Mad Hedge Technology Letter
March 10, 2025
Fiat Lux
Featured Trade:
(TORPEDO FIRED ON TECH MARKET)
(AAPL), (NVDA), (PLTR)
“Brand is just a perception, and perception will match reality over time.” – Said Elon Musk
Mad Hedge Technology Letter
March 7, 2025
Fiat Lux
Featured Trade:
(APPLE LOOKING TO FIND ITS MOJO)
(AAPL), (SAMSUNG), (CHINA)
Not only is Apple losing its edge, but they are failing miserably against the Chinese.
China, with its state-supported behemoths, is the bully on the playground, and Apple can’t too diddlysquat.
Apple has been selling the same product for the past 13 years, and the last iterations have been underwhelming, to say the least.
People don’t want to upgrade, forcing to elongate of the refresh cycle.
It’s now so bad that Apple even ceded 5% market share in the final quarter last year to Chinese competition.
Apple is also very late in integrating AI features, signaling that Apple’s software game is behind the times and mediocre at best.
Apple risks falling behind quickly, and the Chinese have really nailed the consumer tech and muscled into this industry.
They are poised to dominate EVs, smartphones, and other value-added tech in the upcoming years.
They plan to seize the moment and squeeze American companies out of the way for good.
Samsung also has been going through a disastrous down cycle after their Android flagship phone peaked a few years ago.
This new trajectory is a slippery slope, and if Apple goes on the cost-cutting path, there will be little talent left to innovate out of this problem.
The iPhone slipped a point to 18% worldwide market share in 2024.
Apple marked a 2% sales decline for the full year at a time that the wider market grew 4% globally.
China’s smartphone makers are all developing their own in-house AI tools and agents, including services that can perform tasks on a user’s behalf.
Samsung also gave up share to faster-growing Android device makers from China, led by Xiaomi and Vivo. Apple marked a 2% sales decline for the full year.
The situation paints a picture of the non-Chinese smartphone markets in a world of hurt.
I believe that Apple and Samsung have nobody to blame but themselves, as those years of forced technological know-how transfer are coming back to bite them where it hurts.
My friends’ kids have these new Chinese smartphones, and I can tell you that I was surprised about how good they perform.
They are run on Android, which is very different from IoS, but they were premium.
German car companies are also feeling this bitter pill as Chinese companies have taken their own technology and implemented it in a more affordable way.
In aggregate, this latest news is a bad omen for Apple’s earnings season.
They are barely jumping over a lower bar, and that will keep happening until something major is revamped in the product lineup.
I believe any steep sell-off would be a nice opportunity to execute a short-term trade to the upside, but those years of buying and holding Apple until eternity is gone.
Readers must really nitpick what this company is doing because management presides over a dull model, and their China business is falling apart as we speak, all while they helped the local Chinese competition over many years take market share with forced technological transfers.
Surprisingly, the stock has done well during the tariff rhetoric and has trudged along sideways while other stocks have really felt the full brunt of the trade escalation.
If we get a smooth patch, I would advocate for a tactical trade to the upside in AAPL.
“Constantly seek criticism. A well thought out critique of whatever you're doing is as valuable as gold.” – Said Elon Musk
Mad Hedge Technology Letter
March 3, 2025
Fiat Lux
Featured Trade:
(PALANTIR IS ONE TO LOOK AT)
(PLTR), (AI)
Even with Palantir’s short-term pullback of 30%, the stock is still up 16% year to date, showing how potent the price action of the stock really is.
There is a lot to like about PLTR, especially its connection to the White House.
Lost in all the commotion of the sell-off, this is a legit AI company, and companies of this ilk are fetching massive premiums on the open market.
Therefore, I wouldn’t view this firm with a glass-half-empty type of price trajectory because legit AI companies get bought up on the dip for a reason.
Much of the downdraft in shares has to do with all the federal budget cuts.
The amount of fraud that occurred is staggering, but I don’t think the feds will throw out the baby with the bath water.
These companies aids in the security of the United States through software, and I don’t think this business is going away anytime soon.
I also don’t believe any cuts from the federal government will hurt PLTR.
This company is not syphoning off taxpayer funds and has a lot of credibility in business circles.
The artificial intelligence (AI) company is growing quickly, but due to its reliance on government contracts, investors are worried that potential budget cuts at the Department of Defense and other government agencies could hurt the business. Despite the drawdown, Palantir is still valued at over $195 billion.
New Secretary of Defense Pete Hegseth said he aims to cut 8% from the defense budget every year for the next five years. That is not a one-time cut of 8% but five consecutive years of cuts.
Hegseth is starting with civilian workers, aiming to cut over 5,000 people from the payroll. Investors took this as a negative sign for Palantir and other defense contractors, breaking the momentum of the stock.
In 2024, Palantir generated $1.57 billion in revenue from government contracts, making it only a small part of the federal budget. Despite the current administration's proposed cost cuts, I still expect this figure to grow in the coming years.
In recent years, government contracts have also become a shrinking share of Palantir's top line. A push into the commercial sector has been very successful, with the company winning hundreds of customers for its AI and software tools.
U.S. commercial revenue grew 64% year over year in Q4 2024 to $214 million, and the commercial segment now makes up 45% of overall sales. While the government segment is still growing, the commercial side is growing even faster.
The commercial market is simply much larger and could provide a $10 billion-plus revenue opportunity for Palantir. Last quarter, its backlog for U.S. commercial contracts grew 99% year over year to $1.79 billion.
Any weakness at the government level could be made up by private sector businesses.
Once looking at the real numbers, PLTR is the real deal, and one of its founders, Peter Thiel, is the mentor to the United States Vice President JD Vance.
Ultimately, I felt a bullish position is worth the risk in the short-term, and I believe by March 21, the stock should stay above $72.50.
“Man has the power to act as his own destroyer - and that is the way he has acted through most of his history.” – Said Elon Musk
Mad Hedge Technology Letter
February 28, 2025
Fiat Lux
Featured Trade:
(BITCOIN PRICE A SCARE)
(MSFT), (META), ($BTCUSD)
It’s fascinating that Bitcoin was supposed to be the new currency of the Trump administration, and under those conditions, one might believe the price of Bitcoin will double and triple pretty soon.
The results have been dire since the new President took over, with the price of Bitcoin cratering to $77,000 per coin from $107,000.
These devastating results have caught traders off guard, and many have lost their shirts in the quiet storm.
I don’t really care about Bitcoin personally, and I’m usually not in the business of recommending the product, but I do care what it signals about liquidity and the risk on/off sentiment.
The tariffs are starting to scare investors, and we see it in the price of Bitcoin.
Liquidity being pulled can create a cascading effect where nobody knows where the floor is.
Bitcoin could fall a lot further, considering many could just not be bothered to fight through the tariffs and can’t stomach it.
Nobody ever went bankrupt from taking a profit, right?
With all-time highs in many asset classes, it is almost as if Trump thinks he is playing with house money to push through aggressive strategies that put enormous trade pressure on other countries.
It’s a political calculus that fosters uncertainty, and many know that markets hate uncertainty, especially tech stocks.
On the heels of a good Nvidia earnings report, we have received a sell on the news price action, and that is very negative to the overall tech sector.
Year to date, we stand 3.5% in the red, but looking to March expiration, I believe this is a short 3-week buying opportunity until the next bevy of geopolitical chaos.
I recommend keeping your portfolio small for the time being and let the trade rhetoric pass through until you go big.
I did execute 2 more bullish positions in Palantir and Microsoft today.
A rout in Bitcoin deepened forced money to the sideline in the face of the most popular Trump trades.
Alt coins also did poorly too with Ether, Polkadot, and XRP all dropping more than 7% in one day.
Remember in 2022 during the crypto winter, when prices plummeted amid rising interest rates and industry woes.
Trump said Thursday that 25% tariffs on Canada and Mexico would come into force from March 4, undermining hopes he might reverse course after a previous delay. He also said Chinese imports would face a further 10% levy, prompting officials in Beijing to promise “all necessary measures” in response.
The selloff underscores a swift change of fortunes for what was previously one of the most popular Trump trades in global markets: buying Bitcoin on the expectation that the president’s crypto-friendly approach would lead to a broad rally.
Traders are still waiting for Trump to come up with concrete steps for the sector, including a Bitcoin stockpile.
Trump has already made a few changes that have pleased crypto bulls, including putting crypto advocates in key positions. The Securities and Exchange Commission, which embarked on a year-long crackdown under former Chair Gary Gensler, has also closed investigations into several crypto outfits in recent weeks.
Readers shouldn’t get too rattled by the geopolitics.
More often than not, the bluster serves as a good entry point into tech stocks.
I do believe 2025 will be the year of volatility, and buying on these big dips is a big part of our benefit to it.
