Berkshire’s cash reaches new highs, Super Micro faces stock decline, and Amazon bets big on AI investments.
Sectors & Industries
November 4, 2024
This week, LevelFields alerts delivered impressive returns. ADN announced a new CEO, resulting in a 32.87% gain in a single day. BEBE's special $2 per share dividend led to a 32.58% rise, while Peloton saw a 27.8% gain following its own CEO announcement. CCEL’s new dividend boosted its stock by 25.6%. Conversely, MTNB announced layoffs affecting nearly 80% of its workforce, causing an 80% drop in one day.
In 2024, Warren Buffett sold over $100 billion of Apple stock, paused Berkshire Hathaway’s buybacks due to high stock prices, and built the company’s largest cash reserve of $325 billion. Amid a 40% rise in the S&P 500 since October 2023, Buffett appears cautious, suggesting concerns over stock overvaluation or a potential economic downturn. Berkshire's cash now includes a record $288 billion in U.S.
Treasury bills, surpassing the Fed Reserve's own holdings. Some have speculated that Buffet is hedging against a Harris/Democratic win which would likely result in increased capital gains rates. But Buffet is also someone who has lived through many large scale wars, and may seen signs of conflicts escalating globally.
Super Micro’s stock dropped 45% this week, wiping out its 2024 gains, after losing its second auditor in under two years and delaying its financial filings. Ernst & Young resigned, citing unwillingness to be associated with Super Micro’s financial statements, a decision the company disputes.
Super Micro faces additional challenges, including a Justice Department investigation and accounting concerns raised by short-seller Hindenburg Research. Analysts have downgraded the stock, citing potential accounting irregularities and possible dealings with sanctioned entities, adding to the uncertainty as the company plans a business update on Election Day.
As the U.S. election nears, Trump-linked stocks like Trump Media & Technology Group, Phunware, and Rumble have seen volatile trading as retail investors bet on a Trump victory.
Trump Media, associated with TruthSocial, surged 88% in October, while Phunware, known for developing Trump’s campaign app, and Rumble, a conservative-favored video platform, rose 98% and 10.7%, respectively. Despite recent gains, both DJT and Phunware dropped 25% and 47% this past week.
AMD reported third-quarter earnings that met expectations, with revenue slightly surpassing forecasts. Its data center segment saw a significant 122% year-over-year increase, driven by strong AI GPU sales, though overall fourth-quarter guidance was lukewarm. The company introduced its MI235X AI chip, projecting $5 billion in AI-related sales this year.
While data center and client segments grew, gaming revenue dropped 68%, impacted by lower demand for console chips. Despite the robust AI growth, AMD's stock fell 10% this week due to cautious investor sentiment and modest forward guidance.
Amazon's capital expenditures surged 81% in Q3, driven by heavy investments in generative AI. CEO Andy Jassy reassured investors of long-term returns, likening the potential to Amazon Web Services' success.
Amazon plans to spend $75 billion on capital expenditures this year to build out data centers, with even higher investments projected for 2025. AWS has seen strong demand, with its generative AI business achieving a multi-billion-dollar run rate and triple-digit growth. Jassy highlighted the transformative potential of AI, noting Amazon's aggressive pursuit of this "once-in-a-lifetime" opportunity.
Snap reported stronger-than-expected Q3 results, with an 8-cent earnings per share and $1.37 billion in revenue, driven by direct-response ads and Snapchat+ growth. CEO Evan Spiegel highlighted tech upgrades, including Simple Snapchat and new augmented reality products. Global daily active users reached 443 million.
However, analysts remain cautious due to Snap’s slow user growth and high valuation. Despite price target increases from some firms, Snap’s ad revenue trails competitors, and growth prospects hinge on further engagement and potential challenges for rivals like TikTok.
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