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SoundHound AI’s Market Potential: Opportunities and Challenges Ahead

SoundHound AI, Inc. (SOUN) is a leading global company specializing in conversational intelligence. The company provides advanced voice Artificial Intelligence (AI) solutions that enable businesses to offer exceptional conversational experiences to their customers.
SOUN’s technology, developed in-house, delivers unparalleled speed and accuracy across multiple languages. These solutions cater to various industries, including automotive, TV, IoT, and customer service.
With only a market cap of roughly $1.47 billion, the sound recognition and voice assistant technology company has garnered solid attention from investors lately. The company’s shares have climbed a whopping 169.5% over the past three months and 125% year-to-date.
But why?
In February, chip giant and a key beneficiary of the AI boom, NVIDIA Corporation (NVDA), made its inaugural 13-F filing with the Securities and Exchange Commission (SEC), unveiling new holdings in five small AI companies. Among these five companies, NVDA’s stake in SOUN, as of December 31, 2023, was valued at approximately $3.67 million.
Despite being ranked fourth among the five companies in terms of investment, SOUN experienced the most significant spike in its shares as a result of this news. However, this is not the first time SOUN has received investments from NVDA.
In 2017, NVDA participated in a $75 million venture round investment in SOUN. Moreover, SOUN entered the public market through a Special Purpose Acquisition Company (SPAC) in 2022, with NVDA acknowledged in its presentation as a strategic investor.
Beyond investments, the chip maker also engaged in strategic partnerships with SOUN. Last month, SOUN announced a groundbreaking in-vehicle voice assistant powered by a large language model (LLM) on the NVIDIA DRIVE platform.
This innovative technology operates entirely offline, expanding generative AI’s reach beyond cloud connectivity. The collaboration between SOUN and NVDA aims to deploy generative AI in more places and situations. NVIDIA DRIVE enables SOUN’s Chat AI to offer responses without connectivity, enhancing in-car voice experiences.
Rishi Dhall, NVDA’s Vice President of Automotive, emphasized the collaboration with innovative partners like SOUN to integrate generative AI and accelerated computing into vehicles, enhancing the customer experience and bolstering safety on the road.
The in-vehicle voice interface developed by SOUN, powered by NVIDIA DRIVE, promises to deliver rapid and precise information to drivers, even in offline scenarios.
Meanwhile, despite garnering significant attention from investors, the company’s financial performance is not meeting expectations. In its recent quarterly results, the company reported a significant 80% year-over-year jump in revenue, reaching $17.15 million.
However, despite this massive jump, the company’s top-line figure fell short of analysts’ estimates of $17.75 million for the same quarter. The company remained unprofitable in the fourth quarter, reporting a loss of $0.07 per share.
While its bottom line saw a slight improvement from the loss per share of $0.15 in the prior-year quarter, it remained higher than Wall Street’s estimate of $0.06 loss per share. Also, it reported an adjusted EBITDA loss of $3.68 million during the same quarter.
Looking ahead, management anticipates SOUN’s fiscal year 2024 to fall within the range of $63 million to $77 million, with a midpoint target set at $70 million, which is roughly 53% higher than the $45.87 million revenue generated in the fiscal year 2023. Moreover, for the fiscal year 2025, management projects revenue to surpass $100 million and finally achieve a positive adjusted EBITDA.
Bottom Line
Apart from the company’s less-than-stellar fourth-quarter performance, SOUN encountered a setback earlier this week after announcing a $150 million stock sale. The initial $55 million raised is intended for general corporate purposes and working capital, potentially including acquisitions. Any funds exceeding $55 million will be used to repay debt.
While investors may find this news alarming, given the company’s substantial losses, it’s crucial to recognize that SOUN is currently in a growth phase. It’s actively pursuing significant acquisition initiatives and expanding its AI solutions across various industries.
For instance, in 2023, the company entered full production for its integrated generative AI voice assistant with automaker Stellantis’ DS Automobiles, set to be deployed across all models in 13 languages across 18 countries. Additionally, SOUN introduced its Chat AI pilots in Europe with three automotive brands, Peugeot, Opel, and Vauxhall.
Furthermore, the company made waves in the restaurant industry in 2023, with over 100 customers adopting its AI solutions. Given the company’s strategic expansion efforts across several industries, SOUN’s financial standing could witness major improvements in the forthcoming years.
While the immediate impact of SOUN’s financial performance and stock sale may raise concerns, the company’s strategic initiatives and partnerships suggest that it is well-positioned for long-term growth and success in this rapidly evolving AI landscape.
Adding to the optimism is, of course, NVDA’s stakes in SOUN, signaling the chip giant’s confidence in the company’s technology and potential for growth. To that end, it could be wise for investors to scoop up SOUN’s shares for potential gains.

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TSLA vs. BYDDY: The Battle for Electric Pickup Truck Supremacy

China, the world’s largest and fiercely competitive EV market, saw a 38% surge in sales of “new energy vehicles” last year, totaling 9.49 million units. This accounted for nearly 70% of global EV sales, raising concerns among traditional automakers and Tesla, Inc.’s (TSLA) Elon Musk about China’s potential dominance.
Concurrently, BYD Company Limited (BYDDY), a Chinese EV giant, is set to unveil its first electrified pickup truck globally. Though details on powertrain, performance, and pricing remain undisclosed, BYDDY released images featuring an orange and blue camouflaged truck, signaling its entry into the new energy pickup segment.
Competing with TSLA’s Cybertruck, Ford Motor Company’s (F) Ranger and F-150 Lightning, and Toyota Motor Corporation’s (TM) Hilux, the upcoming BYDDY pickup marks a new frontier in the electric pickup market.
That said, TSLA’s Cybertruck, launched in November 2023, faces criticism for battery range discrepancies, premature breakdowns, and durability issues like rust and corrosion. Initially promised at $39,900 with a 500-mile range, TSLA’s Cybertruck now starts at $60,900, with deliveries pushed to 2025 due to production constraints.
Musk has admitted challenges in production, forecasting a financially challenging first year. Moreover, with the Cybertruck as its latest passenger vehicle since 2020, TSLA’s global expansion might stall, leaving markets outside North America waiting for new releases for years to come.
Financial Performance Comparison Between BYDDY and TSLA
In the final quarter of 2023, the Shenzhen-based carmaker saw a surge in net profit, surpassing TSLA to become the top seller of electric vehicles globally. Revenue soared by 49.8% year-over-year to ¥180.04 billion ($24.89 billion), with gross profit reaching ¥38.21 billion ($5.28 billion), a 78% increase year-over-year.
Additionally, BYDDY’s net income attributable to common stockholders reached ¥8.67 billion ($1.20 billion), up from ¥4.13 billion ($571.02 million) in the previous year’s quarter. Sales volume spiked by 38%, with over 526,000 EVs sold, nearly 80,000 more than TSLA’s sales.
BYDDY, for the second consecutive year, outpaced TSLA, producing 3 million new energy vehicles (NEVs) compared to Tesla’s 1.84 million. BYDDY’s cars, mostly priced lower than TSLA’s, offer hybrid and fully electric options, posing a significant threat to competitors, as acknowledged by Musk.
In the fiscal fourth quarter of 2023, TSLA’s total revenue increased 3% year-over-year to $25.17 billion. However, its gross profit declined 23.2% year-over-year to $4.44 billion. Its adjusted EBITDA decreased 26.9% from the year-ago value to $3.95 billion.
Moreover, the company’s non-GAAP net income and non-GAAP EPS attributable to common stockholders reduced 39.5% and 40.3% from the prior year’s period to $2.49 billion and $0.71, respectively.
Musk now recognizes BYDDY’s potential dominance in the EV market despite initial ridicule, foreseeing a scenario where they could outperform most other car companies globally. He said, “Frankly, if there are not trade barriers established, they will pretty much demolish most other car companies in the world.”
The Two Industry Giants’ Business Prospects and Challenges
BYDDY, while absent from the U.S. market, reaches more than 50 countries, concentrating efforts in Asia, South America, Australia, and selected European nations such as Hungary. Plans to unveil new models, including the $233,000 Yangwang U9 electric supercar, complement refreshed models like the e2 and Seagull electric hatchbacks.
Last year’s global sales saw notable NEV success across multiple nations. With over 242,000 units exported, BYDDY anticipates China’s NEV market surge in 2024, reinforcing its multi-brand strategy and global expansion objectives. Expansion ventures into Europe with a new Hungarian factory and successful deliveries also mark a pivotal moment in Central and Eastern European market development.
In South America, BYDDY aims to revitalize a former Ford manufacturing site in Brazil with a $620 million investment. Three Bahia factories will process locally sourced lithium and iron phosphate for vehicle production, enhancing regional presence. Future endeavors further include a prospective Mexican factory by next year’s end.
Additionally, BYD’s battery subsidiary, FinDreams, has partnered with Huaihai Holding Group to lead the sodium-ion battery supply for small electric cars. A Jiangsu production base near Xuzhou aims to revolutionize mass-market EV commercialization with cost-effective sodium-ion battery technology.
TSLA’s recent quarterly sales shortfall has affected Elon Musk’s reputation in China, the world’s largest automotive market. Its market share has shrunk significantly due to unprecedented local competition and declining consumer confidence. Despite being known as a disruptor with advanced technology, TSLA struggles with its limited lineup of the Model 3 sedan and Model Y SUV.
In contrast, competitors like BYDDY offer a wider range of vehicles with advanced features. From the affordable Seagull hatchback to the high-performance Yangwang U8 plug-in hybrid SUV, BYDDY presents a compelling array of options.
Globally, TSLA’s delivery of 386,810 vehicles in the first quarter falls significantly short of expectations. “It’s been an epic disaster, not just in terms of the delivery number, but the strategy,” Wedbush Securities Inc. analyst Dan Ives said. “This is probably one of the most challenging periods for Musk and Tesla in the last four or five years.”
Furthermore, the company’s reliance on BYDDY battery cells puts it at a disadvantage, as BYDDY’s in-house battery and semiconductor manufacturing capabilities give it an edge. BYDDY’s revolutionary Blade Battery, with an impressive 600 km range on a single charge, highlights TSLA’s struggles to remain competitive.
Bottom Line
In 2008, BYDDY introduced its inaugural plug-in hybrid electric vehicle, the F3DM, coinciding with Berkshire Hathaway’s $230 million investment. Since then, BYDDY has solidified its position as a dominant force in China’s EV market, consistently ranking among the top monthly EV sellers in the country.
Having conquered the Chinese market, BYDDY now sets its sights on global expansion, with a presence in at least 58 overseas markets, including Germany, Japan, Australia, and Thailand. Manufacturing facilities in Thailand and Brazil are underway, and commitments are being made to build in Hungary and Indonesia.
BYDDY’s latest ultra-cheap car enhances its competitiveness against TSLA, which still struggles with affordability. Yet, BYDDY’s product portfolio spans all market segments, evidenced by the unveiling of a supercar aimed at the premium end of the EV market spectrum.
Ending 2023 with record-breaking sales, surpassing 3 million annual sales and retaining its global NEV sales champion status for the second consecutive year, BYDDY has solidified its position as China’s best-selling car brand and manufacturer.
Analysts project robust growth for BYDDY in the fiscal year 2024, with its revenue and EPS expected to increase by 28.6% and 3.2% year-over-year, respectively, reaching $107.29 billion and $3.00.
In contrast, TSLA’s revenue for fiscal year 2024 is forecasted to grow 9.9% year-over-year to $106.30 billion, while its EPS is anticipated to decline by 8.4% to $2.86. Moreover, Tesla missed the consensus revenue and EPS estimates in three of the trailing four quarters, which is concerning.
Given this scenario, BYDDY could challenge TSLA’s dominance, making it an attractive investment opportunity in the current market landscape.

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Warren Buffett’s Oil Investments: Insights Into Berkshire Hathaway’s Oil Holdings

Warren Buffett, a prominent billionaire investor known for his investments through Berkshire Hathaway, holds significant investments in the oil sector, with holdings in Chevron Corporation (CVX) and Occidental Petroleum (OXY).
Buffett’s Berkshire Hathaway (BRK.A) (BRK.B) owns 126.1 million shares of CVX, valued at $1.5 billion. This ownership stake represents about 6.7% of the company’s outstanding shares.
Berkshire’s purchase of shares in CVX during the fourth quarter of 2023 is seen as a significant endorsement of Chevron’s $53 billion merger with Hess Corporation (HES), announced on October 23. This move is interpreted as a strong vote of confidence for Chevron’s investors and the oil and gas sector as a whole.
Additionally, per Berkshire Hathaway’s February shareholder letter, the multinational investment firm holds a 27.8% stake in OXY and has warrants that could increase its ownership further at a fixed price.
“We particularly like its vast oil and gas holdings in the United States, as well as its leadership in carbon-capture initiatives, though the economic feasibility of this technique has yet to be proven,” Buffett said, “Both of these activities are very much in our country’s interest.”
In November, Occidental Petroleum and BlackRock, the world’s largest asset manager, announced a joint investment of $550 million in Occidental’s direct air capture plant, Stratos, located in West Texas. The plant is anticipated to commence operations by the middle of the upcoming year.
Direct air capture (DAC) technology differs from traditional carbon capture methods because it extracts carbon dioxide directly from the atmosphere instead of capturing emissions at the source, such as at industrial facilities like steel plants.
According to the International Energy Agency (IEA), 27 DAC plants have been commissioned globally to date, with plans for at least 130 DAC facilities in several stages of development. Both Occidental Petroleum and Exxon Mobil Corp (XOM) estimate that DAC could evolve into a multi-trillion-dollar market for oil producers by 2050 as scale brings costs down.
Warren Buffett has expressed admiration for Vicki Hollub, the President and CEO of Occidental Petroleum, who is the first woman to lead a major American oil company. “Under Vicki Hollub’s leadership, Occidental is doing the right things for both its country and its owners,” Buffett stated. “No one knows what oil prices will do over the next month, year, or decade.”
“But Vicki does know how to separate oil from rock, and that’s an uncommon talent, valuable to her shareholders and her country,” he added.
Understanding the Dynamics of the Energy Sector
Also, Berkshire’s investments consider the dynamics of the energy sector, including factors such as supply and demand trends, geopolitical events, and technological advancements. Oil prices climbed above $90 per barrel last week. This surge was attributed to tensions in the Middle East, concerns regarding tightening supply, and optimistic expectations about demand growth amid improving economies.
Brent crude passed around $91 per barrel on Friday, taking its gains for the year to 18%. The U.S. West Texas Intermediate crude, closely linked to U.S. gasoline prices, has been even stronger, with 21% gains. Both benchmark crude oil prices settled at their highest levels since October 2023.
The oil market could see prices rise to $100 per barrel, especially if OPEC+ maintains its production cuts and extends them further into the second half of the year. This scenario is supported by expectations of robust demand, particularly in the second half, driven by economic growth and increased consumption.
Vitol’s Muller told on Gulf Intelligence’s Daily Energy Markets podcast that he anticipates a significant uptick in refined product demand globally, at around 2 million barrels per day (bpd) than in the same period last year.
This bullish outlook is echoed by experts like Bob McNally, founder of consultancy Rapidan Energy and a former White House adviser, who told Bloomberg Television in an interview that the market is currently “on firm fundamental footing.”
“I think $100 oil is entirely real — it just requires a little more risk pricing on the true geopolitical risk,” McNally added.
Now, let’s review the fundamentals of CVX and OXY in detail:
Chevron Corporation (CVX)
With a $299.80 billion market cap, CVX engages in integrated energy and chemicals operations internationally. It produces crude oil and natural gas; manufactures transportation fuels, lubricants, petrochemicals, and additives; and develops technologies that enhance its business and the industry.
The company also aims to grow its traditional oil and gas business, lower the carbon intensity of its operations, and expand its new lower carbon business in renewable fuels, hydrogen, carbon capture, and other emerging technologies.
On April 4, Chevron New Energies (CNE), a CVX division, announced a lead investment in ION Clean Energy (ION), a Boulder-based tech company that provides post-combustion point-source capture technology through its third-generation ICE-31 liquid amine system. ION raised $45 million in Series A financing led by CNE. 
“We continue to make progress on our goal to deliver the full value chain of carbon capture, utilization, and storage (CCUS) as a business, and we believe ION is a part of this solution,” said Chris Powers, vice president of CCUS & Emerging with CNE.
Also, on March 19, CNE and JX Nippon Oil & Gas Exploration Corporation signed a Memorandum of Understanding (MoU) that offers a framework to evaluate the export of Carbon Dioxide (CO₂) from Japan to Carbon Capture and Storage (CCS) projects located in Australia and other countries in the Asia Pacific region.
For the fourth quarter ended December 31, 2023, CVX’s total revenues and other income declined 16.5% year-over-year to $47.18 billion. Its total adjusted earnings and adjusted EPS decreased 17.8% and 15.6% over the prior-year quarter to $6.45 billion and $3.5, respectively.
However, the company’s worldwide and U.S. net oil-equivalent production set annual records. Worldwide production increased 4% from a year ago to more than 3.1 barrels of oil-equivalent per day, primarily due to the acquisition of PDC Energy, Inc. (PDC) and growth in the Permian Basin, up 10% from 2022. This was led by 14% growth in the U.S.
Last year, CVX returned more cash to shareholders and produced more oil and gas than any other year in the company’s history. Cash returned to shareholders was nearly $26 billion for the full year, 18% higher than the prior year’s total.
The company’s Board of Directors further declared an 8% increase in the quarterly dividend to $1.63 per share, paid on March 11, 2024, to all holders of common stock, as shown on the transfer records of the corporation at the close of business on February 16, 2024.
CVX’s annual dividend of $6.52 translates to a yield of 4.03% on the current share price. Its four-year average dividend yield is 4.43%. Moreover, the company’s dividend payouts have increased at CAGRs of 6.08% and 6.3% over the past three and five years, respectively.
For 2024, CVX announced an expected organic capital expenditure range of $15.5 to $16.5 billion for consolidated subsidiaries (capex) and an affiliate capital expenditure (affiliate capex) budget of around $3 billion. With the acquisition of PDC Energy, Chevron announced an annual capex guidance range of $14 to $16 billion through 2027.
Following the completion of the Hess acquisition, which is expected to be finalized in the first half of 2024, CVX’s annual capex budget is expected to increase significantly to a range of $19 billion to $22 billion.
Analysts expect CVX’s revenue for the fiscal year (ending December 2024) to increase by 1.8% year-over-year to $204.64 billion. However, the consensus EPS estimate of $12.82 for the current year indicates a decline of 2.4% year-over-year.
Occidental Petroleum Corporation (OXY)
With a market cap of $60.94 billion, OXY is a global energy company with assets primarily in the U.S., the Middle East, and North Africa. The company is one of the largest oil and gas producers in the U.S., including a leading producer in the Permian and DJ basins and offshore Gulf of Mexico. 
On February 8, OXY’s Board of Directors declared a regular quarterly dividend of $0.22 per share on common stock, payable on April 15, 2024, to stockholders of record at the close of business on March 8, 2024. The annual dividend per share has increased to $0.88 from its previous rate of $0.72.
OXY’s annual dividend translates to a yield of 1.27% on the current share price. Its four-year average yield is 3.44%. The company’s dividend payments have grown at a CAGR of 5.7% over the past three years.
On December 11, 2023, OXY entered a purchase agreement to acquire Midland-based oil and gas producer CrownRock L.P., a joint venture of CrownQuest Operating LLC and Lime Rock Partners. This acquisition is anticipated to deliver increased free cash flow on a share basis, including $1 billion in the first year based on $70 per barrel WTI.
The acquisition further complements and strengthens Occidental’s leading Permian portfolio by adding around 170 thousand barrels of oil equivalent per day (Mboed) of high-margin, lower-decline unconventional production in 2024 and approximately 1,700 undeveloped locations. It enhances the company’s resource base and growth potential in the region.
During the fourth quarter that ended December 31, 2023, OXY’s revenues and other income decreased 9.6% year-over-year to $7.53 billion. Its income before income taxes declined 35% from the prior year’s quarter to $1.56 billion. Its non-GAAP EPS came in at $0.74, down 54% year-over-year.
Furthermore, the company’s current liabilities increased to $9.15 billion as of December 31, 2023, compared to $7.76 billion as of December 31, 2022.
Street expects OXY’s revenue and EPS for the first quarter (ending March 2024) to decline 9.4% and 45.8% year-over-year to $6.58 billion and $0.59, respectively. For the fiscal year 2024, the consensus EPS estimate of $3.37 indicates a decrease of 8.9% year-over-year.
However, the company’s revenue for the ongoing year is expected to increase 2.5% year-over-year to $29.63 billion.
Bottom Line
Warren Buffett’s investments in the oil sector through Berkshire Hathaway have garnered attention, particularly with holdings in CVX and OXY. Hathaway’s oil investments are also aligned with the demand-supply dynamics in the energy sector. The recent surge in oil prices, driven by tensions in the Middle East, supply constraints, and an optimistic demand outlook, reflects the evolving landscape that Buffett’s investments navigate.
While rising oil prices, production growth, strategic acquisitions and investments, and continued commitment to rewarding shareholders via dividends make CVX an attractive option for long-term investors seeking growth, the company continues to face several challenges, including commodity price dependence, higher operational costs, and uncertainty in the energy transition.
Chevron’s core business in oil and gas exploration (upstream) makes it susceptible to boom-and-bust cycles in commodity prices. The company’s earnings dropped in 2023 due to lower oil and gas prices and reduced refining profits, highlighting the ongoing challenge of staying profitable amid market changes. Also, analysts have presented a mixed outlook for 2024.
CVX also faces cost headwinds, with its operating expenses trending upward and inflationary pressures threatening to squeeze margins further. Moreover, the global shift toward renewable energy presents a long-term challenge for oil and gas companies. 
Regarding OXY, its investments in low-carbon ventures, strategic acquisitions, and technology advancements present numerous opportunities for growth and industry leadership. However, the company must also tackle challenges related to its reliance on commodity prices, managing operational costs and debt obligations, and navigating global economic uncertainties.
While Occidental’s last reported earnings topped analyst estimates, they dropped compared to year-ago values. Further, analysts appear bearish about the company’s financial performance this year.
Staying profitable in such a volatile environment requires strategic resilience, efficient cost management, and a focus on operational excellence to navigate through boom-and-bust cycles effectively. So, given the mixed performance and outlook for CVX and OXY, investors may consider waiting for a better entry point before investing in these stocks.
While Buffett’s endorsement and long-term investment strategy hold weight, it’s essential to assess the companies’ financial health, growth prospects, and industry trends comprehensively.

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3 Renewable Energy Stocks Aligning Shareholder Values Amidst BAC Environmental Backlash

Two years ago, The New York Times disclosed Bank of America’s (BAC) decision to cease financing coal mines, coal-burning power plants, and Arctic drilling projects due to environmental concerns. However, the bank has now reversed its stance, subjecting such projects to “enhanced due diligence” in its latest environmental and social-risk policy.
Amid mounting Republican opposition to corporate consideration of environmental and social factors, Texas and West Virginia have introduced financial regulations to resist denying banking services to fossil fuel companies. In New Hampshire, legislators aim to outlaw ESG (environmental, social, and governance) practices in business, reflecting a broader political backlash.
In this context, coupled with global tensions in Europe and the Middle East, banks such as BAC and JPMorgan are shifting focus away from ESG principles, as evidenced by JPMorgan’s retreat in its annual climate report, toward practices emphasizing energy security.
Simultaneously, the combustion of fossil fuels remains the primary driver of global warming. The United Nations warns that rising temperatures alter weather patterns and disrupt natural equilibrium, intensifying extreme weather events like hurricanes, droughts, and heatwaves, exacerbating their frequency and severity.
These shifts are already manifesting tangible impacts. In 2023, the Amazon basin faced drinking water shortages due to historically low rainfall. Catalonia, Spain, declared a state of emergency earlier this year due to the “worst drought in modern history,” illustrating the immediate consequences of climate change.
Given the recent backlash against BAC’s environmental stance and the urgency of climate change, it’s crucial to prioritize sustainable investments and align portfolios with ecological values. The three renewable energy stocks discussed below exemplify solid environmental commitments and long-term sustainability goals.
NextEra Energy, Inc. (NEE)
NextEra Energy, Inc. (NEE), a prominent utility giant, is reshaping the renewable energy panorama with remarkable advancements in wind and solar energy production. Leveraging its subsidiary, Florida Power & Light, and substantial investments in clean energy, the company has emerged as a pivotal force driving the nation’s shift towards sustainable power origins.
In 2023, NEE achieved more than 9% growth in full-year adjusted earnings per share compared to 2022. The success was attributed to robust operational and financial performance across FPL and NextEra Energy Resources, surpassing adjusted earnings expectations and consistently delivering long-term shareholder value.
Over the past decade, NEE has consistently delivered compound annual growth in adjusted EPS of approximately 10%, the highest among the top-10 power companies. In contrast, other top companies in the sector have seen an average compound annual growth in adjusted EPS of around 2% during the same period.
NEE achieved its best-ever year for new renewables and storage origination in 2023, adding approximately 9,000 megawatts to its backlog. Anticipating a substantial surge in electricity demand due to factors like artificial intelligence, electrification, and cloud capacity, CEO John Ketchum forecasts an 81% increase in electricity demand over the next five years.
Renewable generation could triple or more, reaching 370 to 450 gigawatts, to meet this demand. To meet this increasing demand, NEE has developed a system to identify suitable locations for new data centers based on solar and wind resources and transmission line access. This should bode well for the company’s growth.
For fiscal 2024, NEE maintains its adjusted earnings per share expectations between $3.23 and $3.43. Projected growth for 2025 and 2026 is set at 6% to 8% based on the 2024 range, translating to $3.45 to $3.70 for 2025 and $3.63 to $4.00 for 2026.
Clearway Energy, Inc. (CWEN)
Clearway Energy, Inc. (CWEN) is one of the United States’ largest renewable energy proprietors, boasting approximately 6,000 net megawatts (MW) of installed wind, solar, and energy storage projects. Among its assets are about 8,500 net MW, including roughly 2,500 net MW of environmentally friendly, highly efficient natural gas generation facilities.
The preceding year, CWEN committed around $215 million to new long-term corporate capital investments and secured new Resource Adequacy contracts at Marsh Landing and El Segundo, providing greater visibility into future growth opportunities.
In December 2023, CWEN’s indirect subsidiary acquired a stake in Texas Solar Nova 1, a 252 MW operational solar venture in Kent County, Texas, for $23 million in cash. Supported by power purchase agreements with reliable counterparties, this project showcases CWEN’s dedication to sustainable energy initiatives.
With total liquidity reaching $1,505 million by December 31, 2023, a $139 million increase from the previous year, CWEN demonstrated robust financial health. This was bolstered by refinancing the revolving credit facility, raising its total capacity to $700 million, and additional project-level restricted cash from growth investments.
In 2023, CWEN’s Cash Available for Distribution (CAFD) landed within its revised guidance range of $330 million to $360 million, totaling $342 million. In the fourth quarter, the company achieved commercial operations on Daggett 2 and Texas Solar Nova 1, positioning itself for further CAFD growth in 2024 and beyond.
Committing approximately $215 million to new corporate capital deployments in 2023, CWEN aims for an average five-year annual CAFD yield of about 10%, diversifying its portfolio further. The company announced a 1.7% dividend increase for the quarter, targeting a 7% growth rate for 2024.
Reaffirming its CAFD guidance of $395 million for 2024, CWEN remains on track to achieve its long-term growth targets. Moreover, with a sponsor’s 29-gigawatt renewable pipeline, CWEN anticipates significant asset additions to its portfolio by the mid-decade, ensuring sustained growth and delivering competitively priced energy while reducing risk.
Investors can anticipate a robust growth trajectory from CWEN’s sponsor, which will translate into substantial asset augmentation for CWEN’s portfolio in the coming years.
Atlantica Sustainable Infrastructure plc (AY)
Atlantica Sustainable Infrastructure plc (AY) specializes in sustainable infrastructures, focusing on renewable energy assets with a robust portfolio of 2.2 GW operating assets spread across North and South America and the EMEA region.
In March, AY finalized the acquisition of two wind assets in Scotland, marking its entry into the United Kingdom market. These assets are regulated under U.K. green attribute regulations and have a combined installed capacity of 32 MW.
AY also saw significant progress in its U.S. development team last year, with several new solar assets reaching commercial operation. Presently, the company has three fully contracted projects under construction or about to start construction in the U.S. Southwest, benefiting from the Investment Tax Credit (ITC).
The company’s renewal pipeline has expanded by 12% compared to last year. On March 1, 2024, AY committed or earmarked $175 million to $220 million in new investments, predominantly allocated to solar and storage projects in the United States, representing a significant portion of its investment target.
AY expects to supplement this with additional developments and targeted acquisitions. Most of the company’s investments will be directed toward solar and storage projects already contracted in the United States, including Coso 1, Coso 2, and a new project called Overnight, alongside investments in other geographies such as South America and Europe.
Such strategic investments are poised to enhance AY’s prospects significantly. In full-year 2023, AY’s revenue remained stable at $1,099.9 million, with adjusted EBITDA reaching $794.9 million, showcasing a 1.7% increase from 2022. Cash available for distribution totaled $235.7 million, aligning with yearly guidance.
Looking ahead to 2024, AY anticipates adjusted EBITDA in the range of $800 million to $850 million and cash available for distribution from $220 million to $270 million, reflecting its continued growth trajectory and commitment to sustainable infrastructure development.
Bottom Line
The transition toward renewable energy is one of our time’s most significant investment trends, with trillions of dollars set to be invested in decarbonizing the economy over the upcoming decades. This investment surge is expected to fuel above-average growth for companies focused on renewable energy sectors in the years ahead.
Despite natural gas maintaining its position as the primary fuel source for U.S. power generation, accounting for more than 40% of generation in the fourth quarter of 2023, most new capacity additions have been concentrated in renewable energy sources such as solar, wind, and battery storage.
Natural gas benefits from its abundant availability and low cost in the United States, while coal’s contribution to generation fell to 16% in the fourth quarter of 2023, down from 19% in the same period in 2022. Renewables (excluding hydroelectricity) saw their market share increase to 16% in the fourth quarter of 2023, with solar accounting for approximately 3.5% and wind comprising 12.5% of utility-scale generation.
Further, forecasts predict wind and solar to rise to nearly 45% of generation by 2032, marking a significant increase from current levels. Much of this growth is expected to come at the expense of coal, which is forecasted to continue declining due to its high emission profile.
Investing in renewable energy stocks presents a compelling opportunity amid changing environmental landscapes and evolving market dynamics. These companies are distinguished by their strong commitments to sustainable energy initiatives and consistent financial performance.
Leading utility company NEE is at the forefront of renewable energy transformation, with substantial investments in wind and solar energy production driving the nation’s transition towards sustainable energy sources. The company’s consistent growth in adjusted earnings per share highlights its resilience and potential for long-term value creation.
Emerging players such as CWEN and AY are also making significant strides in renewable energy ownership, boasting diverse portfolios of wind, solar, and energy storage projects. Their strategic investments and steady cash flow generation position them for continued growth in alignment with the rising demand for renewable energy solutions.
As renewable energy stocks are expected to remain relevant amid growing efforts to combat climate change worldwide, consider adding NEE, CWEN, and AY to your portfolio now.

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The Intel (INTC) Conundrum: When Will the Bleeding Stop?

Prominent chipmaker Intel Corporation’s (INTC) shares plunged more than 14% over the past five days. This downward trend follows the revelation that Intel incurred a significant operating loss of $7 billion last year for its chip-manufacturing unit, also called the foundry business, about 35% worse than in 2022. The unit reported revenue of $18.90 billion for 2023, down 31% year-over-year.
During an investor presentation, INTC’s CEO Patrick Gelsinger discussed the company’s projections, stating that 2024 would likely mark the peak of operating losses for its chipmaking division. He mentioned that Intel anticipates reaching break-even on an operating basis by around 2027.
Pat Gelsinger further acknowledged challenges in the company’s foundry business, attributing to poor decisions, including one year ago against extreme ultraviolet (EUV) machines from the Dutch company ASML Holding N.V. (ASML). Although these machines can cost more than $150 million, they are considered more cost-effective compared to earlier chip-making tools.
Partially due to these missteps, Intel has outsourced approximately 30% of its total wafer production to external contract manufacturers like TSMC, Gelsinger added. The company’s goal is to lower this number to around 20%.
Additionally, the semiconductor giant has now transitioned to using EUV tools, which are expected to handle an increasing portion of production requirements as older machinery is phased out.
“In the post EUV era, we see that we’re very competitive now on price, performance (and) back to leadership,” Gelsinger stated. “And in the pre-EUV era we carried a lot of costs and (were) uncompetitive.”
However, on a negative note, investment bank Bernstein analysts recently remarked that there is no compelling reason to hold Intel stock until 2030.
Bernstein recognizes the potential for improvement in Intel’s foundry business, given the significant loss incurred last year and the optimistic projection for achieving a 25-30% operating margin by 2030.
However, analysts cautioned, suggesting that the road ahead for INTC might be challenging, even with the seemingly ambitious targets. They noted that reaching break-even may not happen until after 2027, and the ambitious goals set for 2030 are speculative and dependent on achieving optimal progress, which remains a topic of debate.
In the last reported earnings, INTC surpassed analysts’ estimates on revenue and EPS. However, the chipmaker announced a weak forecast for the current quarter. For the quarter that ended December 31, 2023, INTC’s net revenue increased 10% year-over-year to $15.40 billion. This surpassed the consensus revenue estimate of $15.17 billion.
Also, net income attributable to Intel was $2.70 billion, compared to a net loss of $700 million in the previous year’s period. The company reported an EPS of $0.63, compared to analysts’ estimate of $0.22, and a loss per share of $0.16 in the same quarter of 2022.
However, as of September 30, 2023, the company’s cash and cash equivalents stood at $7.07 billion versus $11.14 billion as of December 31, 2022.
Intel’s fourth-quarter 2023 report marked a return to growth after eight consecutive quarters of decreasing earnings and seven straight quarters of declining sales on a year-over-year basis. But for the first quarter, the chip company projected adjusted EPS of just $13 on sales of $12.70 billion. Analysts expect earnings of $0.14 per share on revenue of $12.78 billion.
During an earnings call, Intel CEO Patrick Gelsinger stated that the company’s first-quarter sales would be impacted by difficulties at Mobileye, where Intel holds a majority stake, and in its programmable chip unit.
Gelsinger also mentioned that Intel’s core businesses, particularly PC and server chips, were performing strongly, with sales expected to fall within the lower end of the seasonal range.
On March 21, INTC announced plans to invest $100 billion in constructing and expanding chip factories across four states in the U.S., following securing $19.50 billion in federal grants and loans and wishes to secure another $25 billion in tax breaks.
Intel’s primary focus in its five-year spending plan is to convert undeveloped land near Columbus, Ohio, into what CEO Pat Gelsinger described as “the largest AI chip manufacturing site in the world,” with potential commencement in 2027.
In addition, the chip giant intends to revamp sites in New Mexico and Oregon while expanding its presence in Arizona. This initiative aligns with rival Taiwan Semiconductor Manufacturing Company Ltd. (TSM) construction of a massive factory in Arizona, leveraging President Joe Biden’s efforts to bolster advanced semiconductor manufacturing in the U.S.
Intel was at the forefront of the semiconductor industry for decades and was known for producing the fastest and smallest chips. The company commanded premium prices for its products and reinvested its profits into continuous research and development (R&D), aiming to stay ahead of its competitors.
However, in the 2010s, INTC’s manufacturing superiority waned, particularly in comparison to TSM. This shift resulted in a significant drop in profit margins as Intel had to lower prices to maintain its market share, even though its products were perceived as less competitive than its rivals.
In 2021, Gelsinger unveiled a strategy to restore Intel to its former top position in the semiconductor market, acknowledging the necessity of government support to ensure the plan’s profitability. With the federal support secured, the chipmaker is now gearing up for substantial investments.
Gelsinger mentioned that approximately 30% of the $100 billion budget will be earmarked for construction expenses, covering labor, piping, and concrete. The remaining funds will be utilized to acquire chipmaking tools from firms like ASML, Tokyo Electron, Applied Materials, Inc. (AMAT), and KLA Corporation (KLAC), among others.
Moreover, Intel’s strategy for business turnaround hinges on persuading external companies to use its manufacturing services. In February, INTC announced that Microsoft Corporation (MSFT) plans to use its services to manufacture a tailored computing chip. Moreover, the company expressed optimism about exceeding its internal target of surpassing TSM in advanced chip manufacturing before 2025.
As a part of this plan, INTC recently told investors it would start reporting the results of its manufacturing operations as a separate unit.
Intel’s new reporting structure, effective from the first quarter of 2024, includes operating segments such as Client Computing Group (CCG), Data Center and AI (DCAI), Network and Edge (NEX), Intel Foundry, Altera (now Intel’s Programmable Solutions Group), Mobileye, and Other. CCG, DCAI, and NEX will be collectively known as Intel Products, while Altera, Mobileye, and Other will be referred to as All Other.
The newly established Intel Foundry segment, including foundry technology development, foundry manufacturing and supply chain, and foundry services, will recognize revenues generated from external foundry customers and Intel Products, along with technology development and product manufacturing costs historically allocated to Intel Products.
Intel’s CFO, Dave Zinsner stated, “This model is designed to unlock significant cost savings, operational efficiencies and asset value. As it begins to take hold, we expect to accelerate on our path toward achieving our ambition of 60% non-GAAP gross margins and 40% non-GAAP operating margins in 2030. Ultimately, improved cost competitiveness will help us deliver process technology, product, and foundry leadership while driving significant financial upside for Intel and our owners.”
Bottom Line
Last week, INTC confirmed its intention to separate the financial results of its foundry business, providing investors with a closer look at its historical performance. However, the revealed figures were disappointing: the foundry business suffered losses of nearly $7 billion in 2023, a 35% increase in losses compared to 2022, alongside a 31% decrease in sales.
Along with these figures, the company stressed that the new financial reporting structure is designed to boost cost discipline and higher returns by offering enhanced transparency, accountability, and incentives across the business. Moreover, this transition is expected to unlock unrealized value across Intel’s about $100 billion in capital assets.
Last month, Intel unveiled plans to spend those $100 billion on building or expanding chip factories in four U.S. states. As part of its turnaround strategy, the chipmaker aims to convince external companies to utilize its manufacturing services. The company has been heavily investing to compete with its main chipmaking rivals, including TSM and Samsung Electronics Co Ltd.
Despite Intel’s optimism about turning the business around and achieving break-even by 2027, with a projected adjusted operating profit margin of 30% by 2030, analysts, including those at Bernstein, are cautious. They view Intel’s forecast as overly ambitious, suggesting that actual margins might only reach 25% by 2030.
Further, CNBC’s Jim Cramer advises investors to avoid investing in Intel despite the company’s turnaround plans.
While INTC is actively pursuing its turnaround initiatives, it currently encounters significant challenges, including underperformance within its foundry business, fierce competition, and cash burn. So, it could be wise to steer clear of this stock now.

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Google’s AI Debacle: A Red Flag for Investors Eyeing Sell Signals?

Since the debut of OpenAI’s ChatGPT in November 2022, numerous tech companies have been swiftly advancing to develop comparable, if not superior, versions of such conversational AI models. Among them, tech titan Alphabet Inc. (GOOGL) has emerged as a prominent player.
Utilizing its extensive resources and employing top-tier talent to explore the frontiers of AI capabilities, GOOGL unveiled its largest and most capable AI model, Gemini (formerly known as Bard), in December last year.
This expansive language model consists of three variants: Gemini Ultra, representing its largest and most proficient category; Gemini Pro, designed to address a wide range of tasks across various scales; and Gemini Nano, tailored for specific functionalities and compatibility with mobile devices.
GOOGL’s CEO Sundar Pichai said this new era of models signifies one of the company’s most significant science and engineering endeavors. He expressed genuine excitement about the future and the opportunities Gemini will bring to individuals worldwide.
However, despite the CEO’s enthusiasm, Gemini failed to garner the same level of traction as ChatGPT. According to web analytics company Similarweb, Gemini currently ranks as the third most popular AI chatbot, trailing significantly behind ChatGPT in terms of traffic.
To make matters worse, Gemini has encountered multiple controversies over the last month, resulting in a notable downturn for GOOGL. According to the Gemini chatbot, one should never misgender a person, even if it could prevent a nuclear apocalypse.
This stance was revealed in response to a hypothetical question posed by a popular social media account, which asked if misgendering Caitlyn Jenner, a prominent transgender woman, could prevent such a catastrophe. Gemini’s “woke” response to the post received major criticism from social media users.
Additionally, the controversy surrounding Google’s Gemini intensified as its image-generating platform was slammed for producing racially inaccurate depictions of historical figures, occasionally substituting images of White individuals with those of Black, Native American, and Asian descent.
Tesla, Inc. (TSLA) CEO Elon Musk expressed concern over these “woke” responses, particularly emphasizing the widespread integration of Gemini across GOOGL’s products and YouTube.
Musk tweeted about a conversation with a senior GOOGL executive, who informed him it would take a few months to address the issue, contrary to earlier expectations of a quicker resolution.
While GOOGL has issued several apologies and halted the use of Gemini’s image-generating platform, a former GOOGL executive disclosed that investors are expressing profound frustration as the scandal involving the Gemini model evolves into a tangible threat to the tech company.
On the other hand, CEO Sundar Pichai reassured stakeholders, affirming that the company is actively working “around the clock” to address the issues with the AI model. Pichai condemned the generated images as “biased” and “completely unacceptable.”
Furthermore, GOOGL recently introduced an update to Gemini that allows users to modify inaccurate responses and provides them with increased control over the platform. Reportedly, GOOGL experienced a loss of approximately $90 billion in market value last month, fueled by the controversy surrounding Gemini.
Also, GOOGL made history as the first company to face a hefty fine for its AI training methods. French regulators imposed a penalty of approximately $270 million on the tech giant. The regulatory authority stated that the company breached a pledge by using content from news outlets in France to train its generative AI model, Gemini.
Bottom Line
As GOOGL grapples with the fallout from Gemini-related controversies, its reputation among investors has taken a significant blow. The company’s AI chatbot faced enhanced backlash from individuals and prominent public figures such as Elon Musk.
Sergey Brin, the co-founder of GOOGL, acknowledged Gemini’s historical inaccuracies and questionable responses. He stated that Google “definitely messed up on the image generation” and attributed the issue to insufficient testing.
However, he highlighted that GOOGL is not alone in grappling with challenges. Various AI tools, including ChatGPT and Elon Musk’s Grok services, struggle to generate accurate results. He noted that these tools sometimes produce peculiar responses that may seem politically skewed.
Despite these challenges, Brin maintains confidence in GOOGL’s position, emphasizing his belief in the tech company’s capabilities to adapt and innovate its business models.
Furthermore, GOOGL continues to lead the way in the field of AI. Talks between GOOGL and Apple Inc. (AAPL) about integrating Gemini’s generative AI technology with iPhones have sparked a significant surge in the stock prices of both companies.
A partnership with AAPL would give GOOGL and Gemini a reassuring vote of confidence, particularly given the recent controversies surrounding its “woke” chatbot and the generation of inaccurate images.
Wedbush analyst Scott Devitt sees the potential deal as a validation moment for GOOGL’s generative AI positioning. The firm rates GOOGL “outperform” and has a 12-month price target of $160. Devitt emphasized that this collaboration represents a significant opportunity for GOOGL to integrate into the AAPL ecosystem.
In conclusion, while GOOGL faces challenges and scrutiny due to controversies surrounding Gemini, the company continues demonstrating determination to adapt and thrive.
Furthermore, talks with AAPL regarding the potential integration of Gemini’s technology signal promising opportunities for GOOGL and its generative AI model. Consequently, in light of this significant development, adopting an entirely bearish stance on GOOGL might not be prudent. Thus, investors could closely monitor the stock for potential gains.

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Bitcoin Halving: Marathon Digital’s $1 Billion War Chest Fuels Growth Plans

Marathon Digital Holdings, Inc. (MARA), a prominent player in supporting and securing the Bitcoin ecosystem, boasts a solid financial position. As of February 29, 2024, it had nearly $1.5 billion in unrestricted cash and cash equivalents and bitcoin. This substantial financial firepower plays a crucial role in enabling the company to execute its expansion strategy with agility and effectiveness.
Acquisition of 200MW Bitcoin Mining Data Center
On March 15, 2024, MARA finalized a deal to purchase Applied Digital Corporation’s Bitcoin mining data center in Garden City, Texas. The data center, which has a capacity of 200 megawatts (MW), will be acquired for $87.3 million, translating to roughly $437,000 per megawatt. The acquisition will be funded entirely through cash reserves from Marathon’s balance sheet.
The Bitcoin mining data center in Garden City, Texas, is located adjacent to a wind farm and is predominantly powered by renewable energy. The site, constructed and energized in 2023 with a workforce of about 25 employees, currently converts around 100 megawatts (c. 4.5 exahash of miners) into economic value through Bitcoin mining.
With the acquisition of this data center, MARA will take direct ownership of its current on-site operations and plans to expand by another 100 megawatts in 2024, totaling 200 megawatts dedicated exclusively to its Bitcoin mining operations.
This move provides Marathon with secure ownership of its operations and expansion opportunities. It also anticipates a 20% reduction in the cost per coin of its current operations at the site. Subject to customary conditions, the transaction is set to close in the second quarter of 2024.
The recent transaction marks Marathon’s second significant acquisition of Bitcoin mining data centers in the past four months, further bolstering its self-owned and operated megawatts to 54% in its Bitcoin mining portfolio. Before the acquisition of its first two data centers, which closed in January, MARA’s Bitcoin mining portfolio included 584 megawatts, with 3% residing on sites directly owned and operated by the company.
With this strategic acquisition and the planned expansion of the site in 2024, Marathon’s Bitcoin mining portfolio is set to increase to 1.1 gigawatts, with 54% under its direct ownership and operation, all of which are diversified across eleven sites on three continents. As a result, MARA will directly own and operate more megawatts than it had in its entire Bitcoin mining portfolio in December 2023.
In January this year, MARA finalized the acquisition of two operational Bitcoin mining facilities in Texas and Nebraska from subsidiaries of Generate Capital, PBC. Under the deal, the company paid around $179 million in cash from its balance sheet for approximately 390 MW of mining capacity. It also terminated rival Hut 8 Corp’s (HUT) involvement in overseeing the facilities.
Preparations for the Bitcoin Halving
Marathon Digital’s timing in acquiring the Bitcoin mining data center, located next to a wind farm with a capacity of 200 MW, is strategic, coinciding with its preparations for the upcoming Bitcoin halving, which is expected around April 20. This event, slashing per-block rewards by half from 6.25 BTC to 3.125 BTC, can strain smaller and less efficient miners with higher energy costs and limited capital access.
Miners with higher electricity costs or lower-efficiency machines “will have a difficult time mining profitably post-halving,” said Ethan Vera, Luxor Technology’s Chief Operating Officer. “Many companies are stuck in power contracts, or benefit from top line gross revenue and as such might continue to mine despite not being profitable. Companies’ balance sheets will determine how long they can survive doing that.”
MARA, an already leading player in the mining space, reported an energized self-mining hash rate of 28.7 exahashes per second (EH/s) at the end of February 2024.
During last month’s earnings call, Marathon executives said they would use its balance sheet, comprising roughly $1 billion worth of unrestricted cash and bitcoin, to approximately double its hash rate to 50 EH/s by the end of 2025. In 2024, the company plans to increase its hash rate to nearly 35 to 37 exahash.
Moreover, MARA is preparing aggressively for the next Bitcoin halving with plenty of cash in hand.
“We have the need for more capacity, we are reaching that limit now as we speak but we will continue to be acquisitive in this space,” Marathon’s chief executive, Fred Thiel, said in an interview on Bloomberg Television. “That has a direct impact on our cost to mine, which lowers our break-even point.”
Marathon Digital is enhancing its infrastructure and increasing the number of its mining devices to keep costs low after the halving event, which will significantly reduce its revenues. The company estimates that the break-even point, where revenue covers the cost of 1 BTC after halving, will be $43,000. 
Fred Thiel said, “By simple calculation, if the industry average breakeven point was previously around $23,000 per Bitcoin, it will now be around $43,000.” Thiel mentioned that some miners will lose their profitability, and perhaps some will have to consider discontinuing their mining activities.
The latest announced purchase is consistent with Marathon’s proactive approach of scaling up its operations before the upcoming bitcoin halving, slated in April, which aims to alleviate potential financial pressures and capitalize on the opportunities in the market.
MARA is not the only mining company preparing for the bitcoin halving. Companies like Riot Platforms, Inc. (RIOT) and CleanSpark, Inc. (CLSK) are also making substantial investments to increase their mining capacities. For instance, last month, Riot Platforms purchased 31,500 next-generation M60S miners from MicroBT for $97.40 million.
On the other hand, CleanSpark acquired three Bitcoin data centers in Mississippi, indicating a strategic move to bolster its mining infrastructure. Hut 8, led by CEO Asher Genoot, has outlined growth plans that focus on cost-effective scaling strategies.
Bottom Line
MARA, one of the largest U.S. bitcoin mining companies, reported outstanding financial and operational results for the fourth quarter and fiscal year ended December 31, 2023. For the full year, Bitcoin production rose 210% year over year to a record 12,852 BTC. The company’s revenues grew 229% from the prior year to $387.50 million in 2023.
Furthermore, Marathon’s net income grew to a record of $261.20 million, or $1.06 per share, from last year’s net loss of $694 million, or $6.12 per share. Also, its adjusted EBITDA improved to $419.90 million from a loss of $543.30 million in 2022.
Marathon Digital, with a combined balance of unrestricted cash and cash equivalents and bitcoin of nearly $1.5 billion as of February 29, continues to build liquidity on the balance sheet to capitalize on strategic opportunities, including industry consolidation. Recently, the company announced buying a 200 MW capacity Texas Bitcoin mining facility owned by Applied Digital for nearly $87 million in cash.
Along with taking direct ownership of its current operations at the site, the company added Marathon intends to grow its presence at the facility by 100 MW by the end of 2024. This planned purchase is consistent with MARA’s strategy to scale up its operations ahead of the next bitcoin halving event, slated for around April 20.
Also, in January, Marathon Digital closed the acquisition of two Bitcoin mining facilities in Texas and Nebraska from subsidiaries of Generate Capital, PBC. It paid around $179 million for 390 MW of capacity.
As the halving event is expected to put financial stress on companies in the mining sector, notably smaller, less-efficient miners with high energy costs and limited capital access, the recent mergers and acquisitions (M&A) emphasize MARA’s consistent efforts to mitigate potential challenges and capitalize on several opportunities in the market.
With MARA’s strong financial position enabling the company to execute its expansion strategy effectively, investors could consider buying this stock now.

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AAL’s Ambitious Change: What Investors Need to Know

With rapid technological advancements and travelers’ evolving demands, the aviation sector is experiencing unprecedented growth and expansion. American Airlines Group, Inc. (AAL), a frontrunner, has unveiled plans to expand its fleet, underscoring its dedication to staying ahead in this dynamic landscape.
Comprehensive Fleet Expansion Breakdown
AAL, earlier this month, announced orders for about 260 new aircraft, including 85 Airbus A321neo, 85 Boeing 737 MAX 10 and 90 Embraer E175. Also, the orders encompass options and purchase rights for an additional 193 aircraft. Under the Boeing order, American Airlines has chosen to convert 30 of its existing 737 MAX 8 orders into 737 MAX 10 aircraft.
These orders from Airbus SE (EADSY), Boeing Company (BA), and Embraer S.A. (ERJ) form a vital component of American Airlines’ ongoing commitment to enhance premium seating options across its narrowbody and regional fleets. They also serve to bolster the airline’s domestic and short-haul international network, contributing to its long-term sustainability and competitiveness.
“Over the past decade, we have invested heavily to modernize and simplify our fleet, which is the largest and youngest among U.S. network carriers,” stated American Airlines’ CEO Robert Isom. “These orders will continue to fuel our fleet with newer, more efficient aircraft so we can continue to deliver the best network and record-setting operational reliability for our customers.”
Since 2014, AAL has received more than 60 mainline and regional aircraft. With the recent announcement, American Airlines now has around 440 aircraft on order, ensuring its aircraft order book extends into the next decade.
“As we look into the next decade, American will have a steady stream of new aircraft alongside a balanced level of capital investment, which will allow us to expand our network and deliver for our shareholders,” said American’s Chief Financial Officer Devon May.
Boosting Regional Fleet Capacity
AAL is prioritizing the integration of larger, dual-class regional aircraft into its fleet, a move aimed at enhancing connectivity from smaller markets to the airline’s global network. The airline has set a goal to retire all its 50-seat single-class regional jets by the decade’s end while ensuring continued service to small and medium-sized markets with larger regional jets.
Upon the completion of deliveries of Embraer E175 aircraft, American Airlines foresees its entire regional fleet being comprised of dual-class regional jets featuring premium seating, high-speed satellite Wi-Fi, and in-seat power amenities. American’s wholly-owned regional carriers will operate the new E175 aircraft, further solidifying the airline’s commitment to modernizing its regional operations.
Arjan Meijer, CEO of Embraer Commercial Aviation, said, “The E175 is truly the backbone of the U.S. aviation network, connecting all corners of the country.”
“One of the world’s most successful aircraft programs, the E175 was upgraded with a series of modifications that improved fuel burn by 6.5%. This modern, comfortable, reliable and efficient aircraft continues to deliver the connectivity the U.S. depends on day after day. This represents American’s largest-ever single order of E175s, and we thank American for its continued trust in our products and people,” Meijer added.
Improvements to Existing Aircraft for a Premium Travel Experience
In addition to the new fleet, AAL has announced plans to initiate retrofitting of its A319 and A320 aircraft, commencing in 2025, in response to heightened customer demand for premium travel experiences. The retrofit program aims to revamp the interiors, featuring power outlets at each seat, expanded overhead bins, and refreshed seats with updated trim and finishes.
Under this initiative, American’s A319 fleet will undergo modifications to accommodate additional premium seating, raising the count to 12 domestic first-class seats. Similarly, the A320 fleet retrofits will see an increase in domestic first-class seating to 16.
Through the combination of retrofitting existing aircraft and the anticipated arrival of new aircraft, American Airlines projects a growth of over 20% in premium seating across its fleet by 2026.
Strategy for Long-Term Growth and Value Creation
On March 4, 2024, AAL’s CEO Robert Isom and other senior leaders provided an update at 2024 Investor Day in New York on the airline’s performance and its path forward for long-term growth and value creation.
“I’m incredibly proud of the work we have done over the past two years to build an American that is stronger, more focused and well-positioned to realize our full potential,” said Robert Isom. “Today, with our key initiatives in place, American is positioned to deliver a reliable operation for customers while generating durable earnings over the long term. We’re excited for the path ahead and confident in our ability to drive value for our shareholders through our commercial initiatives and continued execution.”
Also, American Airlines provided insights into the financial targets it had set for 2024 through 2026 and beyond. For 2024, the airline expects adjusted EBITDAR margin growth of nearly 14% year over year, free cash flow of about $2 billion, and total debt of $41 billion.
American Airlines targets adjusted EBITDAR growth of approximately 14%-16% for the year 2025, free cash flow of greater than $2 billion, and total debt of nearly $39 billion. For 2026 and beyond, the airline projects adjusted EBITDAR growth of around 15%-18%, free cash flow of greater than $3 billion, and total debt of less than $35 billion.
AAL’s members of the senior leadership team also discussed the drivers of its value-creation opportunities, such as operating a transformed fleet that is simplified and optimized for efficiency, capitalizing on competitive advantages of its network poised to adapt to evolving consumer trends, attracting and retaining customers with travel rewards program AAdavantage®, and generating durable financial results.
Bottom Line
AAL’s recent orders for Airbus, Boeing, and Embraer aircraft will allow the airline to expand premium seats across its narrowbody and regional fleets and bolster its domestic and short-haul international network for sustained long-term growth. Further, American is expected to retrofit its A319 and A320 fleets starting in 2025, increasing the number of domestic first-class seats on each aircraft.
These strategic investments in fleet modernization, operational efficiency, and customer experience enhancement demonstrate American Airlines’ commitment to meeting evolving industry demands. This, in turn, could lead to enhanced revenue streams and passenger satisfaction, contributing positively to the company’s growth trajectory.
By upgrading its fleet, AAL can further enhance its competitive position in the market, especially by offering a superior travel experience compared to its rivals. This could help the airline capture a larger market share and strengthen its position as a leading player in the aviation industry.

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Is NVDA Stock Headed for a Correction?

NVIDIA Corporation (NVDA) has undeniably emerged as a powerhouse in the world of chips, riding high on the wave of the Artificial Intelligence (AI) frenzy. The stock’s remarkable rally of roughly 296% over the past year, propelled by skyrocketing demand for its chips essential to train generative AI models, has fueled its trajectory.
This rapid surge positioned NVDA as the third most valuable company in the world, trailing closely behind tech titans such as Microsoft Corporation (MSFT) and Apple Inc. (AAPL).
With the entire stock market captivated by NVDA’s dramatic ascent and retail investor participation reaching unprecedented levels, Goldman Sachs analysts even went as far as to label NVDA as the “most important stock on planet Earth” ahead of its fourth-quarter earnings call.
But Why Is NVDA Deemed so Important?
In 2023, NVDA witnessed a seismic shift in its trajectory. While previously acclaimed for pioneering cutting-edge computer chip technology, particularly in enhancing graphics-heavy video games, the emergence of AI swiftly boosted these chips to newfound prominence.
The H100, crafted by NVDA, stands as a pinnacle of graphics processing unit (GPU). Tailored exclusively for AI applications, it reigns as the most potent GPU chip available. With an astonishing 80 billion transistors, six times more than its predecessor, the A100 chip, the H100 accelerates data processing to unprecedented speeds, solidifying its position as the unparalleled leader in GPU performance for AI tasks.
The H100’s exceptional performance and capacity to turbocharge AI applications have sparked significant demand, leading to a shortage of these coveted chips. On the other hand, despite the limited availability of the H100, NVDA has already unveiled its successor, the GH200.
Anticipated to surpass the H100 in power and performance, the GH200 is slated to be released by the second quarter of this year.
As the demand for innovative generative AI models soars, major tech players are entering the AI arena, designing their very own generative AI models to boost productivity. Thus, NVDA’s AI chips play a vital role in training and operating these generative AI models.
Moreover, with NVDA’s dominant hold of more than 80% of the global GPU chip market, tech giants find themselves heavily reliant on NVDA to fuel the prowess of their generative AI creations.
Despite such solid demand for NVDA’s offerings, Cathie Wood, the head of ARK Investment Management, pointed out that the GPU shortages, which surged last year alongside the increasing popularity of AI tools like ChatGPT, are now starting to ease.
She highlighted that lead times for GPUs, specifically those manufactured by NVDA, have notably reduced from around eight to 11 months to a mere three to four months. With the possibility of double and triple ordering amid widespread apprehensions about GPU shortages, Wood believes that NVDA might face the pressure of managing surplus inventories.
Consequently, Wood’s concerns over excess inventory spark a pivotal question: Is NVDA headed for a correction?
In response to the rising popularity of AI tools last year and heightened demand for its AI chips among tech companies, NVDA has tried to expand its GPU facilities, which is evident from the launch of GH200 this year.
In addition, NVIDIA’s Chief Financial Officer, Colette Kress, underscored the company’s efforts to enhance the supply of its AI GPUs, indicating a commitment to meet growing market demands.
Buoyed by its heavy dominance in the GPU market, the company posted solid fourth-quarter results, which further fueled the stock’s trajectory. Its revenue increased 265.3% year-over-year, reaching $22.10 billion. Meanwhile, the company’s bottom line hit $12.29 billion, marking a staggering growth of 769% from the prior-year quarter.
However, NVDA didn’t experience such remarkable growth in its smaller businesses. Specifically, its automotive division saw a decline of 4%, totaling $281 million in sales. Conversely, its OEM and miscellaneous business, encompassing crypto chips, demonstrated a modest 7% increase, reaching $90 million.
Barclays research analyst Sandeep Gupta anticipates that demand for AI chips will stabilize once the initial training phase concludes. Gupta emphasizes that during the inference stage, computational requirements are lower compared to training, indicating that high-performance personal computers and smartphones could potentially meet the needs of local inference tasks.
As a result, this situation might diminish the necessity for NVDA to expand its GPU facilities further. With that being said, Wood’s observation about the potential for a correction in NVDA was validated when its shares plummeted last week after a robust year-to-date rally.
In addition, Wall Street analysts are ringing the caution bells as the stock reaches dizzying heights, suggesting that the AI market darling could face headwinds ahead, with expectations of slowing growth and fiercer competition.
Bottom Line
NVDA has solidified its position as a dominant player in the chip industry, primarily driven by the surge in demand for its AI chips. The company’s remarkable growth has been propelled by its cutting-edge technology and market leadership, positioning it as one of the most valuable companies globally.
However, the company’s heavy reliance on AI chip demand poses a potential risk, as any fluctuations or slowdowns in the AI market could significantly impact NVDA’s profitability and growth prospects.
Furthermore, NVDA’s shares are trading at a much higher valuation than industry norms. For instance, in terms of forward Price/Sales, NVDA is trading at 20.23x, 590.8% higher than the industry average of 2.93x. Likewise, NVDA’s forward Price/Book ratio of 25.89 is 493.7% higher than the 4.36x industry average.
The stock’s alarming valuation compared to its industry peers indicates investor confidence in NVDA’s future growth potential, leading it to be willing to pay a premium price for its shares.
However, it also signals that NVDA’s anticipated growth might already be factored into its stock price, potentially dimming its attractiveness. With analysts projecting AI chip demand to stabilize, investors might be overly optimistic about NVDA’s future growth potential.
Moreover, Cathie Wood’s concerns regarding a potential correction in NVIDIA were recently validated by a significant drop in the company’s shares last week. The chipmaker closed more than 5% lower last week, marking its most challenging session since last May.
However, despite these uncertainties, NVDA’s growth potential may not have reached its peak yet, given the company’s ability to maintain its dominant position even in the face of stiff competition in the chip space. Therefore, adopting an entirely bearish outlook on the company’s shares might not be prudent.
Instead, investors could consider holding onto their positions, as there may still be opportunities for gains in the future.

Is NVDA Stock Headed for a Correction? Read More »

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Boeing’s Turbulent Week: What Lies Ahead for BA Investors?

Recently, a United Airlines Holdings, Inc. (UAL) aircraft veered off the taxiway into a grassy area upon landing at Houston’s George Bush Intercontinental Airport. The incident, involving United Flight 2477 carrying 160 passengers and six crew members, marks the third notable occurrence last week involving the carrier’s The Boeing Company (BA) planes.
No injuries were reported as passengers disembarked using mobile stairs and were bused to the terminal. The incident last Friday involved a 737 Max, in service for less than a year, built four years ago. This follows a tire loss from a United Boeing 777-200 mid-air last Thursday and an engine failure on a United flight from Houston to Fort Myers, Florida.
The aircraft on the Houston-to-Florida route made an emergency landing when one engine started emitting flames ten minutes post-takeoff. UAL attributed the incident to the engine ingesting plastic bubble wrap left on the airfield before departure.
BA’s series of unfortunate events commenced at the start of the year when a portion of an Alaska Airlines 737 Max detached from the aircraft soon after takeoff. A preliminary federal investigation suggested BA may have neglected to install bolts in the door plug, intended to secure the component and prevent detachment.
Consequently, the incident prompted a temporary nationwide grounding of specific 737 Max jets, leading to congressional hearings, production and delivery delays, and numerous federal investigations, including a criminal probe. The turmoil contributed to a 25% decline in the company’s stock value this year, causing a market valuation drop exceeding $40 billion.
Continued Flight Control and Safety-Related Issues
The string of setbacks for BA does not end here. In February, United Airlines 737 Max pilots reported flight control jamming upon landing in Newark, which has been under investigation by the National Transportation Safety Board.
Recently, the Federal Aviation Administration (FAA) also raised concerns about de-icing equipment on 737 Max and 787 Dreamliner models, potentially leading to engine thrust loss. Despite this, the FAA permit continued flying of the planes, with BA asserting no immediate safety threat.
Adding to BA’s woes, last week, the National Transportation Safety Board (NTSB) revealed the company’s failure to furnish records documenting the steps taken on the assembly line for door plug replacement on the Alaska Airlines jet. Boeing’s explanation includes that these records simply do not exist.
The FAA disclosed that BA’s safety and quality concerns transcend mere paperwork deficiencies. FAA Administrator Mike Whitaker stated that upon reviewing BA’s production procedures and standards, the regulator identified significant weaknesses in critical aspects of the company’s manufacturing and assembly processes.
“It wasn’t just paperwork issues,” Whitaker said. “Sometimes, it’s the order the work is done. Sometimes it’s tool management. It sounds kind of pedestrian, but it’s really important in a factory that you have a way of tracking your tools effectively so that you have the right tool and that you know you haven’t left it behind.”
Legal Battle and Whistleblower Retaliation
According to the Charleston County Coroner’s Office, a former longtime BA employee, who had previously voiced significant concerns regarding the company’s production standards, was discovered deceased in Charleston, South Carolina, over the weekend.
John Barnett, aged 62, passed away on March 9, citing a self-inflicted gunshot wound as the cause. Barnett had a tenure of over three decades with BA before retiring in 2017.
As a quality control engineer at the company, John Barnett expressed concerns about safety compromises in the production of 787 Dreamliner jets. In a 2019 interview with the BBC, he alleged that BA rushed production, resulting in emergency oxygen systems for Dreamliners with a failure rate of 25%.
Barnett indicated that a quarter of 787 Dreamliners were vulnerable to rapid oxygen loss during sudden cabin decompression, posing suffocation risks to passengers. He mentioned experiencing these issues upon joining BA’s North Charleston plant in 2010 and allegedly voiced his concerns to managers but observed no subsequent actions taken.
A statement provided to CNN by his lawyers says, “John was in the midst of a deposition in his whistleblower retaliation case, which finally was nearing the end. He was in very good spirits and really looking forward to putting this phase of his life behind him and moving on. We didn’t see any indication he would take his own life. No one can believe it. We are all devasted [sic]. We need more information about what happened to John.”
Implications for Airlines
BA’s rocky start in 2024 reverberates through its customer base, prompting airlines to reconsider flight schedules and hiring initiatives amid uncertainty surrounding the company’s delivery constraints.
Despite strong demand, Helane Becker, TD Cowen Senior Research Analyst, notes that BA’s manufacturing and delivery disruptions “limit growth” for airlines, compelling them to curtail workforce expansion, thereby impeding service offerings.
Companies will be forced to limit workforce expansion, which will hamper service offerings. “Without a robust airline industry, it’s very hard to have a robust economy,” Becker has warned.
Damage Control
BA is emphasizing quality management by introducing weekly compliance checks and additional equipment audits for all 737 work areas. These measures, outlined in a recent memo to employees, have commenced March 1 onward. Mechanics will also dedicate time during each shift to conduct compliance and foreign object debris sweeps.
“Our teams are working to simplify and streamline our processes and address the panel’s recommendations,” the memo said, noting that employees have to focus on looking out for safety hazards and follow manufacturing processes precisely. “We will not hesitate in stopping a production line or keeping an airplane in position.”
BA is further reinforcing quality standards by auditing all toolboxes and removing non-compliant tools. Stan Deal, Executive Vice President of BA, emphasized the importance of strict adherence to manufacturing procedures and processes designed to guarantee conformity to specifications and regulatory requirements.
Stan Deal also noted that BA, in collaboration with Spirit AeroSystems Holdings, Inc. (SPR), has instituted additional inspection points at their facility in Wichita. Consequently, beginning March 1, teams at the facility are ensuring first-pass quality before any fuselages are shipped to Renton.
Bleak Outlook
In the short term, BA’s outlook appears grim as a result of recent incidents and production challenges, likely leading to a decline in investor confidence and stock performance. While damage control initiatives may eventually improve the company’s trajectory, uncertainties persist, making it prudent for investors to exercise caution at present.
The long-term prospects are contingent upon BA’s ability to restore trust among airlines, regulators, and passengers. However, each new incident and negative headline further complicates this task, potentially eroding the company’s reputation and hindering future growth opportunities. Restoring confidence will be crucial for BA’s sustained success in the aviation industry.
Analysts expect BA’s revenue to rise by 10.8% year-over-year to $19.85 billion in the first quarter ending March 2024. However, the company is expected to report a loss per share of $0.14 for the ongoing quarter. Moreover, BA’s stock is exhibiting significant volatility, with a 60-month beta of 1.52. Over the past three months, BA shares have plummeted by more than 25%.
The company’s profitability has also suffered a considerable blow, with its trailing-12-month gross profit margin at 11.89%, representing a 61.2% decline compared to the industry average of 30.62%. Similarly, its trailing-12-month EBITDA margin and trailing-12-month Capex/Sales stand at 4.05% and 1.96%, lower than the industry averages of 13.75% and 3.04%, respectively.
Bottom Line
The company’s turbulent beginning in 2024 extends beyond its stock performance, compounded by an already tarnished reputation. Rebuilding trust among airlines, regulators, and passengers will be increasingly challenging with each subsequent mishap and negative publicity.
These recent incidents, regulatory scrutiny, and ongoing legal battles have led to a decline in investor confidence and stock performance. While damage control efforts are underway, uncertainties persist. Therefore, it would be wise to avoid investing in BA shares now.

Boeing’s Turbulent Week: What Lies Ahead for BA Investors? Read More »