Let's Talk Money! with Joseph Hogue, CFA: This week's stock market update highlights key stocks to watch, including AMD, Netflix, and Alibaba, and discusses potential market impacts from political events and earnings reports.
Let's Talk Money! with Joseph Hogue, CFA - Buy These 7 Stocks and Don’t Stop
The update emphasizes the importance of this week for setting the stock market's direction for the year. Key stocks to watch include AMD, which is expected to report strong earnings growth and has potential upside due to AI market shifts. Netflix's earnings are anticipated, but concerns about content quality and sports licensing costs may impact its stock. Alibaba faces challenges from trade tensions but has growth potential in AI and cloud services. The update also discusses the potential impact of President Trump's policies on the market, particularly regarding tariffs and deregulation. Additionally, the video highlights the potential for growth in financials, materials, and industrials sectors, while cautioning about consumer discretionary stocks due to potential consumer spending slowdowns.
Key Points:
- AMD is expected to report strong earnings growth, with potential upside from AI market shifts.
- Netflix's earnings may be impacted by content quality and sports licensing costs.
- Alibaba has growth potential in AI and cloud services despite trade tensions.
- President Trump's policies, particularly tariffs and deregulation, could significantly impact the market.
- Financials, materials, and industrials sectors show growth potential, while consumer discretionary stocks may face challenges.
Details:
1. 📈 Weekly Stock Market Update
1.1. Weekly Update Timing and Introduction
1.2. Important Stocks to Watch
1.3. Critical Stock Market News
2. 🔍 Stocks to Watch: AMD and Market Trends
- This week could set the direction for the entire year for stocks, potentially leading to another 20% plus year or a downturn.
- Advanced Micro Devices (AMD) shares dropped 133% in December due to downgrades and market weaknesses, yet Wall Street analysts project a 41% increase from its current price to $172 a share.
- AMD's revenue is expected to rise 25% to $32 billion, with earnings increasing 54% to over $5 a share, setting the shares at a price of just six times this year's expected sales.
- The valuation is at a 95% discount to its average over the last four quarters, and a 23 times price to forward earnings valuation, indicating a significant discount compared to usual trading prices.
- AMD is taking market share from Intel in the PC and gaming markets, driven by strong demand for its Ryzen 7 products, leading to reported shortages.
- AI market developments, shifting from model training to inference, could accelerate AMD's growth as Nvidia's dominance faces challenges due to shortages and overheating issues in its new Blackwell chips.
- There is a noticeable shift of hyperscalers towards AMD for less expensive chips, with Nvidia's GPUs priced upwards of $25,000 each.
- Dell and IBM have announced plans to integrate AMD chips into their corporate products and cloud services respectively, further supporting AMD's growth in AI and corporate sectors.
3. 📊 Investment Opportunities and Insights
- AMD shares may rise beyond the analyst target of $172 per share, indicating potential growth and investment opportunity.
- The Blossom Investing App allows users to view and share portfolios, connect brokerage accounts, and track stocks in one place, enhancing portfolio management capabilities.
- The app provides portfolio insights, including portfolio percentages and average dividend yield, aiding in informed decision-making.
- With over 200,000 investors active on the app's social feed, users can engage with a community to see trending discussions and gain diverse perspectives.
- The app is free to download, with a special invite link available, offering easy access to its features.
4. 🌍 Global Market Influences: Alibaba and Netflix
4.1. Alibaba's Market Position and Strategic Initiatives
4.2. Netflix's Market Dynamics and Earnings Outlook
5. 🏦 Banking Sector and Financial Forecasts
- Bank stocks, including the spyer bank ETF (KBE), increased by nearly 8% following earnings announcements, with JP Morgan (JPM) and Goldman Sachs (GS) seeing even greater increases of over 8% and 11%, respectively.
- Optimistic outlook on investment banking, market activities, and M&A, driven by anticipated deregulatory measures.
- Loan growth has stagnated due to a sluggish economy and fewer Fed rate cuts expected, leading to higher rates on deposits.
- JP Morgan reported a net interest income decrease of 2.3%, equating to over $500 million last quarter.
- Wall Street banks like Goldman Sachs, JP Morgan, and BlackRock (which reported a record $20 billion in fund assets) are expected to perform well, leveraging the market mood.
- Regional banks, primarily reliant on lending revenue, may underperform due to stagnant loan growth and net interest income concerns.
- Ally Financial (ALL) is highlighted as an exception, with expected earnings up 28% to 58 cents a share, and projected 37% earnings growth to $4 a share on 8% revenue growth, despite weakness in revenue.
- Ally Financial's stock is considered undervalued, trading at nine times expected earnings and 0.9 times book value, which is at least 14% below fair value, along with a 3% dividend yield.
- Ally Financial is identified as a solid fintech entity, diversifying beyond auto lending into digital banking, insurance, credit cards, and home loans.
6. 🤖 AI and Robotics: Symbotic's Strategic Moves
6.1. Partnership with Walmart
6.2. Market Potential and Financial Implications
7. 🔮 Quantum Computing: Future Prospects and Risks
7.1. Revenue Growth and Strategic Partnerships
7.2. Investment in Quantum Computing Stocks
8. 🌐 Market Sentiment and Policy Impacts
- All 11 stock sectors closed higher last week, with gains of more than 4% in six sectors: utilities, real estate, materials, industrials, financials, and energy. Utilities and real estate rebounds were driven by a drop in interest rates, which may not continue without changes in market expectations.
- Energy and financials have seen increases over the past month, but further upside potential remains, particularly for big banks. Materials and industrials could continue to rise due to attractive valuations and momentum.
- Consumer discretionary stocks fell by 4.3% over the past month, ranking second worst after Consumer Staples, highlighting sector-specific challenges.
- Bank earnings should be monitored for insights into consumer credit and lending, especially as lower-end consumers are stretched and consumer spending is declining.
- President Trump's inauguration will be a significant indicator of market sentiment, with Tuesday's market measuring investor reactions to initial executive orders. Earnings season is beginning and is expected to support the market, while early policy announcements will set the tone for the year.
- Tax cuts face challenges due to a thin majority in Congress, potentially impacting market sentiment as expiration dates approach. Deregulation is seen as a market positive but will face congressional challenges.
- Market-unfriendly policies could be enacted rapidly through executive orders, potentially affecting market stability. Aggressive policies such as mass deportations or high tariffs could lead to market fears of inflation and economic contraction.
- There are talks of gradual tariff increases and tempered deportation plans, which might stabilize market reactions.
