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april@madhedgefundtrader.com

September 6, 2024

Tech Letter

Mad Hedge Technology Letter
September 6, 2024
Fiat Lux

 

Featured Trade:

(BROADCOM A LONG-TERM WINNER)
(AI), (NVDA), (AVGO),

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2024-09-06 14:04:552024-09-06 16:00:42September 6, 2024
april@madhedgefundtrader.com

Broadcom A Longterm Winner

Tech Letter

The chip trade isn’t in the dumps, but traders are taking a fine tooth comb to earnings guidance to see if the numbers are stacking up with the hype.

Today we got yet another data point that suggests chip stocks are great, but they aren’t living up to the lofty expectations of growth that tech companies are used to.

In short, they are too expensive and investors want a cheaper multiple for chip stocks right here and now.

So be prepared for a little bit of a selloff in the immediate short term.

One of the best second-tier chip stocks and one of Apple's biggest customers gave us a glimpse into operations behind the scenes at one of Silicon Valley’s robust silicon makers.

Broadcom (AVGO) delivered a disappointing sales forecast, hurt by the parts of its business that aren’t tied to artificial intelligence.

The company projected sales of roughly $14 billion in the fourth quarter while they expect $12 billion of revenue from AI-related products for the full year, beating the average estimate of $11.8 billion.

The forecast showed that Broadcom’s non-AI operations are growing more slowly than anticipated. Though the company has benefited from a surge in artificial intelligence spending, not all of its wide-ranging divisions are significantly profiting.

The AI spending boom has turned Broadcom’s rival Nvidia (NVDA) into the richest, most valuable company in the industry. Nvidia sells so-called AI accelerators that help develop tools such as ChatGPT. Broadcom has benefited as well by supplying related components and software.

Datacenter providers rely on Broadcom’s custom-chip design and networking semiconductors to build their AI systems. The company also sells components for cars, smartphones, and internet access gear. Its push into software, meanwhile, includes products for mainframe computers, cybersecurity, and data center optimization.

Over the long term, the AVGOs CEO believes that the AI chip market will move to custom, in-house designs. That would mean shifting away from Nvidia components — a change that could benefit Broadcom since it helps customers produce their chips.

Apple is a top customer as well: Broadcom provides key components for the iPhone.

Chip stocks were hovering at an all-time high just a few weeks ago.

The scandal that spurred a selloff in chips was the accounting issues at SuperMicro.

The initial event opened up a can of worms and signaled to traders to take profits while conditions were still favorable.

Now chip stocks are telling traders that they cannot keep up with the high expectations and investors will need to taper back the whole idea that AI is about to overtake the world.

Even if AVGOs AI business is doing exceptionally well, they have a legacy business that is bringing up the rear and could be a drag on the overall business for years to come.

AVGO is still a stalwart in the chip business with interests in the right verticals and I do believe it is still a long-term buy especially considering they still haven’t successfully integrated VMware.

 

 

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2024-09-06 14:02:542024-09-06 16:00:08Broadcom A Longterm Winner
april@madhedgefundtrader.com

September 6, 2024

Jacque's Post

 

(INVESTORS ARE PAYING ATTENTION TO CHINA’S EV INDUSTRY)

September 6, 2024

 

Hello everyone

 

Xpeng (XPEV) to launch new models later this year.

Chinese EV maker, Xpeng could see a significant move by the end of the year as two new key EV models are being unveiled in the fourth quarter of this year.

JP Morgan has upgraded the China-based electric vehicle maker from overweight to neutral.  It also increased its price target for U.S.-listed shares to $11.50 from $8 per share.  From Wednesday’s close that implies a 36% upside.

The demand for EV’s globally has cooled in 2024.  Consumers have obviously rebelled against the EV adoption marketing slogans & EV technology and have instead dug in their heels…sticking closely to their traditional gas-guzzling machines.

Demand in China for EV’s has been much higher compared to the U.S.  The rollout of its Mona M03 and P7 plus sedans could nearly double the company’s overall vehicle delivery from the third to the fourth quarter.

At a starting price of $US16,812.00, the Mon M03 is directed at the lower to middle-income earner.

Looking into 2025, the current estimate is that sales volume can top 300k units thanks to more new models, which is a big jump from 180k in 2024. 

Shares could see growth on the heels of the new vehicles.  When Xpeng launched its G6 sports utility vehicle in 2023, the stock advanced roughly 30%.

 

Weekly (XPEV) chart

 

The Mona M03

 

I recommended (XPEV) on March 15 this year when it was $10.05.  If you bought some shares at that time and are still holding – well done for showing patience.

For those that don’t own the shares, you can either watch the action in the shares from the sidelines or buy a small parcel of the stock over the next month.

You can see from the chart above that the stock has moved sideways since the beginning of year, which could be a precursor to a breakout rally. 

China appears to enjoy a solid position in the EV industry.   The country is now the world’s largest exporter of cars, having surpassed Germany and is even now outpacing Japan.  By destination, the EU holds the majority share, accounting for 47% of China’s EV exports in value last year; exports to Thailand, the Philippines, and India have also proved strong.  In a strong contrast, exports to the U.S. fell 32% year over year in January – October, curbed by high taxes and U.S. restrictions.  China’s automakers pay a 27.5% import duty to send vehicles to the U.S. compared with just 10% on cars sent to the EU.

 

SOMETHING TO THINK ABOUT

 

 

Have a wonderful weekend.

Cheers

Jacquie

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2024-09-06 12:00:512024-09-06 12:09:12September 6, 2024
april@madhedgefundtrader.com

September 6, 2024

Diary, Newsletter, Summary

Global Market Comments
September 6, 2024
Fiat Lux

 

Featured Trade:

(ANOTHER CRYPTO VICTIM BITES THE DUST)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2024-09-06 09:04:582024-09-06 10:05:56September 6, 2024
april@madhedgefundtrader.com

Trade Alert - (TSLA) September 5, 2024 - STOP LOSS - SELL

Trade Alert

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

https://www.madhedgefundtrader.com/wp-content/uploads/2016/02/Alert-e1457452190575.jpg 135 150 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2024-09-05 15:10:502024-09-05 15:10:50Trade Alert - (TSLA) September 5, 2024 - STOP LOSS - SELL
april@madhedgefundtrader.com

Trade Alert - (CVNA) September 5, 2024 - BUY

Tech Alert

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

https://www.madhedgefundtrader.com/wp-content/uploads/2016/02/Alert-e1457452190575.jpg 135 150 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2024-09-05 13:33:332024-09-05 15:03:59Trade Alert - (CVNA) September 5, 2024 - BUY
april@madhedgefundtrader.com

September 5, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
September 5, 2024
Fiat Lux

 

Featured Trade:

(A VERY STRONG CELL-ING POINT)

(TXG), (NSTG), (BRKR), (ILMN), (BMY), (GILD), (BIO)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2024-09-05 12:02:432024-09-05 12:14:00September 5, 2024
april@madhedgefundtrader.com

A Very Strong Cell-ing Point

Biotech Letter

I've been tracking the biotech sector for decades now, and let me tell you, we're on the cusp of something big. Single-cell and spatial genomics are shaking up cancer research like nothing I've seen before.

Remember when we used to look at tumors as one big blob of cells? Those days are gone.

Now, it's not just about understanding tumors anymore – it's about dissecting them cell by cell, mapping them out like uncharted territories.

Single-cell genomics is giving us a front-row seat to the cellular soap opera playing out in every cancer.

From where I'm sitting, this is the kind of revolution that separates the wheat from the chaff in my portfolio. We're not just identifying the players anymore. Instead, we're mapping out their positions and interactions with unprecedented precision.

Take what's happening at St. Jude Children's Research Hospital. They're using single-cell genomics to crack the code on why some stages of B-cell acute lymphoblastic leukemia thumb their noses at chemotherapy.

And this isn't just academic navel-gazing. It's actually paving the way for treatments that pack a real punch.

Or look at what Fynn Biotechnologies is doing with 10X Genomics' (TXG) Xenium In Situ platform.

They're peering into breast cancer tumors and finding that the neighborhood where immune cells hang out can make or break immunotherapy.

This is the kind of insight that turns the one-size-fits-all approach to cancer treatment on its head.

Now, let's talk turkey. Where's the money in all this? I've got my eye on a few players.

First up, 10X Genomics. These folks aren't just dipping their toes in the single-cell and spatial genomics pool; they're doing cannonballs.

Their Chromium and Xenium platforms are becoming the go-to tools for researchers and clinics alike.

And the numbers don't lie – they pulled in $156 million in Q2 2024, up 25% from the year before.

NanoString Technologies (NSTG) is a bit of a different story. They've been a big name in spatial biology with their GeoMx Digital Spatial Profiler, but they've hit some rough waters.

Filing for Chapter 11 in early 2024 wasn't on anyone's bingo card. Despite a solid Q4 2022 with $36.2 million in revenue (up 29% year-over-year), their legal tussle with 10x Genomics and other financial headaches have put them in a tight spot.

But don't count them out yet – Bruker Corporation (BRKR) swooping in to buy up their assets might just be the lifeline they need.

Illumina Inc. (ILMN) is another heavyweight worth watching. I’ve said it before, and I’ll say this again – this biotech is the reigning 800-pound gorilla in DNA sequencing. And now, they're muscling into single-cell genomics.

Their acquisition of GRAIL shows they're serious about early cancer detection. Sure, they've had some regulatory speed bumps, but with a market cap of about $33 billion in Q3 2024, they're not going anywhere.

Don't overlook the big pharma players either. Bristol-Myers Squibb (BMY) is betting big on precision medicine, teaming up with 10X Genomics to bring single-cell analysis into their drug development pipeline.

With BMY’s oncology portfolio raking in $17.3 billion in 2023, they've got the cash to make big moves.

Gilead Sciences (GILD) is another one to keep an eye on. Their purchase of Kite Pharma put them in the cell therapy game, and they're not shy about using genomic data to develop new cancer treatments. In fact, their cancer segment grew by 22% in 2023.

And let's not forget Bio-Rad Laboratories (BIO). They might have seen a slight dip in net sales from $2.9 billion in 2022 to $2.68 billion in 2023, but their Single-Cell ATAC-Seq Solution is still a key player in epigenomic analysis.

Now, let's zoom out and connect the dots. The genomics market is on a tear.

We're looking at a jump from $18.85 billion in 2020 to a projected $62.9 billion by 2028. That’s a massive growth, and it's directly impacting companies across the board.

Take 10X Genomics, for instance. Their Q2 2024 revenue hit $156 million, a 25% year-over-year increase that's directly tied to the surging demand for their single-cell and spatial genomics tools.

The single-cell genomics market alone was worth $2.4 billion in 2022 and is looking at a CAGR of 16.7% from 2023 to 2030.

Meanwhile, the precision medicine market, fueled by these genomic advancements, is projected to balloon from $66.1 billion in 2023 to $140.6 billion by 2030.

Let's not kid ourselves, though. Biotech investing is not for the faint of heart. You've got to have the stomach for high R&D costs, regulatory labyrinths, and cutthroat competition.

Just look at NanoString Technologies - one minute they're reporting a 29% revenue increase, the next they're filing for Chapter 11. It's a rollercoaster, but for those who can hang on, the potential payoff is enormous.

So, where does this leave us? Well, I didn't spend decades in this game to tell you to play it safe, but I'm not here to see you bet the farm either. Instead, I’m here to tell you to play it smart.

Add those nimble upstarts like 10x Genomics to your watchlist - they're the racehorses that could leave the pack in the dust.

And when the market gets jittery, that's your cue to swoop in on steady workhorses like BMY and Gilead. They might not be as sexy, but they’ve got the tried-and-tested staying power.

Remember, in biotech, today's underdog can become tomorrow's alpha faster than you can sequence a genome.

So stay alert, keep your powder dry, and for Pete's sake, don't wait for a gilded invitation to buy the dip.

 

 

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2024-09-05 12:00:302024-09-05 12:14:45A Very Strong Cell-ing Point
april@madhedgefundtrader.com

September 5, 2024

Diary, Newsletter, Summary

Global Market Comments
September 5, 2024
Fiat Lux

 

Featured Trade:

(COFFEE WITH RAY KURZWEIL)

(GOOG)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2024-09-05 09:04:192024-09-05 10:32:21September 5, 2024
Douglas Davenport

THE 3C’S OF AI

Mad Hedge AI

(AI), (AMZN), (GOOG), (MSFT), (ACN), (BAH), (MTCH), (PLTR), (SPLK), (SNOW)

The other day, I overheard my kids explaining AI to their friends using the video game they’re playing. 

By the time they finished, I realized two things: One, I'm never going to understand Fortnite. Two, if a preteen gets the potential of AI, we'd better pay attention.

Now, you might be thinking, “John, haven't we heard enough about AI?” Well, let me ask you this: Have you ever had enough money? Didn't think so. 

So, as I was saying, the AI market is set to explode from a measly $136 billion last year to a mind-boggling $827 billion by 2030. 

And here's the thing - we're still in the early innings of this game. It's like we've just finished the national anthem and the first pitch hasn't even been thrown. And in this ballgame, I've got my eye on a player that might just hit it out of the park: C3.ai (AI).

Now, before you roll your eyes at another ".ai" company, hear me out. This isn't just another tech firm slapping "AI" onto its name to ride the hype wave.

C3.ai is positioning itself as a one-stop-shop in the AI world. They're not just selling software; they're selling the picks and shovels for the AI gold rush. 

And let me tell you, in a gold rush, you want to be the one selling the tools, not the one with blisters on your hands from digging. Let’s look at the company’s recent performance, shall we? 

Based on their reports, C3.ai’s revenue jumped 16% to $310.6 million in fiscal 2024. I know that 16% might not sound like much to you youngsters used to seeing crypto coins go up 1,000% overnight, but in the real world of enterprise software, that's solid growth. 

And they're projecting $382.5 million for the current fiscal year - a 23% increase. 

Now, here's where things get interesting: C3.ai's customer agreements surged by 52% to 191, thanks largely to their powerhouse partner network. 

This network features big names like Amazon (AMZN), Alphabet (GOOG), Microsoft (MSFT), Accenture (ACN), and Booz Allen Hamilton (BAH), which helped drive much of this growth.

In fact, 115 of those agreements came through these partners, marking a 62% jump from last year.

That's like your Tinder (MTCH) matches suddenly going through the roof (yes, I know how it works, I'm not living under a rock) — it means you're doing something right. 

Next, let's talk valuation. C3.ai is trading at 9 times sales. Is that cheap? Not by your grandfather's standards. But we're not buying IBM here, folks. 

We're buying a ticket to the AI revolution. And compared to some of the frothy valuations I've seen in my time, it's not that outrageous.

Sure, they're not profitable…yet. But neither was Amazon for years, and look how that turned out. 

Actually, the Street expects C3.ai's bottom line to grow at a 51% clip for the next five years. That's the kind of growth that can turn a modest investment into a down payment on that beach house in Malibu you've been eyeing.

But let's not get ahead of ourselves. While the growth story is compelling, there are some wrinkles to consider. That is, C3.ai remains a speculative play at this point. 

Right now, I’m treating C3.ai like that brilliant but erratic friend from college - tons of potential, but you're never quite sure if they're going to end up as a tech billionaire or living in their parents' basement. 

For one, I know that C3.ai’s transition to a pay-per-use model is smart. But, it's also disruptive. Because while their subscription revenue growth of 41% is impressive, it's also volatile.

If you review their reports, it’s easy to spot that this shift might be causing some growing pains. Just look at their latest fiscal quarter. 

While C3.ai’s revenue grew 20% annually, its operating costs also jumped by 11%. That's not exactly the kind of cost control that gets investors excited.

And let's not forget the competition. This is the world of AI, where everyone and their grandmother is trying to get a piece of the pie. That means C3.ai needs to keep innovating faster than its peers just to stay ahead.

There's also the question of valuation. When compared to peers like Palantir (PLTR), Snowflake (SNOW), and Splunk (SPLK), C3.ai is trading at a premium. This suggests that a lot of the growth potential might already be baked into the stock price.

And, of course, let's not forget about those earnings estimates. For the current fiscal year, analysts are expecting a loss of $0.54 per share. 

The next fiscal year looks better with an expected loss of $0.23 per share - an improvement of 56.7%, but still in the red.

So, what's the play here? Well, if you've got the stomach for it, C3.ai could be a worthy addition to the speculative portion of your portfolio. It's not for your widow and orphan money, mind you. 

But for those of you looking to spice up your investments with a dash of AI hot sauce, C3.ai might just fit the bill.

 

https://www.madhedgefundtrader.com/wp-content/uploads/2024/09/Screenshot-2024-09-04-163147.jpg 648 643 Douglas Davenport https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Douglas Davenport2024-09-04 16:33:352024-09-04 16:33:35THE 3C’S OF AI
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