News and analysis

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.

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.

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.

A Tokyo-headquartered SoftBank Group, which specializes in multinational investment management, is ready to become one more corporation to confirm the market's faith that re-elected U.S. president Donald Trump actually has a gift of turning anything he touches to gold, like the Greek myth character, king Midas. This time, Donald Trump and SoftBank CEO Masayoshi Son, one of the early believers in the great power of the World Wide Web who poured billions of dollars into promising start-ups of Silicon Valley including a valuable chipmaker Arm Holdings, have made a joint statement. They appeared together on Monday at Trump's Mar-a-Lago residence and said that SoftBank is going to invest nearly $100 billion over the next four years in what would be a solid boost to the American economy. This means the total sum will be deployed in sync with Trump's second term.

This was enough for Softbank shares to quickly add 4.42% in the Japanese trading session on Tuesday morning. However, that should just be the beginning of a bigger rally, as it echoed a pledge, which the Softbank's founder already made with then-President-elect Trump in December 2016, when Masayoshi Son said he would spend $50 billion to create 50,000 jobs. Shares of Softbank were quoted below 4,000 JPY at that moment, then climbed above 6,000 JPY in nearly two years. It finally peaked at 10,695 JPY in March 2021 and then reset this record to briefly hit above 12,000 JPY in July 2024. The current market price is only about 9,850 JPY, leaving a lot of space for potential growth again.

According to Trump, the investment co-operation would help to create 100,000 more U.S. jobs at a minimum, as Masayoshi Son "feels very optimistic about our country since the election". The investment "will help insure that artificial intelligence, emerging technologies and other industries of tomorrow are built, created right here in the U.S.A.," Trump added, while Masayoshi Son noted that his confidence level to the economy of the United States "has tremendously increased" with Trump's victory. During their joint announcement, by the way, Trump even asked Son to double the proposed sum. "I'm going to ask him right now, will you make it $200 billion, believe it or not, he can actually afford to do that," Trump said after calling Son "one of the most accomplished business leaders of our time". Thus, Son responded that "with your leadership and my partnership and your support" he will "try to make it happen". Last week, Trump proclaimed that he would extend "fast-track permitting" to any company, which invests $1 billion or more into the US economy.

Softbank reportedly has been rebuilding its finances after the failure of an office-sharing startup WeWork and after some other tech firms Softbank invested in just fell out of favour among the crowd of traders. This is probably the reason for a partial discount for Softbank shares after reaching a new all-time high this summer. This looks as an advantage for picking up the stock, even though this also could be a source of some worries for new investors. Again, Donald Trump likes loud announcements promising thousands of jobs, even though such investments do not always pan out. A $10 billion investment by FoxConn into a Wisconsin factory that initially supposed thousands of jobs was later mostly abandoned, as an example. Yet, the crowd's enthusiasm can outbalance old grounds for doubts as the investment community has seemingly started to heat up, so that even the initial mood could be enough for retesting levels above 12,000 JPY of six months ago. After the recent triumph of Tesla, which added more than 70% to its value in the post-election effect, at least a 15% or 20% increase for Trump's Japanese business partner and admirer seems to be quite reasonable.