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The redrawing of the global energy map and shifting geopolitical inclinations in the Middle East since the beginning of the conflict in Ukraine has been nothing short of a windfall for U.S. energy producers. The U.S. has “gone from (being) a very domestically focused market into an international powerhouse.”
The demand-supply imbalance is not as acute as a year back due to macroeconomic headwinds and the initial pent-up demand from China losing momentum amid its faltering economic recovery.
However, on June 4, while OPEC+, which pumps approximately 40% of the world’s crude, made no changes to its planned oil production cuts for this year, Saudi Arabia announced that it would implement an additional voluntary and (extendable) one-month 1 million-barrel-per-day cut starting this July.With this decision, the kingdom has reined in its production to 9 million barrels from 10 million barrels, putting upward pressure on crude prices that have been delicately balanced between demand and supply.
Moreover, the Federal Reserve has adopted a hawkish pause to hold rates steady until the economy absorbs the cumulative effect of the earlier ten interest-rate hikes. This could help businesses and consumers breathe a sigh of relief and translate to increased economic activity during the summer and, consequently, demand for energy.
However, the resulting increase in energy demand amid constrained supplies could play into the hands of and lead to short-term gains for U.S. energy producers. In this context, let’s look at a few well-positioned stocks to convert rising energy prices to increased shareholder returns.As an energy infrastructure company, Cheniere Energy, Inc. (LNG)is engaged in providing clean, secure liquefied natural gas (LNG) to integrated energy companies, utilities, and energy trading companies worldwide.
On May 16, LNG announced its entry into a long-term liquefied natural gas sale and purchase agreement with Korea Southern Power Co. Ltd (KOSPO). Pursuant to the agreement, KOSPO would purchase approximately 0.4 million tonnes per annum (mtpa) of LNG on a delivered ex-ship (DES) basis from 2027 through 2046, with a smaller annual quantity to be delivered starting in 2024.
On February 23, Cheniere Energy Partners, LP (CQP) announced that it initiated the permitting process for significant expansion of the LNG export facility at Sabine Pass, after which the total production capacity would increase to 20 mpta.
As a global energy services company, Weatherford International plc (WFRD) provides equipment and services used in the drilling, evaluation, well construction, completion, production, intervention, and responsible abandonment of wells in the oil and natural gas exploration and production industry as well as new energy platforms.
WFRD operates through three segments: Drilling and Evaluation (DRE), Well Construction and Completions (WCC), and Production and Intervention (PRI).On June 8, WFRD announced that it was awarded a three-year contract with Aramco to deliver drilling services. Under the contract, WFRD will deploy its drilling services portfolio to add value to Aramco’s drilling operations by minimizing OPEX, reducing risks, and optimizing production.
Nustar Energy L.P. (NS) is primarily engaged in transporting petroleum products, renewable fuels, and anhydrous ammonia, terminalling and storing petroleum products and renewable fuels, and marketing of petroleum products. Accordingly, the company operates through three segments: pipeline; storage; and fuels marketing.
As a testament to its future readiness, on May 3, NS announced its agreement with OCI Global to transport ammonia, which the latter would use to make fertilizer and produce DEF (Diesel Exhaust Fluid), which reduces emissions from diesel engines in cars, as well as light and heavy-duty trucks, farming equipment and other heavy machinery.
Moreover, with ammonia emerging as a likely candidate to capture, store, and ship hydrogen for use in emission-free fuel cells and turbines, NS’ expertise in the transportation of ammonia is expected to be a significant growth driver in the future.
Beyond The Horizons
In its latest Oil 2023 medium-term market report, the International Energy Agency (IEA) has forecasted that, under current market and policy conditions, crude oil demand will rise by 6% from 2022 to reach 105.7 million barrels per day in 2028 on the back of the petrochemical and aviation sectors.However, the agency also found that global oil demand growth will trickle nearly to a halt thereafter with the advancement of electric vehicles, energy efficiency, and other technologies.
However, until the modern economy and society can develop renewable energy technologies enough to rely on them exclusively, natural gas transported in bulk and consumed in liquified and compressed forms, respectively, will keep playing a crucial role as a bridge fuel to manage decarbonization goals and facilitate a seamless energy transition.

Delta Air Lines, Inc. (DAL) reported a wider-than-expected loss for the first quarter 2023. However, the carrier’s CEO, Ed Bastian, couldn’t sound more optimistic about its prospects. Two factors drove this dichotomy.
Firstly, the carrier cited its net loss of $363 million, or 57 cents per share, in what has seasonally been the weakest quarter of the year, partly due to a new, four-year pilot contract that includes 34% raises. Moreover, the bottom line is still an improvement over the net loss of $940 million, or $1.48 per share, during the year-ago period when travel demand was still recovering.
Secondly, and more importantly, with the pandemic firmly in the rear-view mirror, consumers are ever keener to redeem their pile of airline miles on other travel rewards on their credit cards for new experiences through revenge travel. Revenge travel has its origins in “baofuxing xiaofei” or “revenge spending,” an economic trend that originated in 1980s China when a growing middle class had an insatiable appetite for foreign luxury goods.
Since e-commerce, albeit with a few hiccups in the supply chain, was able to satiate the appetite for goods through the pandemic, Americans are now going above and beyond to compensate for the years spent indoors trying to substitute real experiences with virtual ones.
Even “pent-up demand” turned out to be an understatement when Ed Bastion and his team at DAL found the gap between inherent demand for U.S. travel that couldn’t be met over the past three years, based on “any kind” of historical pattern to come in at $300 billion. The pleasantly surprised CEO revealed, “We’ve had the 20 largest cash sales days in our history all occur this year.”
Even corporate bookings have been recovering, with domestic sales in March 85% back to 2019 levels. The carrier also got a boost in its loyalty program with the contribution from its co-branded credit card partnership with American Express (AXP) coming in at $1.7 billion in the previous quarter, up 38% year-over-year.
Because of this explosive demand, DAL has forecasted its top and bottom-line performance for the second quarter to exceed analysts’ estimates. Mr. Bastion expects his airline to clock an operating profit of $2 billion, at par with Q2 of 2019, with lower capacity and higher fuel prices, while being the only airline with all the labor contracts in place.
As a result, the Atlanta-based carrier expects sales in the current quarter to increase by 15% to 17% over last year, with adjusted operating margins of as much as 16% and adjusted earnings per share between $2 to $2.25.
The confident CEO has also brushed off the potential consumer pullback in spending while expressing the conviction that pent-up demand for travel will be a multi-year demand set.
According to him, revenue from premium cabins like the first class was outpacing the revenue from coaches, and while sales professionals have moved partially online, consulting and professional service have been the highest volume contributors. They are expected to remain so in the foreseeable future.
How the Market Reacted?
Quite positively, in a nutshell. DAL’s stock has gained 20.5% over the past two months compared to 4.7% for the S&P 500. It is trading above its 50-day and 200-day moving averages and close to its 52-week high.
Pinch of Salt
“If something cannot go on forever, it will stop.” The obviousness of this observation made by Herb Stein was what made it famous.At times such as these, when air carriers have turned to bigger airplanes, even on shorter routes, and jumbo-jets, such as the Boeing 747 and the Airbus A380, are being brought back to help ease airport congestion and work around pilot shortages, it is easy to get carried away by the “pent-up demand” and “revenge travel” narrative.
However, it might be wise to consider certain things before indulging in the willful suspension of disbelief and extrapolating beyond the foreseeable future, like we are all guilty of doing in case of working from home, Great Resignation, and “quiet quitting.”Since the rise of remote work and virtual teams, facilitated by contemporary collaboration and productivity tools, seems to have become an immune and immutable remnant of the cultural sea-change our work and lives had to adopt and adapt to during the pandemic, new reports give us reasons to doubt whether business travel is ever going back to normal.
In such a situation, with traveling for leisure being an occasional indulgence in most of our lives, there are risks that the pent-up demand might not be enough to sustain the momentum that is propelling the growth performance of DAL and other airlines, which are primarily in the business of ferrying passengers.
As far as the largest cash sales days are concerned, we can be certain that inflation would ensure that cash days in the future would still be larger.Moreover, with ticket prices at all-time highs and JP Morgan and a few others predicting that the stash of pandemic stimulus cash, fueling the leisure travel boom, could run out over the next quarter, it is unsurprising to find tricks and trends, such as ‘skiplagging’ and consumers trading down on travel being on the rise.
Bottom Line
While DAL and its peers would want nothing more than for passenger demand to stay strong and, perhaps, keep growing, the most likely case would be a return to seasonality and cyclicality, as is typical of the airline industry.However, the possibility of passenger demand falling off a cliff and investors rushing for the exits only to find that the clock struck midnight and the chariot turned back to a pumpkin can’t be completely ruled out.Either way, every flight that takes off has to land at some point. The only problem is that nobody knows exactly when.

Artificial Intelligence (AI) is an umbrella term that denotes a series of programs and algorithms designed to mimic human intelligence and perform cognitive tasks efficiently with little to no human intervention. Reinforcement through Machine Learning (ML) changes the game by enabling the models and algorithms to keep evolving based on outcomes.
Unlike other next-big things, such as nuclear fusion, quantum computing, and flying cars, which are practically (and literally) pies in the sky, AI has been around for quite some time, influencing how we shop, drive, date, entertain ourselves, manage our finances, take care of our health, and much more.However, the technology came into the limelight late last year with the release of ChatGPT, which in its own description, is “an AI-powered chatbot developed by OpenAI, based on the GPT (Generative Pretrained Transformer) language model. It uses deep learning techniques to generate human-like responses to text inputs in a conversational manner.”
The Euphoria
The easily accessible chatbot, believed to be capable of eventually disrupting how humans interact with computers and changing how information is retrieved, took the world by storm by signing up 1 million users in five days and amassing 100 million monthly active users only two months into its launch. To put this in context, TikTok, the erstwhile fastest-growing app, took nine months to reach 100 million users.
ChatGPT is one of the several use cases of generative AI, the subset of algorithms that creates and returns content, such as human-like text, images, and videos, on the basis of written instructions (prompts) provided by the user.
Including this subset, AI in its various forms and applications is capable of analyzing large volumes of data generated during the entire course of our increasingly digital existence and identifying trends and exceptions to help us develop better insights and make more effective decisions.Given its massive importance, it’s hardly surprising that Zion Market Research forecasts the global AI industry to grow to $422.37 billion by 2028. Hence, this field has understandably garnered massive attention from investors who are reluctant to miss the bus on such a watershed development in the history of humankind.
Although OpenAI, the creator of ChatGPT, is not a publicly listed company, Microsoft Corporation (MSFT) has bet big on the company with a multiyear, multibillion-dollar investment deal. CEO Satya Nadella discussed, at the World Economic Forum held in Davos this year, how the underlying technology would eventually be ubiquitous across MSFT’s products. The process has already begun with updates to its Bing search engine.
MSFT’s rival, Alphabet Inc. (GOOGL), is in hot pursuit. With AI-enabled technology ubiquitous across its platforms, the company has unveiled its response to ChatGPT, called BardAI, with which the company is eager to reclaim its reputation as an early bird in the domain of conversational AI.
Chinese tech giant Baidu, Inc. (BIDU) has also followed suit with Ernie Bot. Amazon.com, Inc. (AMZN) and Meta Platforms, Inc. (META) are also among the notable players in this dynamic domain.
However, more recently, the company which made headlines when its stock got its moonshot due to the widespread public interest in AI is NVIDIA Corporation (NVDA). Post its earnings release on May 24, the Santa Clara-based graphics chip maker has stolen the thunder by becoming the first semiconductor company to hit, albeit briefly, a valuation of $1 trillion.
NVDA’s A100 chips, which are powering LLMs like ChatGPT, have become indispensable for Silicon Valley tech giants. To put things into context, the supercomputer behind OpenAI’s ChatGPT needed 10,000 of Nvidia’s famous chips. With each chip costing $10,000, a single algorithm that’s fast becoming ubiquitous is powered by semiconductors worth $100 million.
The Catch
Notwithstanding all the transformative qualities of AI, investors, who poured a record $8.5 billion of cash into tech funds last week, would be wise to be aware of the limitations and loopholes of investing in technology before FOMO drives them to inflate a “baby bubble” growing in plain sight.
While the technology is powerful (and useful, unlike most cryptocurrencies), the adoption is fast becoming so widespread that it remains unclear how it could help a specific business differentiate itself by developing enduring competitive advantages (read moats) and generating consistent profitability.Moreover, LLM-based generative AI chatbots such as ChatGPT and BardAI are simply auto-complete on steroids that have been trained on a vast amount of data. While they are really good (and continually getting better) at predicting what the next word is going to be and extrapolating it to generate extensive literature, it lacks contextual understanding.
Consequently, the algorithms struggle with nuances such as sarcasm, irony, satire, analogies, etc. This also leads to the propensity to “hallucinate” and generate responses even if those are factually and logically incorrect.
Additionally, with the widespread adoption of LLMs and other forms of generative AI, a massive amount of content will be ingested and regurgitated as canned responses echoed in infinite permutations and combinations. This oversupply could dilute the value and increase demand for qualitatively superior insight and discernment, which (still) requires human intervention.
(Relatively) Safe Havens
Just as we have learned during the dot-com, cryptocurrency, real estate, and numerous other bubbles through the ages, markets can stay irrational longer than investors can stay solvent.
Therefore, even if the next big thing comes along and changes the world (and electricity, automobiles, personal computers, and the Internet really did), it’s the fundamentals that determine whether a business can survive to capitalize on those windfalls.
Hence, it could be wise and safe for investors to stick to big tech mega caps (mentioned earlier in the article), which are involved in providing the infrastructure and computing horsepower required to make the data and power-hungry AI algorithms work.
Moreover, since AI is well-embedded into their business operations and market offerings and AI as a service is (still) a small portion of their revenue, concentration risks can be more easily managed.
Bottom Line
Rather than getting too carried away and stretching a worthwhile and useful innovation to frothy excesses with unrealistic expectations, it could be useful to remember that legendary investor and polymath Charlie Munger doesn’t think that AI is the silver bullet that can solve mankind’s pressing problems all by itself.
Even AAPL co-founder Steve Wozniak, who knows more than a thing or two about technology, agrees with the ‘A’ and not the ‘I’ of Artificial Intelligence.We hope this discourse will help investors cultivate discernment, discretion, and, if necessary, dissent while investing in this revolutionary technology since those are the ultimate indicators of intelligence.

Global commerce company eBay Inc. (EBAY) was founded in 1995 as an auction site. Since then, the company has grown into a major online marketplace for peer-to-peer sales operating in 190 markets globally, and has enabled $74 billion of gross merchandise volume in 2022.Enhancing experience by utilizing the latest technology to empower sellers and buyers and building the trust of customers has been an integral part of the strategy of the online marketplace.
In 2020, EBAY launched its Authenticity Guarantee program, which draws on independent experts to vet and verify items sold on the platform. It was followed up with the debut of an authentication service for luxury handbags that allowed customers to get professional authentication for new and pre-owned handbags from luxury brands such as Saint Laurent, Gucci, and Balenciaga.
Even EBAY’s acquisitions reflect the platform’s unwavering focus on building trust while it increases its penetration in the fast-growing pre-loved segment to differentiate itself from numerous peers focusing on new and largely in-season goods.
As a result, after acquiring marketplace compliance solution 3PM Shield in February 2023 and used-sporting-goods marketplace, SidelineSwap earlier this month, on May 15, EBAY signed a definitive agreement to acquire Certilogo, a provider of AI-powered apparel and fashion goods digital IDs and authentication.
The acquisition is subject to the satisfaction of customary conditions, including regulatory approvals, and is expected to be closed in the third quarter.Certilogo’s platform uses digital technology to tag products with virtual IDs, or “product passports,” that enable traceability and protection against counterfeits. It empowers brands and designers to manage the lifecycle of their garments while providing consumers with a seamless way to confirm authenticity, access reliable information about branded items, and easily activate circular services.
According to Charis Marquez, VP of EBAY, “Certilogo’s technology and talented team allows eBay to build on this commitment, establishing eBay as a leader in pre-loved fashion and offering new ways for consumers to connect and engage with brands.”
Despite ten consecutive interest-rate hikes by the Federal Reserve in just over a year, the red-hot and decades-high inflation is yet to be sufficiently tamed. Amid the rising cost of living crisis, the appetite for second-hand goods has witnessed phenomenal growth, especially among young shoppers.Moreover, with increasing awareness and emphasis on sustainable consumption, the stigma surrounding pre-owned goods has all but disappeared while community and circularity have been embraced.
Unsurprisingly, ThredUp’s annual Resale Report showed that the global pre-owned apparel market is set to double by 2027 to $351 billion — 9 times the growth of the broader retail sector.
However, the concern of ending up with counterfeited goods has fueled the trust deficit and has emerged as a significant roadblock preventing greater adoption. The global market trading in fake goods is worth a staggering $4.5 trillion, with faux luxury merchandise accounting for up to 70 percent ($1.2 trillion), according to a 2019 Harvard Business Report.
Even Washington has expedited its crusade against dupes. It has also received legislative firepower through INFORM Consumers Act, which modernizes consumer protection laws and requires web marketplaces to collect and verify basic business information from sellers before they are permitted to sell online. Moreover, SHOP SAFE Act incentivizes platforms, such as EBAY, to follow best practices for screening and vetting vendors and the products they put up for sale, and forces them to address repeat-counterfeit-sellers.
Given the political emphasis on building and retaining consumer trust, the importance of Certilogo’s assumption can hardly be overstated.This acquisition would also benefit EBAY’s ecosystem by offering fresh opportunities for small businesses to engage with consumers. By assuring their customers of the legitimacy and sustainability of their products, these businesses could be benefited by improving toplines, driven by repeat purchases from loyal customers.
Lastly, with EBAY’s earnings report last month showing increased traction in the luxury sector, with in-focus categories including watches, handbags, jewelry, and sneakers, its acquisition of Certilogo keeps it well-positioned to keep building momentum.

Video game retailer GameStop Corporation (GME), the signature meme stock, had previously been riding some short-term momentum. However, that has since leveled out, and the company has been making progress in right-sizing its business by slashing its inventory levels and reworking its cost structure.Moreover, the company is undergoing a transitional period by halting its e-commerce efforts and focusing on its brick-and-mortar locations. Furthermore, GME makes changes to its rewards program. Also, GME stock might get a significant boost if there is a ban on short selling.
GME is expected to release its fiscal 2023 first-quarter report on June 7. The quarterly report should show reflect the drastic measures the company has been undertaking to achieve considerable profitability this year.
Let’s discuss the catalysts that could send GME’s stock price to fresh heights:
Favorable Fourth-Quarter Earnings
For the last fiscal year’s fourth quarter, the video game retailer posted its first quarterly profit in two years and surpassed analysts’ expectations for revenue. Its aggressive cost-cutting measures and strong demand for video game hardware in the holiday quarter helped the company become profitable.
For the quarter that ended January 28, 2023, GME reported a profit of $48.20 million, or $0.16 per share, compared to a loss of $147.50 million, or $0.49 a share a year earlier. Adjusted earnings of $1.16 a share beat analysts’ projections of a loss of $0.13 per share.
For the fourth quarter, the company’s net sales dropped slightly to $2.23 billion from $2.25 billion in the year-ago quarter. However, the figure was higher than analysts’ estimates of $2.18 billion.
The video game company had been working vigorously to steer itself back to profitability and partially got there by slashing its inventory levels and costs. Its selling, general, and administrative expenses were $453.40 million for the quarter, or 20.4% of sales, compared to $538.90 million, or 23.9% of sales, in the year-ago period.
Like many retailers, GME struggled with supply chain delays that left the company with a backlog of inventory after it previously tried to meet strong demand. Based on its fourth-quarter balance sheet, the company had $682.90 million in inventory, down from $915 million a year ago.Furthermore, GME has been trying to improve its cash balance as a part of its revival strategy. The company’s cash and cash equivalents for the quarter were $1.39 billion.
“GameStop is a much healthier business today than it was at the start of 2021,” CEO Matt Furlong said on a call with analysts. “We have a path to full-year profitability.”
Shifted Focus from E-Commerce to Brick-And-Mortar Sales
Ryan Cohen took over GME in 2021, aiming to transform the struggling video game retailer into an e-commerce juggernaut. Unfortunately, the company’s e-commerce sales failed to take off. GME’s losses widened, and Cohen’s new online-sales executives resigned.As a result, GME began cutting costs. The company canceled plans to build additional warehouses, closed a new e-commerce customer-service center, and laid off many corporate employees hired under the management of Cohen. Also, according to former GME executives and analysts, Cohen miscalculated what customers were prepared to pay through its website and app.
“Quarter after quarter we were unsuccessful with new ventures,” commented Ted Biribin, GME’s former employee. “If something didn’t work, senior leadership would go onto something else very quickly.”
GME’s CEO, Matt Furlong, stated in an internal memo last year, “Our stores, in particular, are a differentiator that will help us maintain direct connectivity to customers and position us to have localized order fulfillment capabilities across more geographies. While we continue evolving our ecommerce and digital asset offerings, our store fleet will remain critical to GameStop’s value proposition.”
GameStop is poised for solid growth as the company has stopped focusing on e-commerce sales. Consequently, the company can now provide more support for its 4,400 brick-and-mortar stores. GME also introduced an initiative to motivate the company’s staff.
Last year, the company announced an “improved compensation” scheme for its brick-and-mortar video game store’s most senior employees. For Assistant Store Leaders and Senior Guest Advisers, the compensation comes as an undisclosed rise in their hourly pay. For Store Leaders, it comes in the form of $21,000 worth of GME stock (vested for three years) on top of their regular pay, coupled with “the opportunity to earn additional compensation every quarter by hitting goals for performance-based equity grants.”
GME’s focus on physical stores resulted in the company reporting a quarterly profit for the first time in two years. For the full fiscal year 2022, expenses were reduced by more than $100 million.
GME’s Membership Program Getting a Huge Makeover
GME offers incentives to members of its rewards program to secure customer loyalty. To that end, the company is seemingly making significant changes to its customer loyalty program. The existing PowerUp Rewards membership will have its name changed to GameStop Pro, with the price going up from $15 per year to $25.
GameStop Pro will access some special perks through this new program. Among other incentives, members will get bigger discounts on collectibles, pre-owned games, GameStop brand gear, clearance items, and more. GameStop Pro is expected to roll out on June 27, with existing memberships being phased out as they come up for renewal.
GME’s revised customer loyalty program could enhance profitability and growth for the company.
Prohibition on Short Selling Could Send GME To New Highs
The practice of short selling has come under increased scrutiny amid the recent banking turmoil. Short selling is a well-known strategy in which financial traders bet that the price of a stock will go down. Short sellers largely profited from the banking crisis by borrowing shares they expected to fall and repaying the loan for less later to pocket the difference.
In March 2023, Wachtell, Lipton, Rosen & Katz, a law firm known for representing large companies in mergers and against attacks from hedge funds, called on U.S. securities regulators to restrict short sales on financial institutions. Also, the calls from Capitol Hill and elsewhere to prohibit short-selling have gotten louder lately.
With more regulators and lawmakers ramping up their calls for an outright ban on short selling, investors should prepare for potential legal changes. As traders anticipate this possibility, GME stock could get squeezed higher quickly. The r/WallStreetBets crowd might start a massive short squeeze in anticipation of a potential short-selling ban.
How Should Investors Approach the Stock
The stock has risen 33.5% year-to-date, beating the 11.5% gain in the S&P 500 index. Moreover, shares of GME have gained 20.1% over the past month and 32.1% over the past three months.
As investors think the company can pull off a successful business turnaround, GME stock has risen recently. The video game retailer has essentially pivoted its focus to brick-and-mortar sales instead of e-commerce sales with an eye on improving profitability. The shift already resulted in its first quarterly profit in over two years.
Moreover, the revised customer loyalty program, GameStop Pro, is a smart move that could bolster the company’s top-line results in 2023. At the same time, a potential ban on short selling could prompt a massive final squeeze for GME stock. Now, all eyes are on GME’s first-quarter fiscal 2023 earnings, to be released on June 7, after the market close.
Over the past few years, stock traders and price chasers have targeted GME, but sensible investors should avoid emotional trades and monitor the company’s financial and operational progress.
Investors could also keep tabs on the buying activity of GME’s insiders. After all, if the company’s insiders express their confidence through share purchases, that is probably a positive sign for the stock. Director Larry Cheng recently purchased 5,000 shares of GME worth about $114,000. Following this purchase, Cheng now owns a total of 44,088 shares.
While many strong forces propel GME, investing in the stock still involves a high level of risk. Investors should continue to expect GME stock to remain volatile (with a 24-month beta of 1.90), and it is not appropriate to pour their entire account into this one stock.Though it is advisable to take a small position in GME stock, as it may be on the cusp of a breakout, and the share price is likely to shoot higher in the near future.

More than a year has passed since an announcement on April 26, 2022, by Ford Motor Company (F) CEO Jim Farley, regarding the company’s intent to challenge Tesla, Inc. (T) as the global EV leader.
Since then, the Detroit automaker has made huge strides in the electric mobility space. It has pipped TSLA to the pickup segment by beginning production of its F-150 Lightning and benchmarked the Model Y for its Mustang Mach-E crossover. While TSLA is still the runaway leader, F notched 61,575 fully-electric vehicle sales to emerge as the challenger in the U.S., something the legacy automaker planned to achieve by mid-decade.
Since both rivals are expected to battle it out for a greater share of the electric-mobility pie, it is understandable why an unexpected announcement by the CEO of both companies to join hands to enlarge the pie took the industry and markets by pleasant surprise.
On Thursday, May 25, during a live audio discussion on Twitter Spaces, Jim Farley and Elon Musk announced an agreement on charging initiatives for Ford’s current and future electric vehicles. Under the agreement, current Ford owners will be granted access to more than 12,000 Tesla Superchargers across the U.S. and Canada starting early next year.
Moreover, the next generation of Ford EVs, expected by mid-decade, will include TSLA’s charging plug, enabling owners to charge their vehicles at Tesla Superchargers without an adapter while using Ford’s software.A separate Ford spokesman later added that pricing for charging “will be competitive in the marketplace.” The companies will disclose further details closer to a launch date, anticipated in 2024.
Following this announcement, which makes F among the first automakers to explicitly tie into the TSLA network, the former’s stock rose by 6.2% on May 26, closing at $12.09 per share, while the latter’s shares also climbed by 4.7%, ending the week at $193.17.In this article, we elaborate on why the optimism makes sense.
Firstly, as F is ramping up its production to double its EV capacity this year and looks on course to get to two million in a couple of years, with public charging of electric vehicles being a major concern for potential buyers, charging infrastructure is going to be critical for the company in order to ensure that it delivers a superior after-purchase experience to its customers.
TSLA is the only automaker that has successfully built out its own network of fast chargers, which gives the EV leader an edge over its competitors, whose partnerships with third-party companies have left much room for improvement in reliability and reach.However, with the announcement, F has managed to more than double its existing capacity of 10,000 fast chargers with 12,000 well-located TSLA Superchargers. Moreover, leveraging TSLA’s superior NACS charging technology is F’s attempt to ensure that it is on what Elon Musk has described as “equal footing” in its completion with the incumbent.
Secondly, opening up 12,000 Superchargers in its network of currently 45,000 connectors worldwide at 4,947 Supercharger Stations could benefit TSLA in multiple ways.
White House officials announced in February that TSLA has committed to open up 7,500 of its charging stations by the end of 2024 to non-Tesla EV drivers. The agreement with F would help the company make progress on that front.
By diversifying from being a competitor to doubling up as an infrastructure provider, the EV leader has hedged its bets to benefit from the increasing presence of legacy automakers in the electric mobility space.
While the company is expected to dominate EV sales in the foreseeable future, the revenue from its Supercharging stations, which is included under the “services and other” segment, is also expected to witness remarkable growth due to increased network utilization by non-Tesla EV drivers.
Lastly, but perhaps most importantly, this partnership could be the initiation of the strategic masterstroke that impacts the entire EV ecosystem. As discussed earlier, while TSLA uses NACS charging technology, the rest of the industry has adopted relatively-slower CCS charging.
With two-leading EV manufacturers joining hands and F being ‘totally committed’ to a single U.S. charging protocol that includes the Tesla plug port, EV strategies of other auto manufacturers, such as GM and STLA, could come under increased pressure.
According to Jim Farley, the others “are going to have a big choice to make. Do they want to have fast charging for customers? Or do they want to stick to their standard and have less charging?”
In this context, it wouldn’t be surprising if Musk’s statement, “Working with Ford, and perhaps others, can make it the North American standard, I think that consumers will be all better for it,” turns out to be the beginning of yet another victory lap for the illustrious CEO.

Just before the shares of NVIDIA Corporation (NVDA)got their moonshot post its earnings release on May 24, we discussed how the race to dominate the AI domain is gaining pace. In this article, we will look at another bus to that to which investors are rushing to hop on board: Marvell Technology, Inc. (MRVL).
While NVDA has clearly stolen the thunder over the past week by becoming the first semiconductor company to reach a trillion-dollar valuation, MRVL’s stock also hogged headlines. It surged by 32% after it surpassed top and bottom line estimates in the first quarter of fiscal year 2023, according to its May 25 earnings release.
However, given that the supplier of data infrastructure semiconductor solutions also witnessed 8.7% and 41.1% year-over-year declines in its quarterly revenue and non-GAAP net income to $1.32 billion and $264.2 million, respectively, it was not past performance, but the company’s bullishness regarding its future prospects that got reflected in the stock’s remarkable price action.
While informing analysts that the company had begun to reassess the “tremendous” business potential of AI, MRVL’s CEO Matthew Murphy said, “In the past, we considered AI to be one of many applications within cloud, but its importance and therefore the opportunity has increased dramatically.”MRVL’s favorable position to capitalize on the tailwind of increasing investments in AI originates in two acquisitions, which, in hindsight, have turned out to be key.
The first of them was a 2019 acquisition of Avera Semi, a spinout of Global Foundries, which contributed to MRVL’s custom chip designing and large-scale Application-Specific Integrated Circuit (ASIC) computing capabilities.
This was followed by a 2020 acquisition of Inphi, which had built a leading high-speed data interconnect platform uniquely suited to meet the insatiable demand for increased bandwidth and low power for both AI Clusters and traditional cloud infrastructure.
However, what was already a growing market share took a quantum leap late last year with the release of ChatGPT, which marked an inflection point for generative Artificial Intelligence (AI) and Large Language Models (LLMs).
With AI, if it isn’t already there, becoming a ubiquitous force majeure that’s touching and shaping every aspect of our modern lives, the traditional ratio of conventional processing through CPUs to accelerated computing through GPUs of 95% to 5% is destined to get inverted with the former component finding greater usage for control than execution.
Moreover, with the ever-increasing adoption of AI, the demand for increased computing power would drive demand for high-speed networking technology and optical productivity, which has been MRVL’s forte.
With triple levers of accelerated computing, data center usage, and high-speed networking to bank on, MRVL was able to quantify its revenue from AI during its recent earnings call. According to a note from Citi’s Atif Malik, “In FY2023, MRVL estimated its AI revenue to be ~ $200 million, representing a strong uptick from FY22. The company expects AI sales to reach ~$400M+ in FY24 before doubling in FY25.”
Bottom Line
According to Bill Gates and a few notable others, we overestimate change in the short term and underestimate it in the long term.The company’s lack of meaningful share repurchases during the previous quarter, despite its clear visibility on stellar growth prospects, makes us wonder if the glowing outlook was a signal to investors or noise to mask top and bottom-line declines.
However, from the perspective of both the current business and the pipeline of opportunities, the substance behind the hype is undeniable.Hence, since we may be at the beginning of a 10-year cycle of AI-driven semiconductor growth, it could be wise for investors to load up on the stock once the current wave of excitement ebbs and there’s more valuation comfort to buy in for the long haul.

Every year, on the last Monday of May, the United States honors its heroes who made the ultimate sacrifice while serving in the United States Armed Forces. And how does a nation celebrate its martyrs who fell defending the core principles of liberty, democracy, and free markets? You guessed it; by exercising the freedom to choose and lead the good life.
Moreover, with the long weekend coinciding with the onset of summer, most Americans look forward to spending time outdoors. And that can only mean one thing: increased consumption. Think camping, cookouts, weekend trips, and home improvement projects.
All that activity translates to increased expenditure for businesses in relevant categories. A few have historically witnessed boosted top-line performance and an uptrend in stock prices at this time of the year.
Moreover, with still enough pent-up demand from the pandemic to go by and a jump of 0.8% in spending in April, with personal consumption expenditure beating estimates to rise 0.4% for the month despite 10 consecutive interest-rate hikes by the Federal Reserve, history seems more than likely to rhyme, if not repeat itself.
Here are a few stocks that could benefit from the holiday tailwind.
Tesla, Inc. (TSLA)
The global e-mobility pioneer’s automotive segment includes the design, development, manufacturing, sales, and leasing of electric vehicles as well as sales of automotive regulatory credits.
Although the company has recently increased the price of the vehicles in the U.S., China, Canada, and Japan, they remain lower than at the start of the year due to several rounds of price cuts worldwide.
In the recent earnings call, TSLA’s maverick CEO Elon Musk signaled that the automaker will be targeting larger volumes of sales versus higher margins but said he expects the company “over time will be able to generate significant profit through autonomy.”
Moreover, since TSLA’s energy generation and storage segment includes the design, manufacture, installation, sales, and leasing of solar energy generation and energy storage products such as the Solar Roof and Powerwall, the stock could also be a home-improvement play this Memorial Day.
In 2022, TSLA’s price return during the fortnight around Memorial Day amounted to 4.3%, compared to 3.4% for the S&P 500.Visa Inc. (V)
Despite a slump in mortgage demand due to rising borrowing costs, total consumer debt hit a fresh new high in the first quarter of 2023, surpassing $17 trillion. Moreover, as consumers remain keen to give their mundane inflation worries a break during the first long summer weekend by splurging now to pay later, that figure is not coming down anytime soon.
The global payments technology company that connects consumers, merchants, financial institutions, businesses, strategic partners, and government entities to electronic payments is well-positioned to benefit from this tailwind.
Lowe’s Companies, Inc (LOW)
With new home purchases softening amid rising mortgage rates, home improvement projects will keep homeowners of an aging U.S. housing stock busier than usual this summer. Hence, with more than two-thirds of sales contributed by non-discretionary purchases, such as new appliances to replace broken ones, the home improvement retailer is best positioned to make a tailwind out of this turbulence.
In 2022, LOW’s price return during the fortnight around Memorial Day amounted to 4.9%, compared to 3.4% for the S&P 500.
Expedia Group, Inc. (EXPE)
With the pandemic firmly in the rear-view mirror and consumers ever keener to redeem their pile of airline miles on other travel rewards on their credit cards through revenge travel, global online travel company EXPE is well-positioned to benefit from this pent-up demand.
In 2022, EXPE’s price return during the fortnight around Memorial Day amounted to 8.3%, compared to 3.4% for the S&P 500.
Camping World Holdings, Inc. (CWH)
For Americans who find the great outdoors and road trips more akin to their idea of freedom and the spirit of adventure, CWH sells recreational vehicles (RVs) and related products and services.
Through its two segments, Good Sam Services and Plans; and RV and Outdoor Retail, CWH offers extended vehicle service contracts; roadside assistance plans; property and casualty insurance programs; travel protection and planning; and RV and outdoor-related consumer shows. Moreover, it produces various monthly and annual RV-focused consumer magazines; and operates the Coast to Coast Club.

After registering two consecutive months of declines of 0.2% and 1%, on May 16, the advance sales report showed a recovery of 0.4% in retail sales for April. However, this modest rebound missed the Dow Jones estimate of a 0.8% increase. In this article, we will explore what this tepid growth means for the prospects of brick-and-mortar stores in today’s economy.
U.S. domestic consumption has been on a roller coaster ride over the past three years. People have gone from not being free enough to spending practically-free money to spend like there’s no tomorrow.
That, in turn, led to a not-so-transitory inflation, the hottest since the 1980s, forcing the Federal Reserve to implement ten successive interest-rate hikes in a little over a year to take the Fed funds rate to a target range of 5% to 5.25%.

With the stash of stimulus cash fast dwindling, average American consumers have been forced to rein in their urge to splurge to prevent inflation from biting harder. The Survey of Consumer Expectations for April carried out by the New York Fed showed that the outlook for spending fell by half a percentage point to an annual rate of 5.2%, the lowest since September 2021.
Could online retailers fare better with a complementary offline presence?

Yes
No
Can’t Say

While consumption may be undifferentiated from a macroeconomic perspective, businesses have evolved to tailor their offerings to cater to various consumer segments. Despite current economic uncertainties and hardships, high-income segments have been relatively unaffected, with affluent patrons queueing up for finer things in life on offer from the likes of Tiffany & Co. and LVMH.
However, middle-income consumers have been forced to go bargain hunting to squeeze out the maximum possible value from money which has gotten dearer. Hence, they have been forced to trade down to budget-friendly retailers, leaving the businesses that offer something in between wrong-footed and stranded.
The divergent prospects between off-price retailers and their middle-of-the-road peers are evident from the Street expectation regarding business performance. The fiscal first quarter revenues of Burlington Stores, Inc. (BURL) are expected to grow by 13% year-over-year compared to an 8.7% year-over-year decline at Macy’s, Inc. (M).
Although budget retailers have lost sales from low-income consumers, that loss has been offset by increased business from the middle-income consumer segment.
As a result, Walmart Inc. (WMT)is expected to have grown by 4.5% year-over-year in Q1, compared to 2.4% for Albertsons Companies, Inc. (ACI)and 1.3% for Albertsons Companies, Inc. (ACI)The Kroger Co. (KR).
While the jobless rate for April fell to 3.4%, tied for the lowest since May 1969, the likelihood that the unemployment rate will be higher a year from now has increased to 41.8% as hiring has slowed and layoffs have ticked up.
Moreover, with consumer debt taking its lead from sovereign debt and pushing past $17 trillion to come in at an all-time high, the polarization is expected to increase even further.

Although inflation has moderated from its decades-high level around this time last year, weak consumer demand led The Home Depot, Inc. (HD)to post the worst revenue miss in two decades.
A decline of 0.3 percentage points in the overall outlook for inflation over the next year suggests that things could improve, but probably not before they worsen.

California-based chip designer NVIDIA Corporation (NVDA) has had an outstanding 2023. The stock has continuously outperformed the S&P 500 and more than doubled year-to-date.
The company went public on January 22, 1999. However, it was not until the pandemic that the tailwind of crypto mining resulted in a surge in demand for its chips and the stock price. This time around, NVDA is riding the waves of Generative AI and Large Language Models (LLMs) that began with the release of ChatGPT to the general public towards the end of the last year.
NVDA is set to release its financial results for the first quarter of the fiscal year 2024 after the bell on May 24. To understand how the business would fare and how its stock price could be impacted after and beyond the upcoming earnings, let’s understand how the global provider of graphics, computation, and networking solutions has grown from being a major player in the gaming industry to an AI giant.
During the dawn of the PC revolution, NVDA’s founder and CEO, Jensen Huang, realized the emergent applications and demand for accelerated computation on the horizon and designed its first high-performance graphics chip in 1997. However, given the relative scarcity of use cases, the fledgling chip designer chose to bet on visual effects and gaming and struck the jackpot.
In 1999, the company launched what it claims to be the first programmable graphics card, the GeForce 256, and popularized the term, Graphics Processing Unit (GPU). In 2000, the company was the first exclusive graphics provider for Microsoft and Xbox.
Since then, these GPUs have become the mainstay of high-resolution gaming and animation to form the primary business of NVDA and contribute around 80% of its revenue.

Moreover, crypto miners hoarded and bid up these gaming GPUs at the peak of crypto-mania. However, with the onset of crypto winter due to rising interest rates and increased regulation risk, those GPUs flooded back into the market. The resulting oversupply led to a 46% year-over-year decline in gaming revenue.For the fiscal year that ended January 29, 2023, NVDA’s revenue remained almost flat at $26.97 billion, while its gross profit declined 12.1% year-over-year to $15.36 billion. The company’s non-GAAP operating income decreased 28.8% year-over-year to $9.04 billion during the same period.Its non-GAAP net income decreased 25.7% and 24.8% year-over-year to $8.37 billion, or $3.34 per share.
However, the company was all in on the next big thing by then. In 2006, NVDA made its foray into parallel (and consequently faster) computing by releasing a software toolkit called CUDA.
Parallel computing was ideal for artificial neural networks’ deep (machine) learning. Hence the kit was first used in AlexNet, a revolutionary AI at the time. This set off a chain reaction that has propelled the company to the center stage of the AI boom.
Fast-forward to today, and NVDA is reaping the rewards for its investment in Artificial Intelligence as its A100 chips, powering LLMs like ChatGPT, have become indispensable for Silicon Valley tech giants.
As a result, the accelerated adoption of its A100 chips due to the AI boom NVDA offset the 20.8% year-over-year decline in revenue due to the gaming slump and reported an EPS of $0.88 to beat its earnings expectations in its previous quarterly earnings release.
Near-Term Prospects
Analysts expect NVDA’s revenue and EPS for the first quarter of fiscal 2024 ended April 30, 2023, to decline 21.4% and 32.4% year-over-year to $6.52 billion and $0.92, respectively.
However, given the fact that the stock is currently trading at 68.57x its forward earnings, which is 224.6% above the industry average of 21.13x and above its 50-day and 200-day moving averages, it could take a monumental outperformance to move the needle that has already been raised by high expectations.
Looking Beyond
For fiscal 2024, NVDA’s revenue and EPS are expected to increase by 11.5% and 36.2% year-over-year to $30.07 billion and $4.55, respectively. Both metrics are expected to keep increasing over the next two fiscals.
Beyond gaming and AI, NVDA’s experience has been mixed. In 2010, it made an unsuccessful foray into smartphones with the Tegra line of processors. In 2020, it closed the long-awaited $7 billion deal to acquire data center chip company Mellanox. However, in 2022 it had to abandon its bid to acquire Arm, citing regulatory challenges.
However, there are enough reasons to be excited about the company’s prospects. With NVDA’s presence in data centers, cloud computing, and AI, its chips are making their way into self-driving cars, engines that enable the creation of digital twins with omniverse that could be used to run simulations and train AI algorithms for various applications.
Even its previously unsuccessful Tegra processors have found a new lease of life in logistics robots and driverless cars.

Potential Risks
Other than the risk of backward integration posed by companies such as Apple Inc. (AAPL) and Tesla Inc. (TSLA) designing their own chips, perhaps the only thing that could keep an NVDA investor awake at night is that fact that it is committed to remaining a fabless chip designer to keep capital expenditure low.
Moreover, almost all of the manufacturing has been outsourced to Taiwan Semiconductor Manufacturing Company Ltd. (TSM), which is yet to diversify significantly outside Taiwan.
Bottom Line
Given the stock’s sky-high valuation and bullish prospects amid the background of concentration and geopolitical risks that are in the process of being mitigated, it could be wise to hold on to NVDA and hope for the status quo on the Taiwan Strait, at least over the next two to three years.