Year: 2024

© Reuters

Here are the biggest analyst moves in the area of artificial intelligence (AI) for this week.

InvestingPro subscribers always get first dibs on market-moving AI analsyt comments.

Microsoft seen as a ‘clear-cut winner in AI’

Microsoft Corporation (NASDAQ:MSFT) held a developer AI tour event in New York City last week and analysts were once again impressed by the company’s advance on the AI front.

For Barclays, the event was another piece of evidence that “Microsoft is a clear-cut winner in AI and has lots of runway to further monetize new and existing products.”

“[We] came away incrementally positive on the progress Microsoft is making in its AI offerings… While today’s event did not feature any new announcements, the strong developer turnout (>3,000 attendees), as well as interest in a variety of Microsoft products (both Copilot and others) demonstrated to us that Microsoft is capturing incremental mind share amongst enterprise customers,” Barclays analysts said.

Can AI rally continue to drive the overall market higher?

Wolfe Research strategists weighed in on the most powerful stocks theme at the moment – AI. Their analysis shows that six prominent large-cap companies, poised to reap significant benefits from AI advancements, have collectively contributed +210 basis points (bps) to the S&P 500‘s year-to-date return of +268 bps.

Within the industry landscape, Semiconductors have stood out as the top-performing group. Companies positioned as major beneficiaries of AI advancements within this sector are anticipated to experience substantial additional advantages in the coming months.

“While expectations appear to be very high, our sense is that the biggest AI beneficiaries are likely to outperform until AI-related earnings expectations start to turn downward. In our view, this is unlikely to occur unless a broad-based recession starts to hit at some point in the months ahead,” strategists said in a note.

“That said, the bigger question is whether the “AI frenzy” can keep powering the overall market higher. While AI should remain a tailwind, our sense is that the overall Fed liquidity picture, the interest rate outlook, and how much the U.S. economy slows in the months ahead will be bigger drivers of overall market returns.”

Citi’s CIO survey

Citi’s 4Q Chief Information Officer (CIO) survey results indicated a significant improvement in the IT budget landscape. Expectations for near-term IT budget growth have increased from +1.9% in the September ’23 survey to +2.8% in the December quarter, approaching the historical average of 3%.

Cybersecurity retains its position as the top investment priority for CIOs, followed by Data modernization/GenAI, Digital Transformation Projects, and Cloud Adoption. The global economic outlook appears stable to slightly improving, with upward revisions noted in trailing 3-month IT budgets. Sector-specific takeaways cover Software, European Technology, Hardware, Communication Services and Infrastructure, and IT Service.

“MSFT remains the top vendor that CIOs are considering as a GenAI partner, far ahead of GOOGL and AMZN. In terms of the breakdown of funding for GenAI projects, 64% of CIOs expect to get new/additional funding while 36% believe it will come from existing resources, with some CIOs expecting to spend less on vendors such as ORCL, IBM (NYSE:IBM) or SAP to make room for GenAI investments,” analysts wrote in a note.

Samsung offers a ‘very cheap’ way to participate in edge AI

Analysts at Morgan Stanley urged the broker’s clients to consider owning Samsung Electronics Co Ltd (KS:005930) shares, as the company offers “one of the best ways” to play a shift to consumer AI.

The analysts argued that AI is “going to be a growth driver for years to come.”

“We estimate double the DRAM content in AI PCs and a >50% rise in the next iteration of AI phones; along with replacement demand, this could drive 6ppt lower DRAM self-sufficiency by 2025,” wrote Morgan Stanley analysts in the note.

“The turn of the memory cycles provides a big boost to earnings estimates,” added the analysts. “Ultimately, Samsung is a very cheap way to participate in edge AI.”

AMD raised to Buy

New Street Research analysts raised their rating on the shares of Advanced Micro Devices Inc (NASDAQ:AMD) to Buy with a $215 per share price target.

The broker’s analysis shows upside for all names in the data center AI chip sector, with AMD and TSMC standing out at each end of the risk spectrum.

“Lisa Su, CEO of AMD, pitched late last year a target addressable market for datacenter AI chips of $400bn. Lisa is to be taken seriously; this forecast might eventually prove wrong, but it was certainly not pulled out of a hat,” the analysts said.

© Reuters

Investing.com — It’s set to be an action-packed week in markets with the Federal Reserve’s first meeting of the year, a flurry of big tech earnings and the latest U.S. jobs report. The Bank of England also holds its first policy meeting of 2024 while data out of China is expected to remain gloomy. Here’s what you need to know to start your week.

Fed ahead

The Fed is widely expected to keep interest rates unchanged on Wednesday with investors eagerly awaiting any indication that officials believe they have progressed enough in their battle against inflation to begin cutting rates sooner rather than later.

Investors have pushed expectations for the Fed’s first rate cut to May from March following recent strong economic data and statements from Fed officials that suggested that cuts may not be as aggressive as expected.

Data on Friday indicated that inflation is moderating but consumer spending remains robust, leading to concerns that price pressures could begin to mount again.

Investors will be closely watching Fed Chair Jerome Powell’s post policy meeting press conference for any insights into how officials have been interpreting recent economic data.

Jobs report

Hard on the heels of the Fed decision the U.S. is to release the January jobs report on Friday, with the economy expected to have added 177,000 new jobs, slowing from 216,000 the prior month.

The recent stock market rally which has powered the S&P 500 to record highs has been driven by expectations of a U.S. economic “soft-landing” in which growth remains stable while inflation cools.

A weaker than expected reading could indicate that the 525 basis points of rate increases delivered by the Fed since 2022 are finally starting to bite, while stronger-than-expected hiring could bolster the case for the central bank to keep rates higher for longer.

The economic calendar also includes data on JOLTS job openings and consumer confidence on Tuesday, followed a day later by a report on private sector payrolls and weekly data on initial jobless claims on Thursday.

Megacap earnings

Earnings will be a major focal point in the week ahead with five of the massive “Magnificent Seven” growth and technology stocks that have powered markets higher for much of the last year reporting.

Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) are due to report results on Tuesday, followed by Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) on Thursday with Meta Platforms (NASDAQ:META) closing out the week on Friday.

With the S&P 500 officially in a bull market, the Magnificent Seven’s results will be crucial in determining whether the index can maintain its momentum.

Collectively, the market capitalization of Alphabet, Microsoft, Apple, Amazon and Meta account for nearly 25% of the S&P 500, giving them an outsize influence on the performance of the broader index.

“There’s not this monolithic performance among those stocks anymore,” said Liz Ann Sonders, chief investment strategist at Charles Schwab told Reuters. “If there is a downside to earnings … that could take the bloom off the rose” for the market as a whole.

Bank of England

The BoE is expected to keep interest rates on hold on Thursday and while it may drop its long-held warning that it will hike rates again if inflation rebounds it is expected to indicate that rates need to remain restrictive for an extended period.

The latest U.K. jobs report showed that wage growth rose at the slowest pace in almost a year in the three months to November, but inflation unexpectedly rose to 4% in December.

Britain’s economy started 2024 on a stronger footing but data last week indicated that supply disruptions in the Red Sea are reigniting inflation in the manufacturing sector.

The BoE raised interest rates 14 times between December 2021 and August 2023, taking rates to a peak of 5.25% after inflation surged to a 41-year high of 11.1% in late 2022.

China PMIs

China is to release official purchasing managers’ index (PMI) data on Wednesday that is likely to show that the world’s second largest economy remains on a shaky footing.

China’s economy expanded by 5.2% in 2023, but its post-pandemic recovery has been shaky, with a protracted housing downturn, mounting deflationary risks and slowing global growth casting clouds over the outlook for this year.

China’s central bank announced last Wednesday that it was making a 50-basis point cut to bank reserves, the biggest in two years, sending a strong signal of support for a fragile economy and the country’s plunging stock markets.

Still, analysts say more stimulus is needed this year to get economic activity on more solid footing.

–Reuters contributed to this report

© Reuters. U.S. President Joe Biden delivers remarks, during a campaign event focusing on abortion rights at the Hylton Performing Arts Center, in Manassas, Virginia, U.S., January 23, 2024. REUTERS/Evelyn Hockstein/File Photo

By Jarrett Renshaw and Steve Holland

COLUMBIA, South Carolina (Reuters) -President Joe Biden on Saturday drew a stark contrast with top Republican rival Donald Trump, making the case that Trump failed to support the rights of Black citizens and represents a threat to the U.S economy and democracy.

Biden’s comments came during a dinner on Saturday to celebrate elevating South Carolina and its large base of Black voters to first place in the Democratic Party’s calendar of contests to nominate a candidate for the November election.

Biden rattled off a list of his accomplishments as president that he said helped a broad swath of Americans, including Black citizens.

Those included a hiring a diverse White House staff, greater investments in historically Black colleges, lower insulin costs, student debt relief and appointing the first Black woman to the U.S. Supreme Court.

“Promises made, promises kept,” Biden declared.

His speech was interrupted three separate times by protesters critical of Biden’s cozy relationship with Israel and the killing of Palestinians.

The president has been getting mixed reviews from some Black voters who backed him in 2020, including discontent over his failure to deliver on voting rights legislation and other issues. Although Democrats have no hope of winning the state in November, Biden hopes the focus on South Carolina will help bolster support among Black voters.

Biden, setting up for a likely rematch of the 2020 contest against Trump, said his Republican rival is “growing a little confused these days.”

“He apparently can’t tell the difference between Nikki Haley and Nancy Pelosi,” Biden referring to a recent speech where Trump repeatedly referred to his Republican rival Haley as Pelosi, former speaker of the U.S. House of Representatives.

On his way to the dinner, Biden and U.S. Representative James Clyburn, whose endorsement in 2020 catapulted him to the White House, stopped at the Regal Lounge barber shop in downtown Columbia, where they shook hands and took selfies with the largely Black patrons.

Biden noted that South Carolina put him in the White House with a resounding victory in the 2020 Democratic primary that salvaged his campaign.

“The truth is I wouldn’t be here without the people of South Carolina,” Biden said. “You are the reason that I’m president.”

The Democratic primary in South Carolina is on Feb. 3 and Biden is expected to win handily as he carves an easy path to the party’s nomination.

Steven Cheung, a Trump spokesperson, said Biden has been “losing badly with Americans of all backgrounds because they had to live through hid disastrous presidency.”

The dinner marked the end of a busy week for the Biden campaign. Surrogates like California Governor Gavin Newsom and Marcia Fudge, head of the agency that oversees federal housing, crisscrossed the state to mobilize voters for the primary.

New Hampshire held its Democratic primary earlier this month despite Biden’s efforts to move it down the nominating calendar. Biden skipped the event, but supporters organized a successful write-in campaign.

Biden’s longshot Democratic challenger, Minnesota congressman Dean Phillips, addressed the crowd of largely Biden supporters. He offered some humility, saying 90% of the room or more will likely support Biden in the primary.

He said every primary needs at least two candidates, even if the race is not much of a contest.

“I am happy to be that other guy,” Phillips said before asking the crowd to stop chattering and let him speak unabated.

© Reuters. Republican presidential candidate and former U.S. President Donald Trump speaks at a campaign rally ahead of the Republican caucus in Las Vegas, Nevada, U.S. January 27, 2024. REUTERS/Ronda Churchill

By Tim Reid

WASHINGTON (Reuters) -Donald Trump on Saturday said he feels “sharper now than I did 20 years ago,” reacting to recent attacks on his age and verbal gaffes by Republican presidential rival Nikki Haley.

Trump also said presidential candidates should have to take a cognitive test, apparently a response to a challenge from Haley, who has advocated the same policy, citing the age of Trump, 77, and Democratic President Joe Biden, 81.

Trump was speaking at a rally in Nevada, ahead of the next vote in the Republican presidential nominating race, a caucus in the state on Feb. 8. In recent days Haley has accused former Republican President Trump of being confused and has questioned his ability to be president at his age.

Trump has recently made some verbal slip-ups. During a speech on Jan. 19 he confused Haley with former Democratic House Speaker Nancy Pelosi. On occasion he has appeared to slur his words and he also suggested former Democratic President Barack Obama was still in office.

Trump is almost assured of all of Nevada’s 26 delegates because Haley is not competing in the caucus. He attacked both Haley and Biden, trying to knock Haley out of the Republican nominating fight while scoring early points in a likely general election rematch with Biden in November.

Trump’s back-to-back wins in the Iowa and New Hampshire Republican contests have all but assured him his party’s White House nomination. But he is infuriated that Haley, his last remaining Republican rival, has refused to drop out.

Trump and his allies have begun a campaign to force Haley out of the race before the next major vote in the primary race, in her home state of South Carolina on Feb. 24. Trump has threatened to banish from his political orbit any donors who continue to fund Haley.

Haley has pledged to keep campaigning in South Carolina and beyond.

Shortly after Trump’s speech, Haley appeared at a rally in South Carolina. She again said Trump had recently appeared “confused”, and said if he wants to take a cognitive test, “he should have no problem getting on a debate stage with me, because that’s the ultimate mental competency test for anyone running for president.”

Trump has refused to participate in any of the Republican nominating debates and is refusing to debate Haley.

In his Nevada speech, Trump repeated a demeaning nickname for Haley, calling her “birdbrain”. He also accused Haley – a conservative Republican – of being “almost a radical left Democrat”.

Trump declared: “It’s time to finish this,” referring to his nomination fight. He leads Haley in opinion polls in South Carolina and she has no clear path to the nomination.

After Trump’s win in the New Hampshire primary on Jan. 23, the Biden campaign issued a statement, saying: “It is now clear that Donald Trump will be the Republican nominee.”

Turning his attention to Biden, Trump focused much of his speech on the southern border.

Record numbers of migrants have been caught illegally crossing the U.S.-Mexico border since Biden took office in 2021, and opinion polls show immigration and the border as a top issue in this year’s general election.

Trump called the illegal crossing a “catastrophe”, an “invasion” and the southern border as an “open wound”.

Meanwhile, Biden and his campaign aides have intensified attacks on Trump in recent days, calling him a threat to U.S. democracy and tying him to the U.S. Supreme Court’s 2022 decision to end federal abortion rights, an issue that has been blamed with hurting Republicans during the 2022 midterm elections.

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© Reuters. FILE PHOTO: United Nations Secretary-General Antonio Guterres addresses delegates at the opening of the Third South Summit (G77+China) in the Munyonyo suburb, of Kampala, Uganda January 21, 2024. REUTERS/Abubaker Lubowa/File Photo
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By Michelle Nichols

NEW YORK (Reuters) -United Nations Secretary-General Antonio Guterres vowed on Sunday to hold to account “any U.N. employee involved in acts of terror” after allegations that some refugee agency staffers were involved in the Oct. 7 Hamas attacks on Israel.

But Guterres implored governments to continue supporting the U.N. refugee agency for Palestinians (UNRWA) after nine countries paused funding.

“Any U.N. employee involved in acts of terror will be held accountable, including through criminal prosecution,” the U.N. chief said in a statement. “The Secretariat is ready to cooperate with a competent authority able to prosecute the individuals in line with the Secretariat’s normal procedures for such cooperation.”

At the same time, he said, “The tens of thousands of men and women who work for UNRWA, many in some of the most dangerous situations for humanitarian workers, should not be penalized. The dire needs of the desperate populations they serve must be met.”

In his first direct comments on the issue, the U.N. chief gave details about the UNRWA staffers implicated in the “abhorrent alleged acts.” Of the 12 implicated, he said, nine had been terminated, one was confirmed dead and the identities of the other two were being clarified.

Britain, Germany, Italy, the Netherlands, Switzerland and Finland on Saturday joined the United States, Australia and Canada in pausing funding to the aid agency, a critical source of support for people in Gaza, after the allegations by Israel.

“While I understand their concerns – I was myself horrified by these accusations – I strongly appeal to the governments that have suspended their contributions to, at least, guarantee the continuity of UNRWA’s operations,” Guterres said.

Adopting a sharper tone, UNRWA chief Philippe Lazzarini said, “It would be immensely irresponsible to sanction an Agency and an entire community it serves because of allegations of criminal acts against some individuals, especially at a time of war, displacement and political crises in the region. ”

In a statement he urged countries to reconsider funding suspensions. “The lives of people in Gaza depend on this support and so does regional stability,” Lazzarini said.