Alphabet Needs to Ship New Products to Prove Incremental Engagement, Morgan Stanley Says

/ / Technology /

Alphabet (GOOGL) needs to ship more generative AI/GPU-enabled products to larger groups of users to show it can drive incremental engagement and more durable long-term monetization, Morgan Stanley said in a note to clients Wednesday. “Shipping products and proving that they will indeed provide incremental multi-year revenue and cash flow growth remains the proof point that [Alphabet] needs to show in order to break out of this 16-20X PE multiple on our ~$10.40 of 2026 EPS,” the investment firm said. Morgan Stanley said it cut the company’s 2026 EPS estimate by nearly 4% to $10.36 after its earnings report due to a 1% decrease in revenue and an about 11% increase in D&A. The investment firm cut Alphabet’s price target to $210 from $215, and kept its overweight rating. Shares of Alphabet were down more than 8% in recent trading.

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AMD Shares Drop After CEO Guides Q1 Data Center Revenue Down 7%

/ / Technology /

Advanced Micro Devices, Inc. (NASDAQ:AMD) shares are diving Wednesday following its fourth-quarter earnings release on Tuesday. Data center segment revenues and guidance given on the company’s conference call are weighing on investors. What To Know: AMD’s Datacenter fourth-quarter revenue came in below analyst expectations of $4.14 billion, per CNBC, and the company guided for further declines ahead. CFO Jean Hu said on the company’s earnings call that data center revenue is expected to decline by about 7% in the first quarter, in line with the company’s overall revenue. CEO Lisa Su added more color to the Q1 guidance and attributed the anticipated decline to seasonality across business segments. “And the way that breaks out in each of the segments assume that data center would be down just about that average, so the corporate average. We would expect the client business and the embedded business to be down more than that. Just given where seasonality is for

AMD Shares Drop After CEO Guides Q1 Data Center Revenue Down 7% Read Post »

Spotify’s Story Looks Similar to Netflix’s. Why There’s Still a Case Against Buying Now.

/ / Consumer Discretionary /

Spotify Technology’s earnings helped push the already well performing stock even higher. That is a reason for concern, according to Rosenblatt Securities. Spotify shares closed at a record on Tuesday after the music streaming company said it added more subscribers than Wall Street expected during the fourth quarter. The company also reported its first full-year profit. In a research note on Tuesday, Evercore analyst Mark Mahaney wrote that there are similarities between what is happening at Spotify and at Netflix. Though the companies operate in different entertainment media, both sell subscriptions, and both have maintained subscription growth even after rolling out price increases. Mahaney, who rates Spotify at Outperform with a price target of $700, wrote that “both companies have created very strong consumer value propositions — aka great products — that consumers are willing to pay more for over time.” Netflix has original shows such as White Lotus and

Spotify’s Story Looks Similar to Netflix’s. Why There’s Still a Case Against Buying Now. Read Post »

IBM Story Is Underappreciated, Goldman Sachs Says Stock Can Re-Rate Higher

/ / Technology /

Goldman Sachs analyst James Schneider expressed views on International Business Machines Corporation’s (NYSE:IBM) Investor Day, which took place on February 4. The analyst maintained a Buy rating and a $275 price forecast, considering the company remains underappreciated in the TMT sector and offers discovery value, especially for long-only investors. The analyst notes that IBM projects over 5% total revenue growth from 2025 to 2027, including M&A, with pre-tax margin and FCF growth outpacing revenue growth. The analyst notes the stock should continue to rise, as IBM has outlined a credible strategy to sustain accelerated long-term Software revenue growth of around 10%, surpassing their previous expectation of high-single digits for 2025-2027. Moreover, Schneider notes that IBM raised its medium-term Software revenue growth target to 10%, up from mid-single digits, with Red Hat seeing mid-teens growth. The analyst sees a potential upside in IBM’s Software growth and margins, fueled by increasing demand for containerization, OpenShift,

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Arm Beats Earnings. The Stock Is Falling Anyway.

/ / Technology /

Arm reported better-than-expected earnings results Wednesday afternoon. It shares fell in after-hours trading. The company reported fiscal third-quarter adjusted earnings per share of 39 cents, compared to Wall Street’s consensus estimate of 34 cents, according to FactSet. Revenue came in at $983 million, which was above analysts’ expectations of $949 million. Arm also guided current-quarter sales to a range of $1.175 billion to $1.275 billion versus the $1.22 billion analysts’ estimate. Arm shares initially fell as much as 7% in late trading following the release. The stock was up 6.8% in Wednesday’s regular trading session. This is breaking news. Read a preview of Arm earnings below and check back for more analysis soon. Investors eager to hear what the DeepSeek moment means for the AI chip industry will be tuning in on Wednesday, when Arm Holdings discloses its quarterly results. Arm makes money by licensing its chip designs to semiconductor

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AMD Faces a Double Threat for 2025

/ / Technology /

This article is from the free weekly Barron’s Tech email newsletter. Sign up here to get it delivered directly to your inbox. Lost Year. Hi everyone. Advanced Micro Devices is facing trouble in 2025. Double trouble, in fact. On Tuesday, AMD reported better-than-expected fourth-quarter earnings results and gave a slightly better-than-expected outlook for revenue in its current quarter. Still, the chip stock tumbled as much as 10% on the news. The culprits were some underlying numbers in the company’s data center business, along with weak commentary about its outlook for all-important AI chips. AMD’s December-quarter data center revenue came in at $3.86 billion, which was below the $4.14 billion estimate. The miss suggests the strong growth for AMD’s core x86 franchise, where it has been gaining share from Intel, could be slowing. AMD also faces a rising threat from Arm in the server CPU market. Microsoft, Amazon Web Services, and

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Costco’s Sales Impress Again. What January Slump?

/ / Consumer Discretionary /

Costco Wholesale carried its winning streak into the new year, with January sales continuing to rise at a fast clip. Costco’s January sales rose 9.2% from a year ago to $19.5 billion. In December, they gained 9.9%. Traffic was strong in January, with comparable-store traffic up 7.1% worldwide, the company said. Same-store sales rose 7.5% year over year, slightly increasing from December’s 7.4% rise. Stripping out currency and gas price fluctuations, Costco’s same-store sales rose 9.8% year over year. The first month of the year is often slower for retailers following the busy holiday season, but Costco’s strong results keep proving that it is no ordinary retailer. The warehouse club has been firing on all cylinders lately, attracting budget-conscious shoppers across the income spectrum. It has also continued to ramp up its online business. E-commerce same-store sales were up 13.6% year over year, Costco said. Costco stock ticked up 0.2%

Costco’s Sales Impress Again. What January Slump? Read Post »

Qualcomm(QCOM.US) Q1 2025 Earnings Conference

/ / Technology /

The following is a summary of the QUALCOMM Incorporated (QCOM) Q1 2025 Earnings Call Transcript: Financial Performance: QUALCOMM reported record fiscal Q1 revenues of $11.7 billion and non-GAAP earnings per share of $3.41 Chipset business revenue hit a record $10.1 billion, driven by handset and automotive sectors QTL revenues were $1.5 billion with EBT margin of 75%, aligning with forecasts QCT EBT margins exceeded guidance at 32%, with EBT dollars increasing 25% year-over-year Returned $2.7 billion to stockholders through buybacks and dividends Business Progress: Launched the Snapdragon 8 Elite for global usage in Samsung Galaxy S25 series Increased design win momentum in PCs, with over 80 designs in production or development Expanded IoT and automotive revenue streams significantly Introduced new AI-powered computing platforms and collaborations in various industrial and automotive domains Opportunities: Enhanced AI capabilities across product lines, especially with the DeepSeek-R1 models running on Snapdragon platforms Broadening the addressable

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Amazon Stock Sets a Record. Analysts Expect More Gains.

/ / Consumer Discretionary /

Amazon.com stock climbed to a record intraday high on Tuesday, and analysts say investors could expect the good times to keep going in 2025. Shares of the e-commerce company rose 2.3% to $240.83, putting it in position for a record close, according to Dow Jones Market Data. The stock briefly touched a new intraday high of $241.77. That pushed its market capitalization to more than $2.5 trillion for the first time, though the number slipped to $2.48 trillion in afternoon trading. The most recent gains could reflect investor optimism ahead of Amazon’s fourth-quarter results, which are slated for release on Feb. 6. Analysts surveyed by FactSet remain bullish: The average call among nearly 100 ratings is Buy or the equivalent. Wedbush analysts reiterated a Outperform rating on the stock on Tuesday while lifting their target for the price to $280 from $260. The new price target suggests a potential upside

Amazon Stock Sets a Record. Analysts Expect More Gains. Read Post »

Apple Stock Is Falling. A Downgrade Highlights China and AI.

/ / Technology /

It’s time to step to the sidelines on Apple, Oppenheimer argued on Wednesday. Analysts Martin Yang and Andrew Northcutt downgraded shares of the iPhone maker to Perform from Outperform, slashed estimates, and removed their $250 price target. Apple stock slipped 1.6% to $234.35 in premarket trading Wednesday. Over the last 12 months, shares have gained 28%. The analyst team cut their revenue and earnings-per-share forecasts for fiscal 2025 and 2026 to below consensus, citing reduced estimates for iPhone sales over the next 12 to 18 months. “We see a twofold challenge ahead for iPhone growth: 1) stronger competition in greater China and 2) lack of compelling Apple Intelligence and generative artificial-intelligence apps to accelerate near-term device replacement,” they wrote. iPhone sales have been slower than anticipated since September, and with Apple stock’s high valuation, Oppenheimer believes it will prove difficult for the shares to outperform from here. Apple reports fiscal-first-quarter

Apple Stock Is Falling. A Downgrade Highlights China and AI. Read Post »

Apple Facing Slower Replacement Demand, Stronger China Competition, Oppenheimer Says

/ / Technology /

Apple (AAPL) is facing stronger competition in China and a “lack of compelling Apple Intelligence and generative AI apps to accelerate near-term device replacement,” analysts at Oppenheimer said Wednesday, downgrading the tech giant’s stock to Perform from Outperform. The Oppenheimer analysts cut their forecast for fiscal 2026 EPS by 4% to $7.95 based on reduced estimates for iPhone sales in the next 12-18 months. Analysts surveyed by FactSet expect $8.22 per share. With slower-than-expected iPhone sales and a lofty valuation, “we believe it will be challenging for AAPL to outperform,” Oppenheimer said.

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How Oracle Plays Cheaply in AI

/ / Technology /

When it comes to big techs, Oracle is hardly small-fry. But the 47-year-old software titan still has to play its hand deftly when it comes to the ultra-expensive game of artificial intelligence. Its approach was apparent in the high-profile announcement about the “Stargate Project,” which aims to invest $500 billion over the next four years to build new AI infrastructure for OpenAI. Oracle was named as both an equity investor and “key initial technology partner” for the project, and founder and Chairman Larry Ellison joined OpenAI’s Sam Altman and SoftBank Chief Executive Masayoshi Son Tuesday at the White House for the announcement. Ellison noted Tuesday that construction on the initial data center for the project was already under way in Texas. Less clear is where such a staggering sum of money will be coming from. OpenAI said $100 billion was being deployed immediately, but that is more than double Oracle

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