Warren Buffett Trims Apple Stake
Market Watch
The equity markets are volatile as investors prepare for the U.S. presidential election and a potential Federal Reserve interest rate cut this week.
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Election results could be key to how the stock finishes in 2024. The latest poll from NBC News indicates a close race between former President Donald Trump and Vice President Kamala Harris.
Any market aftershocks will depend on which party takes control of Congress. Passing significant legislative changes might be difficult if the control of the Senate and the U.S. House of Representatives is divided.
Alternatively, a resounding victory by any party could lead to ambitious spending plans or a tax overhaul. So, expect stocks to remain highly volatile this week.
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Market Movers
Palantir
Palantir’s stock jumped 13% in after-hours trading on Monday after a monster Q3 report and a bullish outlook for the rest of the year.
Here’s the breakdown :
Patlantir’s sales rose 30% year over year in Q3 while net income doubled. So, what’s driving this growth??
Well, it's artificial intelligence. Palantir CEO Alex Karp says demand for the company’s data analytics and AI tech is “unrelenting” due to strong demand from U.S. government customers.
Palantir raised its 2024 revenue forecast to $2.807 billion, a 26% increase from last year. It expects U.S. commercial sales to surge over $687 million, gaining 24% year over year.
Not everything’s perfect, though. International commercial revenue dipped 7%, mainly due to weak performance in Europe and lower spending from a government-sponsored Middle East client.
Palantir has surged close to 150% in 2024, crushing broader market returns this year.
Nvidia Joins the Dow
Big news: Nvidia is replacing Intel in the Dow Jones Industrial Average. This move showcases the rising dominance of AI stocks and the shift in the semiconductor sector.
Nvidia has been on fire, with the stock surging 170% in 2024 after a 240% rally last year. Investors are piling into the AI chipmaker, which now has a $3.3 trillion market cap, second only to Apple.
Notably, major players like Microsoft, Meta, Google, and Amazon are all buying Nvidia’s GPUs to power their AI models and gain a first-mover advantage in the AI race.
Intel, on the other hand, is struggling. Once the king of PC chips, it’s losing ground to AMD and barely making a dent in AI. Intel shares have plummeted over 50% this year due to manufacturing issues and fierce competition.
The move to the Dow signals the rise of AI—as four out of the six trillion-dollar tech companies are part of the legacy index.
Boeing Ends Strike
Boeing machinists have finally approved a new labor deal, ending a seven-week strike. So, what’s the deal?
Boeing machinists will receive a 38% raise over the next four years, including a 13% wage bump right off the bat, plus bonuses that could reach up to $12,000. The union also bagged higher 401(k) contributions.
Boeing has been in a tough spot in recent weeks, as the strike resulted in mounting losses and production delays. Last week, the company raised over $20 billion to help weather a storm of financial troubles, and the labor deal gives the aircraft maker a chance to get things back on track.
The deal is a massive win for new CEO Kelly Ortberg, who’s been trying to steer Boeing through its crises. Moreover, it’s also a win for the workers facing rising living costs and frustrations over stagnant pay.
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Big Tech
Berkshire Reduces Exposure to Apple
Warren Buffett’s Berkshire Hathaway ended Q3 of 2024 with a cash pile of $325.2 billion, up from $276.9 billion in Q2.
Berkshire reduced its position in Apple by 25% and sold $10 billion worth of Bank of America stock in Q3. Overall, it reduced its equity position by $36.1 billion in the September quarter.?
Berkshire began trimming its stake in the iPhone maker in Q4 of 2023. In Q2 this year, Buffett dumped around 50% of the company’s investment in Apple.
Does the Oracle of Omaha expect valuations to pull back with the stock market near all-time highs??
Morgan Stanley is Bullish on Amazon
Morgan Stanley analyst Brian Nowak maintained an “overweight” rating on Amazon and raised the price target to $230, following the tech giant’s better-than-expected earnings in Q3. It indicates an upside potential of 16.2% from current levels.
Nowak also raised Amazon's earnings estimates for 2025 and 2026. The analyst expects Amazon's higher-margin verticals, such as online ads and cloud infrastructure, to expand the bottom line while allowing it to invest in other growth segments.
According to Nowak, Amazon Prime membership growth continues to drive recurring revenue, while the company’s cloud adoption is hitting an inflection point.
Google Leads the Cloud Race
The cloud infrastructure business is a key revenue driver for giants such as Alphabet, Amazon, Microsoft, and Oracle.
In Q3 of 2024, Google outpaced its rivals as its cloud business rose by 35% year over year to $11.35 billion, up from 29% last year.
Amazon Web Services, which leads the segment, saw a 19% growth in sales. AWS is twice the size of Google Cloud but is expanding about half as quickly.
Further, Microsoft increased its cloud sales by 33% in Q3.
Oracle is also a major cloud infrastructure company and the smallest of the lot. In its last report, Oracle’s cloud infrastructure sales were up 45% at $2.2 billion.