FA Alpha Weekly Digest 01 13 2025

Wall Street’s stock picks can’t be trusted and the advertising bias of the mainstream financial media makes their news only sensationalist-driven. Gain an edge by knowing the trends that matter and some of the mispriced stocks in the market.

We bring you the FA Alpha Weekly Digest, a roundup of FA Alpha’s unique and unparalleled equity, credit, and macroeconomic insights over the past week.

In today’s digest, we’ll cover recent trends in the Fed’s late-year rate cut, Apple (AAPL), CompoSecure (CMPO), NVIDIA (NVDA), and Microsoft (MSFT).

Hold steady through the volatility

Despite a volatile end to 2024, the fundamentals for 2025 remain robust. Corporate credit availability is improving, enabling growth, and the upcoming administration's tax policies could further boost earnings. Comparisons to the late-1990s internet boom underscore the market’s long-term potential, despite inevitable short-term drawdowns. Historical Nasdaq data shows that even during massive rallies, pullbacks are common, and reacting to volatility often leads to missed opportunities. With bullish sentiment, strong valuations, and key growth drivers like deregulation and corporate investment intact, investors should view pullbacks as opportunities rather than signals to exit.

Maintaining growth becomes increasingly hard for this tech giant

Apple faces increasing challenges to sustain growth as market opportunities narrow. In 2024, Apple underperformed the "Magnificent Seven”, driven largely by Nvidia's AI-driven surge. To address growth hurdles, Apple plans to launch over 20 products in 2025, including the iPhone 17, M4 chip-equipped MacBook Airs, AirTag 2, Vision Pro updates, and a smart home display. While these releases aim to expand Apple's ecosystem, the company’s financial growth remains heavily reliant on its services segment. As Apple’s Uniform P/E ratio reaches 31.3x, questions arise over whether its product cycle can justify the valuation. Long-term success hinges on balancing hardware innovation with service expansion.

This payment card leader is diving into crypto

CompoSecure (CMPO) has thrived by adapting to market changes and expanding beyond its core business of premium metal payment cards. Its Arculus product addresses the growing demand for secure digital asset management, offering a user-friendly solution that combines cold storage with advanced authentication technology. Strategic partnerships, such as its collaboration with Fiserv, enhance Arculus’s market reach and adoption amid increasing cryptocurrency use. While the company posted an impressive 77% Uniform ROA and 23% asset growth last year, concerns about intensifying competition in the digital asset sector persist. However, with its proven expertise and commitment to innovation, CompoSecure is well-positioned to seize opportunities at the intersection of traditional finance and digital assets.

This tech giant is expensive for a reason

The Consumer Electronics Show (CES) highlighted significant advancements in AI and computing, with NVIDIA unveiling the GeForce RTX 50 series and Blackwell AI accelerators, showcasing a focus on innovation and affordability. Collaborations with firms like Cerence and Microsoft underscore NVIDIA’s growing influence in AI infrastructure and applications. Its dominance in GPUs and AI solutions positions it as a critical player in sectors like data centers, autonomous vehicles, and digital content creation. While concerns over its premium valuation remain, NVIDIA’s steady growth and strong market leadership reinforce a positive outlook.

This tech giant is betting big on AI infrastructure

Microsoft (MSFT) is investing $80 billion in data centers for fiscal year 2025, expanding infrastructure to meet the massive demands of AI growth. This positions Microsoft as a foundational player in AI, with partnerships like OpenAI driving its strategy. Suppliers like Nvidia (NVDA) and AMD stand to benefit from this, while the market anticipates stronger profitability as Microsoft’s AI investments pay off. This move solidifies its leadership in shaping the future of AI technology.

We hope you find this week’s FA Alpha Daily articles insightful.

See you next week as we talk about another set of interesting names.

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