Ticker Reports for June 2nd
Bargain Alert: Amazon and Its 35% Upside
Having hit an all-time high earlier this month, tech titan Amazon.com Inc (NASDAQ: AMZN) shares have been taking a bit of a break. They’ve softened to the tune of 7% over the past three weeks, but in the grand scheme of things, this isn’t anything to be worried about.
The 130% rally that started in early 2023 is still very much intact, and this dip has all the hallmarks of a standard mid-rally breather. In fact, it could be perfect timing for those of us on the sidelines who’ve been looking to get into Amazon.
Understanding Amazon's Relative Strength Index
Amazon stock isn’t afraid to keep its foot on the gas when it is in rally mode. This tends to result in long periods of effective forward-only momentum, making timing entries difficult. The net result is that investors often have to keep chasing or buying at the high, which fuels further gains.
We got a glimpse of this in action earlier in the month, as the reading on Amazon’s relative strength index (RSI) shot above 70. The RSI considers a stock’s recent performance, usually the past two weeks, and spits out a number between 0 and 100. Anything below 30 suggests the stock is extremely oversold and due a bounce, while anything above 70 is the opposite.
Buying into a stock for the first time when its RSI is close to, if not well above, 70 can be painful and risky. But with the recent dip bringing Amazon’s RSI all the way down from 72 to 41, you can’t help but feel we could be looking at a golden buying opportunity.
Bullish Post-Earnings Rally: Amazon Shares Trading at a Bargain
This theory has been backed up by several heavyweight analysts, who, in recent weeks, have clamored to reiterate their Buy ratings on Amazon stock while raising their price targets. Much of this was driven by the company’s solid Q1 earnings report at the end of April, which showed how AI is turning into a new multi-billion recurring revenue business for the company. The report also confirmed for many that one of Amazon’s biggest headwinds from recent years, a broad slowdown in corporate cloud spending, has all but dissipated.
In the aftermath of the report, Morgan Stanley, Wedbush, UBS Group, Citigroup, Barclays, and many of their peers screamed in unison, “Buy.” Refreshed price targets ranged from $220 to $240, but interestingly, Amazon shares topped out at around $190 in their post-earnings rally. They’re currently trading around the $180 mark, adding to the theory that those of us thinking about buying are looking at a solid bargain.
It’s worth noting that just yesterday, the team at Tigress Financial reiterated their Buy rating and boosted their price target up to a street-high of $245. That’s pointing to a targeted upside of at least 35% from where shares closed on Thursday. Not bad for a $1.9 trillion business.
Potential Last Weeks to Buy Amazon Shares Under $200
Readers should look for the current slide in Amazon shares to start running out of steam around the $175 mark and definitely above their pre-earnings low of $170. As the major indices are also starting to soften, this might take a couple of weeks to materialize, but a run of green days, with closes near or at the high, will confirm the uptrend is back.
Some parting thoughts: every single analyst upgrade and price target increase since February has forecasted Amazon shares to be trading above $200. Sure, it hasn’t happened yet, but the stock’s chart is still setting higher highs and lower lows, confirming the rally is in good health. Those of us considering an entry point might be witnessing some of the last weeks that Amazon shares will trade below $200.
Missed NVDA? Buy this AI stock NOW
After Nvidia's record-breaking earnings surge, Wall Street is now selling the stock at the fastest pace in seven months.
So if you currently own NVIDIA (NVDA)... Or were thinking of buying it in the weeks ahead...
I urge you to review my recent interview with 50-year Wall Street legend Marc Chaikin.
AI Is Booming, But Not For These Stocks …Yet
AI is booming, but not for stocks like MongoDB (NASDAQ: MDB), UiPath (NYSE: PATH), and Dell Technologies (NYSE: DELL), which are all thought to be well-positioned for the industry. The caveat is that AI is dominated by a few mega-cap tech companies, which are seeing the most gains. AI is aiding growth for these companies, but AI is still in its early phases, and the NVIDIA-like boom has yet to materialize.
NVIDIA (NASDAQ: NVDA), the leader in AI because of its chips and full-stack approach, will lead the industry long into the future. Others, like Microsoft (NASDAQ: MSFT), Micron (NASDAQ: MU), and Oracle (NYSE: ORCL), are well-positioned because of their offerings and scale. They have the position, reach, and financing to meet the demand. The problem for MongoDB, UiPath, and Dell, to a lesser extent, is that they are better positioned for the second wave of AI, which is yet to come.
Weak Guidance Undercuts Solid Results for Tech Stocks
Results from MongoDB, UiPath, and Dell echo details from Salesforce (NYSE: CRM), which reported solid growth, impressive margin, and growth guidance, but the guidance is weak and undercut the outlook. That’s bad news because the outlook was inflated. All three produced solid reports, outperforming their consensus targets, but cited a slow-down in activity at the start of the year that impacted the guidance. All have guided for growth but have set targets for Q2 and FY 2024 that are below the analysts' consensus, and there is a risk that the slowdown will persist and lead to another reduction later this year.
Among the details impacting the guidance is increased CAPEX plans. Dell, in particular, is ramping up spending on AI to prepare for expected growth in its server, networking, and devices segments. Its servers and networking business is already trending at record levels, with backlogs growing by double-digits, so it should sustain growth this year and next. MongoDB and UiPath focus on client growth, innovation, and new products. MongoDB is well-positioned for the proliferation of AI-empowered apps and services that are expected to blossom over the next three to five years, UiPath for the business automation revolution that is already underway.
Operational quality is a highlight for these companies. There was margin pressure across the board, but all performed better than expected and drove significant cash flow and FCF. Dell’s report was the worst, with earnings contracting compared to last year, but CAPEX mitigated the decline. MongoDB and UiPath reported increased FCF, which aided balance sheet improvement and set them up to provide long-term shareholder value.
Analysts Reset the Outlook for MongoDB, UiPath, and Dell
The analysts are resetting the outlook for these stocks, and the activity shows a glaring difference. Many UiPath and MongoDB analysts have come out to cut their targets, while only two analysts have revised their Dell outlook, which are positive revisions. The takeaway for MDB and PATH investors is that analysts view these stocks as Moderate Buys with a double-digit upside potential relative to the new lows.
The caveat is that analysts lowered their targets by more than 30% on average for MDB and PATH, leading the market to the low end of the range. This is a significant headwind for their markets and will not likely be overcome soon. MongoDB has the added headwind of an overinflated P/E running in the triple-digit range ahead of its report: UiPath the weight of a sudden and unexpected CEO change. The upshot with that news is that founder and chief innovation officer Daniel Dines will retake the helm.
Analysts Lead Dell Higher: Shares Fall 15%
Dell shares are down 15% in premarket trading, but the analysts' activity suggests a quick rebound. The analysts issued numerous price target increases before the release, and the trend continued. Marketbeat is tracking two revisions within the first twelve hours, both with higher price targets. They agree on a $155 price target, $20 above the $135 consensus, and at the low end of the recent range. The targets issued in May suggest this stock should trade between $155 and $185, a 10% to 30% upside from $143.
Bill Gates is all about this tiny $2 stock
What does Bill Gates know about this tiny company that we don't?
From the outside, it looks like a worthless $2 stock…
5 Unexpected AI Innovators Transforming Their Sectors
As the artificial intelligence (AI) revolution continues gaining momentum, companies across various sectors embrace AI technologies to enhance operations, improve customer experiences, and drive innovation.
Leading the charge is NVIDIA Corp. (NASDAQ: NVDA), whose remarkable performance, up 130% year-to-date, underscores the transformative power of AI. While NVIDIA's leadership in AI might be well-known, several other companies, some surprising, are also making significant strides with AI.
Here are five companies that are leveraging AI in unexpected ways.
SoFi Technologies, Inc.
SoFi Technologies, Inc. (NASDAQ: SOFI), an internet-based financial institution, is integrating AI to enhance its banking services.
The company uses the conversational AI engine from its Galileo fintech platform to improve customer satisfaction, response times, and overall business efficiency. AI is also crucial in SoFi's fraud detection, automated investment portfolio management, and instant loan approvals.
Despite being down 31% year-to-date, analysts hold a hold rating with a forecasted 32% upside based on the consensus price target, reflecting optimism about SoFi's AI-driven future.
Netflix, Inc.
Netflix, Inc. (NASDAQ: NFLX), a streaming giant needing no introduction, has seen its stock soar, up 33.9% year-to-date and 18% this month alone.
The company uses AI extensively to personalize user experiences, enhance content quality, and optimize operations. Netflix's AI algorithms recommend shows and movies based on user preferences and viewing history, helping maintain high user engagement. Additionally, AI assists in content categorization, strategic decision-making, post-production processes, and customer service through chatbots.
Analysts are bullish on Netflix, with a moderate buy rating from 35 analysts, bolstered by the company's impressive 70% rise over the past year.
Deere & Company
Deere & Company (NYSE: DE), a leader in agricultural, construction, and forestry equipment, is down 8.3% year-to-date but is actively adopting AI to revolutionize its industry. The company's AI-powered See & Spray product helps farmers reduce herbicide use, while AI algorithms provide data-driven insights to improve farming decisions.
Deere's introduction of a fully autonomous tractor marks a significant leap in agricultural innovation. Analysts are optimistic about Deere's AI initiatives, forecasting an 18.08% upside with a moderate buy rating, signaling potential growth despite current market challenges.
Nike, Inc.
Nike, Inc. (NYSE: NKE), renowned for its sportswear and athletic footwear, is leveraging AI to transform customer experiences and operational efficiencies. AI-driven technologies enhance shoe fitting accuracy, personalize offers, and support virtual assistants. Nike employs advanced analytics and AI strategies in its supply chain to boost speed, accuracy, and sustainability.
Although the stock is down almost 14% year-to-date, analysts predict a 24.7% upside with a moderate buy rating. Nike's commitment to AI underscores its ongoing innovation and customer engagement efforts.
Tesla, Inc.
Tesla, Inc. (NASDAQ: TSLA) is at the forefront of AI-driven autonomous vehicle technology. The company's AI systems use a network of sensors and cameras to monitor surroundings and make real-time driving decisions, powering features like Autopilot and Full Self-Driving (FSD).
Tesla's AI extends to battery management and navigation, enhancing the driving experience. Known for its revolutionary approach, Tesla continues to lead the charge in AI adoption within the automotive industry, underscoring its role as an innovator in intelligent driving technology.
The Bottom Line for These AI Innovators
The rise of AI is not confined only to the tech giants; companies across diverse sectors are harnessing AI to drive innovation and improve operations. From SoFi's AI-driven financial services to Deere's AI-powered service, these five companies exemplify AI's broad and transformative impact. Investors should watch these surprising AI plays, recognizing the potential for growth and further innovation as the AI revolution continues to unfold and expand.
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