Ticker Reports for February 4th
Goldman Sachs vs. Morgan Stanley—Which Stock Has More Upside?
When it comes to the leading investment banks, Goldman Sachs Group Inc. (NYSE: GS) and Morgan Stanley (NYSE: MS) are often placed in the top five spots. Both are powerhouses for deals but also cater to different clientele with different risk appetites. Both are leaders in the finance sector and have tremendous success with their trading, wealth management, and underwriting services. Both banks posted blowout earnings with upbeat guidance, but which stock still has more upside?
Goldman Sachs: Masters of the Universe
Often dubbed the "Masters of the Universe," Goldman Sachs is the elite and clandestine top-tier investment bank that’s had a hand in some of the largest and most notable deals on Wall Street.
The firm advised one of the largest deals in 2024 when Mars acquired Kellanova (NYSE: K) for $83.50 per share in an all-cash $35.9 billion deal. The company posted eye-watering results.
Its strong deal flow and lucrative advisory fees continue to reinforce its dominance in the industry. As M&A activity rebounds, Goldman Sachs remains well-positioned to capitalize on future high-profile transactions.
Crushing Wall Street Estimates (Again)
Goldman Sachs reported Q4 2024 EPS of $11.95 per share, crushing consensus analyst estimates by $3.74. Net earnings were $4.11 billion. Revenues surged 22.5% YoY to $13.87 billion, beating $12.36 billion consensus estimates.
The full-year 2024 EPS was $40.54, up from $22.87 in 2023. The full-year net revenues rose 16% YoY to $53.51 billion, and net earnings were $14.28 billion.
Solid Financial Metrics for 2024
Goldman’s Global Banking & Markets generated $34.94 billion in net revenues driven by record net revenues in Equities, Investment banking fees, and Fixed Income, Currency, and Commodities (FICC). Higher net revenues in Global Banking & Markets and Asset & Wealth Management spurred revenue growth. Provision for credit losses was $351 million, down from $577 million in Q4 2023 and sequentially from $397 million in Q3 2024. Goldman Sachs ranked #1 worldwide in announced and completed mergers and acquisitions in 2024. Assets under supervision grew 12% to a record $3.14 trillion.
Nextracker CEO Dan Shugar commented, "In the quarter, we successfully deployed several of our newly launched products and features at scale, expanding our total addressable market. In addition, we continue to increase our investment in R&D to drive rapid customer-centric innovation, ensuring our solutions remain at the forefront of solar technology while driving value for stakeholders worldwide."
Goldman Sachs CEO David Soloman commented about the reach of Goldman’s alumni, “Today, more than 275 of our alumni are in C-suite roles at companies with either a market cap greater than $1 billion or assets under management of over $5 billion and hundreds of other alumni end up coming back to the firm as Boomerang hires, including roughly 25 partners and managing directors last year alone, a testament to our enduring brand and culture.” Goldman Sachs shares are trading up 11.84% year-to-date (YTD) as of Jan. 31, 2025.
Morgan Stanley: Blue Shoe Investment Bank and More
Goldman Sachs is arguably more risk-tolerant, whereas Morgan Stanley offers a more balanced approach with greater emphasis on wealth management to a wider clientele. Goldman Sachs Private Wealth Management clients are rumored to be required to have at least $10 million invested with the firm.
A Morgan Stanley Private Wealth Management account requires a purported minimum of $5 million for its ultra-high net worth clients. Morgan Stanley is a much larger firm with nearly double the number of associates worldwide, at 80,000.
Morgan Stanley also adopted a large retail and self-directed investor clientele from its acquisition of E*TRADE, which saw active traders grow above 2022 levels.
Morgan Stanley Crushes Q4 as Well
For Q4 2024, Morgan Stanley reported an EPS of $2.22, beating estimates by 52 cents. Revenues surged 25.9% to $16.23 billion, crushing consensus estimates of $15.03 billion by over $1.2 billion. The firm’s expense efficiency ratio was 71% versus 77% in the previous year, reflecting stronger expense discipline.
Solid Segment Metrics
Institutional Securities reported net revenues of $7.3 billion, up from $4.9 billion last year. Pre-tax income was $2.4 billion compared to $408 million last year. Equity net revenues surged 51% YoY, driven by increased client activity with regional strength in Asia and notable strength in Prime Brokerage. Fixed Income revenues grew 35% YoY, driven by credit on higher lending, securitization activity, and higher structured revenues in commodities. Client assets rose to $7.9 trillion, nearly tripling in the past three years. Fee-based flows in Wealth Management grew to $123 billion in 2024.
Morgan Stanley CEO Ted Pick commented on growing its retail segment, “We're going to continue to focus on checking accounts with competitive rates, integrating products into the client journey as they move along with E*TRADE to potentially a classic FA (financial advisor). And then, as you know, we've been really banging the drum on the workplace where we can partner with companies to reach employees.” Morgan Stanley shares are up 10.11% YTD as of Jan. 31, 2025.
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3 Reasons Bulls Will Win on Super Micro Computer Stock
With that in mind, shares of Super Micro Computer Inc. (NASDAQ: SMCI) now represent one of the best risk-to-reward ratios in the technology sector for the United States, not only due to their extremely low price relative to previous highs but also because of their valuation multiples compared to where the company’s product and service demand is potentially headed in the coming months.
Themes in the artificial intelligence space, particularly for names like NVIDIA Co. (NASDAQ: NVDA) and others, have been challenged by the new claims coming out of Chinese company DeepSeek. However, it is clear thus far that no concrete evidence points to these claims being a reality, so the longer-term industry growth is relatively intact. Here are the three main reasons Super Micro Computer’s discount won’t last long.
Not the First Rodeo for Super Micro Computer
In a competitive industry like technology, it is not uncommon to see companies fall victim to accounting scandals, especially when it comes to revenue. In order to meet financial goals and accurately manage tight demand schedules, some companies may choose to undertake their own ways of revenue recognition in accounting terms.
While this might be considered a negative, it hasn’t been done before, so investors have a history to look back on and know that it isn’t always fraudulent. Super Micro Computer faced similar accusations in 2018 and 2020, coming out of them unscathed and better than before.
Knowing this, today’s allegations, which have brought the stock down to a dismal 20% of its 52-week high, might not have the long-lasting impact that most of the market is predicting they will. But that’s not the only reason to believe that Super Micro Computer stock might recover from this horrendous fall.
Tapped to All Tail Winds in Technology
Despite the recent scandals involving Chinese technology, one thing remains true. Demand for data centers and hardware to host these new artificial intelligence models for training will also help Super Micro Computer’s main customers surge.
That being said, as NVIDIA, Advanced Micro Devices Inc. (NASDAQ: AMD), and other such chipmakers see their orders come through in this growing industry, chances are that Super Micro Computer’s billings will follow suit. Even with their own way of revenue recognition, the company is still posting revenue growth that seems to be okay with Wall Street analysts.
This is why there is a consensus earnings per share (EPS) forecast for up to $1.13 a share for the third quarter of 2025, meaning a net growth rate of as much as 23% from today’s $0.92 level. If analysts, who undertake a lot of the financial analysis work, saw a discrepancy in Super Micro Computer stock numbers, this forecast would have probably been changed long ago.
More than that, it seems like the market is still willing to pay a steep premium for this stock over the semiconductor industry's average valuation. At a 102.9x price-to-earnings (P/E) ratio, Super Micro Computer stock trades well above the industry’s 40.6x average valuation.
Some investors might call this expensive, while seasoned traders understand that the market always pays a premium for the stocks it expects will outperform in the near future.
Lots of Upside, Very Little Downside Risk
The third and final reason investors should consider Super Micro Computer stock for a potential turnaround is the risk-to-reward ratio at today’s prices. The low price in relation to 52-week highs makes it an attractive proposition in itself, but so is the fact that it has bottomed since late 2024.
If the news had not already been priced in, the stock would have gone much lower than its $17.25 bottom in October 2024. Knowing this is the setup today, Citigroup analysts felt comfortable reiterating their Buy rating on the company while keeping a valuation of up to $175 a share, calling for a net rally of as much as 53.1% from today’s discount.
As another gauge to consider, investors can look at the recent media mentions for Super Micro Computer stock over the past month. These mentions grew from 31 to the start of January 2025 and rose to a high of 128 for the first week of February 2025. This might signal that many willing buyers might be searching for answers, and now investors have three of them today.
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2 Solar Stocks Heating Up for a Major Industry Rebound
With the Trump administration back in the White House, investors would believe that renewable energy would be a losing game under the “Drill, baby, drill” policies. Trump’s efforts to revoke Biden-era policies like the electric vehicle (EV) mandate assume the clean energy theme is doomed on Wall Street. On the contrary, solar stocks started the year with solid gains, even outscoring the computer and technology sector leaders. Some winners are not solar panels but devices that make them more efficient. Here are two solar stocks heating up for an industry rebound.
Nextracker: Intelligent Solar Trackers To Make Solar Panels More Efficient
A weakness of solar panels (photovoltaic panels) angled in one stationary position in fixed-tilt systems is their inefficiency when the sun moves throughout the day.
To help optimize energy production, Nextracker Inc. (NASDAQ: NXT) designs and manufactures utility-scale intelligent solar trackers that follow the sun throughout the day to increase the energy capture of solar panels by 20% to 30%.
They are the global market leader in intelligent solar trackers augmented with their machine learning-optimized TrueCapture tracking software.
Solid Beat and Raise as Backlog Swells to a Record $4.5 Billion
On Jan 28, 2025, Nextracker reported fiscal Q3 2025 EPS of $1.03, crushing consensus analyst estimates by 45 cents. Revenues fell 4.4% YoY to $679 million, beating $646.02 million consensus estimates. The company increased its record backlog to $4.5 billion, driven by robust demand in all key regions with meaningful contributions from new products. Nextracker expanded its manufacturing and supply chain to over 70 partners operating over 90 facilities across 19 countries, totaling 50 GW of capacity annually. The company also shipped its first 100% U.S. domestically produced solar trackers.
Sunny Days Ahead as Company Raises Guidance for Fiscal 2025
Nextracker raised their fiscal full-year EPS to $3.75 to $3.95, up from the previous guide of $3.10 to $3.30, versus $3.27 consensus estimates. The company issued upside fiscal full year 2025 revenue of $2.8 billion to $2.9 billion versus $2.85 billion.
GAAP net income was raised from $467 million to $497 million, up from the previous forecast of $376 million to $408 million.
Adjusted EBITDA was raised to $700 million to $740 million from $625 million to $665 million.
Nextracker CEO Dan Shugar commented, "In the quarter, we successfully deployed several of our newly launched products and features at scale, expanding our total addressable market. In addition, we continue to increase our investment in R&D to drive rapid customer-centric innovation, ensuring our solutions remain at the forefront of solar technology while driving value for stakeholders worldwide."
Array: An Underdog Bet for Solar Tracking Speculators
While Nextracker is the dominant leader and gold standard in solar trackers, Array Technologies Inc. (NASDAQ: ARRY) stands as a strong runner-up.
The company's sales are a third of Nextracker's, but if Nextracker is any indication of the industry, then Array could also partake in the upswing.
While Nextracker arrays use independent rows with a balanced mechanical design, Array’s DuraTrack is designed with a single-axis tracker with a centralized drive system, which can be more cost-effective for flatter terrains.
The Other Side of the Coin
On Nov 7, 2024, Array Technologies reported its fiscal Q3 2025 EPS of 17 cents, beating consensus estimates by 4 cents.
Revenue fell a whopping 34% YoY to $231.41 million, missing consensus estimates of $232.69 million.
Its backlog was at $2 billion, with 20% of the orders for OmniTrack.
Interconnection and permitting delays are some of the headwinds in the United States, but the financing environment is improving in 2025.
Array Technologies issued downside guidance for fiscal 2025 EPS of 60 cents to 65 cents versus 68 cents consensus estimates.
Revenues are expected between $900 million to $920 million versus $945.06 million.
Tariff-Proofed Solar Trackers Made in America
Array Technologies CEO Kevin Hostetler reiterated their commitment to production in the United States, “Additionally, a significant portion of orders in our domestic order book includes customers evaluating domestic content, and we remain confident in our ability to provide 100% domestic trackers. Our high-probability pipeline remains robust, and we are greatly encouraged by the overall momentum in the business,” This makes their solar trackers basically tariff-proof under the Trump tariffs.
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