Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

On Friday, Michael Saylor’s MicroStrategy acquired another batch of bitcoins. This time, MicroStrategy’s Bitcoin reserves increased by 7,420 BTC bought at $458.2 million, or ~$61,740 per BTC. This puts the company’s Bitcoin holdings at a total of 252,220 BTC, worth nearly $10 billion at an average price of $39,266 per BTC.

Year-to-date, Bitcoin gained 42% value, presently priced at $62,875, which is already above MicroStrategy’s latest acquisition price. In the same period, MSTR stock gained 110% in value. As a clear proxy to Bitcoin exposure, investors see MicroStrategy as a leveraged fee-less option instead of having to tackle the self-custodial risk of direct BTC ownership.

Having delegated this responsibility to MicroStrategy, does that mean that MSTR ownership is preferable to holding Bitcoin itself in the long run?

How Does MicroStrategy’s Debt Leveraging Work? 

Just like before, MicroStrategy bought the latest batch of bitcoins using the debt instrument of convertible notes. As a form of debt, convertible notes incur interest rate and maturity date, but they also offer conversion to equity ownership. This way, investors are betting on a future return on investment, rewarding them with a discounted stock price.

This time, MicroStrategy finished the private issuance of $1.01 billion in Convertible Senior Notes, first announced on Monday at a more modest range of $700 million. Under the Rule 144A of the Securities Act of 1933, MicroStrategy incurred on itself an obligation to pay 0.625% annual interest, starting from March 15, 2025 and finishing on maturity date on September 15, 2028.

MSTR stock is presently priced at $145.16, but with the conversion price of $183.19, accounting for principal and accrued interest, MSTR shareholders would be up for a 26% premium. Of the completed $1.01 billion convertible senior notes sold, $135 million of which was allocated as an extra option to buy notes within 13 days from when they were first sold.

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MicroStrategy’ Gambit: Buying Scarcity with Eroding Currency

Bitcoin plays a perfect role for such a strategy as a scarce resource, limited to 21 million BTC and enforced by a network of Bitcoin miners that use enormous energy and hardware assets to secure Bitcoin’s inviolability. 

This way, it is easy for investors to see Bitcoin not only as a digital asset, but one that is firmly anchored in physical reality via a proof-of-work consensus algorithm. For MSTR investors, the underlying assumption is that Bitcoin scarcity will more than offset MSTR exposure, while giving the buyers of convertible notes a premium.

On a macroeconomic level, this thinking makes sense because it is exceedingly unlikely that USG will ever prioritize financial austerity to reduce debt over profligate spending. For social security expenditures alone, the Congressional Budget Office (CBO) projected a great bifurcation between feasible (payable) benefits and scheduled benefits, as a percentage of gross domestic product (GDP).

By 2033, CBO projects exhaustion of funds for the Old-Age and Survivors Insurance Trust Fund. Image credit: CBO.

Likewise, USG military expenditures have relentlessly increased over the decades, having reached a record high of $876.94 billion in 2022. In other words, the Federal Reserve’s printing machine will have to be turned on. And as the Fed’s balance sheet gets bloated, the value of the dollar will decrease. 

After all, the value of $1 USD in 1913 (the year the Federal Reserve was established) is $31.80 in 2024, having eroded after a 3,079% cumulative inflation rate. Essentially, MSTR shareholders are counting on the devaluation of USD.

As the value of the currency decreases, so does the real value of the debt. Moreover, the commodity hedge for that debt is Bitcoin, which holds mathematically predictable inflation and fixed scarcity, unlike gold or silver which have pseudo-scarcity. 

Against Diversification to Avoid Hugo Stinnes’ Fate?

Industrialist Hugo Stinnes made exactly such a leveraged debt gambit in Weimar Germany, having purchased hard assets like factories and coal mines with rapidly devaluing German marks. Ultimately, Stinnes earned a moniker “Inflation King” with this strategy.

Although the Hugo Stinnes empire fell following the introduction of the Rentenmark in 1924, his holdings were greatly diversified. In contrast, Michael Saylor has made it clear he is against the diversification of assets, having stated in 2020 that “diversification is selling the winners to buy the losers” in an interview with Daniela Cambone. 

Michael Saylor has repeated this conviction across many public appearances.

Michael Saylor on going “all in” on #Bitcoin instead of diversifying:“How many chairs are you sitting in right now?”H/T @Scavacini777 pic.twitter.com/1vvtqqT2lL

— Mark Harvey (@thepowerfulHRV) November 15, 2023

Although diversification is typically seen as a diversification of risk in finance, the problem with Hugo Stinnes is that his diversification was also poorly managed as he overextended into hotels, shipping, banking and newspapers.

By adopting an anti-diversification approach in the first place, Michael Saylor is eliminating that risk entirely. Even better, such a risk is replaced with a completely decentralized asset that runs on cryptographic math, enforced by computing power. In turn, this makes MSTR exposure itself as one that has a decentralized risk, despite lacking diversification per se.

Do you think MSTR investors will vindicate their confidence? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

The post Is MSTR Stock Still a Buy as it Builds a Massive Bitcoin Pile? appeared first on Tokenist.

Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

In a groundbreaking move, Constellation Energy (NASDAQ: CEG) has inked an exclusive deal with Microsoft (NASDAQ: MSFT) to restart Unit 1 of the Three Mile Island nuclear plant in Pennsylvania, marking the first-ever restart of a nuclear power plant in the U.S. after shutdown. The agreement, announced on Friday, September 20, 2024, sent Constellation Energy’s stock soaring nearly 8% to $224.4 in premarket trading. This partnership reflects a growing trend in the tech industry as companies seek sustainable and reliable power sources for their burgeoning artificial intelligence operations.

Constellation Energy and Microsoft’s Landmark Power Deal

Under the terms of the agreement, Constellation will provide approximately 835 megawatts of power to Microsoft, making it the energy company’s largest power purchase agreement to date. The electricity will primarily fuel Microsoft’s data centers, with a focus on powering AI-related operations. Constellation plans to invest about $1.6 billion to restart the plant, which was shut down in 2019 due to economic reasons. The company anticipates the facility will come online by 2028, pending necessary permits.

The deal specifically involves Unit 1 of the Three Mile Island plant, which Constellation acquired in 1999 and operates independently from Unit 2. It’s worth noting that Unit 2, infamous for its partial meltdown in 1979, will not be part of this restart initiative. This strategic move comes as the tech industry grapples with the massive surge in energy demand from data centers, driven by the boom in artificial intelligence. Nuclear power offers a carbon-free and reliable energy source that can consistently meet the high-power demands of AI workloads while aligning with carbon-neutral goals.

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Constellation Energy Stock Gains in Premarket Trading

The announcement of this landmark deal has had a significant impact on both companies’ stock performance. As of 8:38 AM EDT in pre-market trading, Constellation Energy (CEG) saw a dramatic increase of $19.17 (9.19%) to $227.67. The company’s stock has shown impressive growth, with a year-to-date return of 79.33%, significantly outperforming the S&P 500’s 19.79%. Its one-year return stands at an impressive 89.73%, while both its three-year and five-year returns are at a staggering 448.68%.

Microsoft (MSFT), on the other hand, showed more modest pre-market movement, with its stock price up $0.08 (0.02%) to $438.77. Despite this, Microsoft’s long-term performance remains strong, with a one-year return of 34.32% and a five-year return of 231.57%, both outperforming the S&P 500.

The tech giant’s market capitalization stands at an impressive $3.261 trillion, reflecting its dominant position in the industry.

This deal between Constellation Energy and Microsoft is part of a broader trend in the tech sector. As companies like Microsoft invest heavily in AI capabilities, they’re simultaneously seeking ways to power these energy-intensive operations while meeting sustainability goals. The resurgence of interest in nuclear power comes as the electricity grid faces increasing strain from data center workloads. With other tech giants like Amazon Web Services also making moves to secure nuclear power for their data centers, this deal may signal a new chapter in the intersection of technology and energy sectors, as companies strive to balance innovation with environmental responsibility.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

Nike Inc. (NYSE: NKE), the global sportswear giant, is undergoing a significant leadership transition as it grapples with ongoing restructuring efforts and market challenges. The company announced Thursday that CEO John Donahoe will step down, to be replaced by longtime Nike veteran Elliott Hill, effective October 14, 2024. This change comes as Nike faces criticism for losing its innovative edge and struggles with sales declines in key markets.

Nike’s CEO to Step Down, Make Way for Company Veteran

Donahoe, who has led Nike since January 2020, will retire from his position on October 13 but will remain as an advisor through January 2025. Under his tenure, Nike shifted its strategy to focus more on direct-to-consumer sales, growing annual revenue from $39.1 billion in fiscal 2019 to $51.4 billion in fiscal 2024. However, the company has recently faced headwinds, warning of a 10% sales drop in its current quarter due to soft demand in China and uneven global consumer trends.

Elliott Hill, who worked at Nike for 32 years before retiring in 2020, will return to take the helm. Hill’s career at Nike spans from an internship in the 1980s to his role as president of the consumer and marketplace division. Known for being well-liked among employees, Hill’s appointment is seen as a move to bring back someone with a deep understanding of Nike’s culture and industry.

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NKE Stock Gains in Premarket Trading Session

Nike’s stock, which has been down more than 25% year-to-date as of September 2024, showed a significant uptick in pre-market trading following the leadership announcement. As of 5:38 AM EDT, Nike shares were trading at $86.64, up 6.99% from the previous close of $80.98.

Despite recent underperformance compared to the S&P 500 across various timeframes, Nike maintains a solid financial position. The company reported a market capitalization of $121.42 billion, with a trailing twelve-month revenue of $51.36 billion and net income of $5.7 billion. Analysts maintain a relatively positive outlook, with a one-year target estimate of $129.83, significantly above the current trading price.

As Nike navigates this transition, the company plans to reduce costs by about $2 billion over the next three years and cut 2% of its workforce. Under Hill’s leadership, Nike aims to refocus on innovation, rebuild company morale, and invest in growth areas such as running, women’s category, and the Jordan brand. This leadership change appears to be a strategic move to address current challenges and reposition Nike for future growth in the competitive sportswear market.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

In a day of significant market movements, three major tech stocks are making headlines due to corporate announcements and macroeconomic factors. Tesla (NASDAQ: TSLA), PayPal (NASDAQ: PYPL), and Uber (NYSE: UBER) are all seeing notable price shifts as investors react to news of partnerships, rebranding efforts, and interest rate cuts.

Tesla (TSLA) Stock Surges After Federal Reserve Cuts Interest Rates by 50 Basis Points

Tesla’s stock surged 6.73% to $242.49 following the Federal Reserve’s decision to cut benchmark short-term interest rates by 50 basis points. This move is expected to make cars more affordable, potentially boosting demand for Tesla’s electric vehicles. The company’s stock has historically been volatile in response to Fed decisions, with an average movement of 3.2% the day after such announcements since 2019.

Despite the positive market reaction, Tesla faces challenges in Europe, where new car sales declined 17% year-over-year in August. More concerning for the electric vehicle manufacturer, battery-electric vehicle sales in the region dropped 36% during the same period, mirroring Tesla’s own 36% decline in European sales. With a market cap of $774.956 billion and a P/E ratio of 63.82, Tesla continues to trade at a premium valuation despite recent headwinds.

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PayPal (PYPL) Stock Gains on Recent Developments

PayPal’s stock rose 5.47% to $77.12 on news of a strategic partnership with Amazon (NASDAQ: AMZN) for its Buy with Prime service. Starting in 2025, Prime members will be able to link their Amazon accounts to PayPal, enabling them to use PayPal for purchases on participating merchants’ sites while still senjoying Prime shipping benefits. This integration comes as Buy with Prime orders have increased by more than 45% annually through merchant websites.

In addition to the Amazon partnership, PayPal unveiled a new brand identity designed by Pentagram. The refresh includes a new bespoke typeface called PayPal Pro and an updated logo with cleaner lines and more contrast in the overlapping blues. The company also announced a major marketing campaign featuring actor Will Ferrell. With a market cap of $78.852 billion and a forward P/E of 15.08, PayPal’s stock has outperformed the S&P 500 year-to-date, returning 25.60% compared to the index’s 19.77%.

Uber (UBER) Stock Climbs on Food Delivery Partnership with Olive Garden’s Parent Company

Uber’s stock climbed 3.19% to $75.84 following the announcement of a multi-year partnership with Darden Restaurants (NYSE: DRI), the parent company of Olive Garden. The collaboration aims to introduce on-demand delivery services, starting with a pilot program at select Olive Garden locations in late 2024. The service is expected to expand to all 900 company-owned Olive Garden restaurants across the US by May 2025.s

This partnership addresses growing customer demand for home delivery options while allowing Darden to maintain control over guest experience and data. Customers will place orders through Olive Garden’s website and app, with deliveries facilitated by Uber Direct. With a market cap of $159.338 billion and a forward P/E of 30.86, Uber’s stock has shown strong performance, with a year-to-date return of 23.18% and a one-year return of 63.06%, significantly outpacing the S&P 500.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

Darden Restaurants, Inc. (NYSE: DRI), the parent company of Olive Garden, has announced a new multi-year partnership with Uber Technologies (NYSE: UBER) to introduce on-demand delivery services. The collaboration, set to begin in late 2024, aims to address growing customer demand for home delivery options while maintaining control over guest experience and data. Both companies’ stocks saw gains in premarket trading after the announcement.

Darden Partners with Uber, to Launch Pilot Program at Select Locations

The partnership will initially focus on Olive Garden, with a pilot program launching at select locations in late 2024. Darden plans to expand the service to all 900 company-owned Olive Garden restaurants across the United States by May 2025. Customers will be able to place orders through Olive Garden’s website and app, with deliveries facilitated by Uber Direct using its national delivery network.

Darden CEO Rick Cardenas emphasized the importance of preserving the team member and guest experience while addressing customer needs. “As we continued to evaluate delivery, it was important for us to find a way to address this guest need state without disrupting the team member or guest experience and without compromising our competitive advantages and simple operating model,” Cardenas stated.

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DRI and UBER See Gains in Premarket Trading

The announcement comes as Darden reported its fiscal 2025 first-quarter results, which fell short of analysts’ expectations. The company saw a 1.1% drop in same-store sales, with Olive Garden experiencing a 2.9% decline. Despite these challenges, investors responded positively to the Uber partnership news, with Darden’s stock price surging 8.41% to $172.52 in premarket trading.

Uber also saw a boost in its stock price, rising 1.97% to $74.95 in premarket trading. The partnership represents an expansion of Uber’s delivery business and secures a major player in the restaurant industry as a client. Analysts have maintained largely positive outlooks on Uber stock, with many rating it as a “Strong Buy” or “Buy.”

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

FactSet (NYSE:FDS) (NASDAQ:FDS) has reported its results for the fourth quarter of fiscal 2024, delivering a solid performance across various financial metrics. The company announced Q4 GAAP revenues of $562.2 million, marking a 4.9% increase from the same period in 2023. This growth reflects the company’s ability to maintain and expand its market position despite challenging economic conditions.

Additionally, FactSet’s organic Q4 ASV plus professional services amounted to $2,272.8 million, up 4.8% year over year. This metric, which captures the company’s recurring revenue streams, highlights the sustained demand for FactSet’s services. The company’s Q4 GAAP operating margin stood at 22.7%, showing an improvement of approximately 110 basis points from the previous year. Furthermore, the adjusted operating margin reached 35.8%, up 240 basis points from the prior year, indicating improved operational efficiency.

FactSet’s earnings performance also saw significant improvements. The Q4 GAAP diluted EPS was $2.32, up 38.1% from the prior year, while the adjusted diluted EPS was $3.74, up 23.8% year over year. These figures underscore the company’s strong profitability and its ability to deliver value to shareholders.

FactSet Research Reports Better than Expected Q4

Comparing FactSet’s current performance against expectations reveals a positive surprise for investors. Analysts had projected an EPS of $3.62 for the quarter, but FactSet exceeded this expectation with an adjusted diluted EPS of $3.74. This represents a notable beat, reflecting the company’s robust financial management and operational execution.

On the revenue front, the expectations were set at $547.22 million. FactSet outperformed these projections by achieving GAAP revenues of $562.2 million. This revenue beat of approximately $15 million underscores the company’s effective sales strategies and strong market demand for its products and services. Such performance not only builds investor confidence but also sets a positive tone for the company’s future growth prospects.

The company’s ability to surpass both EPS and revenue expectations highlights its resilience and strategic prowess in navigating market challenges. Investors and analysts are likely to view these results favorably, as they indicate a strong foundation for continued growth.

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Guidance

FactSet has provided its fiscal 2025 guidance, which offers a glimpse into the company’s future performance expectations. The company anticipates organic ASV growth of 4% to 6%, reflecting continued demand for its core services. GAAP revenues are expected to be in the range of $2,285 to $2,305 million, suggesting steady revenue growth.

FactSet also projects an adjusted operating margin in the range of 36% to 37%, indicating ongoing efforts to enhance operational efficiency. The adjusted diluted EPS for fiscal 2025 is expected to be between $16.80 and $17.40. This guidance demonstrates the company’s confidence in its ability to maintain profitability while investing in growth initiatives.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

General Motors (NYSE: GM) announced Wednesday that its electric vehicles will now have access to Tesla’s extensive Supercharger network, marking a significant milestone in the evolution of electric vehicle charging infrastructure. The move comes as GM’s stock experiences a notable uptick, reflecting investor confidence in the automaker’s electric future.

GM’s Electric Vehicle Charging Expansion

General Motors has updated software in its electric vehicles, granting customers access to 17,800 Tesla Supercharger plugs nationwide. The announcement, made on September 18, 2024, comes 15 months after GM first revealed plans to adopt Tesla’s EV charging plug. Owners of electric Chevrolet, Cadillac, and GMC vehicles can now purchase “GM approved” Tesla adapters for $225 through each brand’s smartphone app. Future GM vehicles will come with Tesla’s charging port natively installed.

The collaboration introduces the North American Charging Standard (NACS), also known as the SAE J3400 fast charging plug. This standard, which nearly every major automaker has committed to adopting, begins with a software update and adapter use. Within a few years, automakers plan to produce EVs with NACS ports built directly into vehicles, eliminating the need for adapters.

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GM Stock Performance and Financial Overview

As of 12:07 PM EDT on the day of the announcement, GM’s stock price stood at $48.55, up $1.03 or 2.17%. The company’s year-to-date return reached an impressive 36.26%, with a one-year return of 44.58%. Despite a slight dip of 3.19% over three years, the five-year return remained strong at 32.77%.

GM’s market capitalization was reported at $54.566 billion, with a trailing price-to-earnings ratio of 5.34 and a forward P/E of 4.85. The company’s financial highlights include a trailing twelve-month revenue of $178.09 billion and a net income available to common shareholders of $11 billion. With a diluted earnings per share of $8.90 and total cash of $23.43 billion, GM maintains a solid financial position in the competitive auto manufacturing industry.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

When the decade-long Apollo program ran its course and successfully landed the first humans on the Moon, there were no investors to partake in this history. The stake was indirect through taxation as the program was 100% government funded. 

This changes with Intuitive Machines (NASDAQ: LUNR). On Tuesday, as one of the company’s latest government contracts, IM received the record-breaking $4.82 billion in NASA funding over five years under the Near Space Network (NSN) contract.

Since our last Intuitive Machines coverage on September 2nd, LUNR stock has gone up from $4.97 to $8.65 per share, netting investors 74% (unrealized) gains. At that time, it was clear that the company was the main beneficiary of NASA funding for the Moon revisit, and this would likely continue. 

Now that this scenario materializes, is LUNR stock still worth a buy? But first, what do American taxpayers pay Intuitive Machines to do?

Details of the $4.82 Billion Near Space Network (NSN) Contract

On top of its baseline five-year period, the contract has optional doubling potential for another five years. Starting from October 1st 2024 to September 30th 2034 as the final end-point, the contract drives Intuitive Machines funding in three directions.

First, boosting the company’s funding to support greater lander payload capacity and delivery. In February 2024, Intuitive Machines completed the first privately developed landing on the Moon with the Nova-C lander, dubbed Odysseus, under the IM-1 mission. 

Weighing nearly 2 tons and 4m tall, the vessel used liquid methane and liquid oxygen (methalox) in addition to generating 200W from solar panels when it landed to deliver 12 payloads worth of instruments. This included the 125-stainless steel balls sculpture Moon Phases by Jeff Koons.

The Japanese commercial counterpart to Intuitive Machines, startup iSpace, failed to do the same with its Hakuto-R lander in April 2023, despite being nearly half the size and weight. 

Second, the NASA contract will fund Intuitive Machines’ deployment of microsatellites to map the Moon’s surface in 4K resolution. This will go a long way in detecting just the right landing sites for future landers. In turn, it should make scientific instruments more effective when they are deployed on more interesting locations.

Lastly, Intuitive Machines will use the $4.82 budget to develop infrastructure, logistics and mapping solutions to facilitate the Moon’s exploration.

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Is Intuitive Machines also a SpaceX Exposure?

Still not publicly traded, Elon Musk’s SpaceX is the main facilitator of renewed lunar exploration. The medium-lift Falcon 9 rocket delivered the Nova-C (Odysseus) lander. The first lunar satellite is scheduled for late 2025 under the IM-3 mission. 

Within the NSN scope, Boeing Starliner was supposed to deliver two astronauts to the International Space Station (ISS) and back from a short 8-day visit in June. Still stranded, Suni Williams and Butch Wilmore now rely on SpaceX to return them home in February 2025 via the SpaceX Crew Dragon capsule.

In other words, as taxpayers fund NASA, NASA funds Intuitive Machines, which then pays SpaceX for future launches for the Commercial Lunar Payload Services (CLPS) initiative. By the same token, it is the dependability of SpaceX rockets that will ultimately drive LUNR valuation.

Intuitive Machines Investing Proposition

It is likely that the value of Intuitive Machines stock will now grow simply on the basis of exposure to historical undertaking. As a matter of national pride, each news item should boost more investor participation.

This is why it is difficult to gauge the company’s prospects, government-funded as it is. In late Q4 2024, IM will undertake the IM-2 mission, forecasting “20 times better precision”, according to IM CEO Stephen Altemus.

The company will upgrade Nova-C lander to that effect without it having an impact on schedule. Outside of mere landers, IM is also looking to secure a rover contract from NASA as a part of the agency’s Lunar Terrain Vehicle (LTV) Services project.

Although IM gained $30 million for LTV in April, this was the first feasibility step. With the latest $4.82 billion funding, included for more exciting lunar exploration via rover, it is not difficult to see this would do wonders for satellite-driven 4K resolution to draw in even more investors.

At the moment, 12.30% of LUNR shares are held by insiders, while 31% are held by institutions. Although a botched mission could drive LUNR stock into a downfall, this will likely be a coveted “buy the dip” opportunity, given the long span of time IM has at its disposal.

Vice-versa, today’s LUNR stock may seem like the very bottom by the time the IM-3 mission rolls out in late 2025 and is successfully completed. 

Do you think IM could take advantage of extra funding via capital markets even more than through NASA funding? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

General Mills, Inc. (NYSE: GIS) reported its fiscal 2025 first-quarter results, showing a mixed performance across key financial metrics. Net sales for the quarter were $4.8 billion, a decline of 1% compared to the same period last year. Organic net sales also mirrored this 1% drop, driven primarily by unfavorable net price realization and mix.

Operating profit took a significant hit, dropping 11% to $832 million, while adjusted operating profit fell by 4% in constant currency to $865 million. Diluted earnings per share (EPS) stood at $1.03, down 10%, with adjusted diluted EPS at $1.07, reflecting a 2% decrease in constant currency.

Breaking down the performance by segments, the North America Retail segment saw a 2% decline in net sales to $3.0 billion, influenced by lower pound volume. The North America Pet segment also experienced a 1% drop in net sales to $576 million, driven by unfavorable net price realization and mix.

The North America Foodservice segment remained flat at $536 million, while the International segment’s net sales were essentially unchanged at $717 million. Despite these challenges, the North America Foodservice segment posted a 21% increase in operating profit, indicating some areas of strength within the company.

General Mills Beats Expectations in Fiscal 2025 Q1

When comparing the current performance against expectations, General Mills fell slightly short. Analysts had anticipated an EPS of $1.05 and revenue of $4.77 billion for the quarter. The actual EPS of $1.03 missed the mark by $0.02 but the adjusted EPS of $1.07 exceeded the expectations, while the revenue of $4.8 billion slightly exceeded expectations by $0.03 billion.

The company’s overall performance was influenced by several factors, including input cost inflation and higher selling, general, and administrative (SG&A) expenses, which included increased media investment.

Gross margin decreased by 130 basis points to 34.8% of net sales, largely due to input cost inflation and unfavorable mark-to-market effects.The North America Retail segment’s 2% decline in net sales was primarily due to lower pound volume, although this was partially offset by favorable net price realization and mix. In contrast, the North America Pet segment’s operating profit increased by 7%, driven mainly by Holistic Margin Management (HMM) cost savings and lower other supply chain costs.

The International segment faced significant challenges, with a 58% drop in operating profit due to input cost inflation and higher SG&A expenses, despite some growth in Europe & Australia and distributor markets. The company’s overall operating profit margin decreased by 180 basis points to 17.2%.

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Guidance

General Mills reaffirmed its full-year fiscal 2025 outlook, despite the mixed results in the first quarter. The company expects organic net sales to range between flat and up 1% for the full year. Adjusted operating profit is anticipated to be between down 2% and flat in constant currency, while adjusted diluted EPS is projected to range from down 1% to up 1% in constant currency. The company also aims for a free cash flow conversion of at least 95% of adjusted after-tax earnings.

These targets do not yet reflect the impact of the proposed North American Yogurt divestitures, which are expected to be incorporated into the outlook after the transactions close in calendar 2025. General Mills remains focused on executing its Accelerate strategy, which aims to drive sustainable, profitable growth and top-tier shareholder returns. The strategy emphasizes building brands, relentless innovation, leveraging scale, and standing for good. CEO Jeff Harmening highlighted the company’s commitment to improving competitiveness and leading growth in its categories through superior product innovation and increased investment.

The company also plans to generate HMM cost savings of approximately 4 to 5% of the cost of goods sold, exceeding the anticipated input cost inflation of 3 to 4%. This margin flexibility is expected to be reinvested in the business to drive improved volume performance.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

Despite the September Effect burden on top of the early August market correction, the US stock market has largely recovered. Ahead of the much-anticipated rate cuts, the Dow Jones Industrial Average index (DJI) closed at a record high on Monday, presently at 41,800 and up 3.5% within the last five days.

Likewise, the tech-oriented Nasdaq Composite (IXIC) rose by nearly 4%, returning to August-end level of over 17,700. At the same time, CBOE Volatility Index (VIX) is down 10% since last Wednesday, mirroring investors’ optimism as they anticipate the end of the high interest rate regime. 

Although market swing could still turn bearish due to substantial rate cut lag and carry-trade dynamics, the market appears set for more near-term rally. Taking into account prior market corrections, which stocks are presently discounted?

Lam Research Corporation (NASDAQ: LRCX)

Alongside Taiwan Semiconductor Manufacturing Company (TSMC), Lam Research is a critical cog of the global semiconductor industry. While TSMC manufactures chips for fabless companies like Nvidia and Intel, Lam provides TSMC and others the equipment necessary to do so.

Specifically, Lam supplies wafer fabrication equipment. For instance, the company’s ALTUS lineup makes it possible to manufacture advanced memory, chip packaging and transistors via atomic layer deposition (ALD) and chemical vapor deposition (CVD). Likewise, Lam’s Syndion makes it possible to manufacture dense integrated circuits necessary for smart devices via deep silicon etching.

Suffice to say, Lam Research is in the top tier of companies that rely on scarce human capital, competing with Dutch ASML Holding (ASML) and Applied Materials (AMAT). Being adjacent to the semiconductor industry, Lam is also a cyclical company, evidenced by its annualized ups and downs.

Lam Research’s annualized revenue growth per quarter. Image credit: MacroTrends

At present, AI demand is still ramping up as the Big Tech sector finds the most cost-effective way to deploy generative AI products. It also bears keeping in mind that text-to-video platforms are still in an incipient stage, but they will require the largest deployment of chips due to highest computing demands. 

In Q2 2024 earnings ending June, Lam Research reported $1 billion net income vs $0.8 billion in the year-ago quarter, having raised record cash reserves to $5.85 billion. The company is clearly in the upcycle, but AI is yet an unknown quantity that could protract it for far longer.

Lam’s price-to-book ratio is presently 11.54, while its forward price-to-earnings ratio is 21.01. Against the 52-week average of $841.98, LRCX stock is currently priced at $771.16 per share. Nasdaq’s analyst forecasting aggregation is quite optimistic for Lam Research stock.

The bottom outlook is significantly higher than the present price level, at $893, while the average LRCX price target is $1085.71 per share. This would indicate an impressive potential upside of 40%.

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Intel (NASDAQ: INTC)

Standing out from the Nvidia/AMD/Intel trio, Intel is the only semiconductor company with its own foundries, while the other two rely on TSMC capacities. Intel is also in a heavy negative news cycle. 

Across social media platforms, Intel has been bearing the consequences of its eroded quality control issues. On top of the previously reported elevated voltage issues with 13th/14th-Gen desktop CPUs, Intel recently officially recognized oxidation problems from late 2022. 

Although these manufacturing mishaps serve as a compounding event to pile on Intel, it still stands that Intel is a strategic vehicle for US-based chip manufacturing.

Due to costs related to foundry building efforts, it is yet unclear if Intel will bifurcate its holdings. Such news would likely boost INTC stock based on gains when the restructuring potential was revealed in late August. But with lower interest rates on the horizon, Intel may opt to refinance its substantial $48.3 billion debt load, of which $4.7 billion is short-term debt.

Against the 52-week average of $36.11, INTC stock is now at $21.93 per share. The bottom outlook is close at $19.8 while the average INTC price is $26.09. The high forecast is $42, provided Intel leaves the current news cycle behind and improves its financials. 

iQIYI, Inc. (NASDAQ: IQ)

iQIYI is a Chinese take on Netflix, providing one of the cheapest exposures to this promising business model. Alongside subscription fees for its streaming services and exclusive content, iQIYI offers free access that is ad-supported.

Even more so than Netflix, IQ partners with multiple companies for original series, from Philippine broadcaster ABS-CBN and Malaysian Astro to Bingo Group. At the end of 2023, the company partnered with over 90,000 content creators to churn out content, making it more of a hybrid between Netflix and YouTube.

In the latest Q2 2024 earnings delivered in August, iQIYI reported a 5% year-over-year revenue decline to $1 billion, generating $9.5 million net income. Being highly dependent on content, the company’s membership revenue declined 9% year-over-year.

With that said, iQIYI holds substantial $888,391 million in cash reserves for the next content cycle. At present penny stock price of $2 per share, IQ shares are halved from their 52-week average of $4.08.

The average IQ price target is $3.59 based on 10 analyst inputs. This makes for a 71% potential upside, while the optimistic forecast of $5.1 is even more enticing. 

Do you prefer cheap, high-risk/high-reward stocks or more expensive, relatively safe stocks? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

In a bustling day on Wall Street, three tech giants are making waves with significant announcements and stock movements. Intel (NASDAQ: INTC), Hewlett Packard Enterprise (NYSE: HPE), and Microsoft (NASDAQ: MSFT) are each navigating unique challenges and opportunities in the rapidly evolving tech landscape, particularly in the realm of artificial intelligence.

Intel Shares Surge on Major AWS Deal

Intel Corporation (INTC) shares surged 6.81% to $22.33 in morning trading, buoyed by a major deal with Amazon Web Services (AWS). The chipmaker announced it will produce custom AI chips for AWS, marking a significant milestone for Intel’s struggling foundry business. This multibillion-dollar agreement is seen as a vote of confidence in Intel’s capabilities and could potentially add over $3 billion to the company’s market value. Despite a challenging year with a year-to-date return of -54.97%, this deal offers a glimmer of hope for Intel’s turnaround efforts.

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HPE Stock Gains on Analyst Upgrade

Hewlett Packard Enterprise (HPE) saw its stock climb 5.92% to $18.25 following an analyst upgrade from Bank of America. BofA raised its rating on HPE to Buy from Neutral and increased the price target to $24 from $21. The upgrade comes as HPE moves forward with its $14 billion acquisition of Juniper Networks, a deal expected to yield significant cost synergies. HPE’s recent Q3 financial report highlighted strong AI server revenues of $1.3 billion and a substantial backlog, indicating growing momentum in the AI infrastructure market.

MSFT Announces $60 B Share Buyback Program, 10% Dividend Hike

Microsoft Corporation (MSFT) shares rose 1.24% to $436.67 after the tech giant announced a new $60 billion share buyback program and a 10% increase in its quarterly dividend. The company’s board approved a quarterly dividend of $0.83 per share, up from $0.75 in the previous quarter. Microsoft continues to invest heavily in AI infrastructure, with capital spending up 77.6% in the most recent quarter. The company’s year-to-date return stands at an impressive 16.75%, reflecting investor confidence in its AI-driven growth strategy.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Ferguson (NYSE: FERG) reported fourth-quarter sales of $7.9 billion, reflecting a 1.4% increase compared to the same period last year. Despite experiencing a price deflation of approximately 2%, the company managed to achieve this growth through a combination of organic revenue and acquisitions. The operating margin for the quarter stood at 10.2%, a 20 basis point improvement from the previous year. On an adjusted basis, the operating margin was 10.8%, up by 40 basis points.

Ferguson’s diluted earnings per share (EPS) for the fourth quarter were $2.23, but on an adjusted basis, the EPS was $2.98. The company declared a quarterly dividend of $0.79 per share and completed four acquisitions during this period. Additionally, Ferguson repurchased shares worth $213 million in the fourth quarter, demonstrating its commitment to returning value to shareholders.

Full-year performance showed net sales of $29.6 billion, a slight decrease of 0.3% from the previous year. The gross margin improved by 10 basis points to 30.5%, and the operating margin remained flat at 8.9%. On an adjusted basis, the operating margin was 9.5%, down 30 basis points. The full-year diluted EPS was $8.53, while the adjusted EPS was $9.69. The company generated strong cash flow, with $1.9 billion in net cash from operating activities.

Ferguson Beats EPS Expectations at $2.89

The fourth-quarter results reveal that Ferguson’s performance was below market expectations. Analysts had anticipated an EPS of $2.89, but the reported EPS was $2.23. However, the adjusted EPS of $2.98 exceeded expectations. This discrepancy was largely due to one-time, non-cash deferred tax charges arising from the new corporate structure, which impacted the reported EPS.

Revenue expectations for the quarter were set at $8.06 billion, but Ferguson reported $7.9 billion in sales. Despite this shortfall, the company managed to achieve a 1.4% increase in net sales compared to the same period last year. This growth was primarily driven by acquisitions, which contributed 1.7% to the overall sales growth, offsetting a 0.2% decline in organic revenue and a 0.1% adverse impact from foreign exchange rates.

Ferguson’s gross margin for the quarter was 31.0%, a 40 basis point improvement compared to last year. This increase was attributed to the value provided to customers and a decrease in inventory reserves. The operating profit for the quarter was $811 million, a 3.7% increase from the previous year, while the adjusted operating profit was $857 million, a 5.3% increase.

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Guidance

Ferguson has issued its guidance for FY2025, projecting modest full-year growth with continued market outperformance. The company anticipates net sales to grow in the low single digits, assuming market conditions remain challenging and pricing slightly down for the year. The adjusted operating margin is expected to be between 9.0% and 9.5%.

Interest expenses are projected to range between $180 million and $200 million, while the adjusted effective tax rate is estimated to be around 26%. Capital expenditures are expected to be between $400 million and $450 million. These projections reflect Ferguson’s strategy to invest in scale and capabilities, aiming to capitalize on multi-year structural tailwinds such as underbuilt and aging U.S. housing, non-residential large capital projects, and opportunities with dual-trade plumbing and HVAC contractors.

CEO Kevin Murphy expressed confidence in the company’s ability to outperform the market as it returns to growth. He highlighted the balanced business mix and the ability to deploy scale locally as key factors that will enable Ferguson to navigate the ongoing challenging market environment. The company plans to continue its investment in organic growth, sustainable dividend growth, and market consolidation through acquisitions.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Chipotle Mexican Grill is taking a significant step towards automation in its restaurants, introducing robots to assist with food preparation as it grapples with rising labor costs. The fast-casual chain has deployed an avocado-processing robot called ‘Autocado’ at its Huntington Beach, California location, while also testing an automated bowl-and-salad maker at another California store. This move comes as the company adapts to California’s new $20 per hour minimum wage for fast food workers, which took effect on April 1, 2024.

Automating the Guacamole Process

The ‘Autocado’ robot, developed by Los Angeles-based startup Vebu, can process an avocado in just 26 seconds, cutting, coring, and peeling the fruit before an employee mashes it into guacamole. This innovation could significantly streamline operations for Chipotle, which goes through more than 5 million cases of avocados annually. In addition to the ‘Autocado’, Chipotle is testing an “augmented makeline” at its Corona Del Mar store. This automated system dispenses ingredients like rice, corn, and lettuce into bowls, further reducing the manual labor required in food preparation.

Chipotle’s foray into automation is backed by a substantial financial commitment. The company has invested in these technologies through a $100 million venture fund, which received an additional $50 million boost in February 2024. This fund includes a stake in Hyphen, the startup behind the automated bowl-and-salad maker. The market has responded positively to Chipotle’s automation efforts, with analysts suggesting that this technology could give the chain a competitive edge. As of 12:59 PM EDT on the day of reporting, Chipotle’s stock (NYSE: CMG) was trading at $2,157.58, up 2.61% or $57.47.

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Financial Performance and Outlook

Despite the challenges posed by rising labor costs, Chipotle’s financial performance remains strong. The company boasts a market capitalization of $78.862 billion and a trailing twelve-month (TTM) revenue of $10.66 billion. Its profit margin stands at 13.23%, with a return on equity (TTM) of 43.54%. The stock’s forward price-to-earnings ratio of 41.84 and PEG ratio of 2.70 suggest that investors have high growth expectations for the company. However, Chipotle faces the challenge of balancing efficiency gains from automation with maintaining food quality and customer service, a crucial factor in the competitive fast-casual dining sector.

As the debate over the impact of automation on jobs in the food service industry continues, Chipotle’s moves highlight the broader trend of increasing automation in response to rising labor costs.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

Just as the interest rate hiking cycle had a suppressive effect on the economy to curb inflation, the upcoming interest rate cuts are viewed as relieving the pressure. Scheduled for 17-18 September, the FOMC meeting should deliver the first rate cut since 2020.

With borrowing costs reduced, this should boost consumer confidence and more business investing. In anticipation of the cutting cycle, Brent oil futures (for November) are up $1.33 or 1.86% at press time. For September, FedWatch tool suggests a 50 bps cut with 61% probability, lowering the interest rate from present 5.00% – 5. 25% to 4.75% – 5.00% range.

At the same time, the market could suffer a bearish brunt. Not only do rate cuts have a long lag, but this interim period creates the perception of economic weakness. Moreover, because lower interest rates reduce the return on US investments, holding USD becomes less attractive, which could depreciate the currency. 

In that scenario, foreign investors could exert a selling pressure by selling US equities to avoid foreign exchange (FX) losses. This has the potential of a negative feedback loop that erodes investor confidence, which in turn instigates more selling.

But with these factors in mind, following a market correction, which stocks could benefit from an alleviated interest rate regime?

Tesla (NASDAQ: TSLA)

In October 2023’s earnings call, Elon Musk made it clear that a high interest rate regime is a great threat to Tesla’s bottom line. 

“I just can’t emphasize it enough that for the vast majority of people, buying a car is about the monthly payment. And as interest rates rise, the proportion of that monthly payment that is interest increases naturally.”

Ahead of the presidential elections in November, Tesla is becoming an even more interesting investing proposition outside of ending the high interest rate regime. In the case of former President Trump’s second term, it is likely that his administration will be hostile to DEI policies, as Trump made it clear that “We will terminate every Diversity, Equity, and Inclusion program across the entire federal government.”

Tesla already dropped DEI language from its filing report in January 2024, despite elevated scrutiny from multiple federal agencies, including DoJ, SEC, NLRB and NHTSA. Even more importantly, Trump favors exceedingly high tariffs against China. 

This is critical for Tesla’s viability, as Chinese EV companies have sufficiently scaled up their operations to offer competitive EVs. For instance, BYD’s cheapest offering is the Seagull model at around $13k vs Tesla’s upcoming Model 2 that shouldn’t go under $25k.

Even if the upcoming October Robotaxi event goes sour, these factors will likely drive TSLA stock up if Trump’s 2nd turn materializes. In the meantime, Tesla holds $30.7 billion in cash and cash equivalents ending June against total liabilities worth $45.5 billion, of which current liabilities constitute $27.7 billion. 

In the last three months, TSLA stock went up 29%, priced at $229.83 against the 52-week average of $209.04. This is still significantly under the 52-week high of $273.93 per share.

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Charles Schwab (NASDAQ: SCHW)

After the initial realignment as the economy shifts from a high to low interest rate regime, stock market investing is likely to make a comeback in a big way. Whether the market rally is immediate or delayed, Charles Schwab has an edge over Robinhood by providing thousands of no-transaction-fee mutual funds.

In the latest August activity, Schwab reported a 4% increase in new brokerage accounts compared to year-ago. Schwab’s total client’s assets increased to $9.74 trillion, up 20% year-over-year. 

In July 2024, SCHW stock dropped by nearly 5% following Q2 earnings. Although Schwab’s trading revenues were up 1% to $4.69 billion, this was offset by a 6% drop in net interest income, falling short of expectations. Nonetheless, the company has a record net core base with which to work.

On Jim Cramer’s show, CEO Walt Bettinger also insisted that the company’s cash sorting issues are not related to a repeat of the regional banking crisis.

“The circumstance with our stock decline in the last few days has nothing to do whatsoever with the regional banking-related issues of a year plus ago,”

In the last three months, SCHW stock is down 13% to $63.74 against the 52-week average of $65.48 per share. With Nasdaq’s bottom forecast of $64, this makes it a solid entry opportunity. The average SCHW price target is $75 while the ceiling twelve months ahead is $90 per SCHW share. 

Textron Inc. (NASDAQ: TXT)

Mentioned in September’s lineup of space stocks, Textron is one of the infrastructural layers of the aerospace and defense industry. As lower interest rates spur more favorable loans for aircraft purchases, Textron would benefit. In particular for civilian Beechcraft and Cessna aircraft as mid-sized solutions for larger companies.

With Boeing’s reputation eroded, Textron is likely to even gain more government contracts. For instance, in March 2024, subsidiary Bell Textron gained a $455 million contract for 12 AH-1Z helicopters for Nigeria.

Furthermore, Textron employs a wide range of DEI initiatives. This burden could be eliminated with former President Trump’s 2nd term to operate more efficiently. In Q2 2024 earnings, the company reported $3.5 billion revenue, of which $25 million went to interest expenses.

In the quarter, Textron generated $247 million net income vs $275 million in the year-ago quarter, leaving the company with $1.4 billion cash holdings vs $1.75 billion in the same period last year.

Currently priced at $88.28 per share, TXT stock is just above its 52-week average of $85. The present TXT price aligns with the low estimate of $87 while the average TXT price target is $102.11 per share. The ceiling for TXT stock is $115 based on 15 analyst inputs.

Do you think recession, as officially stated, will be completely avoided? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

In a day of significant developments for the technology sector, three major players are making headlines with strategic moves and partnerships. Intel Corporation (NASDAQ: INTC), CrowdStrike Holdings (NASDAQ: CRWD), and Oracle Corporation (NYSE: ORCL) are each positioning themselves for growth in their respective markets, from semiconductor manufacturing to cybersecurity and cloud computing.

Intel Corporation Shares Gain on Reports of $3.5 B Federal Grant

Intel Corporation (INTC) shares surged 4.25% to $20.50 as reports emerged of a potential $3.5 billion federal grant for Pentagon chip production. The funding, part of the “Secure Enclave” program, aims to bolster domestic semiconductor manufacturing for critical military and intelligence applications. Intel plans to invest in an Arizona production plant, cementing its position as a key supplier for national security technology. Despite recent poor performance across all timeframes, this news has given the stock a boost. With a market cap of $87.637 billion and a forward P/E ratio of 18.62, Intel’s alignment with strategic national priorities could signal a turnaround for the chip giant.

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CrowdStrike Holdings Stock Climbs After Expansion of Accelerator Program in Partnership with AWS and NVDA

CrowdStrike Holdings (CRWD) saw its stock climb 4.10% to $269.75 following the announcement of its expanded Cybersecurity Startup Accelerator program. In partnership with Amazon Web Services (AWS) and newly joined NVIDIA, the program offers selected startups a free eight-week curriculum, up to $25,000 in AWS credits, and potential funding opportunities. This initiative not only solidifies CrowdStrike’s position in the cybersecurity ecosystem but also fosters innovation in the field. Trading near the upper end of its 52-week range, CrowdStrike boasts a market cap of $66.123 billion and has garnered bullish sentiment from analysts, reflecting its strong performance and growth potential in the cybersecurity market.

Oracle Corporation Jumps on Strategic Partnership with AWS

Oracle Corporation (ORCL) shares jumped 5.26% to $170.56 after announcing a strategic partnership with Amazon’s cloud unit (AWS). This move follows similar alliances with Microsoft and Google, marking Oracle’s adaptive strategy in the competitive cloud and AI landscape. By placing its hardware inside partners’ data centers, Oracle aims to provide faster processing between its databases and partner cloud services. The company continues to pitch its own cloud platform as a cost-effective alternative while also offering private cloud solutions for businesses with specific needs. Trading near all-time highs with a market cap of $472.617 billion, Oracle’s stock reflects its strong performance across all timeframes, though analyst recommendations remain mixed.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

It is fair to assume that any data, from visual to textual, has been used to train AI models since the dawn of the Internet. It is now incumbent on AI companies to clean and fine-tune those datasets to reduce noise and deliver useful products.

In the worst-case scenario, even if current AI models don’t budge from their performance ceiling, they would still be massively useful for automating tasks. As of March 2024, AI reporter Maxim Lott rated Claude-3 as the best performing model, achieving an IQ score of 101, with ChatGPT-4 falling behind at an IQ of 85.

On September 24th, OpenAI is scheduled to release Strawberry as a standalone ChatGPT offshoot, purportedly customized to offer a particular set of advantages and drawbacks. However, given the clear trend of performance improvements, exposure to AI stocks seems sounder than ever.

In the recent Q1 FY2025 earnings call for Oracle (NASDAQ: ORCL), billionaire Larry Ellison noted his bullishness on data center growth for generative AI models.

“When I talk about building gigawatt or multigigawatt data centers for these AI models, these frontier models, the entry price for a real frontier model for someone that wants to compete in that area is around $100 billion,”

The question is, which publicly traded companies will be the beneficiaries? Considering their 3-month price action, these are the AI candidates for September exposure entry.

Honda Motor Company (NASDAQ: HMC)

Why is this legacy Japanese auto manufacturer on an AI stock list? To kill two birds with one stone – eVTOL and AI. Within a 3-month period, HMC stock is down 3.6%.

If any company is to reliably unroll a practical and robust autonomous flying taxi, it’s Honda. Unlike other eVTOL companies, Honda adopted a hybrid approach, combining a gas turbine with battery storage that powers 8 rotors for vertical take-off and landing. Having already received FAA’s certification for its engine and airframe, Honda eVTOL is set to have one of the longest ranges of up to 400 km (250 miles).

To boost AI capability for autonomous flight, Honda recently invested in SiLC Technologies,  via Honda Xcelerator Ventures, for its frequency-modulated continuous wave (FMCW) lidar solutions. The company’s Eyeonic Vision Chip extends long-range detection over 2km, giving advanced machine vision to eVTOLs.

Honda first announced its AI platform, Cooperative Intelligence (CI), in November 2022, featuring mapless cooperative driving technology. Most importantly from an investing perspective, Honda’s financial health is only growing stronger, as shown in the company’s free cash flow figures from 2020 to 2024.

Image credit: Honda

At the end of August, Honda reported a 105% year-over-year global production increase, delivering 2,179,983 vehicles from January to July 2024. 

Currently, HMC stock is underinvested, priced at $31.51 per share against the 52-week average of $32.98 per share. According to WSJ, the average HMC price target is $39.26, giving investors a potential upside of 24%.

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Pegasystems Inc. (NASDAQ: PEGA)

Pegasystems is similar to Palantir (NYSE: PLTR), having its own business unit Pega Government. Like Palantir, the company utilizes generative AI to identify and streamline workflows of organizations in order to boost their efficiency. Within its Pega Infinity suite, Pega GenAI even generates user interfaces.

Suffice to say, these solutions are a major boon to companies looking to offset costly developer expenditures and rapidly deploy software automation. By partnering with Google Cloud, AWS and Microsoft Azure, Pega Cloud offers enterprises easy integration to their existing services.

As of latest Q2 2024 earnings ending June 30th, Pegasystems reported 119% year-over-year free cash flow increase to $218 million. In contrast to net loss of $46.8 million in the year-ago quarter, the company generated $6.6 million net income (GAAP) this quarter. Subscription revenue generated the largest growth at 26%, ahead of Pega Cloud’s 17% growth.

Against the 52-week average of $56.04, PEGA stock is now priced at $67.14 per share, having received a 13% value boost over the last three months. The average PEGA price target is $83, giving investors a potential upside of 23%, according to Nasdaq data. Interestingly, PEGA’s low estimate of $74 is also above the current price level.

Advanced Micro Devices (NASDAQ: AMD)

Since June’s in depth coverage of AMD vs Nvidia, AMD stock dropped by 7% following wider market pullback. Nonetheless, AMD exposure is now more relevant than before. Not only is AMD now the preferred choice for CPUs after protracted Intel mishaps, but the company is making a concerted effort to prioritize AI chips over high-end GPUs for gaming.

In a recent Tom’s Hardware interview, AMD’s general manager of Computing and Graphics division, Jack Huynh, emphasized the race to capture developers as a key expansion strategy.

“Because without scale right now, I can’t get the developers. If I tell developers, ‘I’m just going for 10 percent of the market share,’ they just say, ‘Jack, I wish you well, but we have to go with Nvidia.’ So, I have to show them a plan that says, ‘Hey, we can get to 40% market share with this strategy.’ Then they say, ‘I’m with you now, Jack. Now I’ll optimize on AMD.’ Once we get that, then we can go after the top.”

This is not surprising given AMD’s acquisition of ZT Systems in August, worth $4.9 billion, alongside July’s acquisition of SiloAI, Europe’s largest private AI lab.

Both NVDA and AMD stock have fallen within a 3-month period, but AMD stock is slightly ahead at -5.5% vs -7% for Nvidia. AMD’s 52-week average is $148.80 vs current price of $151.57 per share. Nasdaq’s average AMD price target is $190.25, giving investors a potential upside of 25%.

The bottom outlook for AMD stock is aligned with the current price level, at $150 per share.

Do you think current investments are leaning too heavily on AI, or is the hype yet to materialize? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

The post 3 AI Stocks Worth Buying in September 2024 appeared first on Tokenist.

Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

In a day of mixed market movements, three technology companies are making waves on Wall Street. Uber Technologies Inc. (NASDAQ: UBER), Adobe Inc. (NASDAQ: ADBE), and MicroStrategy Inc. (NASDAQ: MSTR) are each experiencing significant stock price fluctuations due to recent announcements and financial results.

Uber Shares Surge Following Waymo Partnership Expansion

Uber Technologies Inc. (UBER) shares surged 5.07% to $71.54 following news of an expanded partnership with Alphabet’s Waymo for autonomous ride-hailing services. The company announced plans to offer driverless rides in Austin, Texas, and Atlanta, Georgia, beginning in early 2025. This expansion, which builds on their initial collaboration in Phoenix, represents a significant step forward in Uber’s autonomous vehicle strategy. The move is seen as a response to investor pressure and a potential counter to Waymo’s growing presence in the ride-sharing market. Uber’s stock has shown strong performance, with a year-to-date return of 16.19% and a one-year return of 49.29%, outpacing the broader S&P 500 index.

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Adobe Stock Plummets After Firm Reports Weaker-than-Expected Guidance

Adobe Inc. (ADBE) experienced a sharp decline of 9.39%, with shares falling to $531.50 after the company released its third-quarter results and provided weaker-than-expected guidance for the fourth quarter. Despite reporting a revenue increase of 11% year-over-year to $5.41 billion and a net income of $1.68 billion for Q3, Adobe’s fourth-quarter revenue forecast of $5.50 billion to $5.55 billion fell short of analysts’ expectations of $5.61 billion. The software giant’s stock has underperformed the S&P 500 this year, with a year-to-date return of -10.91%. However, some analysts remain optimistic, with Goldman Sachs maintaining a buy rating and a $640 price target, citing Adobe’s progress in AI integration.

Microstrategy Stock Jumps Following News of $1.11 Billion Bitcoin Buy

MicroStrategy Inc. (MSTR) shares jumped 7.02% to $139.95 following the announcement of a significant Bitcoin purchase. The company acquired an additional 18,300 bitcoins for approximately $1.11 billion between August 6 and September 12, 2024, at an average price of about $60,408 per bitcoin. This latest acquisition brings MicroStrategy’s total bitcoin holdings to 244,800, with a total investment of $9.45 billion. The company’s aggressive cryptocurrency strategy has led to remarkable stock performance, with a year-to-date return of 121.65% and a one-year return of 302.58%, significantly outperforming the broader market. MicroStrategy funded the purchase through stock sales, selling 8,048,449 shares to raise $1.11 billion.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

Boeing Co. (NYSE: BA) is grappling with its largest labor disruption in over a decade as more than 30,000 workers walked off the job early Friday, bringing production of most aircraft to a standstill. The strike, which began after midnight, follows an overwhelming rejection of a tentative labor agreement by members of the International Association of Machinists and Aerospace Workers (IAM), with 94.6% voting against the deal and 96% supporting the work stoppage.

IAM Workers Reject Tentative Deal with Boeing, First Strike Since 2008

The IAM characterized the action as an “unfair labor practice strike,” citing allegations of discriminatory conduct, coercive questioning, and unlawful surveillance by Boeing management. Workers rejected a tentative four-year contract unveiled on September 8, which offered a 25% wage increase over four years and improved retirement benefits. Union members argued that the proposal failed to adequately address rising living costs, having initially sought raises of about 40%.

This marks the first strike by Boeing machinists since 2008, when workers were off the job for nearly two months. The current work stoppage halts production of most Boeing aircraft, including its bestselling 737 Max, and comes at a critical time for the aerospace giant. Boeing has been striving to increase output and rebuild its reputation following a series of safety crises, including a door plug blowout on a 737 Max 9 in January 2024 that intensified federal scrutiny of its production lines.

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Boeing Stock Tumbles in Premarket Trading

The strike’s financial implications for Boeing could be severe. Analysts estimate a potential 30-day cash impact of $1.5 billion, with concerns that prolonged disruption could destabilize suppliers and supply chains. The news sent Boeing’s stock tumbling in premarket trading, with shares down 3.21% to $157.55 as of 8:49 AM EDT on Friday.

Boeing’s financial health was already precarious before the strike, with the company having burned through approximately $8 billion so far in 2024 and facing mounting debt. The labor dispute presents yet another challenge for new CEO Kelly Ortberg, who has been at the helm for just five weeks.

The strike underscores Boeing’s ongoing struggles, reflected in its stock performance. Year-to-date, Boeing shares have declined 37.55%, significantly underperforming the S&P 500’s 17.32% gain. With a market capitalization of $100.303 billion and a trailing twelve-month EPS of -$5.65, the company faces an uphill battle to regain investor confidence.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

The post Over 30,000 Boeing Workers Go on Strike, Stock Tumbles appeared first on Tokenist.

Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

Warner Bros. Discovery (NASDAQ: WBD) and Charter Communications (NASDAQ: CHTR) announced a groundbreaking multi-year distribution partnership on Thursday, September 12, 2024, aimed at reimagining the future of video content delivery. The early renewal agreement integrates linear video and streaming services, marking a significant shift in the video distribution landscape as both companies adapt to changing viewer preferences.

WBD and Charter Partnership Details and Implications

The deal includes the addition of Max (Ad Lite) and Discovery+ to all Spectrum TV Select packages at no extra charge, while extending Spectrum’s carriage of WBD’s linear network portfolio. This move adds nearly $60 per month of retail direct-to-consumer (DTC) value to Spectrum’s bundle proposition. Charter plans to fully deploy DTC distribution to its broadband customers by 2025, offering more flexible package options.

For Warner Bros. Discovery, this partnership expands the distribution of its ad-supported Max service to millions of Spectrum customers. It also recognizes the value of WBD’s linear content and investments in original programming, sports, and news, potentially increasing the company’s audience reach and strengthening its position in the evolving video ecosystem.

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WBD and CHTR Gain on Partnership

The announcement had an immediate impact on both companies’ stock prices. As of 11:08 AM EDT on the day of the announcement, Warner Bros. Discovery (WBD) stock was trading at $7.59, up $0.65 (9.37%). Despite this positive movement, WBD’s stock has significantly underperformed the S&P 500 over the past year, with a one-year return of -34.46% and a year-to-date return of -33.30%.

Charter Communications (CHTR) also saw a boost in its stock price, trading at $336.29, up $8.87 (2.71%). While CHTR has outperformed WBD over the past year, it too has lagged behind the S&P 500, with a one-year return of -22.84% and a year-to-date return of -13.48%.

The positive stock movements for both companies on the day of the announcement suggest that investors view this partnership as a strategic move to address the challenges faced by traditional media and cable companies in an increasingly streaming-dominated market.

However, the long-term financial implications of the deal remain to be seen, as both companies continue to navigate the rapidly changing media landscape.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

Moderna, Inc. (NASDAQ: MRNA) announced today a significant reduction in its research and development budget, sending shockwaves through the biotech industry and causing its stock to plummet. The company, known for its mRNA technology and COVID-19 vaccine, plans to cut $1.1 billion from its R&D spending by 2027 as it grapples with commercial setbacks and a shifting market landscape.

Moderna’s Strategic Shift and Pipeline Adjustments

In a move described as a “more selective and paced approach” to drug development, Moderna outlined plans to reduce its annual R&D spending from the current $4.8 billion to between $3.6 billion and $3.8 billion by 2027. The company has discontinued five programs, including vaccines for endemic human coronaviruses and a pediatric RSV program, as well as several oncology and cardiovascular candidates. Notably, Moderna has abandoned plans for accelerated approval of its standalone flu vaccine, shifting focus to a flu-COVID combination shot.

Despite these cuts, Moderna maintains ambitious goals, aiming to secure 10 approvals over the next three years. However, the company has pushed back its break-even timeline to 2028, two years later than previously anticipated. This delay, coupled with regulatory hurdles for key prospects like the cancer therapy mRNA-4157, partnered with Merck & Co., has raised concerns about Moderna’s path to profitability.

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Moderna Stock Drops Over 17%

The announcement triggered a sharp decline in Moderna’s stock price, which fell 17.62% to $65.50 as of 10:02 AM EDT. This drop reflects investor concerns about the company’s future prospects and ability to diversify beyond its COVID-19 vaccine revenue stream. Moderna’s market capitalization has shrunk to $25.178 billion, with the stock experiencing significant underperformance compared to the broader market.

Moderna’s financial metrics paint a challenging picture, with a profit margin of -116.18% and a return on equity of -40.94%. The company reported $5.05 billion in trailing twelve-month revenue and holds $8.49 billion in cash, but faces pressure to achieve $6 billion in sales to break even by 2028. Analyst recommendations remain mixed, with price targets ranging from $58.00 to $310.00, underscoring the uncertainty surrounding Moderna’s future performance.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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