Relief at the resumption of disinflation triggered the best day for U.S. stocks and bonds since the spring as Fed rate hike bets evaporated, eyes turned to softening retail numbers and a long-feared government shutdown was averted until next year at least.
The three major indexes have advanced from their bear market lows, but you may still be worried every time the market dips. After all, markets aren't completely predictable on a day-to-day basis, and additional declines are always possible. But before losing sleep about this, it'
When you think of successful companies and stocks, Apple (NASDAQ: AAPL) probably is one of the first to come to mind. The maker of the world-famous iPhone and a slew of other top products and services has seen its earnings climb into the billions of dollars over the past decade,
Thailand will receive 300 billion baht ($8.46 billion) worth of investment from Amazon Web Services (AWS), Google and Microsoft, a government spokesperson said on Wednesday.
Berkshire Hathaway said on Tuesday it has shed its holdings in General Motors and Procter & Gamble, and trimmed its stake in Amazon.com, as the conglomerate controlled by billionaire Warren Buffett boosted its cash pile to a record $157.2 billion.
Target (NYSE: TGT), the second-largest discount chain in the U.S., is scheduled to report its fiscal third-quarter results on Wednesday, November 15. We expect Target’s stock to likely trade higher past Q3 results due to revenues and earnings beating expectations. The sto
Berkshire Hathaway, the conglomerate run by billionaire Warren Buffett, on Tuesday said it has made a small investment in the company that indirectly owns the Atlanta Braves baseball team, and eliminated its holdings in General Motors and Procter & Gamble.
Several hedge funds expanded their bets on big technology stocks including Amazon, Microsoft and Meta Platforms even as these companies stumbled some during the third quarter after having fueled broad market gains this year, new regulatory filings show.
Rivian Automotive (
NASDAQ:
RIVN
) certainly isn't the most famous or well-capitalized electric vehicle (EV) maker. Yet, I believe Rivian's shareholders should stay on track and be patient. I am bullish on RIVN stock, but only for the long term, as Rivian's road to recovery will take some time.
Headquartered in California, Rivian Automotive manufactures EVs, including electric commercial delivery vans. Believe it or not, Tesla (
NASDAQ:
TSLA
) CEO Elon Musk predicted last year that Rivian would go bankrupt.
Of course, Musk's dire prediction about Rivian should be taken with a grain of salt. After all, he's the head of a competing EV manufacturer. Still, Rivian has had its fair share of challenges, but a fresh round of data indicates that the automaker is doing better than the experts had anticipated.
Rivian Looks Beyond Amazon Partnership
In the history of the company's existence, Rivian's biggest win is probably a collaboration with e-commerce and product delivery giant Amazon (
NASDAQ:AMZN
). What could possibly be better for Rivian than an agreement to manufacture electric commercial delivery vans for Amazon?
Just that deal, by itself, could sustain Rivian for a long time. On the other hand, it's understandable if Rivian's management doesn't want to be limited by its Amazon partnership.
Thus, it makes sense that Rivian is now
allowing companies other than Amazon to purchase the automaker's custom-designed Rivian Commercial Van. To quote Rivian Automotive CEO RJ Scaringe, "We’re excited to open sales of our electric commercial van to more businesses."
Don't get the wrong idea here. Scaringe and Rivian will still work closely with Amazon. "Amazon is, and will remain, a key partner for us," the Rivian CEO assured.
In other words, Rivian Automotive will still help Amazon achieve its goal of decarbonizing last-mile package delivery, yet the automaker can also generate revenue by selling the Rivian Commercial Van to other businesses. You must agree; it's just great news all around for Rivian.
Rivian Ramps Up Its EV Production Target
Speaking of great news, Rivian recently published its shareholder letter for 2023's third quarter. Perhaps the best part of the letter is the disclosure that Rivian is raising its full-year 2023 EV production outlook.
Previously, Rivian had guided for production of 52,000 units. Now, the company
expects to produce 54,000 units for the year. Rivian's management cited "the progress experienced on [its] production lines, the ramp of [its] in-house motor line, and the supply chain outlook" as reasons for the raised EV production guidance.
That's not the only positive news. Rivian also improved its adjusted EBITDA guidance, citing "progress on cost management" while also lowering the company's capital expenditures (CapEx) guidance.
What about Rivian's third-quarter 2023 performance, though? No worries there, as the company produced 16,304 EVs, a quarterly record for the company. Plus, that figure demonstrated excellent progress compared to the production of 13,992 vehicles in the second quarter and only 7,363 units in 2022's third quarter.
Musk would probably scoff at those production figures. However, Tesla also had to grow its operations over time. Currently, I believe there's no reason to assume that Rivian Automotive will go bankrupt.
Getting back to the Q3-2023 results, Rivian reported
revenue of $1.34 billion, beating the consensus estimate of $1.31 billion. Meanwhile, Rivian posted a quarterly
per-share loss of $1.19. This is certainly better than Wall Street's consensus forecast that Rivian would lose $1.34 per share in the third quarter, and it's also better than last year's loss of $1.57 per share.
It might bother some investors that Rivian Automotive is still a money-losing business. Musk would certainly point this fact out, but let's not be too harsh. Improvement, not perfection, is the name of the game. That's why patience is essential if you're going to invest in RIVN stock.
Is RIVN Stock a Buy, According to Analysts?
On TipRanks, RIVN comes in as a Moderate Buy based on 12 Buys, seven Holds, and one Sell rating assigned by analysts in the past three months. The
average Rivian Automotive stock price target is $26.11, implying 54.5% upside potential.
Conclusion: Should You Consider RIVN Stock?
There's definitely a degree of risk if you're going to invest in Rivian stock. The company isn't profitable at the moment, but at least Rivian is doing better than the analyst community had anticipated.
It's also notable that Rivian Automotive is raising its vehicle production outlook. This suggests that Rivian's management is confident about the automaker's future prospects. Therefore, if you don't mind taking a chance on a still-growing EV startup, feel free to consider RIVN stock.
Disclosure
The S&P 500 and Nasdaq posted their biggest daily percentage gains since April 27 on Tuesday as softer-than-expected inflation data supported the view that the Federal Reserve may be done raising interest rates.
U.S. stocks closed sharply higher on Tuesday, led by the Nasdaq, as softer-than-expected inflation data supported the view that the Federal Reserve may be done raising interest rates.
Several hedge funds expanded their bets on big technology stocks including Amazon, Microsoft and Meta Platforms even as these companies stumbled some during the third quarter after having fueled broad market gains this year, new regulatory filings show.
Tech stocks rose late Tuesday afternoon with the Technology Select Sector SPDR Fund (XLK) adding 2.1% and the Philadelphia Semiconductor index jumping 3.7%.
U.S. stocks rose sharply on Tuesday, led by a more than 2% gain in the Nasdaq, as softer-than-expected inflation data supported the view that the Federal Reserve may be done raising interest rates.
Chipmaker Qualcomm (
NASDAQ:
QCOM
) had a difficult year, owing to macroeconomic pressures weighing on consumer spending. However, with the global smartphone market on the mend, things are starting to look up for QCOM. Wall Street also remains hopeful of Qualcomm's future, given management's belief in stabilizing market dynamics. Also, AI-driven opportunities may improve Qualcomm's fundamentals in the coming years, which is why I am bullish on QCOM stock.
Macroeconomic Headwinds Strained Qualcomm’s Fiscal 2023
Qualcomm's success has relied on its innovative chipsets, particularly the Snapdragon series. These chipsets power a vast range of devices, from smartphones, tablets, and wearables to automotive systems.
However, Fiscal 2023 turned out to be not so positive for the chipmaker, led by a slowdown in smartphone sales. Rising inflation has put a damper on consumer spending on discretionary products such as electronics and smartphones. Its latest fourth-quarter Fiscal 2023 results were also gloomy, disappointing investors. The stock has gained a mere
18.2% YTD, which is not great compared to the massive gains its peers in the semiconductor industry have achieved so far in 2023.
In Q4, its revenue declined by 24% year-over-year to $8.7 billion, beating consensus estimates by $146 million. Meanwhile, earnings per share (EPS) for the quarter fell by 35% to $2.02, surpassing estimates by $0.11. For the full Fiscal year, revenue and earnings declined by 19% and 33%, respectively.
Notably, Qualcomm’s operations are distinguished by two segments: QCT (Qualcomm CDMA Technologies), which represents its chip business, and QTL (Qualcomm Technology Licensing), which covers its licensing business. In Fiscal 2023, QCT accounted for about 85% of its total revenue.
Let’s break down its revenue for the QCT segment (chip sales). The market’s lukewarm demand for new smartphones led to a 22% decline in Handset chip sales in Fiscal 2023, while its IoT (Internet of Things) chip sales dropped 19.2% year-over-year. Qualcomm's Automotive chip sales, on the other hand, stood out with a 24% increase from Fiscal 2022.
As the automotive industry continues to evolve, Qualcomm’s Snapdragon Digital Chassis remains an essential part of this digital transformation. In the Q4 earnings call, CEO Cristiano Renno Amon highlighted the company’s new long-term strategic deal with Amazon’s (
NASDAQ:
AMZN
) AWS (Amazon Web Services) "to enable automakers to integrate cloud technologies into their vehicle development life cycle.”
What’s more, Qualcomm is also a dividend stock that has a
dividend yield of 2.6%, significantly higher than the S&P 500’s (
SPX
) average yield of 1.6%. The company generated $9.8 billion in free cash flow in Fiscal 2023, out of which it used $3.5 billion to pay dividends and $3 billion to repurchase shares. It also ended Fiscal 2023 with a strong balance sheet with $11.3 billion in cash, cash equivalents, and marketable securities.
Fiscal 2024 Could Turn Around QCOM's Fortunes
Going into 2024, according to
International Data Corporation, the global smartphone market is expected to recover by 4.5% year-over-year. This recovery could help boost demand for Qualcomm’s products.
While other chip makers like Nvidia (
NASDAQ:
NVDA
) and Advanced Micro Devices (
NASDAQ:
AMD
) are ramping up their AI efforts, Qualcomm is raising the stakes in the game as well.
In its annual Snapdragon Summit event in October, the company unveiled two new generative AI-integrated chips, the Snapdragon 8 Gen 3 for smartphones and the Snapdragon X Elite for the personal computer (PC) market. For improved audio experiences, it also unveiled the AI-powered S7 and S7 Pro Gen 1 sound platforms.
Qualcomm’s efforts to stay current with the evolving tech industry by incorporating AI into all its products and services are positioning it for more growth. Furthermore, in the fourth quarter, Qualcomm also announced a deal with Apple (
NASDAQ:
AAPL
) to supply Snapdragon 5G Modem-RF Systems for smartphone launches from 2024-26.
Looking ahead, management sees signs of stabilization in the demand for 3G, 4G, and 5G handsets worldwide. Hence, the company now forecasts Q1 Fiscal 2024 revenue in the range of $9.1 billion to $9.9 billion and EPS between $2.25 and $2.45.
If Qualcomm meets the upper end of the guidance, that would mean 5% revenue and 3.4% earnings growth over the year-ago period. Along with an amazing sequential growth of 14% in revenue and 21.3% in earnings, it would also signal the global smartphone market's recovery. Meanwhile, analysts forecast revenue of $9.5 billion and EPS of $2.36 for Fiscal Q1 2024.
Although Qualcomm did not provide full-year guidance for Fiscal 2024, the outlook for the start of the fiscal year appears encouraging. Analysts foresee its revenue and earnings to show year-over-year growth of 5.5% and 9.3%, respectively. Currently, Qualcomm trades at 13.4 times its projected 2024 earnings. For a growth stock with AI capabilities, its valuation seems fair.
Is
Qualcomm a Buy, According to Analysts?
Following Qualcomm’s fourth-quarter results, TD Cowen analyst
Matt Ramsay reaffirmed his Buy rating on the stock with a target price of $145.00. The analyst finds Qualcomm's
successful foray into the PC space and its commanding presence in the Android handset market to be impressive. Additionally,
DZ Bank also upgraded QCOM stock to Buy from Hold, assigning a price target of $140.
Meanwhile, after QCOM's Q4 earnings, JPMorgan (
NYSE:
JPM
) analyst Samik Chatterjee now believes Qualcomm “
finally reported an end to the downward spiral” with its rosy outlook for Q1 Fiscal 2024. The analyst has a Buy rating on the stock and raised its price target from $135 to $140.
Out of the 21 analysts covering Qualcomm stock, 14 recommend a Buy, six recommend a Hold, and one recommends a Sell, giving the stock a Moderate Buy rating. The
average QCOM stock price target is $135.83, implying 7% upside potential over the next 12 months.
The Takeaway
Qualcomm still plays a pivotal role in shaping the future of technology as we delve deeper into the 5G, IoT, and AI era. Its relentless pursuit of innovation, coupled with its diverse product portfolio and improving market dynamics, may all contribute to stronger revenue and profit growth in the years to come. For this reason, I remain cautiously optimistic that good days are ahead for Qualcomm.
Disclosure
In the wake of a historic bear market of 2022, Wall Street appears to have turned the corner. After languishing for much of last year, 2023 is setting the stage for an epic bull run.
Tech stocks were higher Tuesday afternoon, with the Technology Select Sector SPDR Fund (XLK) adding 1.9% and the Philadelphia Semiconductor index gaining 3.4%.
U.S. stock indexes rallied on Tuesday as cooler-than-expected inflation data boosted expectations that the Federal Reserve was done raising interest rates and could start cutting them next year.