“The transition from a levering, asset-inflating secular economy to a post bubble delivering era may be as difficult for one to imagine as our departure into the hereafter,” former PIMCO managing director, Bill Gross, once the world’s largest bond manager.
(ORCL), (NVDA), (MSFT)
The artificial intelligence (AI) arena is undeniably pulsing with potential, promising to be the most transformative tech wave in history.
These days, it’s no longer just about the smart gadgets. We're talking about machines that can outpace and outperform humans in jobs ranging from drafting intricate documents to conjuring up code — all in the blink of an eye.
If you listen closely to the chatter along Wall Street, you'll catch whispers of AI's potential to inject anywhere from $7 trillion to a staggering $200 trillion into the global economy over the next decade.
Now, we all know that Nvidia (NVDA) has been basking in the limelight as the golden child of the AI saga, thanks to its data center chips that have become the backbone for nearly every major AI breakthrough.
This chip titan has seen its market value balloon to an eye-watering $1.8 trillion, with a jaw-dropping $1 trillion of that amassed in just the last year.
While Nvidia continues to ride high on AI's tidal wave, let me turn your attention to another contender quietly gearing up in the AI arena: Oracle (ORCL).
Founded back in the serene tech landscape of 1977, Oracle first made its mark with its database management software.
Fast-forward to today and Oracle is flexing its muscles in the cloud computing race with its Oracle Cloud Infrastructure (OCI), which spans 66 global data centers.
But, it looks like Oracle is not stopping there. The company is currently in the throes of a massive expansion, adding 100 more data centers to meet the surging demand for AI infrastructure.
In fact, the company shared that their Nvidia GPU cluster tech is setting new industry benchmarks, enabling developers to train AI models with unmatched speed and cost-efficiency.
Dubbed the Gen2 Cloud, Oracle's latest data center evolution centers on automation, promising operational savings that are passed down to customers.
This next-gen cloud has become a magnet for leading generative AI startups such as Cohere, Adept AI, and even Elon Musk's xAI, which have pledged billions towards Gen2's capacity.
Despite its strides in AI, Oracle hasn't quite captured the investor frenzy like some of its peers. While its stock has seen a healthy 30% jump over the past year, it's still in the shadow of Nvidia's meteoric rise.
But, Wall Street has been eyeing Oracle with an optimistic lens, signaling a 14% upside potential. Actually, most industry experts are excited over Oracle Cloud's growth, partly fueled by generative AI customers and the push for sovereign clouds.
Unlike the AI stock craze, Oracle's shares are a breath of fresh air for investors seeking AI exposure without the hefty price tag, trading at just 17.3 times expected earnings. That makes it a tempting investment for anyone looking to take a piece of the AI action.
So, what's the verdict on Oracle?
Well, Oracle is undoubtedly a significant player in its league. Yet, it's not in the same fast lane as tech giants like Microsoft (MSFT) or Nvidia when it comes to AI's dazzling prospects.
The company’s growth, pegged at a respectable 7% to 9% for earnings and revenue in the upcoming year, doesn't really spark the same excitement as its high-flying counterparts.
That said, Oracle presents a solid investment case with its sensible valuation, but it might not be the showstopper in your tech portfolio.
Other tech behemoths, boasting a more vibrant mix of growth and valuation, might edge out as more enticing picks. Given Oracle's shares are hovering near their peak and have rallied 30% in the last year, a strategic pause might be wise.
A more attractive entry point could emerge, offering a golden opportunity to bet on Oracle's quiet but steady march in the AI revolution. For now, simply add this stock to your watchlist.
Mad Hedge Technology Letter
March 15, 2024
Fiat Lux
Featured Trade:
(POACHING FOREIGN TECH)
(TSLA), (OCDO.L)
Europe is reeling and now it is becoming Silicon Valley’s playground.
The evidence is all over Europe and quite clear-cut at this point.
The royal 7 from the likes of Tesla (TSLA) and Apple (APPL), who have been responsible for most of the stock market gains this year, are leading the charge to cherry-pick the best tech companies in Europe.
Many European companies are now waving the red flag amid commercial electricity costs spiking 100% in many Western European countries.
The unrelenting electricity increase has caused a mad rush to relocate the best European talent to the United States.
Or, if they don’t relocate out of their own will, many are buy-out targets just like the recent news of British online grocer Ocado.
They are on the verge of tasting the sweet hand of acquisitive cash from Amazon (AMZN).
Poached or not poached – Silicon Valley is dominating.
Ocado Group shares jumped the most in more than five years.
Even though the acquisition never came to fruition, this is the type of environment we find ourselves in, as European tech takes the Silicon Valley money before they can go themselves organically without any external help.
Ocado’s stock soared in 2018 on a landmark deal to build warehouses and license software to US supermarket chain Kroger Co., boosting the grocer’s credentials as a technology company. Ocado has partnerships with several grocers, but investor focus has shifted to profitability as demand for automated warehouses slows.
Amazon wasn’t only interested in Ocado, they had to abandon the iRobot deal.
Amazon’s deal to buy Roomba maker iRobot fell apart after iRobot said the deal had “no path to regulatory approval in the European Union.”
iRobot also announced layoffs of around 350 employees, or around 31 percent of its workforce as part of a restructuring.
Ocado has developed, leading automated warehouse technology that could be of great use to Amazon if it tried to take over the European supermarket industry, which it might.
Many American tourists might experience how outdated and obsolete many European supermarkets are these days.
On the corporate side, when I talk to many European workers on the ground in Milan and Brussels, the consensus is that finding a job at an American big tech firm is considered the proverbial golden paycheck.
European counterparts are mired in inefficiency and unproductivity, and the politicians who exist as 27 European Joe Bidens are ruthlessly driving the industry into the ground by taxing and regulating the hell out of them.
European workers also take 2 months of vacation every year along with 15 to 20 federal holidays per year.
When I read the tea leaves, the next expansion of Silicon Valley is to gobble up anything of perceived value in Europe and anything in any European Union country is fair game.
This buying spree could trigger another leg up to big tech and expand margins.
American tech possesses the powerful balance sheets to wield around the world and dominating the European supermarket industry would add to the top line.
Amazon has already forayed into the food industry with Whole Foods in America so this should be viewed as something similar to that.
Look for big tech to enter strategic European industries and eventually buy something like Manchester United or any other high-quality asset.
“Computers are useless. They can only give you answers.” – Said Artist Pablo Picasso
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
(MORGAN STANLEY SEES OPPORTUNITIES IN THE CHINESE EV MARKET)
March 15, 2024
Hello everyone,
The electric vehicle industry in China could be in for a shake-up after selling off this year. According to Morgan Stanley, a couple of stocks are poised to deliver significant returns.
According to the investment bank, LiAuto(LI) and Xpeng(XPEV) offer significant investment opportunities, rating both of them overweight. While China has faced falling international investment and property headaches, negative forces influencing EV stocks may be already reflected in the prices. Analysts believe the Under-owned autos group should be back in focus in 2Q.
The auto sector in China has sold off about 30% year-to-date as companies work through a huge inventory due to seasonal market weakness. According to Morgan Stanley, EV penetration fell from a peak of 40% in December to 33.5% this year as makers of internal combustion engine cars pushed sales aggressively ahead of the Chinese New Year.
Even though Chinese EV makers have had a rough start to the year, analysts believe these companies are expected to launch a record number of new models and accelerate expansion plans in Europe, Latin America, and Southeast Asia, at the same time as they’re seeing lower battery costs.
Morgan Stanley sees LiAuto has booked several profitable quarters in a row, demonstrating solid execution of model launches and effective cost management. And the investment bank has boosted the total sales volume for the company by 12% in 2024 and 8% in 2025, which reflects stronger demand for new models. Morgan Stanley’s price target for LiAuto is $74.
Xpeng has also successfully launched several new models and has a strong pipeline, with Morgan Stanley expecting monthly sales to accelerate compared to the second half of 2023. The price target of $18 for Xpeng implies an upside of about 90% from its previous close of $9.52.
This Post shows you what Morgan Stanley understands about the EV Chinese market. If you plan to purchase any Chinese stocks, you are buying them with the full knowledge that this is still a risky market and should be approached with caution. i.e. dip your toe in/buy small parcels.
Daily chart
Weekly chart
Daily chart
Weekly chart
Cheers,
Jacquie
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
Global Market Comments
March 15, 2024
Fiat Lux
Featured Trade:
(PROFITING FROM AMERCIA’S DEMOGRAPHIC COLLAPSE)
