I’m writing this on Sunday night and have reflected the past few days on mega cap tech earnings. I hope you are doing well, and as always - your support means a ton to me.
Here are the stats on revenue growth
Tesla TSLA 0.00%↑ +41.6%
Google GOOGL 0.00%↑ +12.6%
Microsoft MSFT 0.00%↑ +12.4%
Netflix NFLX 0.00%↑ +8.6%
Amazon AMZN 0.00%↑ +7.2%
Apple AAPL 0.00%↑ +1.9%
Meta META 0.00%↑ -0.9%
Nvidia NVDA 0.00%↑ reports earnings later this month.
For the record I own Apple, Amazon, Tesla, Microsoft, Google in that order in terms of weighting.
Tesla: The only questions I have right now for TSLA is what 2024 is going to look like. Wall Street basically has this stock growing 40%++ until you get to 2024. Conceivably seems likely given the backlog of buyers. The company will need to execute on the Cybertruck, which I think is likely, and the Semi to a lesser degree. The AI Bots, Robotaxis, HVAC stuff is interesting - but Tesla is methodical - so I don’t expect any of these things to scale up anytime soon.
Google: The company has way too much cash. It’s possible things get so brutal for companies like Snapchat, Pinterest, Roku - Google is saving them in the eyes of a regulator … but I doubt it. Maybe the sting of overpaying for Fitbit and basically not hearing about that company since has made Google shy. But clearly, Google’s growth minus inflation for the next couple of quarters might be negative. This company needs to figure out a way to go on an M&A buying spree.
Microsoft: This company is an example of where Google needs to get to. Microsoft has overpaid for many acquisitions over the years, but the cash sitting on the balance sheet gets diluted by lawmakers … who then make it harder every year to make the next deal. Still a ton of potential in Gaming, Cloud and Advertising for MSFT.
Netflix: Always evolving and needs to again. Netflix doesn’t need a complete pivot like when it switched to streaming - but the company relies on mega hits that are consumed quickly. Live sports and lower budget episodic content that plays out over months - not just 10-12 “bingeable” episodes. Podcasts - or interview style shows - similar to Joe Rogan would be an ideal way to get people to keep paying. Netflix is just a speculative investment until they really level up in some ways, but it’s possible.
Amazon: Competition over at Wal-Mart WMT 0.00%↑ & Target TGT 0.00%↑ might go through some real challenges. Not that either will fold, but imagine all the other retailers that will. The worry is AWS slows down, but if it doesn’t - that gives Amazon plenty of runway to scale up everything else.
Apple: I’d be surprised if the rumored AR/VR device is similar to an Oculus - or something you strap onto your face. Apple likes to create things that seamlessly fit into your daily life - like Apple Watch, ApplePay, and obviously the phone. A device you strap onto your face that has limited software & use cases would be a flop. More interesting would be a lens or eyeware for your phone notifications.
Meta: Pretty classic case that if you’re going to own individual stocks, you better be prepared to make tough decisions. Could I see a scenario where you just hold Meta and the company figures some stuff out and it becomes a $1T company again. Yes. But many of us are old enough to remember Netscape, AOL, Yahoo, Myspace, were all basically Meta at one point. Some will argue Meta has more users - but you couldn’t even really use the internet at all without Netscape, AOL or Yahoo. Once alternatives pass you by … it’s not that easy to catch back up.
Worth A Watch
I listened to these two shows over the weekend. The first features Jim Bianco who has a real solid viewpoint on how the economy has changed since 2020 … and how it’s not going back to “normal”.
Real Vision Finance: Why The Inflation Is Over Rally Will Fail
The next features Adam Rozencwajg who discusses the global energy markets. This is a real complex situation now that you have the western democracies & Russia using it as a way to fight a war.
Clearly this isn’t a new tactic; but with global supply chains already on thin ice the impacts on markets are dramatic.
Macro Voices: #334 Understanding the Global Energy Crisis
As it relates to energy, if we are truly on the verge of some sort of prolonged crisis - it would be wise to plan for that now.
If you can afford a backup power source like a generator, or battery backup - items like these could be hard to find when you need it most.
Technically Speaking
S&P 500 looks overextended to the upside and a backtest to 3950 seems likely here.
With this rally, a pullback to 3800 (S&P currently 4125) would not have me concerned and I would buy areas as it approaches.
A bullish rally higher to 4200 - 4300 seems unlikely, but if it materializes would really encourage some retail FOMO.
The next couple of months will offer very solid buying opportunities that I believe should be taken by long term investors. Make a plan NOW on what price you are buying - because once this rally is over, the news flow will be rough - but that’s when you get good prices.
Looking to add:
AAPL @ $137
GOOGL @ $109
MSFT @ $240
TSLA @ $680
AMZN @ $105
Sector ETF:
SMH (Semis) @ $195
XLI (Industrials) @ $86
XLF (Financials) @ $31
XLB (Materials) @ $73
XLV (Health Care) @ $125
Keep an eye on the channel this week - lots of speculative stocks reporting that could create some shorter term opportunities. Good luck with your investments!
Colin