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Chevron vs. NextEra Energy: Which Dividend Stock is the Better Buy?

Despite the industry challenges, Chevron Corporation (CVX) and NextEra Energy, Inc. (NEE) are both gaining significant traction and rewarding shareholders with reliable dividends. But if you had to choose between them, which would be the better buy?
Chevron’s Dividend Strength Over 37 Years
Chevron is one of the largest integrated energy majors globally, with operations spanning oil production, transportation, and processing. This strategic spread helps cushion the inherent volatility in oil and gas markets, ensuring stability and sustained growth.
Recently, oil prices dipped after hitting seven-week highs. Brent crude futures slipped to $85.27 a barrel, while U.S. West Texas Intermediate crude dropped to $81.47 per barrel. Despite the cyclical nature of the oil sector, Chevron’s solid operational and financial performance continues to shine through.
In its latest earnings release, the company reported a double-digit increase in worldwide production and returned $6 billion in cash to shareholders. CVX beat first-quarter earnings estimates, with an adjusted EPS of $2.93, surpassing analysts’ expectations of $2.87. U.S. production surged to 1.57 million barrels of oil and gas per day, a 35% increase from a year ago, thanks to strong output from the Permian and Denver-Julesburg basins.
What truly sets Chevron apart is its financial muscle. The company’s debt-to-equity ratio is a mere 0.12, the lowest among its peers. This low leverage gives CVX the flexibility to support its operations and sustain its dividends even during downturns, providing a significant competitive advantage.
In the first quarter of 2024, Chevron’s return on capital employed exceeded 12%, reflecting efficient management and strategic investments. The company increased its quarterly dividend by 8% sequentially to $1.63 per share and repurchased nearly $3 billion worth of its shares.
With 36 consecutive years of dividend growth and a forward dividend yield of 4.16%, Chevron offers investors a compelling mix of income and growth potential. CVX has a four-year average yield of 4.35%, and its dividend payouts have grown at a CAGR of 6.4% over the past three years.
Moreover, the company aims to grow its annual free cash flow (FCF) by nearly 10% through 2027, even if Brent crude prices fall to $60 per barrel. With Brent crude currently around $83 per barrel, Chevron has ample room for growth. CVX’s strategy focuses on improving ROCE by investing in high-return areas like the Permian Basin, expected to drive substantial cash flow growth.
Increasing cash flow and robust dividend growth make CVX an attractive long-term investment. The company’s ability to navigate market fluctuations and maintain financial stability positions it as a top choice for investors seeking security and growth in the energy sector. Shares of CVX have gained over 4% over the past six months and nearly 5% year-to-date.
How Is NEE Positioned to Reward Shareholders?
NextEra Energy is a dual force in the energy sector, uniquely positioned with substantial operations in regulated utilities and renewable energy. As one of the largest regulated utility companies in the U.S., NEE enjoys stable earnings through its main subsidiary, Florida Power & Light (FPL).
FPL’s recent expansion efforts, including the addition of 1,640 megawatts of new solar capacity, underscore its commitment to clean energy and meeting the growing electricity demands. In the first quarter that ended March 31, 2024, FPL reported a net income of $1.17 billion or $0.57 per share, reflecting an increase of 9.5% and 7.5% year-over-year, respectively.
Simultaneously, NextEra Energy Resources, the company’s renewable energy arm, continues to advance in sustainable energy production. The segment had a record quarter, adding approximately 2,765 megawatts of new renewables and storage projects to its backlog. Its adjusted earnings for the quarter were $828 million and $0.40 per share, up from $732 million and $0.36 per share in the first quarter of 2023.
Financially, NEE’s performance remains robust. During the quarter, the company’s adjusted earnings amounted to $1.87 billion or $0.91 per share, reflecting an increase of 11.6% and 8.3%, respectively. Its adjusted EBITDA was $462 million, and $164 million cash was available for distribution. Moreover, its revenue and EPS have grown at respective CAGRs of 16.6% and 20.2 over the past three years.
Looking forward, NEE sees significant growth potential in the U.S. renewables and storage market, expecting it to triple over the next seven years from 140 gigawatts to around 375-450 gigawatts. With an existing 74-gigawatt operating fleet, split between FPL and Energy Resources, the company aims to expand to over 100 gigawatts by 2026, further strengthening its operational scale and creating additional value for its stakeholders.
On June 17, NEE paid its shareholders a quarterly dividend of $0.52 per share. With 28 consecutive years of dividend growth and a forward dividend yield of 2.84%, NEE offers an attractive proposition for income-oriented investors seeking exposure to the clean energy sector. Also, it has a four-year average dividend yield of 2.23% and has grown its dividend payouts at a CAGR of 10.2% over the past three years.
All said, NEE stands at the forefront of the energy transition, leveraging its dual strengths in regulated utilities and renewable energy to drive sustainable growth and value creation. The stock has gained over 21% over the past six months and over 19% year-to-date.
Should You Buy Chevron or NextEra Energy?
Analysts are bullish on these dividend-paying giants, each presenting significant upside potential. So, how do these two stack up?
Mizuho gave Chevron a Buy rating and raised the price target from $200 to $205, implying a substantial 23.59% upside from the current price of $156.64. This sentiment is echoed by other prominent analysts, with HSBC and Scotiabank setting price targets of $178 and $195, respectively. This results in an average price target of $186.95, suggesting a potential 16% upside.
On the other hand, NextEra Energy has also caught the eye of analysts. BMO Capital recently maintained an Overperform rating on the stock and raised the price target from $78 to $79, suggesting an 8.3% upside from the current price of $72.46.
In terms of dividend yield as a rough measure of value, CVX’s 4.2% yield is far more attractive compared to NEE’s modest 2.8%. While both stocks historically offered higher yields during oil downturns, NextEra Energy’s current yield is comparatively lower. This positions CVX as a stronger income play and suggests it may be the more attractive stock between the two.

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Why Broadcom’s (AVGO) 10-for-1 Stock Split Could Attract a New Wave of Investors

Broadcom Inc. (AVGO), a prominent player in the semiconductor industry, announced a 10-for-1 forward stock split set to take effect on July 15, 2024, taking advantage of a rally in its shares this year. This decision comes on the heels of an outstanding second-quarter performance, underscoring Broadcom’s strategic positioning amid the burgeoning artificial intelligence (AI) revolution.
Understanding Stock Split Mechanics and Strategic Implications for Broadcom
A stock split involves dividing each existing share into multiple shares, effectively lowering the share price proportionally while maintaining the company’s total market capitalization. In AVGO’s case, each shareholder will receive nine additional shares for every one share held, resulting in a tenfold increase in the number of outstanding shares.
The primary objective of a stock split is to make shares more affordable and accessible to a wide range of retail investors by reducing the nominal share price. Given Broadcom’s share price surpassing $1,800 recently, the split aims to address perceived affordability barriers that may have deterred investors.
The increased accessibility can broaden AVGO’s investor base, potentially stimulating demand for its shares. Consequently, a higher number of outstanding shares resulting from the stock split typically leads to higher trading volumes. This enhanced liquidity can benefit both existing and new investors, allowing for easier entry and exit from positions.
Comparison with NVIDIA’s Recent Similar Move
Broadcom’s stock split mirrors a similar move by NVIDIA Corporation (NVDA), its rival in the AI hardware market. With more individual investors gaining access to Nvidia’s shares post-split, which came into effect at the close of trading on June 7, increased trading activity and demand were observed, potentially driving share prices higher.
NVIDIA’s stock is trading above its 50-day and 200-day moving averages of $99.28 and $68.61, respectively. NVDA’s successful split this month was preceded by significant market gains, highlighting the strategic timing of Broadcom’s decision to capitalize on investor sentiment surrounding the AI and semiconductor sectors.
Historically, stock splits are viewed as a bullish signal. According to data from BofA research, total returns for companies announcing stock splits are about 25% in the 12 months after a stock split compared to 12% gains for the S&P 500 index.
Broadcom’s Unprecedented Growth Amid the AI Boom
With a $839.05 billion market cap, AVGO is a technology leader that develops and supplies semiconductor and infrastructure software solutions. The company manufactures sophisticated networking chips for handling vast amounts of data used by AI applications such as OpenAI’s ChatGPT, positioning it as one of the beneficiaries of increased enterprise investments in the boom.
According to Grand View Research, the global AI market is projected to reach $1.81 trillion by 2030, growing at a CAGR of 36.6% during the forecast period (2024-2030). As AI continues to revolutionize industry verticals, including automotive, healthcare, retail, finance, and manufacturing, chipmakers like Broadcom are at the forefront, providing the essential chips that power AI applications.
Broadcom’s second-quarter results were primarily driven by AI demand and VMware. For the quarter that ended May 5, 2024, AVGO’s net revenue increased 43% year-over-year to $12.49 billion. Its revenue surpassed the consensus estimate of $12.01 billion. Revenue from its AI products was a record $3.10 billion during the quarter. Broadcom reported triple-digit revenue growth in the Infrastructure Software segment to $5.29 billion as enterprises increasingly adopted the VMware software stack to build their private clouds.
AVGO’s gross margin grew 27.2% from the year-ago value to $7.78 billion. Its non-GAAP operating income rose 32% year-over-year to $7.15 billion. Furthermore, the company’s non-GAAP net income came in at $5.39 billion or $10.96 per share, up 20.2% and 6.2% year-over-year, respectively. Its EPS exceeded the analysts’ expectations of $10.84.
Also, the company’s adjusted EBITDA grew 30.6% from the prior year’s quarter to $7.43 billion. It reported a free cash flow, excluding restructuring and integration, of $4.45 billion, up 18% year-over-year. As of May 5, 2024, AVGO’s cash and cash equivalents were $9.81 billion.
After an outstanding financial performance, Broadcom raised its fiscal year 2024 guidance. The company expects full-year revenue of nearly $51 billion. Its adjusted EBITDA is expected to be approximately 61% of projected revenue.
Favorable Analyst Estimates
Analysts expect AVGO’s revenue for the third quarter (ending July 2024) to grow 45.6% year-over-year to $12.92 billion. The consensus EPS estimate of $12.11 for the current quarter indicates a 14.9% year-over-year increase. Moreover, the company has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
For the fiscal year ending October 2024, Street expects Broadcom’s revenue and EPS to grow 43.4% and 13% year-over-year to $43.37 billion and $47.74, respectively. In addition, the company’s revenue and EPS for the fiscal year 2025 are expected to increase 15.3% and 25.6% from the previous year to $59.22 billion and $59.95, respectively.
Bottom Line
As AI continues to revolutionize several sectors, chipmakers such as Broadcom are at the forefront, offering essential semiconductor and infrastructure software solutions powering this technology. Driven by robust AI demand and VMware, AVGO reported solid second-quarter performance, exceeding analysts’ estimates for revenue and earnings.
The management expressed confidence in the company’s growth prospects by raising the company’s fiscal year 2024 guidance for revenue to $51 billion and adjusted EBITDA to 61% of revenue. Moreover, AVGO’s strong financial health enabled it to approve a quarterly dividend of $5.25 per share, payable on June 28, 2024.
The company pays an annual dividend of $21 per share, which translates to a yield of 1.17% on the current share price, while its four-year average dividend yield is 2.69%. Its dividend payouts have grown at CAGRs of 12.9% and 17.5% over the past three and five years, respectively. Broadcom also raised its dividend payouts for 13 consecutive years.
In the last quarterly earnings release, AVGO announced a ten-for-one forward stock split of its common stock, making ownership of Broadcom stock more accessible to investors. The company’s decision to execute a stock split represents a strategic move to enhance shareholder value and broaden investor participation.
By making its shares more accessible and increasing liquidity, Broadcom positions itself to attract a diverse array of investors keen on capitalizing on the AI-driven semiconductor boom. The stock split is a pivotal catalyst that could propel AVGO’s growth trajectory forward, cementing its status as a critical player in the evolving tech industry.
In a report released on June 16, William Stein from Truist Financial maintained a Buy rating on AVGO, with a price target of $2,045. Further, Oppenheimer’s Rick Schafer increased the price target on Broadcom from $1,500 to $2,000 while maintaining a Buy rating on the stock.
In addition to Oppenheimer’s rating update, other analysts adjusted their price targets for AVGO. Goldman Sachs’ Toshiya Hari raised the price target from $1,550 to $1,850 and maintained a Strong Buy rating. Also, JP Morgan’s Harlan Sur raised the price target from $1,700 to $2,000 and maintained a Strong Buy rating on the stock.
In conclusion, for investors eyeing opportunities in the dynamic intersection of AI and semiconductor sectors, Broadcom’s ten-for-one stock split presents a compelling avenue to consider, backed by sound fundamentals and strategic foresight.

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Coherent’s Quantum Leap: Capitalizing on the AI Boom

Formerly known as II-VI Incorporated, Coherent Corp. (COHR) has established itself as a critical supplier of materials, photonics, and laser technologies to a wide array of target markets. This company emerged from the merger of two leading laser industry giants and has since forged strong partnerships to extend its market reach and diversify its product offerings.
Substantial investments in research and development (R&D) and a laser-sharp focus on artificial intelligence (AI) products drive the company’s growth strategy. With a diverse portfolio ranging from engineered materials to optoelectronic components, COHR is setting its sights on dominating lucrative markets such as semiconductor manufacturing equipment and life sciences.
The laser maker’s shares have doubled in recent months, benefiting from the burgeoning demand for AI and a boost in investor confidence following significant leadership changes. On June 3, the stock jumped more than 22% after Jim Anderson, who took over from the retiring Vincent Mattera Jr., was named the new CEO.
Anderson’s impressive stint at Lattice Semiconductor Corporation (LSCC), where he drove remarkable revenue and earnings growth, has investors dreaming big. They’re betting his leadership could propel Coherent to new heights, especially with AI’s potential. Moreover, COHR’s stock has gained nearly 70% year-to-date and more than 130% over the past nine months.
In addition to leadership changes, Coherent has unveiled innovative products. On May 30, 2024, the company introduced a new laser power sensor, the PM10K+, designed to accelerate power output measurements by up to 500%. This new sensor is tailored for high-power applications, a growing sector in the industry.
Further, COHR launched a new single-mode, polarization-maintaining optical fiber. This product, the first of its kind in the market, is designed to support high-power 1550 nm amplifiers with over 20 watts of average power. Such developments highlight Coherent Corp’s ongoing commitment to innovation, addressing market needs, and positioning itself as a leader in pushing the boundaries of laser technology capabilities.
How Did COHR Perform Financially and What Lies Ahead?
In the third quarter ended March 31, 2024, COHR posted revenue of $1.21 billion, exceeding the Wall Street estimates of $1.17 billion by 3.5%. Within its Networking segment, revenue amounted to $619 million, reflecting an 18% increase sequentially and a 12% rise year-over-year. This growth was driven by a significant, nearly 80% sequential rise in AI-related 800G Datacom transceiver revenue, which reached around $200 million.
Further, COHR saw an 11% increase in orders year-over-year, boosting its backlog to over $2.74 billion (up over $100 million from the previous year). The company’s non-GAAP operating income and attributable net earnings amounted to $182.20 million and $113.20 million, registering sequential growth of 6.2% and 31%, respectively.
Also, the company’s third-quarter non-GAAP EPS came in at $0.53, above the high end of its guidance. Moreover, Coherent surpassed the consensus EPS estimate of $0.42 by 27.3%.
Looking ahead, COHR anticipates sequential revenue growth in the remaining quarters of fiscal 2024, driven by solid demand in AI and other favorable end-markets. In addition, management lifted the lower end of its revenue outlook for the fiscal year 2024 by $70 million. It expects full-year revenue from $4.62 to $4.70 billion. Also, Coherent raised the non-GAAP EPS guidance to $1.56 to 1.73, a moderate increase from the previously guided $1.30 to $1.70.
Furthermore, Analysts expect COHR’s revenue for the fourth quarter (ending June 2024) to increase 5.8% year-over-year to $1.28 billion. The company is estimated to post an earnings per share of $0.60 in the current quarter, indicating a 46.5% improvement from the prior year’s period.
Is Coherent Poised to Capitalize on the AI Boom?
COHR is strategically well-positioned to capitalize on the burgeoning demand for AI-related technologies, mainly through its robust datacom portfolio enhancements. Analysts from JPMorgan highlighted Coherent among the companies poised to benefit from the expanding AI market.
Leveraging its specialized transceivers designed for AI and machine learning applications, which support key protocols like Ethernet and NVIDIA’s NVLink, Coherent is reinforcing its commitment to innovation at the intersection of networking, lasers, and advanced materials.
Beyond its core strengths, the company is seeing significant momentum across its AI/ML portfolio. Revenue from 800G transceivers surged nearly 80% sequentially, nearing the $200 million mark in the last reported quarter. Looking forward, Coherent is gearing up for the commercial launch of 1.6T transceivers later this calendar year, anticipating continued strong demand driven by advancements in AI technology.
Meanwhile, management is optimistic about the future and anticipates that 50% of Datacom transceiver revenue for fiscal 2024 will be driven by AI-related revenue. It expects this robust demand environment to persist into the next fiscal year and beyond.
Given the expectations of continued market strength and a projected 21% CAGR in the Datacom transceiver market until 2028, Coherent remains well-positioned to capitalize on the accelerating demand for AI-driven technologies and data center expansions.
Bottom Line
As Coherent continues to navigate the AI boom, its ability to stay ahead of market trends and technological advancements will be crucial. With new leadership and a strong foundation in R&D, Coherent is well-positioned to maintain its momentum and achieve sustained growth in the competitive tech industry.
Meanwhile, the global AI in hardware market is poised to grow from $23.50 billion in 2023 to $84.90 billion by 2031, growing at a CAGR of 15.5%. COHR is expected to benefit significantly from the booming AI market due to its expertise in laser and photonics technologies, which are integral to AI hardware development and applications.
While the recent surge in COHR’s stock price following the announcement of the new CEO has brought it close to bullish expectations, this optimism warrants caution until more evidence of financial performance aligns with these high expectations. Hence, investors should stay vigilant and track the company’s progress in its key markets and ability to deliver on its growth promises.

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How Micron Technology Is Poised to Benefit from AI Investments

Artificial Intelligence (AI) continues revolutionizing industries worldwide, including healthcare, retail, finance, automotive, manufacturing, and logistics, driving demand for advanced technology and infrastructure. Among the companies set to benefit significantly from this AI boom is Micron Technology, Inc. (MU), a prominent manufacturer of memory and storage solutions.
MU’s shares have surged more than 70% over the past six months and nearly 104% over the past year. Moreover, the stock is up approximately 12% over the past month.
This piece delves into the broader market dynamics of AI investments and how MU is strategically positioned to capitalize on these trends, offering insights into how investors might act now.
Broader Market Dynamics of AI Investments
According to Grand View Research, the AI market is expected to exceed $1.81 trillion by 2030, growing at a CAGR of 36.6% from 2024 to 2030. This robust market growth is propelled by the rapid adoption of advanced technologies in numerous industry verticals, increased generation of data, developments in machine learning and deep learning, the introduction of big data, and substantial investments from government and private enterprises.
AI has emerged as a pivotal force in the modern digital era. Tech giants such as Amazon.com, Inc. (AMZN), Alphabet Inc. (GOOGL), Apple Inc. (AAPL), Meta Platforms, Inc. (META), and Microsoft Corporation (MSFT) are heavily investing in research and development (R&D), thereby making AI more accessible for enterprise use cases.
Moreover, several companies have adopted AI technology to enhance customer experience and strengthen their presence in the AI industry 4.0.
Big Tech has spent billions of dollars in the AI revolution. So far, in 2024, Microsoft and Amazon have collectively allocated over $40 billion for investments in AI-related initiatives and data center projects worldwide.
DA Davidson analyst Gil Luria anticipates these companies will spend over $100 billion this year on AI infrastructure. According to Luria, spending will continue to rise in response to growing demand. Meanwhile, Wedbush analyst Daniel Ives projects continued investment in AI infrastructure by leading tech firms, “This is a $1 trillion spending jump ball over the next decade.”
Micron Technology’s Strategic Position
With a $156.54 billion market cap, MU is a crucial player in the AI ecosystem because it focuses on providing cutting-edge memory and storage products globally. The company operates through four segments: Compute and Networking Business Unit; Mobile Business Unit; Embedded Business Unit; and Storage Business Unit.
Micron’s dynamic random-access memory (DRAM) and NAND flash memory are critical components in AI applications, offering the speed and efficiency required for high-performance computing. The company has consistently introduced innovative products, such as the HBM2E with the industry’s fastest, highest capacity high-bandwidth memory (HBM), designed to advance generative AI innovation.
This month, MU announced sampling its next-generation GDDR7 graphics memory with the industry’s highest bit density. With more than 1.5 TB/s of system bandwidth and four independent channels to optimize workloads, Micron GDDR7 memory allows faster response times, smoother gameplay, and reduced processing times. The best-in-class capabilities of Micro GDDR7 will optimize AI, gaming, and high-performance computing workloads.
Notably, Micron recently reached an industry milestone as the first to validate and ship 128GB DDR5 32Gb server DRAM to address the increasing demands for rigorous speed and capacity of memory-intensive Gen AI applications.
Furthermore, MU has forged strategic partnerships with prominent tech companies like NVIDIA Corporation (NVDA) and Intel Corporation (INTC), positioning the company at the forefront of AI technology advancements. In February this year, Micron started mass production of its HBM2E solution for use in Nvidia’s latest AI chip. Micron’s 24GB 8H HBM3E will be part of NVIDIA H200 Tensor Core GPUs, expected to begin shipping in the second quarter.
Also, Micron’s 128GB RDIMMs are ready for deployment on the 4th and 5th Gen Intel® Xeon® platforms. In addition to Intel, Micron’s 128GB DDR5 RDIMM memory will be supported by a robust ecosystem, including Advanced Micro Devices, Inc. (AMD), Hewlett Packard Enterprise Company (HPE), and Supermicro, among many others.
Further, in April, MU qualified a full suite of its automotive-grade memory and storage solutions for Qualcomm Technologies Inc.’s Snapdragon Digital Chassis, a comprehensive set of cloud-connected platforms designed to power data-rich, intelligent automotive services. This partnership is aimed at helping the ecosystem build next-generation intelligent vehicles powered by sophisticated AI.
Robust Second-Quarter Financials and Upbeat Outlook
Solid AI demand and constrained supply accelerated Micron’s return to profitability in the second quarter of fiscal 2024, which ended February 29, 2024. MU reported revenue of $5.82 billion, beating analysts’ estimate of $5.35 billion. This revenue is compared to $4.74 billion for the previous quarter and $3.69 billion for the same period in 2023.
The company’s non-GAAP gross margin was $1.16 billion, versus $37 million in the prior quarter and negative $1.16 billion for the previous year’s quarter. Micron’s non-GAAP operating income came in at $204 million, compared to an operating loss of $955 million and $2.08 billion for the prior quarter and the same period last year, respectively.
MU posted non-GAAP net income and earnings per share of $476 million and $0.42 for the second quarter, compared to non-GAAP net loss and loss per share of $2.08 billion and $1.91 a year ago, respectively. The company’s EPS also surpassed the consensus loss per share estimate of $0.24. During the quarter, its operating cash flow was $1.22 billion versus $343 million for the same quarter of 2023.
“Micron delivered fiscal Q2 results with revenue, gross margin and EPS well above the high-end of our guidance range — a testament to our team’s excellent execution on pricing, products and operations,” said Sanjay Mehrotra, MU’s President and CEO. “Our preeminent product portfolio positions us well to deliver a strong fiscal second half of 2024. We believe Micron is one of the biggest beneficiaries in the semiconductor industry of the multi-year opportunity enabled by AI.”
For the third quarter of 2024, the company expects revenue of $6.60 million ± $200 million, and its gross margin is projected to be 26.5% ± 1.5%. Also, Micron expects its non-GAAP earnings per share to be $0.45 ± 0.07.
Bottom Line
MU is strategically positioned to benefit from the burgeoning AI market, driven by its diversified portfolio of advanced memory and storage solutions, strategic partnerships and investments, robust financial health characterized by solid revenue growth and profitability, and expanding market presence.
The company’s recent innovations, including HBM3E and DDR5 RDIMM memory, underscore the commitment to advancing its capabilities across AI and high-performance computing applications.
Moreover, the company’s second-quarter 2024 earnings beat analysts’ expectations, supported by the AI boom. Also, Micron offered a rosy guidance for the third quarter of fiscal 2024. Investors eagerly await insights into MU’s financial performance, strategic updates, and outlook during the third-quarter earnings conference call scheduled for June 26, 2024.
Braid Senior Research Analyst Tristan Gerra upgraded MU stock from “Neutral” to “Outperform” and increased the price target from $115 to $150, citing that the company has meaningful upside opportunities. Gerra stated that DRAM chip pricing has been rising while supply is anticipated to slow. Also, Morgan Stanley raised their outlook for Micron from “Underweight” to “Equal-Weight.”
As AI investments from numerous sectors continue to grow, Micron stands to capture significant market share, making it an attractive option for investors seeking long-term growth in the semiconductor sector.

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Recession-Proof Your Portfolio With Top Stocks to Buy Now

Amid economic headlines of slowing growth and persistent inflationary pressures, navigating the financial markets can feel like steering through turbulent waters. According to Commerce Department estimates, U.S. Gross Domestic Product (GDP) slowed to an annual rate of 1.3% in the first quarter of 2024, decelerating from a brisk 3.4% growth rate observed in late 2023. This underscores a shift from robust expansion to more tempered economic activity.
Despite this slowdown, the Consumer Price Index (CPI) increased 3.3% in May compared to a year ago, slightly lower than April’s 3.4%. While this marks a decline from the pandemic-era peak of 9.1% in 2022, it remains above policymakers’ target of around 2%.
The investment landscape grows increasingly complex as the Federal Reserve grapples with taming inflation through successive interest rate hikes. In this climate, the quest for recession-proof investments becomes paramount for risk-averse investors to safeguard their portfolios against economic downturns.
Historically known for their resilience during economic downturns, food makers are increasingly sought after. These stocks encompass essential goods such as packaged food products, beverages, and household staples that consumers prioritize consistently, even during lean times.
In this article, I have highlighted three top food maker stocks, General Mills, Inc. (GIS), Tyson Foods, Inc. (TSN), and Campbell Soup Company (CPB), to consider investing if you are looking to recession-proof your portfolios. So, let’s dig deeper into these stocks’ fundamentals and growth prospects.
General Mills, Inc. (GIS)
Food maker General Mills, Inc. (GIS) has been a household name for decades, with a lineup of beloved brands that span everything from cereals to snacks, yogurt, baking products, and even pet foods. You must have probably grown up with their iconic brands like Cheerios, Haagen-Dazs, Betty Crocker, and Yoplait.
In the third quarter earnings report, GIS demonstrated growth on both the top and bottom lines, navigating through moderating inflation, stabilized supply chains, and a cautious yet resilient consumer base.
For the fiscal 2024 third quarter that ended February 25, 2024, GIS’ net sales amounted to $5.09 billion, beating the analysts’ expectations of $4.97 billion. Its adjusted gross margin grew 13.2% from the year-ago value to $914.50 million.
Moreover, adjusted net earnings attributable to GIS increased 15.9% year-over-year to $674 million, while adjusted EPS stood at $1.17, up 1.8% from the prior year’s quarter. The company even exceeded the consensus earnings estimate by $0.12.
Looking ahead, Wall Street anticipates GIS to post earnings per share of $1.00 for the fourth quarter (ended May 2024), down 10.8% from last year’s quarter. The company is expected to generate $4.87 billion in revenue for the same period, reflecting a 3.1% year-over-year decline.
However, given General Mills’ track record of beating earnings estimates in each of the trailing four quarters, there’s a lot of optimism that it might once again exceed expectations in the forthcoming quarterly announcement.
General Mills is preparing for the rest of fiscal 2024 with an eye on the economic health of consumers, the slowing pace of inflation, and the increasing stability of supply chains. The company forecasts organic net sales to be flat or slightly down by 1%. Yet, it remains confident, projecting a 4% to 5% increase in adjusted operating profit and adjusted EPS in constant currency.
Regarding rewarding shareholders, General Mills offers a stable dividend with a four-year average yield of 3.13% and a payout ratio of 49.9%. GIS’ current annual dividend of $2.36 translates to a 3.61% yield at the prevailing share price. Moreover, the company has increased its dividend payouts at a CAGR of 5.3% over the past three years.
Despite the positive earnings report, GIS shares have declined nearly 20% over the past year and more than 7% over the past month. Yet, the stock has managed to eke out marginal gains year-to-date, reflecting a resilient performance amidst broader market challenges.
Tyson Foods, Inc. (TSN)
Tyson Foods, Inc. (TSN) is renowned for its leadership in protein and a lineup of household brands, including Tyson, Jimmy Dean, Hillshire Farm, and Ball Park. The company released its half-yearly results on May 6, exhibiting its resilience and growth in a competitive market.
During the fiscal second quarter (ended March 30, 2024), TSN’s sales amounted to $13.07 billion, slightly below the year-ago value of $13.13 billion. However, its attributable non-GAAP net income amounted to $220 million compared to the prior year’s adjusted net loss of $12 million.
Likewise, the company’s adjusted operating income improved substantially from the prior year’s quarter to $406 million. The company’s non-GAAP EPS came in at $0.62 (comfortably beating the Street’s estimate of $0.40) versus a loss per share of $0.04 a year ago.
The consensus EPS estimate of $0.62 for its fiscal third quarter (ending June 2024) represents a 315.3% improvement year-over-year. The consensus revenue estimate of $13.17 billion for the current quarter indicates a marginal increase year-over-year. Moreover, Tyson Foods has an excellent earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
Benefiting from robust free cash flows totaling $556 million in the first half of the year, Tyson Foods announced a quarterly dividend of $0.49 per share on Class A common stock and $0.441 per share on Class B common stock, payable on September 13, 2024.
TSN’s four-year average dividend yield is 2.80%, and its forward annual dividend of $1.96 translates to a 3.58% yield. Tyson Foods has increased its dividend for 12 consecutive years, reflecting its commitment to returning value to investors. Additionally, its dividend payouts have grown at a 3.6% CAGR over the past three years and a 6.5% CAGR over the past five years.
Looking ahead to fiscal 2024, Tyson Foods expects total adjusted operating income to range between $1.4 billion and $1.8 billion, with sales projected to remain relatively flat compared to fiscal 2023. Despite market fluctuations, TSN stock has shown resilience, gaining over 8% over the past six months and nearly 2% year-to-date.
Campbell Soup Company (CPB)
Campbell Soup Company (CPB) is a staple in American kitchens, famous for its iconic soups and a wide variety of products, including snacks, beverages, and packaged fresh foods. The company owns popular brands like Pepperidge Farm, V8, and Snyder’s-Lance, which many of us have grown up with. It primarily operates through two segments: Meals & Beverages and Snacks.
In its latest earnings report, the company exceeded analysts’ expectations on top and bottom lines. For the fiscal third quarter ending April 28, 2024, CPB’s net sales increased 6.3% year-over-year to $2.37 billion, partly thanks to its acquisition of Sovos Brands.
Furthermore, the company’s adjusted EBIT and non-GAAP attributable net earnings increased 13.1% and 9.8% from the year-ago values to $354 million and $224 million, respectively. Also, its adjusted EPS came in at $0.75, representing a 10.3% increase from the prior year’s quarter.
Analysts expect CPB’s revenue to increase 12.4% year-over-year to $2.32 billion in the fiscal fourth quarter (ending July 2024). In addition, its EPS is projected to register a year-over-year growth of 23.9%, settling at $0.62. Moreover, it surpassed the consensus EPS and revenue estimates in three of the trailing four quarters.
On May 13, Campbell announced a quarterly dividend of $0.37 per share on May 13, payable to its shareholders on July 29, 2024. With a four-year average dividend yield of 3.17%, the current annual dividend of $1.48 translates to a 3.46% yield. Over the past five years, Campbell’s has shown a commitment to returning value to its investors, with dividend payouts growing at a CAGR of 7.1%
Despite an upbeat earnings report, the shares of the food company have tumbled more than 6% over the past month, though it has seen a slight uptick over the past nine months. Further, the company has adjusted its full-year 2024 guidance to reflect the impact of the Sovos acquisition, forecasting net sales growth of 3-4% and organic sales tracking to approximately flat to down 1%. Adjusted EPS is expected to increase by 2-3%, between $3.07 and $3.10.
Overall, Campbell continues to be a resilient player in the food industry, adapting and growing despite market fluctuations and economic challenges.
Bottom Line
Food maker stocks are historically resilient during economic slowdowns due to the inelastic nature of their products. When economic uncertainty rises, consumers prioritize spending on necessities, such as food, over discretionary items.
Packaged foods, beverages, and other household staples become even more crucial as they offer convenience and affordability, making them a go-to choice for families tightening their budgets. So, consistent demand for packaged food companies, irrespective of economic conditions, underscores their defensive nature, providing a safe haven for risk-averse investors looking to safeguard their portfolios against economic downturns.
Given their essential products, strong brand loyalty, and consistent financial performance, packaged food stocks like GIS, TSN, and CPB offer enhanced stability and growth potential, making them attractive buys for investors looking to recession-proof their portfolios.

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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.

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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.

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