• Metadoro
  • Products
  • News and analysis

News and analysis

Check market insights shared by our community members
26.04.2023
Diversification Inside Tech Sector: Taiwan Semiconductor

TMS is the most valuable semiconductor producer in the world. Its stock went down by 40% during the recent market correction, and rebounded slightly after a strong Q1 2023 earnings report. The company reported an operational margin at 45.5% as production of 5 nm and 7 nm chips is increasing. The company continues to generate profit despite decreasing demand for personal computers after surging during the pandemic in 2020-2021. Its financials are looking much stronger than its major peer Intel. In the worst-case scenario TSM’s operational margin is expected to decline to 40%, while Intel is expected to deliver a 39% operational margin with a negative net cash flow in Q1 2023. Taiwan Semiconductor is planning to spent between $32 billion to $36 billion on CAPEX this year, while Intel has cut CAPEX to $20 billion despite being 30% co-funded by the U.S. government.  On the negative side, the company is quite vulnerable to geopolitical risks as tensions between China and Taiwan are mounting. Although, it is hard to believe that Beijing will take the island by force, these threats could not be discounted. China is building its image as a global peacemaker while promoting its roadmap to establish peace between Russia and Ukraine, and the recent China-brokered agreement between Iran and Saudi Arabia. Economic ambitions of China are also a major hurdle for a military solution of the long-lasting conflict as the destruction of the chip production facilities of TSM will make such military operations pointless in the economic sense. In other words, TSM stocks may interest very optimistic investors that are seeking extra profit amid recovering demand for chips in the second half of` 2023.  

16.06.2022
Not Every Tech Stocks are Equally Strong: SAP

SAP stocks have lost 30% since the beginning of 2022. The German tech company develops enterprise software and solutions to manage business operations. For example, one of its services can be used  to manage all business travel financial activities and related spending. In other words, it is quite a routine company with  a stable and strong cash flow. Once SAP software is installed on a corporate level it is hard to do without it as it is deeply integrated into the business core processes. Moreover, SAP is restructuring its business model around its subscription base and this will allow for cash flows to be even more predictable and balanced through the financial year. Such a model is in favourable to Wall Streel investors.

The war in Ukraine has a 300-million-euro negative effect on SAP business, and it is only a marginal 1% of the overall revenue base for the company, while its dominance in the ERP segment is secure. The revenues added 11% year-on-year to 7.08 euros in Q1 2022. The revenues grew by 6% in  Q4 2021.

The company has made some successful M&A deals, acquiring Qualtrics, a cloud-based subscription software platform, that delivered +48% revenue in Q1 2022. This company had a gross margin above 90% in 2021 while SAP’s gross margin was at 70% for the same year.

SAP management promised to triple its cloud-based business by 2025, and boost revenues to 22 billion euros, while operational profit is forecasted to grow by 40% from the current 8.4 billion euros. This is a very extensive growth for the company that has a high P/E ratio at 17. The company may not perform very high growth rates as its younger tech sector peers, but it may certainly recover to new all-time highs in the long-term perspective. However, the sector may require several quarters to recover, and the recovery would be headed by such reliable companies as SAP with a low risk profile.

11.08.2022
Perspective Peers of Ethereum: Avalanche

Avalanche is ranked by Coinmarketcap at the 12th position by market cap with $7.8 billion, which is 4% less than Ethereum’s market cap. AVAX prices dropped by 82% of its peak values, allowing investors to buy it at early 2021 prices. Avalanche’s infrastructure consists of three logically isolated networks, each of these with their own processing, validators, and own set of rules.

This platform is often compared to the existing internet web infrastructure with core connection protocols like HTTP, surrounded by a huge number of networks to their apps. Avalanche allow for the creation of public and private systems as a blockchain or DAG (Directed Acyclic Graph) and for the use of different virtual machines for apps, including EVM engine (Ethereum Virtual Machine) that allows Enthereum network programs to be developed.

Avalanche includes C-chain to create smart contracts that are processed on an advanced EVM engine, P-Chain that coordinates validators that process transactions and also allows for the creation and management of new subnetworks, and X-Chain which is a directed acyclic graph regulating issuance and trade of cryptoassets. DAG systems record new transactions on top of the old ones, allowing for processing speed to be increased and for capacity substantially. It is quite different to other blockchains, where transactions are compiled in blocks in order to be processed.

The advantage of Avalanche is that it provides anyone with the opportunity to create his or her own isolated blockchain with its own set of parameters, including access to apps and the programming language with which it will work. Every subnetwork can process around 4,500 transactions per second compared to 14 processed by the Ethereum network.

B
A Skunk at the Christmas Garden Party

Last night when the S&P 500 broad barometer of Wall Street performed a 3% downward correction on the U.S. Federal Reserve's halving its rate cut guidance for 2025, which temporarily tamped down overall bullish bets, shares of Micron Technology (MU) felt much more pressured by a self-estimated rather gloomy outlook. The stock of a well-known manufacturer of data storages like dynamic random-access memory (DRAM), flash memory "NOT AND" (NAND) chips to retain gigabytes of data when the power is off or solid-state drives (SSDs) is now about to hit its annual low after plunging by 15% in after-hours trading. My stock portfolio received an unpleasant blow to introduce a skunk at our cool garden party before Christmas. Indeed, if something has arrived (and, of course, I am talking about my perfectly predicted Broadcom's shine with a 35% jump within only 2 days), it usually means somewhere has departed, when it comes to Micron's sliding and some total value adjusting on Wall Street.

Well, if Broadcom (AVGO), NVIDIA, Meta, Google and some other giant and smaller techs are just providing most patient investors to buy more shares when asset prices are episodically rolling back from their fresh historical record highs, then it is probably a different story with Micron stocks. The inertia of a retreat may prolong a negative momentum in Micron for weeks or even for another two or three months before proper and eventual bottoming and then strengthening again amid its volatile landscape on charts.

The whole intrigue is that Micron issued its record-ever quarter in terms of both profit and sales. Its revenue for the last reporting period which ended on November 28 came out at $8.71 billion vs $8.68 of consensus estimates, $7.75 billion for the prior quarter and $4.73 billion for the same period in 2023. Its net income of $2.04 billion, or $1.79 per diluted share, compared to $1.73 according to an average analyst poll forecast, added 51.6% QoQ vs $1.18 per share in the previous quarter, not to mention a loss-making cycle between Q3 2022 and Q3 2023. Yet, the major difference between Broadcom's shining and Micron's disappointing case is that Micron's projection of its future revenue and profits fell deeply short of both the crowd's bets and expert predictions.

As for Broadcom, it sees continuing revenue growth from $14.1 billion in Q3 to $14.6 billion in the current quarter, with an implied profit of $1.51 per share vs an already historically record $1.42 per share in Q3. Yet, the most important part of Broadcom's projections was that its AI-based revenue would range from $60 billion to $90 billion from current customers by 2027, compared to the company's total revenue around $50 billion for the last four quarterly periods. One may easily understand why Broadcom was gaining so quickly but another chipmaker Micron is drowning.

Micron foresees its earnings at $1.43 per share, plus or minus 10 cents, in the nearest three months, which is severely lower than the Wall Street consensus of $1.91. Besides, the current quarter's revenue number was anticipated at $7.90 billion, plus or minus $0.2 billion, which also falls short of the widely expected $8.98 billion. Micron's official comments after earnings clearly pointed to lower memory chip prices and subdued demand for handsets and PCs in significant markets like China. Sanjay Mehrotra, president and CEO of Micron noted that consumer-oriented markets "are weaker in the near term", so that he anticipates "a return to growth" only "in the second half of our fiscal year". Despite he still remained optimistic about AI PC adoption "over time", Sanjay Mehrotra had to admit in prepared remarks that the PC refresh cycle "is unfolding more gradually", so that he expects "PC unit volume growth to be flattish in calendar (year) 2024, slightly below prior expectations," while research firm Gartner investigated that global PC shipments faced a 1.3% decline YoY to nearly 62.9 million units in Q3.

The stock has suffered a notable 44% significant decline, when initially dropping from its early June peak later in mid-summer, due to exactly the same kind of headwinds. At that stage, I was betting on a slowly and steadily refreshing cycle, yet the challenging situation aggravated instead. Frankly speaking, I would not advise anybody to rush into attempts of seeking instant dips for fresh buying of Micron shares. It would be better to wait some extra, despite I personally bought them before, sure at more expensive price, as I see it now. Later on, Micron may benefit from expected tax cuts and regulatory easing under the Trump administration, as the company is using a 1,400-acre mega campus territory to make DRAM chips in central New York state. Yet, the positive impact is by no means guaranteed and certainly will be postponed for better time.

2029
Rafael Quintana Martinez
Money Manager de alto rendimiento, con una sólida formación académica, profesional y de campo. Más de 9 años de experiencia especializada en el comercio de mercados financieros internacionales. La devoción, la fiabilidad, la responsabilidad y la ética impulsan mi vida. Actualmente me desempeño como Analista Senior para Metadoro. https://metadoro.com/es https://mx.investing.com/members/contributors/235587671/ https://es.tradingview.com/chart/EURUSD/rE9gVips/
NEO Is Losing Momentum

Neo (NEO) has declined by 11.0% this week, trading at $15.70, significantly underperforming the broader market, where Bitcoin (BTC) is down just 0.3% to $102,489. The sell-off in risky assets followed the Federal Reserve's quarter-point interest rate cut, which was accompanied by hawkish commentary that spooked investors.

Neo's price dropped sharply by 10.5% in reaction to the Fed's announcement, bringing it close to the key support level at $15.00. This decline is a concerning signal for the market, as increased selling pressure could lead to a breakdown of this support. Should this occur, Neo's price might accelerate downward, with the next major target potentially around $10.00.

1682
Lam Research Is in Our Buy&Hold List

Here is one more undeservedly forgotten hero of the semiconductor era, which added nearly 50% to its market value from the beginning of the year until the first decade of July, but later reversed into a deep correction despite a continuous and notable quarter-by-quarter growth over the last five accounting periods. LRCX share price is now only about 7% exceeding its peaking levels of December 2021, still being 30% below its all-time highs of the summer 2024. Meanwhile, the Bank of America (BofA) freshly spotlighted Lam Research among its 6 key chip stocks to own for 2025 as a "flash-memory tool leader poised for capital expenditure recovery and impact resolution in China". Slower spending in domestic China previously formed a headwind for Asia-oriented chip companies. TD Cowen investment bank also called Lam Research "top pick", citing its "exposure to secular trends such as increasing memory content in storage, mobile and other applications and strong cash generation", although with a pretty moderate price target of $100.00, compared to varying around $78.5 at the moment.

A 25% to 30% resurgence in wafer fab equipment (WFE) investments over the next couple of years is forecasted by various analyst groups, as this technology has found a fast-increasing market in digital players and cameras, as well as solid-state drivers (SSD) for laptops, USB flash drives and all other devices which need large files to be frequently uploaded or replaced. Lam Research is exactly specializing in WFE. The firm reportedly commands over 30% of the capacity upgrade WFE market. Only leading-edge logic chips, which are used in artificial intelligence, quantum computing and machine learning may obtain a comparable pace of growth. Capital expenditures on necessary segments of WFE manufacturing dropped significantly in 2023 and 2024, with reinvestment supposedly falling up to 35%, but TD Cowen estimated it was going to rapidly recover up to 50% in 2025. Lam's customer support business division shows a 22% quarter-over-quarter surplus. The company's other diverse and innovative"4 Horsemen" technologies to generate more sales and to expand its part of the WFE market are GAA (Gate-All-Around), which is important for advancing transistor design, as well as Backside Power Distribution for better efficiency, Advanced Packaging solutions to overcome physical limitations and Dry Resist technology for reducing costs in lithography processes. If production chain partners want to improve yields and reduce costs, they are likely to invest in upgrading existing Lam's fabs instead of trying to build entirely new infrastructure.

Partially easing of China restrictions could be listed among factors to contribute to this kind of an optimistic view. The firm's solid financial metrics could be expected at the end of January when the time for nearest quarterly earnings will come, so that the stock has enough space and time for buying step-by-step on expectations. It could be mentioned here that Lam Research has a long history of beating consensus profit guidelines, averaging $0.63 per share above the midpoint over the last eight quarters. The appointment of Ernst & Young by Lam Research shareholders as the independent auditor may help to consolidate its corporate finances, even though its liquid assets are well exceeding short-term obligations and the company operates with a moderate level of debt. This sounds nice when combined with a $1 billion worth of shares in a quarterly buyback program. We feel that the AI agenda is going to continue driving the chip segment higher at least in the first half of 2025 before its attraction for Wall Street crowd may shift to some other side, but a broadening in the semiconductor rally could be expected later, based on still being in the shadow but slowly growing industrials. The same BofA sees global memory sales to jump by another 20% in 2025, after a nearly 80% rise this year, with core semiconductors (excluding memory) climbing by 13% on average and its whole industry sales target reaching $725 billion. Of course, China's market may potentially expose the whole segment to mid-term risks because of trade war threats and other geopolitical tensions, which may disrupt normal logistics and demand curve or create an overcapacity situation on Lam's Asian markets. Strengthening in the U.S. pressure may stimulate China for more attempts to develop its own alternatives to American-rooted manufacturing, which in turn may erode Lam's market share in the long term. So, this is a risk investors should closely watch.

1434
Rafael Quintana Martinez
Money Manager de alto rendimiento, con una sólida formación académica, profesional y de campo. Más de 9 años de experiencia especializada en el comercio de mercados financieros internacionales. La devoción, la fiabilidad, la responsabilidad y la ética impulsan mi vida. Actualmente me desempeño como Analista Senior para Metadoro. https://metadoro.com/es https://mx.investing.com/members/contributors/235587671/ https://es.tradingview.com/chart/EURUSD/rE9gVips/
APE Is Likely to Survive around $1.500 for 1-2 Weeks

ApeCoin (APE) has declined by 4.5% to $1.464, underperforming the broader crypto market, where Bitcoin (BTC) has risen by 1.4% to $104,180. APE's recent rally, driven by optimism surrounding U.S. President-elect Donald Trump’s promise to establish a strategic Bitcoin reserve, has fizzled out, with the altcoin returning to its average price levels.

APE is currently struggling to hold above the $1.5000 support level. If this support is breached, prices could drop further to $1.000, a scenario that aligns with the baseline market outlook. However, this bearish projection is not corroborated by the price movements of the NFT Bored Ape Yacht Club (BAYC). BAYC NFT prices surged by 101.0% to 22.99 ETH but have since corrected only by 20.0% to 18.30 ETH, whereas APE prices have dropped by 33.0%. This divergence is notable, as APE and BAYC typically exhibit strong price correlation.

Given this discrepancy, two potential scenarios emerge: either BAYC prices will decline further, aligning with APE's trajectory, or APE will experience a short-term rebound above $1.500. Both scenarios suggest that APE prices are likely to consolidate around the $1.500 level for the next one to two weeks.

1658
27

Join our community

Share your professional and amateur observations, exchange experiences, anticipate developments

Category
All
Stocks
Crypto
Etf
Commodities
Indices
Currencies
Energies
Metals
Instruments
Author
All
Metadoro
Contributors