Question for ChatGPT: Who Wins, Microsoft or Alphabet?

guardianpub on February 10, 2023

For the first time in memory, Google’s search dominance is facing a legitimate threat. Let’s see what that means.

In a news item that almost seems like science fiction, Alphabet (GOOGL) lost over $100 billion in market capitalization on Wednesday due to a technical error. The stock fell 8% when the company’s new AI chatbot, Bard, shared incorrect information.

Does Wednesday’s selloff create an opportunity? Let’s go to the charts to find out.

Just a week ago, Alphabet’s chart was looking good. The stock had broken out of a bullish cup and handle formation (curved lines), and closed above its 200-day moving average (red) for the first time since April of last year.

After Wednesday’s flop, Alphabet is back below that key moving average, hovering at the breakout point of the cup and handle. The stock sold off on nearly triple its normal volume (arrow), Alphabet’s highest turnover since February. This is an indication of heavy institutional selling, and a warning that the stock could move lower.

Alphabet has a bigger problem than getting the bugs out of Bard. According to Statista, as of December 2022, Google dominated online search with an 84.08% market share. Microsoft’s Bing had only 8.95%.

Now that Bing is integrating ChatGPT, Google has a lot to lose. The successor to Microsoft’s often-derided, now-retired Internet Explorer browser is now a legitimate threat to siphon market share, along with ad dollars, from Google.

Why have chatbots become so important, so quickly? Unlike a search engine, which simply pulls information from the internet, a chatbot provides personalized results. Chatbots could make search engines like Google obsolete.

For example, a search for poetry on Google provides over 1.3 billion links in less than a second. A chatbot, on the other hand, can be instructed to create poems with specific style, tone, and content.

There are reports that in late December, Google declared “code red” in response to the suddenly ubiquitous ChatGPT, a chatbot created by OpenAI. OpenAI is a privately-held, San Francisco-based company that was funded in part by Elon Musk.

Earlier this month, in response to the sudden popularity of ChatGPT, Microsoft (MSFT) announced it was integrating the chatbot into its search engine, Bing. That was followed by this week’s introduction of Google’s AI product, called Bard.

Why did these companies adapt AI technology so quickly? Both Microsoft and Alphabet were faced with a threat that could undermine their search engines. Quick action was needed. Fast action can create results, but it also leads to mistakes, like the one Bard made on Wednesday.

Bottom line: For the first time in memory, Google’s search dominance is facing a legitimate threat. The stock’s suddenly discounted price may appear to be an opportunity, but heavy institutional selling is a warning that Alphabet could move lower before it finds its footing.

Source: finance.yahoo.com

Oil faces a ‘serious problem’ by 2024 as production capacity runs out, warns Goldman — here are 3 big oil stocks with yields as high as 4%

guardianpub on February 9, 2023

Oil prices have cooled down in recent months, but Goldman Sachs sees a major rebound on the horizon.

Speaking on the sidelines of a conference in Saudi Arabia, Goldman’s global head of commodities research Jeff Currie predicts that oil prices could climb back above $100 a barrel this year.

The analyst sees rising demand for oil from China. Meanwhile, sanctions against Russia will likely reduce the country’s oil exports.

“Right now, we’re still balanced to a surplus because China has still yet to fully rebound,” Currie tells Bloomberg. But the analyst notes that by May, the oil market could swing to a supply deficit.

And that’s not all.

“Are we going to run out of spare production capacity? Potentially by 2024, you start to have a serious problem.”

Here is a look at three big oil stocks. Wall Street already sees upside in this trio.

Shell

Headquartered in London, Shell (SHEL) is a multinational energy giant with operations in more than 70 countries. It produces around 3.2 barrels of oil equivalent per day, has an interest in 10 refineries, and sold 64.2 million tons of liquefied natural gas in 2021.

It’s a staple for global investors, too. Shell is listed on the London Stock Exchange, Euronext Amsterdam, and the New York Stock Exchange.

The company’s NYSE-listed shares are up 5% over the past year.

Piper Sandler analyst Ryan Todd sees an opportunity in the oil and gas supermajor. The analyst has an ‘overweight’ rating on Shell and a price target of $70.

Considering that Shell trades at around $58.50 per share today, Todd’s price target implies a potential upside of 20%. The stock also offers a dividend yield of 4.0%.

Chevron

Chevron (CVX) is another oil and gas supermajor that’s benefiting from the commodity boom.

In 2022, the company reported earnings of $35.5 billion, which represented a 127% increase from 2021. Sales and other operating revenues totaled $235.7 billion for 2022, up 51% year over year.

Last month, Chevron’s board approved a 6% increase to the quarterly dividend rate to $1.51 per share. That gives the company an annual dividend yield of 3.5%.

The stock has enjoyed a nice rally too, climbing 23% in the last 12 months.

In January, Barclays analyst Jeanine Wai reiterated an ‘overweight’ rating on Chevron while raising the price target from $196 to $212. That implies a potential upside of 24% from the current levels.

Exxon Mobil

Commanding a market cap of over $460 billion, Exxon Mobil (XOM) is bigger than Shell and Chevron.

The company also boasts the strongest stock price performance among the three — Exxon shares are up 36% over the past year.

It’s not hard to see why investors like the stock: the oil-producing giant gushes profits and cash flow in this commodity price environment. In 2022, Exxon earned $55.7 billion in profits, a huge increase from the $23.0 billion in 2021. Free cash flow totaled $62.1 billion for the year, compared to $37.9 billion in 2021.

Solid financials allow the company to return cash to investors. Exxon pays quarterly dividends of 91 cents per share, translating to an annual yield of 3.2%.

Bank of America analyst Doug Leggate has a ‘buy’ rating on Exxon and a price target of $140 — around 25% above where the stock sits today.

Source: finance.yahoo.com

Tesla Stock Tops $200. Here’s What Happens Next.

guardianpub on February 9, 2023

Tesla TSLA +2.28% stock just won’t stop going up. Shareholders should feel happy, but they should keep asking themselves what comes next.

Shares are up 2.3% at $201.35 in midday trading Wednesday. The S&P 500SPX –1.11% and Nasdaq CompositeCOMP –1.68% are down 0.9% and 1.6%, respectively. Tesla stock is now up 63% year to date, and up 98% from its Jan. 6 52-week intraday low of $101.81.

It’s been quite a run. The last time Tesla stock closed above $200 was Nov. 4. The last time shares touched $200 was Nov. 15. Still, the stock looks like it’s due for a pause.

“Tesla is into resistance at the $200 level, former support, from where it broke down in early November,” says John Roque, senior managing director at 22V Research and market technician. “Former support often becomes new resistance.”

Roque isn’t a fundamental analyst. His is looking at stock charts to figure out investor sentiment and what could happen next. He is also the technical analyst who thought Tesla stock would approach $100, which they did in early January.

“The preceding crash and current spike have been as symmetrical as possible over a two-month time frame,” says CappThesis founder and market technician Frank Cappelleri. “The downturn got the stock overly depressed, and the subsequent four-week rally also appears overextended short term.”

He also believes Tesla stock is due for a pause, calling shares overbought. That’s a term technicians uses to describe a situation when stocks rise a lot over a short period of time. At certain levels, it can mean all the buying is done, for a while.

A pause for a technician can last anywhere from two weeks to two months. Typically something new has to happen to shake the stock out of a trading band.

One thing that could do that is the company’s coming investor event on March 1. Management should be talking about new platforms, plants and the coming Cybertruck there.

Maybe Tesla stock should pause, but it doesn’t obey all the rules. Shares are still about $24, or 10%, below the level where Tesla CEO Elon Musk bought Twitter. Late in 2022 he said he would find a new leader for his social media network. If he does, it could give Tesla shares a boost.

Tesla investors have been worried that Musk hasn’t been able to fully focus on Tesla because of Twitter. Investors have also worried that Musk would sell Tesla stock to fund losses at Twitter. Musk tweeted on Feb. 5 that Twitter was approaching break-even. That reduces the likelihood of future Tesla stock sales. Tesla stock is up about 6% since then. The Nasdaq Composite is down about 2% over the same span.

The $225 level is also very close to the stock’s 200-day moving average. That would be another level of resistance for investors to consider what comes next.

Barron’s wrote positively about Tesla stock on Jan. 6. Since that article appeared, shares are up about 78%.

Tesla is a volatile stock, and banking some profits after run-ups can help investors weather the inevitable ups and downs of investing alongside Musk.

Source: barrons.com

Microsoft’s new Bing and Edge hands-on: Surprisingly well-integrated AI

guardianpub on February 8, 2023

The age of generative AI is upon us, and this week alone Google and Microsoft made major announcements around their respective products for the masses. While Google unveiled an “experimental conversational AI service” called Bard, Microsoft had a fuller slate of news to share at its event in Redmond, WA yesterday. Through a partnership with ChatGPT maker OpenAI, Microsoft is adding more advanced AI conversation models to power updates to Bing and Edge.

Bing improvements

In general, there are four new areas of change coming to Bing (and we’ll get to Edge later): Search, Answers, Chat and Create. The first update is the new search box. Instead of your typical long, one-line bar, there is now a box more similar to those on Twitter or Facebook that prompts you to ask Bing anything. The character limit is now 1,000. The idea is to make the process of looking for answers something more conversational — similar to Google’s approach for years now.

When you submit your query, results are now displayed a bit differently. On the left is a column with your typical “answers” just like how you see it on Bing now. On the right, however, is a box that explains how the system found those answers and also starts a chat. I initially thought this was similar to what Google does in its “About this search” panels, but I was wrong. This box is a home for the AI and fills up with text that appears in real time, complete with animation and a “Stop responding” button in case you don’t have the patience to see the AI’s explanation. In my time with the preview so far, these new features didn’t happen on my first few searches, but did appear subsequently.

Chat and create in Bing

The third and fourth parts are the more interesting updates. Chat, for example, is a new way you can get solutions to the problems you’re looking to solve. You can access the Chat page from the Bing results page by tapping the Chat button above the answers or by scrolling up (swiping down on touchscreens). When you’re there, you can continue the conversation about your ongoing search, or use the Broom icon next to the text input field to clean the slate.

This page is a more practical manifestation of the notion of an AI copilot — it’s basically ChatGPT or any other chat bot you may have interacted with while getting tech support from your bank or shopping website. But the results Bing’s Prometheus model has been able to return are definitely more impressive. The outputs it can return along with the inputs it can understand make it much more versatile and therefore more useful.

For example, you can tell it to create travel itineraries or meal plans with specific parameters and it’ll actually give you lists with what to do or make each day. The demos I saw included coming up with “3-day itinerary for Snoqualmie” or “vegetarian meal plan with chocolate included in the dessert” and each time Bing delivered the requested plans in plain, legible English that not only met the requirements but also cited its sources. It also didn’t take very long for the system to produce the results — we only had to wait between five and ten seconds on the demo Surface laptop. When the system is processing, you’ll also see the “Stop responding” button to give up waiting for results, just in case you’re running short on time.

I asked Bing to propose itineraries for a six day family trip to Los Angeles, which would have come in handy during my vacation last week. It took two attempts with different wording before I got the results I expected, but Bing got there. It suggested destinations and sights that my cousin also recommended, which is nice, though I have yet to closely scrutinize the program to see if it makes sense geographically and on timing.

I also used one of the suggested prompts in the preview to get Bing to create a 30-minute workout for me, focusing on arms and abs using no gym equipment and excluding situps. The resulting plan of several exercises, including three sets of 10 reps of dips, crunches and more all seemed sound. Bing pulled from various publications in generating this program and cited its sources as it churned out the words, meaning it was actually doing some work compiling instead of just regurgitating a single article.

Like other conversational assistants, Bing’s chat is capable of understanding context. In the demo, Saunders asked for spots to take photographs after first requesting a 3-day itinerary for Snoqualmie, and Bing replied with scenic locations in the same region. After my query about a 30-minute workout for abs and arms, I followed up with “how about an hour” and Bing was actually smart enough to follow up by telling me to add more exercises, suggested more things to do, as well as suggest I simply do the initial workout twice.

I did a lot of follow-up questions to other searches, and to list them all would take forever. Suffice to say that the conversations generally felt very natural and contextually rich, in a way that few other AI chatbots have achieved.

The Edge browser with an AI copilot built in

With the new Edge, a button on the top right will allow you to access the new Bing’s chat feature within your browser. But it goes beyond just answering your questions without having to leave the pages you’re browsing. Edge can help make sense of the sites you’re looking at and make research or multitasking much easier.

During its keynote yesterday, Microsoft showed how it was able to use Bing to summarize Gap Inc’s quarterly report and extract not only key takeaways but also financial highlights. When I opened the PDF from Gap’s investor relations page and asked Bing (in Edge) to give me the key takeaways, it told me about the company’s performance in digestible snippets. I then asked for “financial highlights” and the system gave me six bullet points listing the net sales, net loss, gross margin, operating loss, cash and cash equivalents and free cash flow. Each item listed the dollar amount as well as how that compared to last year’s performance.

What’s more impressive is that Edge can also find another company’s earnings report from this chat window, without having to open another tab, and compare the results. You can also then tell the browser to create a table analyzing the two companies side by side. The fact that this worked during my own testing of the new Edge left me very impressed, and I can already see myself using this to compare specs of new phones in future.

Finally, at least for this hands-on article today, I checked out the new Compose function, which you can use to come up with posts, emails or essays. I asked Bing to write an email for me to convince our video producer Brian Oh to come on this work trip to Microsoft in Seattle with me. There were several options to choose from for parameters like tone (funny, professional, casual, informational or enthusiastic), format (paragraph, email, blog post or ideas) and length (short, medium or long). At the bottom is a “Generate draft” button, which delivers the text in a box below it, under which is a button for you to “Add to site.” Clicking on that sends the generated words over to the website where your cursor is.

The resulting prose read like a human person wrote it, with proper grammar and punctuation (except in places where it would be more natural to ignore grammatical rules). I set the tone to “funny” and while some of the AI’s efforts at comedy were kind of cringe-worthy, it was fairly subtle. For example, at the end of a 4-paragraph letter extoling the virtues of Seattle and Microsoft, the system wrote “So, what do you say? Are you in or are you out? Please say yes, because I already booked your ticket and hotel room. Just kidding, I didn’t.”

That’s not my style but it’s definitely something a somewhat funny human might write. For anyone that’s ever played with ChatGPT, this will feel somewhat familiar. The integration into the browser, which allows for easy transferring of the AI-produced content into, say, emails and social media sites, makes things very convenient.

Source: finance.yahoo.com

Netflix says it ‘updated’ new password sharing policies that had users melting down

guardianpub on February 8, 2023

Netflix and chill (out), password sharers.

After intense backlash surrounding what appeared to be the first signs of the company’s upcoming password sharing crackdown, Netflix (NFLX) clarified no official announcements have been made outside of the current test countries.

“For a brief time last Tuesday, a help center article containing information that is only applicable to Chile, Costa Rica, and Peru, went live in other countries. We have since updated it,” a Netflix spokesperson told.

Last week’s updates appeared to show the company would require users to identify a “primary location” for all accounts that live within the same household. News which had users suggesting this would be a bridge too far, and threatening to leave the platform as a result.

Users would then need sign into the home Wi-Fi of the primary location at least once every 31 days to ensure their device is not blocked. Temporary codes would need to be used for traveling members, which would only remain valid for seven consecutive days

Netflix said it would use information such as IP addresses, device IDs, and account activity to determine whether a device signed into the account is connected to the primary location.

In a recent survey, investment firm Jefferies highlighted concerns surrounding the company’s crackdown on password sharing, particularly among the account freeloaders Netflix hopes to convert.

According to lead analyst Andrew Uerkwitz, about 62% of the 380 Netflix password borrowers surveyed said they would stop using Netflix once the crackdown takes effect.

Only 10% of those polled said they would move to create their own account for $9.99 a month, hinting password borrowers don’t see enough value in the platform. The survey also suggested competitors could greatly benefit from Netflix’s crackdown.

Some 35% of respondents said they can replace Netflix with another service, while another 31% added they don’t enjoy the content enough to justify paying for it.

When asked which platforms users would use more frequently if they eliminated Netflix, the top streaming alternatives included Amazon Prime Video (42%), Hulu (35%), and Disney+ (26%).

In its quarterly letter to shareholders published last month, Netflix said it would be intensifying its push to combat password sharing in Q1, although the streamer did not provide details on when exactly that would occur and what countries would be impacted.

“Later in Q1, we expect to start rolling out paid sharing more broadly. Today’s widespread account sharing (100M+ households) undermines our long term ability to invest in and improve Netflix, as well as build our business,” the company wrote.

Netflix’s password crackdown, coupled with its recently launched ad-supported tier, have been looked at as meaningful profitability drivers, especially as competition within the streaming space escalates: “As always, our north stars remain pleasing our members and building even greater profitability over time.”

Netflix reported subscriber net additions of 7.66 million in Q4, above company guidance for 4.5 million amid a slew of high-profile and record-breaking content releases, including “Glass Onion,” “Troll,” “All Quiet on the Western Front,” “My Name is Vendetta,” and “Wednesday.”

“The bottom line is there’s a massive amount of password sharing, particularly among affluent people,” told Jason Helfstein, head of internet research at Oppenheimer.

“We do think a good chunk of [Netflix] subscribers will probably pay more to keep certain members of their household, or let’s say their children who no longer live with them, on their plan,” he continued.

Helfstein, who described the crackdown as a “net positive” in the long term, added Netflix, “would not be doing this if they thought they would end up in a worse revenue situation.”

“This is a company that historically has prided itself on customer service, above all,” Helfstein said.

“The reality is people have taken advantage of it. Sharing your Netflix account with 20 other people is probably not what the company had in mind, [but] if people are reasonable and share this with five, six people in their family? I think it’s going to work out.”

Source: finance.yahoo.com

Takeover News: February Opens With M&A Bang As Gold Miners, REITs Pitch $28 Billion In Deals

guardianpub on February 7, 2023

Mergers and acquisitions may be exiting their recent slump with multiple takeover deals suddenly making news. Public Storage (PSA) made an $11 billion bid for Life Storage (LSI) on Sunday. Also Sunday, gold miner Newmont (NEM) offered $16.9 billion for smaller competitor Newcrest Mining (NCMGY). Meanwhile, shares of drug components supplier Catalent (CTLT) spiked 19.5% Monday on murmurs of an acquisition by Danaher (DHR).

The proposals come as deal making fell starkly last year. Worldwide, mergers and acquisitions totaled $3.6 trillion in 2022, down 38.8% from 2021, according to markets research firm Dealogic. And fourth quarter takeover volume came in at $538 million. That was the lowest Q4 level since 2017, according to data compiled by Bloomberg Law.

Public Storage Takeover

Public Storage, the largest American self-storage property company, proffered an $11 billion all-stock bid for Life Storage after it denied previous takeover offers, Reuters reported. According to terms of the deal, Life Storage shareholders would receive 0.4192 shares of Public Storage stock for each LSI stock they own. That would equal $129.30 per share based on PSA stock’s closing price on Friday. And it represents a 19% premium based on 20-day volume-weighted average price of both stocks. Including debt, the deal would value Life Storage at $15 billion.

Glendale, Calif.-based Public Storage first approached Life Storage in December. It had an initial bid rejected in January, the company said in a statement. Both companies are real estate investment trusts (REITs). That tax-sheltered business model return unused cash flow to investors via payouts.

Life Storage currently yields 4.1%. Public Storage yields 2.6%.

In a separate statement, Life Storage said the public proposal is “substantially similar in all material respects,” to the previous deal that was denied. The company plans to review the proposal to determine the best course of action for shareholders. It advises shareholders not to take any action at this time.

Last year, REITs had $83 billion in merger and acquisition volume, making it the second-best year for the sector since 2007, according to the National Association of REITs.

PSA stock dipped 0.3% Monday while LSI stock jumped more than 11% following the news.

Newmont, Newcrest Mining

On Monday, Colorado-based gold miner Newmont made a $16.9 billion all-stock offer to buy Australia-based competitor Newcrest Mining. Newmont is the world’s largest gold producer by market value and ounce production.

Under terms of the deal, Newcrest shareholders would receive 0.38 Newmont share for each Newcrest stock share they own. That would result in the combined company being 70% owned by Newmont and 30% owned by Newcrest, Newmont stated in a new release. And the current offer price of $27.16 per Newcrest share would represent a 21% premium based on Newcrest’s Friday closing price of $22.45 per share.

“The proposed transaction would join industry-leading portfolios of assets and projects to create long-term value across the combined global business, and we welcome the consideration of Newcrest’s Board of Directors,” Newmont CEO Tom Palmer said in the announcement.

Takeover Bid Comes Amid Bobbing Gold Price

On Monday, Newcrest Mining confirmed that the offer followed a previously rejected proposal of 0.363 Newmont shares for each Newcrest stock share. However, Newcrest’s board of directors didn’t believe it delivered enough value to shareholders. Newcrest is considering Newmont’s latest proposal and advised shareholders to not take any action at this time.

The takeover attempt occurs as the price of gold bobs beneath an early February high. Spot gold prices rose to $1,953 per ounce on Feb. 1, it’s highest since April 21 last year when it traded at $1,951, according to data from metals dealer Scottsdale Bullion & Coin. Gold prices are currently hanging around $1,873 per ounce, but still well above November lows of $1,629. Bank of America projects it will reach $2,000 by the third quarter. JPMorgan and UBS Bank are a bit more bearish, projecting gold prices to reach $1,860 and $1,900 by the fourth quarter and end of year, respectively.

NEM stock slid 4.5% Monday while NCMGY stock rose about 12% following the news.

Catalent Chatter

Also on Monday, Catalent shares soared after Bloomberg reported that life sciences company Danaher is considering a takeover attempt. Those familiar with the matter say the deal is not imminent, and the companies have yet to comment publicly on the reports. Still, CTLT stock soared 19.5% by market close Monday after leaping 24% early in the day. DHR stock dipped 2.3% on the day.

Source: investors.com

Binance to Suspend US Dollar Transfers Using Bank Accounts

guardianpub on February 7, 2023

Binance, the world’s largest cryptocurrency exchange, said it’s temporarily suspending deposits and withdrawals of US dollars using bank accounts, and will work to restart the service soon.

The suspension will start Wednesday, according to a Binance spokesperson. No specific reason was given for the suspension. Bank transfers using other fiat currencies, such as euros, are unaffected, the representative said.

“It’s worth noting that only 0.01% of our monthly active users leverage USD bank transfers, but that we are working hard to restart service as soon as possible,” the spokesperson said in an emailed statement. Other methods of buying and selling crypto on Binance, such as via credit card, Google Pay and Apple Pay, “remain unaffected.”

Binance US, a separate entity designed for US users, said it’s not affected by the move.

Crypto companies have had difficulties finding banking partners to facilitate the sending of money to buy and sell digital assets. Following the collapse of FTX, banks have been warned by federal regulators of the risks of doing business with crypto firms.

While some banks are “withdrawing support for crypto, other banks are moving in,” Binance Chief Executive Officer Changpeng Zhao said on Twitter in response to the Binance announcement. “Some setbacks were expected from last year’s incidents.”

Last month, Binance said its banking partner Signature Bank would handle user transactions only if they’re for more than $100,000 as the lender decreases its exposure to digital-asset markets. The New York-based bank said in December it intends to cut as much as $10 billion in deposits from crypto clients.

A spokesperson for Signature said Monday that the bank can’t comment on client-related matters.

Source: finance.yahoo.com

2 Industrial Stocks To Buy Hand Over Fist in February

guardianpub on February 6, 2023

These stocks will generate steady earnings and pay out dividends for decades to come.

Inflation rocked the U.S. economy in 2022. Rising prices across the board led to higher costs for consumer products. But one company’s cost is another’s revenue, and in the cases of rising commodity, energy, and agricultural prices, plenty of sectors benefited from these trends last year.

The industrial sector is a good hunting ground for stocks that will benefit from rising inflation, specifically with railroads and defense contractors. Here is one railroad and one defense contractor with durable earnings streams to buy in February.

1.Lockheed Martin: one reliable customer

Lockheed Martin (LMT 1.37%) has been a mainstay of the defense industry for decades, becoming one of the largest customers for the U.S. government and its allies. It supplies missiles, helicopters, satellite systems, fighter jets, and many other products for war departments. Some of the company’s revenue comes from cost-plus contracting, which gives contractors like Lockheed Martin a guaranteed return on projects. These kinds of contracts are part of the reason why the company can ride through periods when wages and input costs are rising quickly, as is happening today. And even if cost-plus contracting goes away, Lockheed is still the sole supplier for many weapons systems like the cutting-edge F-35 fighter jet. Regardless of the contract structure, Lockheed will likely be a monopoly supplier to the U.S. government for decades to come.

With governments — especially the U.S. government — always wanting the latest in defense/war technologies, Lockheed has an incredibly steady and predictable business. Last year, it generated $66 billion in sales and $6.1 billion in free cash flow. More importantly, its backlog grew 11% year over year to $150 billion, a lot of which has been driven by countries wanting to increase their defense spending post the Russian invasion of Ukraine. For example, Finland signed a $9.4 billion deal for the new F-35 fighter jet last year, which will create an earnings stream for many years as the aircraft is deployed and maintained.

Management takes this steady cash flow and returns it to shareholders through dividends and share buybacks. Over the last 10 years, Lockheed’s dividend per share is up 165%, while shares outstanding are down 21%, and its dividend is currently yielding 2.60%. If dividend growth and buybacks continue for the next few decades, shareholders of Lockheed stock will achieve solid long-term returns.

2.Union Pacific Corporation: a durable railroad operator

Railroad company Union Pacific (UNP -0.05%) operates in a different industry from Lockheed Martin but actually has similar competitive advantages helping it consistently generate profits. As one of the only railroad operators throughout the western half of the United States, companies that want to ship items by rail have no choice but to use Union Pacific’s routes. That allows the company to earn steady profits regardless of its input costs, as it can just pass them on to customers.

Over the last 10 years, Union Pacific has grown its free cash flow by 124%, hitting $5.7 billion over the last 12 months. Like Lockheed, Union Pacific consistently returns cash to shareholders in both dividends and repurchases. The dividend per share is up 280%, and shares outstanding are down 34.5% in the last 10 years. Investors currently get a 2.5% dividend yield each year for holding the stock, indicating to me that shares are inexpensive at the moment.

With urban areas spaced widely across a large land mass, railroads have been a shipping mainstay in the United States for over 100 years. I would bet that they will likely stick around for at least another few decades, if not much longer, as the geography of the West Coast is not changing anytime soon. That bodes well for investors looking to buy Union Pacific stock and hold on for many years.

Source: fool.com

Institutional Traders Shifting Attention from Blockchain to AI: JP Morgan

guardianpub on February 6, 2023

More than half of the institutional traders surveyed by global financial services giant JP Morgan said that artificial intelligence and machine learning will be the most influential technology in shaping the future of trading over the next three years—cited four times more often than blockchain and distributed ledger technology.

JP Morgan’s e-Trading Edit report is now in its seventh year, the latest report drawn from a January survey of 835 institutional traders in 60 global markets. The annual assessment of trader sentiment spans several asset classes and is intended to reveal “upcoming trends and the most hotly debated topics.”

The tumultuous bear market in crypto—coupled with the recent consumer and commercial hype over accessible AI technology like ChatGPT—seems to have shifted the outlook of financial industry professionals. Last year, blockchain and distributed ledger technology tied for second with AI and machine learning with 25 percent of respondents declaring them key to the future. Mobile trading applications came in first, with 29 percent.

Now, AI dwarfs every other major category of technology, its 53% citation rate far and away ahead of API integration (14%) and blockchain (12%). The top 2022 technology, mobile apps, fell to 7%, along with quantum computing and natural language processing.

Why Is Crypto Twitter Obsessed with ChatGPT?

Tackling crypto specifically, JP Morgan found that 72% of traders “have no plans to trade crypto [or] digital coins,” with 14% predicting they plan to trade within five years.

Even so, respondents clearly felt that other players were bullish on the space.

“Crypto and digital coins, commodities, and credit are predicted to have the biggest increases in electronic trading volumes over the next year,” the report notes, with participants predicting 64 percent of their activity will be in the crypto space by 2024.

While the survey found traders were unanimous in their belief that electronic trading will continue to grow, they also expected rough weather ahead. When asked which potential developments will have the greatest impact on the markets in 2023, the top answers were recession risk (30%), inflation (26%), and geopolitical conflict (19%).

The e-Trading Edit report is only the latest of several studies and reports that JP Morgan has released in the past month relating to cryptocurrency and digital assets. Last week, the firm predicted “significant challenges” for Bitcoin and Ethereum and noted that Solana, Terra, and tokens were gaining traction in the world of decentralized finance (DeFi) and non-fungible tokens (NFTs).

JP Morgan also looked at the prospects for leading crypto exchange Coinbase last month, saying the upcoming Shanghai update for Ethereum “could usher in a new era of staking” for the firm.

Source: finance.yahoo.com

Apple stock gets nailed as CEO Tim Cook spooks investors with one phrase

guardianpub on February 3, 2023

Apple (AAPL) CEO Tim Cook and his righthand CFO Luca Maestri channeled their inner Wall Street economist on the tech giant’s earnings call late Thursday, and investors aren’t liking it.

Shares of Apple — which had reverted to slightly positive in after-hours trading on upbeat China demand comments on the earnings call — fell more than 3% in pre-market trading on Friday.

The pullback likely reflects a rare earnings miss for Apple, coupled with the fact Cook and Maestri used some variation of the phrase “challenging economy” seven times on the earnings call. Both are unusual for the mighty Apple.

“The macroeconomic environment this past quarter markedly was more challenging than 12 months ago,” Maestri told analysts.

Those challenges could be seen in Apple’s earnings.

Apple Earnings Overview

  • Revenue: $117.1 billion versus $121.1 billion expected
  • Adj. earnings per share: $1.88 versus $1.94 expected
  • iPhone revenue: $65.7 billion versus $68.3 billion expected
  • Mac revenue: $7.7 billion versus $9.72 billion expected
  • iPad revenue: $9.4 billion versus $7.7 billion expected
  • Wearables: $13.4 billion versus $15.3 billion expected
  • Services: $20.7 billion versus $20.4 billion expected
  • Wins: 1) China demand appears to be gaining steam; 2) $50 billion plus in cash on the books; 3) Supply constraints have pretty much ended.
  • Misses: 1) No March quarter revenue guidance again; 2) Executive tone negative on the economy; 3) Weak wearables sales due to economic conditions.

Despite the rare miss and cautious tone from Cook & Co., the bulls on the Street are standing pat on the stock.

The collective vibe is that everyone knew the quarter was going to be soft as the China economy slowly reopens and U.S. consumers spent more cautiously. In turn, Apple’s latest quarter may be as bad as it gets fundamentally for the iPhone and Mac maker this year.

Or so the bulls are betting.

“Bears will be quick to point out negative sales growth but we note when adjusting for FX that sales and outlook are flat, which is materially better than other consumer electronic companies. Importantly services are also outperforming and Apple’s installed base continues to grow (over 2 billion active Apple devices and iPhone installed base estimated at 1.2+ billion),” Citi analyst Jim Suva said in a note to clients.

Source: finance.yahoo.com