Fed Rate Cut ‘Very Bullish Backdrop’ for AI and Big Tech, Wedbush Says

/ / Technology /

The Federal Reserve’s decision to lower the federal funds rates rate by 50 basis points is a “very bullish backdrop” for a risk-on trade of big tech companies and artificial intelligence heading into 2025, Wedbush said in a note Thursday. The rate cut was the “missing piece” in the puzzle as a lot of investors were looking for a green signal for the tech growth trade into this year’s end and 2025, analysts led by Daniel Ives wrote. The tech supply chain is preparing for a huge growth period ahead as roughly $1 trillion of artificial intelligence capital expenses are expected to be on the horizon in the near future, the analysts said. “We continue to strongly believe its 9 pm in the AI Party that goes till 4 am,” Wedbush said. Alongside Nvidia (NVDA) and Microsoft (MSFT), many other tech companies are joining the AI party including Oracle (ORCL), […]

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Oracle Stock Is Heading for a Record Close. An Upgrade Is Helping.

/ / Technology /

By Emily Dattilo Shares of Oracle are on track for another record close, and there is reason to believe the rally will continue, Melius Research argued on Monday. Analysts Ben Reitzes and Jack Adair upgraded shares of the enterprise software company to Buy from Hold. They lifted their target for the price to $210 from $155. Shares rose 6.2% to $172.02 in afternoon trading, putting them on track for a record high, according to Dow Jones Market Data. The previous closing record was $162.03 on Friday. “You could say we are late, upgrading a stock that is up 54% year-to-date — but we could be just in the middle of a move,” the team wrote. “We see close to $8.50 in terms of an EPS run rate within 2 years — and with our biggest worries muted — we find it hard not to put a 25x multiple on a

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ASML’s Investor Day to Shift Market Focus to Longer Term

/ / Technology /

The market focus on ASML Holding will likely shift away from the short term to 2026 and 2027 when the Dutch semiconductor-equipment maker hosts an investor day on Nov. 14, UBS analysts write in a note to clients. The analysts say ASML’s earnings on Oct. 16 should provide a near-term boost for the stock as they expect to see solid orders from Taiwan Semiconductor Manufacturing Co. and Samsung Electronics, but the market will likely focus more on the investor day the following month. ASML shares trade 3.6% higher at 696.60 euros.

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Lower Interest Rates Yield a Loser: Berkshire Hathaway — Barrons.com

/ / Financials /

Andrew Bary Berkshire Hathaway was a major beneficiary of the sharp increase in short rates from 2022 through early this year but now stands to lose given the drop in short rates now unfolding with the Federal Reserve’s half-point cut in a key short rate Wednesday. Berkshire had the largest holdings of cash and equivalents of any U.S. company at $277 billion at the end of the June, compared with Apple at $153 billion and Alphabet at $101 billion. The bulk of Berkshire’s cash is invested in short-term Treasury bills which have maturities of under a year. Berkshire CEO Warren Buffett is partial to three and six-month T Bills that are auctioned weekly by the Treasury. Berkshire held $234 billion of T-Bills at the end of June. Berkshire’s interest and other investment income was up sharply in the first half of 2024, rising 80% to $4.5 billion before taxes from

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Adobe Stock Is an Unappreciated AI Play. It’s Time to Buy. — Barrons.com

/ / Technology /

By Jacob Sonenshine Adobe’s earnings report painted a pretty picture of its ability to turn artificial intelligence into paying customers. But the reaction to its disappointing guidance was anything but pretty. That has created a buying opportunity in its stock. There was a lot to like about Adobe’s third-quarter results, with both earnings and sales easily topping estimates. The market, though, focused on management’s somewhat disappointing outlook, which included a forecast for “net new annual recurring revenue” — representing the sales Adobe expects to bring in from new customers or from increasing monthly subscription payments — to come in at $550 million in the fourth quarter, up 9% quarter over quarter. The fourth quarter usually sees double-digit growth, and the stock tumbled 13% after the report. It has since settled around $510. The market reaction was understandable, if dubious. The lower-than-expected guidance could be a sign that competition from other

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Salesforce Unveils New AI Strategy, Will Charge $2 per Conversation

/ / Technology /

Salesforce (CRM) unveiled a new business model in which it will charge $2 per conversation held by its new generative AI-powered bots, Bloomberg reported Tuesday. The business model represents a change for Salesforce from building human-assisting AI tools to increasing dependence on AI-powered bots, the Bloomberg report said.

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Salesforce Needs to Sell Its Latest AI Vision — Heard on the Street — WSJ

/ / Technology /

Low expectations make for unfamiliar ground at Salesforce. Given the uncertainty that artificial intelligence has cast over the cloud software industry, they may also be welcome. As Salesforce kicks off its annual confab known as Dreamforce this week, the pioneer of the software-as-a-service — or SaaS — category finds itself with a lot to prove. Years of turbocharged revenue growth through relentless sales deals and acquisitions has finally slackened, with Salesforce’s revenue expected to rise at a single-digit percentage for the first time ever in the current fiscal year. That has put a bit of a cloud over the company’s stock price, which is down about 2% since the start of the year. At least Salesforce has plenty of company. Adobe, Workday, Atlassian and Snowflake are just a few of the SaaS providers that have seen their shares take a hit; the BVP Nasdaq Emerging Cloud Index has shed more

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Buy Broadcom Stock. Its $12 Billion in AI Revenue Has Room to Grow, Analyst Says.

/ / Technology /

Broadcom stock has already risen by nearly half this year, but it can trade even higher fueled by growth in revenue related to artificial intelligence, a William Blair analyst says. Broadcom is the market’s second-favorite AI chip play behind Nvidia. Its shares have gained 46% this year given its position as one of the leading players designing chips for companies such as Alphabet’s Google unit and Meta Platforms, which are all-in on building enormous AI data centers. In its latest call to discuss earnings, earlier this month, management said it is targeting $12 billion in AI revenue for the 2024 fiscal year, which ends in October, up from $11 billion earlier. There was no numerical forecast for next year, but the company expects continued “strong growth.” On Wednesday, in a research note, William Blair’s Sebastien Naji wrote that he sees “room for continued steady growth going into fiscal 2025 and

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Boeing’s Recovery Likely to Be Slowed Down by Union Worker Strikes, S&P Says

/ / Industrials /

Boeing’s (BA) expected recovery, including its target of boosting production of Max aircraft to 38 units per month by the end of 2024, will likely be delayed by an ongoing strike by unionized workers which began Friday, S&P Global Ratings said Monday. S&P said the employee walkout by machinists will not immediately affect its credit rating or its longer-term outlook for the planemaker. The ratings agency said Boeing should be able to weather the financial impact of a strike lasting only a few weeks or so, noting the company had roughly $12.6 billion in cash on hand at the end of June and also has access to around $10 billion in undrawn credit facilities. Longer term, however, the S&P analysts said, “We believe an extended strike would be costly and difficult to absorb, given the company’s already strained financial position.” S&P currently rates Boeing debt at BBB-. Boeing already is

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Microsoft Announces $60 Billion Share Buyback, Hikes Dividend. The Stock’s Rising.

/ / Technology /

Microsoft had good news for investors as the software giant announced plans for an increased shareholder payout as well as a new share buyback program. It said late Monday that it is increasing its quarterly dividend by 10% compared with last quarter, to 83 cents a share. The dividend is payable on Dec. 12 to shareholders of record on Nov. 21. The board of directors at the software giant also approved a new share repurchase program of up to $60 billion. The program has no expiration date and can be terminated at any time. Share buybacks are seen as good for shareholders as the amount of outstanding shares decreases, which tends to increase the nominal value per share. Microsoft reported fourth-quarter results on July 30 that largely matched analysts’ estimates. Shares, however, fell immediately after the release, reflecting the market’s high expectation of the legacy software company. The stock was

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Stage Set for Tech Stocks to Rise, Wedbush Says

/ / Technology /

With the tech supply chain gearing for unprecedented growth driven by the roughly $1 trillion of AI capex, the stage is set for tech stocks to rise into year-end and 2025, Wedbush analysts say in an industry note. The analysts estimate that for every $1 spent on an Nvidia GPU chip, there is a $8-$10 multiplier across the tech sector. While Nvidia and Microsoft are core drivers of AI, many other tech companies including Palantir, Salesforce, Dell, IBM, Apple, and AMD are now joining the AI party. “As more tech vendors show the monetization piece of AI this will ultimately drive the next leg of the tech bull market in a very stable overall IT spending environment that is a bullish backdrop for tech stocks in our opinion,” they add.

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