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Social media company Meta Platform's (
NASDAQ:META
) efforts to strengthen its position in the
AI (artificial intelligence) race have gained significant traction in recent months. The stock has risen by 162% year-to-date, outperforming the S&P 500's (
SPX
) 12% gain, and analysts see more upside ahead. Meta's attempt to strengthen and monetize its already popular social media platforms by adopting generative AI could boost its revenue and earnings in the next few quarters. Hence, I am bullish on META stock now.
Meta Platforms: Gearing Up for Another Strong Quarter
Meta (formerly Facebook) is a part of the big tech
FAANG group, which also includes Amazon (
NASDAQ:AMZN
), Apple (
NASDAQ:AAPL
), Netflix (
NASDAQ:NFLX
), and Alphabet (formerly Google) (
NASDAQ:GOOGL
).
Meta Platforms owns social media platforms Facebook, WhatsApp, Instagram, Messenger, the recently launched Threads, and others. These fall under one of its segments, Family of Apps (FoA). Its augmented and virtual reality-related products and services fall under its other reportable segment, Reality Labs (RL).
Reality Labs hasn’t been profitable for the company. In Q2, it reported a $3.7 billion operating loss, however, thanks to its FoA segment, which is making up for the damage done. It brought in $31.7 billion in revenue, accounting for a chunk of total revenue, resulting in a $13.1 billion operating profit.
CEO Mark Zuckerberg had set 2023 as the "year of efficiency" and has been working hard to make that happen. It entailed layoffs, reducing spending on less significant projects, and focusing on more AI-related projects. During its Q2 earnings call, the company discussed how its AI-related investments over the years are finally paying off.
Meta Stock: Powering Through AI Innovations
Certainly, it has been a year of efficiency. Most recently, at Meta's Connect conference, CEO Mark Zuckerberg unveiled the company's new generative AI products, which sparked market excitement. Meta AI is an advanced conversational assistant that can generate text responses and photo-realistic images and is integrated with Meta's popular products, WhatsApp, Messenger, and Instagram.
Meta AI is powered by Llama 2, its large language model, which it released in July in collaboration with Microsoft (
NASDAQ:MSFT
). The company intends to incorporate Meta AI into its mixed reality headset, Quest 3, and another new offering, a new generation of Ray-Ban Meta smart glasses. The company will launch Quest 3 on October 10.
Zuckerberg described Quest 3 as the best value in the industry for combining digital and real-world experiences at a low cost. Indeed, it is low-cost, priced at $500, while competing with Apple's Vision Pro Headset, which will come with a price tag of around $3,500. Apple's headset is set to hit the market in early 2024.
What's more, its new generation of Ray-Ban Meta smart glasses, in collaboration with EssilorLuxottica, are priced at $299. The glasses will be launched in the third week of October. Meta claims the glasses can take pictures, record videos, and connect to social media.
Along with these, Meta has added generative AI stickers to its messaging apps. It could use AI to unlock more
monetary potential in the wildly popular messaging app WhatsApp, which it purchased for $19 billion in 2014. More features from the company include its monthly subscription charges for
ad-free Instagram and Facebook app use in Europe, which could be around 10 euros ($10.60 at current exchange rates).
CFO Susan Li stated that the company's capital expenditures could rise in 2024 as it navigates AI and metaverse opportunities by expanding its workforce with more technical roles.
Looking ahead, management anticipates revenue in the third quarter to be in the $32 billion to $34.5 billion range, representing an impressive 16% to 25% increase over Q3 2022. Meanwhile, analysts expect its revenue to be in the $29 billion to $34 billion range, with earnings estimates ranging from $2.27 to $4.27 per share, with the consensus
EPS estimate landing at $3.59. On October 25, Meta will report its third-quarter earnings.
Additionally, Meta closed its Q2 with a hefty cash balance of $53.5 billion and $18.3 billion in long-term debt. Given the company's rapid growth in revenue and profits, repaying the debt shouldn't be hard. Furthermore, it generated a sizable $11 billion in free cash flow in the quarter, which should aid in debt repayment and future project financing.
While in pursuit of getting ahead in the AI race, Meta also believes this technology is still in its early stages and thus intends to build it responsibly.
Is META Stock a Buy, According to Analysts?
Turning to Wall Street, TipRanks rates Meta as a Strong Buy, with 40 Buys, two Holds, and no Sell ratings assigned in the past three months. The
average META stock price target of $376.47 implies 19.35% upside potential. The highest price target for the stock stands at $435, while the lowest is at $285 per share.
The Takeaway
Summing up, sitting at a market cap of $811.6 billion, Meta is very close to joining the $1 trillion club. With Meta's efforts to monetize its social media apps and capitalize on the massive growth brought about by AI, the company is well-positioned to achieve this goal. Though the AI niche is enticing, it is also susceptible to market fluctuations. But for now, I share Wall Street's optimism about META stock's outstanding long-term prospects.
Disclosure
Major
chip stocks have rallied this year due to the generative
artificial intelligence (AI) boom. Advanced chips are needed for developing and training AI models. While Nvidia (
NASDAQ:NVDA
) is seen as the frontrunner in the AI race, other chip companies are working on innovative products that can capture growth opportunities in the AI market. We used
TipRanks’ Stock Comparison Tool to place Broadcom (
NASDAQ:AVGO
), Nvidia, and Intel (
NASDAQ:INTC
) against each other to find the best chip stock, as per Wall Street analysts.
Broadcom (NASDAQ:AVGO)
Broadcom shares have rallied 51% year-to-date, as the company is expected to benefit from the generative AI wave. However, the company’s
Q4 FY23 revenue growth guidance of 4% disappointed investors, especially after
Nvidia issued a market-crushing outlook.
Moreover, a report by
The Information that tech giant Alphabet (
NASDAQ:GOOGL,
GOOG
) is
thinking about ditching Broadcom as its supplier of AI chips as early as 2027 further impacted investor sentiment. The report also said that Marvell Technology (
NASDAQ:MRVL
) could replace AVGO as one of Google’s AI chip development partners.
Despite all this noise, Wall Street analysts remain bullish on Broadcom, as they see it as the next big semiconductor play to immensely gain from AI-induced demand, trailing only Nvidia. The company expects generative AI to account for over 25% of its semiconductor revenue in FY24, up from 10% in FY22.
What is the Price Target for AVGO?
Last month,
Truist Financial analyst William Stein reiterated a Buy rating on AVGO stock and raised the price target to $995 from $942. The analyst noted that while the company’s traditional chip business is stabilizing, its AI revenue is accelerating and supporting a more stable and "growthy" model.
Stein thinks there is more room for upside to both Broadcom’s fundamentals and the stock over time, given continued dividend growth, potential M&A benefits, and revenue growth looking possibly higher than the mid-single-digit level.
With 16 Buys and two Holds,
Broadcom stock earns a Strong Buy consensus rating. At $984.94, the average price target implies 16.5% upside.
Nvidia (NASDAQ:NVDA)
Nvidia shares have skyrocketed 213% so far this year, as the semiconductor giant is seeing a spike in demand for its graphics processing units (GPUs) from companies that are aggressively pursuing their generative AI ambitions.
The company’s
Q2 FY24 revenue jumped 101%, while
adjusted EPS surged 429%, mainly driven by a 171% rise in the data center segment’s revenue. The data center segment includes the HGX platform, which is witnessing robust demand from cloud services providers and large consumer internet companies like Amazon (
NASDAQ:AMZN
), Alphabet, Meta Platforms (
NASDAQ:META
), and Microsoft (
NASDAQ:MSFT
).
Looking ahead, the company expects its Q3 FY24 revenue to increase 170%, as clients are seeking the company’s advanced GPUs to build and run AI applications.
Is Nvidia a Good Stock to Buy Now?
On October 2,
Goldman Sachs analyst Toshiya Hari added Nvidia to its Conviction Buy List. Hari views the company as the principal “shovel supplier” in the AI wave. Also, the analyst believes that NVDA will maintain its position as the “accelerated computing industry standard for the foreseeable future given its competitive moat and the urgency with which customers are developing and deploying increasingly complex AI models.”
Wall Street’s Strong Buy consensus rating on
NVDA stock is based on 38 Buys and one Hold. The average price target of $647.07 implies 41.4% upside.
Intel (NASDAQ:INTC)
Intel shares have risen 37% year-to-date, as investors are appreciating the company’s turnaround efforts. After two consecutive quarters of losses, the company returned to profitability in the second quarter despite continued weakness in the top line.
Persistent weakness in the PC market has significantly impacted Intel’s revenue. Moreover, cloud companies and several other enterprises are more interested in securing graphics processors for generative AI than Intel’s central processors. Against a tough demand backdrop, the company delivered improved earnings driven by its cost reduction efforts.
The company is taking several initiatives to turn around its business. Earlier this week, the company announced its
intention to separate its Programmable Solutions Group (PSG) into a standalone business. The PSG unit, which makes programmable chips for defense, telecommunications, and other end markets, will eventually be spun out through an IPO. The move follows the company’s Mobileye (
NASDAQ:MBLY
) spin-off last year.
Is Intel a Buy, Sell, or Hold?
While several analysts cheered Intel’s PSG announcement,
Barclays analyst Blayne Curtis is skeptical about it and reiterated a Hold rating on the stock on October 4. “If it's about accountability, then it's unclear why PSG was folded into [Data Center and AI Group] when times were good during the pandemic and it's being broken off when the business is turning negative,” said Curtis.
Curtis said that he appreciates Intel’s turnaround efforts but remains on the sidelines as he is doubtful about the company's ability to execute on its roadmap. Further, he expects some downside to the Q4 2023 and Q1 2024 estimates.
Wall Street’s Hold consensus rating on
INTC stock is based on six Buys, 20 Holds, and five Sells. The average price target of $36.53 indicates that the stock could be range-bound at current levels.
Conclusion
Analysts are bullish on Nvidia and Broadcom, while they are sidelined on Intel. Nvidia has outperformed Broadcom and Intel so far this year and yet Wall Street expects the highest upside in NVDA stock from current levels. The company’s advanced GPUs and innovative technology are expected to drive continued strength in its performance.
Disclosure
In this piece, I
evaluated two legacy automaker stocks, General Motors (
NYSE:GM
) and Ford Motor (
NYSE:F
), using TipRanks' comparison tool to determine which is better. General Motors is a multinational automaker best known for its four core brands: Buick, Cadillac, Chevrolet, and GMC. Ford Motor is a multinational automaker that sells cars, trucks, SUVs, and commercial vehicles under its Ford brand and luxury vehicles under its Lincoln brand.
GM shares are
down 8% year-to-date and off 11% over the last year, while Ford stock is
up 11% year-to-date but up only 5% over the last year.
With such a dramatic difference in stock-price performance, it shouldn't be a surprise that Ford has a much higher valuation than General Motors. In this article, we'll compare their price-to-earnings (P/E) ratios to gauge their valuations against each other and look at the major trends and challenges faced by each to determine which is better.
General Motors (NYSE:GM)
At a P/E of around 4.3, General Motors is trading at a steep discount to Ford and on the low side relative to its own five-year history. Excluding the periods when its valuation went through the roof, including in late 2018/early 2019 and late 2020/early 2021, GM has traded at a P/E of between 4.0 and 7.0 (roughly). Thus, its low valuation, combined with its positive sales momentum, suggests a bullish view may be appropriate for GM.
Both GM and Ford are dealing with
a union strike among auto workers that threatens to idle their plants and cut into their sales. In fact, GM reported that the United Auto Workers (UAW) strike cost $200 million in just the first two weeks alone. As a result, the company has established a $6 billion line of credit in case of a prolonged work stoppage.
Unfortunately, GM stock is down 21.8% over the last three months, erasing its long-term momentum and dragging its five-year returns down to just 2%. Hedge funds appear to be spearheading that negative move,
unloading 14.5 million shares in the last quarter. It's a major bearish signal reflective of the negative sentiment that has plagued General Motors recently.
However, the market is failing to acknowledge the positive aspects of this automaker. GM reported a 21% year-over-year increase in third-quarter sales, outpacing analysts' expectations of a 15% to 16% increase in new vehicle sales for the industry during the quarter. Meanwhile, Ford reported only an 8% year-over-year increase in auto sales for the quarter — without any impact from the ongoing strike, which is expected to hit automakers' results starting in October.
GM has also been growing its
electric vehicle (EV) sales, an area of critical importance for the long-term survival of legacy automakers. The automaker reported a 28% increase in EV sales from the second to the third quarter. Finally, GM's net income margin has remained strong in recent years, ranging from 5% in 2020 to 8% in 2021 and 6% for the last 12 months. Meanwhile, Ford saw negative net income margins in 2020 and 2022.
I believe the market is wrong about General Motors, but it may take time for this bull thesis to play out, especially if the strike goes on much longer. Rising interest rates are also a factor because most consumers need to finance auto loans. However, GM shares have sold off so much recently that future upside seems very likely.
What is the Price Target for GM Stock?
General Motors has a Moderate Buy consensus rating based on eight Buys, four Holds, and two Sell ratings assigned over the last three months. At $49.86, the average
General Motors stock price target implies upside potential of 61.4%.
Ford Motor (NYSE:F)
At a P/E of around 11.6, Ford Motor is trading at a much higher valuation than GM. Over the last five years, Ford's P/E during its profitable periods has ranged from about 4.0 to 5.0 in 2022 to 21 this past July, putting the current valuation roughly in the middle. Despite its higher valuation versus GM, Ford's positive sales trends and long-term stock-price gains suggest a bullish view may still be appropriate.
Ford faces the same challenges and enjoys many of the same benefits as GM, but its valuation is significantly higher.
Hedge funds snapped up 4.1 million shares in the last quarter, although Ford is down 19% over the last three months. Some of those purchases may have been motivated by the special dividend the automaker paid after selling most of its ownership stake in Rivian Automotive (
NASDAQ:RIVN
), which
boosted its trailing dividend yield to over 10%.
However, Ford shares are up 67% over the last five years, even after the three-month decline of 19%. This suggests that the stock could be a strong buy-and-hold position over the long term, even though the automaker lost money in 2020 and 2022, resulting in net income margins of -1% for those years. Notably, Ford enjoyed a net income margin of 13% in 2021.
Finally, Ford continues to enjoy solid sales momentum and managed to edge out GM on EV sales during the third quarter, coming in at almost 21,000 versus GM's total of just over 20,000.
What is the Price Target for F Stock?
Ford Motor has a Moderate Buy consensus rating based on seven Buys, seven Holds, and one Sell rating assigned over the last three months. At $15.37, the average
Ford Motor stock price target implies upside potential of 28.1%.
Conclusion: Long-Term Bullish on GM and F
While both General Motors and Ford receive bullish ratings, they are for totally different reasons. GM trades at a steep discount to Ford as sentiment restrains its share price despite the positives — a situation I view as temporary. On the other hand, Ford enjoys long-term positive momentum in its stock price and fundamentals that suggest further upside is likely, even if not in the near term.
Disclosure
The average one-year price target for Danske Bank AS (OTC:DNSKF) has been revised to 28.61 / share. This is an increase of 8.39% from the prior estimate of 26.39 dated April 23, 2023. The price target is an average of many targets provided by analysts. The lat
Shares of Millennial-loved fintech darling SoFi Technologies (
NASDAQ:SOFI
) have been steadily trending lower of late, with shares down around 32% from recent 52-week highs. Despite the ominous stock chart, many upbeat analysts still believe the stock's a tempting dip buy at current levels. The fintech bubble may have burst two years ago, but SoFi seems like one of the industry players poised to rise from the rubble.
Indeed, the company's recent quarterly earnings beat is encouraging, as too are comments made by its CEO Anthony Noto in a recent sitdown with
Mad Money host Jim Cramer, who noted SoFi is stealing market share from the big banks. Targeting the big banks could mean big growth opportunities to be had for the $7.26 billion firm that rose to fame for its student loan services.
At this juncture, it seems like SoFi is ready to ramp up its disruptive innovative capabilities to beckon more folks away from traditional banking services.
All things considered, I have to stand with the many bullish analysts covering the name. Sure, SOFI stock has been battered, but in the digital age, I'm inclined to side with the neobanks over the old-school banks that are more or less being forced to spend on technological initiatives or run the risk of being left behind.
SoFi Has Room to Run as It Expands Its Financial Services Footprint
SoFi has come a long way since its days serving mostly students seeking to borrow or manage their university loans. Though the company is
still a dominant behemoth in the realm of student loans with around 60% market share, it's other areas of financial services that could really help drive growth in the long term.
With a broader range of financial services and plenty of upselling opportunities (many loyal student loan customers are ready to refinance with SoFi with student loan payments resuming), SoFi's growth narrative still seems as sound as ever.
More recently, the company assisted in underwriting the Instacart (
NASDAQ:CART
)
IPO, marking a notable first for the company.
Eugene Simuni, an analyst over at
Moffett Nathanson, viewed SoFi's involvement with the CART IPO as a "very positive development." I couldn't agree more. SoFi is becoming less of a niche fintech play and more of a neobank over time. As the company begins cutting more into the turf of the big banks, I think the rewards will eventually come.
For now, however, the company is still in full-on growth mode, and investors shouldn't expect the firm to take its foot off the pedal, even as high-interest rates incentivize firms to cut back on excess expenditures, including those essential to a long-term growth engine.
As interest rates finally do peak (and perhaps slide), I believe SoFi is one of the technology firms that could stand to explode higher as investors rotate back into the most disruptive of innovators. For now, SoFi stock is one of the market's losers of the high-rate world. However, once the tables turn, I do not doubt SoFi stock's ability to pick up where it left off before the Fed started cranking rates higher.
Five-Star Analyst Sees a Path for Considerable Upside
Five-star-rated Jefferies analyst
John Hecht is one of the bigger bulls on SoFi stock, with a Buy rating and a $15.00 price target, which entails 87.7% upside potential from current levels. Mr. Hecht doesn't think it will take much to move the needle much higher on the stock,
stating, "Even a modest recovery would be a catalyst for loan growth."
I'm inclined to agree. The stock has been so heavily punished already, now sitting down around 72% from its 2021 all-time highs of around $28 per share. At writing, shares go for 4.0 times price-to-sales (P/S). That's about in line with the financial services industry average price-to-sales multiple. Given SoFi's tech edge and its strong and mostly young user base, shares deserve a much fatter premium, in my opinion, as the company aims to one-up the banks over the coming years.
Is SOFI Stock a Buy, According to Analysts?
On TipRanks, SOFI stock comes in as a Hold. Out of 15 analyst ratings, there are five Buys, six Holds, and four Sell recommendations. The
average SOFI stock price target is $9.73, implying upside potential of 21.8%. Analyst price targets range from a low of $3.00 per share to a high of $16.00 per share.
The Bottom Line
SoFi stock has already been punished for being a high-growth, high-spending disruptor in a high-interest-rate world. As the firm continues to bring the fight to traditional banks with its high-tech advantage, I wouldn't bet against the firm, as even a small positive could be a huge positive for the firm, given how much the bar has been lowered in recent years.
Disclosure
The average one-year price target for Nicox (PAR:ALCOX) has been revised to 3.06 / share. This is an increase of 5.26% from the prior estimate of 2.91 dated August 31, 2023. The price target is an average of many targets provided by analysts. The latest target
The average one-year price target for SLB (EPA:SLB) has been revised to 66.62 / share. This is an increase of 8.89% from the prior estimate of 61.18 dated August 31, 2023. The price target is an average of many targets provided by analysts. The latest targets
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It's hard to avoid the rumors surrounding Apple (
NASDAQ:AAPL
) and how a Disney (
NYSE:DIS
) acquisition would pan out. Though there are many ways Disney could enhance Apple's ecosystem, I'd argue that the iPhone maker would be better off buying Japanese video game maker Nintendo (
OTC:NTDOY
) to potentially jolt the iPhone and Vision Pro as it looks to move further into the gaming waters. Either way, I am bullish on Apple stock as shares cool for autumn.
Undoubtedly, there are some serious troubles at the House of Mouse right now. The stock is heavily discounted, now down around 60% from its all-time high hit back in 2021. Still, the $152 billion behemoth isn't just too large to be an acquisition target (maybe except by titans like Apple), but there are too many moving parts to the business, and they don't appear to be moving gracefully together these days.
Add succession issues into the equation, as CEO Bob Iger looks to turn the tides under yet another tenure, and it's clear that Disney may not be the juiciest Apple (please forgive the pun) of Apple's eye at this point in time.
Why Apple Probably Won't Buy Disney in Whole
The Apple Vision Pro reveal gave a bit of time to Disney and its top boss, Bob Iger, to discuss the possibilities for Disney in the age of spatial computing. And while Disney's streaming platform, deep library of content, and ESPN sports channel would fit well in the Apple TV+ arsenal, we can't forget about the Theme Parks and Cruises business, which isn't precisely within Apple's circle of competence!
Even if bought Disney in whole, what would it do with parks? I'm not so sure it wants to get into that business. Though, I suppose anything is possible if the price is right.
Iger recently announced the firm's intention to double down on its Parks business, which seems like a pretty wise move, given that it seems to need to do more to justify ticket price hikes. In any case, I wouldn't get my hopes up for a Disney-Apple deal, as it doesn't seem to make a lot of sense, in my humble opinion. However, I do think pursuing ESPN could prove wise, given how incredible the sports content looked on Vision Pro during its big reveal back in June.
Back to Nintendo. Nintendo seems to "rhyme" with Disney but in the world of video games. The company has a strong, time-tested library of content, characters, and expertise. And though it has Nintendo World theme parks, which recently opened in Universal Studios Hollywood earlier this year, I'd argue that parks are an incredibly small part of the overall pie, at least compared to Disney.
Video Gaming Could be More of a Game-Changer for Apple
I view gaming as an area that could mean the difference between a mild Vision Pro launch and a scorching hot one. Additionally, it's hard to look past the graphical capabilities of the iPhone 15 Pro and iPhone 15 Pro Max. With console-worthy game titles (like
Resident Evil 4 and
Resident Evil Village) now playable on the iPhone 15, Apple seems to have advanced on the hardware front such that it now makes sense to double-down in the realm of triple-A gaming to make the most of the hardware.
Indeed, the latest line of console-grade games look impressive when played on the latest iPhone. However, there's one small thing that could prevent the iPhone from eating into the share of the PC or console gaming market -- a lack of titles.
Apple could acquire its way to solve the problem. Given that Nintendo has a ton of impressive family-friendly exclusives that we all know and love, I view Nintendo as the perfect piece to the puzzle.
It's not just the iPhone that could be a disruptive triple-A gaming platform. The Vision Pro's hardware looks to be best-in-class, but on the front of gaming, I'm sure you could give the edge to Meta Platforms (
NASDAQ:META
) and its Meta Quest 3 headset.
A recent
FastCompany article I came across gave praise to Meta's plan to beat Apple, noting that Meta's offering is cheaper, faster, and more fun. In the power versus affordability debate, I think power wins every step of the way (one point for Apple Vision Pro). Still, at this juncture, it's hard to deny that Meta's offering looks more fun, given how much emphasis was placed on gaming. Apple has the power to change things, however, and all it could take is a few major partnerships or one big acquisition.
Is Apple Stock a Buy, According to Analysts?
On TipRanks, AAPL stock comes in as a Moderate Buy. Out of 29 analyst ratings, there are 20 Buys and nine Holds. The
average Apple stock price target is $207.69, implying upside potential of 17%. Analyst price targets range from a low of $167.00 per share to a high of $240.00 per share.
The Bottom Line
Buying Disney would give Apple a nice edge as it continues investing in its Apple TV+ business. Still, I'd argue Nintendo would give the iPhone maker a better bang for its buck, as exclusive games and characters would enable the firm to better showcase the potential of its graphically-capable hardware.
Additionally, the only thing that may stop the Vision Pro from being a mainstream success may be how "fun" it is for users. Sure, its $3,500 sticker price is a shocker, but if it has some exclusive games on it, I'd bet a lot of people will be itching to get their hands on one anyway.
Disclosure
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