rock bottom multiple. Today, AMD boasts industry-leading ROI and will remain consistently profitable for the foreseeable future. That makes it more of a blue chip than a high risk/high reward investment. While there is perhaps some room for further operating margin improvement and further P/S multiple expansion that would likely accompany it, there's simply no way that AMD's P/S or P/E multiple will 14x again in the next decade.
That said, AMD could still produce respectable and market-beating returns of a more modest form. If we assume that AMD grows revenue at 15% over the next five years with a 2% buyback yield, and assume that profit margins expand from 15% to 22% with a terminal P/E of 20, my valuation model estimates a market cap of $237B in 5 years, implying 14% annualized returns.
Here are a couple other possible scenarios based on my model:
|In 5 Yrs||Bear||Avg||Bull|
|Estimated Annualized Return||-19%||14%||43%|
|P/E||10||20||30|
|Profit Margin||15%||22%||30%|
|Revenue CAGR||3%||15%||25%|
|Buyback Yield||0%||2%||3%|
Source: The Author
Based on these estimates, we can see that there's a wide range of possibilities for AMD stock. In the worst case, perhaps due to an extremely poor macro environment impacting the cyclical semiconductor industry and/or unexpected success from AMD's competition, AMD fails to generate much growth and has a very negative return due to multiple contraction. In the best case, AMD extends the massive growth it experienced over the past decade for another five years and crushes the market. In my view, neither of these outcomes is particularly likely compared to the average case, which I discussed above.
Final Thoughts
In the short term, AMD stock may continue to see downward pressure as a result of its recent Q3 earnings miss. It's likely that some analysts will lower their future growth expectations for AMD and thus downgrade their rating on AMD stock, potentially causing more selling. Of course, the short term is very unpredictable.
Regardless of what happens in the short term, AMD should get back on track alongside the rest of the economy in the next couple years, and it will probably beat the market over the next five years if that happens.
Considering that most of the industry is valued similarly, I recommend other semiconductor stocks instead of AMD to members of my private investing community Tech Investing Edge. This is mostly because I believe that other options have wider moats and more predictable revenue streams. However, there are valid reasons to pick AMD, such as:
- The data center segment that accounts for most of AMD's revenue may have more growth potential than other parts of the industry
- AMD currently has lower profit margins than other peers of similar quality, and thus may have more room for margin expansion
- AMD was one of the industry's biggest winners in the past, and winners tend to keep winning.
For investors who want to own AMD, now may be a good time to dollar-coast average ("DCA") by buying a few more shares.
I hope you enjoyed my research. I'm the author of Tech Investing Edge, a premium service focused on growth stocks for investors with a 10+ year time horizon. I use my "edge" from working in the tech sector to understand tech companies' long term growth potential and share my best investment ideas in cloud, SaaS, crypto, cybersecurity, semiconductors, and more with members. I'm currently offering a two week free trial to new members, so I hope you'll check it out!
This article was written by
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Comments (14)
INTC has to wait for the node and transistor change to work to make next gen chips.
AMD would show up with backlog ready to go.
" banned by our government so that it could haircut China market revenue?"AMD's China revenue ($2.33 billion)
Intel enjoyed $21.1 billion net revenue from China in 2021INTC has far more to worry about there
seekingalpha.com/..."AMD's sales to China made up the second largest region, second only to the US in FY21. AMD's Chinese revenue comprised 25% of overall revenue, growing 76% over 2020. This shows AMD isn't in the clear in terms of being insulated from Chinese revenue"
There is more revenue now than 2020 so % is less.
2.33 billion over 9.7 = 24%
2.33 billion over 26 = 9%The govt only finalized the letter to NVDA and AMD on high end chips to China and AMD already answered 400mill hit.The bulk of AMD chips to China are low level and not covered.
I would not expect any extra hit at allFor the full year 2022, AMD continues to expect revenue to be approximately $26.3 billion
AMD revenue for the twelve months ending June 30, 2022 was $21.576B, a 61.74% increase year-over-year.
AMD annual revenue for 2021 was $16.434B, a 68.33% increase from 2020.
AMD annual revenue for 2020 was $9.763B, a 45.05% increase from 2019.
AMD annual revenue for 2019 was $6.731B, a 3.95% increase from 2018.
With just the title of this article we have to be getting close to the bottom - this is just getting absurd. | NVDA |
https://finnhub.io/api/news?id=ddf99448a991089ae4804fec69922a9e74837f3df80f15350b290ce4c4c079ca | AMD Joins The Ranks Of Its Peers, Time To Start Buying | AMD finally had the shoe drop as it pre-announced a substantial downward revision to guidance. Read what could happen next with this semiconductor giant. | 2022-10-07T08:35:54 | SeekingAlpha | AMD Joins The Ranks Of Its Peers, Time To Start Buying
Summary
- AMD finally had the shoe drop as it pre-announced a substantial downward revision to guidance.
- However, all this does is join AMD to the ranks of its peers, peers who had the exact same troubles.
- But relatively speaking, AMD is the best suited to recover as growth remains positive while its valuation remains well below peers like Nvidia.
- The market can now begin pricing in the bottom and look toward the recovery, making this an opportunity to start buying.
- Looking for a helping hand in the market? Members of Tech Cache get exclusive ideas and guidance to navigate any climate. Learn More »
It seemed as if AMD (NASDAQ:AMD) was going to escape the clutches of the weak retail/PC market after issuing a softer but very respectable revenue guide in early August. After Intel (INTC) in late July and Western Digital (WDC), Micron (MU), and Nvidia (NVDA) in early August all issued disappointing reports or pre-announcements, AMD stood out as the sole high-growth semiconductor to buck the trend. For a bit, I thought AMD would offset the weakness in the retail end markets because by flexing its strength in its market share advancement. In the end, however, AMD was hit as badly as the rest. But the result for investors is not to flee AMD but instead begin accumulating shares, as the bottom is now within sight.
Recapping The Pain
Intel's bombshell of a report and guide in July reeked of its typical internal business chaos. After all, its data center division was down 16% year-over-year, and no one was calling for data center weakness through the summer. So while putting investors on alert, it was hard to take Intel seriously as it hadn't shown itself to be the bellwether it once was.
But it did start making one think more about Qualcomm's (QCOM) poor FQ4 guide a day earlier.
The truth began pouring in the following week, though, as other companies started reporting their own bad news; one after the other, each seemingly worse than the next.
First, it was Western Digital with its topline miss in its report and very staggering downside guidance - coming in at $3.7B in revenue vs. expectations for $4.79B. Then, three days later, Nvidia pre-announced it would miss its guidance, missing an $8.1B consensus by $1.4B. A day later, Micron pre-announced it would come in at or below the low end of its guidance - just five weeks after issuing said guidance.
Five companies were all seeing the same end-market weakness - large, big-name companies.
In between Intel and Western Digital, AMD reported and provided light but materially intact guidance. It seemed as if AMD was going to get by largely unscathed.
But the overall bad semiconductor news didn't end there.
Nvidia and Micron then officially reported and guided well below consensus estimates for the current quarter. Nvidia, for its part, at the end of August, guided $1B below consensus, adding to the pain of its pre-announcement. Micron saw the worst of it as it guided just a week ago for $4.25B in revenue vs. expectations for $5.68B - after already signaling a weak upcoming quarter.
All the while, AMD continued to buck the trend through silence. But, as we now know, the company will ultimately miss its quarter by a large margin, missing $6.71B estimates by over $1.1B. In a few weeks, we'll likely see the fallout of a below consensus guide, finishing off the pain.
Opening The Barn Doors Now
But not following the stock's performance over the last two months would not be seeing the whole picture. Additionally, not considering the bottom is finally beginning to be carved out with the downside pre-announcement would mean missing out on the opportunity to build a long-term position for the retail market rebound.
For those who haven't been picking up AMD during this falling knife scenario and now have a full position, the barn doors have just opened to welcome the horses back in.
Among the ones I've mentioned in this article, the best near-term opportunity is Micron, as the bottom in memory will happen more swiftly than logic chips due to the lever of controlling supply. It's one of several factors, including others, I've outlined for my subscribers. But beyond this accelerated timetable for Micron is AMD's fabless structure and well-managed, well-executing business. So if this retail end-market inventory correction will impact all of these names, AMD is at the top of my list for wanting to be in the recovery end of this downturn.
This pre-announcement takes estimates down so the market's anticipatory senses can begin seeing at the bottom, but, more importantly, the shift in estimate revisions back up. This is a six-to-nine-month look ahead mechanism the market employs. Therefore, as long as the recovery is within the next three quarters, the market will begin laying the bottom in the stock. Once the market is within two quarters of the recovery and earnings revisions have leveled off, the stock will start making headway higher.
Keeping Valuation Relative
Considering AMD is now the worst performing of the semiconductors I mentioned year to date, second only to Nvidia, the opportunity becomes the best value in this region. Moreover, comparing fabless peers' valuations (as peers with fabs have inherently lower valuations due to the higher capital costs) shows AMD is well within both relative buy range and absolute buy range.
Now, I'm well aware of the danger of using the forward valuations of these companies as their earnings estimates continue to decline. The idea is to also use the historical averages and find the buffer of how undervalued the stock may be. For this, I reference F.A.S.T. Graphs as it charts out the valuation relative to both future expectations and past performance. There hasn't been a valuation time like this in the last ten years for AMD.
Beyond just the basics of earnings, one has to keep in mind the growth rates still expected for AMD relative to peers like Nvidia, where growth is going solidly negative.
You would expect Nvidia to have the lower valuation as it has lower forward growth rates, but the exact opposite is true. AMD has a higher expected growth rate but a lower valuation. The market may be expecting a more significant turnaround for Nvidia as it currently expects growth to return a quarter sooner than AMD (going back to my point about the bottom being closer) or further downward revisions for AMD, but the gap in valuation does not make up for the risk between the two.
Finally, The Shoe Dropped
AMD's pre-announcement is disappointing but is in no way surprising considering its peers had entire novels written on the wall. The market was waiting for the AMD shoe to drop so it could begin pricing in the extent of the earnings cuts. With it now in the rearview, a comparison among peers is much easier to work through. It comes down to the company's ability to push through the retail and inventory correction downturn to the other side.
As I said earlier, Micron will be the first of the group to see upside return, but AMD is at the top of the list when it comes to a less risky semiconductor business structure. As a result, it isn't just a relative performance issue, it's also a meaningful difference in relative and absolute valuation. Over the last decade, AMD hasn't been at this low of a valuation, while Nvidia remains at valuations well over double it.
The least risky, more undervalued play among the semis is AMD. And with the downside pre-announcement out of the way, the market can begin to look to the other end of this challenging environment. It makes this dip into the $50s a serious first opportunity to buy the recovery as a long-term investor.
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This article was written by
Education and Investment Background
Joe has a Bachelors of Science in Computer and Electrical Engineering. He follows technology related companies as well as blue chip industrials and consumer products. Joe writes mainly about technology companies, especially ones that he uses and consumes. Knowing the technical side of the products helps him in his analysis of what the product impact is to consumers and the markets they reach. Joe's interests lie in tech and growth stocks.
Work Experience
Joe works for a technology contracting company as a Release Manager working with Dev/Ops tools and integrating CI/CD systems. This entails automating workflows and deploying compiled artifacts using change control/version control software and deployment automation tools. The sector of his work is governmental and deals with the department of health. He previously worked in the IT field of the healthcare industry for a major teaching hospital and practice group working mostly with integration engines for use with hundreds of systems as well as end user application access and security including single sign-on.
A Little About Joe...
Joe enjoys a variety of hobbies including playing drums and building racecars made for the ice and asphalt. He raced nationally in college for Baja SAE and continues to build racecars and race on a regional level both on road courses and frozen lakes.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of AMD, INTC, MU, NVDA, QCOM either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Comments (64)
what do you estimate AMD's organic growth rate was recently without the acquisitions Xilinx and Pensando ?
(After reading numerous reports on AMD here on SA, NOT ONE has addressed this issue.)
Pls state when they were acquired, what the TTM rev growth of each pre-acq was, and what your best estimate of AMD's organic growth rate was recently, without them
Thanks in advance.
no response ? re above ?
so where have i already ans it ?
seekingalpha.com/...
AMD
QCOM
ARCC
BX
CLF
PERI (small cap, just pre announced beat)
AVGO
PRU
ABBV
SPGI actually have more. But these are ones I really like at right price. Patience and Discipline.
https://schrts.co/agtCfUxb | NVDA |
https://finnhub.io/api/news?id=e82ac3a822e6964d43c74103b6804a1b2780cd85cae00a80a29b38b4be1f03db | PC weakness hitting semi stocks like AMD, says BofA's Vivek Arya | Vivek Arya, Bank of America Securities senior semiconductor analyst, joins 'Power Lunch' to discuss the individual company factors that're companies like Nvidia and AMD to stumble, how big a headwind export controls will be for American producers and more. | 2022-10-07T08:12:57 | CNBC | Credit Cards
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https://finnhub.io/api/news?id=8cb735aae8377161ad4786994837c420b2d760d3e455fc22c612991eb05b778e | AMD Stock Is Hitting Lows. Here's When to Buy. | AMD stock is hitting 52-week lows as it reports disappointing preliminary revenue results. Here's when to buy the chipmaker's shares. | 2022-10-07T07:41:00 | Yahoo | AMD Stock Is Hitting Lows. Here's When to Buy.
AMD stock is hitting 52-week lows as it reports disappointing preliminary revenue results. Here's when to buy the chipmaker's shares.
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https://finnhub.io/api/news?id=5294e5403becc3ef126d878ccce42a5b4c780fdbd1a0522ef0e010b98cf03567 | 12 Best Fintech Stocks to Buy After The Selloff | In this article, we discuss 12 best fintech stocks to buy after the selloff. If you want to read about some more fintech stocks, go directly to 5 Best Fintech Stocks to Buy After the Selloff. The fintech industry has taken a beating in the past few months due to soaring inflation and rising interest […] | 2022-10-07T07:27:20 | Yahoo | 12 Best Fintech Stocks to Buy After The Selloff
In this article, we discuss 12 best fintech stocks to buy after the selloff. If you want to read about some more fintech stocks, go directly to 5 Best Fintech Stocks to Buy After the Selloff.
The fintech industry has taken a beating in the past few months due to soaring inflation and rising interest rates, a combination that has pushed investors towards value offerings at the stock market. However, the slowdown has also created incredible buying opportunities in the fintech sector that looks set to rise given the advancements being made in the fields of artificial intelligence, robotic process automation, smart contracts, DeFi, and virtual reality. Fintech is no doubt the biggest disruptor in the finance industry.
This disruptive force has already won the hearts of tech giants like NVIDIA Corporation (NASDAQ:NVDA), Mastercard Incorporated (NYSE:MA), and Alphabet Inc. (NASDAQ:GOOG), all of whom have pledged hundreds of millions into the development of fintech products over the next few years. As the fintech market evolves from a disruptive one to an established one, as indicated from the more than 26,000 fintech firms in existence, it looks ready to capture a huge chunk of the $4 trillion global e-commerce market by 2027.
Some of the key trends shaping the fintech industry include the introduction of new features, the expansion of machine learning algorithms to beat fraudulent practices, and the gradual phase out of cash and physical cards that are being replaced with virtual cards secured with robust biometric technology. According to Fintech Magazine, about 30% of all banking customers use at least one financial service offered by a non-traditional provider, and this number looks set for explosive growth in the coming years.
Our Methodology
The companies that operate in the fintech sector were selected for the list. In order to provide readers with some context for their investment choices, the business fundamentals and analyst ratings for the stocks are also discussed. Data from around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
Photo by Clay Banks on Unsplash
Best Fintech Stocks to Buy After The Selloff
12. Futu Holdings Limited (NASDAQ:FUTU)
Number of Hedge Fund Holders: 9
Futu Holdings Limited (NASDAQ:FUTU) operates an online brokerage and wealth management platform in Hong Kong and internationally. It is one of the best fintech stocks to invest in. The stock has gained in the past few weeks after reports suggested that the US and China had reached a tentative auditing deal that would allow independent access to the accounting books of Chinese firms, in line with new US regulations in this regard.
On August 31, JPMorgan analyst Katherine Lei upgraded Futu Holdings Limited (NASDAQ:FUTU) to Overweight from Neutral with a price target of $62, up from $55, noting that the Q2 results of the company beat expectations on the back of stable client growth.
At the end of the second quarter of 2022, 9 hedge funds in the database of Insider Monkey held stakes worth $153 million in Futu Holdings Limited (NASDAQ:FUTU), compared to 11 in the preceding quarter worth $124 million.
Just like NVIDIA Corporation (NASDAQ:NVDA), Mastercard Incorporated (NYSE:MA), and Alphabet Inc. (NASDAQ:GOOG), Futu Holdings Limited (NASDAQ:FUTU) is one of the best fintech stocks to buy now according to hedge funds.
11. Upstart Holdings, Inc. (NASDAQ:UPST)
Number of Hedge Fund Holders: 15
Upstart Holdings, inc. (NASDAQ:UPST) operates a cloud-based artificial intelligence (AI) lending platform in the United States. It is one of the top fintech stocks to invest in. The company recently announced that it had allowed Vantage West Credit Union to offer personal loans to new and existing members across Arizona. Vantage West is a credit union with over 170,000 members and assets amounting to more than $2.6 billion.
On July 17, Piper Sandler analyst Arvind Ramnani maintained a Neutral rating on Upstart Holdings, Inc. (NASDAQ:UPST) stock and lowered the price target to $25 from $44, highlighting that over the next 6 to 18 months, enterprise technology spending could be pressured as macro headwinds persist.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Upstart Holdings, inc. (NASDAQ:UPST), with 2.7 million shares worth more than $84 million.
In its Q2 2022 investor letter, Vulcan Valve Partners, an asset management firm, highlighted a few stocks and Upstart Holdings, inc. (NASDAQ:UPST) was one of them. Here is what the fund said:
“Upstart Holdings, inc. (NASDAQ:UPST) was a material detractor for the quarter. It was a mistake, and we sold our position. Upstart is an artificial intelligence (AI) and cloud-based lending platform. The company uses AI models that are designed to underwrite superior loans with lower interest rates, lower default rates, higher approval rates, and increased underwriting automation. When we purchased Upstart, we believed the company had an excellent product and the addressable market was large.
Upstart’s results during 2021 were impressive. In the first quarter of 2022, the company reported solid results but lowered guidance and, more importantly, used its balance sheet to warehouse loans temporarily. The company’s decision to use its balance sheet to finance its growth surprised us and other market participants, and its stock price decreased dramatically. While we admire the management team, we are less confident in the company’s long-term prospects.
It will be more difficult than we anticipated for Upstart to extend its competitive advantages with smaller banks into adjacent markets such as auto loans and mortgages. As a result, our value for Upstart is unstable and the company no longer qualifies for investment. We are following our discipline and reallocating capital into companies with more stable values.”
10. SoFi Technologies, Inc. (NASDAQ:SOFI)
Number of Hedge Fund Holders: 22
SoFi Technologies, Inc. (NASDAQ:SOFI) provides digital financial services. It is one of the premier fintech stocks to invest in. The company recently announced that it had signed Justin Herbert, a quarterback for the Los Angeles Chargers, on a three year partnership. Under the terms of the deal, Herbert will take part in a new brand campaign and television ad.
On September 14, Bank of America analyst Mihir Bhatia upgraded SoFi Technologies, Inc. (NASDAQ:SOFI) to Buy from Neutral with a price target of $9, up from $8, backing the firm to drive user growth and engagement in the coming months.
At the end of the second quarter of 2022, 22 hedge funds in the database of Insider Monkey held stakes worth $337.6 million in SoFi Technologies, Inc. (NASDAQ:SOFI), compared to 22 in the preceding quarter worth $475 million.
In its Q4 2021 investor letter, Altron Capital Management, an asset management firm, highlighted a few stocks and SoFi Technologies, Inc. (NASDAQ:SOFI) was one of them. Here is what the fund said:
“We have been building our position in SoFi Technologies, Inc. (NASDAQ:SOFI) over the last two quarters but have not yet written about our thesis until now. SoFi is an online financial technology company that started off refinancing student loans. This segment remains a big part of the company’s business, but they have more recently expanded their products to offer an entire suite of financial services including personal banking, investing, and credit. While their collection of products is still evolving and not yet complete, we believe the company is in the early stages of its inflection. The company nearly doubled its member count over the past year and is growing 50%+ despite its loan refinancing business taking a hit due to the COVID-related loan moratorium. Furthermore, the company is close to obtaining a bank charter through its acquisition of Golden Pacific Bancorp, a community bank based in Sacramento. A bank charter would allow SoFi to take in its own customer deposits, lowering its cost of capital and expanding the company’s breadth of financial offerings (…read more)
9. Affirm Holdings, Inc. (NASDAQ:AFRM)
Number of Hedge Fund Holders: 27
Affirm Holdings, Inc. (NASDAQ:AFRM) operates a platform for digital and mobile-first commerce in the United States, Canada, and internationally. It is one of the elite fintech stocks to invest in. The company recently announced that it would extend the services it offers on Amazon with the introduction of pay-over-time option to customers in Canada. This addition will enable shoppers to pay in installments.
On September 7, investment advisory Morgan Stanley maintained an Overweight rating on Affirm Holdings, Inc. (NASDAQ:AFRM) stock and lowered the price target to $53 from $80. Analyst James Faucette issued the ratings update.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Affirm Holdings, Inc. (NASDAQ:AFRM), with 4.1 million shares worth more than $74 billion.
In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Affirm Holdings, Inc. (NASDAQ:AFRM) was one of them. Here is what the fund said:
“We recently covered our short position in Affirm Holdings, Inc. (NASDAQ:AFRM) after a rapid decline brought the share price to ~$30 – down from our entry point above $100 – in only 7 months. We discussed Affirm in our Q4 letter, saying the following:
Affirm is a “Buy Now, Pay Later” (BNPL) company founded by former PayPal CTO and cofounder Max Levchin. They provide installment loans to consumers, partnering with retail companies looking to drive higher sales. They have two primary products: a zero-fee installment loan for consumers with the best credit scores, and a more traditional product with 20%+ interest rates for subprime borrowers. Their stated plan is to disrupt the credit industry with more transparent, lower-fee loans. At a roughly $28b market cap at the start of 2022, AFRM stock was priced at more than 20x trailing sales, a steep price for a money-losing lender. While their early lead in online BNPL transactions and partnerships with fast-growing retailers like Peloton has fueled significant historical growth, a wave of competition has arrived… While the stock has already fallen sharply from where we initiated our short position, we think it could fall another ~40% to trade at 8x FY2022 sales."
8. Coinbase Global, Inc. (NASDAQ:COIN)
Number of Hedge Fund Holders: 29
Coinbase Global, Inc. (NASDAQ:COIN) provides financial infrastructure and technology for the crypto economy. It is one of the most prominent fintech stocks to invest in. On September 29, the company announced that it had teamed up with investment management software provider SS&C to expand the digital asset trading capabilities of the latter. Through the partnership, SS&C clients will gain access to the institutional crypto trading platform, Coinbase Prime.
On September 14, investment advisory JPMorgan maintained a Neutral rating on Coinbase Global, Inc. (NASDAQ:COIN) stock and raised the price target to $78 from $64. Analyst Kenneth Worthington issued the ratings update.
At the end of the second quarter of 2022, 29 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in Coinbase Global, Inc. (NASDAQ:COIN), compared to 46 in the preceding quarter worth $2.3 billion.
In its Q2 2022 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and Coinbase Global, Inc. (NASDAQ:COIN) was one of them. Here is what the fund said:
“Coinbase Global Inc. Ordinary Shares (NASDAQ:COIN) fell during the quarter as the crypto markets continued to suffer. While the company reported disappointing results, it committed to capping EBITDA losses at $500M even in the event of “a prolonged market downturn”. COIN’s ample liquidity ($6b in cash on hand) should enable them to survive a prolonged “crypto winter” and invest to strengthen the business in the downturn. While the crypto market is early in its adoption, Coinbase is focused on building the platform for crypto not only supporting trading, and cold storage, but moving into NFTs, staking, and crypto derivatives. We see tremendous upside potential for COIN over the next decade if they are able to successfully execute on their platform strategy.”
7. Opendoor Technologies Inc. (NASDAQ:OPEN)
Number of Hedge Fund Holders: 39
Opendoor Technologies Inc. (NASDAQ:OPEN) operates a digital platform for residential real estate in the United States. The company recently announced that it would expand the Opendoor Finance App to three more states in the US. The Opendoor Finance App, available only in California, will now launch in Georgia, Arizona, and Texas, promising consumers pre-approval letters in 60 seconds or less.
On September 23, investment advisory Credit Suisse maintained an Outperform rating on Opendoor Technologies Inc. (NASDAQ:OPEN) stock and a price target of $16. Analyst Stephen Ju issued the ratings update.
Among the hedge funds being tracked by Insider Monkey, Hong Kong-based firm Sylebra Capital Management is a leading shareholder in Opendoor Technologies Inc. (NASDAQ:OPEN), with 30.5 million shares worth more than $143.8 million.
In its Q4 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Opendoor Technologies Inc. (NASDAQ:OPEN) was one of them. Here is what the fund said:
“The Fund invests in secular growth and innovative businesses across all market capitalizations, with the bulk of the portfolio landing in the large-cap zone. The Fund is categorized as US Large Growth by Morningstar. As of the end of the fourth quarter, the largest market cap holding in the Fund was $2.5 trillion and the smallest was $791 million. The median market cap of the Fund was $27.5 billion. The Fund had $1.7 billion of assets under management. The Fund had investments in 63 securities. The Fund’s top 10 positions accounted for 45.4% of net assets. Fund inflows were positive for 2021.We sold Opendoor Technologies Inc. (NASDAQ:OPEN) because we identified issues relating to our long-term theses in the company, and we decided to exit the positions to fund other purchases.”
6. Fiserv, Inc. (NASDAQ:FISV)
Number of Hedge Fund Holders: 59
Fiserv, Inc. (NASDAQ:FISV) provides payment and financial services technology worldwide. The firm recently revealed that merger-related synergy work had caused expenses to increase in the first half of the year. The statement was made by Frank Bisignano, the CEO of the firm, who also said that the company should reap benefits in the remainder of the year as those costs wind down.
On August 11, Evercore ISI analyst David Togut upgraded Fiserv, Inc. (NASDAQ:FISV) to Outperform from In Line with a price target of $149, up from $101, noting that the company was embracing a new growth playbook.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Harris Associates is a leading shareholder in Fiserv, Inc. (NASDAQ:FISV), with 23 million shares worth more than $2 billion.
In addition to NVIDIA Corporation (NASDAQ:NVDA), Mastercard Incorporated (NYSE:MA), and Alphabet Inc. (NASDAQ:GOOG), Fiserv, Inc. (NASDAQ:FISV) is one of the best fintech stocks to buy now according to hedge funds.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Fiserv, Inc. (NASDAQ:FISV) was one of them. Here is what the fund said:
“While the threat of disruption risk to these established payment companies should not be taken lightly, it is important to note that many of these emerging disruptors are small relative to the massive global payments network and heavily reliant on the very payment infrastructure they are trying to disrupt. This led us to initiate a position in Fiserv, Inc. (NASDAQ:FISV), whose stock dropped to a level that embedded projections for negative long-term growth despite no current evidence of disruption. We think Fiserv will continue to grow despite perceived disruption risks given its scale and efficiency. Fiserv also owns cloud-based payments hardware and software system Clover, which is both bigger and faster growing than Square; this provides an additional degree of protection against further disruption risk.”
Click to continue reading and see 5 Best Fintech Stocks to Buy After The Selloff.
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Disclosure. None. 12 Best Fintech Stocks to Buy After The Selloff is originally published on Insider Monkey. | NVDA |
https://finnhub.io/api/news?id=3dad04abdb259bc8c686b7aa1b711c8d2a5d23ecfcc9985d47812eb44c9b82d9 | 11 Best Long-Term Stocks To Buy Now | In this article, we will look at the 11 best long-term stocks to buy now. If you want to explore similar stocks, you can also take a look at 5 Best Long-Term Stocks To Buy Now. The current market situation is not ideal for short-term investors and day traders. As of October 5, the S&P […] | 2022-10-07T06:31:21 | Yahoo | 11 Best Long-Term Stocks To Buy Now
In this article, we will look at the 11 best long-term stocks to buy now. If you want to explore similar stocks, you can also take a look at 5 Best Long-Term Stocks To Buy Now.
The current market situation is not ideal for short-term investors and day traders. As of October 5, the S&P 500 has tanked over 21% year to date, the tech-heavy Nasdaq is down 30% for the year, and the Dow has lost 17.35% since the beginning of 2022. The stock market is in shambles, but for long-term investors, it has started to look like an attractive entry point.
Wharton’s Jeremy Siegel: “If You’re a Long-Term Investor, I Would Absolutely Buy Now”
Jeremy Siegel is a professor of finance at the Wharton School of the University of Pennsylvania and is a notable commentator on the economy and capital markets. Mr. Siegel recently appeared on CNBC’s ‘Squawk Box’ where he discussed his view on why now is an attractive buying opportunity for long-term investors. Here are some comments from the professor of finance at one of the top business schools in the world:
“If you’re a long-term investor, I would absolutely buy now. I think these are absolutely great long-term values. Could it go down more? Of course in the short-run and in bear markets (historical), it has gone down more. But when you’re talking about 16 times earnings and even if they are clipped by a recession, you shouldn’t just base it on recession earnings you should base it on longer-term earnings, which I think are very favorable looking beyond the dip. I think these are just absolutely excellent values. Short-term, anything can happen in the short term.”
While short-term investors are unwinding their positions and triggering major sell-offs, they are in fact creating a buying opportunity for long-term investors. Some of the best long-term stocks to buy now include Johnson & Johnson (NYSE:JNJ), NVIDIA Corporation (NASDAQ:NVDA), and Microsoft Corporation (NASDAQ:MSFT).
Photo by Roberto Júnior on Unsplash
Our Methodology
To determine the 11 best long-term stocks to buy now, we picked out blue chip companies with track records of profitability and strong balance sheets. We picked stocks from a variety of sectors including consumer staples, healthcare, and technology. Along with each stock, we have mentioned the hedge fund sentiment, analyst ratings, and salient features that make it a good candidate for long-term investors. The hedge fund sentiment was derived from Insider Monkey's database, which tracks roughly 900 elite hedge funds.
Best Long-Term Stocks To Buy Now
11. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 55
Colgate-Palmolive Company (NYSE:CL) is one of the best long-term stocks to buy now because of its rich dividend history, defensive business model, and strong pricing power due to a solid brand image in global markets. On September 9, Colgate-Palmolive Company (NYSE:CL) declared a quarterly cash dividend of $0.47 per share. The dividend is payable on November 15, to shareholders of record on October 21. As of October 5, the stock is offering a forward dividend yield of 2.64%.
On August 1, Wells Fargo analyst Chris Carey raised his price target on Colgate-Palmolive Company (NYSE:CL) to $80 from $71 and upgraded the stock to Equal Weight from Underweight. This August, Barclays analyst Lauren Lieberman raised his price target on Colgate-Palmolive Company (NYSE:CL) to $74 from $71 and maintained an Equal Weight rating on the shares.
At the end of Q2 2022, 55 hedge funds held stakes in Colgate-Palmolive Company (NYSE:CL). The total value of these stakes amounted to $2.93 billion, up from $2.59 billion a quarter ago, with 50 positions. The hedge fund sentiment for the stock is positive.
As of June 30, First Eagle Investment Management is the largest investor in Colgate-Palmolive Company (NYSE:CL) and has stakes worth $899 million in the company.
Here is what First Eagle Investments had to say about Colgate-Palmolive Company (NYSE:CL) in its second-quarter 2022 investor letter:
“Shares of consumer staples giant Colgate-Palmolive have performed well as investors rotated into more recessionary-resilient defensive stocks amid the broader selloff during the second quarter. The company raised revenue guidance for 2022 but lowered its margin outlook because of higher costs for raw materials, packaging and logistics; we believe that the company’s size and market share provide it with options to mitigate the inflation challenges it faces. We continue to like Colgate- Palmolive’s dividend and previously announced $5 billion stock buyback program.”
10. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 60
The Coca-Cola Company (NYSE:KO) has the ability to drive long-term shareholder value and is one of the best long-term stocks to buy now. The company has been awarding shareholders with dividends for roughly 6 decades. At the close of the second quarter of 2022, 60 hedge funds were long The Coca-Cola Company (NYSE:KO) and held stakes worth $28.3 billion in the company. This is compared to 64 hedge funds in the previous quarter that had stakes worth $29 billion in the company.
Wall Street is bullish on The Coca-Cola Company (NYSE:KO) and sees upside to the stock. This July, Deutsche Bank analyst Steve Powers raised his price target on The Coca-Cola Company (NYSE:KO) to $65 from $64 and maintained a Hold rating on the shares. On September 6, HSBC analyst Carlos Laboy raised his price target on The Coca-Cola Company (NYSE:KO) to $76 from $72 and reiterated a Buy rating on the shares.
As of June 30, Berkshire Hathaway is the largest shareholder in The Coca-Cola Company (NYSE:KO) and owns 400 million shares. Warren Buffett has owned the stock for over a decade and the investment covers 8.38% of his hedge fund's second-quarter 2022 investment portfolio.
Some of the top blue-chip companies that should be on long-term investors' radars include The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), NVIDIA Corporation (NASDAQ:NVDA), and Microsoft Corporation (NASDAQ:MSFT).
9. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 64
On September 22, Costco Wholesale Corporation (NASDAQ:COST) released earnings for the fourth quarter of fiscal 2022. The company reported earnings per share of $4.20 and generated a revenue of $72 billion, up 15% year over year, and ahead of Wall Street estimates by $90 million. As of October 5, the stock has gained 6.8% over the past twelve months.
Costco Wholesale Corporation (NASDAQ:COST) is one of the best long-term stocks to buy now because the company has a track record for profitability and financial growth. Over the past ten years, Costco Wholesale Corporation (NASDAQ:COST) has returned 20% to investors, outperforming the S&P 500's return of 12% for the same time period.
Shortly after the company's earnings release, Jefferies analyst Corey Tarlowe reiterated his $610 price target and Buy rating on Costco Wholesale Corporation (NASDAQ:COST) and also said that the stock remains his "top pick".
At the end of Q2 2022, 64 hedge funds were bullish on Costco Wholesale Corporation (NASDAQ:COST) and held stakes worth $4.76 billion in the company. This is compared to 61 hedge funds in the preceding quarter with stakes worth $5.41 billion.
As of June 30, Fisher Asset Management is the leading shareholder in Costco Wholesale Corporation (NASDAQ:COST) and has stakes of more than $2 billion in the company. The investment covers 1.47% of Ken Fisher's 13F portfolio.
8. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 67
Walmart Inc. (NYSE:WMT) is one of the largest retailers in the world by revenue and is one of the best long-term stocks to buy now. Walmart Inc. (NYSE:WMT) is a cash-rich and profitable business that can meet its long-term financial goals and drive long-term shareholder value. As of July 31, Walmart Inc. (NYSE:WMT) has a debt-to-equity ratio of 0.58. The company has a trailing twelve-month operating margin of 4% and has free cash flows of $5.4 billion.
Analysts see upside to Walmart Inc. (NYSE:WMT). This August, Morgan Stanley analyst Simeon Gutman raised his price target on Walmart Inc. (NYSE:WMT) to $150 from $145 and maintained a buy-side Overweight rating on the shares. On September 14, KeyBanc analyst Bradley Thomas started coverage of Walmart Inc. (NYSE:WMT) with an Overweight rating and a $155 price target.
Walmart Inc. (NYSE:WMT) is a prominent backer of the metaverse. On September 26, the company launched two new experiences, Walmart Land and Walmart's Universe of Play, in Roblox Corporation's (NASDAQ:RBLX) metaverse platform. The Walmart Land and Walmart's Universe of Play feature Walmart's aisles in a virtual world.
At the end of Q2 2022, 67 hedge funds disclosed ownership of stakes in Walmart Inc. (NYSE:WMT). These funds held collective stakes of $3.78 billion in the company. As of June 30, GQG Partners owns more than 9.8 million shares of Walmart Inc. (NYSE:WMT) and is the most prominent investor in the company.
7. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 71
The Procter & Gamble Company (NYSE:PG) is one of the best dividend-paying long-term stocks to buy now. The company's defensive business model makes it less vulnerable to changes in economic cycles and allows it to maintain its profitability. The Procter & Gamble Company (NYSE:PG) has a trailing twelve-month operating margin of 23.3% and has free cash flows of $13.5 billion. Over the past ten years, The Procter & Gamble Company (NYSE:PG) has returned 9.68% to investors.
The Procter & Gamble Company (NYSE:PG) has a consensus Buy rating among Wall Street analysts. On August 2, Barclays analyst Lauren Lieberman revised her price target on The Procter & Gamble Company (NYSE:PG) to $154 from $157 and maintained a buy-side Overweight rating on the shares.
At the end of the second quarter of 2022, 71 hedge funds were eager on The Procter & Gamble Company (NYSE:PG) and held stakes worth $5.53 billion in the company. As of June 30, Bridgewater Associates is the largest shareholder in the company and has stakes worth $970 million. The investment covers 4.1% of Ray Dalio's 13F portfolio.
Like The Procter & Gamble Company (NYSE:PG), other profitable cash-rich companies include Johnson & Johnson (NYSE:JNJ), NVIDIA Corporation (NASDAQ:NVDA), and Microsoft Corporation (NASDAQ:MSFT).
6. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 79
Merck & Co., Inc. (NYSE:MRK) is presenting an attractive entry point for long-term investors and is trading at bargain levels. As of October 5, the stock has a trailing twelve-month PE ratio of 13.47 and is offering a forward dividend yield of 3.15%. Merck & Co., Inc. (NYSE:MRK) has consistently grown its dividends for the past decade and the stock is one of the best undervalued long-term stocks to buy now.
Analysts are bullish on Merck & Co., Inc. (NYSE:MRK). On August 25, Erste Group analyst Hans Engel upgraded Merck & Co, Inc. (NYSE:MRK) to Buy from Hold. The analyst noted that the company is leading its sector and has above-average profitability. On September 14, Berenberg analyst Luisa Hector raised her price target on Merck & Co., Inc. (NYSE:MRK) to $100 from $95 and upgraded the stock to Buy from Hold. As of October 5, Merck & Co., Inc. (NYSE:MRK) has gained 14.75% year to date and has a trailing twelve-month operating margin of 34.9%.
At the close of Q2 2022, 79 hedge funds were bullish on Merck & Co., Inc. (NYSE:MRK) and held stakes worth $6.11 billion in the company. This is compared to 84 hedge funds in Q1 2022 with stakes worth $5.86 billion.
As of June 30, Fisher Asset Management owns more than 12 million shares of Merck & Co., Inc. (NYSE:MRK) and is the largest investor in the company. The investment covers 0.78% of Ken Fisher's 13F portfolio.
Here is what Chartwell Investment Partners had to say about Merck & Co., Inc. (NYSE:MRK) in its second-quarter 2022 investor letter:
“In the Dividend Equity accounts, the three best performers in Q2 includes Merck (NYSE:MRK, 3.6%), up 12.0%. Merck, like other pharma companies, is in a defensive business, but the stock also did well as peak-sales estimates for their flagship drug, Keytruda, have gone up (JPMorgan estimates $32 billion in sales by 2026).”
Click to continue reading and see 5 Best Long-Term Stocks To Buy Now.
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Disclosure: None. 11 Best Long-Term Stocks To Buy Now is originally published on Insider Monkey. | NVDA |
https://finnhub.io/api/news?id=b4fa4ae4b6dfa08a823a89f327621c0222a07ed4bdd15d6e81e97f0ecba72f34 | Stocks making the biggest moves midday: CVS, Credit Suisse, AMD, Lyft and more | These are the stocks posting the largest moves in midday trading. | 2022-10-07T06:30:01 | CNBC | Check out the companies making headlines in midday trading Friday.
Ambac Financial Group – Shares of the municipal bond insurer shot up 15.7% on news of settlements with Bank of America that would bring Ambac $1.84 billion. The settlements come out of lawsuits related to the bond insurance policies Ambac used for Bank of America prior to the 2008 financial crisis. Bank of America was down about 2.4%.
related investing news
Levi Strauss – Levi's dropped 11.7% to a 52-week low after cutting its full-year sales and profit outlook Thursday, as the clothing maker cited issues stemming from the supply chain and the stronger U.S. dollar.
DraftKings – Shares of DraftKings rose 3.3% on a Bloomberg report that the online sports betting company is close to a partnership deal with ESPN.
Lyft – The rideshare company slid 8.7% after RBC downgraded the stock to sector perform from outperform. RBC said competitor Uber, which was down about 4.5%, had "structural advantages."
CVS Health – Shares of CVS dropped 10.5% following a report that the health care giant is in "exclusive talks" to buy Cano Health. The company had already been falling after the Centers for Medicare and Medicaid Services downgraded one of its Aetna Medicare Advantage plans in its annual ratings. Shares of Cano gained 9%.
Tesla, Twitter – The two businesses continued to move following a week of news on Elon Musk reviving his high-profile plans to purchase Twitter. Tesla fell 6.3%, while Twitter lost 0.2%. On Thursday, a judge said Musk needs to complete his purchase by Oct. 28 to avoid a trial.
Credit Suisse – The European bank was up 13.1% after offering to buy back $3 billion in debt securities Friday and sell a famous hotel it owns. It marks another day of tumult for shares of the stock — which hit an all-time low earlier in the week — as market observers questioned the bank's health.
DexCom – Shares of the manufacturer of glucose monitoring devices jumped 7.3% after the Centers for Medicare and Medicaid Services updated a local coverage determination related to such devices. The move could boost the bottom line for DexCom, a key player in the continuous glucose monitoring space.
Apple – The tech giant was down 3.7% despite Morgan Stanley reiterating the stock as overweight, noting elevated lead times for the iPhone. People following the company have raised concern over the performance of the new line of iPhones compared to previous rollouts as Apple yanked plans to increase production.
Meta – The Facebook owner also slid 4% despite being reiterated as a buy by Citi, which noted an appealing risk/reward outlook as Reels revenue increases and new ad formats come into play. The stock hit a 52-week low.
Cannabis companies – Shares of cannabis companies were all down, after initially soaring on news that President Joe Biden wants a review of how marijuana is classified under federal law. Biden also announced he'll pardon thousands convicted of marijuana possession. Tilray Brands, which reported a larger-than-expected quarterly loss on Friday, was down 18.8%. Canopy Growth plunged more than 25.6%, Aurora Cannabis fell 12.8% and Cronos Group lost 15.6%.
Advanced Micro Devices – Shares of Advanced Micro Devices plummeted 13.4% after the semiconductor company issued disappointing preliminary results for the third quarter and said it expects revenue to fall short of its previous $6.7 billion dollar forecast. AMD blamed the shortfall on weakening PC demand and supply chain constraints. Shares of other chip companies including Intel and Nvidia fell on the news.
Unity Software – Shares of Unity, known for its software for three-dimensional design, dropped 8.6%. It contrasts with Needham earlier Friday initiating the stock as a buy with an upside of 39%.
Provention – Shares of the biopharmaceutical company leaped 11.3%, continuing to rally on news Thursday of plans to launch a drug candidate for type 1 diabetes.
— CNBC's Samantha Subin, Michelle Fox, Carmen Reinicke, Tanaya Macheel and Yun Li contributed reporting. | NVDA |
https://finnhub.io/api/news?id=3a61310dc09564bcdc6e1c302c6122a60a6acc2b14effe9e3136b10688b98763 | 11 Best FAANG Stocks To Buy Now | In this article, we will be taking a look at the 11 best FAANG stocks to buy now. To skip our detailed analysis of these stocks and the technology sector, you can go directly to see the 5 Best FAANG Stocks to Buy Now. In spite of the Fed jacking up interest rates, the technology sector […] | 2022-10-07T06:24:03 | Yahoo | 11 Best FAANG Stocks To Buy Now
In this article, we will be taking a look at the 11 best FAANG stocks to buy now. To skip our detailed analysis of these stocks and the technology sector, you can go directly to see the 5 Best FAANG Stocks to Buy Now.
In spite of the Fed jacking up interest rates, the technology sector is continuing to attract investor attention in 2022. With rampant inflation still plaguing the market, the sector was expected to suffer from a loss in popularity. However, its cheaper valuation in a time of economic recession is managing to work in its favor. According to a Bloomberg article published this September, The Nasdaq 100 Index was 35% cheaper than its peak in 2020. Some of the best FAANG stocks like Apple Inc. (NASDAQ:AAPL) still continued to rake in cash and maintain their earnings outlooks, inspiring confidence as far as investors were concerned.
What are FAANG stocks?
The acronym FAANG refers to the top five American technology companies in the market today: Facebook (now known as Meta Platforms, Inc. (NASDAQ:META)), Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), Netflix, Inc. (NASDAQ:NFLX), and Alphabet Inc. (NASDAQ:GOOG). With Netflix, Inc. (NASDAQ:NFLX) losing the favor of many investors with its performance this year, Microsoft Corporation (NASDAQ:MSFT) is steadily becoming a new member of this group of stocks.
Investors' approach to the markets this year has demonstrated that staying away from the best FAANG stocks like Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft Corporation (NASDAQ:MSFT) is not an option. The sheer size of the tech industry alone makes it the largest of its kind in the S&P 500, making up almost 27% of the index. As a result, many investors are now being pulled towards durable businesses like the FAANG stocks.
According to a Reuters article published this July, Microsoft Corporation's (NASDAQ:MSFT) earnings results added to investor confidence in the tech sector, as they showed that the FAANG stocks were well-equipped to deal with a recession. Microsoft Corporation (NASDAQ:MSFT) rose by about 3.1% in July after the company mentioned it was targeting double-digit growth in fiscal revenue.
Let's now take a look at the 11 best FAANG stocks to buy now.
Our Methodology
We have selected renowned tech stocks that are comparable to the Big Tech companies. These stocks were popular among the 895 hedge funds tracked by Insider Monkey in the second quarter of 2022. They have also reported positive latest earnings and demonstrate growth potential based on projected EPS growth, revenue growth, and free cash flow growth, among other factors. We have ranked these stocks based on the number of hedge funds holding stakes in them, from the lowest to the highest. We have also mentioned analyst ratings and price targets for these stocks.
Best FAANG Stocks To Buy Now
11۔ International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 40
International Business Machines Corporation (NYSE:IBM) is an information technology company providing integrated solutions and services across the globe. The company offers hybrid cloud platform and software solutions, software for business automation, data and artificial intelligence solutions, and more. It is based in Armonk, New York.
An Overweight rating was reiterated on shares of International Business Machines Corporation (NYSE:IBM) on October 6, by analyst Erik Woodring at Morgan Stanley. The analyst also placed a $152 price target on the stock.
The company's revenue has grown by 27.28% year-over-year, and its EPS is expected to grow by 8.97% over the next three to five years. International Business Machines Corporation (NYSE:IBM) has a one-year dividend growth rate of 0.77% as well. Its EPS in the second quarter of 2022 was $2.31, beating estimates by $0.02. International Business Machines Corporation (NYSE:IBM) also brought in $15.54 billion in revenue, beating estimates by $359.15 million.
Citadel Investment Group was the largest stakeholder in International Business Machines Corporation (NYSE:IBM) in the second quarter, holding 2.9 million shares worth about $420.9 million. In total, 40 funds were long the stock, with a total stake value of $948 million.
International Business Machines Corporation (NYSE:IBM), like Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), and Microsoft Corporation (NASDAQ:MSFT), is one of the top tech stocks hedge funds are pouring into today.
10. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 65
Intel Corporation (NASDAQ:INTC) is a semiconductor company working to design, manufacture, and sell computer products and technologies across the globe. It offers platform products like central processing units and chipsets. It is based in Santa Clara, California.
Ross Seymore at Deutsche Bank has a Hold rating on Intel Corporation (NASDAQ:INTC) shares as of September 8. The analyst also placed a $35 price target on the stock.
Intel Corporation (NASDAQ:INTC) has a forward dividend per share growth rate of 4.21%, and a one-year dividend growth rate of 5.17%. The company has been investing large sums in research and development, manufacturing, and packaging technologies, a move that will benefit it in the long run. This March, Intel Corporation (NASDAQ:INTC) announced plans to invest $85 billion in the above areas.
In total, there were 65 hedge funds long Intel Corporation (NASDAQ:INTC) in the second quarter. Their total stake value was $2.5 billion.
9. QUALCOMM, Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 71
QUALCOMM, Incorporated (NASDAQ:QCOM) is a semiconductor company working to develop and commercialize foundational technologies for the wireless industry worldwide. The company operates through its Qualcomm CDMA Technologies (QCT), Qualcomm Technology Licensing (QTL), and Qualcomm Strategic Initiatives (QSI) segments. It is based in San Diego, California.
On September 26, Samik Chatterjee at JPMorgan reiterated an Overweight rating on shares of QUALCOMM, Incorporated (NASDAQ:QCOM). The analyst also placed a $185 price target on the stock.
QUALCOMM, Incorporated's (NASDAQ:QCOM) EPS is expected to grow by 23.02% over the next three to five years. The company's revenue has grown by 29.36% year-over-year, and its forward free cash flow per share growth rate is 50.65%. QUALCOMM, Incorporated (NASDAQ:QCOM) also has a one-year dividend growth rate of 6.08%. Analyst Chatterjee sees a substantial upside in the stock in light of the stock's current valuation.
QUALCOMM, Incorporated (NASDAQ:QCOM) was found among the 13F holdings of 71 hedge funds in the second quarter, and 73 funds in the previous quarter. Their total stake values were $2.8 billion and $3.6 billion, respectively.
8. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 84
NVIDIA Corporation (NASDAQ:NVDA) is another semiconductor company providing graphics, compute, and networking solutions in the US, Taiwan, China, and internationally. It offers game streaming services and related infrastructure, solutions for gaming platforms, and automotive platforms for infotainment systems. It is based in Santa Clara, California.
Joseph Moore at Morgan Stanley holds an Equal Weight rating on shares of NVIDIA Corporation (NASDAQ:NVDA) as of September 21. The analyst also maintains a $182 price target on the stock. Moore believes NVIDIA Corporation (NASDAQ:NVDA) will benefit in the near future, since gaming revenues are set to recover in 2023, seeing how prices in the sector are 28% higher than the baseline price from two year ago. NVIDIA Corporation (NASDAQ:NVDA) had revenue of $6.7 billion in the fiscal second quarter of 2023, beating estimates by $3.47 million.
There were 84 hedge funds long NVIDIA Corporation (NASDAQ:NVDA) in the second quarter, with a total stake value of $3.3 billion. Of these funds, Citadel Investment Group was the largest stakeholder in the company, holding 17.7 million shares worth $2.7 billion.
7. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 87
Advanced Micro Devices, Inc. (NASDAQ:AMD) is another information technology company operating in the semiconductor industry. The company offers chipsets, discrete and integrated graphics processing units (GPUs), data center and professional GPUs, and development services, among more. It is based in Santa Clara, California.
An Overweight rating was maintained on shares of Advanced Micro Devices, Inc. (NASDAQ:AMD) on October 5, placed by analyst Aaron Rakers at Wells Fargo. The analyst also placed a $90 price target on the stock.
Advanced Micro Devices, Inc.'s (NASDAQ:AMD) working capital growth year-over-year stands at a rate of 61.17%. The company's EPS is expected to grow by 30.95% over the next three to five years, and its revenue has grown by 61.74% year-over-year. This October, Advanced Micro Devices, Inc. (NASDAQ:AMD) also led chip stocks higher for the third straight day of gains this month.
Out of 895 funds, 87 funds were long Advanced Micro Devices, Inc. (NASDAQ:AMD) in the second quarter, with a total stake value of $4.8 billion. In comparison, 83 funds were long the stock in the previous quarter, with a total stake value of $6.9 billion.
6. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 106
Alibaba Group Holding Limited (NYSE:BABA) is an internet and direct marketing retail company operating in the consumer discretionary sector. The company provides technology infrastructure and marketing reach to help merchants, retailers, and businesses to engage with their consumer bases in China and internationally. It is based in Hangzhou, China.
On October 3, Jiong Shao at Barclays kept an Overweight rating on Alibaba Group Holding Limited (NYSE:BABA) shares, while placing a $135 price target on the stock.
This October, Alibaba Group Holding Limited (NYSE:BABA) led Chinese tech stocks in the broader market, rising 4.6% on October 4. The company's revenue has grown by 10.87% year-over-year, and its EPS is expected to grow by 1.74% over the next three to five years. In the fiscal first quarter of 2023, Alibaba Group Holding Limited (NYSE:BABA) had an EPS of $1.74, beating estimates by $0.18, while its $30.46 billion revenue also beat estimates by $296.3 million.
Alibaba Group Holding Limited (NYSE:BABA) had 106 hedge funds long its stock in the second quarter, with a total stake value of $7.4 billion. Fisher Asset Management was the largest stakeholder in the company, holding 14.5 million shares worth $1.6 billion.
Distillate Capital Partners LLC, an investment management firm, mentioned Alibaba Group Holding Limited (NYSE:BABA) in its second quarter 2022 investor letter. Here's what the company said:
“Changes & Regional Weights: The largest new position is Alibaba Group Holding Limited (NYSE:BABA), which underperformed considerably and has seen its enterprise value fall by almost two thirds from its peak despite a net cash position on its balance sheet.”
Alibaba Group Holding Limited (NYSE:BABA), like Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), and Microsoft Corporation (NASDAQ:MSFT), has been on the rise in the tech sector for many year, attracting positive investor attention.
Click to continue reading and see the 5 Best FAANG Stocks to Buy Now.
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Disclosure: None. 11 Best FAANG Stocks to Buy Now is originally published on Insider Monkey. | NVDA |
https://finnhub.io/api/news?id=378b65fc26384c7ab958af3a586c5789cbfcd911f12f7ab67cfc15e53ae20c50 | Chip stocks slide as Samsung, AMD expect steep fall in demand | AMD, Nvidia Corp, Intel Corp, Qualcomm Inc and Micron Technology Inc were down between 1.2% and 6.0%, weighing on smaller peers such as Marvell Technology Inc and Applied Materials Inc. Samsung, the world's top maker of memory chips, smartphones and televisions, is a bellwether for global consumer demand and its disappointing preliminary results add to a flurry of earnings downgrades and gloomy forecasts. | 2022-10-07T05:59:31 | Yahoo | Chip stocks slide as Samsung, AMD expect steep fall in demand
(Reuters) - Dire forecasts from Samsung Electronics Co Ltd and Advanced Micro Devices Inc sent chip-related shares lower on Friday, sparking fears that a slump in demand for semiconductors could be much worse than expected.
AMD, Nvidia Corp, Intel Corp, Qualcomm Inc and Micron Technology Inc were down between 1.2% and 6.0%, weighing on smaller peers such as Marvell Technology Inc and Applied Materials Inc.
Samsung, the world's top maker of memory chips, smartphones and televisions, is a bellwether for global consumer demand and its disappointing preliminary results add to a flurry of earnings downgrades and gloomy forecasts.
The chip sector has been grappling with weak demand, spurred by decades-high inflation, rising interest rates, geopolitical tensions and pandemic-related lockdowns in China, hitting the PC and smartphone market as businesses and consumers rein in expenses.
Nearly a dozen analysts cut their price targets on AMD's shares by as much as $50 after the U.S.-based chipmaker slashed its third-quarter revenue outlook by about a billion dollars.
"We believe AMD's warning will have the most negative read-across for PC peer Intel, but also somewhat for Nvidia and related memory and data center peers," BofA Securities analyst Vivek Arya said.
Memory chip buyers such as smartphone and PC makers are holding off on new purchases and using up existing inventory, leading to lower shipments and ushering in an industry downcycle.
"We still think the industry is heading for its deepest downcycle in a decade, thanks to high supply chain inventories and falling end demand," Jefferies analysts said.
Global chip sales grew just 0.1% in August, making it the 15th month of a downcycle since June 2021, when sales rose more than 30%, according to Jefferies.
Shares of major U.S. chipmakers have already lost between a third and half of their value so far this year, following huge gains last year when Nvidia was inching closer to a trillion-dollar valuation.
(Reporting by Eva Mathews and Nivedita Balu in Bengaluru; Editing by Shounak Dasgupta) | NVDA |
https://finnhub.io/api/news?id=b0aa698af42c47329dafbbdeb2f4fe4052500b32515e05bf97db95dc20b941d1 | AMD: Of Course There Is A Profit Warning | AMD announced preliminary third quarter results and disappointed the market with a weak performance. Here's a trade recommendation on AMD stock. | 2022-10-07T05:14:38 | SeekingAlpha | AMD: Of Course There Is A Profit Warning
Summary
- AMD announced preliminary third quarter results and disappointed the market with a weak performance.
- AMD estimates that Q3 sales will likely fall around $5.6 billion, which is $1.1 billion lower than what the company expected only 3 months ago.
- Investors should consider that AMD's preliminary Q3 results have been released in context of a global slowdown.
- AMD is slowly approaching a valuation that offers investors a reasonable risk / reward opportunity.
- Following the profit warnings, and given elevated volatility levels (61.2% IV), investors could consider writing January 20-dated $60 Strike PUTs.
Thesis
On October 6th, Advanced Micro Devices, Inc. (NASDAQ:AMD) announced preliminary third quarter results and disappointed the market with a weak performance. But honestly, at this point who has not expected it? After a disastrous Q2 for Intel (INTC), almost all leading chip developers including Micron (MU), Nvidia (NVDA) and Samsung (OTCPK:SSNLF) have warned that Q3 results will miss expectations. Of course now there is a profit warning also for Advanced Micro Devices.
Following the announcement, AMD shares are down approximately 5% (extended trading hours reference). And the company's valuation is slowly approaching an attractive risk/reward set-up. But for now, I advise to "HOLD."
For reference, AMD shares are down almost 55% YTD, versus a loss of "only" 22% for the S&P 500 (SPX).
AMD's preliminary Q3 Results
Advanced Micro Devices, which is expected to announce official Q3 2022 results on November 1st, released preliminary results that the company will likely miss earnings estimates as compared to the company's prior guidance (Q2 guidance). The company estimates that Q3 revenues will likely fall around $5.6 billion, which is $1.1 billion lower than what the company estimated only 3 months ago. Moreover, AMD's profitability has materially contracted, as the company expects gross profit margin to fall by about 4 percentage points to 50%.
The press release highlighted multiple reasons for the profit warning, including "lower revenue driven by lower Client processor unit shipments" as well as the realization of a "lower average selling price." AMD also commented on operating expenses, which have negatively been influenced by approximately $160 million of inventory related and pricing related charges.
AMD's Chief Executive Officer Dr. Lisa Su commented (emphasis added):
The PC market weakened significantly in the quarter ... While our product portfolio remains very strong, macroeconomic conditions drove lower than expected PC demand and a significant inventory correction across the PC supply chain.
As we navigate the current market conditions, we are pleased with the performance of our Data Center, Embedded, and Gaming segments and the strength of our diversified business model and balance sheet. We remain focused on delivering our leadership product roadmap and look forward to launching our next-generation 5nm data center and graphics products later this quarter.
Notably, AMD's client segment is expected to have lost about 40% of revenues year over year, and 53% quarter-over-quarter. However, the chip-developer's other segments such as gaming, data centers and embedded solutions remained relatively resilient (see below).
Thoughts About The Semi Industry
Investors should consider that AMD's preliminary Q3 results have been released in the context of a global slowdown for chip demand. Notably, after a disastrous Q2 performance from Intel, almost all major chip developers have highlighted challenges, including Micron and Nvidia. On Friday morning October 7th, even Samsung has issued a profit warning.
Accordingly, AMD's results should not surprise the market. The fact that AMD shares are nevertheless down about 5% (pre-market reference) is in my opinion more a reflection of a mechanical selling response following a profit warning than a sincere repricing of new information.
In my opinion, the profit warning from AMD does not signal any notable danger -- given that the demand slowdown appears much more industry-related than company-specific. Investors should note, however, how rapidly and aggressively the slowdown has materialized versus AMD managements' Q3 guidance in July.
A Buying Opportunity?
AMD is slowly approaching a valuation that offers investors a reasonable risk / reward opportunity. As of October 7th, AMD is priced at a one year forward P/E of x16, a P/B of x1.9, and a P/S of x4.
I would like to point out, however, that most of AMD's price multiples still imply a premium to the sector median valuation within the semiconductor sector, while AMD's profitability and growth do not necessarily justify such a premium.
That said, I remain slightly cautious investing in AMD stock short-term -- I don't think there is a need to rush. But I acknowledge that, long term, AMD could be an attractive investment pick. Investors should consider that the structural tailwind for higher chip consumption remains strong -- given trends in automotive, IoT connectivity, VR/AR and gaming. In fact, the global demand for semiconductors is expected to surpass $1 trillion by 2030, growing at a CAGR of about 10%. And there is little doubt that AMD will manage to capture a sizeable share of this opportunity.
Trade Recommendation - Selling Puts
There could be an interesting trade opportunity for investors who are comfortable trading options and seeking to accumulate AMD stock despite the ongoing weakness in the chip industry. Specifically, given the elevated volatility levels (61.2% implied volatility), investors could write January 20th dated $60 Strike PUTs and collect a $6 premium (about 10%, and 39.5% annualized). In my opinion, the premium that an investor receives from writing PUTs would either provide investors with a nice margin of safety if the stock is assigned, or generate an attractive return if the options expire worthless.
This article was written by
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
not financial advise
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Comments (40)
or even 40. Jan $60 is an extremely poor call, IMHO. | NVDA |
https://finnhub.io/api/news?id=9dc981f4effb5088c65f10db358fe34ab3c9e151a1628599a46c66bf8247b3ba | Samsung: Q3 Profit Drop Doesn't Change Deep Value Thesis | Samsung Electronics released guidance for Q3 2022 results and flagged the first year over year quarterly profit decline in almost three years. Read more here. | 2022-10-07T03:20:21 | SeekingAlpha | Samsung: Q3 Profit Drop Doesn't Change Deep Value Thesis
Summary
- Samsung Electronics released guidance for Q3 2022 results and flagged the first year-over-year quarterly profit decline in almost three years.
- Samsung Electronics expects consolidated operating profit of approximately 10.8 trillion Korean won, vs. 11.8 trillion Korean won expected.
- The slowdown is expected to be temporary and the structural tailwind for chip consumption remains strong -- given trends in automotive, IoT connectivity, VR/AR and gaming.
- In my opinion, there is no sound reasoning why one of the world's leading chip and consumer electronics company should trade at x2.9 EV/EBITDA.
Thesis
On October 7th, Samsung Electronics Co., Ltd. (OTCPK:SSNLF) released guidance for Q3 2022 results and flagged the first year-over-year quarterly profit decline in almost three years. Given slowing demand for chips, Samsung Electronics expects consolidated operating profit of approximately 10.8 trillion Korean won, versus about 15.8 trillion Korean won for the same period one year prior.
Although the global slowdown in consumer electronics products and semiconductors is likely to persist for a few more quarters, I remain highly confident in Samsung's long-term prospects. On the backdrop of a structural market expansion for semiconductors, I view the current cyclical downturn as a buying opportunity. Reiterate "Strong Buy."
Samsung's Q3 Preliminary Results
Samsung Electronics, which is expected to announce official Q3 2022 results on October 27, preliminary released that the company will likely report as follows: consolidated revenues between 75 and 77 trillion Korean won; and operating profit between 10.7 and 10.9 trillion Korean won.
As compared to Q3 results one year prior, Samsung's operating income is down about 31% year over year, reaching the lowest quarterly profit in almost 3 years. Moreover, Samsung's preliminary results could be viewed as a profit warnings -- given that analysts had expected operating income about 8.5% higher, at 11.8 trillion Korean won (Source Bloomberg).
Thoughts About The Semi Industry
As one of the world's largest chip makers and electronics company, Samsung is Electronics is highly sensitive to the global economy. And the global economy is slowly slipping into a recession. Moreover, Samsung's preliminary Q3 results have been released in context of a global slowdown for chip demand in particular, and come after warnings and earnings from Micron (MU), Nvidia (NVDA), Intel (INTC), and Advanced Micro Devices (AMD) have already painted a gloomy picture for the global semiconductor industry.
But the slowdown is expected to be temporary. Investors should consider that the structural tailwind for higher chip consumption remains strong -- given trends in automotive, IoT connectivity, VR/AR and gaming. In fact, the global demand for semiconductors is expected to surpass $1 trillion by 2030, growing at a CAGR of about 10%.
Buy The Dip
Samsung's quarterly profit drop looks more like a cyclical fluctuation than a structural challenge, as there are no strong arguments to doubt that Samsung's position as a leading chipmaker and electronics consumer company is challenged. In fact, Samsung Electronics remains innovative, cost competitive, and relatively shielded from geopolitical tensions.
Investors should also consider that Samsung stock is down about 30% YTD and trades at incredible valuation levels. Moreover, semiconductor manufacturers and consumer electronics companies are preferably bought on a cyclical downturn -- and accordingly on weakness.
That said, I argue that investors should appreciate the negativity as a buying opportunity, accumulating SSNLF shares at an incredibly attractive valuation -- priced at x2.9 EV/EBITDA.
I would like to highlight that following the "profit warning," Samsung stock lost less than 0.2% (South Korea listing reference: Samsung Electronics Co., Ltd. (005930.KS))
Risks
Personally, I believe Samsung stock is strongly de-risked at current valuation levels, given that the risk of every investment opportunity is a function of price. But investors should consider a few challenges that might pressure SSNLD stock for a longer period of time:
First, slowing global consumer confidence could provoke an extended depression of Samsung's revenues, given a slowdown in the consumption of consumer electronics products and chip sales.
Second, as a technology company, a loss of competitive advantage in various business segments such as smartphones could materially influence Samsung's long-term industry position.
Third, higher than expected R&D investments in order to realize new product initiatives and/or to defend competitive positioning could pressure operating profitability.
And finally, investors should consider that currently much of Samsung's share price action is driven by investor sentiment. Accordingly, investors may need to stomach price volatility even though SSNLF's fundamental business outlook remains unchanged.
Conclusion
I like to consider SSNLF as a deep value stock. In my opinion, there is no sound reasoning why one of the world's leading chip and consumer electronics company should trade at x2.9 EV/EBITDA. For reference, even Intel is valued at a x5.8 one year forward EV/EBITDA.
I would like to highlight , that despite the global economic slowdown Samsung is still highly profitable -- and the "profit warning" is actually quite positive: Samsung estimates Q3 quarterly operating profit at about 10.8 trillion Korean won (about $7.7 billion). Reiterate "Strong Buy."
This article was written by
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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Comments (5)
I have been a very very long time investor in Samsung, but just this time I have had the idea to sell it due to its very bad performance.
I did sell because I though the decline was due to the taxes that the heirs of the founder has to pay, and the way to do it is by raising money via selling stocks.
¿what do you think about this possibility? | NVDA |
https://finnhub.io/api/news?id=43862604dbd2716b4aeacdd602f57b2e31aa3c459c710074a3453b3e67012940 | AMD shares fall more than 10% on weak outlook | AMD shares were down more than 10% on Friday after the chipmaker issued a weak outlook, blaming declining PC demand and supply chain issues. | 2022-10-07T02:35:54 | CNBC | - Investors continued to sell shares of AMD on Friday after the chipmaker issued weak preliminary third-quarter results.
- AMD pointed to slumping PC demand and overall supply chain issues.
- Shares of other chipmakers, including Intel and Nvidia, were also down.
AMD shares were down 13.9% on Friday as investors digest the company's disappointing preliminary third-quarter results Thursday that were well below its initial guidance.
The chipmaker cut its sales forecast on Thursday for the third quarter, blaming a larger-than-expected decline in the personal computer market and supply chain issues.
related investing news
AMD now expects preliminary quarterly revenue of about $5.6 billion thanks to "reduced processor shipments." That's more than $1 billion below the $6.7 billion it had previously forecast as the midpoint of its revenue expectations for the quarter.
The company also said its non-GAAP gross margin is expected to come in around 50%, while it had previously expected gross margin to be closer to 54%.
Several firms, including Piper Sandler, Stifel, KeyBanc Capital Markets and Mizuho Securities cut their price targets for AMD in notes to clients Friday, though each of those maintained a buy or overweight rating.
Shares of other chipmakers like Intel and Nvidia were also down, more than 5% and 8%, respectively, as weak PC demand and supply chain issues could weigh on other semiconductor players.
WATCH: AMD's third quarter cut was deeper than the market expected, says Bernstein's Stacy Rasgon | NVDA |
https://finnhub.io/api/news?id=6992287c59c85772c50eaba8ea320679cea582b9553a714e296e923ae636b13a | Thank Nervous Investors for This Prime Opportunity to Buy NVDA Stock | A prominent Wall Street expert is concerned about weakness in the PC market. His point is duly noted, but NVDA stock can still recover. | 2022-10-07T02:23:00 | InvestorPlace | Nvidia (NASDAQ:NVDA) stock is just one of many downtrodden tech stocks of 2022. As some investors fret over PC-market pressure, it might be tempting to give up on Nvidia altogether. However, the shares are so beaten-down that it’s starting to look like an overreaction. Besides, Nvidia’s latest GPU lineup is bound to be a game-changer, literally and otherwise.
If people hoped that Nvidia would single-handedly save the tech sector in August, they were surely disappointed. The company reported second-quarter fiscal 2023 GAAP earnings per diluted share of just 26 cents, down 72% year-over-year (YOY). Moreover, gaming-segment revenue declined 33% YOY, and that’s the company’s bread and butter.
Nvidia’s quarterly results stoked the market’s bearish sentiment, and a Wall Street expert’s PC-industry concerns only add to the anxiety. Nevertheless, contrarian investors should see the pessimism as overstated — and with top-tier gaming tech, Nvidia might manage to prove the skeptics wrong.
NVDA Stock Gets a Price Target Cut
When stocks decline precipitously, it’s normal for analysts to reduce their price targets. That said, it’s instructive to consider their stated reasons for lowering their share-price forecasts.
Thus, as Susquehanna analyst Christopher Rolland just cut his price target on NVDA stock from $190 to $180, investors should want to know why. Apparently, his primary reason is simple: The PC market isn’t doing well.
Rolland’s “checks indicate PC-market weakness may be extending beyond consumer and into enterprise.” Consequently, Susquehanna reduced the firm’s share-price prediction for Nvidia and its peers to reflect a “new PC-shipment forecast and weakening PC-industry checks.”
That’s a fair point, as Rolland expects PC-industry shipments to fall 17% this year, which is worse than his previous prediction of an 11% decline. Naturally, this should dent Nvidia’s top and bottom lines to a certain extent.
The Market’s Pessimism Could Be a Setup for a Great Quarter
While Rolland’s point about PC-industry pressure is duly noted, it’s also most likely priced into NVDA stock by now. After all, PC-market weakness isn’t a secret, and the markets are quite efficient.
Indeed, investors are so pessimistic and the bar is so low that Nvidia should be able to surpass analysts’ expectations in the fourth quarter. To this point, Nvidia CEO Jensen Huang expects “a pretty terrific Q4 for Ada,” referring to the company’s recently unveiled next-generation chip architecture.
Let’s not forget that Nvidia’s shareholder value comes from its tech innovations. “Ada” refers to Ada Lovelace, which will power Nvidia’s much-talked-about RTX 4090 graphics card. Ada’s specs should make any tech geek salivate:
“Ada’s advancements include a new Streaming Multiprocessor, a new RT Core with twice the ray-triangle intersection throughput, and a new Tensor Core with the Hopper FP8 Transformer Engine and 1.4 petaflops of Tensor processor power.”
It’s fine if you’re not up to speed on “ray-triangle intersection throughput” and “petaflops.” Suffice it to say that Ada Lovelace and the RTX 4090 should keep competing GPU makers at bay and hardcore gamers happy.
There’s Strong Value in NVDA Stock
NVDA stock is cheaper than it’s been in a while, and Nvidia’s market capitalization is down to around $300 billion. In other words, you’re looking at a great value-investing opportunity.
For this, we can thank the market, as it seems that investors have overreacted to an admittedly weak PC market. Meanwhile, Nvidia is still doing what it does best: building the components that gamers crave and developers demand.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. | NVDA |
https://finnhub.io/api/news?id=5e3a7f453ab59f0458cf2424b1e23932fa9b09bba32fdc60169523450fd5dcdb | Why Is Polestar (PSNY) Stock Heating Up Today? | PSNY stock is climbing slightly in early trading after the company reaffirmed its 2022 production guidance this morning. | 2022-10-07T01:40:00 | InvestorPlace | Polestar (NASDAQ:PSNY) stock is climbing in early trading after the electric vehicle (EV) maker reaffirmed its 2022 delivery guidance. Specifically, it continues to expect to deliver 50,000 EVs in 2022.
Last quarter, Polestar delivered about 9,215 EVs, roughly 100% higher than the number it provided in the third quarter of 2021. During the current quarter, Polestar expects to deliver more than double the number of EVs it unloaded in Q3. The company explained it has been able to step up its production in China in recent months.
“We needed to catch up on production after Covid-19 related setbacks in China and we have,” Polestar CEO Thomas Ingenlath said in a statement. “The majority of Polestar 2 cars set for delivery in Q4 are ready and making their way to our customers in 27 markets around the world, with the fourth quarter set to be our strongest on record yet.”
Investors are trying to determine if, despite the supply chain issues all automakers are encountering, EV startups like Polestar will be able to meet their production guidance.
Upcoming SUV Launch
Next Wednesday, Oct. 12, Polestar will unveil its first SUV, the Polestar 3. InvestorPlace Writer William White recently reported the EV will feature “centralized core computing from Nvidia (NASDAQ:NVDA)” and be able to “adapt to different road types once every two milliseconds.” The EV will also be equipped with advanced safety systems made by Polestar’s sister company, Volvo Cars.
Polestar is a joint venture controlled by Volvo and Chinese automaker Geely. The latter company has owned Volvo Cars since 2010.
A Negative View on PSNY Stock
On Sept. 9, research firm Redburn started coverage of Polestar with a “sell” rating. The firm believes that, with many more companies making EVs, Polestar may “struggle to stand out,” particularly outside of Europe. Calling the company’s prices soft, the firm thinks the demand for Polestar’s EVs will not meet its targets.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. | NVDA |
https://finnhub.io/api/news?id=8fd98f7eafe11536a7f1c84ad3f0a727dc13dd3d6d83d873b7680e69144a0418 | Should Investors Stay Away from the Shares of Top Chipmakers? | Shares of top chipmakers, including Advanced Micro Devices (NASDAQ:AMD), Intel (NASDAQ:INTC), and Nvidia(NASDAQ:NVDA), have eroded investorsâ wealth in 2022. ... | 2022-10-06T23:16:00 | TipRanks | Shares of top chipmakers, including Advanced Micro Devices (NASDAQ:AMD), Intel (NASDAQ:INTC), and Nvidia (NASDAQ:NVDA), have eroded investors’ wealth in 2022. The slump in consumer demand and lower average selling prices are taking a toll on their financials and stock price. Amid challenges, Robert W. Baird analyst Tristan Gerra suggests investors stay away from PC-centric companies.
Gerra wrote, “We would continue to stay away from PC-centric names, which within our coverage list include AMD, INTC, and NVDA, due to a likely prolonged PC downturn into next year and continued weakness in consumer gaming.”
While Gerra remained sidelined on the shares of these chipmakers, AMD’s lackluster Q3 performance further strengthened his view. Notably, AMD announced preliminary numbers for Q3, wherein its revenue of $5.6 billion came about $1.1 billion lower than its prior expectations. AMD blamed a weaker-than-expected PC market and inventory correction actions across the PC supply chain for the underperformance.
Gerra reduced his price target to $65 from $100 on Advanced Micro Devices stock following the preliminary Q3 numbers. He maintains a Hold recommendation on AMD stock.
Earlier, Susquehanna analyst Christopher Rolland also warned investors about the prolonged weakness in the PC market. Rolland lowered his price target on AMD, NVDA, and INTC stocks.
Given the challenges, let’s see what Wall Street recommends for these chipmakers.
Is Advanced Micro Devices a Buy, Sell, or Hold?
Wall Street analysts are cautiously optimistic about AMD stock. It has received 19 Buys, seven Holds, and one Sell rating for a Moderate Buy consensus rating. Further, analysts’ average AMD price target of $112.84 implies 66.3% upside potential.
Meanwhile, Advanced Micro Devices stock has a Neutral Smart Score of five out of 10 on TipRanks.
What is the Prediction for Nvidia Stock?
Similar to AMD, analysts are cautiously optimistic about Nvidia stock. NVDA commands a Moderate Buy consensus rating on TipRanks based on 24 Buys and nine Holds. Moreover, these analysts’ average price target of $206.81 implies 57.5% upside potential.
Meanwhile, Nvidia stock has an Outperform Smart Score of eight out of 10 on TipRanks due to its AI (Artificial Intelligence) capabilities and momentum in the Data Center business.
What is the Prediction for Intel Stock?
The overall weakness in the PC market is keeping analysts sidelined on Intel stock. INTC stock sports a Hold consensus rating on TipRanks based on four Buy, 16 Hold, and eight Sell ratings. Meanwhile, analysts’ average price target of $37.76 implies 38.9% upside potential.
INTC has a Neutral Smart Score of 5 out of 10.
Conclusion
The industry is in the middle of a correction following the solid demand it witnessed during the pandemic times. Prolonged weakness in demand (both from consumers and enterprises), lower selling prices, and an uncertain macro environment will likely play spoilsport in the short term. | NVDA |
https://finnhub.io/api/news?id=e83b482ddbe9d9731143dd48cd152551727c7a5d309200d08df83dd446056198 | Why Advanced Micro Devices Shares Lost 25% Last Month | Shares of Advanced Micro Devices (NASDAQ: AMD) fell 25.3% in September 2022, according to data from S&P Global Market Intelligence. The semiconductor designer released some new embedded and mobile chips last month, but the new products were not the reason for AMD's diving stock price. Instead, the richly valued shares were weighed down by troublesome ripples in the American economy. | 2022-10-06T15:19:47 | Yahoo | Why Advanced Micro Devices Shares Lost 25% Last Month
Shares of Advanced Micro Devices (NASDAQ: AMD) fell 25.3% in September 2022, according to data from S&P Global Market Intelligence. The semiconductor designer released some new embedded and mobile chips last month, but the new products were not the reason for AMD's diving stock price. Instead, the richly valued shares were weighed down by troublesome ripples in the American economy. | NVDA |
https://finnhub.io/api/news?id=8d3a08d3a3d44544e70a6d8a36683b1e87443a6cc29295ebd71fd10700048c62 | Nvidia (NVDA) Stock Moves -0.6%: What You Should Know | Nvidia (NVDA) closed the most recent trading day at $131.30, moving -0.6% from the previous trading session. | 2022-10-06T14:45:09 | Yahoo | Nvidia (NVDA) Stock Moves -0.6%: What You Should Know
In the latest trading session, Nvidia (NVDA) closed at $131.30, marking a -0.6% move from the previous day. This move was narrower than the S&P 500's daily loss of 1.03%. At the same time, the Dow lost 1.15%, and the tech-heavy Nasdaq gained 0.39%.
Prior to today's trading, shares of the maker of graphics chips for gaming and artificial intelligence had lost 3.68% over the past month. This has was narrower than the Computer and Technology sector's loss of 4.49% and lagged the S&P 500's loss of 3.51% in that time.
Nvidia will be looking to display strength as it nears its next earnings release. In that report, analysts expect Nvidia to post earnings of $0.74 per share. This would mark a year-over-year decline of 36.75%. Our most recent consensus estimate is calling for quarterly revenue of $5.99 billion, down 15.73% from the year-ago period.
For the full year, our Zacks Consensus Estimates are projecting earnings of $3.50 per share and revenue of $27.46 billion, which would represent changes of -21.17% and +2.03%, respectively, from the prior year.
It is also important to note the recent changes to analyst estimates for Nvidia. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.
Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.
The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 2.1% higher. Nvidia is currently sporting a Zacks Rank of #5 (Strong Sell).
Investors should also note Nvidia's current valuation metrics, including its Forward P/E ratio of 37.78. This represents a premium compared to its industry's average Forward P/E of 9.35.
Meanwhile, NVDA's PEG ratio is currently 3.08. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Semiconductor - General was holding an average PEG ratio of 1.86 at yesterday's closing price.
The Semiconductor - General industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 240, which puts it in the bottom 5% of all 250+ industries.
The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.
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https://finnhub.io/api/news?id=788051d3958b6d28594547ce0f7f6898ed2d0947fcb250aa0d75cc6003612045 | Stocks trending after hours: Levi Strauss, AMD, Tilray, and more | Levi Strauss, AMD and Tilray are among the top trending stocks in after hours trading on Thursday, October 6, 2022. | 2022-10-06T14:39:47 | Yahoo | Stocks trending after hours: Levi Strauss, AMD, Tilray, and more
Levi Strauss (LEVI): Shares fell 5% in extended trading after the jeans-maker lowered its full year forecast, citing the strong dollar and supply chain disruptions. Levi sees full-year adjusted earnings per share of $1.44 to $1.49, down from its previous range of $1.50 to $1.56, and 2022 net revenue growth of 6.7% to 7%.
For the third quarter, Levi reported adjusted earnings of 40 cents a share on revenue of $1.52 billion.
Advanced Micro Devices (AMD): The chipmaker fell in after hours trading after the company lowered its guidance for third-quarter venue, noting a weak PC market and “significant” inventory corrections throughout the PC supply chain. AMD now sees 3Q sales of $5.6 billion, down from its previous estimate of $6.71 billion.
Competitors Nvidia (NVDA) and Intel (INTC) fell in the post market on the news.
Tilray (TLRY), Canopy Growth (CGC), Aurora Cannabis (ACB): Cannabis stocks soared ahead of the close and added to gains in extended trading after President Biden pardoned all prior Federal offenses of simple possession of marijuana. Biden also urged Governors to do the same with state offenses and asked the Secretary of Health and Human Services Xavier Becerra and Attorney General Merrick Garland to review how marijuana is classified under federal law.
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https://finnhub.io/api/news?id=a3ce3660fbf9ffa2377f3738aff738ac01fc1ec9ce61fa52a51cb268422d2dd0 | The Curious Reason Why Nvidia Stock Gained Ground Thursday Morning | Investors are anticipating that the U.S. will impose additional export controls to protect intellectual property and boost national security. | 2022-10-06T10:29:12 | Yahoo | The Curious Reason Why Nvidia Stock Gained Ground Thursday Morning
Investors are anticipating that the U.S. will impose additional export controls to protect intellectual property and boost national security.
Investors are anticipating that the U.S. will impose additional export controls to protect intellectual property and boost national security.
Mark Spitznagel and Nassim Taleb have been watching for black swans for decades. "We’ve never seen anything like this level of total debt and leverage in the system," he tells Fortune. "It's an experiment."
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Stocks have blown past expectations for 2023 – but some analysts are bracing for a sell-off as the market approaches record highs.
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The week ahead will feature a crucial inflation report and earnings out of Disney, UPS, and Alibaba as second quarter earnings season winds down.
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Dubbed the Oracle of Omaha, Warren Buffett is renowned for his simple and frugal lifestyle. Despite being the sixth richest person globally, with a net worth estimated at $117.9 billion, Buffett continues to live in the same modest home in Omaha that he purchased in 1958 for just $31,500. Adjusted for inflation, that amount today would be approximately $328,990.80, a mere 0.000279% of his total net worth. Buffett has consistently ranked the purchase of his home as the third-best investment he ha
As a pandemic-inspired boom ends, entrepreneurs and giant corporations alike are counting on customers to keep accumulating more stuff than they can squeeze into their homes. | NVDA |
https://finnhub.io/api/news?id=f337ea8670b95243b8498031471f049b97606b9b9c721cce8179313fbc707f57 | This Could Be the Best Black Friday Ever! | One of the consequences of the coronavirus pandemic was widespread supply shortages. As a result, many retailers overreacted and ordered more products than they needed. This video will highlight why the inventory glut at companies like Nvidia (NASDAQ: NVDA) could lead to the best Black Friday ever for shoppers. | 2022-10-06T08:30:00 | Yahoo | This Could Be the Best Black Friday Ever!
One of the consequences of the coronavirus pandemic was widespread supply shortages. As a result, many retailers overreacted and ordered more products than they needed. This video will highlight why the inventory glut at companies like Nvidia (NASDAQ: NVDA) could lead to the best Black Friday ever for shoppers. | NVDA |
https://finnhub.io/api/news?id=ca12a0a042972362c5ca9289856f34a76e17b6227d237a73811150719f4dddae | Nvidia, Alphabet gain as mega cap stocks move higher | Yahoo Finance's Jared Blikre breaks down the latest market action. | 2022-10-06T07:02:51 | Yahoo | Nvidia, Alphabet gain as mega cap stocks move higher
Yahoo Finance's Jared Blikre breaks down the latest market action.
Video Transcript
[AUDIO LOGO]
BRAD SMITH: Welcome back to "Yahoo! Finance Live" this morning, everyone. We're taking a look at the US major averages. We are mixed right now with the Dow just barely in negative territory here. And so we did open the day lower. Now, we're seeing a little green on the screen there. For more, let's get on over to Yahoo! Finance's own Jared Blikre. Jared.
JARED BLIKRE: Yes, let's take a look at the four-day price action here. Dow just passed into the green yet again. This is a one day. And so let's take a look at Monday, Tuesday, Wednesday, Thursday, right up against the upper end of this range that we've been looking at. Good for 6%. Very impressive start to the quarter. A day ago, it was the best start to a quarter since 1938. Have to retabulate that at the end of today. So far so good.
A lot of seasonality studies out there. This is a midterm election year. And a lot of times we do see a rise in October. I've spoken to a number of commentators, analysts, strategists, and they do expect largely a big bounce sometime between now and mid-November. But the debate centers around, is it going to be reflecting the low or is that just going to lead to yet another low? Jury's open on that one.
So we have energy, tech, communication services, and consumer discretionary all in the green outperforming. So that means the mega caps, plus energy, are feeling the love right now.
And let's take a look at the NASDAQ 100. You can see mainly green here. Nvidia up over 2 and 1/2 percent. Alphabet up over 1%. Not a lot of outliers that I'm seeing. Looks like software and also semiconductors is feeling some love. AMD up about 3% there.
Let's take a look at the Dow. And we can see more of a mixed board. We can see pharmaceuticals taking a little bit of a backseat here. Johnson & Johnson and Merck off by about 2/3 of percent. And just taking a look at our leaders for today. We can see a lot of love for ARKK, as well as Korean stocks, chip makers, IPOs, retail.
Let me just show you what's happened so far this week. This is gonna be the four-day price action. And we can see a ton of outperformance by stocks. Those are the chip stocks, once again.
Meme stocks, and let's take a look at that as well. We can see the four-day price action on this. Very indicative of a risk on, let's-buy-everything mood. And we know these don't necessarily last, but that's what we're seeing right now. So a little bit of enthusiasm as we still approach this liftoff from those lows.
BRIAN SOZZI: Gosh, love that heat-map analysis. Jared Blikre, thanks so much. Appreciate it. | NVDA |
https://finnhub.io/api/news?id=9117b3c15a952a45b77a6f095174170e3749b4e1768c295c61347cb377d1916a | Zacks Market Edge Highlights: ExxonMobil, Meta Platforms, UnitedHealth Group, Biogen and NVIDIA | ExxonMobil, Meta Platforms, UnitedHealth Group, Biogen and NVIDIA are part of the Zacks Market Edge article. | 2022-10-06T04:30:11 | Yahoo | Zacks Market Edge Highlights: ExxonMobil, Meta Platforms, UnitedHealth Group, Biogen and NVIDIA
For Immediate Release
Chicago, IL – October 6, 2022 – Zacks Market Edge is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here: https://www.zacks.com/stock/news/1988279/should-you-sell-your-fangman-stocks)
Should You Sell Your FANGMAN Stocks?
Welcome to Episode #331 of the Zacks Market Edge Podcast.
(1:00) - Should You Continue To Invest In Growth Stocks?
(6:10) - Understanding FANG During A Down Market
(17:45) - Should You Be Buying The Dip Or Staying On The Sidelines?
(29:00) - Have A Plan That Works For Your Investment Timeframe
(34:50) - Episode Roundup: XOM, META, NVDA, MSFT, UNH, CNC, BIIB, LLY, ARKK
[email protected]
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week, Tracey is joined by Zacks Senior Strategist, Kevin Cook, to discuss their favorite topic: what should investors do as stocks sell-off?
Should you sell? Or add further to your positions?
What do you do with growth stocks? Do you sell your FANGMAN stocks, which are down anywhere from 10% to 50% from their highs?
Or do you do...nothing?
Exxon's Market Cap Overtakes Meta Platforms
This year, for the first time in 5 years, ExxonMobil's XOM market cap has exceeded Meta Platforms META, one of the FANGMAN stocks.
Meta Platforms shares have fallen 18.5% over the last 5 years as shares have plunged this year.
But ExxonMobil shares are now up 16% over the last 5 years after gaining 56% this year.
ExxonMobil has been a value stock for years. Meta Platforms was a growth stock, often listed among the top stocks as one of the "FANGMANs."
Is the tide turning in favor of value?
[As we talk about in the podcast, Kevin is reading the May 2022 book called Fossil Future by Alex Epstein. Tracey promised to link to it. You can find it on Amazon here.]
What's Working and What's Not
In addition to energy, investors have been fleeing to healthcare stocks for safety. Should you follow?
And they have been selling the big tech names, especially the semiconductors. Are the semi stocks oversold?
1. UnitedHealth Group UNH
UnitedHealth Group has been holding up during the 2022 sell-off. Shares are up 4.2% year-to-date while the S&P 500 is down 22.8%.
Over the last 5 years, UnitedHealth Group shares are up 164% compared to just 48.7% for the S&P 500.
UnitedHealth Group isn't cheap. It trades with a forward P/E of 23.6.
It also pays a dividend, but it is only yielding 1.3%.
Is it too late to hide out in UnitedHealth Group?
2. Biogen BIIB
Biogen shares popped 37% recently after it announced its Alzheimer's drug reduced cognitive decline by 27% compared to the placebo.
Shares of Biogen are up 11.5% year-to-date.
Biogen isn't that expensive, with a forward P/E of 16.1. It does not, however, pay a dividend.
Should investors be buying Biogen after the big pop?
3. NVIDIA NVDA
NVIDIA is one of the big winners of the "FANGMAN" stocks. Over the last 5 years, NVIDIA has gained 190%.
But NVIDIA shares have taken a big dive in 2022, falling 55.2%.
Shares of NVIDIA are still expensive at 35x. It now has a Zacks Rank of 5 (Strong Sell).
NVIDIA has been one of Kevin's favorite stocks. Is he buying it here on weakness?
What Else Should You Know About the Stock Market Sell-Off and Growth Stocks?
Tune into this week's podcast to find out.
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https://finnhub.io/api/news?id=4e211bfa490c747d502378bbabb31ac4645512cf0c00cdaa193ca748c5c698d9 | Dear PSNY Stock Fans, Mark Your Calendars for Oct. 12 | Fans of Polestar Automotive (PSNY) stock will want to keep an eye on the company as a potential catalyst is coming on Oct. 12. | 2022-10-06T03:18:00 | InvestorPlace | Fans of Polestar Automotive (NASDAQ:PSNY) stock will want to keep an eye on the company as a potential catalyst is coming on Oct. 12.
This coming Wednesday, Polestar will reveal the Polestar 3. This is the electric vehicle (EV) company’s first SUV. The launch of a new EV is something investors will want to keep in mind, as it could push shares of PSNY stock higher that day.
Investors that want to see the reveal for themselves will be able to tune into a live stream of the event. It will take place at 1:00 p.m. Eastern Time and will be lead by Polestar CEO Thomas Ingenlath and Head of Design Maximilian Missoni.
What Does the Polestar 3 Offer?
Polestar is working to create a performance SUV that also features modern amenities. As such, it comes equipped with centralized core computing from Nvidia (NASDAQ:NVDA) as well as advanced safety systems from Volvo Cars.
To go along with that, the Polestar 3 makes use of a rear-biased dual motor powertrain and an electric torque vectoring via a dual clutch system on its rear motor. This, combined with its adaptive dual-chamber air suspension, lets it adapt to different road types once every two milliseconds.
PSNY stock is down 3.4% as of Thursday morning.
Investors looking for all of the latest stock market news will want to keep reading!
InvestorPlace offers up all of that news ready to go in one place! For Thursday, that includes what has shares of Camber Energy (NYSEMKT:CEI), Annovis Bio (NYSE:ANVS) and Twitter (NYSE:TWTR) stock on the move today. You can read up more on these matters at the links below!
More Thursday Stock Market News
- Camber Energy (CEI) Stock Heats Up After Regaining Listing Compliance
- Why Is Annovis Bio (ANVS) Stock Up 12% Today?
- Carl Icahn Just Made a Big Bet on Twitter (TWTR) Stock
On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. | NVDA |
https://finnhub.io/api/news?id=661fe9adcd8afe6fe714078c932adbaceae012086e9242137db590f8466f36ab | AMD: Be Greedy When Others Are Fearful | AMDâs shares are currently trading at a heavily discounted price. Click here to read why I believe the drop is a great opportunity to buy AMD's shares at discounted price. | 2022-10-06T03:08:14 | SeekingAlpha | AMD: Be Greedy When Others Are Fearful
Summary
- AMD’s shares are currently trading at a heavily discounted price.
- Weakening fundamentals in the gaming business are fully priced into AMD’s valuation.
- New product launches could lead to a revenue bump for AMD in Q4’22.
- AMD's valuation relative to Nvidia is highly attractive.
I am buying Advanced Micro Devices, Inc. (NASDAQ:AMD) right now because I believe the market is wholly irrational about the value of AMD's shares as well as the company's growth prospects. The semiconductor company is seeing a slowdown in the Gaming business as consumers no longer buy graphics cards as quickly as they did a year ago, but AMD's new Ryzen processors and Radeon GPUS may give revenues a bump in the fourth-quarter. The market is currently not in favor of AMD, which has led to a major repricing of the company's shares. I believe the drop is a great opportunity to buy shares of AMD at a discounted price!
AMD's repricing is exaggerated
Year to date, AMD's shares have seen a 53% revaluation to the down-side due to a couple of factors that have created negative sentiment overhang for AMD. Among the factors that have hurt AMD are a light forecast for AMD's third-quarter -- which indicates a revenue deceleration -- weaker gross margins, and slower growth in the Client and Gaming businesses.
In 2020 and 2021, GPU prices surged due to unprecedented demand from not only gamers that upgraded their equipment during the pandemic, but also from cryptocurrency miners. This demand pushed prices dramatically above the manufacturer's suggested retail price for both AMD's and Nvidia's (NVDA) graphics cards and led to a shortage in GPUs that supported strong pricing. The market situation fundamentally changed in 2022, as demand for GPUs dropped rapidly and the price for AMD's RX 6000 GPU, for example, fell below the manufacturer's suggested retail price in July.
New product launches in Q4 '22 could create catalyst for AMD's two struggling businesses
AMD's two core business segments are Data Centers and Gaming. The chipmaker split up its reporting segments following the successful acquisition of Xilinx and now reports four segments: Data Center, Client, Gaming and Embedded. Data Center and Embedded are AMD's two fastest growing businesses which continue to benefit from strong EPYC server processor sales as well as accelerating product adoption by enterprise customers. AMD's new Client and Gaming segments effectively split up revenues generated from selling Ryzen processors (Client) and Radeon graphics cards (Gaming). Client and Gaming have seen the slowest top line growth rates of 25% and 32% in Q2'22 due to the broader slowdown in the PC market post-pandemic.
The Data Center business is likely going to continue to drive strong results for AMD due to strong product demand, growing enterprise adoption, and Intel's (INTC) problems with its own data processor chips.
A key accelerant for AMD's growth in the Data Center business is the delayed launch of Intel's Sapphire Rapids server processors which are the chipmaker's fourth-gen Xeon server processors. Intel has fought with delays for a while but it looks that the company's server chips -- which were originally meant to compete against AMD's highly successful third-gen Zen 3 EPYC Milan processors -- are set to launch only in the first quarter of 2023… with volume shipments kicking in even later. The delayed launch for the Sapphire Rapids will likely set up Intel for even stronger competition in the server market because AMD is set to launch the EPYC Genoa processor -- which is build on the more powerful Zen 4 architecture -- in FY 2023.
The slowdown in the Client And Gaming segments, however, is a concern for AMD, but the firm is launching new products that could lead to a re-invigoration of revenue growth in the fourth-quarter.
AMD just released a slew of new Ryzen processors and will release new Radeon GPUs in November that could make a strong impact on AMD's revenue growth and lead to a new up-grade cycle for gamers. AMD just launched its new AMD Ryzen 7000 Series desktop processors which started to retail at about $300. A 3D V-Cache model is expected to come to market later this year. The new Ryzen 7000 Series processors, which promise significant performance enhancements over prior-gen models, have the potential to re-accelerate AMD's revenue growth in the Client segment in the fourth quarter.
AMD's new Ryzen 7000 Series desktop processors are powered by AMD's new Zen 4 architecture, offering content creators stronger rendering performance and better energy consumption. AMD's top-of-the-range processor, the 16-core AMD Ryzen 9 7950X processor offers 57% better content creation performance (speed) while delivering 47% better energy efficiency than prior-gen models.
AMD is also set to launch next-generation Radeon RX 7000 graphics cards in November which could result in accelerating segment revenue growth in the important fourth-quarter. I estimate that a successful roll-out of a new slate of CPU and GPU products could drive stronger revenue growth in the Client and Gaming segments, which have taken a backseat lately to AMD's excellent performance in Data Centers.
Facing a long term growth catalyst: Metaverse
AMD could play a crucial role in helping Meta Platforms (META) to develop its next big business. Meta Platforms announced last year that it will invest heavily into the metaverse growth opportunity, which, according to Bloomberg Intelligence, could grow into an $800B market by 2024.
Meta Platforms has even changed its reporting structure to include a segment called "Reality Labs" in its disclosures which consolidates its activities in the metaverse. The metaverse is a connection of virtual worlds where consumers can engage online in virtual reality social spaces, and Meta Platforms needs high-performance chips to support the development and use of virtual reality apps. A large part of Meta Platforms' top-line growth going forward is likely to come from its Horizon World's VR platform through which the company plans to take a 50% cut from virtual asset sales. Until FY 2025, it is expected that virtual world spending will double to $400B, with the majority coming from in-game purchases.
With user growth slowing at Meta Platforms' social media platform Facebook, it needs a partner that can help develop a foundation for the next growth frontier, the metaverse… and AMD could play a critical role in doing this. Specifically, AMD's acquisition of Xilinx has created an opportunity for AMD to support the creation of a metaverse-ready infrastructure that will set the foundation for Meta Platforms' growth going forward. AMD's RF chip Xilinx Zynq UltraScale+ RF SoC, for example, has been selected as a key chip for Meta's Evenstar program, which is meant to accelerate the adoption of open radio access networks/RANs. RANs are critical to expanding 4G/5G global mobile network infrastructure, and AMD's expanded product portfolio, through the acquisition of Xilinx, could be critical in powering not only Meta Platforms' growth, but its own as well.
Earnings risk and relative valuation
Due to AMD's 53% decline in the price of its shares this year, AMD has a much better risk profile than at the beginning of the year, despite slowing revenue growth. AMD's revenue estimates have fallen lately, in part because of a lighter revenue outlook for AMD's third-quarter. In the last 90 days, there were 24 downward revisions and 8 upward revisions for AMD's forward annual revenue estimates. The trend clearly indicates that the market expects slowing overall top line growth.
AMD is expected to generated $4.35 in EPS this year and $4.88 next year, which implies a current P/E ratio of 14 X... which is very close to AMD's 1-year low. Relative to Nvidia, I believe AMD is the much better investment in the chip industry… not only because of the lower valuation based off of earnings, but also because Nvidia has more exposure to the decelerating GPU market than AMD. AMD trades -- despite lowered EPS estimates -- well below its 1-year average P/E ratio of 23 X.
Based off of sales and free cash flow, AMD is also a much better deal than Nvidia: AMD has a P/S ratio of just 3.7 X, while Nvidia's P/S ratio is almost three times higher. AMD may also grow much faster in the future than Nvidia due to the recently completed acquisitions of Pensando and Xilinx, which greatly strengthen AMD's Data Center capabilities. Last but not least: Nvidia issued a very weak forecast for FQ3'23 due to its heavy reliance on graphics cards.
Risks with AMD
AMD projected $6.7B in revenues +/- $200M for the third-quarter, implying 55% year over year growth which is still impressive. Considering that AMD grew 70% in the second-quarter, AMD's growth is slowing, however, which could pressure the firm's valuation factor going forward. Intel and Nvidia effectively warned of weaker growth due to the decline in PC shipments and GPU sales in 2022, which may result in lower gross margins in the chip industry as a whole. Weaker gross margins may further pressure AMD's valuation factor and lead to lower earnings estimates as a result.
A global economic recession and inflation obviously represent significant risks for AMD and other chip manufacturers if weakening product demand translates to weaker pricing of PC and laptop components. The U.S. is already "unofficially" in a recession, and pricing strength in the GPU market already has eroded compared to last year. I also see continual risks with the supply chain, which, according to McKinsey, is still disrupted due to the global COVID-19 pandemic. While AMD faces a set of risks, I believe the low valuation strongly suggests upside potential.
Final thoughts
Pricing AMD's growth at a 13 X P/E ratio is irrational, and I have acquired shares of AMD quite aggressively in the last few days. AMD has launched new Ryzen processors which could be a strong catalyst for AMD's fourth-quarter revenues. The new generation of 5nm gaming processors promises significant performance improvements over prior-gen processors, and AMD may kick off a new upgrade cycle with its newest Ryzen 7000 Series as well as new Radeon graphics cards. AMD also continues to benefit from Intel's problems with its own server processors. Because shares of AMD are cheap -- given the firm's long-term potential and connection to the metaverse opportunity -- I believe investors may want to be greedy as long as the market appears to be fearful!
This article was written by
Analyst’s Disclosure: I/we have a beneficial long position in the shares of AMD either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Comments (35)
AMD EPS for the quarter ending June 30, 2022 was $0.27, a 53.45% decline year-over-year.
www.macrotrends.net/...
AMD shares outstanding for the quarter ending June 30, 2022 were 1.632B, a 32.47% increase year-over-year.
Fear is not sufficent reason to buy something.
You make a good case for AMD.
BUT, often others are fearful for a good reason.
Look before you leap.
Fools rush in where others fear to tread (and the fools die). | NVDA |
https://finnhub.io/api/news?id=d42152d42b4b78606fefaaa64a4ff7824dad2af9956427fd1e3289f69129adad | Stocks Fall Ahead Of The Make Or Break Job Report | Stocks fell today, despite trying to rally as rates and the dollar pushed higher. The job report tomorrow will drive what happens next. | 2022-10-06T00:24:00 | TalkMarkets | Stocks Fall Ahead Of The Make Or Break Job Report
Stocks fell today, despite trying to rally as rates and the dollar pushed higher. The job report tomorrow will drive what happens next and based on a lot of different data, I think those forecasts of 250,000 news jobs may prove low. Those ISM data points have shown three solid months of improvement in the service industry and suggest an improving labor market, not softening. Additionally, the BLS job report has beaten consensus estimates every month since October 2021, except for March and April of this year, and the April miss was by a small margin.
Of course, tomorrow can be the day that NFP comes in below estimates because I am pointing it out. But again, all one can do is analyze the data and form an opinion based on it. So that has allowed me to believe that the jobs data will be better than expected and potentially significantly better than expected.
2-Yr
The 2-Year appears to be breaking out as well, suggesting there may be more upside for rates to come. The 2-yr is flirting with the 4.25% level, and should that level be cleared, then it has a lot of room to run higher.
(Click on image to enlarge)
S&P 500 (SPX)
Meanwhile, the S&P 500 has formed one of my diamond patterns. If that is correct, the index is set for a pretty significant drop back to the origin of the rally and suggests a reversal of all the gains and potentially undercut the September low.
(Click on image to enlarge)
AMD (AMD)
AMD pre-announced revenue numbers after the close, showing sales of about $5.6 billion vs estimates of $6.7 billion. That is a huge miss, more than 16%. It is no different than Nvidia when it gave that horrible guidance, and it really should not come as a surprise. Even Micron cited it had a big slowdown in PC sales when it reported, I think it was last week? It feels as if Micron reported ages ago, but I think it was last week. Anyway, the point is, there was no way AMD was immune, and that is probably why the stock has been crushed. Now could it fall further, sure? But really, it all depends on that support level at $61. Once that support goes, this stock has no support, from what I can see, until the upper $ ’40s.
(Click on image to enlarge)
Nvidia (NVDA)
Nvidia is also trading lower after hours on the AMD news, and I have no idea why this stock holds up, so well. I guess what I am wondering now is if the sector has deteriorated further since Nvidia gave that guidance in mid-August. My guess is it has, and if it has, it probably comes on the gaming side, and if that data center side goes, watch out. For now, the stock stalled out at $131, and support comes at $117.
(Click on image to enlarge)
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Disclaimer: Mott Capital Management, LLC is a registered investment adviser. Information ...more
Disclaimer: Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.
This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.less | NVDA |
https://finnhub.io/api/news?id=8ea288ac88549313280531e8ce90f2e8e316f18b8e1762bdcfd29b36778e5540 | U.S. Stocks - Elliott Wave Technical Analysis | Stock Market News: The nonfarm payrolls on Friday, but more importantly would be the CPI on the 13th Oct as the Feds are firmly focused on inflation. | 2022-10-05T23:58:00 | TalkMarkets | U.S. Stocks - Elliott Wave Technical Analysis
Image Source: Pexels
US Stocks: AAPL, AMZN, NVDA, TSLA, GOOGL, BRK-B, SQ, META, NFLX, ENPH, MSFT, BAC, JPM. Elliott Wave
SP500 US Stock Bear Market: AMZN, AAPL, NVDA, TSLA, GOOGL, BRK.B, SQ, META, NFLX, ENPH, MSFT, BAC, JPM, GS. Elliott Wave Technical Analysis
Stock Market News: The nonfarm payrolls on Friday, but more importantly would be the CPI on the 13th Oct as the Feds are firmly focused on Inflation.
Stock Market Summary Elliott Wave Count: Tracking two different Elliott Wave counts.
Analysis US Stocks: Tesla TSLA, Amazon AMZN, Nvidia (NVDA), Apple AAPL, Microsoft MSFT, Berkshire Hathaway (BRK/B), Block, Inc (SQ), Meta Platforms, Netflix (NFLX), Enphase (ENPH), Alphabet GOOGL. XLF Finance Sector ETF, JPMorgan JPM & Bank of America BAC, Goldman Sachs Group Inc (GS)
Stock Market Trading strategies: The risk-reward is not there, so no trading strategy
Video Length: 00:37:59
Video Chapters
00:00 SP500
09:06 Apple (AAPL)
12:58 NVIDIA (NVDA)
14:12 Amazon (AMZN)
16:07 Meta Platforms (META)
18;20 Netflix (NFLX)
19:12 Enphase (ENPH)
21:34 Tesla (TSLA)
28:09 Alphabet (GOOGL)
29:09 Microsoft (MSFT)
30:03 Berkshire Hathaway (BRK.B)
31:56 Block Inc. (SQ)
34:01 Banks JPM, GS
37:58 End. Thanks for supporting!
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Disclosure: As with any trading or investment opportunity there is a risk of making losses especially in day trading or investments that Trading Lounge expresses opinions on. Note: Historical ...more
Disclosure: As with any trading or investment opportunity there is a risk of making losses especially in day trading or investments that Trading Lounge expresses opinions on. Note: Historical trading results are no guarantee of future returns. Some investments are inherently more risky than others. At worst, you could lose your entire investment and more TradingLounge™ uses a range of technical analysis tools, such as Elliott Wave, software and basic fundamental analysis as well as economic forecasts aimed at minimising the potential for loss. The advice we provide through our TradingLounge™ websites and our TradingLounge™ Membership has been prepared without taking into account your particular objectives, financial situation or needs. Reliance on such advice, information or data is at your own risk. The decision to trade and the method of trading is for you alone to decide, tradinglounge takes no responsibility whatsoever for your trading profits or losses. This information is of a general nature only, so you should, before acting upon any of the information or advice provided by us, consider the appropriateness of the advice in light of your own objectives, financial situation or needs. Therefore, you should consult your financial advisor or accountant to determine whether trading in Indices Stocks shares Forex CFDs Options Spread Betting derivatives of any kind / products is appropriate for you in light of your financial trading circumstances.less | NVDA |
https://finnhub.io/api/news?id=d9a4c0e40c5d01f36c8f6a89419c61e658624ba3c1d7c1fba92d609527f3202d | AMD Tumbles After Catastrophic Preannouncement, Drags Down Chip Sector | AMD reported that Q3 revenue was about $5.6 billion, which was +29% Y/Y, was far below the average estimate $6.71 billion. | 2022-10-05T22:20:00 | TalkMarkets | AMD Tumbles After Catastrophic Preannouncement, Drags Down Chip Sector
Chip giant Advanced Micro Devices slumped, and dragged peers such as Intel and others lower in after-hours trading after the company released preliminary Q3 results which fell were a disaster, some 20% below analyst the company's own guidance from just two months ago, and sparking fresh concerns about a sputtering market for personal-computer chips which has sent Intel to the lowest level in seven years.
AMD reported that Q3 revenue was about $5.6 billion, which was +29% Y/Y, was far below the average estimate $6.71 billion.
The company said that "preliminary results reflect lower than expected Client segment revenue resulting from reduced processor shipments due to a weaker than expected PC market and significant inventory correction actions across the PC supply chain."
And in the latest confirmation that the inventory and margin-crushing bullwhip effect is now everywhere and about to unleash a deflationary tsunami (just as we warned back in May), AMD said that non-GAAP gross margin will be approximately 50%, down sharply from the company's previous guidance of 54% announced just two months ago.
AMD blamed the gross margin shortfall on "lower revenue driven by lower Client processor unit shipments and average selling price (ASP). In addition, the third quarter results are expected to include approximately $160 million of charges primarily for inventory, pricing, and related reserves in the graphics and client businesses."
(Click on image to enlarge)
“The PC market weakened significantly in the quarter,” said AMD Chair and CEO Dr. Lisa Su. “While our product portfolio remains very strong, macroeconomic conditions drove lower than expected PC demand and a significant inventory correction across the PC supply chain. As we navigate the current market conditions, we are pleased with the performance of our Data Center, Embedded, and Gaming segments and the strength of our diversified business model and balance sheet. We remain focused on delivering our leadership product roadmap and look forward to launching our next-generation 5nm data center and graphics products later this quarter.”
AMD stock plunged on the latest dismal report but has since recovered more than half the drop.
(Click on image to enlarge)
Other names hit by the ugly preannouncement include INTC and NVDA, which will likely be next to preannounce catastrophic Q3 results.
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They are short 1.1bn which is exactly the 53% of decline in client segment. | NVDA |
https://finnhub.io/api/news?id=95937964d2f779957252423125f8cdacf924152a6844011f19545b0273d862a6 | Best Stocks 2022: NVDA Stock Can Still Make a Comeback Despite Bleak Forecast | Readers have voted NVDA stock as one of the best stocks of 2022, and while it faces macro-turmoil, it could still finish the year strong. | 2022-10-05T20:10:00 | InvestorPlace | InvestorPlace readers are big on tech this year. That much is certain based on the fact that readers chose Nvidia (NASDAQ:NVDA) stock as one of the Best Stocks for 2022. And it’s easy to understand why. With its impressive trajectory throughout the last several years and the speculative investing frenzy’s influence on tech, NVDA stock seemed like a no-brainer in January.
Unfortunately, though, things have not kept their pace, and it’s been a thorn in the side of the chipmakers. The stock has seen a 55% decline year-to-date (YTD).
However, there are some positives at the end of Q3. The losses are slowing for NVDA. The stock declined only 14% in the quarter, as compared to the average 20%-plus losses in the two preceding quarters. And with some bullish catalysts for the chip industry, NVDA stock still might find some wind in its sails before 2022 ends.
How Nvidia Got Here
Nvidia, like most other companies in 2022, certainly hasn’t gotten a fair shake. The Federal Reserve is making it difficult for any publicly traded company to turn a decent profit, after all. Rate hikes aimed at killing inflation are holding Wall Street hostage. And being part of a sector that is largely speculative and more volatile than others, NVDA stock and its peers bear the brunt of Jerome Powell’s decision-making.
Not to mention, supply-chain issues aren’t exactly in the rearview. Chip production is still hampered by the effects of a long constrained supply chain. Couple this with the estimated $500 million hit to the company from cutting ties with Russia, and you’ve got a recipe for bearishness.
Investors haven’t been given much to look forward to regarding Nvidia’s incoming earnings report, either. After missing estimates on its Q2 earnings, the company also slashed its forecast for this past quarter to save face. The company projected at the time that it would make $5.9 billion in Q3 revenue — a steep decline from Wall Street’s $6.9 billion expectations. This decline comes as the company predicts a further decline in the demand for graphics cards — a downturn not helped by Ethereum’s (ETH-USD) Merge upgrade killing ETH mining outright.
CHIPS Act, Quantum Computing, the Metaverse Provide a Light for NVDA Stock
Sure, things don’t seem great. But, don’t count NVDA stock out just yet. For all the macroeconomic factors playing the heel to Nvidia’s year, there are positive outlooks for the company.
The U.S. government’s recent chip news does present Nvidia with some positive catalysts, however minor they may be. The CHIPS Act will help furnish the entire U.S. chip industry. Although Nvidia doesn’t manufacture its chips, the rush of cash could help it to rise in sympathy with its American peers. InvestorPlace’s Samuel O’Brient has noted that several investing insiders have gravitated toward NVDA stock in the wake of the news, including Paul Pelosi.
O’Brient also mentions that Nvidia will benefit as the metaverse increases its presence worldwide. As users grow, and computers scale up graphic processing technologies, Nvidia will be there to service those needs. In fact, information leaked earlier this week relating to the company’s new RTX 4090 graphics card. If figures hold true, the card will make for one of the highest-performing cards on the market, working four times faster than the previous generation and producing 360 frames per second at high resolutions.
Quantum computing, like the metaverse, also seems to be a catalyst to look forward to for NVDA stock. InvestorPlace contributor Ian Bezek has named NVDA stock as one of his top bets in quantum computing, thanks to its interest in expanding into the quantum simulations niche, a move helped greatly by its GPU technology.
Bottom Line on NVDA Stock
It might be easy to be down and out looking at NVDA’s performance thus far. And while things don’t look great for the immediate future, there are signals suggesting NVDA might be one of the Best Stocks for 2022.
It’s important to keep in mind that the issues plaguing NVDA stock are, largely, not unique to the company. These are issues keeping all of Wall Street pinned to the wall. Inflation doesn’t reserve itself for certain sectors. And issues of decreasing demand for graphics cards won’t last forever. The world is dependent on computers, making long-term prospects quite high. The decrease in demand is just another symptom of inflation hitting people right in the wallet.
So hold strong, NVDA stock believers! Lots of analysts still paint the stock as a buy, and they will feel vindicated in their takes when all is said and done.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. | NVDA |
https://finnhub.io/api/news?id=794c7e7291a6906c42c25641136c59e581c1be5525237dc5e7ee0f600941335d | 7 Undervalued Tech Stocks With Dividends to Buy Now to Retire Rich | It might feel impossible because of the bear market, but there are still several undervalued tech stocks with dividends to buy. | 2022-07-17T04:08:00 | InvestorPlace | For as much attention as bear markets get, they actually don’t come around all that often. When they do though, they present an opportunity for long-term investors. That’s as they scour for bargains in various sectors, like tech. With that in mind, let’s look for undervalued tech stocks with dividends.
The “with dividends” part may allow us to find some stocks that have slower growth, but have held up better amid the recent selling pressure.
That additional yield has become a bit less attractive, as yields of risk-free assets — Treasuries — have gone higher this year. Still though, it helps soften the blow of buying stocks while waiting for them to appreciate down the road.
When combined with a reasonable valuation and a sizable decline, these undervalued tech stocks with dividends become even more worthy of our attention. Let’s look at three of them now.
|AVGO||Broadcom||$557.81|
|INTC||Intel||$26.21|
|CSCO||Cisco||$47.50|
Broadcom (AVGO)
It’s hard not to be bullish on Broadcom (NASDAQ:AVGO), even if the stock has enjoyed a strong rally off the low. The company continues to deliver strong results, even as the economy remains questionable.
The stock suffered a peak-to-trough decline of 38%, better than many of its peers. However, many also fail to realize that Broadcom pays out a 3.3% dividend yield, too.
That dividend was raised 12% when the company last reported earnings. Alongside that dividend hike, Broadcom delivered a top- and bottom-line beat and better-than-expected first-quarter outlook.
As for expectations, analysts expect mid- to high-single-digit revenue and earnings growth in FY 2023 (just beginning) and 2024.
As for the “undervalued” part of undervalued tech stocks with dividends, Broadcom trades at a rather attractive valuation of 13.5 times this year’s earnings. However, should shares retest the lows, Broadcom will trade at roughly 10 times earnings, while its yield will swell to 4.5%.
Intel (INTC)
Intel (NASDAQ:INTC) is becoming another name that’s hard to ignore. Only this time, there are concerns about how low the stock may go. I don’t know that its 52-week low of $24.59 will hold.
The stock recently enjoyed a 27.5% rally off the October low — when it hit its 52-week low — but has been under pressure once again. As a result, the stock pays a dividend of 5.6%. Of the stocks on this list, Intel’s is certainly the highest, although that comes along with being the worst performer over the last 12 months.
Shares trade at roughly 5 times last year’s earnings, but that doesn’t really matter; what matters is what the company will do going forward.
Unfortunately, analysts expect just under $2 a share in earnings this year, leaving the stock to trade at just under 13 times earnings. When will it be a bargain? At $20? Back below $15?
I don’t know that either of those scenarios will unfold.
What I do know is that Intel has become a conglomerate in the chip space. Eventually when things settle down and a trough is formed, this stock will be a solid long-term hold — especially if the company can maintain its dividend.
Cisco (CSCO)
Last but certainly not least, we have Cisco Systems (NASDAQ:CSCO). Paying out a 3.2% dividend yield and Cisco has a respectable income stream for investors.
While Cisco has not been a big out-performer on the year, it has held its own. Shares are up 16% in the last three months and 7.5% in the last six months. Its 25% year-to-date drop is better than all of FAANG, Microsoft (NASDAQ:MSFT) and other so-called safe-haven mega-cap tech names.
In mid-November, the company delivered better-than-expected fourth-quarter results. Cisco then provided a strong outlook for its fiscal first quarter, as well as the full year.
For the year, analysts expect about 6% revenue and earnings growth. Next year, those expectations climb to almost 8% earnings growth despite revenue growth forecasts of just 4%.
That said, shares trade at a valuation of just 13 times earnings. If Cisco stock trades back down to $41 — a level it has hit several times this year — shares will trade at just 11.5 times earnings and yield will climb to 3.7%.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. | NVDA |
https://finnhub.io/api/news?id=b49ebd0d9cc97c6e1b441ad3ec03c3725e297ad8fe4dde4e3297acdb697a94ea | Big Tech Are Falling Knives | The competitive playing fields are evening out, and Big Tech is losing its edge. It's time to buy the tech startups that are unseating them. | 2022-10-05T18:08:00 | InvestorPlace | [Editor’s note: “Big Tech Are Falling Knives” was previously published in April 2022. It has since been updated to include the most relevant information available.]
I make a lot of bold claims. And one of my biggest, boldest, wildest of all time is that Big Tech is dead.
I first said that back in July 2021. No one listened at the time. In fact, everyone thought I was nuts.
It’s part of the nature of being a tech entrepreneur and an early-stage investor. Most people see the world as it is today. I see the world as it will be in five, 10, 15-plus years. That means I sound a bit out there sometimes. But that perception also helped me become the world’s No. 1 stock picker.
Indeed, look what’s happening now.
All the once-unstoppable Big Tech stocks are crashing. We saw a 65% drop in Netflix (NFLX) and a 60% decline in Meta (META) stocks. And Nvidia (NVDA) stock fell 60%, too.
It’s a bloodbath. And now everyone is asking: Is Big Tech dead?
In short, yes. Separate from the 2022 selloff, small-cap stocks killed them.
Competition Has Caught Up to Big Tech
Many think my rationale for believing Big Tech is dead hinges on government regulation, consumer boycotts over censorship, or even the turbulent macroeconomic environment.
But my rationale for claiming Big Tech is dead is much more fundamental in nature.
It’s dead because of competition.
In short, Big Tech became what it is by leveraging first-mover advantages in emerging tech industries. Amazon (AMZN) turned into a trillion-dollar company because it pioneered the e-commerce industry. Meta became a tech giant because it founded social media. And Netflix reached its height because it established TV streaming.
Now, though, those first-mover advantages are disappearing. We’re 10-plus years into the e-commerce, social media, and TV-streaming revolutions. Every retailer is selling online these days. Every website has an app, and every media company has a streaming platform.
The playing fields in the industries that Big Tech have dominated are “evening out.”
As they are, Big Tech is losing its edge.
Meta and Netflix are seeing a novel drop in users. Amazon’s e-commerce sales growth has flipped into negative territory. Alphabet‘s (GOOGL) hypergrowth YouTube business is slowing for the very first time. Nvidia’s GPU performance lead is narrowing.
These examples aren’t just one-off phenomena. They are indicative of a broader trend, where small tech stocks are disrupting big tech stocks.
Meta: Fallen Big Tech Titan
Let’s look at the demise of Big Tech on a case-by-case basis, starting with everyone’s favorite: Meta.
Who uses Facebook anymore? I mean, come on! Most of us have a Facebook profile because it’s like the “internet ID.” But much like your real ID, you only use it when you must. Facebook is not something most folks use anymore for anything besides social “housekeeping.”
It’s yesterday’s social media platform.
Sure, the Facebook ecosystem includes Instagram, and Instagram is cool. But even that “cool” platform is losing mindshare to trendier visual apps like Snap (SNAP) and TikTok.
Meanwhile, Messenger and WhatsApp have durable appeal. But they’re messaging platforms, and those are notoriously difficult to monetize unless you charge for them. And the moment Messenger and WhatsApp aren’t free is the moment they aren’t popular anymore.
The verdict on Meta? It’s over the hill.
How about Amazon? Yes, we all still shop there. But five years ago, Amazon was the only game in town. And now consumers have options.
We have Walmart (WMT), Target (TGT) and Home Depot (HD). Our favorite brick-and-mortar stores have all shifted online.
There’s Wayfair (W), Etsy (ETSY) and Chewy (CHWY). New e-retail platforms have emerged to specialize in specific shopping verticals.
And how about all those Shopify (SHOP) stores? They’re everywhere these days.
In other words, our online shopping habits have been democratized. And while Amazon is still growing, it’s growing much less quickly than the likes of Shopify, Wayfair, Etsy, and Chewy. In fact, Amazon’s core e-commerce business is seeing its revenues drop right now. They’ve fallen 4% year over year, as per the company’s second-quarter earnings report.
It’s an incumbent with eroding market share — not great.
Alphabet’s Crumbling Foundation
Moving on to Alphabet, we may have the worst of Big Tech here. It’s the one giant tech company that is most at-risk of meaningful disruption in the coming years.
Google Search is losing ad-dollar market share to visual-heavy platforms like Snapchat and TikTok. That’s because Google Search sells text-based ad real estate, which is significantly less engaging and valuable than visual-based advertising. And visuals are what Snap and TikTok are selling — and most others in the space, for that matter.
Google’s self-driving unit, Waymo, appears to be in shambles. It’s been losing talent left and right over the last year, including the unit’s longtime CEO. I’m hearing murmurs from the self-driving industry that Waymo — once considered the runaway AV leader — is falling behind. And if current trends persist, this company may not be a major player in self-driving once the tech becomes real.
Then you have Google Cloud, which is really losing steam, too. And while the smart home products from Alphabet are cool, that’s not enough to offset slowing growth elsewhere.
Alphabet is in trouble.
Netflix’s Streaming Spiral
Then there’s Netflix. Over the past few months, I’ve heard countless people say something along the lines of, “Netflix isn’t cutting it anymore.”
Two years ago, my friends and I used to talk about all the different Netflix shows to watch. Now we’re talking about the content on Disney+, HBO Max and Peacock.
It’s a whole new world. And in this world, Netflix has a ton of competition and is losing viewership share. They’re even losing users!
I rest my case — Big Tech is dead.
The Final Word on Big Tech
Big Tech companies aren’t going to die overnight. But their dominance will erode, and Big Tech stocks will be dead money for the next few years.
And the catalyst behind this phenomenon is simple. These once untouchable tech giants are losing market share to hungrier, more innovative tech startups.
The investment implication? Forget Big Tech. Buy the tech startups unseating them.
P.S.: The recent volatility in stocks has created a rare event that’s only happened three times in the market’s history. It’s a 1,000% Divergence Window. It won’t be open for much longer. And it presents the perfect opportunity to buy the next Netflix, next Meta, or next Amazon at a massive discount.
The last time a divergence like this occurred, stocks soared hundreds, even thousands of percent. And some saw gains over 10,000%.
Indeed, anyone who caught wind of this event during the savings and loan crisis of 1988, the dot-com crash of 2000, or the housing bubble of 2008 could have made decades’ worth of gains — in five years or less.
But that’s nothing compared to the divergence window that’s open right now. We can confidently say this is the biggest and fastest-moving divergence window in the history of the stock market.
There’s truly no time to waste. This phenomenon won’t mint millionaires for long.
Find out my No. 1 divergence stock to buy today so you can win big in a hurry.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article. | NVDA |
https://finnhub.io/api/news?id=0b3569729834f1d236f72c1d0cd7bb776846995ff9309e5b2350c2164e6f999d | Should You Sell Your FANGMAN Stocks? | Tracey and Kevin discuss the rocky 2022 stock market and the future of growth stocks. | 2022-10-05T12:25:07 | Yahoo | Should You Sell Your FANGMAN Stocks?
(1:00) - Should You Continue To Invest In Growth Stocks?
(6:10) - Understanding FANG During A Down Market
(17:45) - Should You Be Buying The Dip Or Staying On The Sidelines?
(29:00) - Have A Plan That Works For Your Investment Timeframe
(34:50) - Episode Roundup: XOM, META, NVDA, MSFT, UNH, CNC, BIIB, LLY, ARKK
[email protected]
Welcome to Episode #331 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week, Tracey is joined by Zacks Senior Strategist, Kevin Cook, to discuss their favorite topic: what should investors do as stocks sell-off?
Should you sell? Or add further to your positions?
What do you do with growth stocks? Do you sell your FANGMAN stocks, which are down anywhere from 10% to 50% from their highs?
Or do you do…nothing?
Exxon’s Market Cap Overtakes Meta Platforms
This year, for the first time in 5 years, ExxonMobil’s XOM market cap has exceeded Meta Platforms META, one of the FANGMAN stocks.
Meta Platforms shares have fallen 18.5% over the last 5 years as shares have plunged this year.
But ExxonMobil shares are now up 16% over the last 5 years after gaining 56% this year.
ExxonMobil has been a value stock for years. Meta Platforms was a growth stock, often listed among the top stocks as one of the “FANGMANs.”
Is the tide turning in favor of value?
[As we talk about in the podcast, Kevin is reading the May 2022 book called Fossil Future by Alex Epstein. Tracey promised to link to it. You can find it on Amazon here.]
What’s Working and What’s Not
In addition to energy, investors have been fleeing to healthcare stocks for safety. Should you follow?
And they have been selling the big tech names, especially the semiconductors. Are the semi stocks oversold?
1. UnitedHealth Group UNH
UnitedHealth Group has been holding up during the 2022 sell-off. Shares are up 4.2% year-to-date while the S&P 500 is down 22.8%.
Over the last 5 years, UnitedHealth Group shares are up 164% compared to just 48.7% for the S&P 500.
UnitedHealth Group isn’t cheap. It trades with a forward P/E of 23.6.
It also pays a dividend, but it is only yielding 1.3%.
Is it too late to hide out in UnitedHealth Group?
2. Biogen BIIB
Biogen shares popped 37% recently after it announced its Alzheimer’s drug reduced cognitive decline by 27% compared to the placebo.
Shares of Biogen are up 11.5% year-to-date.
Biogen isn’t that expensive, with a forward P/E of 16.1. It does not, however, pay a dividend.
Should investors be buying Biogen after the big pop?
3. NVIDIA NVDA
NVIDIA is one of the big winners of the “FANGMAN” stocks. Over the last 5 years, NVIDIA has gained 190%.
But NVIDIA shares have taken a big dive in 2022, falling 55.2%.
Shares of NVIDIA are still expensive at 35x. It now has a Zacks Rank of 5 (Strong Sell).
NVIDIA has been one of Kevin’s favorite stocks. Is he buying it here on weakness?
What Else Should You Know About the Stock Market Sell-Off and Growth Stocks?
Tune into this week’s podcast to find out.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Biogen Inc. (BIIB) : Free Stock Analysis Report
UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Meta Platforms, Inc. (META) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research | NVDA |
https://finnhub.io/api/news?id=620015f9b1c1831950fad43aa36ea180f2fc8c214b1e89b916971fdd7476a2b4 | Why Nvidia, Shopify, and Palantir Stocks Slumped Wednesday Morning | In many ways, 2022 has been a year like no other, as investors and consumers alike have been looking for signs that the macroeconomic headwinds might eventually ease. October started off in rally mode, but a couple of new economic reports suggest relief is still a way off, sparking a wide-ranging sell-off on Wall Street. To be clear, there was nothing in the way of company-specific news driving these technology stocks lower today. | 2022-10-05T12:15:42 | Yahoo | Why Nvidia, Shopify, and Palantir Stocks Slumped Wednesday Morning
In many ways, 2022 has been a year like no other, as investors and consumers alike have been looking for signs that the macroeconomic headwinds might eventually ease. October started off in rally mode, but a couple of new economic reports suggest relief is still a way off, sparking a wide-ranging sell-off on Wall Street. To be clear, there was nothing in the way of company-specific news driving these technology stocks lower today. | NVDA |
https://finnhub.io/api/news?id=486c70625b0f4b48c7a2eb05ba4b515d888c1c5f30be5af6b7ed5d6f3a233b39 | YMTC Ban Likely A Plus For Micron & Western Digital, While A Minus For AMD & NVIDIA, Analyst Says | Mizuho analyst Vijay Rakesh saw the potential for a Yangtze Memory Technologies Co ban and expanding restrictions from AI or GPUs to include compute/memory, happening in short order. Based on checks from his Washington team, the analyst believes expanded restrictions could happen soon. He assumed a ban on YMTC could be a near-term positive for memory and Micron Technology, Inc (NASDAQ: MU) (Neutral; Price Target $52) or Western Digital Corp (NASDAQ: WDC) (Neutral; Price Target $40), but he belie | 2022-10-05T11:22:50 | Yahoo | YMTC Ban Likely A Plus For Micron & Western Digital, While A Minus For AMD & NVIDIA, Analyst Says
Mizuho analyst Vijay Rakesh saw the potential for a Yangtze Memory Technologies Co ban and expanding restrictions from AI or GPUs to include compute/memory, happening in short order.
Based on checks from his Washington team, the analyst believes expanded restrictions could happen soon.
He assumed a ban on YMTC could be a near-term positive for memory and Micron Technology, Inc (NASDAQ: MU) (Neutral; Price Target $52) or Western Digital Corp (NASDAQ: WDC) (Neutral; Price Target $40), but he believes YMTC already has the equipment to ramp wafers through 2023E.
While he believes MU is positioned well with new roadmap ramps, near-term headwinds remain into 2023E with softening demand for PC and handsets and a deteriorating pricing environment for DRAM and NAND as the industry remains modestly oversupplied.
WDC has executed well overall, but he sees NAND trending even softer into 2H22 and 2023E as demand paused for PCs and handsets with inventory correction.
He also sees emerging entrants into the NAND landscape, such as YMTC, bringing on capacity in 2023E and beyond, with NAND oversupply likely to continue, impacting pricing and margins.
There could be expanded restrictions from AI or GPUs to include compute, CPU, and data center, an increased negative to Advanced Micro Devices, Inc (NASDAQ: AMD) (Buy; Price Target $125) or NVIDIA Corp (NASDAQ: NVDA) (Buy; Price Target $205).
The restrictions on >128L NAND and <18nm DRAM memory equipment sales and the possible addition of YMTC to the entity list could be harmful to WFE, with 2023E WFE downside to as low as <$80 billion.
He believes AMD is well positioned and has a significant opportunity to gain server share targets and upcoming game console launches.
While NVDA's valuations were steep, he believes improving PCs, AI deep learning and inferencing markets, gaming trends, automotive, and data center position it for upside to estimates.
NVDA is also well positioned for the growing machine learning, deep learning, and AI markets driving 10-11x performance versus CPUs, in his view.
His NVDA price target reflects its >90% market share in critical high-margin Data Center AI.
Price Action: MU shares traded higher by 0.91% at $54.45 on the last check Wednesday.
Latest Ratings for MU
Date
Firm
Action
From
To
Feb 2022
Wedbush
Upgrades
Neutral
Outperform
Jan 2022
Goldman Sachs
Maintains
Buy
Jan 2022
New Street Research
Initiates Coverage On
Buy
View More Analyst Ratings for MU
View the Latest Analyst Ratings
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© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved. | NVDA |
https://finnhub.io/api/news?id=70bf0de9784f59bce53f7e5dff5bc72f5b7ea2f63d290cec44ff1dd80d92daeb | Nvidia Stock Attempts A Bottom; Will This Bull Call Spread Earn You $305? | Create the bull call spread trade by first buying a call and then selling a further out-of-the-money call. | 2022-10-05T10:33:54 | Yahoo | Nvidia Stock Attempts A Bottom; Will This Bull Call Spread Earn You $305?
Create the bull call spread trade by first buying a call and then selling a further out-of-the-money call.
Create the bull call spread trade by first buying a call and then selling a further out-of-the-money call.
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VZ stock provides a dividend but a buyback has been shelved amid 5G wireless investments. When will revenue growth reaccelerate?
Will generative artificial intelligence boost Palantir stock in the commercial market amid slowing revenue growth for the company?
Retirement account withdrawals not only help you cover basic living expenses, but they also can fund the lifestyle you've always envisioned in your golden years. That money, however, can have unintended tax consequences. Required minimum distributions (RMDs) and other withdrawals … Continue reading → The post Social Security Taxes Can Hit You Hard in Retirement. Here's How to Lower Them appeared first on SmartAsset Blog.
Dubbed the Oracle of Omaha, Warren Buffett is renowned for his simple and frugal lifestyle. Despite being the sixth richest person globally, with a net worth estimated at $117.9 billion, Buffett continues to live in the same modest home in Omaha that he purchased in 1958 for just $31,500. Adjusted for inflation, that amount today would be approximately $328,990.80, a mere 0.000279% of his total net worth. Buffett has consistently ranked the purchase of his home as the third-best investment he ha
As a pandemic-inspired boom ends, entrepreneurs and giant corporations alike are counting on customers to keep accumulating more stuff than they can squeeze into their homes. | NVDA |
https://finnhub.io/api/news?id=3ebaa19e26a1ca4d8a336abd7cfe707d416cc52f565c89ea058718bc3becf20f | For NVIDIA Corporation (NASDAQ:NVDA) insiders, selling US$156m worth of stock earlier this year was a smart move. | NVIDIA Corporation's (NASDAQ:NVDA) stock rose 6.1% last week, but insiders who sold US$156m worth of stock over the... | 2022-10-05T07:01:25 | Yahoo | For NVIDIA Corporation (NASDAQ:NVDA) insiders, selling US$156m worth of stock earlier this year was a smart move.
NVIDIA Corporation's (NASDAQ:NVDA) stock rose 6.1% last week, but insiders who sold US$156m worth of stock over the last year are probably in a more advantageous position. Selling at an average price of US$212, which is higher than the current price might have been the right call as holding on to stock would have meant their investment would be worth less now than it was at the time of sale.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
See our latest analysis for NVIDIA
NVIDIA Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Independent Director, Mark Stevens, for US$51m worth of shares, at about US$186 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The good news is that this large sale was at well above current price of US$132. So it is hard to draw any strong conclusion from it.
Insiders in NVIDIA didn't buy any shares in the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Does NVIDIA Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that NVIDIA insiders own 4.0% of the company, worth about US$13b. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The NVIDIA Insider Transactions Indicate?
The fact that there have been no NVIDIA insider transactions recently certainly doesn't bother us. While we feel good about high insider ownership of NVIDIA, we can't say the same about the selling of shares. Therefore, you should definitely take a look at this FREE report showing analyst forecasts for NVIDIA.
Of course NVIDIA may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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https://finnhub.io/api/news?id=4f899b6adf28633ac50f67f6184f1cf347b3c1e2acd5ffd37c59f5c70f301463 | From PCs To Cars: Nvidia, Qualcomm And Intel Race To Automotive Semis | Todayâs automobile market is seeing a transformation of capabilities, architecture, and design, all being driven by chip-powered digital technologies from Nvidia, Qualcomm, Intel and others. | 2022-10-05T05:30:00 | SeekingAlpha | From PCs To Cars: Nvidia, Qualcomm And Intel Race To Automotive Semis
Summary
- Today’s automobile market is seeing a transformation of capabilities, architecture, and design, all being driven by chip-powered digital technologies.
- Many of the world’s largest semiconductor companies, including Nvidia, Qualcomm, Intel and others, had already started making plans for what they saw as the next big digital device category: the smart, connected car.
- As we start to see the debut of model year 2023 cars with increasingly sophisticated technology-enabled functions, it’s becoming clear that those early bets are starting to pay off.
One of the biggest challenges for large semiconductor-focused companies is that they must make big bets on key technologies and markets many years before they become commonplace. After all, in our increasingly digital world, chips are the main base-level component necessary to enable new types of innovations that, in turn, lead to the creation of new product categories or the reinvention of older ones.
Such is the case with today’s automobile market, which is seeing a transformation of capabilities, architecture, and design all being driven by chip-powered digital technologies. Several years back, many of the world’s largest semiconductor companies, including Nvidia (NVDA), Qualcomm (QCOM), Intel (INTC) and others, started making plans for what they saw as the next big digital device category: the smart, connected car.
Now, as we start to see the debut of model year 2023 cars with increasingly sophisticated technology-enabled functions, it’s becoming clear that those early bets are starting to pay off. Each of these major tech vendors - all of whom have typically focused on end-user computing devices like PCs and smartphones - is making important inroads into the automotive industry. In fact, each is now starting to highlight signs of the increasing importance that being a car component supplier is having on their respective bottom lines.
At its recent GTC conference, for example, Nvidia highlighted how it is leveraging its next-generation GPU technology for a variety of different automotive applications, including assisted and autonomous driving, as well as infotainment-based functions. Similarly, Qualcomm held an Investor Day last month that specifically discussed the company’s rapidly growing pipeline of automotive-based business. Finally, Intel just announced that it will be spinning out its Mobileye (MBLY) division in what it hopes will prove to be a big financial windfall after purchasing the ADAS (Advanced Driver-Assistance Systems) technology-focused, Israel-based company in 2017.
In Nvidia’s case, the company has already released many previous iterations of its GPU-powered technology for the car market, but with each successive generation, the company is enabling more powerful capabilities and reaching into new applications. After years of success driving car infotainment systems, for example, the company took on the more challenging task of assisted driving functions and now continues to work towards higher levels of autonomous driving. Specifically, at this year’s show, the company’s new Drive Thor platform is powered by the latest Ada Lovelace generation of GPU technology, the newest Arm-based Grace CPU technology that the company announced earlier this year, and the AI capabilities from the company’s Hopper Multi-Instance GPU technology for AI acceleration.
Collectively, these three enable a whopping 2 teraflops of performance. In real-world terms, that means that Drive Thor can be used to enable most of the key technology-driven functions found in a modern car - including ADAS and some autonomous driving functions, automatic parking, infotainment control, driver and passenger monitoring, and instrument cluster control - from a single platform. This is a big, important advance because previously, many of these functions were run by separate chips. (In fact, many car makers or Tier 1 automotive suppliers would often pick chips from different vendors to run these different functions. That’s why it became relatively common to hear multiple chip vendors talk about how they won business from the same vendor and sometimes even the same models. They were being used for different functions.)
With Drive Thor, Nvidia is offering car manufacturers - starting with their 2025 models - the ability to start integrating more of these functions into a single platform. Given the enormous complexity of today’s cars, that’s a potentially big win for everyone involved. For Nvidia, of course, it gains more of the business and establishes itself as an even more critical supplier. For carmakers, the integration of multiple functions into a single digital platform can help simplify the overall architecture of the car, which should lead to more reliable operation and reduce the costs and complexity associated with combining multiple platforms into a single vehicle.
Drive Thor enables this multi-function support by being able to run multiple different applications simultaneously through a virtualized software environment (conceptually similar to what servers do in data centers and in the cloud) that Nvidia refers to as multi-domain computing. In essence, this allows Drive Thor to replicate in software the many physical domain controllers that have powered various automotive functions within cars for decades now. Also, unique to Drive Thor versus previous-generation Nvidia automotive hardware is an inference transformer engine, which the company claims can deliver a 9x improvement running the types of neural networks that are at the heart of assisted and autonomous driving functions. Rounding out the news, Nvidia also announced that China-based car company ZEEKR (part of the Geely Automotive Group (OTCPK:GELYF), which also owns Volvo) will be the first to use Drive Thor as its computing platform starting with cars built in 2025.
At its Automotive Investor Day, Qualcomm also announced (though did not detail) a new automotive technology offering called the Snapdragon Ride Flex SOC (system on chip). Like Nvidia’s Drive Thor, Qualcomm’s Ride Flex is supposed to be powerful enough to support all the key compute-powered driving functions in a smart, connected car, but full details on the chip aren’t expected until the upcoming CES show.
As with Nvidia, Qualcomm has been releasing products for the automotive industry for many years now and, back in the beginning of this year, launched a renewed automotive strategy with its Snapdragon Digital Chassis program. Digital Chassis integrates multiple different functions, such as Snapdragon Digital Cockpit for in-vehicle infotainment (IVI) and Snapdragon Ride for assisted and autonomous driving, into a single platform that carmakers can either pick and choose from, or take as one - a path that may become more popular with the debut of the Ride Flex SOC.
Qualcomm’s history with the car industry actually goes much further back than that, however, as it’s been delivering communications-focused peripherals such as cellular modems, WiFi, and Bluetooth chips for cars for several decades. Most telematics systems like GM’s OnStar and its equivalent, for example, are typically powered by Qualcomm’s connectivity chips. Plus, given the increasingly software-defined nature of modern cars, as well as the critical need and potential new business opportunity for over-the-air upgrades, the “connected” part of the smart, connected car is becoming significantly more important.
As a result of those long-term connections, along with its growing range of Snapdragon Digital Chassis offerings, the company announced at its investor event that its pipeline for automotive revenue had grown from $19 billion to $30 billion over the course of just a few months, highlighting the momentum it is seeing with partners like Acura, Audi, BMW (OTCPK:BMWYY), Cadillac, Jaguar (TTM), and Stellantis (STLA). In addition, Qualcomm also unveiled a partnership with Mercedes Benz to bring the Digital Cockpit functions and the Snapdragon Automotive Connectivity Platform into future Mercedes vehicles.
For its part, Intel just announced plans to spin out its Mobileye division in a widely anticipated IPO. Mobileye has been the early leader in assisted driving functions through its camera-driven and smart map-based technology, and has established partnerships with virtually all the largest car manufacturers around the world. Recently, the company added support for lidar and other sensors with its True Redundancy platform, and is increasingly moving towards more autonomous driving functions.
When Intel purchased Mobileye just over 5 years ago, it was one of the first clear signs of the growing importance of the automotive sector for big semiconductor companies. Since then, Intel has continued to nurture the company and helped it to grow. Now it hopes to be able to “cash in” on its investment with the newly announced IPO and leverage some of those funds for its own aggressive plans for new chip manufacturing sites.
As with many long-term predictions, not everything about how the big semiconductor companies and the automotive industry would work together has panned out as initially expected. After all, we are still a very long way from fully autonomous Level 5 cars for individuals - despite the tech industry’s strong prognostications and huge efforts. However, there’s no question that smart, connected cars are going to be an incredibly important part of the future growth of not only the big-chip companies like Nvidia, Qualcomm, Intel, and AMD, but of lesser-known ones like Marvell (MRVL), Lattice Semiconductor (LSCC), and many others as well. In fact, recent reports from large investment banks have suggested that 45% of a car’s components could be tech-related in the next 10 years or so. As the high-tech link to the automotive industry continues to evolve, we’re also starting to witness huge growth in cloud-powered connected services for cars and much more. In sum, it’s a great (and telling) example of the kind of influence that semiconductors and tech can have on traditional industries overall. It also may be a foreshadowing of other interesting re-invention opportunities still to come.
Disclaimer: Some of the author's clients are vendors in the tech industry.
Disclosure: None.
Source: Author
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
This article was written by
Comments | NVDA |
https://finnhub.io/api/news?id=e089d87378abad24813c1dcf24064360d909f8f498f956949a1a676771467c76 | AMD Is Expected to See Strong Revenue Growth, but What About Nvidia? | Today's video focuses on Advanced Micro Devices (NASDAQ: AMD), Nvidia (NASDAQ: NVDA), Qualcomm (NASDAQ: QCOM), Texas Instruments (NASDAQ: TXN), and a closer look at future revenue growth expectations and valuation metrics. | 2022-10-05T04:30:00 | Yahoo | AMD Is Expected to See Strong Revenue Growth, but What About Nvidia?
Today's video focuses on Advanced Micro Devices (NASDAQ: AMD), Nvidia (NASDAQ: NVDA), Qualcomm (NASDAQ: QCOM), Texas Instruments (NASDAQ: TXN), and a closer look at future revenue growth expectations and valuation metrics. | NVDA |
https://finnhub.io/api/news?id=9b01f063c26e7b66da32fbfc50c64c2fd4857a274b784c436ba05be9d03e04cd | Surprise! This Mining ETF Might Be a Compelling Addition to Your Tech Stock Portfolio | If Moore's Law is ending, then computing technology could contribute to mined material inflation. | 2022-10-05T02:50:00 | Yahoo | Surprise! This Mining ETF Might Be a Compelling Addition to Your Tech Stock Portfolio
If Moore's Law is ending, then computing technology could contribute to mined material inflation.
If Moore's Law is ending, then computing technology could contribute to mined material inflation.
Mark Spitznagel and Nassim Taleb have been watching for black swans for decades. "We’ve never seen anything like this level of total debt and leverage in the system," he tells Fortune. "It's an experiment."
Warren Buffett is undeniably the most famous and influential investor in modern history, based on his extraordinary performance record. Not surprisingly, the investment portfolio of Berkshire Hathaway Inc. (BRK.A), the holding company employing the Oracle of Omaha as chairman and CEO, receives wide media attention and scrutiny, even though Buffett is no longer making every investment decision. Despite his unparalleled success, Buffett's investment model has long been transparent, straightforward, and consistent.
Stocks have blown past expectations for 2023 – but some analysts are bracing for a sell-off as the market approaches record highs.
The JPMorgan Equity Premium Income ETF’s (NYSEARCA:JEPI) combination of high yield and monthly payments has quickly made it one of the market’s most popular ETFs. Investors who like JEPI’s style now have another high-yield competitor to consider — the NEOS S&P 500 High Income ETF (BATS:SPYI), which also pays on a monthly basis and yields 10.7%. Let’s take a closer look at this intriguing new option for high-yield investors. What is SPYI ETF’s Strategy? Launched in August of 2022, SPYI is still a
Just because you retire doesn't mean you have to stop working. And when work is an option rather than a requirement, it's possible to select a low-stress job that multiplies fulfillment without adding anxiety - but still provides a bit … Continue reading → The post 12 Low-Stress Jobs You Can Do in Retirement appeared first on SmartAsset Blog.
Berkshire Hathaway historically reports its quarterly financial results on weekends, and CEO Warren Buffet has a simple reason why. Berkshire (ticker: BRK.A, BRK.B) reported second-quarter earnings Saturday morning. Many other public companies, however, release their earnings results during the trading week, either before the market opens or after the closing bell.
The market rally is at an infection point after notable losses. Here's what to do. Warren Buffett's Berkshire earnings rose.
Is there a point at which I should stop reinvesting stock dividends and invest the money or save the cash? -Anonymous Many financial experts recommend that you reinvest dividends most of the time – and I'm inclined to agree. The … Continue reading → The post Ask an Advisor: Should I Stop Reinvesting Dividends? appeared first on SmartAsset Blog.
There are many different approaches and strategies for retirement investing that might appeal to you. But how do you tell if a certain strategy works for your situation? When evaluating different approaches, consider how each strategy is put together and … Continue reading → The post Here's How Much to Keep in Stocks, Bonds and Cash in Retirement appeared first on SmartAsset Blog.
The week ahead will feature a crucial inflation report and earnings out of Disney, UPS, and Alibaba as second quarter earnings season winds down.
(Bloomberg) -- Dan Loeb is hardly the first Wall Street titan to lament how meme stock traders have made short selling a perilous endeavor. But that Loeb, who runs the hedge fund Third Point LLC, did so now is what’s interesting.Most Read from BloombergTexas Power Prices to Surge 800% on Sunday Amid Searing HeatNetanyahu Seeks to Change How Judges Are Named, Then Stop RevampChina Embassy Rips ‘Brutal’ Russia Border Incident in Rare MoveThe Most Dangerous Job for Lawyers Is Being on Trump’s Legal
AustralianSuper, one of the world’s largest pensions, halved its Apple stock investment and sold Microsoft stock, while buying shares of Tesla and Nvidia.
One in 6 asset and wealth management companies will be bought or shut down in the next five years, according to a PwC survey of asset managers and institutional investors.
Warren Buffett's Berkshire Hathaway operating profit rose by 10%. BRKB stock is just out of buy range.
Travel scams are on the rise. Don't be a victim.
VZ stock provides a dividend but a buyback has been shelved amid 5G wireless investments. When will revenue growth reaccelerate?
Will generative artificial intelligence boost Palantir stock in the commercial market amid slowing revenue growth for the company?
Retirement account withdrawals not only help you cover basic living expenses, but they also can fund the lifestyle you've always envisioned in your golden years. That money, however, can have unintended tax consequences. Required minimum distributions (RMDs) and other withdrawals … Continue reading → The post Social Security Taxes Can Hit You Hard in Retirement. Here's How to Lower Them appeared first on SmartAsset Blog.
Dubbed the Oracle of Omaha, Warren Buffett is renowned for his simple and frugal lifestyle. Despite being the sixth richest person globally, with a net worth estimated at $117.9 billion, Buffett continues to live in the same modest home in Omaha that he purchased in 1958 for just $31,500. Adjusted for inflation, that amount today would be approximately $328,990.80, a mere 0.000279% of his total net worth. Buffett has consistently ranked the purchase of his home as the third-best investment he ha
As a pandemic-inspired boom ends, entrepreneurs and giant corporations alike are counting on customers to keep accumulating more stuff than they can squeeze into their homes. | NVDA |
https://finnhub.io/api/news?id=97c93b12e16735e963c710733dbcfeea9fef915536e9b90317660f0da5a8b407 | Should You Sell Your FANGMAN Stocks? | In addition to energy, investors have been fleeing to healthcare stocks for safety. And they have been selling the big tech names, especially the semiconductors. | 2022-10-05T00:14:00 | TalkMarkets | Should You Sell Your FANGMAN Stocks?
Image Source: Pixabay
This week, Tracey is joined by Zacks Senior Strategist, Kevin Cook, to discuss their favorite topic: what should investors do as stocks sell-off?
Should you sell? Or add further to your positions?
What do you do with growth stocks? Do you sell your FANGMAN stocks, which are down anywhere from 10% to 50% from their highs?
Or do you do…nothing?
Exxon’s Market Cap Overtakes Meta Platforms
This year, for the first time in 5 years, ExxonMobil’s (XOM - Free Report) market cap has exceeded Meta Platforms (META - Free Report), one of the FANGMAN stocks.
Meta Platforms shares have fallen 18.5% over the last 5 years as shares have plunged this year.
But ExxonMobil shares are now up 16% over the last 5 years after gaining 56% this year.
ExxonMobil has been a value stock for years. Meta Platforms was a growth stock, often listed among the top stocks as one of the “FANGMANs.”
Is the tide turning in favor of value?
What’s Working and What’s Not
In addition to energy, investors have been fleeing to healthcare stocks for safety. Should you follow?
And they have been selling the big tech names, especially the semiconductors. Are the semi-stocks oversold?
1. UnitedHealth Group (UNH - Free Report)
UnitedHealth Group has been holding up during the 2022 sell-off. Shares are up 4.2% year-to-date while the S&P 500 is down 22.8%.
Over the last 5 years, UnitedHealth Group shares are up 164% compared to just 48.7% for the S&P 500.
UnitedHealth Group isn’t cheap. It trades with a forward P/E of 23.6.
It also pays a dividend, but it is only yielding 1.3%.
Is it too late to hide out in UnitedHealth Group?
2. Biogen (BIIB - Free Report)
Biogen shares popped 37% recently after it announced its Alzheimer’s drug reduced cognitive decline by 27% compared to the placebo.
Shares of Biogen are up 11.5% year-to-date.
Biogen isn’t that expensive, with a forward P/E of 16.1. It does not, however, pay a dividend.
Should investors be buying Biogen after the big pop?
3. NVIDIA (NVDA - Free Report)
NVIDIA is one of the big winners of the “FANGMAN” stocks. Over the last 5 years, NVIDIA has gained 190%.
But NVIDIA shares have taken a big dive in 2022, falling 55.2%.
Shares of NVIDIA are still expensive at 35x. It now has a Zacks Rank of 5 (Strong Sell).
NVIDIA has been one of Kevin’s favorite stocks. Is he buying it here on weakness?
More By This Author:
Bull Of The Day: Titan Machinery
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Disclaimer: Neither Zacks Investment Research, Inc. nor its Information Providers can guarantee the accuracy, completeness, timeliness, or correct sequencing of any of the Information on the Web ...more
Disclaimer: Neither Zacks Investment Research, Inc. nor its Information Providers can guarantee the accuracy, completeness, timeliness, or correct sequencing of any of the Information on the Web site, including, but not limited to Information originated by Zacks Investment Research, Inc, licensed by Zacks Investment Research, Inc. from Information Providers, or gathered by Zacks Investment Research, Inc. from publicly available sources. There may be delays, omissions, or inaccuracies in the Information.less | NVDA |
https://finnhub.io/api/news?id=1249cf9295ca4607687e361c7b5f8d563d760035de26cf6a9239774c3397dba3 | 7 Seriously Undervalued Large-Cap Stocks to Buy Now | Investors looking for deals in this oversold market should consider taking positions in these undervalued large-cap stocks. | 2022-10-04T23:08:00 | InvestorPlace | Undervalued large-cap stocks present a particularly good opportunity right now with all three major indices in the U.S. continuing to trend lower to start the New Year.
The latest data out of the U.S. showed that inflation rose 7.1% in November from a year ago, which is still well above the Fed’s 2% target. This raises the likelihood that the central bank will continue raising its benchmark interest rate in the coming months, albeit at a slower pace than in previous months.
As rates continue inching higher and inflation slowly decelerates, stocks are likely to remain volatile. But the retreat of the markets seen in 2022 (the worst year for equities since the 2008 financial crisis) has left many large-cap stocks deeply undervalued. This presents an opportunity for investors who can tolerate the near-term ups and downs of the market and keep their eyes fixed on the long-term.
Here are seven seriously undervalued large-cap stocks to buy now.
|AMZN||Amazon||$83.55|
|NVDA||Nvidia||$143|
|NKE||Nike||$122|
|AAPL||Apple||$126|
|COST||Costco||$452|
|MSFT||Microsoft||$224|
|AXP||American Express||$145|
Undervalued Large-Cap Stocks: Amazon (AMZN)
Amazon (NASDAQ:AMZN) stock is now trading under $85 a share, its most affordable level in more than five years.
Following Amazon’s disappointing third-quarter earnings and lowered guidance, AMZN stock is down 50% in the last 12 months. Even a 20-for-1 stock split undertaken at the beginning of June hasn’t helped the share price.
Having given up most of the gains it achieved during the pandemic when consumers were forced to shop online, AMZN stock seems to have been abandoned by consumers. Yet analysts say that is a mistake, and the company is poised for a rebound.
For its part, Amazon is doing what it can to try to raise its share price, as the company earlier this year announced a $10 billion stock buyback program.
Amazon also completed its second Prime sales event of the year in mid-October, which should give its fourth-quarter earnings a boost. Further, the company has reduced its staff levels and taken other cost-cutting measures as it tries to adjust to the current economic environment.
While Amazon’s price-earnings (P/E) ratio remains a hefty 75 times, it is not that high when one considers the company’s nearly $1 trillion market capitalization or that it generates more than $100 billion of revenue each quarter. Take advantage of the shares’ weakness and buy the dip of AMZN stock.
Nvidia (NVDA)
Few large-cap technology stocks have been beaten down as much as semiconductor company Nvidia (NASDAQ:NVDA). NVDA stock has tumbled 50% in the last year to $143. In November 2021, the company’s shares were trading above $300, and that was after a 4-for-1 stock split.
The share price has been hurt by mounting fears that the demand for Nvidia’s chips and semiconductors will slow along with the global economy. To be sure, the company’s earnings for the third quarter were a disaster with revenue down 17% year-over-year. The Q3 print didn’t help the share price at all.
Nvidia has also lowered its forward guidance multiple times this year. It most recently said that it expects about $6 billion of sales in Q4, lower than the average estimate of $6.09 billion among analysts who cover the company.
Nvidia CEO Jensen Huang has stressed that the company is grappling with a “challenging macro environment.” Still, Nvidia, whose chips are used in everything from supercomputers to artificial intelligence applications, remains a solid, long-term buy.
Its P/E ratio is high at 61 times, but that has come down over the last year with the share price. And, unlike many tech stocks, Nvidia pays a dividend that yields 0.11%. It’s not the most generous dividend, but it helps make NVDA one of the more reliable undervalued large-cap stocks to buy.
Nike (NKE)
The shares of the world’s largest supplier of athletic shoes and apparel have been pummeled over the past year. The stock of Oregon-based Nike (NYSE:NKE) has plunged 27% and now trades at $122 per share. The decline, while no doubt troubling to shareholders, makes NKE stock a screaming buy.
A year ago, Nike’s stock was trading at $167 a share. Its big decline has been due largely to the same issues that are vexing companies all over the world: Supply chain problems, excess inventories, Covid-19 lockdowns in China, and slowing consumer spending.
Just before Christmas, Nike reported fiscal second quarter earnings that surpassed the average outlook of the analysts on Wall Street, sending its stock more than 10% higher in a single trading session.
The shoemaker announced quarterly earnings per share of 85 cents versus the mean estimate of 64 cents. Its revenue came in at $13.32 billion compared to the $12.57 billion that had been expected.
NKE’s price-earnings ratio of 34 is slightly high, but it’s justified given the company’s market-leading position. And NKE stock pays a quarterly dividend that yields 1.1%. Grab this stock while it remains on sale.
Undervalued Large-Cap Stocks: Apple (AAPL)
Apple’s (NASDAQ:AAPL) stock just keeps getting more affordable and attractive. Its share price fell 15% in December alone, bringing its 2022 decline to 30%. The consumer electronics giant’s stock is now trading right around $125.
Analysts’ median price target on AAPL stock is currently $175 a share, which is nearly 40% higher than its current level. The shares’ P/E ratio of 20 times is the lowest it has been in years and the stock pays a dividend that yields 0.73%.
With Apple, investors also get a company that buys back more of its own stock than any other publicly traded concern. The company most recently announced that its board of directors had greenlit a $90 billion share buyback program.
Apple is also increasingly diversified, venturing into new areas ranging from streaming to buy now, pay later. Further, with its iPhones and Mac computers., Apple remains the world’s leading consumer electronics company
As with many companies, Apple is dealing with issues that include supply chain constraints, wage inflation and slowing consumer spending in the face of rising interest rates. Its iPhone production has also been hurt by Covid-19 lockdowns in China.
AAPL stock took it on the chin after the company announced that it was scaling back production of its new iPhone 14 due to the issues in China and weaker consumer demand than forecast. The company’s most recent earnings report was mixed but managed to beat analysts’ average expectations.
Apple’s lower share price should make the stock more appealing to value investors.
Costco (COST)
The shares of big-box grocery retailer Costco (NASDAQ:COST) are down 19% over the past 12 months. COST’s 52-week low is $406, well below its current level of $452. The retailer has managed to recover by demonstrating that its sales remain strong despite high inflation and rising interest rates.
The company’s November sales figures were mixed. Costco said its net sales for the period came in at $19.17 billion, up 5.7% year over year. However, the firm’s e-commerce sales fell 10.1% during the period. COST stock declined 3% on the data.
However, Costco has retained the loyalty of its customers by announcing that it would not raise its membership fees this year, holding them at $60 for a regular annual membership and $120 for an executive membership.
The stock’s P/E ratio of 35 times looks high at first glance, but investors need to keep in mind that Costco is on track to surpass $200 billion of sales for 2022, making it one of the more impressive undervalued large-cap stocks .
The company’s stock pays a dividend that yields 0.79%, but Costco has a history of paying out special, one-time dividends as well.
Microsoft (MSFT)
Seattle-based Microsoft (NASDAQ:MSFT) is a seriously undervalued technology stock. Founded by Bill Gates and Paul Allen in 1975 and publicly traded since March 1986, Microsoft today is a well-diversified and battle-tested technology company that is involved in everything from computer software and video games to online search and cloud computing.
The company is hugely profitable and generates positive cash flow. And its stock has been a consistent winner for shareholders over the years.
While MSFT stock is down 30% in the last year, it is up 160% over the past five years and has gained more than 500% over the last decade. Today Microsoft has a market capitalization of $1.67 trillion, a reasonable price-earnings ratio of 24, and is one of the few mega-cap tech stocks that actually pays shareholders a quarterly dividend (Its payout currently yields 1.13%).
While the company has not been immune to the economic challenges afflicting the global economy, it remains one of the tech giants best positioned to weather the storm and come out stronger on the other side.
Currently trading at $224 a share, MSFT stock is definitely worth buying at its current levels.
Undervalued Large-Cap Stocks: American Express (AXP)
The shares of credit-card giant American Express (NYSE:AXP) are fresh off a 52-week low and currently trading right around $145. Down 13% in the last year, AXP stock is at its most affordable level since the pandemic struck in March 2020.
The stock’s price-earnings ratio of 15 times is right around the average of companies listed in the S&P 500 index. It pays a 1.4% quarterly dividend.
With people all over the world traveling and vacationing again, there’s every reason to be bullish on AXP stock and the company’s future earnings.
But don’t take our word for it. Consider that American Express is one of legendary investor Warren Buffett’s favorite stocks. The Oracle of Omaha has held his current position in AXP stock for more than 30 years and never sold a single share.
Besides its traditional credit card loans, American Express also operates an end-to-end payment system that facilitates transactions between consumers and businesses. Revenue from those transactions is today the company’s biggest source of revenue.
On the date of publication, Joel Baglole held long positions in NVDA, MSFT and AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia. | NVDA |
https://finnhub.io/api/news?id=63693f4d18f8d0506b897b9c9ea4421265b724f98a558380b82bfe745bed01e5 | 3 Stocks to Buy Before the Bear Market Ends | When bear markets come around, panic tends to ensue. As the move lower accelerates, stress levels rise as investors worry about the economy, their jobs and their money. But bear markets are precisely the time when investors should be looking for stocks to buy. Truth be told, bear markets aren’t all that common. The long-term performance of the S&P 500 tends to heavily favor the upside. So even though bear markets are scary, they have historically always been an opportunity. There are a couple of | 2022-10-21T12:41:59 | Yahoo | 3 Stocks to Buy Before the Bear Market Ends
When bear markets come around, panic tends to ensue. As the move lower accelerates, stress levels rise as investors worry about the economy, their jobs and their money. But bear markets are precisely the time when investors should be looking for stocks to buy.
Truth be told, bear markets aren’t all that common. The long-term performance of the S&P 500 tends to heavily favor the upside. So even though bear markets are scary, they have historically always been an opportunity.
There are a couple of caveats with that, though. The first is that the statement bear markets “have historically always been an opportunity” applies to the broader indices, not necessarily individual stocks. Plenty of stocks never go on to recover to their prior highs. The second caveat is that we don’t know when the market will bottom or how far it will fall before it does.
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Yet, as investors wait for a bottom, there are a few obvious stocks to buy.
Palo Alto Networks (PANW)
Source: Sundry Photography / Shutterstock.com
Inflation, currency headwinds and fears of a recession have led to weakening demand across most industries as businesses and consumers rein in spending. However, that’s not been the case with cybersecurity.
In August, cybersecurity firm Palo Alto Networks (NASDAQ:PANW) reported better-than-expected revenue and earnings for its fiscal fourth quarter. Revenue jumped 27% year over year to $1.55 billion, while billings were up 44% to $2.7 billion. Management also delivered upbeat guidance. For its fiscal 2023 year, which is just getting started, they forecasted 25% revenue growth and that the company would be profitable on a GAAP basis.
Despite increasing macroeconomic uncertainty, management said customers are making longer-term commitments to Palo Alto Networks. They also noted how many companies are carrying on with their long-term investments despite short-term volatility.
PANW stock has fallen 13% year to date to trade around $162. As I wrote recently, shares are a bargain if they get down to the $130 level and would be an outright steal below $110.
Microsoft (MSFT)
Source: NYCStock / Shutterstock.com
I recently included Microsoft (NASDAQ:MSFT) on a list of blue-chip stocks to buy. In that article, I noted that the company is expected to deliver double-digit percentage earnings and revenue growth annually from now through FY26 and that its operating margins were better than all of the FAANG names.
In the current bear market, Microsoft has suffered a peak-to-trough decline of 37%, hitting a low of $219.13 on Oct. 13. Shares have bounced back to around $242 currently.
To put it bluntly, I’m a buyer all day long when a company with a balance sheet as strong as Microsoft’s sees its share price take a nearly 40% haircut. I consider $210 to $215 an attractive “panic price” entry for long-term investors. However, anytime shares dip below $225, you should consider getting long.
Nvidia (NVDA)
Source: Shutterstock
Of today’s three stocks to buy before the bear market ends, Nvidia (NASDAQ:NVDA) is the riskiest of the bunch. Shares of the semiconductor company are down more than 57% year to date and suffered a peak-to-trough drop of 69%. For a company like Nvidia, that’s a monumental decline.
Nvidia dominates the high-end chip market. Betting on Nvidia is a bet on technology itself. Its end markets include data centers, the cloud, artificial intelligence, gaming, automotive and autonomous driving, robots, drones, supercomputing, graphics and much more. For that reason, I know the recovery in Nvidia stock is a question of “when” rather than “if.”
The company’s most recent earnings report was not very encouraging, as guidance missed expectations by a wide margin. While growth is being pressured this year, a Piper Sandler analyst said Nvidia’s business is close to bottoming and shares are ready for a comeback. I have to agree.
On the date of publication, Bret Kenwell held a long position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.
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The post 3 Stocks to Buy Before the Bear Market Ends appeared first on InvestorPlace. | NVDA |
https://finnhub.io/api/news?id=c2b02d48c21e11a43af26d3f30cfaa50ccaab392255bbfac62e662183e734fbd | The real trade war with China has begun | A new embargo on advanced semiconductor sales is the most aggressive move yet by any US president against China. | 2022-10-21T10:37:31 | Yahoo | The real trade war with China has begun
Former President Trump launched a “trade war” with China in 2018 that mostly produced a series of economic skirmishes and logistical workarounds. Trade between the two nations continued, with some collateral damage where Trump lobbed a tariff, or China lobbed back retaliatory measures.
With far less fanfare, the Biden administration has launched a new broadside against China that could do far more damage to its economy than anything Trump contemplated, and trigger unprecedented retaliation by China. On Oct. 7, the Biden administration surprised the world with new export controls that effectively prohibit the sale of advanced American computer chips and chipmaking technology to China. While several nations make advanced chips, much of the technology behind that production is American, which means the Biden ban will impede China’s ability to develop artificial intelligence, supercomputers, advanced weaponry and other crown jewels of the modern digital economy.
“These new controls [are] a genuine landmark in US-China relations,” Gregory Allen of the Center for Strategic and International Studies wrote in a recent analysis of the new rules. “These actions demonstrate an unprecedented degree of US government intervention to begin a new US policy of actively strangling large segments of the Chinese technology industry—strangling with an intent to kill.”
Until now, Biden’s China policy had been fuzzy. He kept in place the Trump tariffs on some $350 billion worth of Chinese imports, without saying whether he might review them as part of a broader strategy or continue Trump’s piecemeal approach to China. What’s clear now is that Biden plans to treat China as more of a military and economic threat than any of his predecessors. Some economic ties will undoubtedly continue, but the US government is now practicing a kind of economic containment strategy—subordinating trade and commerce to national security for the first time since China joined the World Trade Organization in 2001 and became the “world’s factory.”
The growing risks China poses
US relations with China have been fraying since the Obama administration, as China developed an aggressive program of stealing Western technology, using government subsidies to grab market share in key global industries, and building a muscular military able to enforce China’s communist ideology in Asia and beyond. At the same time, it became apparent that the mass movement of factory work to China had hollowed out America’s blue-collar labor force, with little or nothing to replace millions of lost jobs.
[Follow Rick Newman on Twitter, sign up for his newsletter or sound off.]
Trump focused mostly on the US trade deficit with China, which economists broadly regard as a misdirected way to address the growing risk China poses. The Trump tariffs were supposed to stimulate new American manufacturing, by raising the cost of Chinese imports and making US production more competitive. But there’s been no meaningful change in US industrial production since the Trump tariffs went into effect. There has been one other notable change, however: Many imports of tariffed goods from China have been replaced with imports of non-tariffed goods from other countries, as Chad Bown of the Peterson Institute for International Studies has demonstrated. That’s just a shuffling of import flows, which doesn’t do anything to boost the US economy or create American jobs.
In the aftermath of the 2020 COVID pandemic, which revealed an alarming US over-dependence on imported goods from China and elsewhere, Biden vowed to strengthen domestic supply chains for critical products and technologies. The Inflation Reduction Act, for instance, incudes high domestic content requirement for electric vehicles in order to qualify for federal subsidies. It also includes powerful incentives for the domestic development of critical minerals such as lithium, cobalt and nickel.
The CHIPs+ Act, which Congress passed in July, was an unusual bipartisan effort to boost US production of semiconductors. Most Republicans and some Democrats normally oppose such “industrial policy,” deeming it better for private-market incentives to determine who builds what where. But there’s a growing consensus on the need to combat government support for key industries in China and even some democratic nations with similar programs here at home.
In September, National Security Adviser Jake Sullivan gave a speech in which he signaled a change in long-standing US policy on technology exports. “We have to revisit the longstanding premise of maintaining ‘relative’ advantages over competitors in certain key technologies,” he said. “Given the foundational nature of certain technologies, such as advanced logic and memory chips, we must maintain as large of a lead as possible.”
Sullivan’s remarks got tech companies’ attention, but nobody was sure what he meant, exactly, until the government announced the new export controls on Oct. 7. Gregory Allen of CSIS detects four main thrusts to the new Biden policy, which broadly seeks to disrupt China’s artificial-intelligence industry: denying access to advanced chips, the software used to design those chips, the equipment used to produce those chips, and the components that go into the production equipment. There's also a restriction on "US persons" working with Chinese companies—as vendors or consultants, say—in the targeted industries.
“In summary,” Allen concludes, “the United States does not want China to have advanced AI computing and supercomputing facilities. In weaponizing its dominant chokepoint position in the global semiconductor value chain, the United States is exercising technological and geopolitical power on an incredible scale.”
'Something significant will happen in terms of retaliation'
The effect has been immediate. US chip suppliers such as Intel (INTC), Nvidia (NVDA), AMD (AMD), KLA (KLAC), Applied Materials (AMAT) and LAM Research (LRCX) have halted deliveries to China as they figure out what’s allowed under the new rules and what’s not. Apple (AAPL) has dropped a plan to use chips made by Chinese firm YMTC in upcoming iPhones, according to Nikkei Asia. Tech giants based in other countries, such as Taiwan’s TSMC, are likely to be affected as well, given close ties with US industry. Tech stocks, which have had a bad year, sold off further after the Oct. 7 announcement.
China will likely respond. “I’m assuming something significant will happen in terms of retaliation, because the impact of this rule is quite significant,” Kevin Wolf, former Assistant Commerce Secretary for Export Administration, said on a recent podcast. China could block US imports of critical minerals from China or punish US companies doing business in China, which would be muscular forms of escalation. It could also target US allies that must comply with some elements of the new US rule, including South Korea, Japan and Taiwan. Chinese President Xi Jinping will likely cite the move as evidence of America's effort to keep China down, perhaps fueling nationalistic sentiment.
There are risks to this economic containment effort. There will still be openings for firms from other nations to fill the gap with their own chip technology, for instance. American officials say they’ll spend the next year or two trying to get allies to join the Chinese chip embargo, but some nations could see it as a chance to turbocharge the development of their own chip industries. China could also defy expectations and make more technological progress on their own than expected.
Politically, however, the new Biden restrictions seem likely to stick, no matter which party wins the White House in 2024. China’s militant capitalism and hostility toward Taiwan and other neighbors have left it with few friends in Washington, and no “soft on China” wing in either party willing to advocate moderation. As Biden has kept Trump’s tariffs in place, the next president will probably cement Biden’s chip embargo, and perhaps look for other ways to tighten the screws on China.
Trade wars aren’t good, but some may be necessary.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman
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Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube | NVDA |
https://finnhub.io/api/news?id=1a61477953a6a90118111687ae95fe09553719272b478c91896e52ddeb15bdf3 | NVIDIA Corp. stock rises Friday, still underperforms market | Shares of NVIDIA Corp. rallied 2.23% to $124.66 Friday, on what proved to be an all-around great trading session for the stock market, with the S&P 500 Index... | 2022-10-21T10:13:00 | MarketWatch | Shares of NVIDIA Corp.
NVDA,
+0.37%
rallied 2.23% to $124.66 Friday, on what proved to be an all-around great trading session for the stock market, with the S&P 500 Index
SPX,
-0.53%
rising 2.37% to 3,752.75 and the Dow Jones Industrial Average
DJIA,
-0.43%
rising 2.47% to 31,082.56. This was the stock's fifth consecutive day of gains. NVIDIA Corp. closed $221.81 below its 52-week high ($346.47), which the company reached on November 22nd.
The stock underperformed when compared to some of its competitors Friday, as Microsoft Corp.
MSFT,
+0.34%
rose 2.53% to $242.12, Intel Corp.
INTC,
+1.14%
rose 3.41% to $26.97, and Texas Instruments Inc.
TXN,
-1.96%
rose 3.90% to $159.72. Trading volume (60.7 M) eclipsed its 50-day average volume of 59.1 M.
Editor's Note: This story was auto-generated by Automated Insights, an automation technology provider, using data from Dow Jones and FactSet. See our market data terms of use. | NVDA |
https://finnhub.io/api/news?id=b4ba078f89de603dca263f011aade9408acf74966baf66c503be36bdcdb9e3f5 | Why Nvidia Stock Rallied This Week | Week to date, shares of Nvidia (NASDAQ: NVDA) were up 7% as of 11:20 a.m. ET on Friday, according to data provided by S&P Global Market Intelligence. Nvidia's return outperformed the Nasdaq Composite's return of 2.6% over the last week. A new partnership with Oracle gave Nvidia a much-needed boost. | 2022-10-21T09:34:05 | Yahoo | Why Nvidia Stock Rallied This Week
Week to date, shares of Nvidia (NASDAQ: NVDA) were up 7% as of 11:20 a.m. ET on Friday, according to data provided by S&P Global Market Intelligence. Nvidia's return outperformed the Nasdaq Composite's return of 2.6% over the last week. A new partnership with Oracle gave Nvidia a much-needed boost. | NVDA |
https://finnhub.io/api/news?id=3807c6814887a9083a6b4faea94a00a46eb65eee7a084618211268d848a103ea | NIO, Li, XPeng Overview: President Xi's Support Is Not Enough | Chinese EV stocks have been caught in a volatile rut this year. Click here to read more about them. | 2022-10-21T08:57:02 | SeekingAlpha | NIO, Li, XPeng Overview: President Xi's Support Is Not Enough
Summary
- Chinese EV stocks have been caught in a volatile rut this year, with their valuations blighted by headwinds spanning regulatory risks, geopolitical tensions, and a dampening global economic outlook.
- Despite President Xi's recent call for further support on the growth of innovative technology, including core green initiatives like the EV sector, related stocks found little respite.
- The following analysis will provide an overview on the performance and key focus areas on Chinese EV upstarts NIO, Li Auto and XPeng, and discuss near-term implications on their prospects.
- Looking for more investing ideas like this one? Get them exclusively at Livy Investment Research. Learn More »
COVID disruptions and protracted industry-wide supply chain constraints were key themes in 2Q22 for the electric vehicle ("EV") and broader auto sector. However, the situation has rapidly evolved away from said themes after production volumes staged a rapid recovery in June after China lifted lockdown orders in key production hub Shanghai, with focus zeroing-in on potential implications from a deteriorating macroeconomic outlook and the Inflation Reduction Act ("IRA") during 3Q22.
While supply chain constraints remain a lingering factor that has been gating production volumes, consensus points to continued easing, though not as substantial as expected - specifically, component and raw material supply/demand is not expected to find a meaningful balance until mid- to late-2023 or 2024 given much of the supply chain is still under development while the EV market is ramping up at a rapid pace. Easing supply constraints are further corroborated by gradual improvements to inventory levels reported by automakers. But auto sales remain muted q/q, flashing early warnings of demand destruction amid a looming economic downturn.
As mentioned in our 2Q22 EV preview, investors will continue to focus on management commentary on inflationary pressures and recession risks in the upcoming earnings season for clues on OEMs' near-term growth and profitability trajectory. Given valuation multiples across the EV sector have come down substantially in the first nine months of the year with no immediate catalyst in sight to stage a rebound, any signs of real demand destruction in the near-term would make it harder for investors to justify any bullishness under the current risk-off environment for equities.
The sector's fragility is further corroborated by weakness observed recently in Tesla's stock (TSLA) after it missed 3Q22 delivery and revenue expectations, and Rivian stock's (RIVN) short-lived rally after reiterating its full-year production guidance. Declines in shares of their Chinese counterparts, including NIO (NYSE:NIO), Li Auto (LI) and XPeng (NYSE:XPEV) were even sharper, as they grapple with potential demand risks amid a slowing Chinese economy, as well as roadblocks to their respective international aspirations given intensifying geopolitical tensions. Even the cohort's latest rally following supportive commentary from Chinese President Xi last weekend failed to sustain momentum, underscoring elevated investors' angst over China's rapidly deteriorating economy.
Let's take a deeper look into the Chinese EV market, which currently boasts the best penetration rate and commands the largest share of global EV sales. While EV demand in the region continues to outpace supply availability by wide margins, China's near-term macroeconomic outlook - which has been stifled by stringent COVID restrictions and a property crisis - remains a key focus area in the coming months as deteriorating consumer confidence could very reasonably drive a deceleration in order book growth, even with the help of financial incentives aimed at shoring up the sector.
An Overview of China's EV Market in 3Q22
China's passenger vehicle sales continue to recover from 2Q22 lows observed during the height of the region's COVID outbreak and ensuing lockdowns. Power disruptions during August in Sichuan province resulted in a 1.5% m/m decline in passenger vehicle sales during the month, but recovered quickly with no material impact to quarterly volumes. To put that into perspective, wholesale production volumes in China fell only 2% y/y during the week of August 22 to 28 when the power cut was implemented, and resumed swiftly the week thereafter to a 45% increase y/y.
EV sales continued to take the lead on new car registrations - representing a record 28% penetration in August and 31.8% in September - with favourable policy support being a key driver of take-rates still, especially given rising prices at the pump. Domestic brands drove more than half of September's EV sales, with premium EV makers accounting for about a third of volumes, beating "mainstream joint venture brands" led by foreign legacy automakers.
Increased production capacity recently announced by Chinese EV maker NIO with start of productions at its new NeoPark manufacturing hub, and Tesla with its completed upgrades at Giga Shanghai are expected to make a more evident contribution to China EV output volumes in 4Q22 and through 2023. However, it is currently uncertain whether accelerating take-rates observed through 3Q22 will continue as China's economic growth slows.
President Xi's Support for Domestic EV Development
Ramping up investments in innovation and technology was a key theme in a speech by President Xi during the twice-a-decade Communist Party congress that kicked off last weekend. This underscores "expectations that more supportive policies" will be implemented to boost development of sectors core to the country's economic and emissions reduction goals, including EVs:
The commitment to tech and green sectors looks strong, meaning these sectors are the rare darlings with favourable government policies.
Source: Natixis
While the remarks lifted sentiment in Chinese EV stocks earlier this week, it was insufficient to overcome broader concerns over the central government's unwavering commitment to COVID Zero, which has been a significant drag on China's economic growth this year. The muted response to supportive policy packages aimed at salvaging China's latest property sector slump has also added to investors' angst, as it points to a looming macroeconomic crisis in the region that risks stalling demand in the Chinese EV market.
What this Means for Up-and-Coming Chinese EV Makers like NIO, LI, and XPEV
This means more Chinese EV makers will not only be focused on domestic growth in the near-term but also making inroads across fast-expanding overseas markets for EV adoption. Following earlier expansion of reputable home-grown Chinese auto brands like MG Motor (owned by SAIC Motor) and BYD (OTCPK:BYDDF/OTCPK:BYDDY) to overseas markets, which pioneered local demand for China-built cars across Europe and the U.S. in recent years, many more Chinese EV upstarts have started to follow their footsteps in recent years - today, Chinese automakers have penetrated 5% of the European EV market, and is expected to account for 9% to 18% of Europe's total EV sales by mid-decade.
Looking ahead, investors will not only be focused on the domestic growth prospects of up-and-coming Chinese EV makers like NIO, Li Auto and XPeng, but also on their overseas expansion progress. Diversification and growth of global market share would be key to supporting the respective stocks' longer-term valuations, as well as their competitive stance against global peers like industry leader Tesla, and China's auto leader BYD.
NIO
3Q22 Production and Deliveries: NIO delivered 31,607 vehicles in the third quarter (+29% y/y; +26% q/q), underscoring a rapid recovery from earlier production challenges stemming from COVID disruptions, as well as positive progress on ramping up output at its new facility at NeoPark.
The company's newest offerings, including the ET7 sedans and ES7 SUVs built on its newer higher-margin NT 2.0 platform, continued to demonstrate acceleration in terms of both productions and deliveries. More than 8,500 ET7s were delivered in the third quarter despite protracted supply chain constraints that included a shortage of casting parts in July, making positive progress from 6,749 units delivered in the second quarter and 163 units in the first quarter. NIO also recently began customer deliveries on the ET5 sedan, with third quarter results including revenues generated from the sale of 221 units of the model. The results highlight NIO's strength in navigating through protracted industry-wide supply chain bottlenecks, while also partially compensating for the near-term increase in new vehicle and new facility (i.e. NeoPark) ramp-up costs with increasing sales of its more profitable models.
Key Focus Areas:
- Europe expansion: NIO has recently outlined its ambitions in becoming a prominent Chinese EV brand in the European EV market during its "A New Horizon" keynote event in Berlin earlier this month. The Chinese EV maker, known for its goals to create a seamlessly integrated ecosystem and simplified car ownership experience for its loyal customer base, introduced "monthly subscription and leasing options" to prospective European buyers as part of efforts to better serve the needs of different markets. NIO will establish a presence across Germany, Denmark, Sweden and the Netherlands to complement its existing sales hub in Norway, and introduce three vehicle models to the European market - namely, the ET7, ET5 and EL7 (equivalent to the ES7 SUV in China) - by the end of the year to better penetrate the region's growing premium segment. Then, it plans to further penetrate five additional countries across the European EV market by 2023, with further expansion into the U.S. EV market by mid-decade. As part of NIO's Europe strategy, it will be offering vehicle subscriptions "ranging from one to 60 months" in the region, starting at 1,295 euros ($1,265) per month. The business model will not only appeal to retail customers looking to experiment with the Chinese EV brand, but also allow NIO to capitalize on growth opportunities stemming from corporate fleet demand in the midst of their transition to electric. Investors will likely be looking to management commentary at NIO's upcoming earnings call to better understand how it plans to manage roll-out costs and their related impact on the bottom-line amid a macroeconomic environment where profits are preferred over growth. Management will also be expected to provide commentary on how it plans to navigate through an anticipated slowdown in auto demand across Europe as the region deals with a rapidly deteriorating economy with rising inflation and recession fears. While Europe's EV sales continued to increase despite an overall slowdown in auto sales due to protracted supply chain constraints, demand in the segment is starting to show deceleration. Specifically, EV sales in Europe increased by more than 26% y/y in 4Q21, but decelerated to an average of about 20% y/y in 1H22, while its share of total new passenger vehicle sales also fell from 11.8% in the first quarter to 11.3% in the second quarter, underscoring potential demand risks. However, as mentioned in the earlier section, we view NIO's strategic entry to the European market with its subscription model an attractive offering for increasingly budget-conscious consumers in the region. The pricing model is also expected to partially compensate for the near-term demand slowdown in the region and build brand awareness for NIO.
- Mass market penetration: As NIO has mentioned in recent quarters, it has already made meaningful progress in penetrating the premium market across China's wealthier tier 1 and tier 2 cities, and is looking to better capture share in the tier 3 and 4 cities within the foreseeable future. And this is what drives its upcoming roll-out of two new mass market sub-brands, including one that is speculated to offer an EV at under $15,000. We view this as a prescient undertaking by NIO, which first focused on ramping up production and sales of premium higher-margin vehicles, then capitalize on mass market opportunities once brand reputation is established. The roll-out of the two planned sub-brands aimed at penetrating mass market opportunities also comes in a timely manner, as much of China's EV demand is now entrenched in the price-sensitive mass market. This is further corroborated by industry-leading EV sales by mass market automakers BYD and SAIC-GM-Wuling, which together account for seven of the top 10 best-selling EV models in China this year. As such, positive commentary on the timely and on-budget development of NIO's two mass market sub-brands will be critical for buoying its near-term valuation prospects, as it underscores further market share gains within the increasingly competitive EV landscape over coming years.
- Profit margins: In addition to demand outlook and market share gains, NIO's profitability trajectory is another key focus area in the near-term, especially under the current market climate where investors are skeptical over long-duration assets with cash flow realization timelines still being far out in the future. We see three major factors influencing NIO's profit margins in the near-term - namely, 1) NeoPark ramp-up costs; 2) NT 2.0 contributions; and 3) favourable policy support. On NeoPark, which has only recently come online to facilitate productions of the ET5, we expect related early-stage ramp-up costs to weigh on NIO's auto margins (~17% in 2Q22) in the near-term. However, the more efficient design of the newer NT 2.0 platform in which the ET5 is built on, paired with the sedan's higher pricing are expected to partially compensate for some of the ramp-up cost headwinds. And over the longer-term, given the Chinese government's heightened focus on making tech and innovation a core driver of its economy, we expect continued policy support for the ongoing build-out of China's EV economy, which would be a tailwind to NIO's profitability timeline.
Financial Forecast: Although we had previously expected NIO's valuation to benefit from improved demand sentiment in China, and the removal of a regulatory/delisting risk overhang, it seems that looming macroeconomic concerns paired with intensifying geopolitical tension are near-term challenges to the stock which cannot be ignored. As such, we are revising the 12-month PT for NIO from $27 to $17 (constant currency from previous coverage: $19), which would represent upside potential of 55% based on the shares' last traded price of $10.97 on October 20.
The PT is computed through a discounted cash flow ("DCF") analysis that draws on our latest fundamental forecast for NIO, adjusted for its actual 3Q22 delivery progress as well as recent developments surrounding its demand and cost environment. The analysis assumes a perpetual growth rate of about 3% (previous forecast: 5%) and WACC of 9%, which is consistent with China's longer-term economic expansion rate as well as NIO's capital structure and risk profile.
NIO_-_Forecasted_Financial_Information.pdf
Li Auto
3Q22 Production and Deliveries: Li Auto delivered 26,524 vehicles in the third quarter (+62.5% y/y; -8% q/q), outperforming its revised guidance of 25,500 vehicles (original forecast 27,000 to 29,000 vehicles) citing acute supply chain constraints. August was an outlier - the company had only delivered a little more than 4,500 vehicles during the month, compared to preceding output monthly volumes between 20,000 and 30,000 vehicles. And in September, the company delivered 10,123 units of the newest L9 SUV during the model's first full month of sales; meanwhile, the legacy Li ONE SUV sales dropped from more than 10,422 units in the beginning of the second quarter to merely 1,400 units by September. The results have drawn investors' concern that the L9 - alongside the roll-out of the L8 and L7 SUVs later this year and in 1Q23, respectively - is starting to "cannibalize" demand for the Li ONE, which already boasts positive gross margins averaging 22% in 1H22.
Key Focus Areas:
- Li ONE demand cannibalization: As mentioned in the earlier section, Li Auto's legacy Li ONE plug-in hybrid SUV sales have come down significantly since the launch of the L9 six-seater full-size SUV. While the L9 boasts a higher price of about RMB 460,000 compared to the Li ONE's MSRP of about RMB 338,000, it is currently unknown of the newer full-size model's gross margins - especially given early-stage ramp-up costs as well as the recent increase in input costs. Yet, the Li One has already boasted impressive gross margins of 22% on average in 1H22, matching closely to industry leader Tesla's 26%+ (ex-credits). Under the current macroeconomic environment where profitability takes the driver's seat for valuations, the near-term ramp-up costs pertaining to new models, paired with an imbalanced mix may spell some near-term challenges to Li Auto's bottom-line, and inadvertently, pressure on its shares' performance ahead of its next earnings release.
- New vehicle launch: Drawing on the above concerns about mix and margins, Li Auto's upcoming start of deliveries on the L8 six-seat large-size SUV in November, which is priced at a similar range as the Li ONE at under RMB 400,000, and the even-lower priced L7 five-seat SUV in 1Q23 bring on some short-term headwind on margins. But overall, the planned launch of the L-series (including the L6 five-seat mid-size SUV launching at a later date) is a welcomed endeavour that will likely improve Li Auto's scale and market share over the longer-term. The build-up of consumer interest in the new models - which is further corroborated by Li Auto's recent decision to fast-track the L8's launch - underscores the plug-in hybrid SUV specialist's appeal despite rising concerns of demand risk in the Chinese EV sector. SUVs represent a lucrative vehicle segment in China, accounting for close to half of the region's passenger sales. Paired with increasing momentum in EV take-rates across China, Li Auto's rapid diversification of its product pipeline is expected to improve its competition compared to premium electric SUV rival NIO and others over the longer-term, while expanding its total addressable market across different vehicle types and pricing segments.
- Supply chain constraints: While the broader auto industry - from legacy OEMs to EV upstarts - is sounding a unanimous chime that acute supply chain constraints are finally showing structural evidence of easing, Li Auto says otherwise. The company announced prior to the end of its third quarter that it will be taming its delivery expectations for the three months through September due to ongoing supply chain constraints. This is consistent with the sporadic COVID disruptions in Jiangsu province where Li Auto's Changzhou manufacturing facility, as well as key auto suppliers, are located. In addition to looming demand risks, Li Auto's underperformance in managing the supply chain snarls compared to peers as observed by its muted August deliveries draws intense scrutiny from investors ahead of its upcoming earnings release, with many now paying attention to whether the company can make up for the lost volumes before the end of the year.
Financial Forecast: Despite concerns over Li Auto's sales mix and related impact on its profit margins over coming months as it begins customer deliveries on the remainder of the L-series, we remain optimistic that the company will be able to achieve GAAP-based net income sooner than its domestic peers. Specifically, Li Auto's experience in ramping up productions, and earlier focus on a single-vehicle business model has allowed it to scale its operations better, albeit slowing its market share gains compared to peers like NIO and XPeng which boasts multiple models and services various vehicle segments. We are projecting narrowing operating and net losses over the next two years as the company's R&D spending remains elevated to support the roll-out and ramp-up of the L-series models, with nominal net income realization of about RMB 166.5 million by the end of next year and auto sales driven operating profit of RMB 3.3 billion by 2024.
On the valuation front, we are maintaining a conservative view given the same external headwinds faced across its domestic EV peers - namely, macroeconomic deterioration, regulatory overhang, and geopolitical risks - as well as protracted supply chain constraints that appear more acute to Li Auto relative to peers. Applying a perpetual growth rate of about 3% to our DCF analysis for Li Auto - which is similar to the one applied for NIO to reflect its operating environment - and WACC of 9.5% to account for the company's greater risk profile and highly leveraged capital structure, we are setting a base case PT of $18 (constant currency from previous coverage: $20) for the stock. This would represent upside potential of 16% based on the shares' last traded price of $17.30 on October 20.
Li_Auto_-_Forecasted_Financial_Information.pdf
XPeng
3Q22 Production and Deliveries: XPeng delivered 29,570 vehicles in the third quarter (+15% y/y; -14% q/q), slightly outperforming its guided range of 29,000 and 31,000 vehicles. The company started its first batch of customer deliveries on the all-new G9 SUVs in September after reservations began in August, marking its initial foray in the best-selling vehicle segment. However, consistent m/m delivery declines across all of its models during the third quarter is starting to raise concerns of whether the company is inadequately handling the roll-out and ramp-up of output after adding the G9 to its line-up (i.e. operational and cost inefficiencies), while also increasing worries over demand risks as consumer sentiment in China wanes.
Key Focus Areas:
- G9 SUV: Sales and reservation volumes on the G9 SUV is a key focus area for investors, as it would infer XPeng's progress in gaining market share via expansion into a new vehicle segment. The last official disclosure from the company indicated that the G9 had acquired more than 22,800 reservations on the first day that it became available for pre-order in China. The company delivered 184 units in September, representing a weekly run-rate of about 48 vehicles. Continued acceleration in G9 deliveries and reservation volumes would be critical to XPeng's fundamentals, as 22,800 reservations alone already represent an estimated value of RMB 8 billion. As discussed in our previous coverage on the stock, not only does the G9 open opportunities for XPeng to compete for share in the largest and fastest-growing SUV segment, but also allowed the company to better compete for share against domestic premium electric SUV leader NIO, given comparable technological capabilities. Alongside initiating customer deliveries on the G9, XPeng has also recently rolled out "City NGP" ("Navigation Guided Pilot"), its newest ADAS system, as part of a pilot program composed of select P5 customers in Guangzhou. City NGP essentially enables next-generation ADAS capabilities - such as autonomous driving / cruising based on a set destination on the navigation system - with "coverage from highways and parking lots to much more complex city driving scenarios". City NGP is part of XPeng's "XPILOT 3.5" ADAS, which will roll into "XPILOT 4.0" debuting with the G9.
The G9 makes a key differentiator for XPeng against rivals within the increasingly crowded Chinese EV landscape. From a technology perspective, the G9 boasts the fastest charging speed - the vehicle is built on XPeng's newest "XPower 3.0 powertrain", which features an 800-volt battery pack that can add more than 120 miles of range in under five minutes. The G9 also features XPeng's next-generation "XPILOT 4.0" advanced driving assistance system, which leverages best-in-class software enabled by "NVIDIA DRIVE Orin-X" chips (NVDA). As discussed in a previous coverage, the combination of newly introduced technological features in XPeng's newest SUV accordingly puts it on par with competitive offerings observed in rival EV makers, such as NIO's "Power Swap", which switches out a dead battery for a fully charged one in under three minutes, and "NIO Autonomous Driving" ("NAD"), which also leverages the "NVIDIA DRIVE" platform.
Source: "XPeng: Moment of Truth"
- Restructuring speculations: As mentioned in the earlier section, recent observations of delivery volume declines across XPeng's line-up is drawing up investors' angst over demand risks and operating inefficiencies. Based on a recent report released by Chinese outlet Jiemen, the company is currently undergoing early stages of a restructuring process to arrest the recent decline of demand and underperforming sales rate across its line-up - including the G9 SUV that boasted robust reservation volumes in August, as well as the P5 sedan. Specifically, the report indicated that the G9 had fallen short of users' expectations, with sales underperforming expectations. Meanwhile, take-rates on the P5 sedan introduced last year are also stalling. The speculated restructuring efforts would aim at improving demand for the two models, which are heavily relied on to expand XPeng's total addressable market in the increasingly competitive Chinese EV market, while also improving its sales mix and profit margins. The report also pointed to the fact that the bulk of XPeng's sales are currently coming from the P7 sedan introduced almost three years ago, with limited feature upgrades. This could potentially explain the delivery declines observed in recent quarters for the P7, as limited feature upgrades make it a difficult contender among an increasing slate of EV options on the market - including NIO's newest ET7 and ET5 premium electric full- and medium-size sedans. As such, increased clarity on XPeng's forward strategy on managing its brand appeal, and ramping up sales and production volumes would be critical to restoring investor confidence in the stock.
Financial Forecast: Adjusting our previous forecast on XPeng for its actual 2Q22 results and 3Q22 deliveries, we are forecasting vehicle sales of RMB 30.3 billion by the end of the year with anticipation for volumes to pick up in 4Q22. Specifically, the assumption is consistent with anticipated pent-up demand before the end of year for all Chinese EV makers due to pulled-forward consumer purchases before the EV subsidy ends on December 31, barring any material disruptions to productions/supply chains given the region's fluid COVID situation. Paired with expectations for the continuation of cost patterns observed in 1H22 to support continued R&D developments (e.g. XPILOT 3.5 / XPILOT 4.0), alongside impact from near-term inflationary pressures that have been partially offset by the y/y increase in higher-priced sales (by value and by volume), the company is expected to experience increased net losses from RMB 4.9 billion in 2021 to RMB 7.8 billion in 2022.
Drawing on the above fundamental forecast, we are placing a near-term PT of $11 on the stock, which has been downward adjusted from the previous PT of $36. The significant downward adjustment to valuations is the result of increasingly prominent external and internal operating headwinds, spanning company-specific risks over demand and inadequate sales mix impact on margins, as well as macroeconomic and geopolitical factors that are weighing on the broader Chinese EV sector's valuation multiples.
XPeng_-_Forecasted_Financial_Information.pdf
Final Thoughts
While battered valuations across Chinese EV stocks today - primarily NIO, Li Auto and XPeng - could imply a compelling entry opportunity, external factors such as regulatory and geopolitical risks harbingers further volatility over coming months. This is especially true given the rapidly deteriorating global economic growth outlook, which has already been weighing on market sentiment this year, hence the violent selloff observed across almost all industries.
Until each of NIO, Li Auto and XPeng can address and resolve internal issues that investors are raising concerns over - whether it is demand risks, cost and operating inefficiencies, supply chain constraints, and/or a lack of clarity on forward strategies to gain market share / achieve profitability - and external headwinds subside, the stocks' valuations will likely find difficulty in sustaining momentum.
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Comments (6)
Taiwan conflict is inevitable imo. That being said I do not expect it to happen in the short/medium term to worry.
China is still at the military readiness for an all out invasion. Whilst the Russian saga and the west's response, will make China pause to deliberate their actions. | NVDA |
https://finnhub.io/api/news?id=c1abb4eec0800b4518c9c2aa569265daafed48edd20dca0035e75aed3539b9f3 | Cathie Wood Snags Tesla Shares, Unloads Nvidia | Wood's Ark Innovation ETF has plunged 64% so far this year, and is down 78% from its February 2021 peak. | 2022-10-21T08:20:00 | Yahoo | Cathie Wood Snags Tesla Shares, Unloads Nvidia
Wood's Ark Innovation ETF has plunged 64% so far this year, and is down 78% from its February 2021 peak.
Wood's Ark Innovation ETF has plunged 64% so far this year, and is down 78% from its February 2021 peak.
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Stocks have blown past expectations for 2023 – but some analysts are bracing for a sell-off as the market approaches record highs.
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Berkshire Hathaway historically reports its quarterly financial results on weekends, and CEO Warren Buffet has a simple reason why. Berkshire (ticker: BRK.A, BRK.B) reported second-quarter earnings Saturday morning. Many other public companies, however, release their earnings results during the trading week, either before the market opens or after the closing bell.
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The week ahead will feature a crucial inflation report and earnings out of Disney, UPS, and Alibaba as second quarter earnings season winds down.
(Bloomberg) -- Dan Loeb is hardly the first Wall Street titan to lament how meme stock traders have made short selling a perilous endeavor. But that Loeb, who runs the hedge fund Third Point LLC, did so now is what’s interesting.Most Read from BloombergTexas Power Prices to Surge 800% on Sunday Amid Searing HeatNetanyahu Seeks to Change How Judges Are Named, Then Stop RevampChina Embassy Rips ‘Brutal’ Russia Border Incident in Rare MoveThe Most Dangerous Job for Lawyers Is Being on Trump’s Legal
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Warren Buffett's Berkshire Hathaway operating profit rose by 10%. BRKB stock is just out of buy range.
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Dubbed the Oracle of Omaha, Warren Buffett is renowned for his simple and frugal lifestyle. Despite being the sixth richest person globally, with a net worth estimated at $117.9 billion, Buffett continues to live in the same modest home in Omaha that he purchased in 1958 for just $31,500. Adjusted for inflation, that amount today would be approximately $328,990.80, a mere 0.000279% of his total net worth. Buffett has consistently ranked the purchase of his home as the third-best investment he ha
As a pandemic-inspired boom ends, entrepreneurs and giant corporations alike are counting on customers to keep accumulating more stuff than they can squeeze into their homes. | NVDA |
https://finnhub.io/api/news?id=69d6dfc0ddd82a3d0deaa2844c7ca56c13d851c62827e84af0b4fc09fd0f5e39 | Intel: The Bad Can Get Better | Intel has been caught up in the bear perfect storm. Financials are deteriorating due to weakened demand. See why we rate INTC stock a buy. | 2022-10-21T07:58:43 | SeekingAlpha | Intel: The Bad Can Get Better
Summary
- Intel has been caught up in the bear perfect storm: the financials are deteriorating due to weakened demand just as Intel is going all-in on investing in fabs and R&D.
- The thesis remains that investors may be overly bearish due to extrapolating Q2/Q3 figures which include a one-time inventory correction.
- Contrary to popular opinion, the dividend is likely not at risk, although it may depend on how fast there will be a recovery in demand.
- While others may be ridiculing the collapsed Mobileye IPO valuation, this presents a very compelling entry point (in the bull case its robotaxi business becomes more profitable and hence valuable than Uber).
- Raptor Lake has a very strong CPU line-up, and the Arc launch represents a milestone for Intel's XPU strategy.
Investment Thesis
As discussed extensively in previous articles, Intel Corporation (NASDAQ:INTC) earnings are down for a variety of reasons, both macro- and micro-economic. This has resulted in a perfect bear storm.
In the near-term, as this article previews Intel’s Q3 report, due Thursday, October 27, the “big” question is if Intel’s forecast for a recovery in Q4 will materialize. On the one hand, Intel claimed it has been vastly under-shipping the market due to the inventory correction. On the other hand, the results and guidance of other companies such as Micron (MU) aren’t exactly inspiring either.
On the balance, my view remains that Intel has become undervalued under $30 since investors are willing to pay only for immediate profits, despite that there is much leverage built into Intel’s multi-year plan (which is impossible to predict exactly and therefore not present in any analyst “gospel” estimates). This means Intel’s earnings have the potential to multiply over time, and with that the stock.
Earnings preview
The model below isn't so much a model, as it is just extrapolating the Q2 results going forward. When I saw that this resulted in just below $65B revenue for the year (the low-end of the guidance), I was satisfied with the exercise.
|DCAI||NEX||AXG||IFS||MBLY||CCG||CCG Adj||Sum|
|22Q1||6,034||2,213||219||283||394||8600||694||18437|
|22Q2||4649||2333||186||122||460||7040||625||15415|
|22Q3||4649||2333||186||122||460||7040||625||15415|
|22Q4||4649||2333||186||122||460||7040||625||15415|
|19981||9212||777||649||1774||29720||2569||64682|
Looking over these results, if this is indeed what Intel will report, then this would be just horrible:
- DCAI reported its lowest revenue since (at least) Q1'21 (given the new segment reporting, results from earlier quarters aren't available). For reference, the highest DCAI revenue yet was in Q4'21, just below $6.5B. Although there have been periods of weakness in the past (2019 and early 2021), those periods ("cloud digestion") were after periods of high growth.
- CCG (excluding the adjacencies) reported its worst result since Q2'16.
While the other segments are a bit more resilient, they are still small, and even if they improve from the Q2 results, aren't going to move the needle:
- NEX is the highlight as the one not-very-small segment that seems to continue to grow to new all-time highs, confirmed by Intel's comments.
- The expected AXG ramp is delayed due to the delays in the ramp of Arc and Ponte Vecchio.
- IFS, as expected, remains in the buildout phase.
- Mobileye had a great Q2 and will likely continue to grow, but will likely need its autonomous (L4) product and its robotaxi business to become a material business for Intel's overall financials.
This is how these results would fit in the long-term trends:
|CCG||DCAI||NEX||AXG||MBLY||IFS|
|2019||37938||21696||6829||606||879||461||68409|
|2020||40535||23413||7132||651||967||715||73413|
|2021||41067||22693||7976||774||1386||786||74682|
|2022||32289||19981||9212||777||1774||649||64682|
Overall, CCG will likely see a ~$10B or 25% hit, while DCAI would lose closer to 10%, for a large part attributable to market share losses. Revenue would drop firmly below 2019 levels.
For some further discussion, in ordinary times it just seems nearly impossible that Intel would report three straight quarters of multi-year low results in both DCAI and CCG, but of course these aren't ordinary times. Since Pat Gelsinger said in early September that the results are trending towards the lower end of the guidance (but still within the guidance), there is no reason to model in any sort of recovery.
Nevertheless, one thing investors should be aware of is that Intel was quite firm in Q2 on noting that part of the results was a "once in a decade" inventory correction. So, at the time, Intel did actually guide to some recovery in Q4. Given how the macro environment hasn't really improved since July, even if demand continues to soften, at least there should be some less inventory burn, both of which might to first approximation cancel out each other.
Hence, since (1) the "model" above indicates that Intel hardly needs any recovery to report full-year results within its Q2 guidance range, as well as (2) given Pat Gelsinger's comment about being in the guidance range, and (3) given how bleak the Q2 results were to begin with, contrary to some investors, I do not necessarily expect a further downside guidance revision (although perhaps the top-end of the range may be reduced).
As case in point, the PC sale numbers that have been reported for Q3 certainly were not post-apocalyptic, and within pre-pandemic levels. Of course, there may have been some market share and average selling price changes since then.
On the other hand, though, a revenue shrink of "just" around 25% would actually be quite strong compared to what we've seen from AMD and Nvidia recently. In that sense the glass could be seen as either half full or half empty.
Lastly, for reference, my Q3 "prediction" (extrapolation) is in-line with the Street estimate, while for Q4 the estimates are modelling in a ~$1B sequential improvement.
Investment Thesis: Revisited
Given the discussion above, it can be concluded that revenue has indeed likely bottomed. If that is indeed the case, then Intel may have reached the financial bottom, and hence also the stock bottom since the stock has simply followed the earnings estimates. This is no guarantee for a quick recovery, but at least the Q4 guidance will either confirm or disprove this thesis by next week already.
Just given how weak the Q2 results were, the upside at this point seems a lot larger than any potential further downside, especially since none of this factors in any of the three "new" growth businesses/segments ((AXG, IFS, MBLY)), which currently still represent a rounding error in the overall results.
Business updates
There have been several moving pieces over the last quarter, which warrants a review (see below for a summary).
1. Raptor Lake and Zen 4 launch
At the time of writing, Raptor Lake has been announced but not yet launched, just a few weeks after Advanced Micro Devices (AMD) launched its own Zen 4 CPUs. This means there are only reviews yet of the AMD part, although as usual there have been plenty of leaks and Intel has disclosed its own benchmark measurements. Contrary to some investors’ (outdated) opinions, Intel has been very competitive again since the Alder Lake launch, and this remains the case.
Background
As a reminder, Intel launched Alder Lake less than a year ago with the game-changing feature of adopting big. Little (hybrid architecture), which is common in smartphones. However, Intel is using this feature to be able to deliver both single-threaded and multi-threaded leadership. The P-core (performance core) team is charged with developing the highest IPC (instructions per clock cycle) and highest clocking architecture, while the E-core team is focused on delivering the highest performance per mm2 of silicon. Note that contrary to smartphone little cores, the Intel E-cores are actually much closer to smartphone big cores; Intel has compared the Alder Lake E-core to its 14nm Skylake CPUs in terms of performance, but at just a fraction of the power. (Intel should perhaps have called them large X-core and small S-core.)
Raptor Lake
The top-end Alder Lake was equipped with an 8+8 config of P+E cores, but Raptor Lake doubles the E core count to 16. Intel has also tuned the process and circuits to improve the frequencies, which have also improved slightly. Overall, Intel is claiming low double digit single-threaded and around 40% multi-threaded improvement.
Zen 4, comparison and verdict
Although this is quite substantial, AMD’s Zen 4 claimed a similar (or even slightly higher) multi-threaded improvement, and a nearly 30% single-threaded improvement. This was achieved due to a combination of IPC and frequency.
Hence, the general expectation is that Zen 4 (Ryzen 7000) and Raptor Lake are closely matched in terms of performance, as the multi-threaded comparison isn’t changing much while Zen 4 is catching up a bit in terms of single-threaded performance. However, pricing is heavily in favor of Intel, especially considering that the Intel platform still supports DDR4 memory, unlike Zen 4. This means both cheaper motherboards and RAM.
Hence, despite being at a process node disadvantage, Intel will likely actually end up slightly edging out AMD in terms of performance per dollar.
So, overall, Intel’s competitive position in the PC market remains solid. Of course, though, Intel still has a substantial market share advantage due to its incumbency position; it could perhaps be argued that simply being roughly on par might not be enough for Intel in order not to be vulnerable to continued market share erosion over time.
Power consumption
A specific remark should go to power consumption. Last generation, Intel received quite a lot of criticism with Alder Lake for its supposed lack of efficiency. However, power consumption scales linearly to quadratically at best and cubically at worst with frequency. This means that the last few percentages of performance are responsible for the vast majority of the total power consumption. Hence, in the pursuit of the performance crown, Intel sacrificed power consumption, even though at lower power consumption the performance per watt improves substantially.
As case in point, Intel has claimed that Raptor Lake at 65W delivers the same performance as Alder Lake at 250W. This claim has already been verified at least at 80W.
This generation, with Zen 4 and the new AM5 platform (as the AM4 platform was capped at around 140W), AMD had opted to follow into Intel’s footsteps. As mentioned above, the majority of the Zen 4 performance improvement comes courtesy of higher frequency, which is inefficient.
Tests have indeed shown that this has offset pretty much all of the supposed benefit of the 5nm process technology. In the worst-case, the performance per watt (energy per instruction) is pretty much the same as Zen 3. Even worse, for gaming the fps per watt (energy per frame) has deteriorated substantially.
Surely AMD bulls will point out the eco modus in Zen 4, but the point remains that out of the box, both Intel and AMD are now sacrificing power (efficiency) in pursuit of the highest performance for their flagship CPUs. In other words, this shows that the efficiency of an architecture/CPU is not something inherent, but obviously depends on its specific operating condition; both Intel and AMD CPUs can be both efficient or inefficient.
2. Arc debut
As discussed in previous article, Intel is – to no one’s surprise given the specifications and time to market – playing the performance per dollar game in the mid-range segment in order to capture market share as it enter the GPU market.
Overall, this launch is a substantial milestone for what should be a new growth segment for the next decade.
For a more technical discussion (feel free to skip), the major issue with Arc is that the GPUs do not live up to their theoretical capabilities (as measured in TFLOPS), likely due to immature drivers and/or architectural bottlenecks. In principle, the A770 should or could have a performance between the, both much more expensive, GTX 3060 Ti and 3070, while in reality it falls short of the GTX 3060 Ti and actually rather competes against the 3060, where the . The reason this is in issue is because AMD still exists and actually already competes favorably against Nvidia (NVDA) based on performance per dollar, which further reduces any performance per dollar advantage that was left in the Nvidia comparison. Hence, reviewers tends to recommend AMD at best.
Nevertheless, in a recent discussion, although not really surprising, Intel said most of its engineers are working on Battlemage now, as well as that Intel isn’t planning on repeating the mistakes it made with Alchemist. Intel remains committed to its roadmap.
In particular, while it is currently leveraging Taiwan Semiconductor (TSM) ("TSMC"), given Intel’s highly outspoken target of regaining process leadership, a Celestial GPU on 18A in 2025 could in principle be highly compelling, given that especially GPUs can very effectively use additional transistors that are available with a process node advantage. As Pat Gelsinger said, even a mediocre architecture with a leading transistor will still a leadership product.
Although, as last technical remark, one criticism that I have had about Intel’s architectures over the years is that Intel often tends to use design libraries with relatively low density, far below the theoretical maximum transistor density of the node. This means that even if Intel is one node ahead, if it then uses a library that is 2x less dense than what AMD and Nvidia are using, then this offsets the theoretical advantage. Indeed, a comparison I saw passing on Twitter (but couldn’t find) compared the Arc GPUs against AMD and Nvidia in terms of transistor count and silicon area vs. performance. In simple terms, the 400mm2 Arc GPU has trouble competing against much smaller chips from the competition, which also refers back to the point above that Arc doesn’t even deliver the performance (TFLOPS) that it theoretically has in the first place.
3. Mobileye IPO
Although the IPO is receiving most attention, the real news is that Mobileye Global (MBLY) is nearing the initial launch of its robotaxi service, although no formal announcement has been made yet. A few years ago, the CEO had stated early 2022 launch, so there is a bit of a delay. Since Mobileye had said it is waiting for regulatory approval to launch its driverless service, it seems the delay is due to regulation and not technology.
A few years ago, I had put out a moonshot goal for Mobileye revenue to reach $4B to $5B by 2023. Although for this to happen to growth rate would have to accelerate to more than triple digits, the premise of the robotaxi service opening a large new growth market for Intel remains. In the bull case, robotaxi takes over all ride-hailing, becoming larger (as well as more profitable given the lack of driver opex) than the likes of Uber (UBER).
Regarding the IPO itself, it has been ridiculed by investors for the valuation collapse over the last year. However, I wonder what investors are complaining about, as this provides a great investment opportunity. Given how disruptive robotaxis will be (or at least can be in theory), there is a likelihood Mobileye revenue could surpass its IPO market cap over the coming decade.
4. IFS update
Capacity corridors and system foundry
A new tidbit of information came out about Intel Foundry Services. Intel is establishing dedicated capacity corridors for its foundry customers. No one, not even Intel, will be able to touch these corridors. Intel said the MediaTek corridor is a few thousand wafers per week. Depending on the wafer price assumed, a few thousands wafers per week at a few thousand dollars each starts to approach the $1B annual revenue mark, from just one customer. Note that MediaTek has so far only signed a deal for Intel 16, so the opportunity for land and expand remains strong.
Overall, a few billion revenue from about half a dozen large customers (Intel is engaged with 6 of the top 10, according to Pat Gelsinger in July) is exactly the recipe to build a large foundry business.
In addition, Intel has propagated a new marketing terms for all its foundry initiatives together (including things like packaging and its ecosystem investments): systems foundry. Together with the capacity corridors, this shows that Intel is taking the steps to become at least on equal to footing to pure play foundries such as TSMC. For example, one often heard criticism remains that some customers supposedly would avoid IFS since Intel would be competing against its own foundry customers.
Twitter.
However, this argument doesn’t make a lot of sense since for the competitiveness of some product, the only thing that matters is the transistor, not who made the transistor. As case in point, although it could be interpretated otherwise since Apple (AAPL) did eventually switch to TSMC, Apple had been a Samsung foundry customer for quite a few years. That was, effectively, as if AMD would use IFS to manufacture its CPUs.
In addition, since IFS was set up as a separate business, it actually does not compete against any of its customers, just like TSMC. And since Intel has also addressed some of the other criticisms (such as lack of ecosystem and EDA support), the decision for fabless customers will simply come down to things like process leadership, packaging and pricing – all of which Intel is well-positioned to compete on going forward.
TSMC already pressured
TSMC seems to be feeling the competitive pressure from IFS already.
Twitter.
TSMC indicated it is challenged by “overseas fab expansions”. While certainly Intel isn’t the only “overseas” foundry, nor the only one busy with fab expansions, it is the most logical candidate, especially since, indeed, Intel’s foundry business is still in the phase of building the fabs.
For comparison, it took something like 3-4 years after the launch of Ryzen/Epyc for Intel to acknowledge that the competitive environment was intensifying.
Gross margin de-risked
When Intel announced the foundry business, one concern was that only few companies can really attain high gross margins, as even market leader TSMC achieved “only” around ~50%, so it was questioned if Intel could make this a profitable business.
However, in the most recent quarter, TSMC gross margin reached a record ~60%, driven by price increases in the wake of the shortages. The operating margin was around 50%. Hence, even assuming that Intel is willing to sacrifice a bit of margins to lure customers, both TSMC metrics are much higher than what Intel has reported most recently.
Financial engineering: Internal foundry model and Brookfield
I recently discussed Intel’s new internal foundry model, which warrants some follow-up discussion as there seems some misunderstanding.
First, as it relates to the general topic of financial engineering, one comment said that I had misunderstood the previous piece of Intel financial engineering, namely the Brookfield deal, which I summarized as Intel building two fabs for the price of one, but also only getting profits for one fab. The commenter said that Brookfield’s maximum profit is purportedly capped. No source was provided, though, and Intel never mentioned anything like this, so my opinion stands.
Secondly, the misunderstanding about the internal foundry model seems to be that people think that it is only now that Intel is starting to apply IP protection/firewalls and a separate P&L for its foundry business.
Twitter.
This is simply factually wrong. Intel Foundry Services was conceived from day one as a separate entity with its own P&L. This is obviously mandatory to be a foundry in the first place. Investors may know that a common criticism is that Intel is (or would be) competing with its own foundry customers, so obviously IFS cannot just be allowed to give its customers’ IP to Intel.
Hence, this is the wrong way to look at things. Imagine you’re Apple or Nvidia, for example, and given the standards you as a company adhere to, as well as what your shareholders demand anyway, you must build the most competitive silicon out there. Especially in the case of Nvidia, if you can build a better GPU, you can charge higher prices and maintain a higher market share.
But since you’re a fabless company, you can freely go shopping around looking for foundries that make the best transistors. In the case of Apple or Nvidia, or even AMD, that means comparing the offerings of the three leading edge foundries (i.e., Intel, TMSC, and Samsung), and then picking based on features likes pricing and power/performance. Of course, if for some reason you have a prejudice against one company, fine, but then you risk not making the best silicon possible.
This has been true from day one for IFS. What the internal foundry model changes, though, is that now Intel itself also becomes an IFS customer. I suppose this entails that for example Intel’s client and data center groups will get the same wafer pricing as other foundry customers. In this way, Intel design groups will get apples-to-apples comparisons against pricing of other foundries, and hence Intel’s process development teams are challenged with providing and getting a lower cost than foundries.
While this sounds like a neat exercise and obviously will require some organizational changes to do this, my argument was that it doesn’t change any fundamental economics. It is just accounting. Even if IFS charges Intel’s client group with some arbitrary wafer price, this is just internal money that gets shuffled around inside Intel.
Twitter.
Dividend sustainability
Some recent articles argued that Intel’s dividend is unsustainable given the recent trends such as FCF. However, investors who analyze Intel purely based on its financials, as argued in a recent article, are probably the reason Intel is currently as cheap as it is. In other words, the argument is that investing in Intel purely based on the numbers is misleading.
In summary, Intel’s FCF has been negative in 2022 due to large fab investments in preparation for a return to growth in the coming years, while (coincidentally) revenue is also excessively underperforming due to unsustainable inventory burn and lowered demand. Nevertheless, in the case that there would be no growth, the fab investments would obviously decline significantly. In addition, there is further long-term (gross margin) upside as the investments to regain process leadership progress. Lastly, many of these articles seem to rely on estimates as if these are gospel. The reality is that given all the variables involved (for example, what if the robotaxi, GPU or foundry business becomes successful?), no one can reasonably predict Intel’s mid-term earnings and FCF (although obviously Intel as discussed at investor meeting does have some guardrails which they are managing).
As one more note, I would nevertheless not commit to any bet that Intel will certainly not cut its dividend, but such a thing would in my opinion depend more on the evolution of the overall PC and data center demand, rather than AMD. As case in point, AMD’s pre-announced Q3 PC financials were objectively far worse than Intel’s Q2. Intel reported a COVID-hangover combined with inventory burn, while AMD reported a total collapse.
Layoffs
Seeing the damage that the 2016-2017 reorganization did to the company, certainly I am no fan of the latest round of layoffs. However, one must also admit they are perhaps just the simple financial reality:
Intel cut its annual sales forecast from $79 billion to $67 billion in July amid a steep decline in PC demand and a softening data center market.
Intel hired on the order of 18k net new employees over the last 18 months, so it is unlikely there will be a complete reversal, but with around ~$15B in lower sales than expected (the low end of the guidance range is $65B), something has to give. So if as discussed above Intel is unwilling to cut the dividend, then apparently it are the employees. Nevertheless, the article that details the layoff plans mentions that Pat Gelsinger noted Intel's low current gross margin profile, but Intel has only itself to blame for falling behind in process technology and the low yield of 10nm and 7nm. This is something that can only be fixed by Intel's employees.
Summary
Some of the key points:
- Intel’s earnings may be bad in the near-term, but that can (almost certainly?) only get better.
- The dividend is not at risk.
- Intel has been competitive in the PC market since Alder Lake, which has been ramping in 2022, and despite the process disadvantage over the next year, the competitive environment isn’t changing materially over the next year due to Raptor Lake being a strong improvement.
- AMD has been pushing the power envelope of its highest-end CPUs (at the expense of efficiency), just as Intel has been doing for several generations node.
- Arc is not delivering the performance one might expect based on theoretical FLOPS (an issue that had been expected and readily admitted by Pat Gelsinger and the GPU team itself). In addition, since AMD was already competing favorably on performance per dollar vs. Nvidia, the value proposition of Arc isn’t quite as large as Intel portrayed.
- While the downspecced Mobileye IPO is at the expense of the amount of money Intel can raise, perhaps in order to fund the fabs, R&D and dividend, it provides a compelling entry point for investors to buy the stock. There is no reason to complain.
- The argument that Mobileye’s valuation has remained stagnant because of its current bear market valuation is nonsensical, and at best could be applied to many, many more companies that have seen their valuation being compressed like a souffle under a sledgehammer.
- Intel has been and continues to build a highly credible foundry business, offering a complete systems portfolio (including leading edge process technology as well as more niche offerings from the upcoming Tower acquisition), which even includes dedicated capacity corridors.
- IFS is open to all customers, including AMD, Nvidia and Apple, and given the rising wafer prices and accordingly gross margins that TSMC has been charging since the chip shortages (as well as its half a decade of standstill with N3 and N2), surely leading edge fabless companies have every reason to check out its offerings.
Investor Takeaway
Referring back to my relatively recent discussion about the Intel stock and financial trends, the thesis was that, in hindsight, due to underinvestment Intel might actually have been overvalued when it was trading for $50-60, as it was not reinvesting enough profits back into R&D. In addition, the gross margin erosion might cost another $10 or so in stock price.
However, the forward-looking thesis was that the gross margin weakness should improve over time, so with the stock price now firmly below $30 due to recessionary cautiousness, Intel is trading below any reasonable steady-state valuation. Moreover, if Intel does not revise its guidance downward, then this would be proof of the bottom.
In addition, there is much further upside that no analyst estimates will recognize (or would even be able to predict) until it actually materializes, namely (1) regaining process technology leadership, and, more directly, (2) the three new emerging businesses (robotaxi, GPU and foundry). Therefore, estimates should be taken with a grain of salt.
As discussed here, Intel is in-line on robotaxi (it is not sure if any delays are due to regulation or technology), a bit behind on GPU (but no fundamental roadblocks as it now comes down to improving the software stack further over time and executing on the roadmap), and a bit ahead on foundry.
Given Intel's mid-quarter confirmation that it was performing within guidance, the thesis of Intel bottoming seems substantially de-risked, so investors don't have to wait until the earnings to buy the stock. Although Intel does have a history of dropping after its earnings reports.
This article was written by
Analyst’s Disclosure: I/we have a beneficial long position in the shares of INTC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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Comments (43)
Ignore the AMD fans who come to INTC articles to convince you to dump your shares. Intel closed the gap for high-end chips. AMD will have to lower prices.PC World Review
https://youtu.be/RptMO7GUDwc
www.tomshardware.com/..."Intel i9-13900K and i5-13600K review: Beating AMD at its own game"
arstechnica.com/...
www.reddit.com/...
[Aaron, in reviewing the behavior and performance reported by yesterday's written reviews, there seems to be an immense disparity in how motherboard manufacturers have implemented "unlimited power" across PL1/PL2/ICCMax. Can you clarify which of these problems is contributing to the broad misunderstanding by reviewers and consumers regarding the efficiency of the i9-13900k?Of the 25+ reviews posted yesterday, it seems that only ArsTechnica and Derbauer had time to dig into the motherboard settings. What they found was that when used with sane voltages, the i9-13900k performed significantly more efficiently than the 7950X. If you can score 38k in Cinebench R23MT at 253W (and default voltages), why are so many reviewers reporting 300+ W?]Here's the Der Bauer review mentioned. The Core i9-13900K easily beating the 7950X in gaming. What he also shows is that even limiting the 13900K to 90 watts it still easily beats the 7950X. An amazing efficiency result.
youtu.be/...
Blender doesn't represent a lot of server workloads, as most server workloads aren't trivially parallel. That's the only area the 7950X leads the i9-13900k.Techpowerup did a page on "server and workstation" benchmarks and on the database benchmarks the 7950X did poorly.
www.techpowerup.com/...Igor's Lab found the same result on the AutoCAD benchmarks which also don't parallelize easily.
www.igorslab.de/...Also see the Der Bauer results I posted in a comment above, as most motherboard manufacturers for the DIY build market let the Core i9-13900K run full throttle. They know the PC enthusiasts they're targeting don't care about the power consumption of less than 60W lightbulb. In servers they'll dial back the power consumption and still get the vast majority of the performance.
youtu.be/...
[Our 13th Gen Intel Core content creation review is live!Pretty much a straight win for Intel, with 13th Gen beating AMD Ryzen 7000 in almost every instance.]
Below is what they wrote. They're looking across all skus and they're looking at price/performance as well. You also have your numbers wrong. The 8% was from Unreal Engine. So yes, their conclusion it's a straight win is justified, with the only caveat that in some benchmarks the 7950X outperforms the i9-13900K, but at a much higher price point (which is actually higher than they indicate because of the AMD AM5 platform costs - they're only referring to cpu price when they talk about $100 premium).Keep in mind they are specifically looking at content creation, which is a small part of the desktop market. For gamers and single-thread performance it's a clear win for Raptor Lake, but you have to look for other reviews which focus on those use cases.[These improvements lead intel to be the top performer when comparing CPUs at similar price points. The lower-end CPUs, specifically the 13600k and 13700K have a greater than 50% lead over AMDs latest CPUs. Intel’s top new CPU, the 13900k is on average 20% faster than the Ryzen 7900X, however 6% slower than the 7950X. This means the absolute top performance in this category does go to AMD’s Ryzen 7950X, though at a $100 premium.Rounding out our testing was Unreal Engine, which can be used in a variety of industries including game development, virtual production, and real-time visualization. Once again, the gen-over-gen improvement is massive, with 13th Gen coming in at around 25-29% faster than the 12th Gen depending on the specific CPU model. Interestingly, just like with CPU rendering, Intel holds a lead when comparing similar priced CPUs, with the 13600K, 13700K, and 13900K beating Ryzen 7600X, 7700X, and 7900X respectively. However, AMD takes the crown with its Ryzen 7950X, though only by 8%.Overall, the 13th Gen Intel Core processors show some impressive gains over the previous generation. AMD manages to hold into a slim lead in a few areas, but almost every single instance where Ryzen 7000 was significantly faster than Intel 13th Gen came from the Ryzen 9 7950X, which is a more expensive CPU than anything currently in the 13th Gen lineup. That does mean that you can sometimes get more performance out of the Ryzen platform than Intel Core, but in terms of dollar-for-dollar, Intel 13th Gen scored on par or significantly higher in every single benchmark we ran.]
Intel Debt/Equity hasn't changed since 2015.A couple of questions. Any idea why AMD's imaginary "goodwill" and "acquisition related intangibles" has spiked to $50.4B, a 17,339% increase YoY from $289M? Would this explain the ballooning gap between AMD's falling GAAP and non-GAAP earnings?
I see you are a hard-core Intel fan boy, commenting on every Intel article zealously while bashing any other chipmaker.
So your ignorance is justified. | NVDA |
https://finnhub.io/api/news?id=5dda417972885f34bdcc14293bf46b4d591a7fe9d9565a9c40707b53912c90e1 | Netflix's cloud gaming plan is a tall order — just ask Google | Netflix might be getting into the cloud gaming business. But it'll be hard to pull off. | 2022-10-21T07:39:04 | Yahoo | Netflix's cloud gaming plan is a tall order — just ask Google
Netflix (NFLX) is diving deeper into gaming. During TechCrunch Disrupt earlier this week, VP of gaming Mike Verdu said it's “seriously exploring a cloud gaming offering.”
Sounds like a surefire win right? Not necessarily. Take a look at Google (GOOG, GOOGL), which announced last month it’s axing its own cloud gaming service Stadia due to a lack of players.
Cloud gaming is still in its early stages. It requires huge infrastructure, no latency, and plenty of games. Consumers generally tolerate a bit of lag when starting up a show, but that won’t fly with cloud gaming. Even the slightest slowdown or lag in your connection can ruin your gaming experience. And while Netflix is a massive organization with huge resources at its disposal, even that isn’t enough to win over gamers
"Google has a lot of things theoretically in place that would make you think they could succeed at a cloud streaming gaming service,” IDC research director of gaming, eSports and VR/AR Lewis Ward told Yahoo Finance. “Even [Amazon’s] (AMZN) Luna, 18 months past its official launch date, isn't exactly crushing it either with all of Amazon's resources."
He added, "So I just think it's very tough to make these things succeed.”
Cloud gaming is more difficult than streaming movies
While cloud gaming might be a powerful way to keep customers from ditching their subscriptions when they finish their favorite shows, running a successful cloud gaming business poses major challenges.
Cloud gaming allows users to stream games to low-powered devices like Chromebooks, phones, and smart TVs. The latency issue can be huge. Imagine you’re in a tense standoff with another player and just as you’re about to make your move, your connection freezes for two seconds. Next thing you know, your character is dead and the 11-year-old you were playing is laughing at you in your headset.
Even if companies have the technology, success in cloud gaming has proven relatively elusive.
Microsoft (MSFT) and Nvidia (NVDA) seem to be performing well in the area, though they don’t release exact user numbers. Microsoft’s cloud games augment its library of downloadable games, giving users more options to play and a better reason to stick around. Nvidia lets you stream games you already own.
Both services essentially give you the option of playing games on your console or PC and then jumping to the cloud when you don’t have an available TV or are on the go.
Still a growth opportunity
If Netflix does get into cloud gaming, it’s going to need to ensure it has the technology to do so, and provide gamers with something akin to Microsoft or Nvidia’s services.
But if Netflix can pull it off, a cloud gaming offering could boost a company that's just now pulling out of a post-COVID tailspin that sent customers fleeing and shares plummeting 57% over the last 12 months.
During the pandemic, when millions became one with their couches, Netflix saw its user numbers explode. In the first quarter of 2020, the company had 182.86 million global subscribers. By the fourth quarter of 2021, it had 221.84 million. But that growth was untenable; between the first and second quarter of 2022, Netflix lost 1.17 million subscribers.
While Netflix added 2.41 million subscribers in the third quarter, it's going to need to keep working to retain the subscribers it has. That’s where gaming comes in.
“The challenge is when the content schedule is a little more uneven, when there's not content that people are urgently wanting to watch, that’s where you see churn tick up, and people cut off their service for a while,” Dave Heger, Edward Jones senior equity analyst, told Yahoo Finance Live.
Gaming could keep people engaged with Netflix during those lulls between show debuts. It’s not just about holding on to existing subscribers, though. Netflix could also use its cloud gaming business to attract younger consumers who are more interested in gaming than simply watching TV and movies.
“They're looking at trends of where people are spending their entertainment time — they're seeing gaming rise faster than linear TV shows, or streaming TV shows, [video on demand],” Ward said. “And, oh, by the way, the demographics looking forward are going to favor gaming in the sense that those users tend to be younger overall.”
That combination has likely led Netflix to view cloud gaming as a growth opportunity — even with its challenges.
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https://finnhub.io/api/news?id=f2fcd6ad7b5ca8a5dd5e8ff9f00b2b869817a9daefdfefd6a8f3f66fce593b3d | Why Nvidia, AMD, ASML, and Other Semiconductor Stocks Were Up Thursday Morning | Today's video focuses on ASML (NASDAQ: ASML), Lam Research (NASDAQ: LRCX), and key points from recent earnings that might have been driving semiconductor stocks up early Thursday morning. Numerous headwinds are affecting the semiconductor market, but future projections from these semiconductor giants might have investors questioning if things are as bad as they seem. | 2022-10-21T07:30:00 | Yahoo | Why Nvidia, AMD, ASML, and Other Semiconductor Stocks Were Up Thursday Morning
Today's video focuses on ASML (NASDAQ: ASML), Lam Research (NASDAQ: LRCX), and key points from recent earnings that might have been driving semiconductor stocks up early Thursday morning. Numerous headwinds are affecting the semiconductor market, but future projections from these semiconductor giants might have investors questioning if things are as bad as they seem. | NVDA |
https://finnhub.io/api/news?id=f0e42d1d9afa1d620f1dfb011cb77ca4ebd799168c9759ec3feaa21f7e4066d0 | Here's Why the Competition Is Intense Between AMD and Intel | Today's video focuses on new products released by Advanced Micro Devices (NASDAQ: AMD), Intel (NASDAQ: INTC), and Nvidia (NASDAQ: NVDA). It is impressive how AMD continues to battle two semiconductor giants in different technologies. | 2022-10-21T07:00:00 | Yahoo | Here's Why the Competition Is Intense Between AMD and Intel
Today's video focuses on new products released by Advanced Micro Devices (NASDAQ: AMD), Intel (NASDAQ: INTC), and Nvidia (NASDAQ: NVDA). It is impressive how AMD continues to battle two semiconductor giants in different technologies. | NVDA |
https://finnhub.io/api/news?id=1c8d1ed3c67cfac886a023e2d2d68aab3ac61ab938f4f70125ad6715ce80f4f0 | NVIDIA (NASDAQ:NVDA) Knows How To Allocate Capital | To find a multi-bagger stock, what are the underlying trends we should look for in a business? Typically, we'll want to... | 2022-10-21T06:00:25 | Yahoo | NVIDIA (NASDAQ:NVDA) Knows How To Allocate Capital
To find a multi-bagger stock, what are the underlying trends we should look for in a business? Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. With that in mind, the ROCE of NVIDIA (NASDAQ:NVDA) looks attractive right now, so lets see what the trend of returns can tell us.
What Is Return On Capital Employed (ROCE)?
For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. The formula for this calculation on NVIDIA is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.26 = US$9.4b ÷ (US$43b - US$7.6b) (Based on the trailing twelve months to July 2022).
So, NVIDIA has an ROCE of 26%. That's a fantastic return and not only that, it outpaces the average of 15% earned by companies in a similar industry.
Check out our latest analysis for NVIDIA
In the above chart we have measured NVIDIA's prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free report for NVIDIA.
How Are Returns Trending?
In terms of NVIDIA's history of ROCE, it's quite impressive. The company has consistently earned 26% for the last five years, and the capital employed within the business has risen 328% in that time. Now considering ROCE is an attractive 26%, this combination is actually pretty appealing because it means the business can consistently put money to work and generate these high returns. If NVIDIA can keep this up, we'd be very optimistic about its future.
In Conclusion...
In summary, we're delighted to see that NVIDIA has been compounding returns by reinvesting at consistently high rates of return, as these are common traits of a multi-bagger. And the stock has done incredibly well with a 152% return over the last five years, so long term investors are no doubt ecstatic with that result. So while investors seem to be recognizing these promising trends, we still believe the stock deserves further research.
If you want to continue researching NVIDIA, you might be interested to know about the 1 warning sign that our analysis has discovered.
If you'd like to see other companies earning high returns, check out our free list of companies earning high returns with solid balance sheets here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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https://finnhub.io/api/news?id=c3e8cad69e7e911577726208615447164275d018d7dfda4791d7c036a8e8eaed | One Chinese Chip Startup Shows Key Gap in Biden Export Curbs | (Bloomberg) -- One of China’s most promising chip designers has already navigated through the Biden administration’s export restrictions and concluded it will be able to continue tapping Taiwan Semiconductor Manufacturing Co. to produce its advanced silicon.Most Read from BloombergChina Summons Chip Firms for Emergency Talks After US CurbsTrump Deposed in Suit by Investors Claiming Fraud in ‘Apprentice’ Videophone PitchesLiz Truss Odds: The Front-Runners to Replace the Prime MinisterWeed Is Comi | 2022-10-20T23:45:37 | Yahoo | Chinese Chip Startup Shows Key Gap in Biden Export Curbs
(Bloomberg) -- One of China’s most promising chip designers has already navigated through the Biden administration’s export restrictions and concluded it will be able to continue tapping Taiwan Semiconductor Manufacturing Co. to produce its advanced silicon.
Most Read from Bloomberg
Biren Technology develops artificial intelligence chips and is considered a promising domestic contender to compete with graphics chips from Nvidia Corp., which has said it can no longer sell its most advanced AI products into China. The US measures were designed to limit China’s development of technology that may be used in aid of its military, and appeared to rule out access to advanced fabrication, but Biren believes its AI chips produced by TSMC are not covered by the sanctions, according to people with direct knowledge of the matter.
Shanghai-based Biren, founded in 2019, made bold claims in the summer about its chips outperforming Nvidia’s market-leading A100 AI accelerator -- the very product that can no longer be sold in China. But after reviewing the designs, TSMC and Biren concluded that the specs of the Chinese chip don’t meet the criteria for restriction, according to one of the people, who asked not to be named discussing a sensitive matter. That suggests Washington’s controls may not capture all alternatives to Nvidia’s hardware.
“Biren has a chip fortunately just below the threshold and the chip hence can still be made by TSMC,” Bernstein analysts led by Mark Li wrote in a report that analyzed chips against the export control.
The US Commerce Department’s Bureau of Industry and Security, which plays a key role in designing and enforcing export controls, announced the semiconductor restrictions on Oct. 7.
“While BIS cannot comment on company-specific actions, we expect all companies to comply with export controls,” a Commerce Department spokesperson said in an emailed response to a Bloomberg query. “Since the release of the rule on October 7, BIS has been undertaking a vigorous outreach effort to educate those impacted by it to aid compliance efforts.”
TSMC, the world’s largest contract chipmaker, complies with all relevant rules and regulations and “will continue to serve all customers around the world,” Chief Executive Officer C.C. Wei said in response to a question about China during its earnings call last week.
Biren believes everything it’s doing is in compliance with legal regulations, according to one of the people. TSMC is reviewing products from other Chinese chip developers to see whether it can continue their production under the new export controls, another person said.
Representatives for Biren and TSMC declined to comment.
As the US banned exports of Nvidia and Advanced Micro Devices Inc.’s high-end AI-training chips to China, it set a performance threshold above which no semiconductors made with US technology can be sold in the country. The metrics include a combination of connectivity speeds and operations per second. Bernstein’s analysis shows the Biren BR100 falls just shy of that control cutoff.
Bernstein’s Li saw limited revenue exposure for TSMC from the new controls, stressing that “only very high-end compute chips are restricted” and estimating a hit of 0.4% to the Taiwanese company’s 2023 sales.
Still, while Biren may continue building its current generation of semiconductors, Washington’s curbs are likely to effectively cap its progress up the technology ladder. Additional improvements from Biren are liable to fall foul of the high-performance silicon restriction.
Biren, backed by the likes of IDG Capital and Walden International, was seeking new funds earlier this year at a valuation of $2.7 billion, Bloomberg News reported. Its flagship BR100 and BR104 processors are designed along similar lines to the graphics chips that Nvidia and AMD have adapted to AI purposes and are used to train artificial intelligence models and algorithms. Those include computer vision, natural language processing and conversational AI.
Washington’s latest salvo of restrictions triggered a selloff in Chinese tech stocks and narrowed the ability of international suppliers to sell or support chipmaking equipment in China. Netherlands-based ASML Holding NV withdrew support by US employees due to a new measure that precludes US citizens or green card holders from helping to make semiconductors that may have a military use in China. American suppliers like KLA Corp. and Lam Research Corp. also distanced themselves from the country’s top chip plants.
China’s Ministry of Industry and Information Technology summoned representatives from across its semiconductor sector to review the fallout from the latest US restrictions. Lawyers and executives at those firms are still assessing the full impact of the measures.
--With assistance from Eric Martin.
(Updates with Commerce Department comment in sixth paragraph)
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https://finnhub.io/api/news?id=63a5ecffb0d3ea20297dea7d730829a2f3cae905efef41984c8ab1650ae91a3d | Is Doom And Gloom In Store For Tech Stocks This Earnings Season? | The earnings calendar for tech stocks kicks into high gear in coming days as one analyst draws comparisons with two difficult years. | 2022-10-21T05:15:18 | Yahoo | Is Doom And Gloom In Store For Tech Stocks This Earnings Season?
The earnings calendar for tech stocks kicks into high gear in coming days as one analyst draws comparisons with two difficult years.
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As a pandemic-inspired boom ends, entrepreneurs and giant corporations alike are counting on customers to keep accumulating more stuff than they can squeeze into their homes. | NVDA |
https://finnhub.io/api/news?id=b2e2bc9341e901c1e572b3afbc5df6836bd23619978b6bb703682aa42f72d3b8 | EXD: Premium Is Rising | When buying closed-end funds, we often want to see discounts before picking up funds, but for EXD, the fund has come to a premium now. Click here to read more. | 2022-10-21T03:41:43 | SeekingAlpha | EXD: Premium Is Rising
Summary
- When buying closed-end funds, we often want to see discounts before picking up funds.
- For EXD, the fund has come to a premium now, but history suggests it might not have to be a sell.
- The overall equity slump makes it a fairly compelling time to start putting capital to work.
- This idea was discussed in more depth with members of my private investing community, CEF/ETF Income Laboratory. Learn More »
Written by Nick Ackerman, co-produced by Stanford Chemist. A version of this article was published to members of the CEF/ETF Income Laboratory on October 7th, 2022.
Eaton Vance Tax-Managed Buy-Write Strategy Fund (EXD) has bumped up to a premium since the last time we covered it. To be fair, though, the fund was only at a slight discount when we last touched on it. This premium has expanded quite materially in just the last week or so. Either way, that has actually helped it dodge some of the downturn we saw in the broader market. At least on a share price total return basis.
Now that the fund is at a premium, it still might not be time to panic out of the fund. It remains fairly attractive compared to its sister fund at this time or a "Hold." However, with equities down across the board, putting some capital to work in a quality name such as EXD could be a compelling option for long-term investors.
The Basics
- 1-Year Z-score: 2.56
- Premium: 9.76%
- Distribution Yield: 8.58%
- Expense Ratio: 1.26%
- Leverage: N/A
- Managed Assets: $89.5 million
- Structure: Perpetual
EXD's strategy is to "invest in a diversified portfolio of common stocks and write call options on one or more U.S. indices on a substantial portion of the value of its common stock portfolio to seek to generate current earnings from the option premium. The Fund's portfolio managers use the adviser's and sub-advisers internal research and proprietary modeling techniques in making investment decisions. The Fund evaluates returns on an after-tax basis and seeks to minimize and defer federal income taxes incurred by shareholders in connection with their investment in the Fund."
EXD is on the smaller side, even for closed-end funds. This can be a risk to larger investors that need a lot of liquidity. It is just over $93.7 million in total managed assets. For a larger fund that's virtually similar, one could consider its ~$1.341 billion sister, Eaton Vance Tax-Managed Buy-Write Opportunities Fund (NYSE:ETV). ETV's premium is even higher than EXD's at this time. A point we'll explore in the next section.
Another benefit of EXD compared to other closed-end fund choices at this time is the lack of leverage. Instead, they operate with an option writing strategy against indexes.
Performance - Still Offering Some Shelter
The fund's options strategy would have also reasonably been assumed to provide at least some slight benefit beyond the benefit of an expanding premium. That's what we noted earlier in the year in that previous update. This continues to be the case as the fund benchmarks against the S&P 500 and Nasdaq 100. Below is a YTD comparison of the performance against the SPDR S&P 500 (SPY) and Invesco QQQ Trust (QQQ).
With a tilt towards a heavier tech exposure, a comparable fund without an options writing strategy could be expected to perform somewhere in the middle. However, EXD has held up on a total NAV return basis, better than both benchmarks. That being said, it has been running quite close with SPY. A heavier positioning into the mega-cap tech names could also be seen helping this fund.
For the fund's premium, we can see above that the 1-year z-score puts it well above the usual level. In the last week or so alone, this has ramped up significantly. If we look at the longer term, the fund is more elevated than we've seen in the last several years. At least, going back to when the fund converted to a wildly different fund. Stanford Chemist published an article about when the conversion took place that explains it more in-depth.
That might not be a fair comparison, though, simply because it had taken some time for investors to realize the fund had changed. Additionally, with COVID in 2020, CEF discounts widened out significantly too. Instead, a better look could be provided by looking at ETV. The sister fund has the same strategy. Albeit holdings are slightly different. We can see that the fund has sustained a higher premium for quite a few years.
For ETV, we can see the premium is even higher at this time. However, even ETV would be elevated at this point. It could suggest, though, that EXD is still fine to hold for now, as ETV isn't going to be an attractive alternative. It also could suggest that some small premium could be appropriate for EXD. Ideally, it would probably be below the current level to be an attractive buy candidate. Of course, the usual caveat of "past performance never guarantees future results" is present here too.
Distribution - When Gains Are Hard To Come By
When the strategy change took place, EXD switched to a monthly distribution. Since that time, it hasn't been cut. To note, ETV hasn't cut since ~2010.
The distribution yield currently works out to 8.58%, with the NAV rate pushing 9.42%. As an equity fund, they'll rely heavily on capital gains to fund their payouts. We know those are becoming harder to come by in this type of market.
Once again, we go back to the options writing strategy, though. With the contracts expiring worthless, they are pocketing that premium. That results in capital gains being realized for the fund. For the first six months, this equated to nearly $8 million in option premium "income."
It wasn't enough to offset the total unrealized losses in the portfolio, which is why the fund still declined in value. However, the premium collected was enough to cover the distributions paid out. That's despite the negative net investment income the fund regularly generates.
One reason why this could be seen as a negative is come tax time. When writing options that expire worthlessly, those gains are short-term capital gains. This can be remedied in two manners, though. This is a "tax-managed" fund, after all.
For one, the fund could realize more losses in its underlying portfolio, offsetting the gains and classifying the distribution as return of capital.
The second way is from carryforward losses from prior years. The fund generated significant losses under its prior strategy, and that can be helpful for shareholders holding the fund now. Fortunately, Douglas Albo recently covered that subject exactly for EXD in his fantastic write-up.
With that being the case, I suspect that the majority, if not all, of EXD's distribution will continue to be classified as tax-deferred return of capital.
EXD's Portfolio
Since the fund's transition, the turnover of the fund has been incredibly low. This is something we've seen in ETV too. Another symptom of trying to stay tax-managed is limiting those realized gain potentials. As the market was strong for most of the preceding decade, gains were plentiful, and there was no real reason to sell positions.
Last year the turnover for the entire year was 3% for EXD. In the last semi-annual report (six months), the turnover rate exploded to 6%. Exploded is hyperbole. On a percentage basis for the difference, that is quite a large leap, regardless. With the market in turmoil, it would make them more flexible to shift the portfolio around without worrying about running into lots of gains.
All that being said, we still haven't seen any meaningful changes in the top ten allocations of the fund.
In fact, the only changes I can see are that Alphabet Class A (GOOGL) has swapped spots with NVIDIA (NVDA) and Adobe (ADBE) has swapped spots with Meta Platforms (META) since we saw the holdings earlier this year. Here was the performance of these positions in that specific period. ADBE and GOOGL holding up better in this period would contribute to this result.
For META, the fund had increased the number of shares they held to 10,843 at the end of June from earlier in the year at the end of March. At the end of March, they held 10,375 shares. ADBE's share count was reduced from 4564 to 4229. They don't provide a share count for the end of August besides showing the percentage weightings I've included above. However, it gives us a glimpse into how the managers shifted some positions.
NVDA's and GOOGL's share counts stayed the same in that time period.
Since the end of August, NVDA has been slammed even further by a warning from Advanced Micro Devices (AMD) that they will miss revenue by a huge margin.
The heavy tilt towards technology comes thanks to the Nasdaq 100 exposure the fund tries to mimic. That puts the weighting of tech in the portfolio at a commanding allocation. Perhaps not too surprising after seeing the top ten list of the fund.
Conclusion
It's a tough market out there in 2022, no doubt about it. A longer-term investor looking for places to put money or at least building up a watchlist could be appropriate. I think that while EXD isn't overly attractive in terms of its discount/premium, it also isn't overly extended to cause me to sell either. Combing that with the latest declines makes it a fairly interesting choice at this time. An equity fund that seems to be more than able to generate the gains needed despite the downturn is a place I'm quite content.
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I provide my work regularly to CEF/ETF Income Laboratory with articles that have an exclusivity period, this is noted in such articles. CEF/ETF Income Laboratory is a Marketplace Service provided by Stanford Chemist, right here on Seeking Alpha.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of EXD either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Comments (37) | NVDA |
https://finnhub.io/api/news?id=7ddb6e45318cb27a00055f3adab17010ce2df253ad68fb53181a2b05d420a839 | Dogecoin leads drops as largest cryptocurrencies start mixed | The largest cryptocurrencies were mixed during morning trading on Friday, with Ripple seeing the biggest move, rising 2.95% to 45 cents. Dogecoin led the... | 2022-10-21T03:00:00 | MarketWatch | The largest cryptocurrencies were mixed during morning trading on Friday, with Ripple XRPUSD seeing the biggest move, rising 2.95% to 45 cents.
Dogecoin DOGEUSD led the decreases with a 1.27% drop to 6 cents.
Five other cryptocurrencies saw increases Friday. Ethereum ETHUSD climbed 0.31% to $1,285.71, and Bitcoin Cash BCHUSD rose 0.27% to $106.20.
Cardano ADAUSD rose 0.17% to 34 cents, and Litecoin LTCUSD climbed 0.12% to $51.12.
Bitcoin BTCUSD saw the smallest increase, climbing climbed 0.06% to $19,034.03.
In addition to Dogecoin, two other currencies posted drops. Uniswap UNIUSD dropped 1.27% to $6.01, and Polkadot DOTUSD sank 0.61% to $5.89.
In crypto-related company news, shares of Coinbase Global Inc. COIN rose 0.47% to $63.89, while MicroStrategy Inc. MSTR rallied 1.22% to $223.71. Riot Blockchain Inc. RIOT shares rose 0.72% to $5.62, and shares of Marathon Digital Holdings Inc. MARA increased 1.28% to $11.06.
Overstock.com Inc. OSTK climbed 0.68% to $23.85, while Block Inc. SQ declined 2.08% to $54.04 and Tesla Inc. TSLA rose 0.88% to $209.11.
PayPal Holdings Inc. PYPL slipped 0.59% to $84.28, and Ebang International Holdings Inc. Cl A EBON shares declined 1.14% to 32 cents. NVIDIA Corp. NVDA climbed 0.32% to $122.33, and Advanced Micro Devices Inc. AMD dropped 0.59% to $57.09.
In the fund space, blockchain-focused Amplify Transformational Data Sharing ETF BLOK rose 0.03% to $17.91. The Bitwise Crypto Industry Innovators ETF BITQ, which is focused on pure-play crypto companies, declined 1.04% to $5.72. Grayscale Bitcoin Trust GBTC, which tracks the Bitcoin market price, slid 0.84% to $11.18.
Editor's Note: This story, which tracks nine of the top cryptocurrencies and excludes stable coins, was auto-generated by Automated Insights, an automation technology provider, using data from Dow Jones, FactSet and Kraken. See our market data terms of use. | NVDA |
https://finnhub.io/api/news?id=0f564401f2c52d2244b82c3ae04c1e511ade6d9497fed87f7474218be0340f4b | Nvidia: 3 Reasons To Buy | Nvidiaâs launch of the RTX 4090 graphics card flagship has salvaged what could have been an ugly quarter. Learn why I remain long NVDA and rate it a Buy. | 2022-10-20T19:08:24 | SeekingAlpha | Nvidia: 3 Reasons To Buy
Summary
- Upgrading my rating of Nvidia from Hold to Buy after the Ethereum merge proves less impactful than expected.
- Reason #1: the successful GeForce RTX 4090 launch.
- Reason #2: GeForce Now thrives while Google Stadia dies.
- Reason #3: Omniverse grows while Meta’s Metaverse declines.
- Investor takeaways: Nvidia has proven that it isn’t just about crypto.
- This idea was discussed in more depth with members of my private investing community, Rethink Technology. Learn More »
Nvidia’s (NASDAQ:NVDA) launch of the RTX 4090 graphics card flagship has salvaged what could have been an ugly quarter following the end of Ethereum (ETH-USD) mining. The 4090’s performance proved skeptics wrong, and the card was an instant sell-out. Nvidia’s GPU prowess has translated into adjacencies such as game streaming and the metaverse. Nvidia has thoroughly disproven the myth that its success relied mainly on crypto.
Upgrading my rating of Nvidia from Hold to Buy after the Ethereum merge proves less impactful than expected
In my recent article on the impact of the Ethereum Merge on Nvidia, I was fairly cautious and maintained a Hold rating on the company. The end of Ethereum mining would, I calculated, put roughly 11 million used cards on the market, most of which were high end current generation GPUs from Nvidia and AMD (AMD). This would suppress demand for new cards of the same generation.
It certainly seems to have done that, judging by the drop in prices for new RTX 30 series cards. A new 3090 Ti, which originally cost upwards of $2,000 can be had on eBay for about $1,000.
Then Nvidia did something that no one expected: it launched the RTX 4090 flagship graphics card that turned out to be vastly superior to the previous generation. While the Ethereum Merge has depressed prices for the RTX 30 series, it has had little impact on demand for the new RTX 4090, which sold out of all sources in the US in a matter of minutes.
The Ethereum Merge could have little or no impact on RTX 4090 sales for the simple reason that there were no used graphics cards that could touch it in performance. The 4090 was in a class by itself.
Together with other developments I discuss below, I decided to lift my Hold on Nvidia and informed subscribers on October 17 that I now rated Nvidia a Buy. I resumed buying the stock on October 19.
Reason #1: the successful GeForce RTX 4090 launch
Nvidia’s CEO Jensen Huang launched the RTX 4090 with the claim that it offered a 50% performance uplift for non-ray traced (rasterized) games and as much as 2-4 times improvement in ray traced games compared to the RTX 3090 Ti. Here, gaming performance is measured in frames per second (FPS).
Not surprisingly, there was considerable skepticism about the claims, with some YouTube tech reviewers even going so far as to claim that Nvidia was lying and that the RTX 4090 was just a scam.
In fact, I can’t remember ever seeing so much hostility towards an Nvidia product launch. The messaging was uniformly pro-AMD: Nvidia is lying about the performance gains of the 4090; Nvidia is gouging consumers with a launch price that is a whole $100 (!) over the launch price of the RTX 3090; Nvidia is evil and consumers should wait for AMD to come to their rescue.
That all changed once the review embargo was lifted on October 11. Even reviewers who had been openly hostile had to grudgingly acknowledge that Nvidia had delivered on its 4090 performance claims. A good example is the review by Paul’s Hardware.
I’ve gone over numerous reviews on YouTube and traditional tech review sites and their conclusions are basically all the same. For display resolutions of 4K UHD and above, FPS performance is limited by the graphics card and not the CPU. In that regime, the 4090 delivers on its performance claims. A couple of examples from one of the best PC reviewers in the business, Guru3d:
Rasterized performance:
Ray tracing performance:
Many reviewers still concluded by questioning whether the card is worth the $1,599 list (for the Nvidia Founders Edition), often imploring their audience to wait until the launch of AMD’s next generation GPUs on November 3.
This is not unreasonable advice, but frankly, I don’t expect AMD’s next generation GPUs to match the performance of the 40 series in ray tracing. AMD has tended to de-emphasize this in favor of rasterization performance.
And the advice has seemed to fall on deaf ears for customers of the 4090. On October 12, the cards sold out within minutes on all venues. Almost certainly, Nvidia was too cautious and underestimated demand.
In addition to inadequate supply, the launch was also marred by a marketing faux pas. Nvidia had announced two versions of the RTX 4080 set to go on sale in November. The lower priced version used a different GPU chip and less video RAM, and it was obvious that it should have been called the RTX 4070.
Once again, it was evil Nvidia trying to deceive the public. Here, I think Nvidia was not so much evil as just plain stupid from a marketing standpoint. On October 14 Nvidia announced that it was “unlaunching” the lower end 4080, prompting much gloating among Nvidia’s critics.
Reason #2: GeForce Now thrives while Google Stadia dies
At Nvidia’s fiscal 2023 Q2 conference call, CFO Colette Kress noted that Nvidia’s game streaming service, GeForce Now, had surpassed 20 million registered users. GeForce Now offers over 1350 games, some of which are included in the subscription, but most can only be played if the user has bought the game elsewhere, such as through Steam.
As such, GFN deviated from the classic streaming model of all content being available for a monthly fee. The GFN user was paying for the privilege of being able to play Windows PC games on a wide variety of other devices or through a web browser.
The saving grace of GFN was that even though users were required to buy most games, the games were portable to Windows PCs. Users weren’t required to keep their games on GFN and didn’t have to worry about losing them if GFN folded.
Not so Google (GOOG) Stadia. Google wanted users to treat Stadia as a gaming platform comparable to consoles or Windows PCs. Users would buy games for Stadia, and they would reside on Stadia, being available nowhere else. “Free” games were also included in the subscription, but most games had to be purchased outright.
On September 29, Phil Harrison, VP and General Manager of Stadia, announced that Stadia would be shut down. Stadia just became the latest in a long line of projects killed by Google.
There had always been concern among gamers about Google’s tendency to kill projects and questions about Stadia’s long-term viability. Google confirmed many gamers’ fears about the platform but did the right thing by refunding all hardware and game content purchases.
In retrospect, Stadia just had the wrong business model. Ideally, one would like the content of a streaming service to be available for an all-inclusive price. Game streaming just isn’t there yet, which I think is mainly due to the publishers. Unlike much of the software industry, game publishers have not embraced the subscription model.
This is probably due to the fact that no individual publisher has a large enough user base to be able to make the transition from outright purchases to subscriptions. The initial phase of such a transition involves some cash crunch. Adobe (ADBE) and Microsoft (MSFT) could afford to make the transition for key products such as Creative Suite and Office, but that’s the kind of scale that’s required.
Even Sony (SONY) PlayStation Plus, which does offer streaming for an inclusive price, restricts title availability to previous generation games, PS 2, 3, and 4, only. Here, it’s easy to see why the game publishers would go along with this. They’re not selling a lot of the older generation games, so this is just a nice source of residual income.
GeForce Now has turned out to be a savvy adaptation to the financial needs of the game publishers. Not all of them are on board with it. After GFN exited beta, some publishers bailed out and refused to authorize streaming of their games on the service. This was despite the fact that users would have purchased the games they were streaming for the most part, so no loss of revenue to the publisher.
This may have been more about political alignments between GFN and Stadia. Now that Stadia is no more, I expect GFN to continue to grow content and subscribers.
Reason #3: Omniverse grows while Meta’s Metaverse declines
These days, we’re hearing a lot of hype about the “metaverse”. The metaverse will replace today’s internet with an all-encompassing immersive 3D experience. The concept is not new and has been the stuff of science fiction since William Gibson invented it in Neuromancer. He called it, The Matrix. Yes, that’s where the movie title came from, but Gibson’s Matrix was fully consensual and had simply evolved out of the internet.
Under the limits of today’s technology, our ability to create a simulated world falls well short of The Matrix. Virtual reality goggles don’t make you feel like you’ve been inserted into a virtual reality but more like you’ve been inserted into a video game. Kind of like Mark Zuckerberg’s avatar that was recently demonstrated for the Meta Connect 2022 event:
Part of the problem with Meta Platforms’ (META) concept may be that it’s so often cartoonish, not even up to current video game standards. More like console or mobile device games of a decade ago.
And perhaps that’s why people seem to be losing interest, according to the Wall Street Journal:
While Mr. Zuckerberg has said the transition to a more immersive online experience will take years, the company’s flagship metaverse offering for consumers, Horizon Worlds, is falling short of internal performance expectations.
Meta initially set a goal of reaching 500,000 monthly active users for Horizon Worlds by the end of this year, but in recent weeks revised that figure to 280,000. The current tally is less than 200,000, the documents show.
Most visitors to Horizon generally don’t return to the app after the first month, and the user base has steadily declined since the spring, according to the documents, which include internal memos from employees.
Nvidia’s Omniverse has a different focus. Instead of trying to replace the internet, Omniverse is intended mainly as a tool for workplace collaboration. This collaboration can take many forms, including architectural design, mechanical engineering, robotics simulation and game creation.
Always there is an emphasis on ray-traced realism and real-time simulation. At the RTX 40 series launch event, Nvidia also demonstrated the power of Omniverse as a game creation tool. A small team of 30 developers were able to create the Racer X demo in just 3 months. Racer X is fully ray traced and physics simulated with no pre-baked visuals and runs in real time on an RTX 4090. A screen grab from the Racer X video is shown below:
With Omniverse, we see the convergence of a number of Nvidia technologies, including GPU hosted ray tracing, game streaming from the cloud, and AI. All of it knitted carefully together with very extensive software development.
Although Omniverse doesn’t have the aspirations of the Metaverse, it could well become it. Omniverse has already attracted numerous partners:
Investor takeaways: Nvidia has proven that it isn’t just about crypto
I still occasionally come across comments to the effect that Nvidia is totally dependent on crypto. This is despite the fact that Data Center revenue exceeded Gaming revenue in fiscal Q1, when Gaming revenue was $3.6 billion and presumably still augmented by crypto.
Even as Gaming segment revenue declined in fiscal Q2 to $2.042 billion, Data Center revenue continued to grow to $3.806 billion, far greater than AMD’s Data Center revenue for Q2 of $1.4866 billion. While many have tended to focus on the battle for data center CPU market share between Intel (INTC) and AMD, Nvidia has been the stealth disrupter of the data center market.
Nvidia has created a virtuous cycle of innovation in which continued performance improvements in its GPUs are funneled into its data center business. Advances in the data center are then folded back into the consumer space through cloud services such as GeForce Now and Omniverse.
If Nvidia can move quickly to meet demand for the RTX 40 series, it will emerge relatively unscathed from the end of Ethereum mining and resume growth in the Gaming segment. Fortunately, Nvidia has a much better manufacturing partner for the 40 series in TSMC (TSM) than it had in Samsung (OTCPK:SSNLF) for the 30 series. TSMC has the scale to meet the demand for the 40 series.
I still expect it to take a few quarters to work through the GPU inventory glut, but in the meantime Nvidia will be able to sell every 4090 and 4080 card it and its board partners can make. That should take the sting out of the lost crypto revenue and lay to rest once and for all the myth of Nvidia’s crypto dependence. I remain long Nvidia and rate it a Buy.
Consider joining Rethink Technology for in depth coverage of technology companies such as Apple.
This article was written by
Analyst’s Disclosure: I/we have a beneficial long position in the shares of NVDA, TSM, MSFT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Comments (12) | NVDA |
https://finnhub.io/api/news?id=c8f0541cc25b578bd6ecd3427e0efb87b0ef8d58ad2706e12672cd2211286ea5 | NVIDIA Corp. stock rises Thursday, outperforms market | Shares of NVIDIA Corp. rose 1.19% to $121.94 Thursday, on what proved to be an all-around dismal trading session for the stock market, with the S&P 500 Index... | 2022-10-20T10:13:00 | MarketWatch | Shares of NVIDIA Corp.
NVDA,
+0.37%
rose 1.19% to $121.94 Thursday, on what proved to be an all-around dismal trading session for the stock market, with the S&P 500 Index
SPX,
-0.53%
falling 0.80% to 3,665.78 and Dow Jones Industrial Average
DJIA,
-0.43%
falling 0.30% to 30,333.59. This was the stock's fourth consecutive day of gains. NVIDIA Corp. closed $224.53 short of its 52-week high ($346.47), which the company reached on November 22nd.
The stock outperformed some of its competitors Thursday, as Microsoft Corp.
MSFT,
+0.34%
fell 0.14% to $236.15, Intel Corp.
INTC,
+1.14%
rose 0.31% to $26.08, and Texas Instruments Inc.
TXN,
-1.96%
rose 0.70% to $153.72. Trading volume (65.0 M) eclipsed its 50-day average volume of 59.0 M.
Editor's Note: This story was auto-generated by Automated Insights, an automation technology provider, using data from Dow Jones and FactSet. See our market data terms of use. | NVDA |
https://finnhub.io/api/news?id=5e811fdfcc199fea010a3a5b11be8017167907a858ed5c66e4736409e9c3582d | Why Shopify, Nvidia, and Roku Stocks Rallied Early Thursday | This helped many stocks gain ground, riding the coattails of the broader market indexes as they climbed higher. Many technology stocks have been beaten down over the past year, and investors are increasingly looking for bargains amid the rubble, particularly on the off chance that the worst of the bear market is behind them -- and evidence suggests they may be right. As a result, Shopify (NYSE: SHOP) surged 8%, Nvidia (NASDAQ: NVDA) jumped 4.9%, and Roku (NASDAQ: ROKU) gained 4.4% as of 11:47 a.m. ET. | 2022-10-20T09:53:00 | Yahoo | Why Shopify, Nvidia, and Roku Stocks Rallied Early Thursday
This helped many stocks gain ground, riding the coattails of the broader market indexes as they climbed higher. Many technology stocks have been beaten down over the past year, and investors are increasingly looking for bargains amid the rubble, particularly on the off chance that the worst of the bear market is behind them -- and evidence suggests they may be right. As a result, Shopify (NYSE: SHOP) surged 8%, Nvidia (NASDAQ: NVDA) jumped 4.9%, and Roku (NASDAQ: ROKU) gained 4.4% as of 11:47 a.m. ET. | NVDA |
https://finnhub.io/api/news?id=0e55e5126ba23b20f8975b9617936c2284e7d7e6032a5631380064599b941c3f | SK Telecom: AI Expansion Is A Strong Tailwind | SK Telecom's declining revenue performance is not going to last a decade. SKM's foray into AI semiconductor products is very promising. Read more here. | 2022-10-20T09:36:34 | SeekingAlpha | SK Telecom: AI Expansion Is A Strong Tailwind
Summary
- The declining revenue performance of SK Telecom is not going to last a decade.
- SK Telecom’s foray into AI semiconductor products is very promising. The AI processor industry touts 46.03% CAGR.
- The partnership with Amazon Web Services is boosting the AIaaS future of SK Telecom.
- The overall global AI business was worth $93.5 billion last year. This industry touts 38.1% CAGR until 2030.
- SKM is trading well below its 52-week high of $48.47. Go long on SKM while it trades below $20. A bounce-back is highly probable.
The fast-growing $93.5 billion Artificial Intelligence industry is why I have a buy rating for SK Telecom Co., Ltd (NYSE:SKM). Its subsidiary, Sapeon, markets an Artificial Intelligence chip that is reportedly much faster than Nvidia's (NVDA) GPU A2 Tensor Core product. Going forward, the Sapeon X220 AI inference chip could boost SKM's 9% net income margin.
Aside from data center purposes, the Sapeon X220 is being used inside U.S. digital TV broadcasting systems.
The AI processor market was worth around $10.25 billion last year. It is growing at 46.03% CAGR. This venture into AI processors/accelerator products could help reverse SKM's declining annual revenue. It is the bane of all telecom firms to have low or negative revenue CAGR. Sapeon AI processors might help SKM reverse that projected -9.21% forward revenue growth.
Yes, it will take time before Sapeon becomes a threat to Nvidia. On the other hand, SK Telecom's $50 billion spending plan for its U.S. subsidiaries include California-based Sapeon. SK Telecom's sister company, SK Hynix owns factories that could manufacture Sapeon processors. Nvidia is still a fabless firm.
Sapeon AI processors also power SK Telecom's Artificial Intelligence as a Service (AIaaS) platform. The AIaaS industry is estimated to have a CAGR of 56.25%. It could have a market size of $77 billion by 2025. SKM has a bright future ahead if it could develop more paid AI services like its X Caliber pet dog diagnostic system.
Why You Should Care
AI processors and AIaaS expansions could fortify the consistent profitability of SK Telecom. Take note, the decreasing annual revenue did not prevent SKM from achieving increased profitability during 2019 to 2021. This feat should be another good reason to go long on this AI-enhanced company.
Amazon.com (AMZN) Web Services recently signed a partnership with SK Telecom. They will jointly develop computer vision services. SK Telecom will provide the AI models and AWS will contribute its edge computing, IoT, data and storage capabilities. Amazon's acceptance of SK Telecom as an AI partner is a long-term tailwind. The global AI computer vision market size was $9.04 billion in 2021. Its CAGR is 46.9%. It will be worth $98.05 billion by 2027.
SK Telecom's technology collaboration with Canada can also fast-track deep learning optimization for Sapeon X220 and X330 processors.
Sapeon Is Competitive
The principle of presumption of regularity compels me to believe the stated performance numbers below. The mega-cap founding members of MLCommons (responsible for MLPerf Benchmarks) are not going to allow Sapeon Inc. to publish this graphic showing the X220 outperforming the Nvidia A2. Nvidia also uses MLPerf benchmark scores to promote its products. Nvidia is a founding member of ML Commons.
The 28nm 8GB Sapeon X220's spec sheet said its INT8 performance could reach 100 Tera OPS using Boost Mode. The 8nm 16B Nvidia A2's INT8 performance is 36 Tera OPS.
Sapeon will launch the X330, X340, and X350 AI processors next year. The X430 will come in 2025. The upcoming Sapeon X350 might be able to match the 660 Tera OPS INT8 capability of the Nvidia A100.
A big-budget marketing campaign for Sapeon X220 could make it harder for Nvidia to sell its A2 product. SK Telecom should imitate the $1 billion U.S. marketing campaign of Flutter Entertainment (OTCPK:PDYPF, OTCPK:PDYPY). This aggressive advertising helped the Flutter-owned FanDuel become the no. 1 sports betting platform in the U.S. It takes money to make money.
Spending $1 billion to promote Sapeon X220 could make data center operators rely less on Nvidia. Nvidia's data center segment's quarterly revenue is $2.94 billion. There's big money in supplying AI processors to the data center market.
Battered-Down to Bargain Status
SKM's 6-month price return is -30%. This stock trades at 10.34x TTM P/E. Investing in an AI-enhanced company that trades at 10x P/E seems is judicious.
SKM is relatively undervalued against its sector peers. Seeking Alpha's Quant System only gives SKM a hold rating, but it gives it a valuation rating of A+. This is due to SKM's TTM P/E of 10.34x being 29% lower than the Communication Services sector's average of 14.57x. The TTM Price/Sales valuation of SKM is also only 0.58x. This is 40% lower than the sector average of 1.14x.
The bargain status of SKM is even greater when you consider its good profitability grade. The 9% net income margin is 60% higher than the sector median of 5.66%. Being more profitable than its peers is why SKM deserves a higher valuation than 10.65x forward P/E.
SKM's handicap is its dependence on wireless and wired communications segments. It is very unappealing that SKM's Others segment contributes almost nothing. Selling AI processors and the subscription fees from AI-as-a-Service could boost the Others segment's revenue.
Final Thoughts
The high CAGR AI chips industry (46.03%) and AI-as-a-Service (56.25%) are emerging catalysts for SK Telecom. These two expansion ventures should help SKM avoid prolonged decline in annual sales.
Promoting SKM as an AI-enhanced company might help its stock rebound near its $48.47 52-week high. Seeking Alpha is still the best platform to disseminate the good qualities of under-followed stocks.
Sapeon AI hardware and SK Telecom software solutions are probably why SKM has higher valuation ratios than its Wireless Telecommunication Services peers. AT&T (T) and Verizon (VZ) are not yet selling AI processors. On the other hand, SKM's valuation stats are still way lower than NVDA's.
Three years from now, SKM could probably generate 10% of its annual revenue from AI hardware and AIaaS. This is feasible thanks to its AI partnership with Amazon Web Services. That AI partnership started in computer vision. However, AI has other applications in the cloud.
Given enough time, AI processors and AIaaS could contribute $1 to $2 billion to SKM's annual sales.
This article was written by
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Comments (1) | NVDA |
https://finnhub.io/api/news?id=04231427d89b3fab49cc3ade44b0d3283f2ac838397542cc4fa9986153fdd291 | Government bonds are eroding crypto's appeal for investors seeking rich yields. But some are staying. | A weekly look at the most important moves and news in crypto and what's on the horizon in digital assets. | 2022-10-20T08:48:00 | MarketWatch | Hello, welcome back to Distributed Ledger, our weekly crypto newsletter that reaches your inbox every Thursday. I’m Frances Yue, crypto reporter at MarketWatch. I’ll walk you through the latest and greatest in the digital asset world this week.
Find me on Twitter at @FrancesYue_ to send feedback, or tell us what you think we should cover. You can also reach me through email to share your personal stories with crypto.
Crypto in a snap
Bitcoin BTCUSD advanced about 1.3% during the past seven days, and was trading at around $19,087 on Thursday, according to CoinDesk data. Ether ETHUSD gained 3% over the seven-day stretch to around $1,289. Meme token Dogecoin DOGEUSD gained 2.6% while another dog-themed token, Shiba Inu SHIBUSD, went up 3.5% from seven days ago.
Crypto Metrics
|Biggest Gainers||Price||%7-day return|
|Frax Share||$6.13||27.4%|
|WhiteBIT Token||$13.61||21.8%|
|Trust Wallet||$1.12||16.8%|
|Casper Network||$0.04||16.6%|
|Lido DAO||$1.48||16.6%|
|Source: CoinGecko as of Oct. 20|
|Biggest Decliners||Price||%7-day return|
|EthereumPoW||$6.32||-19.8%|
|Klaytn||$0.14||-18.3%|
|Axie Infinity||$10||-13.4%|
|Terra Luna Classic||$0.0002||-13.2%|
|Radix||$0.05||-9.9%|
|Source: CoinGecko as of Oct. 20|
Should you stake your ETH?
Last month, Ethereum completed its historical transition to proof-of-stake from proof-of-work, meaning that the network is now secured by stakers, or ether holders who lock up their crypto, instead of miners.
Read: The Ethereum Merge is completed. What’s next? Here are three things you should watch
Through staking, ether holders could help secure the network while receiving rewards, currently with a 4% yield annually, according to the Ethereum Foundation. The amount of ether staked has been growing, up to over 14 million on Wednesday from 8 million at the start of the year, according to data from Ethscan. Ether’s staking rate, or the amount of staked ether to that of ethers’ total supply, went up to about 11.5% from 7.4% at the beginning of this year, according to CryptoQuant.com.
However, with the 10-year Treasury BX:TMUBMUSD10Y bills yielding more than 4% annually, higher than ether’s current staking rewards, why are some investors still staking their coins?
As the crypto bear market continues, most ether holders are investing in the potential of blockchain technology, instead of drawn by the near-term yields, analysts said. Ether has lost more than 65% of its value year-to-date, according to CoinDesk data.
“Ether holders are long the ‘platform’ and are framing the investment as a venture-like bet or thesis trade and want to capture the yield along the way,” said Brian Mosoff, chief executive at Ether Capital. “They have a low time preference by default,” Mosoff noted. Stakers won’t be able to withdraw their ether until the completion of the Shanghai upgrade, which is expected to happen at some point in 2023.
“A U.S 10-year Treasury is more suited for investors that prefer minimum risk,” said Konstantin Boyko-Romanovsky, chief executive and founder of validator node hosting platform Allnodes.
“But for investors that invest in crypto for blockchain technology, nothing can be compared to hosting their own node, supporting the Ethereum network, and decentralization while receiving staking rewards for their contribution,” Boyko-Romanovsky said.
Still, ether holders face several challenges and risks when staking their coins.
They may lose a large amount of ether and be forced out of the network due to “slashing”, when a staker’s activity is recognized as malicious. “Slashing happens when you accidentally run two instances of your own node in two different places,” noted Boyko-Romanovsky.
Stakers should also be alert for any scams, especially when they are asked for private keys, Boyko-Romanovsky said.
Regulators are also paying increasing attention to crypto staking. In September, Gary Gensler, chairman of the U.S. Securities and Exchange Commission, said that cryptocurrencies or intermediaries that allow holders to stake their coins may pass the Howey test, which is used by courts to determine whether an asset is a security. Gensler said he wasn’t referring to any specific cryptocurrencies, but the comments raised concerns whether the classification of ether would be changed.
Bitcoin’s bottom is in?
Bitcoin may have already reached the bottom, based on a comparison with previous bear markets and on-chain data, according to analysts at Arcane Research.
In June, the crypto reached a yearly low of $17,601, according to CoinDesk data. Bitcoin is trading at around $19,087 on Thursday, down 0.6% over the past 24 hours.
It has been more than 340 days since bitcoin reached its all-time high of $68,990 in November, as the crypto went down more than 70% from its peak, according to CoinDesk data.
Looking back at the previous bear markets, bitcoin saw a drawdown in 2018 of up to 84%, and it took 364 days for the crypto to go from cyclical peak to bottom. In 2014, the downturn lasted 407 days, with a maximum drawdown of 85%.
Meanwhile, several on-chain metrics also showed that the worst for bitcoin may have passed, according to the analysts.
I’ve written more about it here.
Mastercard’s new crypto offering
Mastercard Inc. on Monday said it’s launching Crypto Source, a program to help financial institutions offer secure crypto trading capabilities and services to their customers. Mastercard’s financial institution partners will be able to engage in buy, hold and sell services for select crypto assets, according to a statement.
The payment-processing company is expanding its partnership with Paxos Trust, which will provide crypto-asset trading and custody services on behalf of the banks, according to the statement.
Crypto companies, funds
Shares of Coinbase Global Inc. COIN was flat Thursday at around $63.21 on Thursday, and were down 8.8% over the past five trading sessions. Michael Saylor’s MicroStrategy Inc. MSTR shares lost 2.2% Thursday to $221.09, while they are up 0.3% over the past five days.
Mining company Riot Blockchain Inc. RIOT shares lowered 1% to $5.62 Thursday, and they were down 12.1% over the past five days. Shares of Marathon Digital Holdings Inc. MARA dipped 0.5% to $11.03, while down 1.8% over the past five days. Another miner, Ebang International Holdings Inc. EBON tanked 5.5% to $0.30 on Thursday, while down 16% over the past five days.
Overstock.com Inc. OSTK’s shares were mostly unchanged at $23.58. The shares traded 0.3% lower over the five-session period.
Shares of Block Inc. SQ, formerly known as Square, added 2% to $55 and were down 2.2% for the week. Tesla Inc. TSLA shares dropped 7% to 206.55%, down 6.9% over the past five days.
PayPal Holdings Inc. PYPL edged up 0.1% to $84.53, up 0.6% over the five-session stretch. Nvidia Corp. NVDA shares went up 1.2% to $121.92, looking at a 1.9% gain for the past week.
Advanced Micro Devices Inc. AMD shares picked up 0.7% to $57.61 on Thursday, down 2.1% from five trading days ago.
Among crypto funds, ProShares Bitcoin Strategy ETF BITO slipped 1% to $11.74 Thursday, while its Short Bitcoin Strategy ETF BITI rose 1% to $38.91. Valkyrie Bitcoin Strategy ETF BTF went down 0.8% to $7.3, while VanEck Bitcoin Strategy ETF XBTF edged up 0.4% to $18.84.
Grayscale Bitcoin Trust GBTC added 0.2% to $11.27.
Must Reads
- Cracks At Kraken: Crypto’s Near Empty C-Suite (Forbes)
- Retail investors become vigilantes in hunt for crypto’s most wanted man (Financial Times)
- A Crypto Alchemist Made Me an Accidental Billionaire (Wired)
- Texas regulator probes crypto platform FTX and CEO Sam Bankman-Fried (The Washington Post)
- Fidelity’s Crypto Platform to Add Ether Trading for Institutional Clients (CoinDesk)
- JPMorgan Adds Crypto Policy Head After Dimon’s ‘Ponzi’ Quip (Bloomberg Law) | NVDA |
https://finnhub.io/api/news?id=2410a6c8381804057b48b0fe6487dabef6646cd5c4acf149f9a30b2f9b8e93ee | Cathie Wood Stock Portfolio: 7 Newest Stock Picks This Year | In this piece, we will take a look at the seven newest additions to Cathie Wood’s latest stock portfolio. If you want to skip our introduction to the investor, and want to take a look at the top five stocks in this list, then head on over to Cathie Wood Stock Portfolio: 5 Newest Stock […] | 2022-10-20T07:50:42 | Yahoo | Cathie Wood Stock Portfolio: 7 Newest Stock Picks This Year
In this piece, we will take a look at the seven newest additions to Cathie Wood's latest stock portfolio. If you want to skip our introduction to the investor, and want to take a look at the top five stocks in this list, then head on over to Cathie Wood Stock Portfolio: 5 Newest Stock Picks This Year.
Cathie Wood is an American investor who is in charge of running the affairs of the investment firm Ark Investment Management. Ms. Wood set up her fund in 2014, which makes her fund one of the most successful players due to its large portfolio size but relatively young age in an industry filled with companies that have been investing for decades.
Prior to setting up Ark, Ms. Wood spent a considerable amount of time working in the industry. She comes from a military background and is a graduate of the University of California, from which she graduated in 1974 with a bachelor's degree in finance and economics. After graduating, Ms. Wood would go on and join one of the largest financial services firms in the world, Capital Group. She would work at the firm for three years and then head on to New York City for one of the longest stints of her career when she would spend 18 years working for an asset management firm.
Her second attempt at setting up an investment firm would follow in 2014 when Ms. Wood would leave AllianceBernstein to focus on companies spearheading a concept called 'disruptive innovation.' This term, developed by a Harvard professor, is used primarily to explain the rise of companies such as Apple, which managed to upend the status quo through revolutionary products such as the iPhone.
Over the years, her hedge fund has become one of the largest players in the industry, and as of the third quarter of this year, its portfolio was worth a whopping $14 billion. However, 2022 has proven to be one of the toughest ones in Ms. Wood's career, as her focus on disruptive firms, especially those in the technology sector, has coincided with Wall Street becoming risk averse in the aftermath of large interest rate hikes from the Federal Reserve.
These, according to the Fed, are necessary to bring down inflation, but Ms. Wood disagrees with the bank as she believes that the data points it is using to assess inflation are out of touch with reality. According to her, while the Fed is looking at consumer facing inflation for its decisions, prices have already started to drop upstream in the supply chain. She also argues that the prices for a host of commodities such as gold, silver, lumber, iron ore, DRAM, copper, oil, and corn are significantly down both year to date and since their peak highs.
In an open letter that she penned in October 2022, Ms. Wood summed up her thoughts:
The Fed seems focused on two variables that, in our view, are lagging indicators––downstream inflation and employment––both of which have been sending conflicting signals and should be calling into question the Fed’s unanimous call for higher interest rates. During September and early October, the Fed felt vindicated in its tough stance by reports that inflation as measured by both the CPI and PCE Deflator excluding food and energy increased 0.6% (7~-8% annualized) and that the PPI excluding food and energy increased 0.4% (~5% annualized). Including food and energy, the CPI increased and the PPI fell 0.1% (~1% annualized), however, while home prices as measured by the Federal Housing Finance Agency (FHFA) fell 0.6% (~7-8% annualized). Reported on the employment front during September and early October, initial claims for unemployment insurance declined and nonfarm payroll employment increased 263,000, but job openings as measured by JOLTS fell 10% or 1.1 million, manufacturing employment as measured by the ISM Purchasing Managers Index contracted, and Challenger involuntary job separations soared 67.6% on a year-over-year basis.
Cathie Wood's hedge fund has posted its 13F filings with the SEC for the third quarter of this year. Some of the notable names in the portfolio include Tesla Inc (NASDAQ:TSLA), NVIDIA Corporation (NASDAQ:NVDA) and Zoom Video Communications Inc (NASDAQ:ZM). In this article, however, our focus would be the stocks Cathie Wood initiated new stakes in during the September quarter.
Cathie Wood of ARK Investment Management
Our Methodology
We scanned the third quarter portfolio of Cathie Wood and picked the stocks in which she initiated new stakes during the September quarter.
Cathie Wood Stock Portfolio: 7 Newest Stock Picks This Year
7. Compagnie Générale des Établissements Michelin Société en commandite par actions (EPA:ML.PA)
Ark Investment’s Stake Value: $1.8 million
Percentage of Ark Investment’s 13F Portfolio: 0.01%
Number of Hedge Fund Holders: N/A
Compagnie Générale des Établissements Michelin Société en commandite par actions (EPA:ML.PA), simply known as Michelin, is one of the largest tire manufacturers in the world. The firm is headquartered in Clermont-Ferrand, France, and it is one of the oldest companies in the world after being set up in 1889.
Compagnie Générale des Établissements Michelin Société en commandite par actions (EPA:ML.PA) was responsible for manufacturing the tires for NASA's Space Shuttle - highlighting its prowess in the industry due to the extreme requirements for the tires of a spacecraft that is returning from space. Alongside the Shuttle, Compagnie Générale des Établissements Michelin Société en commandite par actions (EPA:ML.PA) has also manufactured tires for Formula One race cars, endurance racing, and the World Rally Championship.
However, tires are not the only industry where Compagnie Générale des Établissements Michelin Société en commandite par actions (EPA:ML.PA) operates. The firm is also renowned for its tour guides, and its three Michelin Start rating is highly coveted in the restaurant industry. It also has a digital mapping service, and the firm's market data for September 2022 revealed that the original equipment business grew across the world, including Europe, America, and China.
This growth was also mirrored by Compagnie Générale des Établissements Michelin Société en commandite par actions (EPA:ML.PA)'s trucks and bus segment, and both these segments also posted year to date growth in all major regions of the world except for China. The company also has a fortress balance sheet, with its latest debt sitting at EUR4.5 billion and its operating income at EUR 4.9 billion, indicating that it is more than capable of meeting all of its obligations.
Cathie Wood's Ark Investment owned 83,484 Compagnie Générale des Établissements Michelin Société en commandite par actions (EPA:ML.PA) shares that were worth $1.8 million by the end of this year's third quarter.
Compagnie Générale des Établissements Michelin Société en commandite par actions (EPA:ML.PA) is a new arrival in Cathie Wood's portfolio, unlike Tesla Inc (NASDAQ:TSLA), NVIDIA Corporation (NASDAQ:NVDA) and Zoom Video Communications Inc (NASDAQ:ZM) which have been featuring in ARK's portfolio for several quarters.
6. HUB Security (TLV:HUB.TA)
Ark Investment’s Stake Value: $2.1 million
Percentage of Ark Investment’s 13F Portfolio: 0.01%
Number of Hedge Fund Holders: N/A
HUB Security (TLV:HUB.TA) is an Israeli startup that is headquartered in Tel Aviv-Yafo. The company develops a hardware security product for finance and cloud applications. It sells its products to enterprises and was set up in 2017.
HUB Security (TLV:HUB.TA)'s founders have a background in the Israeli military, and they have served with the intelligence units of the Israeli Defense Forces. Its products aim to prevent hardware based security intrusions and data thefts, and the company has customers in more than 30 countries. It is also operating in the highly lucrative confidential computing market, which has a total addressable market (TAM) of $54 billion and focuses on solutions that encrypt data even as its being processed inside a processor or a graphics processing unit.
Additionally, and more crucially, HUB Security (TLV:HUB.TA)'s products use post-quantum cryptography to provide secure solutions. This involves using built-in quantum random number generation to eliminate the need for key exchange algorithms, which in turn removes another layer of vulnerability to hackers. HUB Security (TLV:HUB.TA) has also received an order from a Swiss company that is worth $18 million and will see the firm sell its confidential computing solutions. It has also won a three year contract with the Israeli Department of Defense worth NIS 4.2 million.
HUB Security (TLV:HUB.TA) aims to list its shares on the NASDAQ exchange in a $1.3 billion listing under the ticker HUBC, and the firm has filed documents with the Securities and Exchange Commission (SEC) for this purpose. The firm has also received the crucial FIPS 140-2 Level 3 security certification in the U.S. Following its listing, 81% of the company will continue to be owned by existing shareholders, and its chief executive officer Mr. Eyal Moshe will own 7% of the shares.
HUB Security (TLV:HUB.TA)'s first half of 2022 fiscal results saw the firm bring in $36 million in revenue, and it aims to generate $115 million in revenue by the end of this year. It also aims to achieve profitability this year, despite posting a loss during the first half. HUB Security (TLV:HUB.TA) has also closed two pipe funding rounds worth NIS 64 million this year.
Unlike Tesla Inc (NASDAQ:TSLA), NVIDIA Corporation (NASDAQ:NVDA) and Zoom Video Communications Inc (NASDAQ:ZM), HUB is a relatively unknown name in Cathie Wood's portfolio.
Click to continue reading and see Cathie Wood Stock Portfolio: 5 Newest Stock Picks This Year.
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Disclosure: None. Cathie Wood Stock Portfolio: 7 Newest Stock Picks This Year is originally published on Insider Monkey. | NVDA |
https://finnhub.io/api/news?id=31ff0370b2c1fe2e8742fac453745db84073f6b6cf1b51c7886a3374e88b4894 | 7 Growth Stocks to Buy on the Dip or You’ll Be Kicking Yourself Later | While value-oriented equities present arguably the safest investment platform during a market rout, contrarians may want to consider some of the more compelling and relevant growth stocks to buy. After all, these troubles likely won’t be a permanent affair. And at some point, the broader economy must get on with the business of moving on. To be clear, you don’t want to get reckless with growth stocks. Certainly, with few market ideas in this segment offering dividends or other benefits associate | 2022-10-20T07:39:10 | Yahoo | 7 Growth Stocks to Buy on the Dip or You’ll Be Kicking Yourself Later
While value-oriented equities present arguably the safest investment platform during a market rout, contrarians may want to consider some of the more compelling and relevant growth stocks to buy. After all, these troubles likely won’t be a permanent affair. And at some point, the broader economy must get on with the business of moving on.
To be clear, you don’t want to get reckless with growth stocks. Certainly, with few market ideas in this segment offering dividends or other benefits associated with value names, growth-focused ideas present risks. At the same time, if you have a longer-term horizon, companies tied to intriguing fundamentals may see dramatic resurgences.
Therefore, if you have the patience (and the nerve), these discounted growth stocks to buy should be on your radar.
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
PayPal
$87.20
Intuit
$407
Sea Limited
$50
Nvidia
$126.85
AeroVironment
$78.42
ASML
$441.59
Vista Outdoor
$26.18
PayPal (PYPL)
Source: Michael Vi / Shutterstock.com
Although PayPal (NASDAQ:PYPL) represents one of the riskiest growth stocks to buy, it’s also compelling because of its implications for the burgeoning gig economy. First, let’s acknowledge the pain which PYPL suffers from. Since the start of this year, the security has tanked nearly 54%. It’s difficult to ignore such catastrophic losses.
At the same time, since July 14, PYPL gained 25%. For me, that’s the real narrative for the underlying company, which provides digital payment services. In addition, PayPal delivers useful business applications for entrepreneurs, making it a friend to the gig economy. This arena of independent contractors will likely generate $455.2 billion of gross volume, according to Statista.com.
True, several upstart competitors exist that could take the shine off PayPal. Here’s what’s important to remember, though. PayPal has been around for a long time. That carries tremendous social cachet. Further, when dealing with money, brand awareness and trust go a long way. Thus, PYPL is an easy name among growth stocks to buy on the dip.
Intuit (INTU)
Source: Julio Ricco / Shutterstock
On a related note regarding the gig economy, Intuit (NASDAQ:INTU) deserves attention as one of the growth stocks to advantage. Best known for its tax and accounting software, should the pivot to the gig economy accelerate, Intuit will likely enjoy increased demand. Fundamentally, tax preparation for independent contractors presents much more complexities than a standard W2 filing for employees.
In my view, the gig economy should enjoy increased participation thanks to the massive return-to-the-office debate. In short, worker bees want to continue telecommuting while upper management wants them to return.
I’m siding with the latter for two reasons. First, companies sign the checks so they have leverage. Second, employees can’t have it both ways, where they enjoy the security and benefits of employment yet also make their own rules.
Should a recession materialize, corporations will enjoy even greater leverage. That may inspire several holdouts to become fulltime gig workers, which will invariably boost Intuit. Again, gig worker taxes are much more complicated than employee taxes.
Sea Limited (SE)
Source: Muh.Imron / Shutterstock.com
To be fair, the narrative for Sea Limited (NYSE:SE) presents many concerns and fears. Anytime a public company loses almost 78% of market value on a year-to-date basis, anxieties come to the forefront. It would be strange if they didn’t. Further, such emotional catalysts represent a protective mechanism that human traders would be wise to listen to.
Getting that caveat out of the way, for risk-tolerant investors that have a long-term time horizon, SE appears compelling. In a way, Reuters last year laid out the bullish narrative for Sea Limited, a Singapore-based tech conglomerate that features businesses in digital entertainment, e-commerce and financial technologies (fintech).
According to the news agency, “Southeast Asia’s internet economy is forecast to reach $1 trillion by 2030, as tens of millions more people take up online shopping and embrace food delivery.”
Of course, the various woes of this year greatly and negatively affected sentiment. Nevertheless, once the troubles fade, SE could skyrocket, making it one of the growth stocks to consider.
Nvidia (NVDA)
Source: Shutterstock
Among popular growth stocks to buy, semiconductor specialist and tech innovator Nvidia (NASDAQ:NVDA) suffered some of the steepest losses. Since the January opener, NVDA finds itself below parity to the tune of 56%. A victim of the supply chain woes that impacted the semiconductor industry, Nvidia navigated extraordinary circumstances. Still, it incurred a double whammy on a fundamental basis.
First, the cryptocurrency sector melted down this year following a massive outbreak in 2021. Actually, cryptos looked incredibly healthy up until November of last year. With the demand profile of blockchain mining processors fading dramatically, Nvidia could no longer rely on this remarkable revenue channel.
Second, the tech firm also suffered from revenge travel. Essentially, after being locked down or otherwise stymied for approximately two years, consumers eagerly wanted to enjoy “real” experiences. Therefore, video-gaming demand declined and thus, so did Nvidia’s audience (since gaming is the company’s forte).
However, Nvidia also offers myriad relevancies across the innovation sphere, from machine learning to autonomous vehicles to data centers. Thus, for the patient investor, NVDA represents one of the growth stocks to buy on the dip.
AeroVironment (AVAV)
Source: Pavel Kapysh / Shutterstock.com
On a wider scale, defense contractor AeroVironment (NASDAQ:AVAV) wouldn’t ordinarily classify as one of the growth stocks to buy on the dip. That’s because on a YTD basis, AVAV is not offering any kind of dip, skyrocketing 27%. For comparison’s sake, the benchmark S&P 500 index is down 22% during the same period.
Currently, AeroVironment generates plenty of attention because of its Switchblade drones. In short, these weapons systems enable operators to stand at a safe distance while flying drones, looking for targets. Once identified, the unmanned aerial vehicle slams into the target, destroying or disabling it. The system helped Ukrainian resistance forces battle against the invading Russian military.
With fighting ongoing, defense contractors may cynically see increased relevancies.
ASML (ASML)
Source: Ralf Liebhold / Shutterstock
Semiconductor specialist ASML (NASDAQ:ASML) presents a circumstance where its market performance doesn’t reflect the long-term fundamentals. For instance, ASML plunged more than 44% on a YTD basis. On the surface, such a dour performance wouldn’t encourage investors to consider it one of the growth stocks to buy. However, the longer-term framework provides plenty of potential for ASML.
According to CNBC, the semiconductor firm is the only company in the world making extreme ultraviolet (EUV) lithography machines. Essentially, these machines enable organizations to print specific patterns on silicon, enabling distinction among the various semiconductor firms. True, the global supply chain disruption disproportionately impacted the chip-manufacturing industry. Still, unless you believe that EUV lithography will become anachronistic, ASML offers an intriguing discount.
If you need a little more nudging, Gurufocus.com labels ASML as modestly undervalued. Perhaps not surprisingly because of its lithography monopoly, it features excellent profitability metrics.
Vista Outdoor (VSTO)
Source: IgorGolovniov / Shutterstock.com
One of the most controversial growth stocks to buy, Vista Outdoor (NYSE:VSTO) may intrigue investors. As an owner of various outdoors brands, Vista has several ammunition companies under its belt. In the market, VSTO finds itself down 43% YTD. However, this red ink might not last indefinitely.
As mentioned earlier, the revenge travel phenomenon benefitted some businesses while hurting others. Fundamentally, Vista represents one of the beneficiaries because more people seeking real experiences could potentially leader to greater sales for its outdoors-related products.
The other segment is ammo. Looking purely at government data regarding background checks for firearms purchased at retail locations, demand for the shooting sports surged dramatically in the post-pandemic new normal. Effectively, this dynamic sets up an expanded addressable market for Vista.
Yes, it’s cynical and I understand the hesitation involved with this industry. At the same time, these sales numbers don’t lie, making VSTO one of the growth stocks to consider.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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The post 7 Growth Stocks to Buy on the Dip or You’ll Be Kicking Yourself Later appeared first on InvestorPlace. | NVDA |
https://finnhub.io/api/news?id=c6f60881d158cabe78e5fd46400b6d79d493283b08367bd42511dbbbe1ce8a9c | Stocks making the biggest moves midday: Allstate, AT&T, IBM, Tesla and more | These are the stocks posting the largest moves in midday trading. | 2022-10-20T06:03:16 | CNBC | Check out the companies making headlines in midday trading.
AT&T – The telecom giant's stock jumped 7.79% after the company surpassed earnings and revenue estimates for the recent quarter. AT&T's wireless revenue rose 5.6%.
related investing news
Allstate – Shares of insurer Allstate fell 12.90% after the company said it would report a loss in the third quarter following Hurricane Ian, which struck in September and boosted catastrophe losses.
Tesla – Shares of electric automaker Tesla fell 6.65% Thursday, a day after the company reported third-quarter earnings that fell short of Wall Street's expectations for revenue. Tesla also warned of a bottleneck for deliveries in the final week of the quarter but said it's transitioning to a smoother delivery pace.
IBM – Shares of the technology conglomerate added 4.73% after beating top and bottom-line estimates for the recent quarter, posting adjusted earnings of $1.81 per share on $14.11 billion in revenue. IBM also upped its revenue growth outlook for the year.
Las Vegas Sands – Shares of the hotel and casino operator rose 5.59% after the company reported mixed third-quarter results, including a bigger-than-expected loss and revenue that beat analysts' forecasts, according to Refinitiv. China's Covid-19 policies have continued to put pressure on businesses in Macau.
Alcoa – Shares of the aluminum producer rose 3.43% even after the company reported an unexpected third-quarter loss on Wednesday. Higher costs and a drop in aluminum prices weighed on the company's results.
Datadog – Shares of Datadog jumped 4.23% after Canaccord Genuity upgraded the company to buy from hold, saying the stock's beaten down price is an attractive opportunity for investors to play in the cloud software sector.
Lam Research Corporation – Shares of Lam Research Corporation 7.81% Thursday after the company reported an earnings beat amid improving supply chains. Cowen also called their results "impressive."
Freeport McMoRan – Shares of Freeport McMoRan jumped 2.64% after the mining company reported earnings Thursday. The company posted third-quarter per-share earnings of 26 cents on revenue of $5.00 billion, compared to analysts' expectations of 24 cents per share in earnings and $4.88 billion of revenue, according to StreetAccount.
Vertiv Holdings — The former Emerson Network Power soared 8.51% after reports that activist investor Starboard Value bought a position.
Super Micro Computer — The IT provider raised its "sales forecast by 15% at the midpoint, with earnings rising 42% at the midpoint," according to Wedbush Securities. Shares gained nearly 10.3%
Quest Diagnostics - Shares of Quest jumped 6.3% after reporting earnings that beat Wall Street expectations. The company reported third-quarter earnings per share of $2.36 versus the StreetAccount estimate of $2.19. Its $2.49 billion in revenue topped the $2.35 billion expected by analysts, thanks to performance rebounding from softer volume trends earlier in the year.
Nvidia – Shares jumped 1.19% after Piper Sandler reiterated the stock as overweight, saying the tech company had strong performance in business units while dealing with near-term headwinds from having excess inventory.
Nucor – Nucor climbed 2.5% after third-quarter per-share earnings topped its mid-September guidance and sales beat analysts' estimates.
Union Pacific — The Omaha-based railroad fell 6.8% after third-quarter freight revenue and carload volume missed analysts' estimates, as compiled by StreetAccount.
Knight-Swift Transportation Holdings — The Phoenix-based trucker fell 5.91% after third-quarter earnings per share and fourth-quarter guidance missed analysts' estimates.
Landstar System — Shares rose more than 2.8% a day after the trucker posted Q4 EPS and revenue forecasts that topped analyst estimates.
American Airlines – Shares of American Airlines fell 3.79% after the company reported earnings that beat Wall Street's expectations and forecast a fourth-quarter profit, thanks to strong travel demand.
Kinder Morgan — Shares declined 4.84% after the oil and gas pipeline operator reported third-quarter per-share earnings results that missed analysts' expectations, according to consensus estimates on StreetAccount. Kinder Morgan cited lower gasoline and diesel volumes in the quarter. The company otherwise beat on revenue forecasts.
— CNBC's Samantha Subin, Sarah Min, Scott Schnipper, Alex Harring, Tanaya Macheel and Michelle Fox contributed reporting | NVDA |
https://finnhub.io/api/news?id=4a7ce9a0907720b70697b39fc7babf5cc65417953b8f22ed8d796a937c85bfd4 | PHYSICIANS FINANCIAL SERVICES, - GuruFocus.com | GuruFocus Article or News written by insider and the topic is about: | 2022-10-20T04:13:00 | GuruFocus | PHYSICIANS FINANCIAL SERVICES, INC. recently filed their 13F report for the third quarter of 2022, which ended on 2022-09-30.
The 13F report details which stocks were in a guru’s equity portfolio at the end of the quarter, though investors should note that these filings are limited in scope, containing only a snapshot of long positions in U.S.-listed stocks and American depository receipts as of the quarter’s end. They are not required to include international holdings, short positions or other types of investments. Still, even this limited filing can provide valuable information.
PO BOX 10973 RALEIGH, NC 27605
As of the latest 13F report, the guru’s equity portfolio contained 109 stocks valued at a total of $207.00Mil. The top holdings were AAPL(13.91%), AMZN(4.96%), and MSFT(4.88%).
According to GuruFocus data, these were PHYSICIANS FINANCIAL SERVICES, INC.’s top five trades of the quarter.
Apple Inc
PHYSICIANS FINANCIAL SERVICES, INC. reduced their investment in NAS:AAPL by 10,142 shares. The trade had a 0.62% impact on the equity portfolio. During the quarter, the stock traded for an average price of $156.95.
On 10/19/2022, Apple Inc traded for a price of $142.485 per share and a market cap of $2,299.49Bil. The stock has returned -3.21% over the past year.
GuruFocus gives the company a financial strength rating of 6 out of 10 and a profitability rating of 10 out of 10.
In terms of valuation, Apple Inc has a price-earnings ratio of 23.61, a price-book ratio of 39.64, a price-earnings-to-growth (PEG) ratio of 1.66, a EV-to-Ebitda ratio of 17.99 and a price-sales ratio of 6.08.
The price-to-GF Value ratio is 0.83, earning the stock a GF Value rank of 7.
APA Corp
The guru sold out of their 20,000-share investment in NAS:APA. Previously, the stock had a 0.31% weight in the equity portfolio. Shares traded for an average price of $35.75 during the quarter.
On 10/19/2022, APA Corp traded for a price of $41.48 per share and a market cap of $13.38Bil. The stock has returned 54.14% over the past year.
GuruFocus gives the company a financial strength rating of 4 out of 10 and a profitability rating of 6 out of 10.
In terms of valuation, APA Corp has a price-earnings ratio of 4.60, a price-book ratio of 23.39, a EV-to-Ebitda ratio of 3.02 and a price-sales ratio of 1.44.
The price-to-GF Value ratio is 1.03, earning the stock a GF Value rank of 3.
NVIDIA Corp
PHYSICIANS FINANCIAL SERVICES, INC. reduced their investment in NAS:NVDA by 2,073 shares. The trade had a 0.14% impact on the equity portfolio. During the quarter, the stock traded for an average price of $158.09.
On 10/19/2022, NVIDIA Corp traded for a price of $119.495 per share and a market cap of $297.41Bil. The stock has returned -46.34% over the past year.
GuruFocus gives the company a financial strength rating of 8 out of 10 and a profitability rating of 10 out of 10.
In terms of valuation, NVIDIA Corp has a price-earnings ratio of 39.18, a price-book ratio of 12.46, a price-earnings-to-growth (PEG) ratio of 1.22, a EV-to-Ebitda ratio of 31.20 and a price-sales ratio of 10.17.
The price-to-GF Value ratio is 0.48, earning the stock a GF Value rank of 4.
Amazon.com Inc
PHYSICIANS FINANCIAL SERVICES, INC. reduced their investment in NAS:AMZN by 2,827 shares. The trade had a 0.13% impact on the equity portfolio. During the quarter, the stock traded for an average price of $126.4.
On 10/19/2022, Amazon.com Inc traded for a price of $113.87 per share and a market cap of $1,167.19Bil. The stock has returned -33.47% over the past year.
GuruFocus gives the company a financial strength rating of 6 out of 10 and a profitability rating of 9 out of 10.
In terms of valuation, Amazon.com Inc has a price-earnings ratio of 102.66, a price-book ratio of 8.89, a price-earnings-to-growth (PEG) ratio of 2.45, a EV-to-Ebitda ratio of 24.29 and a price-sales ratio of 2.42.
The price-to-GF Value ratio is 0.59, earning the stock a GF Value rank of 8.
Syneos Health Inc
The guru sold out of their 4,000-share investment in NAS:SYNH. Previously, the stock had a 0.13% weight in the equity portfolio. Shares traded for an average price of $64.59 during the quarter.
On 10/19/2022, Syneos Health Inc traded for a price of $46.545 per share and a market cap of $4.77Bil. The stock has returned -46.90% over the past year.
GuruFocus gives the company a financial strength rating of 5 out of 10 and a profitability rating of 7 out of 10.
In terms of valuation, Syneos Health Inc has a price-earnings ratio of 18.11, a price-book ratio of 1.48, a price-earnings-to-growth (PEG) ratio of 1.06, a EV-to-Ebitda ratio of 11.62 and a price-sales ratio of 0.93.
The price-to-GF Value ratio is 0.59, earning the stock a GF Value rank of 10.
Please note, the numbers and facts quoted are as of the writing of this article and may not factor in the latest trading data or company announcements.
Want to provide feedback on this article? Have questions or concerns? Get in touch with us here, or email us at [email protected]!
This article is general in nature and does not represent the opinions of GuruFocus or any of its affiliates. This article is not intended to be financial advice, nor does it constitute investment advice or recommendations. It was written without regard to your individual situation or financial goals. We aim to bring you fundamental, data-driven analysis, The information on this site is in no way guaranteed for completeness, accuracy or in any other way. | NVDA |
https://finnhub.io/api/news?id=4d0d637c7d0abcc87a8e392ccc7359747effb2dd8f921671739f842103179561 | Top 5 3rd Quarter Trades of AS - GuruFocus.com | GuruFocus Article or News written by insider and the topic is about: | 2022-10-20T04:13:00 | GuruFocus | ASSET PLANNING SERVICES INC /LA/ /ADV recently filed their 13F report for the third quarter of 2022, which ended on 2022-09-30.
The 13F report details which stocks were in a guru’s equity portfolio at the end of the quarter, though investors should note that these filings are limited in scope, containing only a snapshot of long positions in U.S.-listed stocks and American depository receipts as of the quarter’s end. They are not required to include international holdings, short positions or other types of investments. Still, even this limited filing can provide valuable information.
509 W. 21ST AVENUE COVINGTON, LA 70433
As of the latest 13F report, the guru’s equity portfolio contained 35 stocks valued at a total of $142.00Mil. The top holdings were MSFT(8.96%), UNH(5.66%), and CVX(4.45%).
According to GuruFocus data, these were ASSET PLANNING SERVICES INC /LA/ /ADV’s top five trades of the quarter.
Intel Corp
The guru sold out of their 93,452-share investment in NAS:INTC. Previously, the stock had a 2.29% weight in the equity portfolio. Shares traded for an average price of $34.09 during the quarter.
On 10/19/2022, Intel Corp traded for a price of $25.79 per share and a market cap of $105.87Bil. The stock has returned -50.68% over the past year.
GuruFocus gives the company a financial strength rating of 7 out of 10 and a profitability rating of 9 out of 10.
In terms of valuation, Intel Corp has a price-earnings ratio of 5.52, a price-book ratio of 1.05, a price-earnings-to-growth (PEG) ratio of 0.40, a EV-to-Ebitda ratio of 3.39 and a price-sales ratio of 1.44.
The price-to-GF Value ratio is 0.52, earning the stock a GF Value rank of 8.
NVIDIA Corp
The guru established a new position worth 26,575 shares in NAS:NVDA, giving the stock a 2.27% weight in the equity portfolio. Shares traded for an average price of $158.09 during the quarter.
On 10/19/2022, NVIDIA Corp traded for a price of $119.495 per share and a market cap of $297.41Bil. The stock has returned -46.34% over the past year.
GuruFocus gives the company a financial strength rating of 8 out of 10 and a profitability rating of 10 out of 10.
In terms of valuation, NVIDIA Corp has a price-earnings ratio of 39.18, a price-book ratio of 12.46, a price-earnings-to-growth (PEG) ratio of 1.22, a EV-to-Ebitda ratio of 31.20 and a price-sales ratio of 10.17.
The price-to-GF Value ratio is 0.48, earning the stock a GF Value rank of 4.
Schwab U.S. Large-Cap ETF
During the quarter, ASSET PLANNING SERVICES INC /LA/ /ADV bought 2,075 shares of ARCA:SCHX for a total holding of 44,306. The trade had a 0.06% impact on the equity portfolio. During the quarter, the stock traded for an average price of $46.9.
On 10/19/2022, Schwab U.S. Large-Cap ETF traded for a price of $43.37 per share and a market cap of $27.99Bil. The stock has returned -19.34% over the past year.
There is insufficient data to calculate the stock’s financial strength and profitability ratings.
In terms of valuation, Schwab U.S. Large-Cap ETF has a price-earnings ratio of 17.59 and a price-book ratio of 3.31.
Microsoft Corp
ASSET PLANNING SERVICES INC /LA/ /ADV reduced their investment in NAS:MSFT by 200 shares. The trade had a 0.03% impact on the equity portfolio. During the quarter, the stock traded for an average price of $264.05.
On 10/19/2022, Microsoft Corp traded for a price of $234.76 per share and a market cap of $1,754.17Bil. The stock has returned -22.89% over the past year.
GuruFocus gives the company a financial strength rating of 8 out of 10 and a profitability rating of 10 out of 10.
In terms of valuation, Microsoft Corp has a price-earnings ratio of 24.41, a price-book ratio of 10.55, a price-earnings-to-growth (PEG) ratio of 1.18, a EV-to-Ebitda ratio of 17.07 and a price-sales ratio of 8.95.
The price-to-GF Value ratio is 0.76, earning the stock a GF Value rank of 9.
Amazon.com Inc
ASSET PLANNING SERVICES INC /LA/ /ADV reduced their investment in NAS:AMZN by 265 shares. The trade had a 0.02% impact on the equity portfolio. During the quarter, the stock traded for an average price of $126.4.
On 10/19/2022, Amazon.com Inc traded for a price of $113.87 per share and a market cap of $1,167.19Bil. The stock has returned -33.47% over the past year.
GuruFocus gives the company a financial strength rating of 6 out of 10 and a profitability rating of 9 out of 10.
In terms of valuation, Amazon.com Inc has a price-earnings ratio of 102.66, a price-book ratio of 8.89, a price-earnings-to-growth (PEG) ratio of 2.45, a EV-to-Ebitda ratio of 24.29 and a price-sales ratio of 2.42.
The price-to-GF Value ratio is 0.59, earning the stock a GF Value rank of 8.
Please note, the numbers and facts quoted are as of the writing of this article and may not factor in the latest trading data or company announcements.
Want to provide feedback on this article? Have questions or concerns? Get in touch with us here, or email us at [email protected]!
This article is general in nature and does not represent the opinions of GuruFocus or any of its affiliates. This article is not intended to be financial advice, nor does it constitute investment advice or recommendations. It was written without regard to your individual situation or financial goals. We aim to bring you fundamental, data-driven analysis, The information on this site is in no way guaranteed for completeness, accuracy or in any other way. | NVDA |
https://finnhub.io/api/news?id=28186c702353c987c7a43cc476e969b267978a8024e2bd17b65e9b806c3970e6 | Dogecoin leads increases as largest cryptocurrencies start mixed | The largest cryptocurrencies were mixed during morning trading on Thursday, with Uniswap seeing the biggest move, dropping 2.65% to $6.49. Dogecoin lead the... | 2022-10-20T03:00:00 | MarketWatch | The largest cryptocurrencies were mixed during morning trading on Thursday, with Uniswap
UNIUSD,
-0.36%
seeing the biggest move, dropping 2.65% to $6.49.
Dogecoin
DOGEUSD,
-1.05%
lead the increases with a 0.68% climb to 6 cents.
Three other currencies posted drops Thursday. Polkadot
DOTUSD,
+0.67%
dropped 1.47% to $6.11, and Cardano
ADAUSD,
-0.09%
shed 1.20% to 35 cents.
Bitcoin
BTCUSD,
-0.00%,
which rounded out the decreases, slipped 0.05% to $19,187.58.
In addition to Dogecoin, four other cryptocurrencies saw increases. Ethereum
ETHUSD,
-0.19%
climbed 0.31% to $1,297.95, and Litecoin
LTCUSD,
-0.21%
rose 0.29% to $51.71.
Bitcoin Cash
BCHUSD,
-1.39%
and Ripple
XRPUSD,
+0.41%
rounded out the increases, inching up 0.08% to $108.26 and 0.06% to 0 cents.
In crypto-related company news, shares of Coinbase Global Inc.
COIN,
-3.79%
climbed 0.45% to $63.48, while MicroStrategy Inc.
MSTR,
-3.32%
climbed 0.14% to $226.40. Riot Blockchain Inc.
RIOT,
-3.93%
shares climbed 0.55% to $5.70, and shares of Marathon Digital Holdings Inc.
MARA,
-4.41%
inched down 0.36% to $11.03.
Overstock.com Inc.
OSTK,
-6.52%
rose 0.15% to $23.61, while Block Inc.
SQ,
-13.64%
climbed 2.84% to $55.47 and Tesla Inc.
TSLA,
-2.11%
shed 8.18% to $203.88.
PayPal Holdings Inc.
PYPL,
-2.23%
rose 1.60% to $85.82, and Ebang International Holdings Inc. Cl A
EBON,
-2.53%
shares declined 1.70% to 32 cents. NVIDIA Corp.
NVDA,
+0.37%
climbed 4.12% to $125.48, and Advanced Micro Devices Inc.
AMD,
+2.36%
climbed 1.60% to $59.11.
In the fund space, the Bitwise Crypto Industry Innovators ETF
BITQ,
-4.08%,
which is focused on pure-play crypto companies, rose 1.01% to $5.88. Blockchain-focused Amplify Transformational Data Sharing ETF
BLOK,
-1.86%
rose 0.83% to $18.13. Grayscale Bitcoin Trust
GBTC,
which tracks the Bitcoin market price, climbed 0.44% to $11.30.
Editor's Note: This story, which tracks nine of the top cryptocurrencies and excludes stable coins, was auto-generated by Automated Insights, an automation technology provider, using data from Dow Jones, FactSet and Kraken. See our market data terms of use. | NVDA |
https://finnhub.io/api/news?id=8aed077864fe710dd3089f45d7c92f51e432d52b1af7b4d626984935b9081670 | 7 Growth Stocks to Buy on the Dip or You'll Be Kicking Yourself Later | While the red ink in the market naturally brings pause to investor sentiment, these growth stocks to buy offer compelling discounts. | 2022-10-20T02:40:00 | InvestorPlace | While value-oriented equities present arguably the safest investment platform during a market rout, contrarians may want to consider some of the more compelling and relevant growth stocks to buy. After all, these troubles likely won’t be a permanent affair. And at some point, the broader economy must get on with the business of moving on.
To be clear, you don’t want to get reckless with growth stocks. Certainly, with few market ideas in this segment offering dividends or other benefits associated with value names, growth-focused ideas present risks. At the same time, if you have a longer-term horizon, companies tied to intriguing fundamentals may see dramatic resurgences.
Therefore, if you have the patience (and the nerve), these discounted growth stocks to buy should be on your radar.
|PYPL||PayPal||$87.20|
|INTU||Intuit||$407|
|SE||Sea Limited||$50|
|NVDA||Nvidia||$126.85|
|AVAV||AeroVironment||$78.42|
|ASML||ASML||$441.59|
|VSTO||Vista Outdoor||$26.18|
PayPal (PYPL)
Although PayPal (NASDAQ:PYPL) represents one of the riskiest growth stocks to buy, it’s also compelling because of its implications for the burgeoning gig economy. First, let’s acknowledge the pain which PYPL suffers from. Since the start of this year, the security has tanked nearly 54%. It’s difficult to ignore such catastrophic losses.
At the same time, since July 14, PYPL gained 25%. For me, that’s the real narrative for the underlying company, which provides digital payment services. In addition, PayPal delivers useful business applications for entrepreneurs, making it a friend to the gig economy. This arena of independent contractors will likely generate $455.2 billion of gross volume, according to Statista.com.
True, several upstart competitors exist that could take the shine off PayPal. Here’s what’s important to remember, though. PayPal has been around for a long time. That carries tremendous social cachet. Further, when dealing with money, brand awareness and trust go a long way. Thus, PYPL is an easy name among growth stocks to buy on the dip.
Intuit (INTU)
On a related note regarding the gig economy, Intuit (NASDAQ:INTU) deserves attention as one of the growth stocks to advantage. Best known for its tax and accounting software, should the pivot to the gig economy accelerate, Intuit will likely enjoy increased demand. Fundamentally, tax preparation for independent contractors presents much more complexities than a standard W2 filing for employees.
In my view, the gig economy should enjoy increased participation thanks to the massive return-to-the-office debate. In short, worker bees want to continue telecommuting while upper management wants them to return.
I’m siding with the latter for two reasons. First, companies sign the checks so they have leverage. Second, employees can’t have it both ways, where they enjoy the security and benefits of employment yet also make their own rules.
Should a recession materialize, corporations will enjoy even greater leverage. That may inspire several holdouts to become fulltime gig workers, which will invariably boost Intuit. Again, gig worker taxes are much more complicated than employee taxes.
Sea Limited (SE)
To be fair, the narrative for Sea Limited (NYSE:SE) presents many concerns and fears. Anytime a public company loses almost 78% of market value on a year-to-date basis, anxieties come to the forefront. It would be strange if they didn’t. Further, such emotional catalysts represent a protective mechanism that human traders would be wise to listen to.
Getting that caveat out of the way, for risk-tolerant investors that have a long-term time horizon, SE appears compelling. In a way, Reuters last year laid out the bullish narrative for Sea Limited, a Singapore-based tech conglomerate that features businesses in digital entertainment, e-commerce and financial technologies (fintech).
According to the news agency, “Southeast Asia’s internet economy is forecast to reach $1 trillion by 2030, as tens of millions more people take up online shopping and embrace food delivery.”
Of course, the various woes of this year greatly and negatively affected sentiment. Nevertheless, once the troubles fade, SE could skyrocket, making it one of the growth stocks to consider.
Nvidia (NVDA)
Among popular growth stocks to buy, semiconductor specialist and tech innovator Nvidia (NASDAQ:NVDA) suffered some of the steepest losses. Since the January opener, NVDA finds itself below parity to the tune of 56%. A victim of the supply chain woes that impacted the semiconductor industry, Nvidia navigated extraordinary circumstances. Still, it incurred a double whammy on a fundamental basis.
First, the cryptocurrency sector melted down this year following a massive outbreak in 2021. Actually, cryptos looked incredibly healthy up until November of last year. With the demand profile of blockchain mining processors fading dramatically, Nvidia could no longer rely on this remarkable revenue channel.
Second, the tech firm also suffered from revenge travel. Essentially, after being locked down or otherwise stymied for approximately two years, consumers eagerly wanted to enjoy “real” experiences. Therefore, video-gaming demand declined and thus, so did Nvidia’s audience (since gaming is the company’s forte).
However, Nvidia also offers myriad relevancies across the innovation sphere, from machine learning to autonomous vehicles to data centers. Thus, for the patient investor, NVDA represents one of the growth stocks to buy on the dip.
AeroVironment (AVAV)
On a wider scale, defense contractor AeroVironment (NASDAQ:AVAV) wouldn’t ordinarily classify as one of the growth stocks to buy on the dip. That’s because on a YTD basis, AVAV is not offering any kind of dip, skyrocketing 27%. For comparison’s sake, the benchmark S&P 500 index is down 22% during the same period.
Currently, AeroVironment generates plenty of attention because of its Switchblade drones. In short, these weapons systems enable operators to stand at a safe distance while flying drones, looking for targets. Once identified, the unmanned aerial vehicle slams into the target, destroying or disabling it. The system helped Ukrainian resistance forces battle against the invading Russian military.
With fighting ongoing, defense contractors may cynically see increased relevancies.
ASML (ASML)
Semiconductor specialist ASML (NASDAQ:ASML) presents a circumstance where its market performance doesn’t reflect the long-term fundamentals. For instance, ASML plunged more than 44% on a YTD basis. On the surface, such a dour performance wouldn’t encourage investors to consider it one of the growth stocks to buy. However, the longer-term framework provides plenty of potential for ASML.
According to CNBC, the semiconductor firm is the only company in the world making extreme ultraviolet (EUV) lithography machines. Essentially, these machines enable organizations to print specific patterns on silicon, enabling distinction among the various semiconductor firms. True, the global supply chain disruption disproportionately impacted the chip-manufacturing industry. Still, unless you believe that EUV lithography will become anachronistic, ASML offers an intriguing discount.
If you need a little more nudging, Gurufocus.com labels ASML as modestly undervalued. Perhaps not surprisingly because of its lithography monopoly, it features excellent profitability metrics.
Vista Outdoor (VSTO)
One of the most controversial growth stocks to buy, Vista Outdoor (NYSE:VSTO) may intrigue investors. As an owner of various outdoors brands, Vista has several ammunition companies under its belt. In the market, VSTO finds itself down 43% YTD. However, this red ink might not last indefinitely.
As mentioned earlier, the revenge travel phenomenon benefitted some businesses while hurting others. Fundamentally, Vista represents one of the beneficiaries because more people seeking real experiences could potentially leader to greater sales for its outdoors-related products.
The other segment is ammo. Looking purely at government data regarding background checks for firearms purchased at retail locations, demand for the shooting sports surged dramatically in the post-pandemic new normal. Effectively, this dynamic sets up an expanded addressable market for Vista.
Yes, it’s cynical and I understand the hesitation involved with this industry. At the same time, these sales numbers don’t lie, making VSTO one of the growth stocks to consider.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. | NVDA |
https://finnhub.io/api/news?id=08fb68a247bdc88ef8264ec73a1ed24ab8ef058f1f0370827f56bf65b5a47e13 | Intel: More Bad News | Intel has seen its shares drop quite a lot this year. And yet, they aren't cheap versus how INTC was valued in the past. Read why here. | 2022-10-20T02:26:03 | SeekingAlpha | Intel: More Bad News
Summary
- Intel has seen its shares drop considerably this year. And yet, they aren't cheap versus how Intel was valued in the past.
- Free cash flow will be very weak this year, which is why the company was hoping for a big cash windfall from its Mobileye IPO.
- But timing has been very bad there, which is why Mobileye will not be the major cash source Intel hoped it would be.
- Looking for a helping hand in the market? Members of Cash Flow Club get exclusive ideas and guidance to navigate any climate. Learn More »
Article Thesis
The global semiconductor industry has performed weakly in recent months on worries about an economic slowdown. Intel (NASDAQ:INTC) has also performed badly, although that was partially caused by company-specific issues such as declining market share and weak cash generation. More bad news keeps emerging -- the value of its Mobileye (MBLY) business, which was supposed to lead to a big cash infusion for Intel, continues to slide, and it now looks like Intel has actually lost money with its Mobileye venture over the last couple of years on a net basis.
Intel: Underperformance Driven By Company-Specific Issues
Intel has seen its shares decline by 53% over the last year, and by 52% year-to-date. That's a pretty hefty loss, relative to how the broad market performed. While some of its semiconductor peers, such as NVIDIA (NVDA) have seen their shares drop even more in that time frame, the driving force behind NVIDIA's share price slump was a too-high valuation. NVIDIA's underlying performance was not at all bad over the last year, although the company showed some weakness more recently. Nevertheless, NVIDIA managed to grow its revenue by around 50% in Q1, and by 3% in the most recent quarter. Intel, meanwhile, saw its revenue drop by 1% in Q1 and by a hefty 17% in the most recent quarter. So while NVIDIA and also AMD (AMD) have seen their share prices pull back over the last year, their underlying business performance remained positive. That can't be said about Intel, which is battling several company-specific issues.
First, the company continues to lose market share in important growth markets such as data centers. While NVIDIA and AMD grew their data center revenue by 61% and 83%, respectively, in their most recent quarters, Intel saw its data center revenue drop by 16%. There is thus a big disconnect between the growth rates of Intel's closest peers in this highly important market, versus the growth that Intel is able to generate. Intel's widely sub-par performance can likely be attributed to the fact that the company has had problems with rolling out next-generation products, and that its chips are generally not great when it comes to energy efficiency. In a world of energy shortages and high electricity prices, that's a major disadvantage for Intel versus peers such as AMD that have more efficient chips on the market.
A New Issue Is Emerging
More recently, a new problem has been emerging. Intel acquired Mobileye for a little more than $15 billion a couple of years ago. The business was not profitable yet, thus Intel had to put some of its core business's cash flow into Mobileye in order to grow it.
More recently, Intel decided to IPO Mobileye, seeking to generate some funds that could be used for its foundry push that requires hefty cash outlays on Intel's side. Not too long ago, Intel and parts of the market believed that Mobileye could fetch a $50 billion valuation when IPO'd. That would be a very large 45% boost versus Intel's current market capitalization, meaning the valuation of Intel without the value of Mobileye would be pretty low. But since then, the presumed value of Mobileye has fallen down considerably -- first, it was rumored that it would be IPO'd at a valuation of $30 billion, then $20 billion, while most recently that became $15 billion or so.
To me, this suggests that Intel's management has had pretty bad timing with the IPO process of Mobileye. Had they brought Mobileye to the market one or two years ago, they probably would have received the $50 billion they originally wanted, or at least something close to that. After all, valuations for speculative, non-profitable tech companies were very high during the "bubbly" times when there were trillions of dollars in cheap money floating around. Especially companies that were a combination of "techy" and vehicle-related, such as Rivian (RIVN), IPO'd at very high valuations. Now, with the Fed focused on tightening financial conditions in order to bring down inflation, the market is much less appreciative of (not yet profitable), highly expensive tech stocks. If Intel had timed the IPO of its Mobileye unit well, it could have taken in a hefty amount of cash. Now, that's not the case any longer. This, in turn, causes other problems. With the cash windfall from the Mobileye IPO, Intel wanted to fund its hefty capital investments for its emerging foundry business. That will now likely not be doable, which is why Intel will have to use cash that was originally planned for other purposes.
The company has announced that its free cash flow will likely be negative this year:
With net capital expenditures forecasted in the low $20 billion range, FCF will be negative at $1 billion to $2 billion. Those are Intel's guidance numbers from July -- since the macro environment has deteriorated to some degree since then, it is possible that Intel will revise its guidance downwards when it reports its Q3 results, as they did when they announced Q2 numbers.
No matter what, pressures for Intel's balance sheet are growing. FCF will be negative even before dividends, and since Intel is paying out around $6 billion in dividends this year, net debt should rise by around $7 billion to $8 billion this year. Intel's net debt position at the end of the second quarter was $9 billion, which isn't especially high for a company the size of Intel. But it looks like that number will grow meaningfully this year, and possibly also next year.
EBITDA is forecasted to grow a little less than $3 billion next year, which makes it likely that operating cash flows will improve slightly in 2023 versus 2022. Free cash flows could, if capital expenditures remain flat versus 2022, come in close to zero next year. That would be an improvement versus this year, but Intel's net debt would still grow in that scenario, as it still would have to pay out billions of dollars in dividends -- unless the company cuts its dividend. A dividend cut is, for now, not necessary, but it can't be ruled out, either. With the Mobileye IPO not leading to a large cash inflow, Intel might be interested in freeing up financial resources in a different manner. Cutting the dividend would serve that purpose, thus investors should not see Intel's dividend as ultra-safe -- that held true when the dividend was well-covered by free cash flows in the past, but at least in the foreseeable future, that will no longer be the case, which increases the likelihood of a dividend cut.
Intel Is Not That Cheap
Intel has seen its shares drop by half so far this year, but its valuation is not actually that cheap, as earnings per share estimates have dropped a lot as well. And that makes sense, as the company has performed rather badly in recent quarters, losing market share, reporting declining revenues, and seeing its margins compress.
Based on current forecasts for this year's earnings per share, Intel is trading at 12x net profits. That's in line with the 5-year median earnings multiple, and slightly ahead of the 3-year median earnings multiple. In other words, Intel looks fairly valued to slightly overvalued relative to how its shares were valued in the past. When we consider that Intel is not forecasted to grow its earnings per share meaningfully over the next couple of years, that does not make for an overly attractive investment proposal.
According to current Wall Street estimates, Intel will earn roughly the same amount of money in 2025 as they will earn this year. If one were to put the median earnings multiple on those profits in 2025, Intel would thus not generate any share price gains. Of course, it is possible that Intel manages to reverse its course and that its actual profits will be higher than they are currently forecasted to be. But as a base case scenario, the analyst consensus estimates seem relatively suitable, and they do not suggest meaningful share price gain potential in the next couple of years. The dividend will provide a very meaningful 6% income yield as long as it is not cut, but I do not believe that this justifies a buy rating on Intel.
Takeaway
The macro environment has gotten harsher for semiconductor companies, but Intel's biggest issues are self-made. The company's product portfolio is not on par with what AMD, NVIDIA, etc. are offering, which results in ongoing market share declines in important areas such as data centers.
The Mobileye IPO seems botched as well, as Intel's management has shown very poor timing. While the IPO could have resulted in a hefty cash inflow when done at the right time, the market is now relatively unappreciative of non-profitable tech stocks, which will result in a meager cash inflow only.
With Intel being free cash flow negative this year, that's an issue. I thus do not believe that Intel is attractive at current prices.
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According to Tipranks, Jonathan is among the top 1% of bloggers (as of August 1, 2023).
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Analyst’s Disclosure: I/we have a beneficial long position in the shares of AMD either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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Comments (96)
The new Intel will be a factory, not a Tech any more.
Getting dumped by Apple is proof and is irreversible.
They will hide their losses in capex for a few years.
It's gonna be a rough ride.
Intel will emerge as a supplier to its current competitors.
I will buy at $5.
You’re smart
You can't buy their new GPUs anywhere.
The Intel Raptor Lake i9-13900K is now the company's fastest gaming CPU, as an overclocker has managed to ramp the chip's frequency to 8.8GHz. www.pcgamesn.com/...
a770 vs 4090 in transcode
www.tomshardware.com/...
INTC … -48.05%
NVDA … -58.51%
AMD … -59.85%
5 Y performance:
INTC ... -36,13%
NVDA ... +148,05%
AMD ... +309,72%
While clearly you can make $ in PCs it seems Intel has issues with competition in this market and got frozen out of the next market - mobile. Can they be competitive again? Sure. Will they? Doubtful. The issue is Intel has not executed in some time and their biggest competitor TSMC has the backing of Apple which drives their process. Simply TSMC has the resources to stay on top and Intel is trying to implement a culture change while trying to gain leadership.
Additionally their operating expenses are sure to keep rising as they ramp up their extremely expensive foundry operations.
I'd agree with the analysts, in the short term ( next 5years) profits are under pressure and will decline.
I'm in it for longer than 5years though, the (dedicated)GPU market is growing quickly so any market share they can take will pay off long term.
My investment thesis would crumble if Intel started producing objectively inferior products that couldn't compete with AMD/Nvidia, not even by being cheaper.
This is, atleast for 13th gen, not the case. | NVDA |
https://finnhub.io/api/news?id=ea19edaa42c1692070b8162a73e99ce73657e3f6375622d7402d32b5147fc183 | Top 5 3rd Quarter Trades of Tr - GuruFocus.com | GuruFocus Article or News written by insider and the topic is about: | 2022-10-20T02:01:00 | GuruFocus | Traynor Capital Management, Inc. recently filed their 13F report for the third quarter of 2022, which ended on 2022-09-30.
The 13F report details which stocks were in a guru’s equity portfolio at the end of the quarter, though investors should note that these filings are limited in scope, containing only a snapshot of long positions in U.S.-listed stocks and American depository receipts as of the quarter’s end. They are not required to include international holdings, short positions or other types of investments. Still, even this limited filing can provide valuable information.
19 E. King Street Malvern, PA 19355
As of the latest 13F report, the guru’s equity portfolio contained 124 stocks valued at a total of $265.00Mil. The top holdings were AAPL(11.11%), MSFT(7.42%), and AMZN(5.36%).
According to GuruFocus data, these were Traynor Capital Management, Inc.’s top five trades of the quarter.
Apple Inc
Traynor Capital Management, Inc. reduced their investment in NAS:AAPL by 380,212 shares. The trade had a 9.01% impact on the equity portfolio. During the quarter, the stock traded for an average price of $156.95.
On 10/21/2022, Apple Inc traded for a price of $143.39 per share and a market cap of $2,304.39Bil. The stock has returned -3.33% over the past year.
GuruFocus gives the company a financial strength rating of 6 out of 10 and a profitability rating of 10 out of 10.
In terms of valuation, Apple Inc has a price-earnings ratio of 23.88, a price-book ratio of 40.06, a price-earnings-to-growth (PEG) ratio of 1.68, a EV-to-Ebitda ratio of 18.19 and a price-sales ratio of 6.14.
The price-to-GF Value ratio is 0.83, earning the stock a GF Value rank of 7.
Amazon.com Inc
Traynor Capital Management, Inc. reduced their investment in NAS:AMZN by 424,593 shares. The trade had a 7.82% impact on the equity portfolio. During the quarter, the stock traded for an average price of $126.4.
On 10/21/2022, Amazon.com Inc traded for a price of $115.25 per share and a market cap of $1,174.12Bil. The stock has returned -32.50% over the past year.
GuruFocus gives the company a financial strength rating of 6 out of 10 and a profitability rating of 9 out of 10.
In terms of valuation, Amazon.com Inc has a price-earnings ratio of 105.47, a price-book ratio of 9.13, a price-earnings-to-growth (PEG) ratio of 2.52, a EV-to-Ebitda ratio of 24.92 and a price-sales ratio of 2.48.
The price-to-GF Value ratio is 0.59, earning the stock a GF Value rank of 8.
Alphabet Inc
Traynor Capital Management, Inc. reduced their investment in NAS:GOOGL by 340,750 shares. The trade had a 6.44% impact on the equity portfolio. During the quarter, the stock traded for an average price of $110.89.
On 10/21/2022, Alphabet Inc traded for a price of $99.97 per share and a market cap of $1,307.46Bil. The stock has returned -29.48% over the past year.
GuruFocus gives the company a financial strength rating of 9 out of 10 and a profitability rating of 9 out of 10.
In terms of valuation, Alphabet Inc has a price-earnings ratio of 19.01, a price-book ratio of 5.23, a price-earnings-to-growth (PEG) ratio of 0.71, a EV-to-Ebitda ratio of 12.36 and a price-sales ratio of 4.91.
The price-to-GF Value ratio is 0.71, earning the stock a GF Value rank of 9.
NVIDIA Corp
Traynor Capital Management, Inc. reduced their investment in NAS:NVDA by 191,753 shares. The trade had a 5.04% impact on the equity portfolio. During the quarter, the stock traded for an average price of $158.09.
On 10/21/2022, NVIDIA Corp traded for a price of $121.94 per share and a market cap of $303.63Bil. The stock has returned -44.76% over the past year.
GuruFocus gives the company a financial strength rating of 8 out of 10 and a profitability rating of 10 out of 10.
In terms of valuation, NVIDIA Corp has a price-earnings ratio of 42.02, a price-book ratio of 13.38, a price-earnings-to-growth (PEG) ratio of 1.31, a EV-to-Ebitda ratio of 33.55 and a price-sales ratio of 10.92.
The price-to-GF Value ratio is 0.49, earning the stock a GF Value rank of 4.
Microsoft Corp
During the quarter, Traynor Capital Management, Inc. bought 43,305 shares of NAS:MSFT for a total holding of 84,302. The trade had a 3.81% impact on the equity portfolio. During the quarter, the stock traded for an average price of $264.05.
On 10/21/2022, Microsoft Corp traded for a price of $236.15 per share and a market cap of $1,761.18Bil. The stock has returned -22.37% over the past year.
GuruFocus gives the company a financial strength rating of 8 out of 10 and a profitability rating of 10 out of 10.
In terms of valuation, Microsoft Corp has a price-earnings ratio of 24.87, a price-book ratio of 10.74, a price-earnings-to-growth (PEG) ratio of 1.21, a EV-to-Ebitda ratio of 17.41 and a price-sales ratio of 9.10.
The price-to-GF Value ratio is 0.76, earning the stock a GF Value rank of 9.
Please note, the numbers and facts quoted are as of the writing of this article and may not factor in the latest trading data or company announcements.
Want to provide feedback on this article? Have questions or concerns? Get in touch with us here, or email us at [email protected]!
This article is general in nature and does not represent the opinions of GuruFocus or any of its affiliates. This article is not intended to be financial advice, nor does it constitute investment advice or recommendations. It was written without regard to your individual situation or financial goals. We aim to bring you fundamental, data-driven analysis, The information on this site is in no way guaranteed for completeness, accuracy or in any other way. | NVDA |
https://finnhub.io/api/news?id=1c6dfdfd14278eaa9717132224e6fe60c46cbb34321f773adf5a434865487e4e | 2022-10-19T23:01:00 | TipRanks | Semiconductor stocks have underperformed so far this year. For instance, shares of Advanced Micro Devices (NASDAQ:AMD), Nvidia (NASDAQ:NVDA), Intel (NASDAQ:INTC), and Lam Research (NASDAQ:LRCX) are down about 60%, 59%, 48%, and 54%, respectively, year-to-date. Despite this significant correction, these stocks could stay under pressure due to multiple headwinds, including the slowdown in demand and the U.S. government’s new regulations for exports to China.
Recently, Lam Research delivered better-than-expected September quarter results. Its revenues of $5.07 billion came ahead of the Street’s expectations of $4.9 billion. Further, its adjusted EPS of $10.42 surpassed analysts’ estimates of $9.57.
While its top and bottom lines exceeded estimates, Lam Research expects the new U.S. export restrictions to negatively impact its financials by $2-$2.5 billion in the calendar year 2023. Earlier, Nvidia stated that it could lose $400 million in sales due to the new restrictions.
Providing his outlook on the semiconductor sector, Susquehanna analyst Christopher Rolland said, “We downgraded the Semiconductor sector in April ’21 based on a combination of high valuation multiples and “over-ordering,” and while multiples have indeed corrected, we still wait for excess inventory to work through the system (PC/Handset/Consumer working now; Industrial/Auto/Broad-based still yet to come).”
While Rolland doesn’t see a valuation risk, inventory and growing macro headwinds remain a concern.
Bottom Line
While semiconductor stocks remain pressured, let’s see how they stack up on TipRanks’ valuable datasets. With the help of TipRanks’ Stock Comparison tool, here is a summary of how these stocks compare.
TipRanks’ data shows that Wall Street is cautiously optimistic about the prospects of AMD, NVDA, and LRCX stocks. These companies sport a Moderate Buy consensus rating on TipRanks. However, analysts remain sidelined on Intel stock, which has a Hold consensus rating.
Further, AMD, NVDA, and INTC stocks have a Neutral Smart Score on TipRanks, and their stocks are likely to perform in line with the broader market. On the contrary, Lam Research stock has an Outperform Smart Score of nine out of 10, while analysts’ average price target of $498.65 implies 51.1% upside potential. | NVDA |
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https://finnhub.io/api/news?id=2c77858b0f4c6835b115a756e72f952d577fca5c2f3aafda98b22680eee854c0 | Stocks finish with second straight loss as Treasury yields grind higher | U.S. stocks finish lower on Thursday, trimming their gains for the week, as Treasury yields rise to fresh multiyear highs | 2022-10-19T22:10:00 | MarketWatch | U.S. stocks finished lower for a second day on Thursday, erasing their earlier gains despite a strong start to the third-quarter earnings season, as Treasury yields rose to fresh multiyear highs.
How stocks traded
-
The S&P 500
SPX,
-0.53%fell 29.38 points, or 0.8%, to finish at 3,665.78.
-
The Dow Jones Industrial Average
DJIA,
-0.43%shed 90.22 points, or 0.3%, ending at 30,333.59.
-
The Nasdaq Composite
COMP,
-6.67%finished 65.66 points lower, or 0.6%, to 10,614.84.
All three major indexes have recorded gains for the week despite finishing lower on Wednesday. The Dow is up 3.6%, while the S&P 500 has gained 3.8%, and the Nasdaq has risen 4.8%, leaving all three on track for their best week in more than a month.
What drove markets
After falling in premarket trade in reaction to a jump in U.S. Treasury yields, stocks recovered some ground as investors cheered stronger-than-expected quarterly earnings, but the 10-year yield
TMUBMUSD10Y,
Christoph Schon, senior director of applied research at Qontigo, said the current correlation between stocks and bonds is really of concern to multi-asset investors.
“Stocks and bonds (are) moving in the same direction, which we haven’t really had in a very long time,” said Schon. “We would see those brief moments when stocks and bonds would fall together. Normally it didn’t last more than a few weeks. Now, this has been going on for many months.”
“With yields now rising so much suddenly, instead of a safe haven, Treasurys are becoming really attractive,” Schon told MarketWatch on Thursday. “We’ve seen lots of inflows into exchange-traded funds and bond funds because of those rising yields. I think investors are starting to see Treasurys as a real alternative to equity.”
See: ‘You can be invested in fixed-income again,’ bond investors say, even before the Fed stops hiking rates
Investors received strong earnings reports from AT&T
T,
On the downside, Tesla
TSLA,
According to FactSet, 90 out of 503 S&P 500 firms have reported earnings so far, with 74.4% of them reporting a positive surprise.
Investors were earlier bracing for bad news after FedEx Corp.
FDX,
“We had expectations for a disaster in earnings, and that expectation hasn’t met reality,” Hogan said. “We haven’t had a single household name that has disappointed. There hasn’t been one standout where you can say ‘this is a tell.’”
See: Stocks are attempting a bounce as earnings season begins. Here’s what it will take for the gains to stick.
Next week will be one of the busiest for corporate earnings this quarter though as investors will see results from Apple
AAPL,
In U.S. economic data Thursday, investors received a weekly update on the number of Americans applying for jobless benefits. The data showed new applications for benefits fell by 12,000 in mid-October to a three-week low of 214,000, as more people who couldn’t work after Hurricane Ian returned to their jobs.
The Philadelphia Fed manufacturing index for October remained in contraction territory, with a reading of -8.7, lower than expectations for -5. That’s compared with -9.9 last month.
Moreover, U.S. existing-home sales fell 1.5% to a seasonally adjusted annual rate of 4.71 million in September, the National Association of Realtors said Wednesday. This is the eighth straight monthly decline, a first since 2007.
In the U.K., British Prime Minister Liz Truss’s decision to resign helped to push the British pound
GBPUSD,
“I fear that market volatility will not be over despite the resignation of Liz Truss,” said Nigel Green, CEO of deVere Group, in emailed comments. “Investors know that the political chaos that has defined the UK throughout 2022 is nowhere near over, and this fuels uncertainty and drives turbulence in financial markets. To investors, the UK looks ungovernable, and its economy resembles that of an emerging market, not a G7 nation.”
Companies in focus
-
Shares of AT&T Inc.
T,
-0.64%ended 7.7% higher after the telecommunications company topped profit expectations and posted another quarter of sizable subscriber gains.
-
American Airlines Group Inc.
AAL,
-0.88%shares declined 3.8% despite the company’s strong third-quarter results and robust fourth-quarter guidance.
-
Shares of Adidas
ADDDF,
+2.45%were down 4.4% after the company slashed its full-year outlook and rolled out a “business improvement program,” which will include initiatives aimed at mitigating “the significant cost increases resulting from the inflationary pressure across the company’s value chain as well as unfavorable currency movements.” NIKE’s NKE, +0.16%shares fell 2% following its rival’s announcement.
-
Semiconductor stocks
SOX,
-0.24%surged with Lam Research Corporation LRCX, -0.42%jumping 7.8% and Nvidia Corporation NVDA, +0.37%rising 1.2%.
—Jamie Chisholm contributed reporting | NVDA |
https://finnhub.io/api/news?id=eac1c761c945735ea514732b69b80752f6e6e564f6e31306177bde2b897e83cf | Accuvest Global Advisors Buys - GuruFocus.com | GuruFocus Article or News written by insider and the topic is about: | 2022-10-19T22:01:00 | GuruFocus | Accuvest Global Advisors recently filed their 13F report for the third quarter of 2022, which ended on 2022-09-30.
The 13F report details which stocks were in a guru’s equity portfolio at the end of the quarter, though investors should note that these filings are limited in scope, containing only a snapshot of long positions in U.S.-listed stocks and American depository receipts as of the quarter’s end. They are not required to include international holdings, short positions or other types of investments. Still, even this limited filing can provide valuable information.
3100 OAK ROAD, SUITE 380 WALNUT CREEK, CA 94597
As of the latest 13F report, the guru’s equity portfolio contained 99 stocks valued at a total of $145.00Mil. The top holdings were SPY(16.23%), GSIE(5.85%), and BX(4.84%).
According to GuruFocus data, these were Accuvest Global Advisors’s top five trades of the quarter.
S&P 500 ETF TRUST ETF
During the quarter, Accuvest Global Advisors bought 35,741 shares of ARCA:SPY for a total holding of 65,896. The trade had a 8.8% impact on the equity portfolio. During the quarter, the stock traded for an average price of $395.76.
On 10/20/2022, S&P 500 ETF TRUST ETF traded for a price of $365.41 per share and a market cap of $341.07Bil. The stock has returned -18.01% over the past year.
GuruFocus gives the ETF a financial strength rating of 5 out of 10 and a profitability rating of 8 out of 10.
In terms of valuation, S&P 500 ETF TRUST ETF has a price-earnings ratio of 17.85, a price-book ratio of 3.35, a price-earnings-to-growth (PEG) ratio of 2.15, a EV-to-Ebitda ratio of 13.79 and a price-sales ratio of 2.61.
The price-to-GF Value ratio is 0.00, earning the stock a GF Value rank of 7.
iShares Core S&P 500 ETF
Accuvest Global Advisors reduced their investment in ARCA:IVV by 33,168 shares. The trade had a 8.09% impact on the equity portfolio. During the quarter, the stock traded for an average price of $397.41.
On 10/20/2022, iShares Core S&P 500 ETF traded for a price of $366.95 per share and a market cap of $276.39Bil. The stock has returned -18.02% over the past year.
There is insufficient data to calculate the stock’s financial strength and profitability ratings.
In terms of valuation, iShares Core S&P 500 ETF has a price-earnings ratio of 17.85 and a price-book ratio of 3.35.
Adobe Inc
The guru sold out of their 7,026-share investment in NAS:ADBE. Previously, the stock had a 1.66% weight in the equity portfolio. Shares traded for an average price of $378.38 during the quarter.
On 10/20/2022, Adobe Inc traded for a price of $302.38 per share and a market cap of $144.24Bil. The stock has returned -52.18% over the past year.
GuruFocus gives the company a financial strength rating of 8 out of 10 and a profitability rating of 9 out of 10.
In terms of valuation, Adobe Inc has a price-earnings ratio of 30.61, a price-book ratio of 10.07, a price-earnings-to-growth (PEG) ratio of 1.04, a EV-to-Ebitda ratio of 20.70 and a price-sales ratio of 8.55.
The price-to-GF Value ratio is 0.48, earning the stock a GF Value rank of 4.
Exxon Mobil Corp
During the quarter, Accuvest Global Advisors bought 25,495 shares of NYSE:XOM for a total holding of 32,532. The trade had a 1.54% impact on the equity portfolio. During the quarter, the stock traded for an average price of $91.3.
On 10/20/2022, Exxon Mobil Corp traded for a price of $103.93 per share and a market cap of $438.15Bil. The stock has returned 68.29% over the past year.
GuruFocus gives the company a financial strength rating of 8 out of 10 and a profitability rating of 7 out of 10.
In terms of valuation, Exxon Mobil Corp has a price-earnings ratio of 11.52, a price-book ratio of 2.47, a price-earnings-to-growth (PEG) ratio of 57.60, a EV-to-Ebitda ratio of 5.86 and a price-sales ratio of 1.27.
The price-to-GF Value ratio is 1.00, earning the stock a GF Value rank of 5.
NVIDIA Corp
The guru sold out of their 15,441-share investment in NAS:NVDA. Previously, the stock had a 1.51% weight in the equity portfolio. Shares traded for an average price of $158.09 during the quarter.
On 10/20/2022, NVIDIA Corp traded for a price of $121.94 per share and a market cap of $319.23Bil. The stock has returned -44.76% over the past year.
GuruFocus gives the company a financial strength rating of 8 out of 10 and a profitability rating of 10 out of 10.
In terms of valuation, NVIDIA Corp has a price-earnings ratio of 42.02, a price-book ratio of 13.38, a price-earnings-to-growth (PEG) ratio of 1.31, a EV-to-Ebitda ratio of 33.55 and a price-sales ratio of 10.92.
The price-to-GF Value ratio is 0.49, earning the stock a GF Value rank of 4.
Please note, the numbers and facts quoted are as of the writing of this article and may not factor in the latest trading data or company announcements.
Want to provide feedback on this article? Have questions or concerns? Get in touch with us here, or email us at [email protected]!
This article is general in nature and does not represent the opinions of GuruFocus or any of its affiliates. This article is not intended to be financial advice, nor does it constitute investment advice or recommendations. It was written without regard to your individual situation or financial goals. We aim to bring you fundamental, data-driven analysis, The information on this site is in no way guaranteed for completeness, accuracy or in any other way. | NVDA |
https://finnhub.io/api/news?id=d686a4eae7bbc0d33d6d611ff04c481365857987f3c52d9285f0273dad6c59c2 | Nvidia: Gaming Could Recover Stronger And Faster Than You Think | Nvidia's gaming segment has seen revenue declines larger than previous cycles. Learn more to NVDA stock, its valuation, and my recommendation. | 2022-10-19T20:37:25 | SeekingAlpha | Nvidia: Gaming Could Recover Stronger And Faster Than You Think
Summary
- Gaming segment has seen revenue declines larger than previous cycles and new product launches along with channel inventory reductions should drive a fast and strong recovery.
- Data centre segment remains resilient as guidance was aligned to expectations despite some concerns around China cloud and charges related to the segment.
- In the GTC event, the approach taken by management for the product launch took into account the current market conditions, which left me more confident in their Gaming recovery story.
- In addition, management mentioned that they are expanding into infrastructure-as-a-service as Nvidia looks to provide new cloud-based offerings to generate recurring revenues.
- My 1-year target price is $205, representing 72% upside from current levels.
Investment thesis
I think that NVIDIA (NASDAQ:NVDA) could see a strong and fierce recovery in the Gaming segment as the segment has fallen below levels seen in previous down cycles, while the channel inventory has been reduced significantly, and the new product launches will drive an acceleration to growth.
For Nvidia's data center segment, there are some concerns about China cloud and the charges relating to the business in the quarter. However, guidance for the business remains strong and there is no concrete evidence of any material slowdown in the Data Centre segment.
From the GTC event, I like that the platform is expanding into infrastructure-as-a-service and the thoughtful approach to new product launch should bode well for the near-term growth of the company.
All in all, I continue to think that Nvidia looks attractive given its product roadmap, strong competitive position as well as solid demand drivers.
Review of results and guidance
In the FY2Q report, we saw that gaming led the weakness in the print, as expected due to higher-than-normal inventory levels at their partner channels, causing the Gaming segment to fall by 33% year on year and 44% sequentially. Also, revenues from Professional Visualization were also down 4% year on year and 20% sequentially due to the lower desktop revenues. On the other than, the data center and automotive revenues held up well. Data center revenues increased 61% year on year to $3.81 billion as a result of strength in US cloud, although there were weaknesses in China cloud. Automotive continues to grow at 45% year on year to $220 million, as a result of growth in the self-driving and AI cockpit solutions business, while the legacy cockpit business continues to decline.
Gross margins fell 21 percentage points to 45.9% in FY2Q as a result of a $1.22 billion charge caused by the negative outlook for Data Center and Gaming. The breakdown for the charge includes $570 million for current inventory while $650 million for inventory purchase obligations. These surpassed the company's expected and forecasted demand and cancellations. EPS came in at $0.51, slightly above market expectations.
For the guidance for FY3Q, management guided for revenues to be $5.90 billion, which is down 17% year on year and 12% sequentially. This guidance was almost 15% below expectations and was driven by weaker than expected revenues from Gamine and Pro-Visualization due to the current correction in inventory. The implied FY3Q EPS is thus $0.72, which is also about 15% below market consensus.
Gaming weak but the rebound will be fierce
As we can see rather clearly from the FY2Q print as well as the guidance for FY3Q, I don't think that there are any debates on how weakness in consumer sentiment will affect the gaming business. I think investors have realised that the Gaming segment could remain soft in the near-term as long as the weakness in the consumer remains. However, as investors we should be looking forward to see what opportunities lie ahead.
I think that investors may not be aware that given revenues for the Gaming segment are now down about 60% from the peak and are down more than the previous down cycle. In fact, based on the historical performance of the Gaming segment, I think that we will see the segment generate a very strong recovery as there has been large amounts of channel inventory reduction in advance of a new platform launch. As such I would argue that Wall Street typically is behind the curve in recognizing the speed and the timing of the recovery of the Gaming business, which could be an opportunity for other investors.
As a result, I think that for the Gaming business, I will be monitoring for when and how fast the recovery in the gaming segment could be. I think while Gaming is suffering in the near-term, investors need to start thinking about how fast it can recover and what margins will look like in the following year as the macroeconomic environment looks set to worsen. Also, after this recovery in the Gaming segment, I think there are some uncertainties in the investment community about what constitutes a more normalized revenue growth in Gaming after 2 years of what we can agree are somewhat outsized growth years for the business.
All in all, I see an opportunity in the Gaming business given that the negative sentiment around the segment has resulted in Wall Street analysts revising their numbers down too aggressively. With the large amount channel inventory reduction that has been done, as well as the Gaming segment being down more than the previous cycles, the recovery in the Gaming will be swift and fast.
While signs of cracks appear, Data Centre remains resilient
All in all, for FY2Q, the Data Centre business looks to me to continue to be strong and resilient, at least in the near-term. In addition, I think that Nvidia remains attractive given their strong through-cycle growth profile as well as solid competitive position.
The key concern for the Data Centre segment is exactly how it will perform in a recession and whether it can be more protected from a recession than the Gaming segment given that we are seeing some ongoing weakness around the Professional Visualization segment. That said, I think that it was a good sign that the guidance for Data Centre remains rather strong relative to the Gaming segment, although as I have mentioned earlier, there were some charges relating to the Data Centre business. While I think that this does suggest that the demand outlook might be slowing, I think that it might not necessarily indicate a decline in Data Centre revenues any time in the near-term.
The main weakness for the Data Centre business today has to be the soft demand from China cloud, causing the mix of enterprise to shift to 50% of its Data Centre revenues. As a result, I think that investors are increasingly concerned that with a larger mix in enterprise, this exposes the company to weaknesses in enterprise IT budgets. If we were to draw some inferences from the Professional Visualization business, given that the business is on average more tilted to enterprises, the recent quarter's weakness in the segment is definitely not a good sign for the Data Centre segment, in my view.
That said, I still remain positive on the Data Centre segment although there are some uncertainties as I think that the demand opportunity for the Data Centre segment for Nvidia remains very strong given a new CPU roadmap.
GTC takeaways
Nvidia making the right steps for revenues in Gaming to recover at a rapid pace with its approach in preparing the channel for the successful product launch. First, it announced the RTX 40 series, including its Ada Lovelace architecture and DLSS 3 neural rendering technology, with only the high-end products being launched while the other products will likely have to wait until the additional reduction in channel inventory. While the pricing for the new cards is actually about $100 to $200 higher, this is likely Nvidia passing on some inflation pressures to customers. As a result, I think that Nvidia has a strong confidence in the demand for the RTX series launch and in conjunction with the launch, it is also cutting prices for the RTX 30 series cards significantly. As a result, I came out of the GTC thinking that Nvidia's approach has been rather thoughtful in ensuring that the channel is ready for the new product launch for it to be successful.
Also, another key theme in the GTC was the push towards becoming an infrastructure-as-a-service company to becoming more like a software company where it can generate recurring revenues by offering cloud-based solutions like Omniverse Cloud Services and BioNeMo. This new cloud offering is designed for enterprises and 3D designers and engineers for working on metaverse applications. The company also announced new key partners for Omniverse, to about 150 connectors today, that should drive further quality and network effect on the platform.
Valuation
I continue to take the view that Nvidia has a strong competitive position with a product cycle story with deep and untapped demand pools that will drive revenues in the future.
My 1-year price target for Nvidia is based on an equal weight DCF method as well as a P/E multiple method. I assume a P/E multiple of 35x for FY2024 P/E. This is in-line with Nvidia's 10-year average P/E. I assume a discount rate of 10% for the discounting of cash flows while my terminal multiple for the company is 20x.
As a result, my 1-year target price is $205, representing 72% upside from current levels.
Risks
Competition from other players in different segments
There is a risk that competitors may drive up pressures in its key markets and improve on their technology to be able to compete meaningfully with Nvidia. AMD (AMD) may bring more competition in the GPU space, where Nvidia has historically made most of the company's gross profits. On the other hand, there is competition from ARM-based applications that aim to overtake Nvidia's lead in dual-core technology. Lastly, there is emerging competition from Intel (INTC) with its Knights processor family that may bring challenges to Nvidia in the long-term.
Demand for Gaming GPUs
Although the management is reducing channel inventory, if the demand for Gaming GPUs is less than expected or if they continue to fall materially, then this will bring downside revisions to Nvidia's forecasts.
Macroeconomic environment
As Nvidia is ultimately in the semiconductor industry, while it has some segments that are high growth and relatively secular, there is the risk that its business segments are materially and negatively affected by the macroeconomic environment. As we have seen with the Gaming segment, changes in consumer sentiment can result in huge declines in revenues and elevated inventory levels for the company. If even the Data Centre segment falters, this could result in a significant downward revision in the valuation multiple and analyst forecasts for Nvidia.
Conclusion
I think that the opportunity set for Nvidia looks attractive at current levels as sentiment has been negative and much of the negative news around the Gaming segment has been priced in. I am of the view that we could see a strong and fast recovery in the Gaming segment given the strong product launches we are seeing along with the reduction in channel inventory before the launches as well as the decline in Gaming segment being worse than previous down cycles. In addition, while concerns remain over China cloud and the charge related to the Data Centre segment, I remain confident on the segment given the relatively strong guidance given by management and the secular nature of the segment. Lastly, I am encouraged by the company's recent approach to its new product launch to take into account the current environment, as well as its expansion into infrastructure-as-a-service. My 1-year target price is $205, representing 72% upside from current levels.
This article was written by
I am a portfolio manager with experience working for a hedge fund and a long-only equity fund with more than $1 billion in assets under management and I have a track record for outperformance in my portfolio. I have been writing consistently, with an article published each day on Seeking Alpha and on my Marketplace service.
Focused on long term investing, I believe in a barbell strategy in a portfolio, where there are both growth and value elements, which will be reflected in my articles.
I will be running a Marketplace service, Outperforming the Market, where I will share with you The Barbell Portfolio, which consists of high conviction growth and value stocks to help you outperform in the long-term, as well as The Price Target Report, which tells subscribers how much discount the stock is trading to intrinsic value and the upside potential. Lastly, subscribers will be able to get direct access to me and can ask me anything about the investment process or stock picks.
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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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Comments (6)
I hereby assign the date of October 13th 2022 as that day.It will also be remembered as the day the stock market capitulated but the VIX stayed blood red.At this point we had heard enough negative stories about rate hikes to last us a life time. All of these stories told of an ominous fate for the tech sector above all others.The S&P had closed lower from peak to trough some 300 days .
( further than the average bear market)The Tech heavy Nasdaq ( home of some of The most profitable companies in the world was off 38%)it was a.moment of Jubilee for the DoTards of this world.The rally that followed was looked on with suspect , Yet the chip companies started reporting blow out earnings and sold out product launches at prices that were the fodder of rampant jokes and much cajoling prior to launch.
This will never fly they told us as if their experiences with flying objects ( perhaps broomsticks - fitting in the month of October) portends the fate of the RTX4090 which launched at what was then considered an absurdly high price. Then the proverbial launch and follow on sell out of the product literally in hours set the outlook for NVDA in a different light .It shined a light on the darkness that had enveloped the chip sector and made everyone realize the narrative of higher rates somehow miraculously impacting the tech sector demand more than all of the others ( even though most electronic products sell for a few hundred dollars to a few thousand dollars not requiring a home equity line of credit to purchase.) was a flawed narrative not supported by facts but conjecture.The 13th was the day that made the rate pundits rethink the narrative that rates would hurt small ticket purchases as opposed to very large ticket purchases which would require expensive loans .So the 13th will also be remembered as the day that destroyed the heretofore rate narrative hurting techs stocks more than others and driving the Nasdaq down 38% .Important to understand tech stocks continued to post record profits and experienced a multiple compression unlike anything we ever have saw based on a flawed narrative associated with rate hikes during this 3 quarter sell off period and wrecked returns for everyone.So now I say run hard chip stocks and reclaim that lost ground.Set new Q4 highs that boggles the minds of the Simpletons. | NVDA |
https://finnhub.io/api/news?id=9e5fa5fe3181894e1193cbb4864cc26a5ea60ae5484ca0dea3cd30c1a741a4e5 | What Do Nvidia, Meta Platforms, and Oracle Have in Common? | Today's video focuses on Nvidia (NASDAQ: NVDA) and a quick update on its data center solutions that involve Oracle (NYSE: ORCL) and Meta Platforms (NASDAQ: META). At the end of the episode, I also discuss a semiconductor company to keep an eye on if it ever goes public. | 2022-10-19T17:05:57 | Yahoo | What Do Nvidia, Meta Platforms, and Oracle Have in Common?
Today's video focuses on Nvidia (NASDAQ: NVDA) and a quick update on its data center solutions that involve Oracle (NYSE: ORCL) and Meta Platforms (NASDAQ: META). At the end of the episode, I also discuss a semiconductor company to keep an eye on if it ever goes public. | NVDA |
https://finnhub.io/api/news?id=acbae39e0bb982ba5fb1ccdea74651377a8127c902637a19a59066246c0f388e | Why Nvidia Stock Was Up on a Down Day for the Market | The tech sector star will be a provider of choice for an important partner's suite of cloud offerings. | 2022-10-19T15:54:03 | Yahoo | Why Nvidia Stock Was Up on a Down Day for the Market
The tech sector star will be a provider of choice for an important partner's suite of cloud offerings.
The tech sector star will be a provider of choice for an important partner's suite of cloud offerings.
Mark Spitznagel and Nassim Taleb have been watching for black swans for decades. "We’ve never seen anything like this level of total debt and leverage in the system," he tells Fortune. "It's an experiment."
Warren Buffett is undeniably the most famous and influential investor in modern history, based on his extraordinary performance record. Not surprisingly, the investment portfolio of Berkshire Hathaway Inc. (BRK.A), the holding company employing the Oracle of Omaha as chairman and CEO, receives wide media attention and scrutiny, even though Buffett is no longer making every investment decision. Despite his unparalleled success, Buffett's investment model has long been transparent, straightforward, and consistent.
Stocks have blown past expectations for 2023 – but some analysts are bracing for a sell-off as the market approaches record highs.
The JPMorgan Equity Premium Income ETF’s (NYSEARCA:JEPI) combination of high yield and monthly payments has quickly made it one of the market’s most popular ETFs. Investors who like JEPI’s style now have another high-yield competitor to consider — the NEOS S&P 500 High Income ETF (BATS:SPYI), which also pays on a monthly basis and yields 10.7%. Let’s take a closer look at this intriguing new option for high-yield investors. What is SPYI ETF’s Strategy? Launched in August of 2022, SPYI is still a
Just because you retire doesn't mean you have to stop working. And when work is an option rather than a requirement, it's possible to select a low-stress job that multiplies fulfillment without adding anxiety - but still provides a bit … Continue reading → The post 12 Low-Stress Jobs You Can Do in Retirement appeared first on SmartAsset Blog.
Berkshire Hathaway historically reports its quarterly financial results on weekends, and CEO Warren Buffet has a simple reason why. Berkshire (ticker: BRK.A, BRK.B) reported second-quarter earnings Saturday morning. Many other public companies, however, release their earnings results during the trading week, either before the market opens or after the closing bell.
The market rally is at an infection point after notable losses. Here's what to do. Warren Buffett's Berkshire earnings rose.
Is there a point at which I should stop reinvesting stock dividends and invest the money or save the cash? -Anonymous Many financial experts recommend that you reinvest dividends most of the time – and I'm inclined to agree. The … Continue reading → The post Ask an Advisor: Should I Stop Reinvesting Dividends? appeared first on SmartAsset Blog.
There are many different approaches and strategies for retirement investing that might appeal to you. But how do you tell if a certain strategy works for your situation? When evaluating different approaches, consider how each strategy is put together and … Continue reading → The post Here's How Much to Keep in Stocks, Bonds and Cash in Retirement appeared first on SmartAsset Blog.
The week ahead will feature a crucial inflation report and earnings out of Disney, UPS, and Alibaba as second quarter earnings season winds down.
(Bloomberg) -- Dan Loeb is hardly the first Wall Street titan to lament how meme stock traders have made short selling a perilous endeavor. But that Loeb, who runs the hedge fund Third Point LLC, did so now is what’s interesting.Most Read from BloombergTexas Power Prices to Surge 800% on Sunday Amid Searing HeatNetanyahu Seeks to Change How Judges Are Named, Then Stop RevampChina Embassy Rips ‘Brutal’ Russia Border Incident in Rare MoveThe Most Dangerous Job for Lawyers Is Being on Trump’s Legal
AustralianSuper, one of the world’s largest pensions, halved its Apple stock investment and sold Microsoft stock, while buying shares of Tesla and Nvidia.
One in 6 asset and wealth management companies will be bought or shut down in the next five years, according to a PwC survey of asset managers and institutional investors.
Warren Buffett's Berkshire Hathaway operating profit rose by 10%. BRKB stock is just out of buy range.
Travel scams are on the rise. Don't be a victim.
VZ stock provides a dividend but a buyback has been shelved amid 5G wireless investments. When will revenue growth reaccelerate?
Will generative artificial intelligence boost Palantir stock in the commercial market amid slowing revenue growth for the company?
Retirement account withdrawals not only help you cover basic living expenses, but they also can fund the lifestyle you've always envisioned in your golden years. That money, however, can have unintended tax consequences. Required minimum distributions (RMDs) and other withdrawals … Continue reading → The post Social Security Taxes Can Hit You Hard in Retirement. Here's How to Lower Them appeared first on SmartAsset Blog.
Dubbed the Oracle of Omaha, Warren Buffett is renowned for his simple and frugal lifestyle. Despite being the sixth richest person globally, with a net worth estimated at $117.9 billion, Buffett continues to live in the same modest home in Omaha that he purchased in 1958 for just $31,500. Adjusted for inflation, that amount today would be approximately $328,990.80, a mere 0.000279% of his total net worth. Buffett has consistently ranked the purchase of his home as the third-best investment he ha
As a pandemic-inspired boom ends, entrepreneurs and giant corporations alike are counting on customers to keep accumulating more stuff than they can squeeze into their homes. | NVDA |
https://finnhub.io/api/news?id=99bfb01dfef7142149e1cfdc3aa27202f1e8c514caa3b6bacc36186aab82e49c | The pandemic is finally hitting big tech — two years later | The pandemic rubber band is hitting the tech industry. | 2022-10-19T13:34:49 | Yahoo | The pandemic is finally hitting big tech — two years later
This article was first featured in Yahoo Finance Tech, a weekly newsletter highlighting our original content on the industry. Get it sent directly to your inbox every Wednesday by 4 p.m. ET. Subscribe
Wednesday, Oct. 19, 2022
The pandemic rubber band is hitting the tech industry.
Microsoft (MSFT) made headlines this week when reports emerged that it slashed nearly 1,000 jobs, making it the latest tech giant to respond to economic turmoil.
The company characterized its layoffs as “structural adjustments,” stressing that it would keep hiring in “key growth areas.” The cuts still might have surprised some observers. While Microsoft's stock is down 22% over the past 12 months, some competitors have fared worse. Amazon is down nearly 32%. Salesforce plummeted 47%, and Google is down 28%.
The recent bad news in the tech industry could be a delayed blow from the pandemic. Interest rate hikes, inflation hovering at 40-year highs and sinking demand are hitting tech companies that have benefited from two years of pandemic-driven growth that saw valuations for some companies eclipse the $2 trillion mark.
“As we entered the pandemic, everybody was afraid that there were going to be these disastrous layoffs and it was going to be horrible. And there were, very briefly, in a few places…but that immediately turned around,” TECHnalysis president and chief analyst Bob O’Donnell told Yahoo Finance.
“In a weird way, it almost feels like now we're getting some of the impact of the pandemic after the fact,” he added. “I think people are recognizing they maybe over extended their hiring when they expected some of the growth that happened during the pandemic to continue in the tech industry.”
Slowing sales, falling stock prices, and layoffs
While Microsoft is easily the largest tech company to lay off employees, it’s far from the only one. Netflix (NFLX) cut off hundreds of employees as subscriber numbers faltered following the pandemic, and Snap eliminated 20% of its employees.
Meta, meanwhile, is slowly pushing workers out the door via department reorganizations. Google parent Alphabet (GOOG, GOOGL), for its part, shuttered projects at its Area 120 division and asked employees to reapply for jobs elsewhere.
Microsoft’s downsizing efforts come as the PC market is experiencing its worst contraction in years. According to Gartner, PC shipments slipped 19.5% in Q3 2022. The reason for the decline? During the pandemic, consumers ran out to stores in search of PCs for everything from work to entertainment. As a result, shipments jumped 32% in Q1 2021 to 69.9 million units. Now that pandemic-powered expansion is rubberbanding back.
The drop in PC sales is hitting chip makers, too. Intel (INTC) is expected to lay off thousands of workers, with an announcement likely to take place sometime around its Oct. 27 earnings report. AMD (AMD), Nvidia (NVDA), and Micron (MU) have all been slammed by a decline in PC sales, too. Nvidia already froze hiring for the rest of its fiscal 2023.
But Microsoft doesn’t just rely on PC sales. The company’s cloud business has been a growth juggernaut for years. So why the layoffs? Falling share prices could be one reason.
“I think there's a sense of internal pressure to deliver better results for shareholders,” O’Donnell said. “And that means increasing the profitability, even though they're already making a lot of money. And I think that's what part of the challenge that we're seeing now is that the market has reacted in such a way, And therefore there's more pressure to deliver better results. And the way you can do that is reduce your costs.”
Other tech companies are looking for ways to cut costs without eliminating jobs. Apple (AAPL), for instance, is reducing production of its iPhone 14 Plus, less than two weeks after the smartphone hit the market, according to The Information.
Amazon (AMZN), which overextended itself during the pandemic boom, is looking to cut back on the number of warehouses it owns. It has shut down a number of projects including its delivery robot and a product that lets children video chat with distant family members.
The downturn could be short lived, at least for tech
On Tuesday, Amazon founder Jeff Bezos became the latest corporate titan to predict an economic downturn could come in the next few months. But according to BofA Global Research analyst Wamsi Mohan, such a decline could be short-lived if the Federal Reserve continues hiking rates.
Yep, the probabilities in this economy tell you to batten down the hatches. https://t.co/SwldRdms5v
— Jeff Bezos (@JeffBezos) October 18, 2022
“If we go into a protracted downturn where inflation is persistently out of control, and we go into an economic slowdown or recession, where both of those are paired together, absolutely, there will be rationalization of jobs,” Mohan told Yahoo Finance.
“But if we’re getting to the peak of rates somewhat quickly because the Fed is trying to do this in an accelerated way, we might end up in the first half of next year moving through most of the job cuts that are needed for companies to get back on the operating profit trajectory.”
This week brought a sign that tech’s downturn might be fleeting. On Tuesday, Netflix reported better than expected quarterly results, beating earnings and revenue expectations and adding 2.4 million subscribers, after it had reported declines every quarter earlier this year.
Netflix was one of the first big tech companies to lose its pandemic sheen, with subscribers sinking after millions signed up while quarantined. Perhaps, after spending time re-connecting with loved ones, Americans are finally ready to get back to their couches — and back to enjoying all that Big Tech has to offer.
By Daniel Howley, tech editor at Yahoo Finance. Follow him @DanielHowley
Read the latest financial and business news from Yahoo Finance
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https://finnhub.io/api/news?id=f4f9d8ddb4c67c50ed51a03d23dafae494158429e19f05215eace73ab1f4b315 | 7 Semiconductor Stocks to Buy When the Chips Are Down | Stock markets treat semiconductor stocks to buy as a leading indicator of the health of the technology sector. In 2022, the bear market sent iShares Semiconductor ETF (NASDAQ:SOXX) down by 44.93%. By comparison, the widely followed S&P 500 ETF Trust (NYSE:SPY) lost 24.70%. The semiconductor sector’s steep under-performance spells trouble ahead. Chip companies are already cutting back on what is normally heavy spending on capital expenditures. Chip firms are bracing for softness that began earlie | 2022-10-19T10:27:44 | Yahoo | 7 Semiconductor Stocks to Buy When the Chips Are Down
Stock markets treat semiconductor stocks to buy as a leading indicator of the health of the technology sector.
In 2022, the bear market sent iShares Semiconductor ETF (NASDAQ:SOXX) down by 44.93%. By comparison, the widely followed S&P 500 ETF Trust (NYSE:SPY) lost 24.70%. The semiconductor sector’s steep under-performance spells trouble ahead. Chip companies are already cutting back on what is normally heavy spending on capital expenditures.
Chip firms are bracing for softness that began earlier this year to continue for the rest of 2022. Chips are down because markets are betting that demand for semiconductors will persist into 2023. This speculation is too bearish.
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Chips power everything from smartphones, computers and electric vehicles, to centralized servers. Demand for data storage, wider communications bandwidth, and computing problems will not slow.
Aggressive investors need to include semiconductor stocks to buy in their growth portfolio. The slowdown may continue for a brief quarter or two. Eventually, consumer spending will rebound as the economy improves.
Applied Materials
$76.56
Intel
$25.87
Lam Research
$328.87
Marvell
$37.68
Nvidia
$119.92
Qorvo
$80.62
Taiwan Semiconductor
$63.36
Applied Materials (AMAT)
Source: michelmond / Shutterstock.com
Applied Materials (NASDAQ:AMAT) is one of the semiconductor stocks to buy on weakness. The company cut its fourth-quarter net sales by around $400 million, explaining that the United States export regulation on chips sold in China will hurt revenue.
Applied will pursue additional export licenses and authorizations. Sales will decline again by $400 million in the first quarter of fiscal 2023. Fortunately, the market priced in the impact of the new regulations.
The chip giant benefits from the strong demand exceeding supply. For example, president and CEO Gary Dickerson met with top chief executive officers. The leaders agreed that the company cannot supply enough to meet demand.
In the longer term, Applied has billions in investments ready. It positioned the company to prepare for major positive inflections ahead.
Intel (INTC)
Source: Kate Krav-Rude / Shutterstock.com
Intel (NASDAQ:INTC) will reportedly cut thousands of jobs. It needs to align costs with the slowdown in the personal computer market.
Unfortunately, the company will not need as much marketing and sales efforts to chase weaker demand in end markets. During the pandemic, customers and corporations bought computers to support working from home.
The PC upgrade cycle started during the 2020-2021 pandemic. Now it needs to pivot beyond selling central computing chips. Late last month, Intel said that Moore’s law is not dead. In effect, CEO Gelsinger’s reference to the law ushered Intel’s entry into mainstream graphics cards.
Intel’s GPU could not come sooner. GPU suppliers are offering minimal discounts on the mid-range card. Consumers may buy Intel’s Arc A770 GPU for $329. The GPU will compete with the Nvidia 3060 Ti.
Since this model is in limited supply, Intel may sell its product at a better price. Strong demand for the new GPUs makes INTC one of the best semiconductor stocks to buy for the long term.
Lam Research (LRCX)
Source: Michael Vi / Shutterstock
Lam Research (NASDAQ:LRCX) raised its dividend by 15% to $0.225 a share in its last quarterly payment. The company intends to increase dividends annually., making it one of the semiconductor stocks to buy for regular income.
Although the stock dividend of 2.19% does not compare to Intel’s 5.63% dividend yield, Lam Research has strong growth prospects today.
The chip sector has been working through a supply chain disruption for around nine months. Lam Research believes the strong NAND market will lift its results.
Layer counts are increasing. As Lam deposits more films on the wafer, it increases the time to output. The denser product should sustain profit margins. Furthermore, the company is investing in its business to maintain its competitive edge.
In December, the company will issue its guidance for 2023. The memory chip market will weaken. Still, price declines for memory will help clear the excess supply.
In addition, the industry will invest less in factories. This gives LRCX stock a boost. The company will enable new node conversions. This should help the company beat expectations.
Marvell (MRVL)
Source: Michael Vi / Shutterstock.com
Marvell (NASDAQ:MRVL) posted record revenue of $1.52 billion in its Q2/2023 report.
Marvell benefits from healthy demand for its products. All but consumer hard drive disk drive demand is outpacing supply. In addition, Marvell has new products ahead. This should support its long-term growth prospects.
The cloud-optimized silicon development is a growth opportunity for the company. It has new design wins that it achieved in the last few years. This will add $400 million in revenue next year. The year after that, Marvell will earn $800 million in incremental revenue.
In the 5G business, strong adoption will fuel the company’s growth. In the automotive segment, customers require Ethernet solutions. Top automotive OEMs require Marvell’s technology. Fortunately, customers require the designs in both gas-powered and electric vehicles.
Nvidia (NVDA)
Source: Michael Vi / Shutterstock.com
Nvidia (NASDAQ:NVDA) recently launched a powerful graphics card for the high-end gamer.
Retailers are pricing the RTX 4090 card between $1,599 and $1,699. The $100 price above the suggested retail price suggests that the product enjoys strong market demand.
At the time it announced the 4090, Nvidia announced an RTX 4080 12GB. At a glance, the product looked like it had less memory than the RTX 4080 16GB. Experts noticed the performance difference and criticized the product name. Nvidia listened. It will “unlaunch” the product and will relaunch it at a later date.
The company is likely producing limited units of a high-end product. It wants the market to sell out of the current RTX 30 series first.
Nvidia’s revenue warning sent NVDA stock lower. It expects revenue will fall by around $5 billion. The firm revised its growth outlook. It did not see a strong back-to-school demand bump. The weak sales may continue this holiday. Investors should consider accumulating shares as the company works down the excess inventory.
Qorvo (QRVO)
Source: Michael Vi / Shutterstock.com
Qorvo (NASDAQ:QRVO) is heavily reliant on smartphone sales. High inflation rates are hurting consumers’ disposable income. If they delay iPhone upgrades, it would hurt Qorvo, which depends on 33% of its sales from Apple (NASDAQ:AAPL).
Investors may take advantage of the lower price-to-earnings multiples on QRVO stock. It is a diversified firm. For example, it has diversification in growth product areas.
The cellular market benefits from multiyear content and integration. In connectivity and sensing, Qorvo’s portfolio has multiple connectivity standards. This includes Matter, Wi-Fi, and ultra-wideband.
Markets overlook Qorvo’s high-performance analog segment. Instead of appreciating the upgrade cycle and 5G infrastructure growth, stock traders react to its stock price.
Qorvo will navigate past the macrocosmic headwind by continuing its design efforts. It will increase volume output as the supply conditions strengthen. Investors may time the low point in its business. The Android business is weakest during the December quarter.
Taiwan Semiconductor (TSM)
Source: Sundry Photography / Shutterstock.com
Taiwan Semiconductor (NYSE:TSM) is a highly profitable manufacturer. It posted gross margins of 60.4% in its Q3 report. Free cash flow is very strong. Markets refuse to acknowledge the business strength. TSM stock is down by 50% year to date.
In 2023, TSM expects challenges from higher depreciation costs, higher inflationary costs, and unfavorable semiconductor cyclicality. Still, its overseas fab expansions are long-term investments that benefit the company’s health. The company will closely work with its customers to support them strategically. Internally, it will find ways to improve costs.
TSM is cautious about the PC and smartphone market. The market’s softness in the quarter weighed on results. Utilization will be under pressure. During that time, it will work with customers to develop radio frequency and connectivity solutions. This increases TSM’s addressable market.
After customers will work through weak demand, TSM’s utilization will recover. Investors should consider buying a small position before that happens.
On the date of publication, Chris Lau did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Lau is a contributing author for InvestorPlace.com and numerous other financial sites. Chris has over 20 years of investing experience in the stock market and runs the Do-It-Yourself Value Investing Marketplace on Seeking Alpha. He shares his stock picks so readers get actionable insight to achieve strong investment returns.
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https://finnhub.io/api/news?id=389a183f42eb0cb501dab7e0e75da854265382b055612ddbdce6daa583fcffa0 | Qualcomm CEO explains why the chips story is 'probably as good as it gets' | In a Yahoo Finance exclusive, Qualcomm's CEO explains why he's still optimistic about chip demand. | 2022-10-19T10:15:27 | Yahoo | Qualcomm CEO explains why the chips story is 'probably as good as it gets'
Semiconductor stocks have had a rough few months, and Deutsche Bank recently released a report projecting that this earning season could reveal more signs of weakness.
Qualcomm (QCOM) CEO Cristiano Amon continues to project optimism about where demand for chips is headed — at least, long-term. He contends that the chip shortage that began at the onset of COVID-19 forced people beyond the industry to understand the importance of semiconductors. Qualcomm's chips are in products as varied as mobile phones, laptops, connected cars, and VR devices.
"People realized chips are an essential ingredient for the digital economy and when they look at economic growth," he told Yahoo Finance at Thursday's Qualcomm Ventures CEO Summit. "When you think about the digital transformation of the enterprise, it’s necessary for companies that need to be more efficient. Chips become incredibly important for all of this because you need connectivity.”
In other words, he said, “The story about chips is probably as good as it gets."
For now, the volatility of the stock market, high inflation and a hawkish Fed all pose challenges not only to Qualcomm, but to tech companies across the board — for instance, the Nasdaq 100 is down about 32% year-to-date as of Wednesday. Qualcomm's revenue and earnings for the last quarter beat analysts' expectations, and it's set to report its Q4 earnings in early November. The company's shares are down about 40% year-to-date.
“In the short-term, consistent with what we said in earnings, we have seen a little bit of a slowdown because of the macro," said Amon.
As Qualcomm finds its way forward in the near-term, the company's diversification strategy — initiated by Amon when he took the helm in 2021 — is front-and-center. For example, Qualcomm Ventures, the company's VC arm, has been focused on investing in companies that build out Qualcomm's ecosystem in forward-looking areas like VR, said Qualcomm Ventures Global Head Quinn Li.
Li says it's a better time to invest than you might think.
“If you look at the last cycle, a lot of big companies actually started and grew in difficult times," he said. "So, from an investor’s perspective, we have the capital to deploy and I think it’s probably a better time to invest than it was the same time last year… I don’t think it’s necessarily a bad time.”
A macro environment that's impossible to ignore
Politics have also affected the overarching chips environment, as President Joe Biden recently rattled the industry by restricting chip exports to China. The move grabbed headlines, and Amon said he was concerned in the near-term as to how it might affect chip demand. However, that's not the China-related situation that's most top-of-mind for Amon.
“The other thing that’s happening right now is that China is in lockdown," he said. "We’ve seen what’s happening in markets, and when you’ve got a lot of people locked down, you don’t go out and decide the best thing to do is buy a new phone. That has a huge impact on consumer spending.”
It doesn't help that the headlines surrounding chip stocks haven't been great lately. Last week, the Philadelphia Semiconductor Index fell more than 4% before rebounding — another tough day on an index that's down more than 40% year-to-date.
“The macro component here, you just can’t ignore it,” Amon said.
Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks.
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https://finnhub.io/api/news?id=f40097a6133b69585c0105c5abbb3548e4862b291df5e7c9cb01ed69ab140412 | NVIDIA Corp. stock rises Wednesday, outperforms market | Shares of NVIDIA Corp. inched 0.70% higher to $120.51 Wednesday, on what proved to be an all-around poor trading session for the stock market, with the S&P... | 2022-10-19T10:13:00 | MarketWatch | Shares of NVIDIA Corp.
NVDA,
+0.37%
inched 0.70% higher to $120.51 Wednesday, on what proved to be an all-around poor trading session for the stock market, with the S&P 500 Index
SPX,
-0.53%
falling 0.67% to 3,695.16 and Dow Jones Industrial Average
DJIA,
-0.43%
falling 0.33% to 30,423.81. This was the stock's third consecutive day of gains. NVIDIA Corp. closed $225.96 below its 52-week high ($346.47), which the company achieved on November 22nd.
The stock demonstrated a mixed performance when compared to some of its competitors Wednesday, as Microsoft Corp.
MSFT,
+0.34%
fell 0.85% to $236.48, Intel Corp.
INTC,
+1.14%
rose 0.50% to $26.00, and Texas Instruments Inc.
TXN,
-1.96%
rose 0.75% to $152.65. Trading volume (52.2 M) remained 7.1 million below its 50-day average volume of 59.3 M.
Editor's Note: This story was auto-generated by Automated Insights, an automation technology provider, using data from Dow Jones and FactSet. See our market data terms of use. | NVDA |
https://finnhub.io/api/news?id=e3d47b58960812c8372f198483371882f3cfc79a9e4a05b6d4fc44228072b26e | Oracle (ORCL), NVIDIA Expanded Partnership Comes With AI Focus | Oracle (ORCL) expands its partnership with NVIDIA, adding tens of thousands of Nvidia's chips to boost artificial intelligence-related computational work in Oracle's cloud. | 2022-10-19T08:23:03 | Yahoo | Oracle (ORCL), NVIDIA Expanded Partnership Comes With AI Focus
Oracle ORCL announced an expanded, multiyear partnership with Nvidia NVDA at Oracle CloudWorld to help customers accelerate artificial intelligence (AI) adoption. The collaboration will bring Nvidia’s full accelerated computing stack — from GPUs to systems to software — to Oracle Cloud Infrastructure (OCI).
OCI will add tens of thousands of Nvidia GPUs, including the A100 and upcoming H100, to its capacity. Enterprises will also get a broad, accessible portfolio of options for AI training and deep learning.
Nvidia and Oracle plan to make an upcoming release of Nvidia AI Enterprise available on OCI, offering customers access to Nvidia’s accelerated, secure and scalable platform for end-to-end AI development and deployment.
Oracle is also offering early access to Nvidia RAPIDS acceleration for Apache Spark data, processing on the OCI Data Flow fully managed Apache Spark service.
Data processing is one of the top cloud computing workloads. To support this demand, OCI Data Science plans to offer support for OCI bare-metal shapes, including BM.GPU.GM4.8 with Nvidia A100 Tensor Core GPUs, across managed notebook sessions, jobs and model deployment.
The announcements fall into three broad categories. One is taking advantage of Nvidia AI software and layering it on to Oracle’s AI strategy. Oracle is focused on an Nvidia GPU solution that allows it to train AI models at scale. Lastly, Oracle is focusing on a real-time GPU, using the Nvidia MPI technology. The training and AI models at scale from a performance perspective allow Oracle to create an entire AI narrative.
Oracle Corporation Price and Consensus
Oracle Corporation price-consensus-chart | Oracle Corporation Quote
Is Oracle's Cloud Strategy Headed in the Right Direction?
Oracle is striving hard to strengthen its position in the lucrative cloud space. Oracle shares have declined 23.2% in the year-to-date period compared with the Zacks Computer - Software industry’s decline of 31.6%.
As part of Oracle’s planned expansion of its cloud region footprint to support strong customer demand for OCI and Oracle Fusion Cloud Applications services worldwide, Oracle aims to open additional cloud regions in Colombia, Chile, and Israel and plans to offer at least 44 cloud regions.
In first-quarter 2023, Oracle's total quarterly revenues were up 18% year over year, largely due to a 14% increase in cloud services and license support subscriptions. Total cloud services and license revenues for the quarter hit $8.4 billion — driven by Oracle Fusion Cloud, Oracle Autonomous Database and OCI Gen 2.
Nvidia Clara, a healthcare AI and HPC application framework for medical imaging, genomics, natural language processing and drug discovery, will be coming soon. Oracle and Nvidia are also collaborating on new AI-accelerated Oracle Cerner offerings for healthcare, spanning areas such as analytics, clinical solutions, operations and patient management systems.
An expanding clientele is enabling the company to maintain its leading position in the cloud ERP market. The healthy adoption of cloud-based applications, comprising NetSuite Enterprise Resource Planning (ERP), Fusion ERP and Fusion Human Capital Management (HCM), bode well for the long term.
Partnerships with Accenture, Microsoft MSFT and VMware VMW are helping Oracle to win new clientele. The company’s share buybacks and dividend policy are noteworthy.
Last quarter, Microsoft and Oracle delivered a high-speed interconnection between Azure and Oracle's cloud to give Azure customers direct access to Oracle databases. Multi-cloud interoperability is a major contributor to the growth of Oracle Database and Oracle's MySQL HeatWave database.
Oracle’s partnership with VMware for Oracle Cloud VMware Solution has been gaining prominence, which is expected to have aided customer growth in the to-be-reported quarter. The solution has gained popularity among leading enterprises in retail, telecommunication, finance and banking, manufacturing, government and others.
This Zacks Rank #4 (Sell) company’s higher spending on product enhancements, especially on the cloud platform, amid increasing competition, is likely to limit margin expansion in the near term.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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https://finnhub.io/api/news?id=e031a85a3b0215a8f6029d815a59f46fbbc3645d58ae3797e4e539d4c6219543 | Nvidia Stock: Bear vs. Bull | Nvidia (NASDAQ: NVDA) bears are out in full force this year as the stock has lost a whopping 60% of its value so far in 2022, and the recent developments in the personal computer (PC) and data center markets suggest that the bears will continue to enjoy an upper hand. From shrinking sales of PCs that have impacted Nvidia's gaming business to restrictions on sales of data center chips to China, the semiconductor giant is facing substantial headwinds right now. Amid these headwinds, Nvidia bears will argue that the stock's decline isn't over yet. | 2022-10-19T05:44:00 | Yahoo | Nvidia Stock: Bear vs. Bull
Nvidia (NASDAQ: NVDA) bears are out in full force this year as the stock has lost a whopping 60% of its value so far in 2022, and the recent developments in the personal computer (PC) and data center markets suggest that the bears will continue to enjoy an upper hand. From shrinking sales of PCs that have impacted Nvidia's gaming business to restrictions on sales of data center chips to China, the semiconductor giant is facing substantial headwinds right now. Amid these headwinds, Nvidia bears will argue that the stock's decline isn't over yet. | NVDA |
https://finnhub.io/api/news?id=37c354633d335e300ef94e17764775086c727a08832f15363a6ac43fe264a190 | 3 Ways to Get Rich From Metaverse Stocks | These are some of the top metaverse stocks to buy to get rich in a sector which could balloon to a potential $1.6 trillion market by 2030. | 2022-10-19T05:17:00 | InvestorPlace | As the market pulls back, it’s time to go bargain hunting. In fact, some of the biggest opportunities may be found on this list of top metaverse stocks to buy to get rich.
According to analysts at Emergen Research, the metaverse market could be worth up to $828.95 billion by 2028. These analysts believe that by 2030, the metaverse could be worth $1.6 trillion. The crazy thing is, this isn’t even the most aggressive forecast for the sector. As I noted on April 1, Matthew Ball, the CEO of Venture Capital firm Epyllion, said the metaverse could be a $10 trillion to $30 trillion market opportunity over the next decade.
Thus, for growth investors, this is a space worth paying attention to.
Corporations certainly are. Many major brands are getting involved with the metaverse. “The planet’s best-known companies and savviest marketers—from Walmart and Coca-Cola to Disney and Victoria’s Secret—continue to invest to stake their claim in the virtual worlds of the metaverse. Technology leaders such as Facebook/Meta, Google, Microsoft and Apple see the metaverse as the new frontier for advertising and digital experiences,” says AdAge.com contributors Joan Smith and Jen Friese.
Despite recent industry hiccups, there’s significant upside potential with metaverse stocks. Here are three of the top bets I think are worth making in this space right now.
|VR||Global X Metaverse ETF||$18.31|
|META||Meta Platforms||$132.80|
|RBLX||Roblox||$43.38|
Global X Metaverse ETF (VR)
One of the best ways to diversify portfolios among a given index or sector is often with an exchange traded fund (ETF). As it happens, the metaverse is a sector which isn’t excluded from this honor. The Global X Metaverse ETF (NASDAQ:VR) is one of the top metaverse stocks to buy to get rich (or at least, an accumulation of metaverse stocks).
With an expense ratio of 0.50%, this ETF provides relatively inexpensive diversification to this high-growth sector. Notably, this ETF invests in companies that are positioned to benefit from the development and commercialization of the Metaverse. This includes companies involved in the development of hardware and software that allow users to experience extended digital realities; creator platforms, where live streaming and other media content is shared in 3D simulations; and creator economies, involving the development digital payments.
Some of its top holdings include Roblox (NYSE:RBLX), Take-Two Interactive (NASDAQ:TTWO), Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA), and Amazon (NASDAQ:AMZN), to name a few. More can be found on the ETF site here.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) may be one of the top ways for investors to gain exposure to the incredible growth potential of the metaverse.
According to the company, “The metaverse will feel like a hybrid of today’s online social experiences, sometimes expanded into three dimensions or projected into the physical world. It will let you share immersive experiences with other people even when you can’t be together.”
Granted, the company is struggling to gets its metaverse off the ground. In fact, its Horizon Worlds, a free virtual reality online video game, has so far failed to meet expectations for user growth. As noted by Fox Business contributor Andrew Miller, Meta Platforms had to revise its monthly active user projection to 280,000 by year end, down from a previous projection of 500,000.
We also have to consider the company has sold about 15 million Quest 2 VR headsets since its launch. It also plans to launch Quest Pro and Quest 3 by next year. These headsets are all expected to be linked back to Horizon Worlds. Over time, those who think Meta’s headsets and metaverse setup will win the race may look at this early traction as success (even when analysts generally don’t).
The key thing to keep in mind is that Meta is still very profitable, with operating margins around 29%. The company also has about $40.5 billion in cash. Thus, if there’s any company that can invest billions to make the metaverse a reality, it’s Meta.
Roblox (RBLX)
At the moment, Roblox is the closest thing to a mainstream social metaverse. This company’s mission is to build a human co-experience platform that enables billions of users to come together to play, learn, communicate, explore and expand their friendships. It’s another one of the top metaverse stocks to buy to get rich.
Indeed, after a rough pullback, the gaming stock is showing some signs of life. This is thanks to some strong growth numbers posted in September. Daily active users grew to 57.8 million, up 23% year over year. Notably, these users were also spending more time on the platform, with another key metric, hours engaged, up to 4 billion, a 16% year-over-year increase. Better, estimated bookings were between $212 million and $219 million, up 11% to 15% year-over-year.
Helping matters, Walmart (NYSE:WMT) just announced it was partnering with Roblox to launch metaverse experiences. Part of the reason for the partnership is the c0mpany is well aware its customers are spending a lot of time there. If time is money (or at least more future online purchases), Roblox is leading the pack in this sector.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. | NVDA |
https://finnhub.io/api/news?id=6756a17724208928cd921ac8979ab7f0b63960bd10efacf48a83fd28d4281004 | Oracle and Nvidia Partner For Better Cloud AI Computation Solutions | Oracle Corp (NYSE: ORCL) and NVIDIA Corp (NASDAQ: NVDA) forged a multi-year partnership to help customers solve business challenges with accelerated computing and AI. The partnership aims to bring the full NVIDIA accelerated computing stack from GPUs to systems to software to Oracle Cloud Infrastructure (OCI). OCI added tens of thousands more NVIDIA GPUs, including the A100 and upcoming H100, to its capacity. Combined with OCI's AI cloud infrastructure of bare metal, cluster networking, and stor | 2022-10-19T04:36:49 | Yahoo | Oracle and Nvidia Partner For Better Cloud AI Computation Solutions
Oracle Corp (NYSE: ORCL) and NVIDIA Corp (NASDAQ: NVDA) forged a multi-year partnership to help customers solve business challenges with accelerated computing and AI.
The partnership aims to bring the full NVIDIA accelerated computing stack from GPUs to systems to software to Oracle Cloud Infrastructure (OCI).
OCI added tens of thousands more NVIDIA GPUs, including the A100 and upcoming H100, to its capacity.
Combined with OCI's AI cloud infrastructure of bare metal, cluster networking, and storage, this provides enterprises with a broad, easily accessible portfolio of options for AI training and deep learning inference at scale.
Oracle CEO Safra Catz said, "Our expanded alliance with NVIDIA will deliver the best of both companies' expertise to help customers across industries – from healthcare and manufacturing to telecommunications and financial services – overcome the multitude of challenges they face."
"Accelerated computing and AI are key to tackling rising costs in every aspect of operating businesses," NVIDIA CEO and founder Jensen Huang said.
U.S. restricted the sales of high-performance AI chips for servers, the A100 and H100, to China and Russia.
However, it authorized exports, reexports, and in-country transfers needed to continue Nvidia's development of H100 integrated circuits.
The U.S. aimed to restrict U.S. exports of certain semiconductors and equipment, fearing China's exploitation of the same for military purposes.
Nvidia CEO Jensen Huang warned analysts against Chinese cloud companies slowing down building out their data centers and that China was a "very large market" for the company.
Price Action: NVDA shares traded lower by 0.90% at $118.59 in the premarket on the last check Wednesday.
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https://finnhub.io/api/news?id=babfb7063a5a5c365f06588cc1931f2a1f307742bbee993864d90fc9b0b53aef | ASML Stock Rises on Hopes of Shaking Off Chip Ban Woes | ASML Holding has reported positive earnings and little impact from the U.S. chip ban. Here's why ASML stock may be a winner among chipmakers. | 2022-10-19T04:36:00 | InvestorPlace | Ever since the U.S. government imposed curbs on selling chips to China, chipmakers have struggled to stay elevated. The policy has sent negative shockwaves throughout the industry, pushing many leading semiconductor stocks down. Despite some volatility earlier this week, though, many are back on the rise now. In particular, ASML Holding (NASDAQ:ASML) stock is leading the charge.
Based in the Netherlands, ASML is one of Europe’s largest chip equipment suppliers and the “third-largest semiconductor wafer front end (WFE) equipment supplier worldwide.” Recently, the company reported third-quarter earnings and beat sales estimates, posting revenue of $5.6 billion. This news is sending ASML stock into the green today. As of this writing, shares are up more than 7%.
This isn’t the only good news from ASML, however. The company has also reported that it has only seen a “fairly limited” impact from the U.S. chip ban. CFO Roger Dassen recently noted that ASML’s products contain little U.S. technology. Financial Times also reports that, while ASML is working to comply with regulations, it was still able to ship non-extreme ultraviolet lithography (EUV) equipment from Europe to China as it “evaluated the latest US export controls.”
Let’s take a closer look at the industry landscape and what investors can expect from ASML stock.
What’s Happening With ASML Stock?
Like its peers, ASML stock has struggled lately amid macroeconomic headwinds pushing down the entire semiconductor sector. But today’s news should remind investors that some companies are more capable of shaking off industry turbulence than others, even in the face of a raging bear market.
Coverage of chip stocks is often dominated by companies like Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD). But while these names don’t always win praise from experts, ASML has been consistently hailed as a long-term play on the chip industry. InvestorPlace contributor Josh Enomoto notes that, although ASML stock is sometimes contained by geopolitical factors, its “one-of-a-kind business” puts it at a clear advantage. Others point to ASML’s EUV machine monopoly, which has given the company a unique and lucrative niche. Now, the fact that ASML doesn’t rely on U.S. tech alone gives it another leg up.
Back in August, Enomoto predicted that markets would see significant demand for ASML’s lithography specialty. That forecast may be coming true as well. According to CNBC, CEO Peter Wennink recently stated that the company is seeing “diverging demand dynamics per market segment.” However, the CEO noted that overall demand for its systems is still strong. Wennink doesn’t seem too concerned about the U.S. chip ban, either:
“Based on our initial assessment, the new restrictions do not amend the rules governing lithography equipment shipped by ASML out of the Netherlands and we expect the direct impact on ASML’s overall 2023 shipment plan to be limited.”
This all comes at a time of rising uncertainty and supply-chain concerns. Despite the state of the semiconductor industry, ASML has reported strong results and demonstrated a clear ability to withstand the headwinds that threaten its competitors. Of course, the future of the sector remains unclear. But ASML stock appears well-positioned to maintain a top spot.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. | NVDA |
https://finnhub.io/api/news?id=df03ee5c2e4bbc4d7e365f5347a73f9822d4f24389812249fccdf5746adbffde | Big Tech Continues To Buy Semiconductors At Record Levels In 2022 | According to Gartner, the overall IT spending is expected to grow 3% to $4.5 trillion in 2022. It is lower than the 10% growth in 2021. | 2022-10-19T04:32:38 | SeekingAlpha | Big Tech Continues To Buy Semiconductors At Record Levels In 2022
Summary
- According to Gartner, the overall IT spending is expected to grow 3% to $4.5 trillion in 2022. It is lower than the 10% growth in 2021.
- According to data from Allied Market Research, the global hyperscale data center market is expected to grow from $59 billion in 2020 to $585 billion by the year 2030.
- Similarly, the Artificial Intelligence chip market is expected to grow from $8.02 billion in 2020 to $194.90 billion by the year 2030.
- Looking for more investing ideas like this one? Get them exclusively at Tech Insider Network. Learn More »
Semiconductors have been rocked this year due to slower consumer spending on PCs and mobile and also slowing enterprise budgets that further affect hardware purchases, including PCs, notebooks and servers. The silver lining is Capex spending by Big Tech companies, which we've covered in the past for our premium members, when we stated that the increased Capex from companies like Google (GOOGL), Microsoft (MSFT) and Amazon (AMZN) and other big tech companies greatly benefit the semiconductor market.
The news has been in an uproar about crypto mining and the consumer-related PC markets. However, it has been our stance for some time that Big Tech capex is the true leading indicator for AI semiconductor companies. Despite an enormous increase in Big Tech capex, primarily driven by data centers, this line item does not get the attention it deserves in terms of follow-through to the semiconductor industry. Below, we look at FY2022 budgets to draw the conclusion that H2 spending on data center chips is equal if not greater than the first half of 2022.
Market Opportunity
According to Gartner, the overall IT spending is expected to grow 3% to $4.5 trillion in 2022. It is lower than the 10% growth in 2021. The slowdown was mainly due to the cutdown in spending on personal computers, tablets, and printers.
The Data Center Systems segment, however, is expected to grow the fastest among all the segments. It is expected to grow 11% YoY to $212 billion, higher than the 6.4% growth in 2021.
Hyperscale data centers, which are very large data centers primarily operated by Amazon, Microsoft and Google, are expected to outpace overall data center systems.
According to data from Allied Market Research, the global hyperscale data center market is expected to grow from $59 billion in 2020 to $585 billion by the year 2030, representing a Compound Annual Growth Rate of 26% from 2021 to 2030.
Similarly, the Artificial Intelligence chip market is expected to grow from $8.02 billion in 2020 to $194.90 billion by the year 2030, representing a CAGR of 37% from 2021 to 2030.
According to a report published by Dell'Oro Group, the global data center Capex is expected to be $377 billion by the year 2026 - which implies the majority of the growth noted by Allied Market Research will occur in the next few years.
The private markets are also signaling growth will continue as there has been quite a bit of deal activity in data centers.
According to data from Synergy Research Group, 87 data center focused merger and acquisition deals were closed in the first half of 2022, worth $24 billion. There is an additional $18 billion of pending deals in the pipeline that are agreed and are yet to be officially closed. The research group mentioned that 209 deals were closed in 2021 for over $48 billion, up 41% from 2020.
One of the more significant deals this year that was completed is the acquisition of CyrusOne for $15 billion by KKR and Global Investment Partners. John Dinsdale, Chief Analyst at Synergy Research Group, said, "There is an ever-increasing demand for data center capacity, driven by rapidly growing cloud markets, aggressive expansion of hyperscale operator networks and continued growth of data-rich digital services."
Big Tech Capex H2 2022
Alphabet's Q2 Capex grew by 24% YoY to $6.9 billion. Ruth Porat, CFO of Alphabet, said, "Turning to CapEx. The largest investments in the second quarter were in servers followed by data centers and office facilities." The company had invested $24.6 billion in Capex in the year 2021, up 11% YoY. The management expects Capex to rise in 2022. In the Q2 2022 earnings call, Ruth Porat said, "We continue to expect an increase in CapEx in 2022 versus last year. For the balance of 2022, the increase will be particularly reflected in investments in technical infrastructure globally, with servers as the largest component." Earlier this year, the company announced its plan to invest about $9.5 billion in data centers and offices in the U.S. for the year 2022. This is up from about $7 billion spent in 2021.
Similarly, Microsoft's Capex, including financial leases, grew by 19% YoY to $8.7 billion in the Q4 FY2022 quarter (i.e., Q2 CY2022). Amy Hood, CFO of Microsoft, said, "Maybe let me start by talking about Q4's capital spend. Obviously, the big driver of our growth this quarter was in data center spend, both new and newbuilds as well as adding capacity to existing data centers. We are seeing, obviously, good demand signal." Management expects a sequential decrease in the next quarter due to the normal variability in the quarterly spend. In the CY 2021, Microsoft's Capex, including financial leases, grew by 33% YoY to $27.5 billion.
Amazon incurred capital expenditures, including equipment financial leases, of about $60 billion in 2021. About 40% of this is made up of technology infrastructure supporting AWS and worldwide stores business. Management expects Capex to increase in 2022 with the increase in technology infrastructure.
Brian Olsavsky, senior VP and CFO, said in the Q2 2022 earnings call, "For full-year 2022, we do expect to spend slightly more on capital investments than last year, but the proportion of capital spending shifts among our businesses. We expect technology infrastructure spend to grow year-over-year, primarily to support the rapid growth in innovation we are seeing with AWS. We expect infrastructure to represent a bit more than half of our total capital investments in 2022."
Meta's capital expenditures in Q2, including principal payments on finance leases, were $7.75 billion, up 64% YoY. The company's CFO, Dave Wehner, said in the Q2 earnings call, "Capital expenditures, including principal payments on finance leases, were $7.7 billion, driven by investments in servers, data centers and network infrastructure. The big step-up in CapEx, both year-over-year and sequentially related to server spend, including for our AI infrastructure."
The company expects 2022 capital expenditures, including principal payments on financial leases, to be $32 billion at the mid-point of the guidance, representing a 66% YoY growth. Tracking the Capex in the first two quarters, Meta Platforms (META) had spent $13.3 billion, which suggests the spend will be higher in 2H 2022. When we deduct from the mid-point of the guidance, it comes to $18.7 billion for H2.
Meta also recently announced its plan to expand the Eagle Mountain data center project. It is a Phase 3 expansion plan and brings the total investment in the project to over $1.5 billion.
Conclusion
Thanks to very Big Tech capex budgets, Nvidia's (NVDA) data center revenue grew 71% YoY to $7.6 billion in 1H 2022. Similarly, AMD's (AMD) data center revenue grew by 83% YoY to $1.5 billion in Q2 2022 and doubled in Q1 2022.
Due to consumer-related weakness, the data center is now the leading segment for these companies, which we had predicted would occur in 2018 in my free weekly newsletter. We also provide regular deep dives for our premium research Members on a more granular level as to what will happen next in the semiconductor industry.
Royston Roche, Financial Analyst for the Tech Insider Network contributed to this article.
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Comments (2) | NVDA |
https://finnhub.io/api/news?id=50343eb7a0b02f736aff59e726df75f246528a3e2c4742fbc29f76bc747f5e7a | The 7 Best Mutual Funds for Your 401(k) | These mutual funds to add to your 401(k) will help you navigate market downturns such as the one we have experienced this year | 2022-10-19T04:30:00 | InvestorPlace | Mutual funds offer a lot of advantages to investors, particularly for retail investors who may have limited time, a low appetite for risk and only a passing knowledge of how the stock market works. People wanting to put away their hard-earned money for retirement often choose these investment vehicles because they provide exposure to a large bundle of stocks and provide a greater margin of safety than individual stocks.
Industry data shows that mutual funds remain one of the most popular investment vehicles for Americans. According to Statista, 45% of households in the U.S. owned the shares of at least one mutual fund in 2021. They can also be a great way for investors to ride out market downturns such as the one we’re experiencing this year because of their diversification, low fees, and relative safety. Many mutual funds also pay regular dividends to investors.
Here are seven of the best mutual funds to hold in a 401k account.
|BACIX||BlackRock Energy Opportunities Fund||$13.14|
|VFIAX||Vanguard 500 Index Fund Admiral Shares||$359|
|OPGSX||Invesco Gold and Precious Minerals Fund||$23.85|
|VEUAX||JPMorgan Europe Dynamic Fund||$26.95|
|PRMSX||T. Rowe Price Emerging Markets Stock Fund||$36.70|
|GVALX||Gotham Large Value Fund||$13.78|
|VITAX||Vanguard Information Technology Fund||$165.94|
Best Mutual Funds for Your 401k: BlackRock Energy Opportunities Fund (BACIX)
Vanguard is one of the biggest investment management companies in the world, second only to BlackRock (NYSE:BLK). Started by John Bogle in 1975, Vanguard today has more than $7 trillion of assets under management. The Pennsylvania-based company offers exchange-traded funds (ETFs) and mutual funds.
One of its most popular investment vehicles is its 500 Index Fund Admiral Shares (MUTF:VFIAX). This is a fund that tracks the performance of the benchmark S&P 500 index. Specifically, it provides investors with exposure to the 500 biggest U.S. companies that account for 75% of the U.S. stock market’s value.
In addition to giving investors diversification and broad exposure to the overall market, Vanguard’s funds are notoriously inexpensive to own. Vanguard prides itself on offering some of the lowest fees in the global fund industry. VFIAX’s expense ratio is currently 0.04%, which is rock bottom for a mutual fund.
The top holdings of the 500 Index Fund, mirroring the weighting of the S&P 500 index, include the stocks of companies such as Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) and UnitedHealth Group (NYSE:UNH). The fund’s performance is identical to that of the S&P 500 index. Over the past five years, the fund has gained 40%, matching the increase of the S&P 500.
Best Mutual Funds for Your 401k: Invesco Gold and Precious Minerals Fund (OPGSX)
Mining can be a tough game. Companies large and small scour the earth in search of precious metals to be extracted from the ground. This often takes them into inhospitable locations and requires large amounts of upfront capital investment. As a result, it can be difficult for investors to distinguish winning mining stocks from losing ones.
Atlanta-based investment management company Invesco (NYSE:IVZ) aims to simplify things for investors with its Gold and Precious Minerals Fund (MUTF:OPGSX). This four-star rated fund invests in leading mining companies that provide exposure to gold and other precious metals.
The holdings of the OPGSX fund include global mining giants such as Newmont (NYSE:NEM), Barrick Gold (NYSE:GOLD), and Ivanhoe Mines (OTCMKTS:IVPAF). The fund is one of the older picks on this list, having been created in 1983.
Today it has $1.77 billion of total assets, and while it is down 4% over the past year amid broad market volatility, the Gold and Precious Minerals Fund has gained 42% over the past five years. It also charges a comparatively low management fee of 0.58% and provides investors with an annual dividend that paid out 93 cents per unit last December
JPMorgan Europe Dynamic Fund (VEUAX)
Investors looking for exposure to foreign stocks should consider the Europe Dynamic Fund (MUTF:VEUAX) from leading commercial bank JPMorgan Chase (NYSE:JPM). The fund invests in a wide range of large and small companies that are located in Western Europe, as well as in emerging Eastern European countries.
The fund holds a total of 68 stocks, including the securities of leading companies such as food giant Nestle (OTCMKTS:NSRGY), pharmaceutical company Nova Nordisk (NYSE:NVO), and oil major BP (NYSE:BP). Much of the portfolio is comprised of leading European companies with track records of strong performances.
While the Europe Dynamic Fund is down 12% over the past 12 months, it has gained more than 100% since the 2009 financial crisis and has grown considerably since its inception in 1995. The management expense fees are a little high at 1.26%, but that is in line with the fees of similar mutual funds.
Investors should be aware that this fund requires a minimum investment of $1,000 and that European markets have been particularly volatile following Russia’s invasion of Ukraine.
Best Mutual Funds for Your 401k: T. Rowe Price Emerging Markets Stock Fund (PRMSX)
Another mutual fund that started in 1995 is T. Rowe Price’s Emerging Markets Stock Fund (MUTF:PRMSX). This is a fund that seeks to provide investors with exposure to companies in developing markets, primarily China (33%), Brazil (8%) and South Korea (13%).
The fund’s management fee of 1.21% is consistent with that of other mutual funds, and the portfolio includes the shares of companies such as Taiwan Semiconductor (NYSE:TSM), Samsung and Alibaba (NYSE:BABA). The fund is up more than 50% since its inception more than 25 years ago, but it is down 20% in the last year due to the market’s ongoing churn.
While heavily weighted toward Asia, the Emerging Markets Stock Fund does give investors some exposure to South America, mainly Brazil. The fund offers exposure to some of the largest and best-performing companies in China and throughout Southeast Asia.
As with other mutual funds in this article, T. Rowe Price’s Emerging Markets Stock Fund requires a minimum investment of $1,000.
Gotham Large Value Fund (GVALX)
Founded and managed by famed value investor Joel Greenblatt, Gotham Funds is a boutique mutual fund company that offers a handful of investment vehicles. One of them is the Gotham Large Value Fund (MUTF:GVALX), which takes long positions in leading, established companies in the S&P 500 index.
Gotham’s holdings are chosen based on their market capitalization, and the firm limits itself to buying the shares of the 500 -700 largest U.S. companies by market capitalization. Among its holdings are major U.S. companies such as Meta Platforms (NASDAQ:META), Intel (NYSE:INTC), and General Electric (NYSE:GE). The fund has been a strong performer since its inception in 2015, returning nearly 30% to investors in the past five years.
Even over the last year, the mutual fund has performed better than the market, as the fund declined just 10% in 2022. That’s nearly 50% less than the decline of the S&P 500 index.
The Gotham Large Value Fund is clearly targeting high-net-worth individuals, as it requires a minimum investment of $100,000. Still, for people who have the means, this is a solid mutual fund that focuses on value investing for the long-term and has a track record of beating the broader stock market.
The fund is also well diversified and gives investors access to the stocks of sectors ranging from industrials and financials to health care and real estate.
Best Mutual Funds for Your 401k: Vanguard Information Technology Fund (VITAX)
When it comes to growth, technology stocks are still likely to lead the way over the long term. And a mutual fund that focuses exclusively on the stocks of technology companies can be a great way for investors to gain exposure to the sector while diversifying their portfolio and offering a margin of safety.
Vanguard’s Information Technology Fund (MUTF:VITAX) is a great option for people who want access to leading, high-growth, tech stocks. The top holdings of the fund include Apple, Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA) and Adobe (NASDAQ:ADBE), to name only a few.
The tech sector sold off aggressively in 2022, causing VITAX to fall 27%. However, the fund has gained 85% over the past five years. Like all Vanguard mutual funds, the Information Technology Fund charges a rock-bottom fees of just 0.10%, which is about a tenth of the fees charged by competing mutual funds.
This fund also pays a quarterly dividend of 30 cents per unit held, which is a decent payout. In total, the fund holds 379 stocks of technology companies large and small, and it has no minimum investment requirement.
On the date of publication, Joel Baglole held long positions in AAPL, MSFT and NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. | NVDA |
https://finnhub.io/api/news?id=092c406db5b713ea1a6bfedaa1715c0a62b2ebb341253040bc30ea47f4412fb9 | High-Speed Interconnect Opportunity | High-Speed Interconnect market is about to take-off. Leading innovators include Ayar Labs, Avicena, and Kandou. | 2022-10-19T04:28:11 | SeekingAlpha | High-Speed Interconnect Opportunity
Summary
- High-Speed Interconnect market is about to take off.
- Leading innovators include Ayar Labs, Avicena, and Kandou.
- Coherent/II-VI and Lightwave Logic are also discussed.
Data traffic continues to grow at an unprecedented rate. According to Cisco (CSCO), data-byte traffic had a 25% compound annual growth rate over the last five years. Driven by artificial intelligence, video streaming, higher-capacity 5G networks, or the internet of things (IoT) - the amounts of bytes of data to be processed principally at large data centers and telecom networks are going through the roof.
Data centers are especially challenged to store and process these massive amounts of data in a fast and efficient manner. The limiting factor in data centers today is not chip processing speeds. It's the limited data rate and attendant power consumption when driving data between chips. Part of this challenge can be addressed between memory and compute by various emerging in-memory processing technologies such as neuromorphic computing, where memory and processing reside together, similar to how the brain functions. The data center challenge also is addressed by high-speed interconnect solutions that are being driven by silicon photonics - silicon and optical integration. Both in-memory processing and silicon photonics technologies have been around for over a decade. Silicon photonics, however, should hit the mainstream over the next few years, creating a compelling investment opportunity for first movers.
All-optical networks for long-haul (>1000 km) communications have been deployed since the 1990s. The speed and data capacity of multiplexed light waves caused fiber to displace slower copper-wire networks. Over time, optical networks moved into metropolitan rings (~80 km) and within buildings (ˆ2 km). Shorter distances, however, require higher levels of integration between silicon and optics to realize the full potential of optical communications.
The integration of specially-designed lasers and CMOS chips into compact, viable solutions will take several years to deploy. In the meantime, Mellanox (NVDA) - acquired by Nvidia for $6.9B in 2019 - has been the leading pure-play high-speed chip interconnect provider over the past decade, mainly using integrated solutions without silicon photonics - actually, Mellanox acquired silicon photonics startup Kotura for $82M in 2013, but subsequently wrote-off the investment. Other semiconductor companies like Intel (INTC) have been investing in silicon photonics for several years. Larger communication equipment companies like Cisco also are positioning themselves for the high-speed interconnect opportunity. Faster transmission of data at lower power is the ultimate goal of silicon photonics - that is, deliver the maximum bits per second for the minimum Joules per bit. To the victor goes the spoils - leadership in a $22B optical interconnect market by 2026, according to Mordor Intelligence.
Leading Innovators
I attended the European Conference for Optical Communications {ECOC} in Basel, Switzerland last month. At the trade show, Ayar Labs demonstrated a silicon photonics solution that can reach data rates of up to 2 terabits per second (Tbps). Their current product consists of the TeraPHY I/O (input/output) chiplet and the SuperNova light source, providing customers the first truly implementable silicon photonics solution. Furthermore, Intel announced that it's supporting the CW WDM MSA rev 1.0 standard, of which Ayar Labs was an early adopter. Ayar Labs is the first mover, and with major industry players standardizing on the laser platform, customers will likely begin committing to the technology.
We're still a few years from mass adoption of silicon photonics. For example, future versions of Ayar Labs' product can integrate its laser and chiplet, creating even higher throughput and energy savings. Similarly, future versions of the CW WDM MSA standard will evolve to continually improve performance. But commercial adoption of silicon photonics is now visible.
In the meantime, several competitors with novel, but unproven, technologies are vying with Ayar Labs to become market leaders. Avicena is focusing on a low-power solution that can scale to very high throughput. Avicena uses arrays of gallium-nitride micro-LEDs that are connected via light-fiber bundles to silicon detectors on standard CMOS chips. This approach enables ultra-low power links of < 1pJ (picojoule) per bit with up to a 10-meter reach (at least 5x less power than what Ayar Labs claims, albeit at a shorter distance). When moving down the interconnect distance spectrum to within a system or a card, efficient power scaling becomes critical. Avicena is an earlier-stage company than Ayar Labs but has the potential to address not only data centers but everyday computers, LiDAR for autonomous driving, and other large markets. We observed heavy traffic at Avicena's booth at ECOC.
Enlightra (pka MicroR Systems), an early-stage startup that also attended ECOC, relies upon micro-resonator technology similar to that of Ayar Labs, but claims better power scaling. Enlightra, under-capitalized in a capital-intensive IT hardware business, is a long way off from commercialization but can be a good strategic fit for a larger player.
The big picture is that silicon photonics is inevitable because it's much more efficient than copper beyond a certain distance, and that critical distance is shortening. That said, Kandou has a proven high-speed SerDes technology for electrical interconnects. SerDes stands for serializer/deserializer, and is chip-to-chip circuitry that converts a serial data stream to a parallel data stream, or vice versa. Kandou licensed its chip-to-chip interconnect technology to Marvell (MRVL) in 2016 and launched a commercial USB product in late 2021.
Kandou's upcoming product for PCIe (Peripheral Component Interconnect express) for printed circuit boards (PCBs) will take fuller advantage of Kandou's technology. Based on a novel modulation scheme, Kandou's technology allows higher speeds mainly due to better design flexibility, allowing closer proximity of chips on PCBs (or even an integrated system on a chip), which in turn, leads to lower power. This PCB (or on-board) space also is being targeted by the aforementioned silicon photonic companies. These are not mutually exclusive solutions. As distances lengthen, Kandou's advantage diminishes over silicon photonics solutions, and vice versa. So, both solutions can coexist.
Coherent / II-VI
Coherent (NYSE:COHR), the merged II-VI - Coherent entity, had a large presence at ECOC. The company's $3.2B acquisition of Finisar in 2019 combined with existing VCSEL capabilities makes Coherent a leading VCSEL optical components supplier. Other major optical component suppliers include Lumentum (LITE) (enabled by its NeoPhotonics and Oclaro acquisitions), Infinera (INFN), and IPG Photonics (IPGP). This newly-established Coherent entity has pro-forma CY 2023 consensus revenues of $5.7B (vs. $2.2B for Lumentum, $1.7B for Infinera, and $1.6B for IPG), making Coherent a force to be reckoned with. Potentially, Coherent can use its resources to move upstream from a component supplier, to a more integrated solutions provider. To do so, would require a major capital investment and likely acquisitions of key enabling technologies to leapfrog current innovators. Historically, II-VI/Coherent has thrived on growth by acquisitions with substantial experience integrating acquired companies into its product roadmap.
Lightwave Logic
At ECOC, I sat next to Michael Lebby, CEO of Lightwave Logic (NASDAQ:LWLG), at the IEEE/MSA presentation of the CW WDM MSA standard showcasing Ayar Labs. I met Michael over 20 years ago when he was the Co-founder/CEO of Ignis Optics, which was subsequently sold to Bookham Technologies at a fire-sale price of $15.5M in 2003 - Bookham subsequently merged with Avanex to form Oclaro in 2009, which was then acquired by Lumentum in 2018. He was quite positive on Lightwave Logic's polymer-based electro-optic technology. Polymers (i.e., plastics) were previously thought to be too slow and unstable to compete in the optical arena. At ECOC, Lightwave Logic announced that it partnered with photonic integrated circuit startup Polariton Technologies to create a 250GHz high bandwidth electro-optical-electrical link. The demonstration at ETH Zurich used Polariton's high-speed plasmonic modulators, Lightwave's proprietary perkinamine chromophores and ETH Zurich's high-speed graphene photodetectors.
While this news is encouraging, it's unclear what contributed to the super high-speed link. Was it the graphene material (which is many years away from industrial production), the Polariton circuit design, Lightwave Logic's chromophores or the combination of all three? At the Polariton booth, I asked about its future with Lightwave Logic. I got blank stares, and then they asked my opinion on the subject.
In any case, more testing and build-outs beyond current prototypes will determine if Lightwave's technology can scale to high-volume manufacturing. For this scaling to happen, very substantial investment is needed in Lightwave Logic by a large commercial partner to prove the technology - a large semiconductor foundry will not likely work with Lightwave Logic in its current state.
Lightwave Logic, which today comprises a small research team making minimal investments, has not generated any revenue since its inception in 2008. Realistically, Lightwave Logic must either raise >$100M to compete with the plethora of other high-speed interconnect startups (which would be highly unlikely, and very dilutive), or be acquired by a large industrial company (in my opinion, large players will not be content to merely license Lightwave Logic's technology).
The burning question: What is the strategic value of Lightwave Logic to a large player in the high-speed interconnect space? From my experience with private companies in Lightwave Logic's niche and at the same level of development of a key enabling technology, Lightwave Logic would not receive more than $100M, likely less. The rub is that Lightwave Logic is currently valued at $742M, despite the stock falling 56% so far this year.
Other Companies Pursuing the High-Speed Interconnect Market
There's no shortage of competitors, both private and public, vying for a piece of the high-speed interconnect market. On the private side, we have met/reviewed several private companies such as Luminous Computing, Icon Photonics, LightMatter , Lightelligence, Aeponyx, Ranovus, etc., with some having more substance than others. The current bear market will likely lead to bankruptcies or sales for some of these companies, depending on their investor base and commercial traction/prospects. The likely winners are those companies with access to sufficient capital despite the stock market crash, enabling them to forge ahead. While those companies will still need to execute, at least they will have a fighting chance.
Public companies are approaching the high-speed interconnect market from different angles. In addition to the previously-mentioned optical component companies, there are communication/FPGA chip companies like Broadcom (AVGO), Intel/Altera, AMD/Xilinx (AMD), Nvidia/Mellanox, and Marvell/Inphi. On the communication networking side, there are Cisco/Acacia/Luxtera, Nokia/Elenion (NOK), Ericsson (ERIC), and Arista (ANET). From the enterprise server side, there are HP (HPE) and IBM (IBM). On the data center customer side, Google (GOOG) (GOOGL) is best positioned to vertically integrate an in-house high-speed interconnect solution.
This is by no means an exhaustive list of public and private companies targeting the high-speed interconnect market. But it gives a flavor of the large number of entrants pursuing this huge market.
Currently, there are no public pure-play investments in the high-speed interconnect market aside from Lightwave Logic. Ayar Labs, Kandou, and possibly Ranovus will most likely be the first companies to go public, given the right market conditions.
I would like to thank William Colleran for his contribution to this article.
This article was written by
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Comments (8)
The shorts are covering more quickly now that they smell a PR coming from the foundries who want to commercialize Perkinamine to triple the speed and cut power consumption by 10x. The big data centers are driving this technology through 5 tier 1 foundries with two more waiting their turn. The stock should move to $12 prior to the completion of the PDKs at two of the foundries. Once this news hits the street, who knows how high it will go? I am sticking around for the billions!
Thank you for informed look at LWLG's technology and the competition facing it. The company is remarkable -- more than a dozen years of ZERO revenues, burning through investor cash. If you read old LWLG management comments, you'll find promises that commercial success is imminent going back to 2012. It's quite rare to come across a company that's been in "start-up" mode for as long as Lightwave -- usually if a company can't develop a salable product within 7 or 8 years it fades away. Current LWLG fans are convinced that promises made by the CEO that the company is "working with" Tier One foundries will result in commercial success -- finally. As this article and many others have detailed, there is reason to doubt the commercial appeal of LWLG's technology. I'm looking forward to hearing more about LWLG's partnerships with foundries, and how these partnerships will spark big sales. | NVDA |
https://finnhub.io/api/news?id=dd882fb2f5ad2ae40b93401d4f263ad4faa05cd843abd0e66399194ae5a3dd7c | Intel's Mobileye IPO Is Turning Into A Disaster | Intel management is aggressively pushing to realize the Mobileye IPO - despite a very unfavorable time and unappealing terms. See why INTC stock is a sell. | 2022-10-19T03:33:04 | SeekingAlpha | Intel's Mobileye IPO Is Turning Into A Disaster
Summary
- Intel management is aggressively pushing to realize the Mobileye IPO - despite a very unfavorable time and unappealing terms.
- Intel acquired Mobileye, a sensor maker based in Israel, about four years ago and grew the company as a leading supplier for AI-chips and software for driverless cars.
- Mobileye's valuation first crashed from $50 billion to $30 billion and now to $14 - $16 billion.
- In my opinion, Intel's aggressive push to IPO MBLY is the latest sign that management might fail to take decisions that align with long-term value accumulation.
- If the company needs cash, I personally would like to see that the 5% dividend is cut in half. Remain "Sell" rated.
Thesis
About two months ago, I highlighted Intel Corporation (NASDAQ:INTC) as a sell idea, and the stock has lost about 20% since. Despite the attractive valuation, I argued that Intel would be a value trap and estimated 27% more downside for the stock. Now, even though INTC stock is now slowly approaching my target price, I simply cannot see an opportunity for turning more bullish.
One major reason for my continued pessimism is anchored on management's decision to aggressively push for the Mobileye Global Inc. (NASDAQ:MBLY) IPO. After Mobileye's valuation first crashed from $50 billion to $30 billion and now to $14 - $16 billion, why is there such a hurry to push the IPO? Given frozen equity markets and low valuations, the time is clearly not right.
As I am concerned about Intel's management culture, INTC stock remains a "Sell."
Intel's Bet On Mobileye
Intel acquired Mobileye, a sensor maker based in Israel, about four years ago and grew the company to become a leading supplier for AI-chips and software for driverless cars. As of June 2022, it is estimated that more than 100 million auto units deploy Mobileye's solutions, and the company believes that another 250 million units could be added by 2030.
Mobileye is also committed to launch its own robotaxi service, which is expected to start operations as early as late 2022/early 2023 in Munich, Germany. Further testing is expected in New York City, where the company is hoping to accumulate data in a dense traffic environment, which is notoriously difficult to navigate. But so far, the permission for New York is still outstanding.
Mobileye’s growth has clearly outpaced that of Intel, but has failed to be a meaningful contributor to the parent company's financials - accounting for only approximately 3% of Intel's revenues. But still, Mobileye’s business expansion has been notable: Revenues have quadrupled since Intel bought the start-up in August 2017, generating about $1.4 billion of sales in 2021.
In Q2 2022, Mobileye grew revenues 41% year over year, to $460 million. The segment's operating income jumped 43% respectively, to $190 million.
Intel paid $15.3 billion for Mobileye.
Self-Driving: Speculation & Glamour
Self-driving technology has for a long time enjoyed interest from the world's major investors and technology companies. The 'on-paper' economics of robotaxis and SaaS-autonomous driving technology are simply too attractive to ignore. According to McKinsey, it is estimated that investors have so far bet around $100 billion on self-driving technologies.
But as of 2022, both the technology as well as the economics of the technology must yet be demonstrated. Moreover, the industry competition, in which Mobileye is not necessarily a leader, is very crowded.
According to research done by Guidhouse Insights, Mobileye is only a "contender" to the leading innovators such as Google's Waymo (GOOG)(GOOGL), Baidu (BIDU), Nvidia (NVDA) and Argo AI.
Reflecting on self-driving technology investments, investors should also consider that the technology is now much less "hyped" than a few years ago. For example, Waymo's valuation was once as high as $175 billion. Now, the valuation is down to $30 billion.
Lower valuations are good for investors, but also indicate funding risk. I have recently written about Aurora Innovation, a self-driving tech company that is now struggling to find financing, as investors are increasingly reluctant to speculate on emerging technologies and long-duration bets - as evident by the sharp sell-off of growth stocks YTD: "Aurora Innovation: CEO Hints Possible Sale To Apple Or Microsoft" (NASDAQ:AUR).
IPO For $14 - $16 Billion?
On September 30, Intel filed the Form S-1 with the SEC to push ahead the Mobileye IPO. The move has been widely expected ever since Intel CEO Pat Gelsinger commented, that an IPO...:
... provides the best opportunity to build on Mobileye’s track record for innovation and unlock value for shareholders.
But the timing for the IPO could not have been worse, as falling valuation and global risk-aversion has frozen access to capital markets. That said, Intel had previously demanded a valuation of about $50 billion, but now cut the valuation almost by half -- to $30 billion. Moreover, the S-1 filing lists 24 underwriters, including Goldman Sachs (GS) Morgan Stanley (MS) and Citigroup (C) -- to name just a few. As I see it, the IPO needs lots of marketing to fill the books.
Intel has previously targeted a $50 billion valuation, then a $30 billion valuation, and now a valuation as low as $14.4 - $16 billion, which is approximately the same price Intel paid for MBLY 5 years ago.
But can Intel call a valuation of $14.4 - $16 billion? Investors should consider that at such a price, Mobileye would effectively be valued at about 12 times 2021 revenue. For reference, Tesla (TSLA) is currently valued at 10 times. Moreover, Mobileye is not yet net profitable. The prospectus highlights that in the 1H of 2022, despite $854 million of TTM revenues, the company posted a net loss of $67 million.
But perhaps more important than the question if Intel "can," an investor should ask if they "should." Intel management claimed that the IPO is designed to "unlock value for its shareholders." But, at a valuation similar to what has been paid in 2017, despite additional funding to support loss making operations over the past 5 years, and despite an arguably successful management of MBLY, I have a difficult time to understand how the IPO should create value for shareholders.
Conclusion
Over the past decade, Intel management has lost much of its technological edge in chipmaking. And the stock price, which has been trading at $28/share already in 1998, clearly highlights this thesis.
In my opinion, Intel's aggressive push to IPO Mobileye - despite a very unfavorable time and unappealing terms - is a latest sign that management might fail to take decisions that align with long-term value accumulation. If the company needs cash, I personally would like to see that the 5% dividend is cut in half. Remain "Sell" rated.
This article was written by
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Not financial advise
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Comments (67)
Bullish on this huge opportunity in Mobile Eye! Intc is worth $100+.
It was clear from the start this wasn't primarily about raising cash. It was about tying Mobileye employee compensation directly to Mobileye performance.Dec 2021
seekingalpha.com/...
[There are two benefits that I see:
a) This will provide some cash to fund IFS and the 5 process nodes in 4 years. Since Intel has said they'll maintain majority ownership we have no idea what percentage they'll IPO.
b) This helps Mobileye attract and retain talent for a fast growing business with huge potential as Mobileye can issue Mobileye employee stock options.(b) is likely as, if not more important, than (a).]Later in the same thread:
[I'm a long-term shareholder, so not only is the IPO irrelevant to me, but I'm hoping that he floats 20% or less of Mobileye. As I pointed out previously, and Gelsinger's interview backs up, a primary goal is to provide for employee stock options tied directly to Mobileye's performance to attract and retain talent in a fast-moving and high-growth segment.]I'm overjoyed Gelsinger is only floating 5%. I was resigned to 20%, and feared it might be more. | NVDA |
https://finnhub.io/api/news?id=561602dfc8245dbba5ea4eb22138ad0cb62157c5642e59bcb8405399f77e20ca | Zacks Investment Ideas feature highlights: Nvidia, Adobe and Alphabet | Nvidia, Adobe and Alphabet have been highlighted in this Investment Ideas article. | 2022-10-19T03:17:10 | Yahoo | Zacks Investment Ideas feature highlights: Nvidia, Adobe and Alphabet
For Immediate Release
Chicago, IL – October 19, 2022 – Today, Zacks Investment Ideas feature highlights Nvidia NVDA, Adobe ADBE and Alphabet GOOGL.
3 Beaten-Down Tech Stocks Trading at a Discount
It’s been a long-fought battle in the market in 2022, with a hawkish Federal Reserve, geopolitical issues, and lingering COVID-19 uncertainties spoiling the fun at every turn.
On a much more positive note, it’s created a massive buying opportunity.
Many investor-favorite stocks have seen their valuation multiples slashed, particularly those in the Zacks Computer and Technology sector.
Of course, nobody has a crystal ball telling them where the market will move next, and it’s impossible to time the market just right.
However, it’s a gold mine out there for those with a long-term horizon, with an extensive list of companies trading at a discount to their historic levels.
Three beaten-down tech stocks that have seen their valuation multiples fall notably – Nvidia, Adobe and Alphabet – could all be of significant interest to those with a bit of patience.
Let’s dive deeper into how the companies currently shape up for those interested in buying tech at a discount.
Adobe
Adobe shares have become notably cheaper amid the stretch of poor price action; the company’s forward earnings multiple of 26.4X is well beneath its five-year median of a steep 45.3X and a fraction of 2021 highs of 65.5X.
Further, ADBE is still forecasted to grow at a solid pace; earnings are forecasted to climb 9% in FY22 and a further double-digit 14% in FY23.
The forecasted bottom-line growth comes on top of projected revenue increases of 11.5% and 12.4% in FY22 and FY23, respectively.
The company posted a solid Q3 2022, exceeding the Zacks Consensus EPS Estimate by 2.1%. Top-line results were strong, too, reported at $4.4 billion and reflecting a strong 13% Y/Y uptick.
Dan Durn, EVP and CFO, said, “Adobe achieved record revenue and strong profitability in the quarter, demonstrating that our products are mission-critical to individuals, small businesses and the world’s largest enterprises.”
Nvidia
Nvidia shares currently trade at a 47.5X forward earnings multiple, certainly not cheap by any stretch. However, the current value is nowhere near the steep 2021 highs of 93.5X during the semiconductor melt-up.
While the company’s Gaming revenue has taken a hit amid a slowdown in demand, NVDA’s Data Center results are definitely worth highlighting – Data Center revenue climbed 61% Y/Y to $3.8 billion in its latest quarter, with sales from hyperscale customers nearly doubling.
Nvidia’s Automotive results are undoubtedly worth a spotlight as well; Automotive revenue climbed a double-digit 45% Y/Y and 59% sequentially, with the strong growth driven by Auto AI Solutions (this includes AI Cockpit and Self-Driving revenue).
While the company’s Gaming revenue has experienced quite a slowdown, other areas of its business are still enjoying strong growth.
NVDA’s earnings are forecasted to decline by more than 20% in its current fiscal year (FY23), but things kick back into the green for FY24, with estimates calling for 30% growth.
Further, revenue is forecasted to climb a marginal 1.8% in FY23 and a sizable 14% in FY24.
Alphabet
Alphabet shares could be the most enticing of all three – the company’s shares trade at a 19.2X forward earnings multiple, reflecting a 7% discount relative to its Zacks Computer and Technology sector.
Further, the current value reflects a sizable 32% discount relative to the five-year median of 26.7X.
GOOGL knows how to generate cash – Alphabet came in hot in its latest print, reporting quarterly free cash flow of $12.6 billion, the fourth highest of any S&P 500 company in Q2.
The company’s Google Cloud platform has been a notable success; in its latest quarter, Google Cloud revenue came in at $6.3 billion, reflecting a stellar 35.6% Y/Y uptick and a 9% sequential increase.
Keeping a Long-Term Mindset
It’s been anything but fun for tech stocks in 2022, with a vast number witnessing double-digit percentage share price declines.
However, amid all the negativity, long-term investors have been presented with a buying opportunity not seen in some time.
Of course, there is always risk to the downside, but that’s why investors need to keep a long-term mindset, especially during uncertain times.
Many strong companies, such as Nvidia, Adobe and Alphabet, have seen their valuation multiples pull back notably.
Implementing a dollar-cost average strategy would be great for those looking to build up their positions and reap the rewards on the way back up.
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https://finnhub.io/api/news?id=95c71aa21c9a2ac0647c9be856fb9896aa51c6ea1fa7b47ef09d98ec31e67c34 | Largest cryptocurrencies fall as Ripple declines | All of the largest cryptocurrencies were down during morning trading on Wednesday, with Ripple seeing the biggest change, falling 3.37% to 45 cents. Cardano... | 2022-10-19T03:00:00 | MarketWatch | All of the largest cryptocurrencies were down during morning trading on Wednesday, with Ripple
XRPUSD,
+0.41%
seeing the biggest change, falling 3.37% to 45 cents.
Cardano
ADAUSD,
-0.09%
shed 2.83% to 35 cents, and Uniswap
UNIUSD,
-0.36%
declined 2.25% to $6.47.
Ethereum
ETHUSD,
-0.24%
shed 2.25% to $1,293.21 on Wednesday, while Polkadot
DOTUSD,
+0.67%
shed 1.33% to $6.09 and Dogecoin
DOGEUSD,
-1.05%
declined 1.35% to 6 cents.
Bitcoin
BTCUSD,
-0.01%
and Bitcoin Cash
BCHUSD,
-1.39%
fell 1.30% to $19,121.01 and 1.29% to $107.48
Litecoin
LTCUSD,
-0.21%
rounded out the decreases with a 1.18% decline to $51.12.
In crypto-related company news, shares of Coinbase Global Inc.
COIN,
-3.79%
dropped 3.23% to $64.07, while MicroStrategy Inc.
MSTR,
-3.32%
dropped 2.41% to $229.33. Riot Blockchain Inc.
RIOT,
-3.93%
shares shed 3.58% to $5.66, and shares of Marathon Digital Holdings Inc.
MARA,
-4.41%
fell 4.53% to $10.87.
Overstock.com Inc.
OSTK,
-6.52%
fell 6.22% to $23.28, while Block Inc.
SQ,
-13.64%
declined 4.77% to $54.54 and Tesla Inc.
TSLA,
-2.11%
slipped 0.35% to $219.43.
PayPal Holdings Inc.
PYPL,
-2.23%
dropped 2.20% to $83.41, and Ebang International Holdings Inc. Cl A
EBON,
-2.53%
shares declined 3.73% to 34 cents. NVIDIA Corp.
NVDA,
+0.37%
slid 0.71% to $118.82, and Advanced Micro Devices Inc.
AMD,
+2.36%
dropped 2.20% to $57.13.
In the fund space, blockchain-focused Amplify Transformational Data Sharing ETF
BLOK,
-1.86%
dropped 1.85% to $18.00. The Bitwise Crypto Industry Innovators ETF
BITQ,
-4.08%,
which is focused on pure-play crypto companies, shed 2.57% to $5.86. Grayscale Bitcoin Trust
GBTC,
which tracks the Bitcoin market price, slid 0.80% to $11.22.
Editor's Note: This story, which tracks nine of the top cryptocurrencies and excludes stable coins, was auto-generated by Automated Insights, an automation technology provider, using data from Dow Jones, FactSet and Kraken. See our market data terms of use. | NVDA |
https://finnhub.io/api/news?id=d88f8d92d05ffd700a640af7e6f8a2bd85995db1f8a9fd69fd6bf8df140379ff | Top 5 3rd Quarter Trades of PL - GuruFocus.com | GuruFocus Article or News written by insider and the topic is about: | 2022-10-19T02:06:00 | GuruFocus | PLIMOTH TRUST CO LLC recently filed their 13F report for the third quarter of 2022, which ended on 2022-09-30.
The 13F report details which stocks were in a guru’s equity portfolio at the end of the quarter, though investors should note that these filings are limited in scope, containing only a snapshot of long positions in U.S.-listed stocks and American depository receipts as of the quarter’s end. They are not required to include international holdings, short positions or other types of investments. Still, even this limited filing can provide valuable information.
330 SWANSEA MALL DRIVE SWANSEA, MA 02777
As of the latest 13F report, the guru’s equity portfolio contained 156 stocks valued at a total of $289.00Mil. The top holdings were AAPL(6.08%), MSFT(4.66%), and PGX(2.84%).
According to GuruFocus data, these were PLIMOTH TRUST CO LLC’s top five trades of the quarter.
iShares 1-3 Year Credit Bond ETF
PLIMOTH TRUST CO LLC reduced their investment in NAS:IGSB by 35,899 shares. The trade had a 0.57% impact on the equity portfolio. During the quarter, the stock traded for an average price of $50.28.
On 10/18/2022, iShares 1-3 Year Credit Bond ETF traded for a price of $48.94 per share and a market cap of $21.16Bil. The stock has returned -8.22% over the past year.
There is insufficient data to calculate the stock’s financial strength and profitability ratings.
Meta Platforms Inc
PLIMOTH TRUST CO LLC reduced their investment in NAS:META by 4,160 shares. The trade had a 0.21% impact on the equity portfolio. During the quarter, the stock traded for an average price of $162.08.
On 10/18/2022, Meta Platforms Inc traded for a price of $133.875 per share and a market cap of $357.31Bil. The stock has returned -60.35% over the past year.
GuruFocus gives the company a financial strength rating of 8 out of 10 and a profitability rating of 10 out of 10.
In terms of valuation, Meta Platforms Inc has a price-earnings ratio of 11.02, a price-book ratio of 2.88, a price-earnings-to-growth (PEG) ratio of 0.41, a EV-to-Ebitda ratio of 6.91 and a price-sales ratio of 3.12.
The price-to-GF Value ratio is 0.34, earning the stock a GF Value rank of 4.
Apple Inc
PLIMOTH TRUST CO LLC reduced their investment in NAS:AAPL by 4,685 shares. The trade had a 0.2% impact on the equity portfolio. During the quarter, the stock traded for an average price of $156.95.
On 10/18/2022, Apple Inc traded for a price of $145.41 per share and a market cap of $2,323.83Bil. The stock has returned -0.72% over the past year.
GuruFocus gives the company a financial strength rating of 6 out of 10 and a profitability rating of 10 out of 10.
In terms of valuation, Apple Inc has a price-earnings ratio of 23.86, a price-book ratio of 40.06, a price-earnings-to-growth (PEG) ratio of 1.68, a EV-to-Ebitda ratio of 18.19 and a price-sales ratio of 6.13.
The price-to-GF Value ratio is 0.84, earning the stock a GF Value rank of 7.
Chevron Corp
During the quarter, PLIMOTH TRUST CO LLC bought 3,194 shares of NYSE:CVX for a total holding of 38,784. The trade had a 0.16% impact on the equity portfolio. During the quarter, the stock traded for an average price of $152.51.
On 10/18/2022, Chevron Corp traded for a price of $163.08 per share and a market cap of $316.75Bil. The stock has returned 52.81% over the past year.
GuruFocus gives the company a financial strength rating of 8 out of 10 and a profitability rating of 6 out of 10.
In terms of valuation, Chevron Corp has a price-earnings ratio of 10.80, a price-book ratio of 2.07, a price-earnings-to-growth (PEG) ratio of 2.30, a EV-to-Ebitda ratio of 5.74 and a price-sales ratio of 1.52.
The price-to-GF Value ratio is 0.87, earning the stock a GF Value rank of 6.
NVIDIA Corp
During the quarter, PLIMOTH TRUST CO LLC bought 3,502 shares of NAS:NVDA for a total holding of 19,725. The trade had a 0.15% impact on the equity portfolio. During the quarter, the stock traded for an average price of $158.09.
On 10/18/2022, NVIDIA Corp traded for a price of $119.42 per share and a market cap of $294.29Bil. The stock has returned -46.74% over the past year.
GuruFocus gives the company a financial strength rating of 8 out of 10 and a profitability rating of 10 out of 10.
In terms of valuation, NVIDIA Corp has a price-earnings ratio of 38.74, a price-book ratio of 12.33, a price-earnings-to-growth (PEG) ratio of 1.21, a EV-to-Ebitda ratio of 30.85 and a price-sales ratio of 10.08.
The price-to-GF Value ratio is 0.47, earning the stock a GF Value rank of 4.
Please note, the numbers and facts quoted are as of the writing of this article and may not factor in the latest trading data or company announcements.
Want to provide feedback on this article? Have questions or concerns? Get in touch with us here, or email us at [email protected]!
This article is general in nature and does not represent the opinions of GuruFocus or any of its affiliates. This article is not intended to be financial advice, nor does it constitute investment advice or recommendations. It was written without regard to your individual situation or financial goals. We aim to bring you fundamental, data-driven analysis, The information on this site is in no way guaranteed for completeness, accuracy or in any other way. | NVDA |
https://finnhub.io/api/news?id=1d5cbc56826bee4d5329a4b8b2c5cc94d82194e10905a1ecd384ded70f08db54 | 2 Semiconductor Stocks With 149% to 178% Upside, According to Wall Street | Regardless of whether you're new to investing or have been putting your money to work on Wall Street for decades, short-term losses in the three major U.S. indexes have put a dent in most portfolios. Since hitting their respective all-time highs between mid-November and the first week of January, the iconic Dow Jones Industrial Average, broad-based S&P 500, and technology-fueled Nasdaq Composite have plunged by as much as 22%, 28%, and 38%. For instance, semiconductor stocks have been taken to the woodshed on the growing prospect of a recession amid higher interest rates and persistent supply chain issues. | 2022-10-19T02:06:00 | Yahoo | 2 Semiconductor Stocks With 149% to 178% Upside, According to Wall Street
Regardless of whether you're new to investing or have been putting your money to work on Wall Street for decades, short-term losses in the three major U.S. indexes have put a dent in most portfolios. Since hitting their respective all-time highs between mid-November and the first week of January, the iconic Dow Jones Industrial Average, broad-based S&P 500, and technology-fueled Nasdaq Composite have plunged by as much as 22%, 28%, and 38%. For instance, semiconductor stocks have been taken to the woodshed on the growing prospect of a recession amid higher interest rates and persistent supply chain issues. | NVDA |
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