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Stocks

Reddit

Reddit – (RDDT) $57 Hold, till post lock up expires on 8/9, we might get it around $50 

Last week I had written on Reddit when the stock was in the mid 60’s suggesting a Hold till it dropped 20-25% to around $50-54. Their lock up period post IPO expires on 8/9 and there could be a lot of shares for sale. With the recent turmoil I want to wait longer.

Here’s the link.

https://seekingalpha.com/article/4706184-reddit-waiting-for-a-better-price

Summary

Reddit has an excellent business model of unique SubReddits.

Its user base is enthusiastic, passionate and sticky.

Reddit’s data licensing revenue stream is an excellent opportunity to grow – currently contracted for $203Mn for 2-3 years and a very profitable business.
Reddit turned cash flow positive for the first time last quarter with a margin of 12%.

The stock is expensive at 10X sales and could fall once the lock-up period post its 2024 IPO expires in August.

Its biggest weakness is a low Average Revenue Per User (ARPU) $4.77, even Pinterest and Snapchat earn almost double – around $8, and Facebook is in a different league at $68, but this should only grow from such a low base.

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Stocks

Qualcomm (NASDAQ:QCOM

Qualcomm gains as handsets boost Q3 results, guidance – Up 7% to $192

Qualcomm (NASDAQ:QCOM) shares rose 4.5% in extended trading on Thursday after the chipmaker reported fiscal third-quarter results and guidance that topped expectations.

For the period ending June 23, Qualcomm said it earned an adjusted $2.33 per share as revenue rose 11.3% year-over-year to $9.39B. QCT sales rose 12% year-over-year to $8.07B. Revenue from handsets rose 12% year-over-year to $5.9B, while automotive sales jumped 87% to $811MM. Sales from its internet of things division fell 8.5% to $1.36B. Licensing revenue rose 3.5% year-over-year to $1.27B.

A consensus of analysts expected the company to earn $2.26 per share on $9.22B during its fiscal third quarter.

“We are excited about the launch of our Snapdragon X Series solutions for PCs that deliver leading performance, unmatched power efficiency and personalized AI experiences,” CEO Cristiano Amon said in a statement. “This launch represents a significant milestone in our transformation from a communications company to a leading intelligent computing company.”

Looking to the fourth-quarter, Qualcomm said it expects to earn between $2.45 and $2.65 per share on an adjusted basis, with revenue forecast between $9.5B and $10.3B.

Analysts were expecting $2.47 per share in earnings and $9.7B in revenue

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Stocks

Qualcomm

Qualcomm (QCOM) $175 

Hold, waiting for a better price to add. Long Term story remains good.

Similar to Lam, there were a couple of weaknesses that erased yesterdays post market gains and then some.

Conservative commentary about the smartphone market for the rest of the year.

Lost its position in Huawei phones, it faces some challenges in the second half of CY24 as the Huawei loss will weigh on handset revenues.

Not enough visibility on AI PC’s revenue – there are 20 models launched, which may be positive surprise.

Management is conservative, which is a good thing.

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Networking Stocks

Arista Networks Beats and Guides Above Expectations (ANET) $345 

Arista Networks (NYSE:ANET) on Tuesday announced a Q2 top – and bottom-line beat, while issuing current quarter revenue guidance that was largely above expectations. 

Arista’s two biggest clients are Microsoft and Meta for datacenter (over 35% of revenue) – now you know where Microsoft’s Capex went yesterday. 

EPS – $2.10 per share V $1.94 expected on an adjusted basis for Q2 on revenue of $1.69B V $1.65B expected.  

The EPS increase is 33% YoY because of strong revenue and better margins.  For the June quarter Arista’s operating margin was 41% and cash flow margin was 59%! Microsoft and Meta are supposed to be strong bargaining giants, right? Doesn’t look like it. 

Guidance is also higher – For Q3, Arista (ANET) sees revenue of $1.72B to $1.75B. V consensus revenue estimate of $1.72B. The Street has been raising long term estimates as well since morning. 

Arista’s (ANET) has been eating Cisco’s lunch for several years now, no easy task beating a giant,  working as partners with hyperscalers for AI. Ms Ullal, as many of you from Silicon Valley would know is absolutely top notch in executing projects of these large sizes and importance.  

“The collective nature of AI training models relies on a lossless, highly available network to seamlessly connect every GPU in the cluster to one another and enable peak performance. Networks also connect trained AI models to end users and other systems in the data center such as storage, allowing the system to become more than the sum of its parts,” Arista (ANET) top boss Jayshree Ullal said in a blog post in May. 

“As a result, data centers are evolving into new AI Centers where the networks become the epicenter of AI management,” Ullal added. 

Holding on to the 80% I have left of my ANET for the long term. This company is a winner. I would have loved to add more, hesitating only because even with the new estimates for 2026 earnings at $11 a share at 35x earnings (In 2025-2026, growth slows to mid-twenties) valued it at $385 in two years. 

More optimistic projections are for $12 EPS x 40 = $480 about 40% higher so that’s more interesting. Maybe I’m being conservative, but it would be very difficult to keep up these high margins and then there’s the customer concentration risk. 

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Stocks

Meta Platforms jumps

Meta Platforms jumps as it sees sales boost amid AI spending

Meta Platforms stock (NASDAQ:META) rose sharply postmarket immediately after posting second-quarter earnings where the company beat expectations on top and bottom lines, though it noted that its spending on tech (notably including artificial intelligence) would keep inching higher.

The company posted earnings per share of $5.16, easily topping views for $4.78, and revenue of $39.07B cleared the Street’s bar of $38.31B (20% growth).

It also guided to sales in the current quarter of $38.5B-$41B, vs an expected $39.2B.

Investors’ eyes were planted on Meta’s expense guidance after the company raised spending forecasts for the year in its first-quarter earnings — and indeed it bumped the bottom end of its range, now seeing 2024 capital expenditures coming in at $37B-$40B from a previous $35B-$40B (and vs. estimates compiled by Bloomberg for $37.6B).

The company also said it should see “significant” growth in capex for 2025.

“We had a strong quarter, and Meta AI is on track to be the most used AI assistant in the world by the end of the year,” said founder/CEO Mark Zuckerberg in his typically terse early reaction. “We’ve released the first frontier-level open source AI model, we continue to see good traction with our Ray-Ban Meta AI glasses, and we’re driving good growth across our apps.”

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Stocks

Lam Research

Lam Research (LRCX) $896 

Hold, waiting for a better price to add. Long Term story remains good.

Post earnings call, the stock dropped 2.5% to $896.

Earnings call suggested that the growth in mature semiconductor lines for memory was still slow and recovering, but the growth from high memory was not enough to stem that weakness. Management wasn’t convincing enough, so this could drag. The other worry was the China exposure, which is a common feature for semis, and tech.

No point chasing yesterday’s rise, we should wait for a decent entry point, there were no ratings downgrades from analysts in the morning, but a couple of price target declines.

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Pharmaceuticals Stocks

Pfizer (NYSE:PFE) Maintaining Pfizer As A Buy On Declines.  

The dividend yield of 5.4% is good and Q2 results beat expectations…. 

Pfizer (NYSE:PFE) topped expectations with its second quarter results and raised its full-year outlook, driven by strength in its oncology portfolio and continued efforts towards realigning its cost base. 

The New York-based pharma giant generated adjusted earnings of $0.60 a share on revenue of $13.28B that grew 2.2% year-over-year. 

This marked Pfizer’s (PFE) first quarter of topline revenue growth, on a year-over-year basis, since the fourth quarter of 2022 when our COVID revenues peaked. Both metrics topped analysts’ projections for the quarter. 

Revenues grew 3% operationally year-over-year despite anticipated decline in revenues from its COVID-19 products, Comirnaty and Paxlovid. Comirnaty vaccine marketed with BIoNTech (BNTX) added $195M in revenue with a ~87% drop while COVID-19 pill Paxlovid generated $251M indicating a ~79% YoY growth. 

Excluding contributions from Comirnaty and Paxlovid, revenues grew 14% operationally to $12.8B, amid a strong performance from blood thinner Eliquis, which Pfizer (PFE) markets with Bristol Myers (BMY). Pfizer (PFE) also achieved exceptional growth in its oncology portfolio, with strong revenue contribution from its legacy-Seagen products. 

The drugmaker raised its full-year 2024 revenue guidance by $1B at the midpoint to a range of $59.5 to $62.5 billion (consensus estimate: $60.58B) and adj. diluted EPS guidance by $0.30 at the midpoint to $2.45 to $2.65 (consensus estimate: $2.37). Including the contribution from Seagen and excluding revenues from Comirnaty and Paxlovid, the firm now expects to achieve full-year 2024 operational revenue growth of 9% to 11% Y/Y. 

The company also said it is on track to deliver at least $4B in net cost savings by the end of 2024 from its previously announced cost realignment program. 

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AI Industrials Stocks

Microsoft Disappoints Markets 

Microsoft (MSFT) shares fell nearly 7% in extended hours trading on Tuesday after the tech giant reported fiscal fourth-quarter results that topped expectations, but Azure growth was weaker-than-expected or simply the expectations were too high. 

For the period ending June 30, Microsoft earned $2.95 per share – above $2.93 guidance as revenue rose 15% year-over-year to come in at $64.7B – above 64.52 guidance 

Included in that was $28.52B from its Intelligent Cloud division, which consists of its Azure cloud unit. Microsoft said Azure revenue grew 29% year-over-year and 30% in constant currency. 

The company previously said it expected Azure to grow between 30% and 31% in constant currency, and some analysts previously said they expected more than 30% growth. 

Guidance for the Sep quarter will come in with the call. 

Categories
Semiconductors Stocks

AMD Bucks The Trend – The Stock Is Up 5% 

  • Advanced Micro Devices press release (NASDAQ:AMD): Q2 Non-GAAP EPS of $0.69 beats by $0.01. 
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  • Revenue of $5.84B (+9.0% Y/Y) beats by $120M. 
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  • Record Data Center segment revenue of $2.8 billion was up 115% year-over-year primarily driven by the steep ramp of AMD Instinct™ GPU shipments, and strong growth in 4th Gen AMD EPYC™ CPU sales. Revenue increased 21% sequentially primarily driven by the strong ramp of AMD Instinct GPU shipments. 
  •  
  • Client segment revenue was $1.5 billion, up 49% year-over-year and 9% sequentially primarily driven by sales of AMD Ryzen™ processors. 
  • Gaming segment revenue was $648 million, down 59% year-over-year and 30% sequentially primarily due to a decrease in semi-custom revenue. 
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  • For the third quarter of 2024, AMD expects revenue to be approximately $6.7 billion vs. $6.61B consensus, plus or minus $300 million. At the mid-point of the revenue range, this represents year-over-year growth of approximately 16% and sequential growth of approximately 15%. Non-GAAP gross margin is expected to be approximately 53.5%. 
Categories
Stocks Utilities

Avoid Buying Plug Power – (PLUG) $2.40 

Terrible history of losses, unproven technology, poor execution and shareholder unfriendly because of constant dilution to raise cash. 

High risk of Obsolescence 

  • Technological advancements in next generation Electrolyzers offer more hope for a green hydrogen economy,  
  • Incumbent Electrolyzer producers like Plug Power are at a disadvantage due to technological inefficiencies and financial instability, making them a risky investment. 
  • Hydrogen can be an alternative source of energy, but Plug may not be the right player, its conversion efficiency is supposedly lower in the 75% range compared to newer technologies offering 95%.