May 2024

THE FOURTH ESTATE MEETS THE FOURTH INDUSTRIAL REVOLUTION

(NYT), (GCI), (NWSA), (MSFT), (GOOGL), (IBM), (PLTR), (ADBE)

Well, slap me with a wet noodle and call me gullible. It turns out Nina Singh-Hudson, the "long-time writer and Bay Area native" gracing Hoodline SF with her byline, is about as real as a $3 bill.

Turns out she, along with her "colleagues" Tony Ng, Leticia Ruiz, Eileen Vargas, and Eric Tanaka, are nothing more than figments of someone's AI-powered imagination.

Since I began my journalism career as a news reporter, seeing fake bylines made my stomach turn. So, I dug deeper. What I unearthed, well, let's just say it didn't exactly brighten my day.

Hoodline, a supposed hyperlocal news site, has been caught red-handed serving up AI-generated fluff across over two dozen cities.

Their "journalists?" Phony personas dreamt up by algorithms. The only hints of this digital deception? A tiny "AI" badge and a disclaimer hidden deep within the website – and only after they were called out.

Their CEO, Zack Chen, admits these AI-spun yarns are published under fake names, claiming it's the "future of news." But hold on a minute – this isn't just harmless innovation. It's a blatant betrayal of reader's trust.

And get this: Hoodline isn't the lone wolf in this game. Sports Illustrated and CNET have also been caught red-handed, trying to pass off AI-generated content as the real deal. And let's be honest, they won't be the last.

Hoodline's deceptive tactics erode trust in an already chaotic news landscape. With 62% of Americans already wary of AI-generated misinformation, transparency is paramount.

While AI can be a useful tool (think Bloomberg's labeled automated reports), Hoodline's lack of disclosure is a betrayal. In the end, journalism's most valuable currency isn't clicks, it's credibility.

Still, don't get me wrong. I'm not throwing the AI baby out with the bathwater.

Media giants like The New York Times (NYT), Gannett (GCI), and News Corp (NWSA) are already dipping their toes into the AI pool, using it for everything from content personalization to operational efficiency.

Even BuzzFeed (BZFD) is getting in on the action, using AI to spice up their quizzes.

In fact, a recent World Economic Forum survey revealed that a whopping 79% of media executives believe AI will be a major player in journalism within the next five years.

Needless to say, AI is here to stay, and it's got the potential to shake up the news industry. But let's not kid ourselves - this AI gold rush comes with a hefty dose of fool's gold.

Hoodline's lack of transparency is just the tip of the iceberg. As AI gets smarter, the ethical dilemmas get stickier.

Thankfully, companies like IBM (IBM) and Palantir (PLTR) are stepping up to tackle the misinformation monster and wrestle with the biases lurking within AI algorithms. Their efforts are crucial in ensuring that the future of news isn't just automated, but trustworthy.

And for those of you who speak fluent "dollar signs," this AI revolution isn't just about fancy algorithms and sci-fi headlines. It's about cold, hard cash.

AI-driven operational efficiencies are streamlining newsrooms, cutting costs, and boosting profit margins. Take Microsoft (MSFT), for example – their AI initiatives have reportedly slashed operational expenses, padding their bottom line in the process.

But that's not all. AI's ability to serve up personalized content is like a turbocharger for user engagement and advertising revenues. Just look at Alphabet's (GOOGL) soaring ad revenue, fueled by the AI-powered engine of Google Ads.

Meanwhile, Adobe Inc. (ADBE), with its AI-powered Adobe Sensei tools has been on a tear, thanks to their successful integration of AI into their service.

So, is AI journalism's savior or saboteur? The answer, as usual, is more nuanced. It's less a Frankenstein's monster and more a trusty sidekick – a Robin to journalism's Batman if you will.

As a former correspondent for The Economist back in the '70s and '80s, I find this whole AI journalism thing exciting. Instead of fearing this technology, I'm curious about what I could have done with it back in the day. Imagine me, running around Tokyo, chasing down leads with an AI sidekick in my pocket.

But, as exciting as this sounds, it's not just about the money (or the shiny new tech). It's about making sure AI plays nice with journalism's code of ethics.

We can't have AI running around spreading fake news like a drunken cowboy at a saloon. The companies that can wrangle AI and keep it on the straight and narrow? They're the ones that are going to come out ahead. I suggest you add them to your watchlist.

May 31, 2024

Tech Letter

Mad Hedge Technology Letter
May 31, 2024
Fiat Lux

Featured Trade:

(ANOTHER AI SERVER STOCK)
(DELL), (SMCI), (NVDA), (ORCL)

Another AI Server Stock

Tech Letter

Nvidia CEO Jensen Huang complimented Dell by saying it’s a “great partnership” at its GTC conference and said that “nobody is better at building end-to-end systems of very large scale for the enterprise than Dell.”

Words like this go a long way in this industry let alone partnering with the best tech firm in the industry.

To have the best CEO in tech flatter your products means staying power but in the short-term, the stock has come too far too fast.

That’s what this deep selloff is about as Dell shares.

The stock is down 19% today but that doesn’t diminish the 207% gain in the past 365 days.

Dell has reinvented itself as an AI stock and specifically a company specializing in servers that serve AI chips.

The company has done so well lately that they are gearing themselves up for inclusion into the S&P index.

That would honestly be a game-changer for the stock.

Super Micro Computer (SMCI), another play on AI servers, was added in March, despite having a market cap below $50 billion.

Confirmation of improving growth prospects could continue to support a stock that’s at a record high while trading at a discount to other tech favorites.

Dell recently generated excitement by unveiling a line of PCs optimized for AI, adding to hopes that such features could prompt a long-awaited upgrade cycle from customers and businesses. HP even reported the first increase in PC sales in two years.

The firm has become a critical cog in the AI ecosystem.

Both the PC and the server businesses will drive growth in coming years, and that’s supportive of both the stock price and the multiple.

I believe we can now say the company has turned itself into both a growth and a value play since the growth story is still under-appreciated and the multiple is very low relative to other AI plays.

The S&P 500 is rebalanced quarterly, with the next scheduled to occur in June. Becoming a component would open Dell up to a fresh avalanche of investors who use the S&P 500 as their benchmark, as well as flows into passive funds that track the index.

All things considered, I believe this is one of the best tech stocks to play server momentum, sky-rocketing storage demand, and an improving PC market.

Dell is becoming an increasingly strategic vendor in AI, but there’s a lot more appreciation for this than there was a few months ago.

Demand for AI systems remains healthy, but other parts of the business remain cyclical, and if we see a macro downturn, even a growth story as powerful as AI could slow down.

I like that investors are looking through the bad PC numbers and only focusing on Dell's AI server story.

This means that readers should be dissuaded from reach for this tech play even though they have a saturated computer business.

The most important and hardest endeavor in the tech industry is to reinvent when business is slowing down.

Only so many firms can pull it off and now that the pivot is into AI, companies are scrambling like Google and Apple in order to stay relevant.

Dell is a stock that should be bought on dips now and I feel funny saying that because that wasn’t the case not too long ago.

Another stock that has reinvented itself with the AI craze has been Oracle (ORCL).

May 31, 2024

Jacque's Post

(SUMMARY OF JOHN’S MAY 29, 2024 WEBINAR)

Friday, May 31, 2024

Hello everyone,

TITLE: The Nvidia Boom

PERFORMANCE:

Month to date - +3.74%

Since inception - +694.98%

Trailing one-year return - +33.25%

Average annualized return - +51.79%

PORTFOLIO:

No Positions.

THE METHOD TO MY MADNESS:

Focus has shifted to the spectacular performance of NVDA and other AI stocks.

Downside is expected to be limited to 5-8% with $8 trillion in cash on the sidelines and a further $26.8 trillion in short-term US treasury bills.

John says technology stocks won’t crash; look for a sideways “time” correction.

All economic data is globally slowing, including the US.

Interest rates are higher for longer but September is on the plate in view of recent data releases.

Buy stocks and bonds on dips.

THE GLOBAL ECONOMY – STILL SLOWING

CPI comes in cool in April at 0.3% versus 0.4% expected.

Global Flash PMI jumps 50.9 for services, and 54.8 for manufacturing, a one-year high.

Weekly jobless claims fall, down 215,000 – down 8,000, the steepest decline since September.

Federal Reserve officials are looking for further weakening in demand as they try to tame inflation without triggering a surge in unemployment.

Consumer Inflation expectations at 3.3%, according to the University of Michigan, the amount of price rises expected in the coming year.

Fed Minutes turn bearish, from their last meeting a month ago.

Chinese government to buy unsold homes to rescue the local real estate market.

STOCKS – BLOWOFF TOP

As the DOW tops 40,000 investors are pouring money into both bonds and stocks, according to the Bank of America. Equity funds saw $11.9 billion in inflows, while bond funds drew in $11.7 billion.

NVDA has triggered split fever in the wake of its own 10:1 announcement last week and traders are piling into the shares of the next candidates.

DOJ to break up Live Nation, seeking to end the monopoly on ticket sales which have sent ticket prices soaring.

Thousands of young traders are getting wiped out following the trading advice of London-based IM Academy and the so-called guru, Chris Terry.

Biggest bear on Wall Street turns bullish. Mike Wilson at Morgan Stanley is targeting $5,400 on the S&P500.

Elon Musk’s X.ai is potentially a trillion-dollar company.

Netflix may be the next candidate to stock split, and to offer a dividend. If it does stock split, the stock will perform very well. Google and Amazon could also be stock split candidates.

Caterpillar (CAT) buy near 200-day MA. If you see weakness in Freeport McMoRan (FCX) buy.

Buy Berkshire Hathaway (BRK/B) on weakness.

Adobe in LEAPS territory. Visa (V) is setting up for another buy.

BONDS – TAKING IT ON THE NOSE:

Today’s treasury auction bombed for two- and five-year notes taking the TLT down $1.31. Oversupply is the big problem. Traders are nervous about this week’s looming inflation data.

Bond investors are making a killing, with the US Treasury paying out $900 billion in interest in 2023.

That’s double the annual cost of the past decade. Remember those coupons?

That’s another reason for the Fed to cut rates soon, so it lessens the backbreaking burden on the government.

After being held hostage by zero-rate policies for almost two decades, US Treasuries are finally reverting to their traditional role in the economy.

Bonds are becoming respectable again after a long winter. Buy (TLT) on dips.

The US Treasury announced a Bond buyback program, with the first scheduled on May 29.

The Treasury’s last regular buyback program began in the early 2000s and ended in April 2002.

FOREIGN CURRENCIES – DOLLAR ROLLING OVER

Most currencies have been hitting two-month highs due to the coming dollar interest rate cuts and are close to upside breakouts.

Japanese yen collapsed to 160 and looking for lower lows.

Bank of Japan intervened with a $35 billion yen buy, dollar sell. Avoid (FXY).

Chinese Yuan remains weak. International trade is collapsing.

Declining exports, collapsing foreign investment, and minimal population growth = weaker Chinese economy.

Higher for long rates means higher for longer greenback (although a downturn in the $ is close).

ENERGY & COMMODITIES – CHEVRON WIN

Chevron's takeover of Hess for $53 billion goes through, creating the second-largest US oil major.

The approval clears one hurdle, but the deal still requires regulatory approval and must face a lengthy arbitration battle with Exxon and CNOOC, Hess’s partners in Guyana.

Buy (CVX) on dips.

Copper slide continues - down 7% in three days as the extent of Chinese speculation becomes clear.

The takeover battle for Anglo American continues with the company turning down the latest $49 billion offer from BHP.

While Anglo’s copper assets have long been coveted by rivals, its complicated corporate structure and unusual mix of commodities have largely deterred potential suitors until now.

(OXY) great buy for the long term.

PRECIOUS METALS – NEW HIGHS

Silver goes ballistic on Chinese speculation to $32.70/ounce heading for $50.

Gold follows by half to $2,460. It is targeting $3,000.

Solar panels are driving global silver demand.

Global investment in solar PV manufacturing more than doubled last year to around $80 billion.

Miners are expanding their operations and ramping up production as prices for the precious metal climb to decade highs.

Demand for silver from the makers of solar PV panels, particularly those in China is forecast to increase by almost 170% by 2030 to roughly 273 million ounces – or about one-fifth of total silver demand.

Buy (SLV) and (WPM) on dips. (GLD) is a great buy on dips – correlates with the price of gold.

REAL ESTATE – SOARING PRICES, FALLING SALES

New Home Sales tank in Aril is down 4.4% and 7.7% in March.

The median price of a new home was $433,500, 4% higher than it was in April 2023.

Builders say they cannot lower prices due to high costs for land, labor, and materials.

The big production builders have been buying down mortgage rates to help boost sales, as they are able to do that because of their size. Smaller ones can’t.

30-year fixed rate mortgage drops below 7.0%. The housing market is taking a step back in April after a strong performance in the first quarter.

Existing home sales fall, down for the second month in a row at -1.9% to 4.14 million rate in April.

The nascent recovery in demand from a 13-year low in October is being hindered by limited inventory which is keeping asking prices elevated.

TRADE SHEET:

Stocks – buy any dips.

Bonds – buy dips.

Commodities – buy dips.

Currencies – sell dollar rallies, buy currencies.

Precious Metals – buy dips.

Energy – buy dips.

Volatility – buy $12

Real Estate – buy dips.

NEXT STRATEGY WEBINAR

Wednesday, June 12 from Incline Village, Nevada.

QI CORNER

Cheers,

Jacquie

May 31, 2024

Diary, Newsletter, Summary

Global Market Comments
May 31, 2024
Fiat Lux

Featured Trade:

(The Mad June traders & Investors Summit is ON!)
(MAY 29 BIWEEKLY STRATEGY WEBINAR Q&A),
(TSLA), (AMZN), (META), (NFLX), (GLD), (SLV), (NVDA), (MSFT), (GOOG), (DELL), (MSFT), (TLT), (BRK/B), (PYPL), (BABA), (DD), (XOM), (OXY)

May 29 Biweekly Strategy Webinar Q&A

Diary, Newsletter

Below please find subscribers’ Q&A for the May 29 Mad Hedge Fund Trader Global Strategy Webinar, broadcast from Incline Village, NV.

Q: Since Elon Musk is raising tons of money for his AI startup called xAI, will this impact Tesla’s (TSLA) stock price?

A: Yes, it's a very positive move for Tesla because anytime Elon Musk raises money anywhere in his network, it takes the need off of him to sell Tesla shares for cash. And I think his xAI will be the next trillion-dollar company, and SpaceX is in front of it as another trillion-dollar company. Those stocks, he can sell any time and raise a lot of money, but the other two are still private companies. We can't buy them yet unless we buy some of the public vehicles offered by venture capitalists like Ron Baron who has heavy positions in both Tesla and SpaceX. So, no direct plays yet on these companies, but no doubt when they become incredibly valuable, he'll take them all public and become the richest man in the world two or three times over. So yes, that is a positive.

Q: Where do you think (TLT) will be in the next few months?

A: In a narrow trading range. I think we're basically in a $86 to $91 trading range, and we'll go nowhere until we get clarification on Fed interest rate cuts. At the rate the economy is slowing, we may get one in September, and even if the Fed doesn't cut, the rest of the world will, including Japan, Europe, Great Britain, and so on. So we may get our interest rates dragged down here by foreign countries that all have much weaker economies than the US.

Q: Should I keep buying big tech stocks after Nvidia's (NVDA) blowout earnings?

A: Well, if you recall back in the ancient times of April, Nvidia had a 20% sell-off, and most of the tech stocks were down at least 10%. So, I would wait for the next 20% sell-off of Nvidia not only to buy Nvidia but all other big tech stocks as well, because it basically is a big tech story and will continue for the rest of the year like that. So we're really looking to buy dips among the big tech winners, and those would include Amazon (AMZN), Meta (META), Microsoft (MSFT), and so on.

Q: How long can the US economy go without a recession?

A: Five years. The way our economic cycle works is after a long period of growth, companies get overconfident, over-invest, create excessive capacity in the markets for everything, and that leads to a crash and a recession, deflation, and lower interest rates. So even if we don't get major moves in the (TLT) upside now, you always will over the long term get interest rates going back to 2 or 3% for the 10-year so it’s a great long-term hold. That is the economic cycle—that's what creates bear markets and it’s known as “Boom and Bust”. Long may it live because that’s where we traders earn our crust of bread. But this time may be different. We may go longer than 5 years because AI is still in its infancy, still rolling out, and the number of companies making actual profits in AI will go from 3 to 300 over the next five years.

Q: I'm looking to buy gold in an investment account (GLD). Would you do that now, if so, what would you recommend?

A: I would recommend GLD (SPDR Gold Trust) because the metals are still outperforming the miners, miners being held back by the inflation rates unique to the mining industry, which are much higher than the 3.3% for the general economy. And if you want to add a little more spice to your portfolio, buy some silver (SLV) because it is rising at three times the rate of gold thanks to Chinese speculation. You might buy some copper while you're at it too—it's moving almost as fast as gold is.

Q: Which big tech firm is next to issue a dividend?

A: That's an easy answer, it's Netflix (NFLX). But there's a more important question out here— Which is the next tech stock to issue a stock split? And guess what the answer is? Netflix again, which needs to declare both a dividend and a stock split. It's at an all-time high, has a very high share price, and over time, stocks that split deliver double the performance of the S&P 500. So, the mere announcement will suck in a lot of new retail investors as we just saw with Nvidia (NVDA), where we got a $250 move on the split announcement. So, watch your splits, and in fact, I'm going to be devoting a major piece of next Monday's newsletter to splits and how to play them.

Q: Why has the stock market been so strong this year when interest rates are high?

A: The answer to that is AI. We are still in the very early days of AI, and as I mentioned earlier, only three companies are making money from AI right now. That's Nvidia (NVDA), Microsoft (MSFT), and Google (GOOG). That number will increase as AI moves down the food chain and everybody starts using it, including you and me. I view the AI development as similar to 1995 when all of a sudden we got Netscape, a navigator that made the Internet available to the public, Dell Computers (DELL), and Microsoft (MSFT) software all at once hitting the market and creating the online economy essentially from scratch. Something of that magnitude is what the stock market is discounting now. Think of it in terms of the revolutionary new technologies of 1995, which means we have another 5 or 6 years to go, and that's why the stock market is so strong.

Q: Should I invest in Berkshire Hathaway (BRK/B), or do you think their magic will run out soon?

A: I don't think their magic will ever run out. Of course, the day that Warren Buffett dies it'll be down 10%, but then you'll want to buy it with both hands because Warren has already replaced himself with a first-class management team who is carrying on his strategy. Any selloffs in Berkshire you get this summer, go in there and buy the calls, the call spreads, the stock, the LEAPS, and the kitchen sink. Still a great long-term BUY, and I see $500 either late this year or next year in (BRK/B).

Q: I'm a member of IM Academy.

A: Oh my gosh. I would let your membership expire, except you're probably on auto-renewal, and the only way to stop your subscription is to call your credit card company and ask them to block the billings. That is the problem with these predatory financial newsletters, they're impossible to get out of, even when they promise refunds anytime.

Q: Are there any Chinese stocks you like now?

A: No, but the highest quality stock in China is Alibaba (BABA). It's basically a combination of Amazon and PayPal in China, but you still have a very high political risk investing in anything in China. The currency is very weak, so better fish to fry is my opinion. And I tend to avoid countries suffering from demographic implosions.

Q: Should we buy (TLT) now or wait?

A: I would wait until we get some upside momentum going and we complete a few more downside tests.

Q: What's the best place to put cash in the summer?

A: The answer is always good old 90-day US Treasury bills. They are still paying 5.25%.

Q: What are your thoughts on PayPal (PYPL)?

A: I'm avoiding that sector because of over-competition crushing profit margins; that has been a problem for a couple of years now. Don't confuse “gone down a lot” with cheap.

Q: Which oil companies are the best to invest in right now?

A: You can buy Exxon Mobil (XOM) for the high dividend and the sheer size of the company. My second is Occidental Petroleum (OXY), because Warren Buffett owns 25% of the company, has shrunk the float, and that has a result in magnifying any moves up in the stock. Also, I somewhat admire Warren Buffett's stock-picking ability. And of course, I’ve been following the California company OXY since 1970, back when it was run by Armand Hammer, a friend of Vladimir Lenin, so my connections with the company go back a very long time.

Q: Do you like DuPont (DD) for the three-way split?

A: I do, but DuPont has a major problem looming with lawsuits over the PFAS chemicals—those are the forever chemicals which are all over the country, all over the food supply, and cause cancer. So that could be sort of like a Johnson & Johnson-type liability problem with the talcum powder. So again…why look for trouble? Buying a stock facing that kind of liability could be another tobacco situation.

To watch a replay of this webinar with all the charts, bells, whistles, and classic rock music, just log in to www.madhedgefundtrader.com, go to MY ACCOUNT, select your subscription (GLOBAL TRADING DISPATCH, TECHNOLOGY LETTER, or Jacquie's Post), then click on WEBINARS, and all the webinars from the last 12 years are there in all their glory

Good Luck and Stay Healthy,

John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader

May 31, 2024 - Quote of the Day

Diary, Newsletter, Quote of the Day

“Life can be understood backwards, but it must be lived forwards,” said Oracle of Omaha Warren Buffet.

May 30, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
May 30, 2024
Fiat Lux

Featured Trade:

“SCALING THE CLIFF”

(PFE), (BMY)

Scaling The Cliff

Biotech Letter

Bob Dylan was right: "The times they are a-changin'". And for Pfizer (PFE), those changing times mean navigating a post-pandemic world and a looming patent cliff. Can they rise to the challenge, or will they be singing the blues?

Pfizer hardly needs an introduction. Founded 175 years ago in 1849 and publicly listed in 1942, Pfizer boasts a market cap of over $160 billion, with highly liquid options trading against its equity.

However, this stock has been on a bit of a rollercoaster lately.

With revenues exceeding $240 billion between 2021 and 2023, largely from vaccines and cancer treatments sold in over 200 countries, Pfizer's reach is undeniable.

But after hitting a record high of $61.71 a share in December 2021, it's taken a nosedive – more than a 50% drop.

So, what gives? Well, it's mostly a combo of waning demand for their Covid-19 products and the dreaded patent cliff looming over some of their top-selling drugs.

At the moment, Pfizer's portfolio paints a mixed picture, with some drugs shining brightly and others facing a cloudier future.

Their pneumonia vaccine duo, Prevnar 13 and 20, remains a reliable workhorse, raking in $6.4 billion in FY23, a 3% increase. With Prevnar 20's patent secure until 2033, it's a safe bet for continued success.

Eliquis, the blood thinner co-marketed with Bristol-Myers Squibb (BMY), is also holding its own, bringing in a respectable $6.7 billion in FY23, up 5%. However, the looming threat of generic competition in 2028 could put a damper on its future prospects.

On the other hand, Vyndaqel, a combination heart and nerve drug, has been a true standout, boasting a remarkable 36% jump in revenue to $3.3 billion in FY23.

Doctors have embraced it for treating a heart condition called ATTR-CM, but its patent situation remains uncertain with a potential expiration in 2024, unless Pfizer's extension to 2028 is approved.

Not all is rosy in Pfizer's garden though.

Comirnaty, their COVID-19 vaccine, may still be pulling in a hefty $11.2 billion in FY23, but it's a far cry from its FY22 peak. Sales have plummeted 70%, and those booster shots aren't exactly flying off the shelves anymore.

As for Paxlovid, the once-promising COVID-19 treatment, this drug has suffered an even more dramatic fall from grace, with revenue crashing 92% to $1.3 billion in FY23. To add insult to injury, Uncle Sam returned a staggering 6.5 million treatment courses.

Meanwhile, Ibrance, their breast cancer treatment, is also feeling the heat, with sales down 6% to $4.8 billion in FY23. It's facing tough competition overseas and its patent is set to expire in 2027, adding further pressure on its future performance.

To make matters worse, several other Pfizer blockbusters – Inlyta, Xeljanz, and Xtandi – are also staring down the barrel of patent expiration in the next few years.

This looming patent cliff poses a significant challenge for Pfizer, as these drugs have been major contributors to their revenue stream.

The company will need to rely on its pipeline of new drugs and strategic acquisitions to offset the potential losses and maintain its position as a leading player in the pharmaceutical industry.

Does that mean, then, that the $43 billion Seagen acquisition in December 2023 could become a lifeline for Pfizer?

Facing a double whammy of declining blockbuster sales and the looming patent cliff, Pfizer isn't sitting idly by. Seagen brings a fresh arsenal of patent-protected cancer-fighting drugs to the table, including three promising antibody-drug conjugates (ADCs).

Two of these, Adcetris for Hodgkin lymphoma and Padcev for urothelial cancer are already showing blockbuster potential, having raked in $751 million and $479 million, respectively, in the first nine months of 2023, despite the acquisition's timing.

But Pfizer's ambition doesn't stop there.

With five new therapies and six label expansions slated for oncology alone by 2026, they're banking on biologics like ADCs to fuel their growth.

They predict these cutting-edge treatments will surge from 6% to 60% of their cancer revenues by 2030, potentially yielding eight new blockbusters.

For now, Seagen's arrival is a much-needed boost to their oncology sales, which dipped 4% to $11.6 billion in FY23, even with Seagen's $120 million contribution in the final weeks of the year.

While the Seagen acquisition helps Pfizer tackle its goals of dominating oncology and fueling pipeline innovation, it's not the whole picture.

Pfizer's got a few other tricks up its sleeve: maximizing new product performance, trimming costs, and playing the capital allocation game to keep shareholders happy.

They're even planning a $3 billion spending spree from late 2023 through 2024, aiming for a cool $4 billion in annual cost savings. Talk about tightening the belt while expanding the empire.

Speaking of empires, Pfizer's 4Q23 results were a bit of a wake-up call.

Earnings per share (EPS) tanked to $0.10 (non-GAAP) on revenue of $14.2 billion, a far cry from the $1.14 EPS and $24.3 billion revenue of the previous year.

For the full year, EPS dropped a whopping 72% to $1.84 (non-GAAP), with revenue down 42% to $58.5 billion.

But, if you ignore those pesky Covid-19 products (Comirnaty and Paxlovid), the top line actually grew a bit – 8% in Q4 and 7% for the whole year.

Just remember, that Paxlovid revenue reversal in Q4 wasn't pretty, slashing both GAAP and non-GAAP EPS by $0.54.

Fast forward to Q1 2024, and Pfizer's numbers were a bit more cheerful, at least compared to what the analysts expected.

Non-GAAP EPS came in at 82 cents, a solid 30 cents above the consensus.

Revenue did fall 19.5% year-over-year to $14.9 billion, but even that beat estimates by $900 million.

Management's still sticking to their FY2024 guidance of $58.5 billion to $61.5 billion in revenue and $2.15 to $2.35 in non-GAAP EPS. We'll see if they can deliver.

That Seagen deal wasn't cheap, though, adding a hefty $31 billion to Pfizer's debt pile. As of March, they had about $12 billion in cash and marketable securities against over $61 billion in long-term debt. Yikes.

Still, management's determined to keep raising those quarterly dividends, now up to $0.42 a share in early 2024. That's a lot, considering it ate up 91% of their non-GAAP earnings in FY23 and is projected to gobble 78% in FY24.

With all that debt, don't expect any more stock buybacks in 2024. Pfizer's taking a break from that game, just like they did last year.

Despite Wall Street's lukewarm reception to Pfizer's patent cliff strategy, it's important to remember that this pharmaceutical giant is far from down for the count.

So, sure, Pfizer's 2023 revenue took a 42% nosedive compared to 2022, but let's not forget: over 620 million people worldwide still rely on their meds.

They actually scored nine FDA approvals, sold more pharmaceuticals than anyone else on the planet, and they're not sitting idly by while their product sales decline. Clearly, they're making moves.

The current bargain-basement price of Pfizer's stock, trading at a P/E of 10.4 on FY25E EPS, coupled with a juicy 5.9% yield, might just be the cherry on top for savvy investors willing to bet on the company's ability to navigate these turbulent times. Whether they can pull it off is anyone's guess, but at this price, it might be worth a gamble.