Market Preview: Chips Hurt Nasdaq and Trade Buoys Broader Market

Investors endured another roller coaster ride in the markets Friday. Tech weighed heavy early on the Nasdaq after chip darling NVIDIA (NVDA) was slammed for reporting a negative outlook. The GPU maker said crypto mining is declining after the recent losses in Bitcoin. Bitcoin plummeted through the $6,000 level on Wednesday and is now trading around $5,600. NVIDIA finished the day down 18.76%, and is now down over 43% from an all-time high set just last month. But, upbeat news on China rallied the markets near the close, putting both the DJIA and S&P 500 in positive territory.. President Trump, speaking to reporters in the Oval Office, said he thinks a deal with China will be done. The positive comments follow a week in which other positive news, a definite meeting of Trump and Xi at the G20, and word that staffers on both sides are talking again, slowly began to paint a more positive picture. This allowed investors to take a few positives into the weekend. On top of the trade news, oil remains much lower than it was a month ago, a positive for all the companies (and consumers) that benefit from lower oil prices. And, the Fed has now stated from more than one source that it does see signs of a global slowdown. And, they will be watching the data as the Fed embarks on rate increases, as opposed to following a rote script.

Although earnings season has begun to wind down, there are still a number of high profile companies reporting next week. Monday Agilent (A) and Intuit (INTU) report earnings. Agilent has shown strength in its life sciences and genomics group in recent quarters. Analysts will be looking for accelerating growth in these areas. While growing its Quickbooks user base, Intuit has been adding international users at a much higher clip, though granted from a smaller base, the past few quarters. Investors would like to see the international growth continue at this rapid pace and possibly offset any softness in U.S. numbers.

Monday brings the release of the housing market index and ecommerce retail numbers. The housing market index, focused on new home purchases, will be of particular interest after the recent warning from KB Homes (KBH) sent the stock lower. More housing numbers are on tap for Tuesday when housing starts are released. We’ll also see Redbook retail numbers. And, to complete the housing picture on Wednesday, both mortgage applications and existing home sales will be released. The data should give a better picture of a housing market which has been slowing rapidly as mortgage rates have risen the past few months. Also released on Wednesday will be durable goods, consumer sentiment, and jobless claims data. There’s no data on Thursday as markets are closed for the U.S. Thanksgiving Day celebration. Those who have recovered from the holiday celebration can pour over flash composite PMI numbers Friday morning.

Best Buy (BBY) and Analog Devices (ANI) take center stage with earnings on Tuesday. Analysts are looking for projected holiday numbers from Best Buy with the release of a plethora of new video games in the second half of 2018. Wednesday investors will hear from John Deere (DE) and Baozun (BZUN). Last quarter Deere complained of rising costs impacting earnings. Sundlands Online Education Group (STG) is scheduled to close out the holiday week on Friday.

Buffett just went all-in on THIS new asset. Will you?
Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.

7 Artificial Intelligence Stocks for an AI Revolution

Source: Shutterstock

We are on the precipice of the Artificial intelligence (AI) era. Whether you like it not, the future is coming. So are you wondering which stocks you should be tracking now to get an investing edge on this major trend? Luckily RBC Capital Markets is here to help. Its just-released report looks out to the year 2025 and imagines which companies will be winners of the Great AI Race.

The firm writes: “To date, AI is still solving fairly basic tasks. But the ingredients are there for AI to accomplish something much more substantial. We believe the application of AI will have very broad implications across a wide swath of industries (Internet, Autos, Banking, Software, Macro Economy, Health Care, and Utilities, to name a few) over the next 5-10 years.”

Here I dial down into seven of the most promising of these artificial intelligence stocks. I used TipRanks market data to source the stocks in the report that have a “strong buy” analyst consensus. This is based on all the stock’s ratings over the last three months. That means that these stocks are also promising investing opportunities right now — you don’t have to wait until 2025 to make an investment! Let’s take a closer look:

Amazon (AMZN)

AI Stocks to Buy: Amazon (AMZN)

Source: Shutterstock

Amazon (NASDAQ:AMZN) is basically applying AI and machine learning to just about every part of its business. In fact, Amazon is estimated to spend 80% more than Alphabet on AI-related jobs! (At $228M vs $125M in 2017 according to Paysa). And as RBC Capital sees it, all this hard work is paying off.

“Overall, while it is still relatively early in the AI lifecycle, leaders are emerging quickly and we believe Amazon is one of them” says RBC Capital.

Here’s why: AI is primarily a prediction technology that gets better as more, relevant data and information is fed to the system. Not only does Amazon have the resources (~$30B in cash) to invest in AI stocks, but it also has the scale and the ability to generate large volumes of data.

In other words, Amazon’s global scale gives it a huge advantage in improving its own position using AI. This is through 1) retail sales growth; 2) Amazon Web Services (AWS) cloud sales growth; and 3) reduction in operating costs.

From a Street perspective, Amazon is currently a “strong buy” among artificial intelligence stocks, with juicy upside potential of 33%. Interested in AMZN stock? Get a free AMZN Stock Research Report.

PaloAlto Networks (PANW)

AI Stocks to Buy: PaloAlto Networks (PANW)

AI is a pretty disruptive force when it comes to the world of cyber security.

And one key company taking advantage of that fact is Palo Alto Networks (NYSE:PANW). “Within our software universe, we would highlight Palo Alto as a likely winner in the category [Security and AI/ machine learning]” says RBC Capital.

Notably, PANW’s WildFire uses machine learning to identify potential risks even if they have not been seen before. This groundbreaking product pulls thousands of features from each file comparing them to data of known threats to discover new malware and exploits.

RBC sums up “WildFire provides excellent visibility into the past and current threat landscape.”

Plus new AI developments are on the horizon for Palo Alto. The company has just snapped up Evident.io for $300M and RedLock for $173M. Combing the tech from these two acquisitions, PANW plans to launch a product in 2019 that takes AI to multi-cloud security analytics by correlating disparate data sets.

This is an artificial intelligence stock with a “strong buy” Street consensus and 45% upside potential. Get the PANW Stock Research Report.

Salesforce (CRM)

Artificial Intelligence Stocks to Buy: Salesforce (CRM)

Source: Shutterstock

Are you ready for Salesforce’s (NYSE:CRM) Einstein? Thanks to several savvy AI acquisitions, Salesforce has created Salesforce Einstein. The equation: Customer data + AI + the Salesforce platform = World’s smartest CRM.

This has multiple applications. By capturing data from various channels, Einstein can:

1. Guide sales (by providing insights like high lead scores, crafting emails, etc),

2. Assist service agents (prompts),

3. Empower marketers (enhancing predictive journeys), and

4. Improve commerce (personalized recommendations).

And the confidence on Einstein is echoed by other firms. Here’s one takeaway from Rosenblatt’s Marshall Senk  (Track Record & Ratings) last month following CRM’s Dreamforce conference:

“Among large multi-cloud customers we met with, we continue to see significant opportunity for seat expansion, driven in large part by adoption of Einstein and the push into vertical markets.”

He’s particularly excited about Einstein Voice, a new feature which allows users to communicate with the platform via voice commands, similar to how Alexa is used in the home.

Out of 29 analysts polled, an impressive 27 are bullish on CRM right now. That’s with a price target of $176 (33% upside potential). Get the CRM Stock Research Report.

Nvidia (NVDA)

AI Stocks to Buy: Nvidia (NVDA)

Source: Shutterstock

Chip stock  Nvidia (NASDAQ:NVDA) has a crucial asset when it comes to the AI race. This is the company’s Cuda Software aka its secret sauce that lies underneath the whole ecosystem.

For the uninitiated, Cuda stands for Compute Unified Device Architecture, and is a parallel computing platform and programming model developed by Nvidia for GPUs. With CUDA, developers are able to dramatically speed up computing applications.

“While there are no guarantees of a winner in the AI stocks race, we think Nvidia is well ahead of its peers and is continuing to gain traction due primarily to the value of Cuda software” cheers RBC Capital.

It estimates that there are currently over one million engineers working with Cuda. Also note that Cuda is used for not just Data Center but self-driving vehicles and gaming. This gives the company an “in” to all three key platforms.

Right now this “strong buy” artificial intelligence stock has stacked up 21 buy ratings in the last three months, vs six hold ratings. This is with a $286 price target (41% upside potential). Get the NVDA Stock Research Report.

Alphabet (GOOG, GOOGL)

AI Stocks to Buy: Alphabet (GOOGL)

Source: Shutterstock

If gasoline was the most important factor to the automobile industry, then information is likely the most important factor in the AI stocks race.

Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) has access to the largest data from search and the largest computing power. This places the company in prime position for AI gold.

AI enables Google to develop new ways to organize the world’s information and make it universally accessible and useful. This includes using your voice to ask the Google Assistant for information, to translate the Web from one language to another, to see better YouTube recommendations and to search for people and events in Google Photos.

Plus Google is creating many of the tools AI researchers are using to develop applications. For example, its second generation TPU (Tensor Processing Unit) is a custom- built processor specifically built for machine learning.

And now is a good time to snap up this artificial intelligence stock: Out of 30 polled analysts, 27 are bullish on GOOGL. Even with shares over $1,000 these analysts still see upside potential of over 26%. Get the GOOGL Stock Research Report.

ServiceNow (NOW)

AI Stocks to Buy: ServiceNow (NOW)

Shares in ServiceNow (NYSE:NOW)  have surged over 200% in the last five years. So what could happen by 2025? Well the firm sees its Intelligent Automation Engine as “ushering in a new era of workplace productivity.” It wants to bring machine learning to your everyday work.

This essentially translates into using machine learning to accurately categorize and route tasks, prevent future issues and precisely predict performance metrics. Plus ServiceNow utilizes AI and ML techniques to increase automation and alert accuracy making sure that IT workers can focus on real problems and help avoid “alert fatigue.”

“This level of automation helps to make the most of human capital being able to process more tasks while ensuring the highest priority tasks are addressed promptly” says RBC Capital.

In total, eight out of nine polled analysts are bullish on this “strong buy” AI stock right now. And with an average analyst price target of $218, upside potential stands at 29%. Get the NOW Stock Research Report.

Microsoft (MSFT)

AI Stocks to Buy: Microsoft (MSFT)

Source: Shutterstock

This list wouldn’t be complete without Microsoft (NASDAQ:MSFT). Like GOOGL and AMZN, MSFT benefits from 1) massive amounts of raw compute power; 2) large data sets; and 3) ability to hire the smartest data scientists on the planet.

“We believe Microsoft is in an enviable position vs other public cloud competitors as their customers can also leverage AI and ML capabilities on premise, something [Amazon’s] AWS and [Google’s] GCP can’t deliver natively” points out RBC Capital.

It picks Microsoft as the Number 1 AI company in the public cloud space thanks to the company’s rapidly growing Azure cloud platform.

Alongside AI tools and infrastructure, AI-based Azure services include everything from Azure Bot Service specifically for bot development and Azure Machine Learning services that provides a preset library of algorithms to quickly create and deploy models all from the cloud.

Meanwhile, Microsoft’s AI School gives developers the tools they need to start building and implementing the tech into their own solutions.

Also in this artificial intelligence stock’s favor is its very bullish outlook from the Street in general. With a “strong buy” consensus, 21 out of 22 analysts rate Microsoft a “buy.” Its average analyst price target is currently at $124. Get the MSFT Stock Research Report.

Buffett just went all-in on THIS new asset. Will you?
Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.

Source: Investor Place

Two Smartphone Makers Nipping at Apple’s Heels

Here is something that may startle you and it’s a subject I will cover in a future issue of Growth Stock Advisor for my subscribers:

A research paper by Professor Hendrik Bessembinder, published in the September edition of the Journal of Financial Economics, posed this question “Do Stocks Outperform Treasury Bills?”. The end result was some rather worrying conclusions for equity investors.

He studied stock returns from 1926 through 2016 and found that out of the universe of 25,967 U.S. stocks in the study, just five companies account for 10% of the total wealth creation over the 90 years, and just over 4% of the companies account for all of the wealth created!

In other words, you need to find the winners over the long-term to be a successful investor.

Apple Stock Selloff

Up until now one of those long-term winners had to be Apple (Nasdaq: AAPL). But some are beginning to question that assumption for the world’s most valuable company.

That can be seen in its recent price action taking it out of the exclusive trillion dollar valuation club. Apple shares, prior to last week, were in the longest weekly streak since November 2012 and had its biggest two-day drop since January 2013. The drop was fanned by twin pieces of negative news…

First, the Nikkei Asian Review reported the company had asked contractors Foxconn and Pegatron to halt plans to ramp up production of the new XR model. That report came just days after Apple gave a disappointing outlook for the upcoming holiday season and, most importantly for me, Apple said it would stop reporting unit sales for iPhones, iPads and Macs. That fanned concerns that demand for the company’s smartphones may have peaked.

 Production Slowdown

Let me tell you first about what the Nikkei reported about Apple cutting its production of the new iPhone XR. This relatively ‘cheap’ iPhone model only hit the shelves in October.

Foxconn had prepared nearly 60 assembly lines for Apple’s XR model, but was recently using only about45 production lines as Apple told it not to manufacture as many XRs as previously planned. That means Foxconn would produce around 100,000 fewer units daily to reflect the new demand outlook. The new production figure is down 20% to 25% from the original optimistic outlook.

Fellow Taiwanese manufacturer Pegatron faces a similar situation, suspending plans to ramp up production and awaiting further instructions from Apple. Apple also had asked smaller iPhone assembler Wistron to stand by for rush orders, but supply chain sources told the Nikkei the company will now receive no orders for the iPhone XR this holiday season.

Apple had great expectations that the iPhone XR would jump-start shipments this year. This lower-cost model debuted alongside the iPhone XS and top-of-the-line XS Max. But now, Apple instead is requesting more of the older iPhone 8 and iPhone 8 Plus models, which are up to 20% cheaper than the XR’s starting price of $749. Apple previously planned 20 million units for the older iPhone models this quarter, but raised that figure by 25% to 25 million units.

The moves to add orders for year-old iPhone models, while suspending extra production for the latest product, may be pointing to Apple’s lack of innovation regarding phones.

Adding to the news coming out of Asia was news from Apple supplier, Lumentum Holdings pointing to slowing iPhone sales. Although Lumentum did not identify Apple per se, it is best known as a major supplier of 3D sensors that power the facial recognition technology on Apple’s latest iPhones.

The company’s CEO Alan Lowe said, “We recently received a request from one of our largest industrial and consumer customers for laser diodes for 3D sensing to materially reduce shipments to them during our fiscal second quarter for previously placed orders that were originally scheduled for delivery during the quarter.”

For me though, there is an even bigger red flag waving…

Apple Becoming Opaque

In a stunning move, the world’s most valuable company said it will no longer tell investors and analysts how many iPhones, iPads or Macs it sells each quarter. Its finance chief Luca Maestri insisted that a “unit of sale is less relevant today than it was in the past”. Apple will now only disclose its dollar revenues and cost of sales for each device category every quarter instead of detailing the number of units shipped down to the nearest thousand.

Maestri told analysts: “I can reassure you that it is our objective to grow unit sales for every product category that we have.” I suspect though that he was shoveling some manure there. The smartphone market seems to have peaked globally. Apple has only managed to maintain its revenue growth by increasing prices, first with the $1,000 iPhone X and then again in September with the $1,100 iPhone XS Max.

The most recent figures show the success of this strategy. The average selling price of an iPhone increased from $618 a year ago to $793 in the latest quarter. That drove Apple’s iPhone revenues up by 29%, even though unit volumes were flat compared to the same period a year ago. Data from the research firm IDC showed that Apple’s combined iPhone shipments grew a mere 1.37% in the first nine months of 2018.

Apple’s Emerging Problem

Getting back to the company’s weak forward guidance, CEO Tim Cook blamed a handful of emerging markets, including Turkey, India, Brazil and Russia, for its weaker outlook on holiday sales. Sales in India were flat year on year while Brazil fell.

The bottom line is that Apple’s phones are just too darn expensive for most consumers in the emerging world. And even where pricing is less of an obstacle – in China – Apple faces other challenges.

Apple shareholders are well aware that China is Apple’s second-biggest market after the U.S. And it has been a major source of growth for Apple in recent years. China itself is responsible for 13% of overall revenues, with the Greater China region accounting for 18% of Apple’s revenues. However, that figure is down from 20% just a quarter ago.

I don’t think the trade war is the culprit, yet. The answer lies in changing consumer tastes in China.

Apple is starting to struggle in China as domestic brands including Huawei and Xiaomi gain in popularity. Huawei Technologies has passed Apple’s spot as the second-largest seller of smartphones share for two straight quarters this year, including the latest quarter.

This looks to be a long-term trend change as, especially in China’s largest cities, the mystique of foreign brands is fading. Chinese consumers are getting more sophisticated and the better local brands are becoming more popular.

In a recent annual survey of China’s favorite brands, Apple dropped out of the top 10 with a fall from fifth to eleventh. And one of its main rivals in China – the aforementioned Huawei – jumped from twelfth to fourth.

Apple’s decision though to not disclose unit volumes is disquieting and likely due to the fact that the company faces the possibility of its first annual decline in sales volume next year and wants the investing public to focus elsewhere.

That’s a warning sign that Apple is no longer the elite stock it once was.

Buffett just went all-in on THIS new asset. Will you?
Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.

Source: Investors Alley