Nasdaq MSFT MicroSoft

Retirement accounts and the 401(k) have become somewhat synonymous. By far the most popular type of retirement account is the 401(k), with close to 35% of working-age people (age 15 to 64) having one or an equivalent like a 403(b). The percentage is even higher for adults when yo

The JPMorgan Equity Premium Income ETF’s ( NYSEARCA:JEPI) combination of high yield and monthly payments has quickly made it one of the market’s most popular ETFs. Investors who like JEPI’s style now have another high-yield competitor to consider -- the NEOS S&P 500 High Income ETF ( BATS:SPYI) , which also pays on a monthly basis and yields 10.7%. Let’s take a closer look at this intriguing new option for high-yield investors.  What is SPYI ETF's Strategy? Launched in August of 2022, SPYI is still a relatively small ETF from NEOS with just $218 million in assets under management (AUM) that employs a similar strategy to the much larger JEPI.  NEOS says that SPYI “seeks to generate high monthly income in a tax efficient manner with the potential for equity appreciation in rising markets.” NEOS essentially seeks to fully replicate the S&P 500 ( SPX ) and generates its high yield by receiving the dividend payments from its S&P 500 holdings, and then adds to this yield with the distributions generated by its selling of S&P 500 covered call options, which generates a premium. NEOS also touts that the SPYI ETF is tax-efficient in that it uses "SPX index options classified as section 1256 contracts (60% long term/40% short term)." Lastly, NEOS also highlights the fact that its strategy may lead to lower volatility in a "mildly bullish or mildly bearish environment." Is There a Tradeoff? This strategy certainly helps to juice yield, but as with anything in life, there is always a tradeoff. While SPYI mentions the potential for equity appreciation in rising markets, selling covered calls caps this upside at a certain point because if the price of the underlying stock rises beyond the strike price, that's additional upside that SPYI investors miss out on. You can see this play out in real time with the results of SPYI, JEPI, and other similar ETFs. So far, SPYI has generated a great 17% return year to date (as of the end of the most recent month), but the broader market (represented here by the Vanguard S&P 500 ETF ( NYSEARCA:VOO) was actually up an even better 20.6% over the same time frame. Similarly, JEPI also trails VOO with a return of 7.3% year-to-date. SPYI is less than a year old, so it's hard to judge how its strategy will perform over time. However, using JEPI as a reasonable proxy for it, this strategy has also trailed the market over a three-year time frame with a total return of 11.5% versus a 13.7% return for VOO. JEPI is fairly new itself, but using another "S&P 500 covered call ETF" to look at this strategy over time for comparison's sake, we can see that the Global X S&P 500 Covered Call ETF ( NYSEARCA:XYLD) has trailed VOO over the past five and 10 years, with total annualized returns of 4.7% over the past five years and 7.0% over the past 10 years versus far superior returns of 12.2% and 12.6% over the past five and 10 years, respectively, for VOO. None of this is to say that SPYI is a bad ETF or that covered-call ETFs are bad, and these are still pretty solid returns, but it simply illustrates the fact that they have historically tended to leave upside on the table versus simply investing in the broader market. SPYI's Holdings SPYI offers investors ample diversification. It holds 506 stocks, and its top 10 holdings account for 30.7% of its assets. Below, you can take a look at SPYI’s top 10 holdings using TipRanks’ holdings tool.  Because SPYI invests in the S&P 500, its holdings are fairly similar to that of the S&P 500 index itself. Apple ( NASDAQ:AAPL ) is the fund’s largest holding with a 7.6% weighting, followed by the other 'magnificent seven' tech stocks that have led the market to new heights in 2023 -- Microsoft ( NASDAQ:MSFT ), Amazon ( NASDAQ:AMZN ), Nvidia ( NASDAQ:NVDA ), Alphabet ( NASDAQ:GOOG ) ( NASDAQ:GOOGL ), Tesla ( NASDAQ:TSLA ), and Meta Platforms ( NASDAQ:META ).   Overall, this is a very strong group of holdings with some great Smart Scores to boot. The  Smart Score is a proprietary quantitative stock scoring system created by TipRanks. It gives stocks a score from 1 to 10 based on eight market key factors. A score of 8 or above is equivalent to an Outperform rating. As you can see, six of SPYI's top 10 holdings feature Outperform-equivalent Smart Scores of 8 or above. SPYI itself boasts a strong ETF Smart Score of 8. Is SPYI Stock a Buy, According to Analysts? Turning to Wall Street, SPYI has a Moderate Buy consensus rating, as 59.08% of analyst ratings are Buys, 35.42% are Holds, and 5.5% are Sells. At $55.90, the average SPYI stock price target implies 13.2% upside potential. SPYI Has High Fees One clear downside of SPYI is its high fees. SPYI has an expense ratio of 0.68%, which is pretty high. This is a fairly complex strategy, so it is understandably going to be more expensive than a basic index ETF. However, the problem for SPYI is that it is also considerably more expensive than JEPI, which runs a very similar strategy and charges an expense ratio of just 0.35%, essentially half of what SPYI charges.  In year one, a JEPI investor investing $10,000 into the ETF would pay $35 in fees, while an SPYI investor investing the same amount would pay $68. The differences can really add up over the years. Over the course of a three-year investment, assuming that each ETF returns 5% per year and that the fees remain the same as they are now, the JEPI investor would pay $113 in fees, while the SPYI investor would pay $218, which is a meaningful difference to returns over time. Keep in mind that this gap would also grow further over the years. Investor Takeaway SPYI has a lot of positive attributes, but there are also a lot of considerations investors need to make before considering an investment in this high-yield fund. On the plus side, SPYI’s double-digit yield is hard to beat, and its monthly payout schedule is appealing to dividend investors.  On the downside, on a more general level, SPYI’s strategy of selling call options leaves some upside on the table as the market rallies since selling calls caps this upside. On a more specific level, if investors are okay with this tradeoff and still want to invest in SPYI, the question then becomes a matter of SPYI versus JEPI. Both ETFs are appealing, but JEPI has a far lower expense ratio, so an SPYI investor would pay considerably more in fees over time (unless the fee gets lower as the fund gets larger, which is a possibility). So an interested investor would need to weigh investing in SPYI against investing in JEPI. However, I can also see the nascent and much smaller SPYI carving out a niche for itself and serving as a viable investment for investors who love JEPI and its strategy and want to diversify away from it with a similar ETF that would give them another stream of dividend income on a different schedule.  Disclosure

Wall Street closed lower on Friday after a report of slowing U.S. labor market growth, and all three major indexes posted weekly losses as investors braced for more possible downside surprises a day after disappointing earnings from Apple.

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

A U.S. judge hearing the Justice Department's antitrust lawsuit accusing Google of unlawfully maintaining monopolies in the internet search market let stand key claims made by the federal government.

Wall Street fell on Friday after a report of slowing U.S. labor market growth, and all three major indexes posted weekly losses as investors braced for more possible downside surprises a day after disappointing earnings from Apple.

The AI ambitions of Apple ( NASDAQ:AAPL ) have been relatively muted compared to its peers in the FAANG basket. Undoubtedly, the $3 trillion tech titan isn't just standing at the starting line of the AI race. The firm began its sprint a long time ago, even though many investors and analysts may not be aware of its current standing in the race. Undoubtedly, it's easy to conclude that Apple is neglecting the growth potential of cutting-edge generative AI technologies like Large Language Models (LLMs). Though Apple has not been nearly as vocal at its conference calls as the other tech titans, it's a mistake not to consider the longer-term monetization potential of AI. As Apple continues investing in the AI we can't see (think the consumer-friendly AI-driven features we take for granted), I think shares of the iPhone maker could have more AI upside relative to its FAANG rivals, most notably Microsoft ( NASDAQ:MSFT ). As such, I'm staying bullish on AAPL stock. Apple Beats on Q3 EPS, Sheds a Little More Light on AI Prospects Apple revealed a decent third quarter after market close yesterday, beating modest analyst expectations on the bottom line while matching revenue estimates of $81.8 billion. Earnings per share (EPS) came in at $1.26, topping the consensus estimate of $1.20. Despite the beat, the most common headline I saw was that Apple revenues slipped for the third-straight quarter. Indeed, investors didn't seem too enthused by the numbers, as shares are currently lower today following the results. I believe the major headline that should have grabbed investors' attention is the strong growth in Services, up 8%, and the insightful commentary on AI from Apple's CEO, Tim Cook. During the earnings call, Cook stated that Apple has been working on AI, including generative AI, for many years. Indeed, this is pretty unsurprising commentary from Apple's top boss, who's probably been hounded to shed more detail on the company's longer-term AI plans. Though Cook didn't say anything game-changing or shocking about Apple's AI ambitions, I do respect that he doesn't appear to be trying to build up any AI hype, at least not to the magnitude of some of the other tech companies out there that can't seem to go a few sentences without mentioning generative AI. "We're going to continue investing and innovating and responsibly advancing our products with these technologies to help enrich people's lives," said Cook. The key words here are "responsibility advancing." Enriching People's Lives Ought to Come Before the Maximization of Profit This isn't the first time we heard Cook mention the goal of enriching people's lives, and it probably won't be the last. Indeed, it's not hard to imagine companies may be getting a tad ahead of their skis when it comes to generative AI and LLMs. While AI can enrich people's lives, there's also the danger it could do some harm. Indeed, OpenAI's ChatGPT and even Microsoft's Bing AI have been called out for "hallucinating," or in Lehman terms, just making stuff up! Undeniably, LLMs like ChatGPT are definitely a work in progress, and there's a lot of reputational risk on the line by putting a consumer-facing AI product out there. While Microsoft may be comfortable taking such risks to be an early mover in the AI race, Apple does not seem to be, at least not yet. As AI regulations and potential downsides arise, I'd look for Apple to be more comfortable making a bigger splash into the uncertain AI waters. Until then, expect the company to keep tabs on the state of the emerging technology as it looks to incorporate various aspects to "enrich people's lives." At the end of the day, Apple seems to be playing the long game with AI, putting people first rather than profits. Moving forward, I expect the company to do more of the same. The latest iOS update may not have AppleGPT, but it does have AI technologies (think the iOS 17's AI-powered Auto-Correct) to help improve numerous aspects of the user experience. Is Apple Stock a Buy, According to Analysts? On TipRanks, AAPL stock comes in as a Strong Buy. Out of 31 analyst ratings, there have been 23 Buys and eight Hold recommendations assigned by analysts in the past three months. The  average Apple stock price target is $206.80, implying upside potential of 13.35%. Analyst price targets range from a low of $150.00 per share to a high of $240.00 per share. Indeed, some may view 13.35% as a modest return for the year ahead. Apple shares are trading on the expensive side of their historical range (the stock's averaged a 25.5 times trailing price-to-earnings multiple over the last five years) at 31 times trailing price-to-earnings. Still, I expect price target hikes to come in as more analysts re-evaluate Apple's longer-term potential in AI. The Bottom Line An AI-powered Auto-Correct feature may be a heck of a lot less ambitious than a ChatGPT rival. However, there's no shame in releasing safe, responsible AI-based technologies before taking chances with a massive GPT-powered Siri update before it's polished enough not to "hallucinate" or do something that could potentially hurt its consumers. The way I see it, getting into the pool from the shallow end is far less risky than the deep end if you're not sure what lies beneath the water. Although it may not seem like it, Apple's a long-term AI winner, albeit a quiet one, for now! Disclosure

ValueAct Capital is reordering its management team and promoting long-time partner Robert Hale to co-chief executive alongside Mason Morfit as the investment firm focuses more heavily on Japan and wants to simplify its own organization.

Microsoft's ( NASDAQ:MSFT ) ability to continuously surprise investors and analysts alike is truly amazing. The company once again showcased exceptional growth in its most recent results. Microsoft's Cloud segment, in particular, has not only managed to sustain solid growth during a very tough macroeconomic environment, but Microsoft's rapid developments in AI are set to gradually further boost the segment's financials and sustain double-digit growth ahead. Overall, under the helm of Satya Nadella, Microsoft seems like an unstoppable force, giving investors the opportunity to have exposure to all of the exciting technological developments (such as AI) along with the safety that comes with a well-run, irreplaceable enterprise tech behemoth. That said, with investors fearing potentially losing the underlying opportunity that Microsoft presents, the stock has already rallied by a significant 37% year-to-date. Therefore, while I do remain highly optimistic regarding Microsoft's future prospects, I am concerned about the potential impact the stock's significant valuation expansion could have on investors' future total returns. Accordingly, I am now switching my MSFT stock rating from a Buy to a Hold. Closing Fiscal 2023 on a High Note, Driven by Cloud Strength Microsoft's most recent results closed the company's Fiscal 2023 on a high note, despite the underlying challenges that persisted over the past 12 months. Even in the face of a shaky business environment in which enterprises are employing cost-cutting measures due to rising rates, Microsoft showcased remarkable growth across all fronts, with its cloud offerings leading the way. In particular, Microsoft's Cloud revenues surged to an impressive $30.3 billion, representing a remarkable 21% increase (or 23% in constant currency) that surpassed the expectations of both management and analysts. This surge in revenue was driven by strategic advancements on multiple fronts, solidifying the company's position as the preferred choice for the world's leading enterprises. Azure, for instance, continues to excel by capturing substantial market share as customers migrate their workloads and invest in innovative projects. Additionally, Azure Arc's remarkable success, a platform enabling companies to develop apps in Azure, resulted in an astonishing 150% increase in customers, reaching 18,000 companies. Notable industry leaders such as Carnival Corp. ( NYSE:CCL ), Domino's Pizza ( NYSE:DPZ ), and Thermo Fisher Scientific ( NYSE:TMO ) have all embraced this cutting-edge technology. In parallel, Microsoft has been successful in productizing its advancements in AI, which opens up tons of opportunities for up-selling and cross-selling additional products to its existing clients. Just take a look at Azure's adoption across Microsoft's OpenAI Service's traction, with over 11,000 leading firms, including renowned names like IKEA, Volvo Group, and Zurich Insurance, already leveraging AI. This figure translates to 100 new customer additions daily during Q2, highlighting the swift pace of Microsoft's AI onboarding. With Mercedes-Benz integrating ChatGPT through Azure OpenAI into over 900,000 vehicles in the U.S., enhancing their in-car voice assistant to be more intuitive, and Moody's constructing an internal copilot to boost productivity for their 14,000 employees, it becomes apparent that AI adoption is becoming indispensable for companies aiming to stay ahead in the competitive landscape. Contrary to concerns about Microsoft's Cloud division potentially slowing down after a decade of widespread adoption, the recent advancements in AI have instead paved the way for a vast and exciting "new" phase of growth. Economies of Scale Expand Margins, Profits Higher Microsoft's business model benefits from excellent economies of scale, allowing the company to enjoy expanding margins and, thus, even more impressive net income growth over time. This is particularly evident in Microsoft's Cloud division, where, as I just mentioned, the company can cross-sell and up-sell its advancements without incurring equally-high costs (e.g., lower customer acquisition costs). Indeed, Microsoft's Cloud gross margin expanded by about three percentage points (300 basis points) year-over-year to 72%. This theme was prominent across Microsoft's consolidated income statement, with Q4-2023 gross, operating, and net income margins landing at 69.8%, 41.1%, and 35.7%, respectively. These numbers compare to 68.3%, 39.6%, and 32.3% over the same period last year, respectively. Therefore, even though Microsoft's revenues grew by 10% in constant currency, in Q4, its operating profit and net income actually grew by 21% and 23% due to the underlying margin expansion occurring. Now, add Microsoft's lofty share repurchases, which amounted to $22.2 billion over the past 12 months and further reduced the company's share count, and earnings per share landed at $2.69 in Q4, up by an even larger 23% in constant currency. Accordingly, Microsoft achieved earnings per share (adjusted for some severance and hardware-related impairments) of $9.81 in Fiscal 2023, up 7% or 12% in constant currency - marking another all-time-high result. Microsoft's Expanded Valuation Impact On Future Returns Microsoft achieved record earnings in Fiscal 2023. However, shares actually rose at an even faster pace, essentially resulting in the stock's valuation experiencing a multiple expansion. While Wall Street forecasts another year of thriving performance in Fiscal 2024, with earnings-per-share expected to grow by about 12.3% to $11.02, the stock's current price of ~$330 implies a rich forward P/E of about 30x. Of course, the reason that this multiple is notably higher than the S&P 500's ( SPX ) multiple of 20.6 is that the market expects Microsoft to continue growing at an above-market-average pace. However, with the Fed remaining persistent with interest rate hikes, the current valuation could be a little too ambitious. Also, while I don't bash investors' willingness to pay a premium for Microsoft's qualities and incredible growth story, I do believe the stock's future total-return potential may have shrunk. Is MSFT Stock a Buy, According to Analysts? Regarding Wall Street’s sentiment, Microsoft maintains a Strong Buy consensus rating based on 31 Buys, one Hold, and one Sell assigned in the past three months. At $392.97, the average  Microsoft stock price projection implies 18.6% upside potential. If you’re wondering which analyst you should follow if you want to buy and sell MSFT stock, the most accurate analyst covering the stock (on a one-year timeframe) is  Alex Zukin from Wolfe Research, with an average return of 32.4% per rating and a 97% success rate. Final Thoughts While Microsoft continues to impress with its exceptional growth and advancements in AI, investors should be cautious about the stock's significant valuation expansion. Despite the company's strong performance, the current price of ~$330 implies a rich forward P/E of about 30x, which may impact future total returns given the current trajectory of interest rates. Therefore, while I remain optimistic about Microsoft's prospects, the stock's high valuation leads me to switch my rating from a Buy to a Hold. Disclosure

Wall Street gained and bond yields fell on Friday after July jobs data showed a slowing in the U.S. labor market with wage gains.

A U.S. judge hearing the Justice Department's lawsuit against Alphabet's Google alleging it broke antitrust law in search let stand key claims made by the government.

Some skeptics see a bubble forming in artificial intelligence, but there are still exciting opportunities to bet on future growth. Here's why Amazon and Nvidia are two AI stocks worth adding to your portfolio right now.

Looking at options trading activity among components of the S&P 500 index, there is noteworthy activity today in Microsoft Corporation (Symbol: MSFT), where a total volume of 352,734 contracts has been traded thus far today, a contract volume which is representative of appr

Wall Street rose and bond yields fell on Friday after July jobs data showed a slowing in the U.S. labor market with wage gains, while Amazon's stellar earnings countered Apple's tepid sales forecast.

Wall Street rose on Friday after data showed the U.S. economy added fewer-than-expected jobs in July, while Amazon's better-than-expected earnings countered Apple's tepid sales forecast.

Wall Street was set to open higher on Friday after data showed the U.S. added fewer-than-expected jobs in July but retained enough momentum to likely shield the economy from a recession amid aggressive tightening by the Federal Reserve.

When it comes to the artificial intelligence (AI) arms race, Microsoft (NASDAQ: MSFT) and Google parent Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG) are two of the frontrunners. The companies have been engaged in a fierce battle over AI in 2023, which has spanned from internet search e

Since late July, five major tech companies from the United States released their earnings reports. Among them, Amazon AMZN, Facebook-parent Meta META and Google-parent Alphabet GOOGL delivered impressive results, garnering positiv

The U.S. economy has proven to be remarkably resilient despite the tough macroeconomic environment. Although the Federal Reserve's 16-month fight against soaring inflation has taken benchmark interest rates to the highest level in 22 years, the U.S. economy has posted an unexpect

Below is Validea's guru fundamental report for MICROSOFT CORP (MSFT). Of the 22 guru strategies we follow, MSFT rates highest using our Patient Investor model based on the published strategy of Warren Buffett. This strategy seeks out firms with long-term, predictable profitabili