Month: January 2024

© Reuters Wedbush’s Ives says Nasdaq could rally to 20k in 2024

As 2024 unfolds, Wedbush anticipates a transformative “Year of AI” poised to elevate tech stocks.

Highlighting the pivotal role played by Jensen Huang of Nvidia (NASDAQ:NVDA) and Microsoft/OpenAI in igniting an AI revolution reminiscent of the Internet’s inception in 1995, the stage is set for substantial growth, according to analysts at Wedbush.

Microsoft (NASDAQ:MSFT) emerges as a frontrunner in the AI arms race, leveraging Azure and the promising Microsoft Co-Pilot for significant monetization opportunities. Meanwhile, Google (NASDAQ:GOOGL) is gaining prominence as a major Generative AI player, earning recognition from Chief Information Officers for advancements in its core technology platform.

“Both Microsoft and Google appear to be in the AI driver’s seat which we think will be a battle over the next decade as we expect other technology companies such as Amazon, Meta, Nvidia, Apple, and other tech stalwarts along with smaller players in the industry to collectively spend billions in this AI arms race over the coming years,” analysts said.

Overall, the key driver remains the burgeoning global demand for AI applications, a trend substantiated by Wedbush’s enterprise survey findings.

“Use cases lead to the pot of gold at the end of the rainbow.50%+ of all enterprises we have recently surveyed see 20+ use cases for Generative AI and 80%+ of all enterprises see 10+ use cases including data analysis, marketing content creation, document editing/summarization, and many more,” analysts added.

Analysts also see potential for “a tidal wave of M&A in the software and chip sectors in our view by both financial and strategic players.”

Wedbush’s bull case for the tech sector assumes 25% gains in 2024, which translates into Nasdaq rallying to hit $20,000.

“The Street is still significantly under estimating how quickly this AI monetization cycle is playing out among enterprises in the field,” analysts concluded.

© Reuters. Apple stock set to open 2024 lower as Barclays cuts to sell on ‘lackluster’ iPhone sales

Barclays analysts downgraded the rating on Apple (AAPL) stock from Equal Weight to Underweight, expressing concerns about a prolonged period of weak results and the potential for multiple expansion not being sustainable.

Barclays is also going against the consensus as it anticipates higher Services-related risks in 2024. In response to these risks, Barclays cut the rating and set a price target of $160 per share on AAPL stock, which signals a near 17% downside risk.

Apple shares (NASDAQ:AAPL) are down 1.4% in pre-market Tuesday.

Barclays made adjustments following recent checks, revealing concerns about iPhone volumes, mix, and a lack of rebound in Macs, iPads, and wearables. The latest data points from China, particularly related to the iPhone 15, indicate a more challenging environment, coupled with ongoing softness in developed markets.

While there is some strength in emerging markets, it is insufficient to offset broader weaknesses.

“IP15 has been lackluster and we believe IP16 should be the same,” the analysts said in a note to clients.

Despite expectations for a largely in-line December quarter, analysts also revised their estimates for the March quarter below consensus. The bank anticipates the March quarter to align closely with seasonal trends, contrary to the Street’s more optimistic modeling that remains 10 points above seasonal expectations.

Notably, Barclays has lowered revenue estimates for iPhones and Wearables in the March quarter, resulting in a decline in revenue and earnings per share in the low single digits compared to previous estimates.

On the Services front, the analysts noted that while the App Store is experiencing 10% growth in the December quarter, this rate is expected to decelerate to the mid-single digits by the September 2024 quarter.

“We expect reversion after a year when most quarters were missed and the stock outperformed,” the analysts concluded.

© Reuters

Investing.com — U.S. stock futures point to a lower start to 2024 following a blockbuster year on Wall Street. Elsewhere, China’s BYD (SZ:002594) unveils fourth-quarter production figures that heap pressure on Tesla’s (NASDAQ:TSLA) spot as the world’s biggest electric vehicle maker. Bitcoin tops $45,000, bolstered by expectations that U.S. securities regulators may be edging closer to approving an exchange traded fund tracking the megapopular cryptocurrency.

1. Futures dip ahead of first trading session of 2024

U.S. stock futures were lower ahead of the start of a new trading year, as investors attempted to gauge the staying power of a bumper 2023 for equities on Wall Street.

By 06:35 ET (11:35 GMT), the Dow futures contract had slipped by 115 points or 0.3%, S&P 500 futures had dropped by 23 points or 0.5%, and Nasdaq 100 futures were down by 128 points or 0.7%. Markets were closed for the New Year’s Day holiday on Monday.

The main indices surged last year despite initial worries that an unprecedented string of Federal Reserve interest rate hikes could spark a recession. But resilience in the U.S. economy helped fuel optimism that the Fed could engineer a so-called “soft landing,” in which inflation is cooled without causing an economic meltdown.

Investors will have the chance to parse through a bevy of fresh data this week that could shed light on the state of the world’s largest economy — and, particularly, its all-important labor market — in the final days of 2023.

2. U.S. indices post blockbuster 2023

The major averages all slipped marginally on Friday, although the declines took little away from what was a stellar 2023 on Wall Street.

The benchmark S&P 500 surged by 24.2% annually, closing out the year with a streak of nine consecutive winning weeks — its best since 2004. The tech-heavy Nasdaq Composite also soared by 43.4%, driven in part by strength in mega-cap stocks and emerging enthusiasm over the possible applications of artificial intelligence.

Meanwhile, the 30-stock Dow Jones Industrial Average jumped by 13.7%, boosted by seven record closing levels in the last days of the year.

Equities endured several shocks throughout 2023, including a regional banking crisis marked by the collapse of Silicon Valley Bank and the outbreak of fresh hostilities in the Middle East. Attention now turns to the new year, with some analysts wondering if the solid returns of 2023 may have left stock valuations overstretched.

3. BYD production figures add to pressure on Tesla

China’s BYD said it sold a record 526,000 battery-powered cars in the fourth quarter, putting further pressure on U.S. rival Tesla’s position as the world’s largest manufacturer of electric vehicles (EVs).

For 2023, Shenzhen-based BYD also sold over 3 million new EVs and hybrids, a roughly 62% increase, figures released by the company on Monday showed. The result leaves Elon Musk’s Tesla, which offers only battery-powered automobiles, potentially on track to sell fewer cars than BYD for the second straight year.

Tesla’s output in the first nine months of 2023 clocked in at 1.35 million cars. The group is set to release its full-year production and delivery numbers on Tuesday.

BYD, which counts Warren Buffett’s Berkshire Hathaway (NYSE:BRKa) as a major investor, controlled around 17% of the global market for electric-only vehicles at the end of the third quarter, matching Tesla’s market share.

4. Bitcoin clears $45,000

Bitcoin rose sharply to a 21-month high on Tuesday on increased speculation that the U.S. Securities and Exchange Commission was close to approving a spot exchange traded fund (ETF) for the world’s largest cryptocurrency.

By 05:05 ET, Bitcoin had jumped by 7.0% to $45,630.9, reaching its highest level since early-April 2022.

The increase came as an extension of a strong recovery in 2023 for Bitcoin, when the token surged more than 100% in value after starting the year at around $17,000.

Partly driving the gains was speculation over the SEC’s approval of an ETF that directly tracks Bitcoin’s prices. The regulator has a January 10 deadline to approve or reject a spot ETF application from Ark and 21 Shares, according to a Reuters report. The ruling could set the precedent for ETF applications from several other fund managers for a similar product.

5. Oil rises

Oil prices rose Tuesday, rebounding after hefty losses in 2023, on concerns over potential supply disruptions in the Middle East.

Reports said on Tuesday that an Iranian warship had entered the Red Sea, a vital trade route between Europe and Asia. The news added to fears over the flow of supplies in the region, which has been impacted recently by a series of strikes by Iran-backed Houthis on several military and commercial vessels.

By 05:04 ET, the U.S. crude futures was trading 2.2% higher at $73.25 a barrel, while the Brent contract had climbed 2.3% to $78.81 per barrel. 

Both benchmark contracts had shed over 10% each in 2023, coming under pressure from persistent concerns over sluggish demand and higher-than-expected supply conditions.