Alphabet disappoints on sales as ad business slips after pandemic run-up

guardianpub on February 3, 2023

Alphabet Inc on Thursday posted fourth-quarter profit and sales short of Wall Street expectations as Google’s advertising clients pulled back spending from a period of pandemic-led excess.

Executives of the search and advertising giant adopted a subdued tone on a call with investors, promising an extended period of belt-tightening, particularly on hiring, real estate costs and experimental projects that can take years to reach fruition.

Shares of Alphabet were down nearly 5% in after-hours trading, after losing about 40% of their value in 2022.

“We are committed to investing responsibly with great discipline and defining areas where we can operate more cost- effectively,” Chief Executive Sundar Pichai told analysts on a call to discuss the company’s results. That echoed comments from Meta Platforms Inc boss Mark Zuckerberg the previous day on cost efficiencies.

Shares of other tech companies Apple Inc and Amazon.com Inc also fell after they posted disappointing results on Thursday, wiping off gains after Facebook parent Meta on Wednesday boosted tech shares with news on cost cuts and a large buyback.

Gone was some of the exuberance of the pandemic when consumers flocked to the internet amid lockdowns and heightened interest in e-commerce and touchless deliveries.

Alphabet’s chief financial officer, Ruth Porat, promised a more measured approach for 2023 and a focus on “delivering sustainable financial value,” not necessarily a hallmark of Silicon Valley firms. “We’re focused on revenue upside as well as durable changes to the expense base.”

Advertisers, who contribute the bulk of Alphabet’s sales, have cut their budgets as rising inflation and interest rates fueled concern over consumer spending.

Pichai pointed to advertisers’ more modest spending and the impact of foreign exchange rates abroad as drags on Alphabet’s overall results.

He said artificial intelligence (AI) software will be an important focus for the company and that it plans to make its LaMDA chatbot software publicly available in the coming weeks.

LID ON COSTS

Mountain View, California-based Alphabet decided to cut 12,000 jobs last month, representing about 6% of its overall workforce, and said it was doubling down on AI. Across the company, Alphabet will “meaningfully” slow its pace of hiring this year, said Porat.

Alphabet, long a leader in AI, is facing competition from Microsoft Corp, which is reportedly looking to boost its stake in ChatGPT – a promising chatbot that answers queries with human-like responses.

“Despite being seen as one of the most insulated companies in the advertising space relative to peers, Alphabet’s poor quarter is the latest sign that worsening fundamentals and a tough macroeconomic environment are prompting advertisers to cut back on spending,” said Jesse Cohen, senior analyst at Investing.com.

Net income fell to $13.62 billion, or $1.05 per share, from $20.64 billion, or $1.53 per share, a year earlier. That was the sharpest decline for Alphabet in four quarters.

Adjusted profit of $1.05 per share fell short of an expected $1.18 per share, according to Refinitiv.

Revenue from Google advertising, which includes Search and YouTube, fell 3.6% to $59.04 billion. Total revenue rose 1% to $76.05 billion, its slowest growth ever barring a small decline in the second quarter of 2020. Analysts were expecting $76.53 billion.

Google is the world’s largest digital ad platform by market share, making it uniquely susceptible to fluctuations in online marketing spending. Its YouTube division has faced a surge in rival platforms, particularly TikTok, whose endless scroll of short video is drawing younger users away.

Alphabet’s Porat said the company’s total capital expenses this year will be in line with last year. As more of its employees work remotely and it consolidates staff, Alphabet expects to pare back its real estate expenses, which Porat said would result in a charge of roughly a half-billion dollars in this year’s first three months.

Revenue from YouTube ads, one of Alphabet’s most consistent money-makers, fell nearly 8% to $7.96 billion, well below the estimate of $8.25 billion, according to FactSet.

Cloud was a bright spot, however, with revenue growing 32% to $7.32 billion, but at its slowest pace since the company began disclosing the segment’s revenue numbers.

But there may be more pain ahead for Alphabet. Late last month, the Justice Department and eight states sued Google over what they said were anticompetitive practices in its digital ad sales. The company is facing multiple lawsuits, which, if successful, could cause it to be broken up.

Source: finance.yahoo.com

Fed’s interest-rate hikes make T-bills an attractive, safer investment

guardianpub on February 2, 2023

A short-term saver? Say thanks to the Federal Reserve.

One benefit of the Fed’s interest-rate hikes aimed at wresting control over inflation is that savers looking for a safe investment for a year or less can now get the best yields in ages from Treasury bills, or T-bills.

Savings rates have jumped from just about zero to more than 4% in the past 12 months on these short-term securities issued by the federal government. On Jan. 24, a one-year T-bill was yielding 4.7%, up from a rate of 0.57% a year ago. A six-month T-bill was at 4.82% on Jan. 23, compared with 0.36% last January, and the three-month T-bill was yielding 4.58%, up from 0.13%.

And as long as the Fed keeps interest rates high — which seems likely after Wednesday’s quarter-point hike — investing short-term money in T-bills has a certain drama-free appeal with modest returns.

While this is not a get rich quick scheme, “T-bills currently offer savers better yield than most online savings accounts and short-term [certificates of deposit],” told Ken Tumin, a senior industry analyst at LendingTree and founder of DepositAccounts.com.

What are T-bills

reasury bills — like i Bonds and Treasury inflation-protected securities, or TIPS — are issued by and backed by the U.S. government. I bonds, for example, pay interest for up to 30 years. T-bills are the ticket for people looking for short-term savings of up to a year.

Additionally, savers can reap tax savings on T-bills, which are exempt from state and local income tax.

“That can make a 4.6% yield equivalent to a 5% yield for a CD in a state with an income tax,” Tumin said.

How T-bills works

T-bills are sold at a discount to their face value; when the bill matures, your interest is the difference between what you paid and the T-bill’s face value. For example, if you bought a $1,000, one-year T-bill at a rate of 4%, you would shell out $960 upfront and receive $1,000 at the end of the year.

You must buy on auction dates, which occur weekly for all maturities, except the one-year T-bill, which is set for every four weeks. Most individual investors make a noncompetitive bid, which means you land the average yield set at auction. (Emergency funds might be best held in high-yield savings accounts.)

Want to sell before the maturity date? That can be “a bit of a hassle,” told Tricia Rosen, a financial planner and founder of Access Financial Plannin.

When you buy through TreasuryDirect — the government’s website — you must hold new Treasury marketable securities for at least 45 calendar days before transferring or selling them (even if it’s a four-week security). Interest is paid when the security reaches maturity.

You won’t pay a penalty or fee if you want to hop out early like you would if you withdrew from a CD early. However, you could possibly lose money, if the sale price of the T-bill is lower than the original purchase price, which you are guaranteed at maturity.

“For individual investors, Treasury bills may be better suited as a way to diversify your portfolio rather than a replacement for your emergency savings,” said Greg McBride, senior vice president and chief financial analyst at Bankrate.com. “If you had an unplanned expense and needed to sell prior to maturity, you wouldn’t be able to sell it on TreasuryDirect but would first have to transfer it to a bank, broker, or dealer.”

Where to purchase T-bills

You can buy newly issued Treasuries in terms ranging from four weeks to 52 weeks through your bank or brokerage, which may charge a commission. Or, you can buy them online for a minimum of $100 through the government’s TreasuryDirect program, with no commission.

Large firms, however, such as Charles Schwab, Fidelity, and Vanguard, do not charge a fee when you buy a T-bill. That said, the minimum order for a new-issue Treasury is typically $1,000 in face value when you purchase it via a brokerage. And if you want to purchase T-bills for individual retirement accounts (IRA) accounts, you must go through a broker. For those nearing retirement, these can be a smart place to set aside cash without the worry of what’s going to happen with the stock market.

“T-bills are paying a slightly higher rate than other short-term investments, and the Treasury Direct website is easier to navigate than it was a few months ago before they revamped it,” Rosen said. “So it’s a good idea for someone who is in a high tax state.”

Source: finance.yahoo.com

Car buyers face ‘inhibiting factors’ for EV adoption: Mazda USA CEO

guardianpub on February 2, 2023

Japanese automaker Mazda (7261.T) has a small, yet cult-like following here in the U.S. While fans of Mazda enjoy the driver-focused characteristics and sporty handling, there is one one area that the company is lagging: electrification.

Though the brand had a strong Q4 in North America—sales jumped around 40% versus a year ago—Mazda saw its overall sales dip around 12% for the year compared to 2021, partly because of supply chain issues. Mazda sold around 295,000 cars in North America last year, highlighting its small brand status in a region where GM (GM) sold nearly 10 times as many cars.

It’s why investing big time into fully electric vehicles has been so hard for Mazda, because of the billions of dollars needed for new platforms. It’s also why Mazda is leaning hard into its hybrid options, like it’s all new flagship SUV, the CX-90.

“So CX-90 launches with our most powerful engine ever in both gasoline mild hybrid and also plug-in hybrid forms – so the platform has only electrified powertrains,” says Mazda North America president & CEO Jeff Guyton in an intervie. “It really represents a big step forward in terms of the premium-ness of the Mazda brand, and we’re bringing that together with a premium experience in our new retail evolution showrooms across the country.”

The CX-90 is a big three-row, premium SUV, and as Guyton mentions, will only have “electrified” powertrains. In a country like the US where EV is growing every year, the question is this: why wasn’t the CX-90 given a fully-electric powertrain?

Guyton says it’s because Mazda’s customers haven’t been asking for that—yet.

“What we see happening right now is that customers are obviously quite interested in the journey of electrification, but there are also inhibiting factors because the customer experience for electric is, let’s say, it has growing pains right now,” Guyton says. “Whether you’re talking about charging, or cold weather, or hot weather, or electricity in California in the summertime, and so forth.”

Mazda currently has only one EV for sale in America, the midsize MX-30 EV which has a paltry 100 mile range, and is only sold in limited quantities in California. Mazda says a hybrid range-extending version of this car is coming out later this year, with the company’s first true EVs slated for 2025-2027 timeframe.

It’s all part of the company’s $10.6 billion investment into EV’s, which does sound like a decent sum of money, but pales in comparison with what giants like GM, Ford (F), and Volkswagen (Vow3.DE) are spending.

Guyton says the company’s plan to delay its EV rollout, and devote funding to hybrid powertrains, is the right answer for the current environment.

“I think there’s a lot of demand, there’s a lot of interest [in EVs], but the technology and the scenery around it in terms of charging and so forth is not really mature yet,” he says. “So we think that the customer experience right now suffers a bit, and that our formula can provide something more timely.”

Speaking of timely: Mazda investors will be hoping Guyton and the management team in Japan are right and haven’t waited too long to begin its EV transformation.

Source: finance.yahoo.com

Amazon expected to post first unprofitable year since 2014 and worst loss since the dot-com bust

guardianpub on February 1, 2023

Holiday earnings will have to greatly exceed expectations for Amazon to reach an annual profit for the year.

Amazon.com Inc. is expected to reveal this week its first unprofitable year since 2014 and the worst year for its bottom line since 2000 — and expectations for this year aren’t headed in a positive direction.

Amazon AMZN, +2.57% reported roughly $3 billion in total losses through the first nine months of the year, and Wall Street analysts on average are projecting about $2 billion in net income in the holiday season, according to FactSet. Beyond being its first annual loss since 2014, a loss of $1 billion or more would challenge for the biggest annual loss on Amazon’s books — the only time it has lost more than $1 billion in a year was a $1.4 billion loss in 2000, when Amazon had less than $3 billion in annual revenue.

Amazon’s losses are driven by Rivian Automotive Inc. RIVN, +7.54%, which Amazon invested in and contracted with for delivery vehicles; the electric-vehicle maker’s stock plunged in 2022 after a successful initial public offering at the end of 2021. Amazon is unlikely to face those paper losses again in future years, and Wall Street projects that Amazon will storm back to more than $17 billion in profit in 2023 by cutting costs and shedding employees it brought on to deal with spiking demand in the first two years of the COVID-19 pandemic.

That forecast may be too bright, though, amid growing doubt about Amazon’s most profitable business, Amazon Web Services. While Amazon is not expected to produce a net income this year, its operating income will be in the black solely because of an expected $23 billion profit from AWS, countering an $11 billion loss from the rest of the business.

Cloud-computing growth is slowing, however, as large corporate customers look to cut back on their spending. Last week, Microsoft Corp. MSFT, +2.10% executives revealed that an Azure slowdown that spooked investors in October had gotten worse in December, and that they expected it to continue to get worse this quarter. AWS revenue growth has already decelerated, and many analysts rushed to adjust their projections for Amazon revenue and profit forecasts ahead of Thursday’s guidance from executives.

“Our lower AWS margin forecasts further drag down our Amazon [operating income] estimates and pose some risk to the outlook,” UBS analysts wrote last week in a report that predicted just 15% revenue growth this year for AWS, a slowdown for a business that has more than doubled sales since the end of 2019 to an expected $80 billion this year.

All of this explains the recent corporate cuts at Amazon, which more than doubled its workforce to become the second-largest private U.S. employer during the pandemic. No amount of cutting is expected to return Amazon to the heights it enjoyed in 2020 and 2021 — when the e-commerce and cloud-computing giant produced more than $54 billion in profit collectively, more than in its entire existence to that point — but now those cuts may be the only way to come close to expectations this year.

“A weaker outlook at AWS puts even more pressure on cost cuts at the retail segment to drive the margin story,” UBS analysts bluntly stated, while maintaining a buy rating but cutting their price target to $118 from $121.

It’s still possible for Amazon to exceed expectations, maybe by enough to reach break-even for the year — holiday earnings have beaten estimates at least five years running, according to FactSet records that date to 2017, including a huge beat last year thanks to the Rivian IPO. The direction of the stock likely depends on the forecast, though, and what it says about the direction of profit, and AWS, in 2023.

Source: finance.yahoo.com

Snap earnings: Stock plunges following Q4 results

guardianpub on February 1, 2023

Snap (SNAP) reported its Q4 2022 earnings on Jan. 31, meeting analysts’ expectations on revenue and user growth, but clocking a net loss and weak guidance for this year’s Q1.

Here are the key numbers that emerged from Snap’s report, as compared with Wall Street’s estimates:

Q4 Revenue: $1.3 billion actual versus $1.31 billion expected

Adjusted Earnings Per Share (EPS): 14 cents versus 11 cents expected

Daily Active Users (DAUs): 375 million versus 374.7 million expected

The company also reported a net loss of $288 million, a stark comparison to the net income of $23 million that Snap reported this time last year.

Looking ahead, Snap’s Q1 2023 revenue guidance suggests a decline “between -10% to -2% year-over-year.” However, that’s an internal forecast and the company declined to provide an official one for the third straight quarter. The Los Angeles-based company added that it expects to see its DAUs grow to between 382 million and 384 million in Q1 2023.

“We continue to face significant headwinds as we look to accelerate revenue growth, and we are making progress driving improved return on investment for advertisers and innovating to deepen the engagement of our community,” CEO Evan Spiegel said in a statement.

Snap stock plunged in after-hours trading by about 13%.

Snap’s 2022 ends with struggles that have dogged the company all year

Today’s results mark the end of a long 2022 for Snap. Even in a rough year for Big Tech as a whole, Snap’s year stood out as uniquely tough. The company’s shares tumbled around 80% throughout 2022, as it was rattled by slowed digital advertising, high inflation, and fast-growing competition from TikTok.

In August, Snap laid off 20% of its workforce, a move that affected 1,300 employees. The cuts were high-profile and included the axing its drone camera Pixy and Snap Originals, the exclusive short shows the company made with celebrities and influencers. Snap also shuffled its executive team around at the time.

The stakes were high for Snap today, as Wall Street’s grown increasingly skeptical of the company’s prospects. To that end, Snap has seen a number of downgrades recently, including from Citizens-owned JMP Securities and Jefferies.

Snap remains in the throes of the advertising slowdown and, if the company’s investor letter is anything to go by, they don’t expect that to let up anytime soon. Right now, advertising is Snap’s business. In Q4 2021, Snap said in SEC filings that “for the years ended December 31, 2021, 2020, and 2019, advertising revenue accounted for approximately 99%, 99%, and 98% of total revenue, respectively.”

Moving forward, look for Snap to tout and attempt to build efficiency in its advertising business.

“While we continued to face significant headwinds to our revenue growth in the quarter, we are optimistic about the improvements we are making to our direct response advertising platform and the early progress we have made improving return on advertising spend (ROAS) for our advertising partners,” Snap’s investor letter reads. “We believe that improving returns on advertising investments will enable us to continue to increase our share of wallet in this highly competitive environment.”

Source: finance.yahoo.com

Stock market: 3 stunning stats from January 2023’s spirited move

guardianpub on January 31, 2023

Investors have had a slew of downbeat headlines to kick off 2023.

Eye-popping layoff news from tech stalwarts Amazon, Microsoft, Salesforce and 3M. Chip giant Intel reported another tough outlook amid a major slowdown in PC demand. Ford and Tesla slashing prices on EVs as the economy has cooled. Signs that inflation continues to slow — but not at such a rapid pace as to suggest rate cuts from the Federal Reserve later this year. Earnings are meh.

And yet stocks are off to a surprisingly solid start to the year.

As of this writing, the Nasdaq Composite has posted a nearly 9% gain so far in 2023. The S&P 500 and Dow Jones Industrial Average have clocked in with 4.65% and 1.7% advances, respectively.

It’s unclear if January will be as good as it gets for stocks this year or the party will continue — in any case, the action has been interesting to watch. Here are a few interesting stats from 2023 served up by astute market strategist Keith Lerner at Truist:

1.Investors are feeling the forgotten.

The 50 worst-performing stocks of 2022 are up an average of 20.1% so far this year, according to Lerner’s research. The 50 best-performing stocks from last year, meanwhile, are up an average of only 1.9%.

“We view this as most likely a short-term reversion of oversold stocks as opposed to new market leadership or a fundamental shift,” Lerner says.

2.Investors pump up PEs.

Analyst earnings estimates for the S&P 500 have ticked down to an 11-month low, Lerner noted. So, the advance in stocks has been fueled by rising price-to-earnings multiples — likely on the hope the Fed halts its rate hikes mid-year.

The S&P 500’s forward PE ratio has jumped back to 17.9 times, near the peak level of 18.0x-18.5x it traded to over the past decade outside of the pandemic highs.

“While this is typical during the early stages of a new bull market, since prices tend to advance well before earnings and the economy turn up, we remain skeptical,” Lerner wrote. “Our view is investors, as reflected in rising valuations, are placing too high of a probability on a soft economic landing and leaving little margin for error.”

3. ‘indiscriminate buying’

Going back to the previously out-of-favor stocks…

Lerner notes that “remarkably,” all 50 of last year’s worst performing stocks are up in 2023.

The appetite to buy these names “indiscriminate buying”, Lerner says.

Source: finance.yahoo.com

Memory-Chip Makers Face a Prolonged Price Slump

guardianpub on January 30, 2023

Memory-chip prices, which dropped steeply over the past year, are expected to keep falling in the first half of 2023, putting more pressure on an industry that has already cut investments and jobs.

Average prices for the two main types of memory chips used in everyday electronics—from smartphones to personal computers and TV sets—are projected to experience double-digit percentage declines this quarter, industry analysts say. That comes after prices dropped by more than 20% in the last three months of 2022 from the previous quarter, according to analyst data.

Memory-chip makers, many saddled with large inventories, have also issued grim outlooks as the slump in demand for gadgets persists after a pandemic boom.

Micron Technology Inc., MU -2.46%decrease; red down pointing triangle SK Hynix Inc., 000660 -0.87%decrease; red down pointing triangle Western Digital Corp. WDC -1.65%decrease; red down pointing triangle and Tokyo-based Kioxia Holdings Corp. have unveiled plans to reduce their investments aimed at capacity expansion or to lower output to address a supply glut that is getting worse. Last month, Micron Technology said it would cut jobs and spending for the year to reduce costs after reporting a loss in its most recent quarter.

Memory chips are considered a bellwether for the semiconductor industry because they are more commoditized and sensitive to shifts in supply and demand.

Samsung Electronics Co., SSNHZ 0.00%increase; green up pointing triangle the world’s largest producer of memory chips, reports earnings Tuesday after saying earlier this month that its operating profit for the October-to-December quarter was expected to drop by 69% from a year earlier to 4.3 trillion won, which is equivalent to roughly $3.5 billion.

SK Hynix, which reports earnings Wednesday, is expected to report a fourth-quarter loss of around 812 billion won, or about $661 million, according to analyst projections averaged by FactSet.

Companies making other types of semiconductors are also caught up in the downturn. On Thursday, Intel Corp. reported a fourth-quarter loss and said poor market conditions would persist through the first half of the year.

Memory prices peaked during the early Covid-19 pandemic due to strong demand for tech products and they began falling in late 2021. Quarter-on-quarter declines got steeper through the second half of last year, as macroeconomic woes and rising interest rates combined with geopolitical uncertainties from the Russia-Ukraine war and China’s Covid lockdowns.

The memory-chip industry started 2023 with high inventories, said Kim Soo-kyoum, associate vice president covering memory semiconductors at International Data Corp., a tech market research firm. With demand still sluggish, memory prices are expected to keep declining throughout this year, though the quarterly drops could narrow or flatten in the second half depending on how soon buyers come back, Mr. Kim said.

Average contract prices for the two main types of memory chips, DRAM and NAND flash, dropped by roughly 23% and 28% respectively during the October-to-December period from the prior quarter, according to TrendForce, a Taiwan-based market researcher that tracks memory prices.

DRAM memory enables devices to multitask, while NAND flash memory provides storage capacity on devices.

Prices for both will likely keep falling through the first half of this year, TrendForce said. DRAM prices are expected to drop—on a quarterly basis—by 20% in the first quarter and 11% in the second quarter, while NAND flash prices during the same time frame are projected to drop by about 10% and 3%, respectively.

Inflation, high interest rates and weak economies are expected to continue to drive pullbacks in corporate and consumer spending on products including smartphones, PCs and data servers that are the biggest users of memory chips, TrendForce said.

DRAM prices are expected to continue dropping through the second half of this year and production cuts on a massive scale would be needed to shore them up, said Avril Wu, a TrendForce senior vice president.

Prices of NAND flash, however, could start to rebound starting in the second half as steeper price falls in recent months had prompted vendors to pursue more aggressive supply cutbacks for 2023, Ms. Wu said.

Samsung, the biggest producer of both types of memory chips, hasn’t publicly committed to moves that could reduce supply. In its last earnings call in October, Samsung’s memory-business Executive Vice President Han Jin-man said the firm was “not considering any artificial reduction in production for the sake of short-term, supply-demand rebalance.”

A Samsung spokeswoman said the company’s stance hasn’t changed.

In a report last month, Goldman Sachs forecast Samsung’s semiconductor unit’s operating profit for the October-to-December quarter would be around 1.5 trillion won, or roughly $1.2 billion, an 83% drop from a year earlier. It also projected Samsung’s memory business would record an operating loss starting from the first quarter of this year due to steep losses in the NAND flash business.

Global tech demand could recover later this year, aided by factors like China’s reopening after a period of strict Covid-19 restrictions which could revive consumer spending on products like smartphones, said David Tsui, senior credit analyst at S&P Global Ratings.

For now, it isn’t clear how quickly and to what extent consumer behavior would change in the country, he said.

Source: finance.yahoo.com

3 Supercharged Electric Vehicle Stocks to Buy in 2023 and Beyond

guardianpub on January 30, 2023

While 2022 was a year for stock price corrections across the electric vehicle (EV) sector, 2023 looks to be a transition year for the businesses themselves. EVs are going mainstream as manufacturers across the globe are ramping up production.

EVs made up 10% of all new cars sold globally last year. Europe and China are leading the way, with fully electric vehicles accounting for 11% and 19% of all new vehicles sold, respectively. With stock prices down and sales continuing to pick up, investors should look at investing in a diverse mix of EV makers in 2023.

Results matter, not expectations

Tesla (TSLA -0.59%) is starting out 2023 proving that it remains the industry leader. It is so far ahead of the competition that it almost has to have a place in any basket of EV holdings. Even after a small recovery to start 2023, Tesla shares are still down almost 60% over the past 12 months.

But Tesla’s business remains strong. Maybe not as strong as some analysts and investors hoped, but that’s why the shares have become much more reasonably priced. Some feared Tesla’s vehicle price cuts across its sales regions indicated a drop in demand that signals a slowing business. But investors should look at results, and not just what prior expectations from analysts have been.

Increasing competition, and the resulting decrease in its market share, were inevitable. But Tesla generated $7.6 billion in free cash flow in 2022 even as it continues to invest for growth. The fourth-quarter results it recently released show its strategy to lower prices as much as 20% is one where it can still be a very profitable, high-growth business. Even with headwinds and price cuts in China, Tesla’s net income continued to grow in the fourth quarter.

Its strategy is to attempt to hold market share and deliver high volumes of vehicles. Even as its margins slide somewhat, Tesla will have those customers and potentially be able to upgrade those units with higher-margin automation in the future. It’s still a long-term growth story one should own.

Invest in the biggest markets

One company that is working to battle Tesla for market share in the biggest global markets is China-based Nio (NIO -3.74%). Nio boosted production, launched new models, and gained traction in the European market in 2022. The company is now squarely embedded in the two biggest global automotive markets.

Nio is a much more speculative investment than Tesla, though. Nio shares are also down about 60% over the last year, but unlike Tesla, it has yet to make a profit. Due to rising costs and production delays from COVID-19 impacts in China in 2022, the company reported a net loss of almost $1.3 billion in just the first nine months of the year. But growth is still accelerating for Nio, and total revenue is expected to be about $7.5 billion from 2022 sales.

With the stock’s decline over the course of the company’s struggles last year, its valuation has reached a reasonable level for a speculative investment. Nio’s price-to-sales (P/S) ratio is now below 3.0, which is less than half that of Tesla. That makes it an intriguing addition to a mix of EV stocks to buy in 2023.

True diversity

Ford (F -1.62%) could also be a good addition to that mix. It not only is quickly growing sales of its brand new lineup of electrified vehicles, but it also offers real diversity in a mix of EV names. That’s because Ford doesn’t intend to end sales of its internal combustion engine vehicles. Its initial electric offerings are also a mix of the Mustang Mach-E SUV, F-150 Lightning pickup truck, and E-Transit commercial van.

The F-150 Lightning has been named the MotorTrend Truck of the Year for this year, and interest is booming. It launched in May and has already become the best-selling electric truck in the U.S. Valuation certainly isn’t a disincentive to own Ford. It sports a P/S ratio of just over 0.3, or about one tenth that of Nio. Ford still needs to show it can earn a profit on its electric offerings, but considering the diversity it already offers, it also makes a good addition to a small basket of EV stocks worth buying in 2023.

Source: fool.com

These Stocks Are Moving the Most Today: Tesla, IBM, Chevron, ServiceNow, and More

guardianpub on January 26, 2023

Stock futures were mostly higher Thursday and tech stocks looked poised to rally after Tesla TSLA +0.38% delivered solid quarterly earnings.

These stocks could make moves Thursday:

Tesla (TSLA) was up more than 7% in premarket trading. The electric-vehicle maker reported fourth-quarter earnings that topped Wall Street estimates. Tesla’s operating earnings of $3.9 billion in the fourth quarter were a record.

International Business Machines IBM –0.52% (IBM) declined 2%. IBM posted better-than-expected quarterly revenue, and its revenue forecast also was upbeat. But the company’s outlook on free cash flow was slightly disappointing. IBM also said it would be cutting 3,900 jobs.

Chevron (CVX) was gaining 3% after the energy giant raised its dividend and announced a new round of buybacks valued at up to $75 billion.

ServiceNow NOW +1.21% (NOW) was down 1.7% even after the cloud-software company posted fourth-quarter earnings that were better than expected and its forecast for first-quarter subscription revenue also was higher than expectations.

Shares of Lam Research (LRCX) fell 1.9% after the silicon-foundry equipment supplier said it would be cutting its work force by 7% to reduce costs as chip equipment demand slows.

American depositary receipts of SAP (SAP) fell 4.4% after the German enterprise software giant announced plans to reduce its staff by 2.5%, and said it has begun exploring the sale of its majority stake in Qualtrics (XM).

American depositary receipts of Nokia (NOK) rose 3% after the Finnish telecommunications company beat analysts’ expectations for its fourth-quarter earnings and sales.

Las Vegas Sands (LVS) rose 2% after the casino company reported a fourth-quarter loss but said revenue jumped 11%. It also said it was confident that travel and tourism spending would continue to recover this year.

American Airlines (AAL) and Southwest Airlines (LUV) will be reporting quarterly earnings before the stock market opens Thursday.

Source: finance.yahoo.com

The 2023 stock market rally is facing its first technical challenge: Morning Brief

guardianpub on January 26, 2023

Stocks mounted an impressive comeback Wednesday, with the Nasdaq Composite (^IXIC) nearly erasing its biggest opening deficit since October. The Dow Jones Industrial Average (^DJI) eked out a small gain — its fourth straight — after spending most of the day in the red.

Even Microsoft (MSFT) rallied back from a 4.6% early loss to end the day down only about half a percent.

This year’s market action has been a reversal of one of last year’s most important trends, which saw the Dow outperform the Nasdaq by the widest margin in two decades.

This year, the Nasdaq is now up 8%, substantially outperforming the Dow’s return of just under 2%.

And while it’s unlikely a new bull market led by tech has begun, this relative performance is a tantalizing reminder of the gains tech bulls reaped in growth stocks during the ultra-low interest rate regime that had prevailed since the Global Financial Crisis.

And with several benchmark indexes right now at key levels, a squeeze out of current trading ranges would likely generate upside momentum.

First, take a look at the highly cyclical semiconductor space, where the PHLX Semiconductor Index (^SOX) is attempting to break out of a 9-month long inverse head-and-shoulders technical formation.

A breakout higher would suggest bulls retaking control after bears dictated price action for most of 2022.

If the majors follow suit and manage their own respective technical breakouts, those moves would likely generate significant momentum given the duration of the consolidation under current levels. The longer an index, stock, ETF, or any other traded asset consolidates around a particular price level, the stronger moves tend to be when the price breaks higher or lower.

For the S&P 500, the December highs around 4,100 mark the upper end of the current range; the index closed at 4,016 on Wednesday.

Meanwhile, Nasdaq has been constrained by 11,500 on the upper end since September, while the Dow has been stuck under 34,500 since April. These indexes closed at 11,313 and 33,743, respectively, on Wednesday.

However, it would be slightly unusual for risk markets to simply rally from here given how stretched the Nasdaq is versus the Dow — as evidenced by the below chart, which dates back to the beginning of the pandemic.

The Dow’s weakness in the face of Nasdaq strength this year appears to have reached a short-term extreme, and is in the process of reversing. And extreme readings have tended to coincide with short-term highs in stocks since the bear market got under way last year. However, during the pandemic bull market of 2020-2021, these extreme readings of relative outperformance tended to do little to dent the rally.

So, if the major indexes do roll over from here, tech and growth stocks would likely sell off more than cyclical and defensive names, allowing the Dow’s performance relative to the Nasdaq to normalize in the short-term. For those concerned with news and fundamentals instead of the technicals, the narrative to explain this price action would likely fixate around a hawkish Fed, higher rates, and disappointing earnings du jour.

Conversely, if chip stocks and the big benchmark indexes rip higher through current resistance, that would likely send the Dow-to-Nasdaq ratio sinking far below its current level.

The bottom line is that stocks could very well surge from here, and the technical setup suggests we’re a crucial juncture for this year’s market rally.

But any rally led tech stocks is likely to be fast, furious, and short-lived.

Otherwise, markets will need to consolidate and save energy for a more durable move higher another day.

Source: finance.yahoo.com