Marqeta is a credit card processor with clients like Block (Square), Affirm, and DoorDash.
Marqeta should grow in 2025, after two years of a slowdown in 2023 and 2024 (estimated).
Total Bookings with new clients and expansions with existing clients are growing well at over 50% and 60%. They’ve also done a good job on cost reduction.
The stock, though, could likely stagnate since they’re far from profitability. The other negative is that this is a commodity business with a lot of strong older players and several new upstarts, without any real competitive advantages. But Marqeta has a strong business relationship with Block, (51% of business) so that’s a plus, and their contract is in place through 2028.
The valuation is around 5X sales, and once growth resumes should be seen as cheap.
I think it’s worth looking into around $5. I’ll keep an eye on updates.
Alphabet stock surged by double digits — (NASDAQ: GOOG) +12%, — after its first-quarter earnings easily cleared analyst expectations as revenues jumped 15% with strong performance, particularly at YouTube.
Revenues rose to $80.54B, easily topping consensus for $78.7B. Advertising revenue rose 13% to $61.7B.
Meanwhile, YouTube ads revenue — previously an area of concern — rose a full 21% to $8.09B. Subscriptions, platforms, and devices revenue jumped 18%.
And the momentum in Cloud continued, with 28% revenue growth and operating income that more than quadrupled year-over-year.
Operating income jumped 46% year-over-year, to $25.47B. Earnings per share landed at $1.89 vs. $1.50 expected by Wall Street.
The operating margin also expanded, to 32% from a year-ago 25%.
“Our results in the first quarter reflect strong performance from Search, YouTube, and Cloud,” said CEO Sundar Pichai. “We are well underway with our Gemini era and there’s great momentum across the company.”
Revenues by segment: Google search and other, $46.16B (up 14.4%); YouTube ads, $8.09B (up 20.9%); Google Network, $7.41B (down 1.1%); Google subscriptions, platforms and devices, $8.74B (up 17.9%); Google Cloud, $9.57B (up 28.4%); Other Bets, $495M (up 71.9%).
Operating income by segment: Google Services, $27.9B (up 28.3%); Google Cloud, $900M (up 371%); Other Bets, -$1.02B (vs. year-ago -$1.23B); Alphabet-level activities, -$2.3B (vs. year-ago -$3.3B).
The company also authorized the buyback of up to an additional $70B worth of shares and declared a cash dividend of $0.20 per share.
Intel’s (NASDAQ: INTC) significantly weaker-than-expected guidance for the coming quarter overshadowed better-than-expected first-quarter results.
For the coming second quarter, the Pat Gelsinger-led firm expects revenue to be between $12.5B and $13.5B, well below the $13.61B analysts were anticipating.
It also anticipates earning an adjusted $0.10 per share with adjusted gross margins of 403.5% and a tax rate of 13%. Analysts were anticipating adjusted earnings of $0.25 per share.
Shares fell more than 6% in extended-hours trading.
For the period ending March 30, Intel earned an adjusted $0.18 per share on $12.7B in revenue. The quarter is Intel’s first period in changing its reporting structure to focus more on its foundry business. Intel products, which now include client computing, data center, and network and edge, came in at $11.9B, including a 31% year-over-year rise in Client Computing revenue to $7.5B.
Datacenter and AI revenue came in at $3B, while revenue attributed to Mobileye (MBLY) was $239M, down 48% year-over-year. The Network and edge segment generated $1.4B, while the company’s foundry segment saw revenue decline 10% year-over-year to $4.4B.
Analysts expected a year-over-year increase in both the top and bottom lines, with the Pat Gelsinger-led firm expected to earn $0.14 per share on $12.78B in sales.
A consensus of analysts expected Intel to earn an adjusted $0.14 per share on $12.78B in revenue.
It has strong defensible franchises, great branding and leadership. Very profitable in all its segments with operating margins in excess of 30%.
The threat of AI replacing some of the video editing and other products is still in its infancy and Adobe is also working on its own AI initiatives; they’ve just been slow to roll it out.
Revenue growth has slowed to 10-12% for the next three years, and management did disappoint for the next quarter’s guidance. However, Adobe is also a good earnings story with 13-14% earnings growth.
The only problem is the valuation, and the market perception that this is a mature company with $20Bn in revenue. At 28x earnings and 10.5x sales there’s not much left for appreciation with that slowing growth.
I would prefer to buy on declines at around $470. At $506 I would expect a return of about 12% or so a year.
Networking infrastructure – It had a down year, with cyclicality in China and slower data center growth. China is about 50% of revenues.
That said, the forecast for the next three years is good, with 24% revenue growth and 35 to 40% adjusted earnings growth.
A lot of this is riding on growth from Nvidia and other AI investments in data centers.
Like most companies in the sector Marvell has also appreciated 73% in the past year so valuations are a bit expensive, 11x sales, with cyclicality and China exposure, it’s definitely on the higher side. It has also financed its acquisitions with debt, carrying a lot of interest burden.
I would prefer to buy 10% lower in the mid sixties for a better return – there is an AI event on April 11th, which may have more specifics/catalysts. Will keep a look out for that.
The stock jumped 15-20% post earnings on an earnings beat and slight revenue miss, from $30 yesterday. Guidance is also decent with 15% revenue growth for 2024.
You could buy around $32 or in installments.
Positives
Focusing on profitability, makes decent cash flow of 15% and adjusted operating of 3-5%, showing an improving trend with good estimates of earnings improving 35% in years 2025-2026.
They have the leverage to do that, it’s a SaaS business but I would have preferred gross margins in the high 80’s. That must happen over time.
They are selling to higher cohort customers, growth in customers over 100K and $1Mn is much higher than baseline growth.
There is a switching cost competitive advantage, especially when you’re dealing with larger customers, and have more than one offering.
Negatives
Sales cycles are longer given the higher value customer.
Banking and financial services software is very competitive, not much to differentiate from one another.
Price has gotten a little expensive at 6x sales with 15% revenue growth so returns going forward will be muted in comparison.
Given the weaknesses in banks and the financial services sector, I don’t expect multiples to be more rewarding than the market, even though this is a tech company, but focused on one vertical.
Intel could lose as much as $1.5B in sales due to China ban; AMD less: Bernstein
The news that China is looking to ban purchases of Intel (NASDAQ:INTC) and AMD (NASDAQ:AMD) chips for government use could be a sizable topline hit to the two semiconductor companies, but perhaps not as much as some believe, investment firm Bernstein said.
On a nominal basis, Intel had roughly 27% of its sales in China in 2023 (or $15B), while AMD had roughly 15% or ($3.4B). However, government purchases were much smaller than that — approximately 10% or so — Bernstein analyst Stacy Rasgon said. As such, Intel could see a revenue impact between $1B and $1.5B, while AMD could lose a “few hundred million,” Rasgon said.
Micron (MU) Rating Upgrade to Buy from Hold, $100.
Results expected this afternoon were very good, and I am more optimistic about the guidance. I was hesitant to add or recommend buying because it looked overpriced compared to its historical average and it had doubled in the past year.
Nvidia’s comments on needing more high bandwidth memory (HBM) vendors like Samsung, suggest the Micron is more likely to have challenges meeting demand. Unlike the past year when they had to discount inventory.
With this beat and these upgrades from Wall Street analysts in Barron, I would start buying.
“Micron is likely to report continued soaring demand for “high bandwidth memory,” or HBM—parts that combine multiple DRAM chips to improve data-processing speeds.
TD Cowen analyst Krish Sankar wrote in a recent research note previewing the quarter that when it comes to Micron, “HBM remains the centerpiece of attention.” Last week, he lifted his target for the stock price to $120, from $100. He said there is a “potential scenario” where the stock can reach $150, for a gain of more than 50% from current levels.”
For the May quarter, the Street is projecting revenue of $5.98 billion, with an adjusted profit of 8 cents a share. Analysts expect the rebound to continue from there. Estimates for the August quarter now point to $6.86 billion in revenue and an adjusted profit of 81 cents a share.
FQ3-24
Revenue 6.6Bn Expected 5.8Bn
EPS $0.17 Expected $0.08
FQ3-24
GAAP(1) Outlook
Non-GAAP(2) Outlook
Revenue
$6.60 billion ± $200 million
$6.60 billion ± $200 million
Gross margin
25.5% ± 1.5%
26.5% ± 1.5%
Operating expenses
$1.11 billion ± $15 million
$990 million ± $15 million
Diluted earnings per share
$0.17 ± $0.07
$0.45 ± $0.07
Wedbush analyst Matt Bryson wrote in a recent research note that recent trends in prices for both DRAM and NAND memory chips suggest Micron will beat its guidance for the quarter. Bryson, who has an Outperform rating on Micron shares, said he expects positive commentary from the company on the outlook for HBM demand.
“Since last summer, management has provided consistently optimistic commentary around anticipated progress with HBM in light of the technology being a derivative of their highly successful standard DRAM nodes,” Bryson writes.
Meanwhile, analysts say the balance between supply and demand has stabilized following a supply glut that spanned multiple quarters.
“Customer inventories have largely normalized, demand conditions across markets appear stable, and supply growth remains muted,” Raymond James analyst Srini Pajjuri wrote in a research note previewing the quarter. “In addition, HBM is a significant secular driver that could add $1.5-$2 in incremental EPS at the next peak.”
Pajjuri maintains an Outperform rating on the stock.
Confluent (CFLT) the stock popped 25% to $30 on great results and guidance.
My last few recommendations in the past two weeks, when the price was $24, was to buy up to $26, with a 1-year target of $28, with a return potential of over 25% in the next 3-5 years.
Wouldn’t advise trying to jump in over $30, there was a short interest of 11% yesterday, so that contributed a ton to the post-earnings pop, but given the performance, I will buy on declines – I still see annual gains over 20% from here – some of the gains have been pulled forward with this jump.
Here are my forward estimates:
3 Year Revenue growth expected 27% – Current P/S 9, drops to 5.6 by 2026,
3-Year Adjusted Earnings growth expected – Management has guided to adjusted operating break even in 2024, and post-2024, I expect at least 35% to 40% operating profit growth (analysts’ estimates are even higher).
Summary of 2023 earnings
Q4 Non-GAAP EPS of $0.09 beats by $0.04.
Revenue of $213M (+26.0% Y/Y) beats by $7.72M.
Fourth quarter subscription revenue of $203 million, up 31% year over year; fiscal year 2023 subscription revenue of $729 million, up 36% year over year
Fourth quarter Confluent Cloud revenue of $100 million, up 46% year over year; fiscal year 2023 Confluent Cloud revenue of $349 million, up 65% year over year
Confluent Crowd is their big growth catalyst
1,229 customers with $100,000 or greater in ARR, up 21% year over year
Q1- 2024, Confluent guidance:
Total revenue between $211 million and $212 million VS $210.54M consensus
Subscription revenue between $199 million to $200 million
Non-GAAP operating margin of approximately negative 4%
Non-GAAP net income per diluted share between $0.00 to $0.02 vs $0.02 consensus
Fiscal year 2024, Confluent guidance:
Total revenue of approximately $950 million $935.29M consensus;
Non-GAAP operating margin of approximately 0%
Non-GAAP net income per diluted share of approximately $0.17 vs $0.17 Consensus
