Month: January 2024

© Reuters. Analyst sees 15% downside risk for Nvidia stock as AI hits ‘trough of disillusionment’

DA Davidson analysts assert that NVIDIA (NVDA) plays a crucial role as a leader in accelerated computing, projecting an impressive 20% compound annual growth rate (CAGR) from 2022 levels across cycles.

Despite recognizing NVDA’s dominance in various categories, analysts express skepticism about the likelihood of consensus expectations for the out-years materializing.

They anticipate a reversion to the trend line within the next 2-6 quarters, citing vulnerability for NVDA as the hype around artificial intelligence (AI) approaches the “trough of disillusionment.”

“While we continue to believe that generative AI is the most important transformative technology since the Internet, we do not expect the same level of investment we saw in 2023 continuing beyond 2024,” analysts said in a note.

As a result, analysts initiated new research coverage on Nvidia (NASDAQ:NVDA) stock at Neutral with a price target of $410 per share, which implies a downside risk of 15% based on Tuesday’s closing price.

“Our $410 price target is based on a 35x multiple on the $7.29 of CY24 EPS for the core company and $155 for the sandbox revenue still coming to NVDA over the next 4-6 quarters. We believe the value of this sandbox could drop considerably once NVDA growth rolls over,” analysts explained.

Nvidia stock closed 2.7% lower on the first trading day in 2024 and is down a further 1.1% in pre-market Wednesday.

© Reuters. Bitcoin Plunges to Low, Down 8.7% at $41,300

(Updated – January 3, 2024 7:37 AM EST)

(Updated – January 3, 2024 7:27 AM EST)

Bitcoin Plunges to Low, Down 8.7% at $41,300

Update:

The reason for the sharp decline wasn’t clear. It could be tied to hedging in case of a negative SEC decision regarding approval of a spot Bitcoin ETF.The SEC is expecting to approve a batch of spot ETFs by Jan. 10.There is some concern that even if the ETFs are approved, the decision by the SEC could still be a “sell the news” event. Earlier Microstrategy, Inc. (NASDAQ:MSTR) co-founder and executive Chairman, Michael Saylor, disclosed the sale of 315,000 common shares worth approximately $216 million.Bitcoin hit a low of $40,968 but has since recovered to $42,000

© Reuters

Investing.com — U.S. futures traded lower Wednesday, with investors consolidating ahead of the release of the minutes from the December Federal Reserve meeting.

Here are some of the biggest premarket U.S. stock movers today:

Apple (NASDAQ:AAPL) stock fell 0.5% after data from research group Counterpoint indicated that the tech giant’s iPhone saw its share of the worldwide smartphone market fall in November.

Tesla (NASDAQ:TSLA) stock fell 1.7% after the electric car manufacturer’s sales in China surged by 68.7% on a yearly basis last month, new data from the China Passenger Car Association showed on Wednesday, with the U.S. carmaker facing intense competition in the world’s largest auto market.

Bloomin Brands (NASDAQ:BLMN) stock rose 2.6% after the restaurant holding company added two new members to its board, in accordance with an agreement it had reached with activist investor Starboard Value.

Walt Disney (NYSE:DIS) stock rose 0.4% after the entertainment giant said investment firm ValueAct Capital will advise it on strategy and support its director nominees at the 2024 annual shareholder meeting.

SoFi Technologies (NASDAQ:SOFI) stock fell 7.3% after Keefe, Bruyette & Woods downgraded its rating on the online personal finance company to ‘underperform’ from ‘market perform’, citing its recent outperformance.

Coinbase (NASDAQ:COIN) stock fell 6.4%, with the cryptocurrency exchange suffering as bitcoin, the world’s favorite digital currency, retreated sharply.

Verizon Communications (NYSE:VZ) stock rose 1.2% after KeyBanc upgraded its stance on the telecoms giant to ‘overweight’ from ‘sector weight’, seeing the potential for it to outshine the sector.

Agios Pharma (NASDAQ:AGIO) stock soared 20% after the biotech announced positive results from a Phase 3 trial of a treatment for a rare blood disorder.

AIG (NYSE:AIG) stock fell 0.2% after Reuters reported that the company was the lead insurer on a $130 million “all-risks” policy for the Japan Airlines airplane which collided with another plane at Tokyo’s Haneda airport.

XRP Falls 18% In Selloff

Investing.com – XRP was trading at $0.51772 by 07:10 (12:10 GMT) on the Investing.com Index on Wednesday, down 18.06% on the day. It was the largest one-day percentage loss since November 9, 2022.

The move downwards pushed XRP’s market cap down to $33.46332B, or 1.98% of the total cryptocurrency market cap. At its highest, XRP’s market cap was $83.44071B.

XRP had traded in a range of $0.51772 to $0.63917 in the previous twenty-four hours.

Over the past seven days, XRP has seen a stagnation in value, as it only moved 1.52%. The volume of XRP traded in the twenty-four hours to time of writing was $1.40463B or 1.92% of the total volume of all cryptocurrencies. It has traded in a range of $0.5177 to $0.6569 in the past 7 days.

At its current price, XRP is still down 84.26% from its all-time high of $3.29 set on January 4, 2018.

Elsewhere in cryptocurrency trading

Bitcoin was last at $40,888.3 on the Investing.com Index, down 6.59% on the day.

Ethereum was trading at $2,127.25 on the Investing.com Index, a loss of 7.56%.

Bitcoin’s market cap was last at $857.41562B or 50.80% of the total cryptocurrency market cap, while Ethereum’s market cap totaled $277.61190B or 16.45% of the total cryptocurrency market value.

© Reuters.

Investing.com — U.S. stock futures point lower on Wednesday after a mostly downbeat start to 2024 in the prior session. Markets are now awaiting the publication of the minutes from the Federal Reserve’s December policy meeting and, with it, potential clues into the central bank’s interest rate path in the coming months. Elsewhere, sales of Tesla’s (NASDAQ:TSLA) China-made cars soar in December, but Elon Musk’s electric vehicle giant is still grappling with fierce competition in the country.

1. Futures inch lower

U.S. stock futures edged down on Wednesday, as investors looked ahead to the release of minutes from the Federal Reserve’s latest policy meeting.

By 05:09 ET (10:09 GMT), the Dow futures contract had dipped by 56 points or 0.2%, S&P 500 futures had shed 11 points or 0.2%, and Nasdaq 100 futures had fallen by 76 points or 0.4%.

The benchmark S&P 500 and tech-heavy Nasdaq Composite both lost ground in the first day of trading of 2024, weighed down in part by ebbing hopes that the Fed will roll out interest rate cuts early this year. Meanwhile, the 30-stock Dow Jones Industrial Average gained just under 0.1%.

In individual stocks, shares in Apple (NASDAQ:AAPL) sunk by around 4% after analysts at Barclays downgraded their rating of the iPhone maker, citing weak hardware demand and concerns over revenue at its services division. Nvidia (NASDAQ:NVDA), Google-parent Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) — who, along with Apple, form part of the so-called Magnificent Seven group of tech firms that helped drive a stellar 2023 for stocks — also declined.

“The impressive rally into year[-]end has faded a bit despite the seasonal tailwinds, but we expect the loss of short[-]term momentum to be modest,” analysts at Fairlead Strategies said in a note to clients.

2. U.S. Treasury yields climb

Also denting stocks on Tuesday was a rise in U.S. Treasury yields, in a possible sign that markets’ excitement over the prospect of Fed rate cuts early this year may be easing.

The yield on the benchmark 10-year note — a key gauge of long-term estimates for borrowing costs — briefly touched an over two-week high, while the yield rate-sensitive 2-year also moved up. Prices typically fall as yields increase.

At the end of 2023, the 10-year Treasury yield was under 3.9% following a strong rally to cap off the year that was driven by expectations for early Fed rate cuts and a so-called “soft landing” for the U.S. economy. In this scenario, the Fed’s aggressive rate hiking campaign successfully cools inflation without sparking a meltdown in the broader economy.

Bolstered by the jump in Treasury yields, the U.S. dollar index, which tracks the greenback against a basket of its currency pairs, had its best daily performance since March 2023.

3. Fed minutes ahead

Traders are now turning their attention to the minutes from the Fed’s December gathering, which are due out at 19:00 GMT on Wednesday.

How officials see borrowing costs evolving in the coming months could factor into the staying power of recent bets that the U.S. central bank will soon begin to bring down interest rates from a more than two-decade high.

In December, the Fed left rates unaltered at a range of 5.25% to 5.50%, but signaled that its unprecedented tightening cycle aimed at corraling elevated inflation may have peaked. New forecasts from policymakers also suggested that they may slash rates by 75 basis points this year, an outlook that was more dovish than prior projections.

Speculation over potential rate reductions fueled a late-year surge in stocks, although many officials have since attempted to temper this enthusiasm. The minutes could provide even more insight into the Fed’s thinking.

4. Sales of Tesla’s China-made EVs surge in December

Sales of Tesla’s electric vehicles (EVs) made in China surged by 68.7% on a yearly basis last month, new data from the China Passenger Car Association showed on Wednesday, although the U.S. carmaker still faces intense competition in the country.

The December total, which includes exports, brought Tesla’s annual amount of China-made sales up to 947,742 — just over half of the company’s global deliveries.

Tesla’s Shanghai plant is its largest production hub, supplying China and other countries like New Zealand and Australia. The group has outlined plans to expand its EV capacity at the factory, but the move has yet to receive regulatory approval from Beijing.

The latest CPCA numbers come after China’s BYD (SZ:002594) unseated Tesla as the world’s biggest EV maker earlier this week. BYD, who offers both battery-only and hybrid options, delivered 341,043 passenger cars in December, an increase of 45% year-on-year.

5. Oil slips

Oil prices retreated Wednesday, ahead of the release of crucial weekly inventories data from the U.S., the world’s largest consumer.

By 05:09 ET, the U.S. crude futures traded 0.6% lower at $69.94 a barrel, while the Brent contract dropped 0.5% to $75.53 per barrel.

U.S. crude stockpiles from the American Petroleum Institute industry group are due later Wednesday, a day later than usual due to Monday’s New Year’s holiday. Official data will then be published on Thursday.

The crude benchmarks had climbed sharply earlier in the week after attacks on vessels in the Red Sea by Houthi rebels raised concerns over potential supply disruptions through this key region.

© Reuters.

2023 closed as a solid year for stock markets worldwide as bets that the Fed will start lowering interest rates as soon as early 2024 prompted investors back to risk assets after a more than forgettable 2022.

But despite the seemingly solid bull run, analysts rightly argue that 2023 was a year for stock pickers, with a handful of companies beating the market by a hefty margin and carrying a good chunk of the benchmark gains as many others underperformed.

In fact, a whopping 72% of the S&P 500’s components failed to beat their benchmark index during the year, while the remaining 28% absolutely crushed the market with once-in-a-lifetime gains.

Against this backdrop, investors faced similar luck with their portfolios: they either crushed the market or – most likely – underperformed the benchmark indexes simply by holding on to the wrong stocks.

That’s where our flagship AI-powered stock-picking tool, ProPicks, can prove a game-changer for 2024.

Using state-of-the-art AI resources, ProPicks picks the best stocks available in the market, granting top-tier performance for InvestingPro users with full access to the tool.

Strategies are then rebalanced at the beginning of each month, adding new stocks that are likely to outperform going forward and removing the ones that have already passed their prime. Source: ProPicks

For the second month since its debut, all of our five strategies that are rebalanced monthly beat their benchmark indexes by a solid margin, making the yearly and compounded 10-year performance of the strategies an even bigger landslide in favor of ProPicks.

Here’s the December performance of all the strategies, followed by their full-year returns and their compounded 10-year performance:

Beat the S&P 500: December – 7.3%; FY23 – 47.8%; 10Y – 979.3%
Dominate the Dow: December – 5.2%; FY23 – 28.1%; 10Y – 617.3%
Tech Titans: December – 13.3%; FY23 – 28.9%; 10Y – 1,381%
Top Value Stocks: December – 5.9%; FY23 – 54.7%; 10Y – 867.5%
Mid-Cap Movers: December – 8.6%; FY23 – 40.3%; 10Y – 647.3%

(*Best of Buffett strategy is rebalanced quarterly and, thus, only compared to the benchmark in that same period).

In order to keep up the excellent performance, the strategies have been rebalanced again at the beginning of January. Let’s take a look at two stocks that were added by the strategy and one that was dropped.

InvestingPro users can see all the January updates here.

Not yet a Pro user? Subscribe here and start outperforming the market immediately.

Join now for up to 50% off for a limited time only as part of our New Year promo!

* Readers of this article can enjoy an exclusive 10% discount on our yearly plan with the code JANREB1 and a similar 10% discount on the by-yearly Pro+ plan by using the coupon code JANREB2 at checkout.

2 ProPicks Buys for January

Stock 1: Lennar Corp

Strategy: Top Value Stocks
InvestingPro Upside Potential: 35.2%

As real state stocks steal the show on the back of the perspective of lowering interest rates, Lennar Corporation (NYSE:LEN) has been added by our Top Value Stocks strategy as one of the top picks to ride the trend.

On top of the positive macro perspective after two difficult years, the Miami, Florida-based homebuilder has all the fundamental strengths to keep on outperforming.

The company demonstrates a high return on invested capital, maintains a favorable cash-to-debt ratio on its balance sheet, and anticipates sustained dividend payments due to robust earnings.

It also holds a ‘great’ financial performance, according to InvestingPro, and a robust upside potential of 35.2% over the next 12 months. Source: InvestingPro

Like this pick? InvestingPro users can see the 30+ new picks for this month along with all the full strategies just by subscribing here.

Stock 2: DocuSign

Strategy: Tech Titans
InvestingPro Upside Potential: 23.8%

As tech stocks keep leading the pack in the face of a more dovish macro environment, savvy investors begin to search for stocks that have strong balance sheets but haven’t yet fully ridden the risk-on train to overbought levels.

That’s precisely the case with DocuSign (NASDAQ:DOCU). One of the pandemic winners, the stock remains yet to reclaim investors’ full attention and, thus, presents more attractive levels than the competition.

With a favorable cash-to-debt ratio on its balance sheet, the company anticipates net income growth this year, boasts impressive gross profit margins and has shown a robust return over the last month.

That’s why InvestingPro gives it a solid 23.8% growth potential under a good financial health score. Source: InvestingPro

Like this pick? InvestingPro users can see the 30+ new picks for this month along with all the full strategies just by subscribing here.

1 ProPicks Sell

Stock: Palo Alto Networks

Strategy: Dominate the Dow
InvestingPro Fair Value: -17.8%

After an impressive 111% rally in 2023, Palo Alto Networks (NASDAQ:PANW) has hit overbought levels that are not in line with ProPicks’ risk profile.

Although the macro environment still appears favorable to the company, many fundamental factors are screaming ‘sell.’ With a PE ratio of 148.4x, which is high even for the fast-growing cybersecurity space, the stock is expected to drop in the upcoming months as its short-term obligations exceed liquid assets.

That’s the main reason why the company holds a -17.8% target on InvestingPro, as seen in the chart below. Source: InvestingPro

As a matter of fact, ProPicks users who sold the stock on January 1 (when the cut was first announced) managed to escape Palo Alto’s lackluster start to the year, with the stock dropping a hefty 2% on the first trading day of the year.

Wishing you had sold it as well? InvestingPro users can see all the changes in strategies by subscribing here.

Join now for up to 50% off for a limited time only as part of our New Year promo!

* Readers of this article can enjoy an exclusive 10% discount on our yearly plan with the code JANREB1 and a similar 10% discount on the by-yearly Pro+ plan by using the coupon code JANREB2 at checkout.