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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.  

15.09.2022
Safe Haven Assets for Long-Term Investments: Broadcom

Broadcom is an American semiconductor and infrastructure software development company. Soon it is expected to close a merger deal with VMware, a cloud computing and visualization company, that will open new cross-sales opportunities for Broadcom to boost its revenues. Broadcom stocks are now 25% off their peak values.

According to the Q3 FY 2022 financial report that ended July 31, consolidated revenues grew by 25% year-over-year to $8.46 billion, and EPS went up by 40% to $9.73 per share. The semiconductors segment, that added 32% year-over-year, was the primary driver for the company’s profit. The company’s free cash flows (FCF) topped $4.3 billion, allowing it to spend $1.7 billion on dividends and 1.5 billion on the shares repurchase program. The company is planning to continue spending at least 50% of FCF on dividends that added 43% every year on average since 2016. 

According to the Q4 FY 2022 forward guidance, the company is expecting its revenues to go up by 20% year-over-year to $8.9 billion and for EDITDA to go up by 25% to $5.6 billion. Broadcom has great experience in expanding its product portfolio by M&A operations, and apparently it will continue on this way. The company is also expected to benefit greatly from the $52.7 billion CHIPS bill in the United States.


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.

04.08.2022
Ethereum’s Most Important Update

ETH is a native token for the Ethereum blockchain and is one of the two most reliable digital assets in the market along with Bitcoin. Ethereum is the first platform that became a hub for thousands of blockchain apps and other digital solutions. The recovery of ETH prices to November 2021 peaks at $4,900 would bring investors 190% profit.

Second layer solutions (Layer2) were introduced to improve stability and effectiveness of the Ethereum blockchain. These are blockchain network add-ons that are added on top of the primary blockchain. The most popular add-ons are Arbitrum, Loopring, Immutable X, and Polygon that have recently partnered with Meta (Facebook owner). In other words, the Ethereum blockchain network has a much broader use than the native blockchain itself.

Ethereum developers promise to release a new Proof-of-Stake (PoS) consensus protocol in late 2022. This protocol will allow miners to stake tokens to a special deposit to mine blocks. Some networks within the Ethereum blockchain have moved to PoS protocol this summer, while others are expected to move to this protocol in the middle of September.  This move will allow for the increase of processing capacity of the network to almost 100,000 transactions a second from the existing 30 transactions and lower commissions. This would also allow for ETH to switch to the deflation model when coins are algorithmically burned, while some coins would be removed from circulation as they would be blocked by staking - more than 13 million ETH or 10% of overall coins in circulation are blocked by staking. The problem is that coins are blocked for a long period of time and cannot be sold or exchanged for fiat currency.

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.

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/
EOS Is Surging amid Altcoin Rally

EOS has surged by 23.7% to $1.3319, pulling back from a high of $1.5390 earlier this week—the highest level since September 12, 2022. The ongoing rally in the altcoin market has been a key driver of this upward momentum. A major catalyst was the announcement of Paul Atkins, a known crypto advocate, as the nominee for the Securities and Exchange Commission (SEC) by U.S. President-elect Donald Trump. This news propelled the entire crypto market, with Bitcoin (BTC) climbing 8.8% to a new all-time high of $104,498. EOS followed suit, spiking by 36.3% in response.

However, the sharp increase has left EOS in overbought territory, suggesting a potential retracement to around $1.1000 before any further upward movement. Such a pullback could provide a healthier foundation for sustained gains.

2335
BlackRock May Rise Above $1,100 on HPS Acquisition

BlackRock's dominance in the global asset business got another confirmation. The institution, which has roughly $11.5 trillion worth of funds under management currently rules a $85 billion private credit platform as of the end of September, yet it is ready to buy one more private credit firm, named HPS Investment Partners, for about $12 billion in an all-stock deal, BlackRock CEO Larry Finksaid and HPS CEO Scott Kapnick said this week. Shares of BlackRock reached the levels above $1,050 on this news, as HPS is a bigger private credit player, with its assets under management evaluating at about $148 billion. Initially being founded in 2007 as a hedge fund unit of JPMorgan's asset management arm, the firm has quickly grown over the past few years, from nearly $34 billion in 2016.

HPS was reportedly approached by a number of interested institutions, which offered acquisition or merger instead of entering into IPO, but BlackRock came out the winner. The entire private credit class of assets is now estimated above $1.5 trillion, and it may grow to $2.6 trillion in the next 5 years, according to average analyst pool projections on Wall Street. Even though BlackRock's rivals Apollo, managing $598 billion in credit assets, Blackstone ($432 billion) and Ares ($335 billion) are still commanding bigger strides in this credit platform speciality, the deal will clearly strengthen BlackRock positions here by creating a private credit franchise with about $220 billion in client assets. According to some estimates, this may increase BlackRock's private markets fee-paying assets under management and management fees by 40% and about 35%, respectively.

As an investment institution, BlackRock previously emphasized that an expanding credit division could be its "primary growth driver" within alternative solutions in coming years. As CEO Larry Fink noted, the HPS deal helps to "deliver income solutions for our clients that blend both the best of the public markets and the best of the private markets". This "positions BlackRock to offer comprehensive alternative asset management portfolio services to the largest institutions in the world ... significantly advancing its private-market growth goals," Ana Arsov, global head of private credit at Moody's Ratings commented.

Many investors think in a similar way. As we saw BLK aiming for new mountains since the very beginning of 2024, now we can update our price target for $1,150 at least. When BLK share price was just a bit above $800 in early January, the pool of Wall Street analysts put their average target at $877, and it adjusted to $1,090 at the moment. A 30% price growth for the last 11 months looks like a reason to expect even better price dynamics. It seems that declining borrowing costs in both the U.S. and Europe along with the Christmas rally have a potential of another 3% to 5% increase for the leaders of the investment segment right in the coming weeks.

 

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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/
ETC Is Losing Momentum

Ethereum Classic (ETC) is up 11.5% this week to $36.88, outperforming the broader market as Bitcoin (BTC) slips 1.1% to $96,678. The altcoin rally remains robust, with ETC surging 10.8% on Wednesday alone, marking a remarkable 97.3% gain since early November.

ETC is now approaching the ascending channel resistance at $40.00, which may act as a pivotal level. While a price spike beyond $40.00 is possible, sustained movement above this resistance is necessary for further upside to $45.00. Without significant positive developments within the Ethereum Classic project, such an advance may lack staying power, increasing the likelihood of a correction back toward $35.00.

2247
Chasing Tech Race

The Santa rally in tech stocks is already here, with the composite index of more than 3,000 stocks listed on the U.S. Nasdaq stock exchange outpacing the Dow Jones industrials since the beginning of December. It scored a historically record closing high at nearly 19,404 this Monday and managed to set the next intraday peak above 19,450 today. A data set since 1928 shows December as the best performing month of the year, with broad market barometers of Wall Street rising 74% of the time, yet this tendency is even more clear In presidential election years, when December provided gains 83% of the time. What also sounds pretty good is that statistically the strength in December usually extends into January. The only thing, which is typical for such presidential election years, is that the closing month is often characterised with an increased accent on activity during the first ten trading sessions but could be somewhat weaker before the ending days. It's easy to conclude that a reasonably hurried type of the pickup strategy for leading tech giants looks to be an appropriate response to fresh challenges. It is always better to buy still relatively cheaper and then hold longer than to try to chase rising prices later following the bullish trend.

Indeed, some market caps record holders are now setting the tone to give an aerodynamic shape to the quickening move up. Shares of Apple (APPL) has a winning streak consisting of seven consecutive days, so that a previously lagging iPhone-maker climbed onto its newfound top levels well above $240. Microsoft (MSFT) added almost 5% in its market value in a similar seven-day trip, with more than enough space to drive it further upstairs, keeping in mind a still existing discount for the stock compared to its all-time record pricing of July. Meta Platforms (META), which is the owner of Facebook, Instagram and WhatsApp, climbed by more than 5% for the last two days on growing advertising monetization hopes to touch an uncharted territory above $605 per share, while an average 12-month price target by the analyst community is located at $649, but we feel it could easily be achieved long before the end of this winter, if not before Christmas. A second wave of positive response to Q3 quarterly reports released by Amazon (AMZN) and Google (GOOG) in November could also be mentioned in the first page of Wall Street's record book of 2024. Actually, the whole market just creeps higher, but the list of the mentioned tech giants is now the first priority in our concept of how to earn on stocks, as we are seeking for a better risk/profit ratio.

Wedbush analysts are citing positive catalysts including deregulation under Donald Trump’s second term and the “AI revolution" helped by a "$1 trillion+ of incremental AI cap-ex over the next 3 years” as a proper base for 20% or more surge in the tech sector in 2025. In a client's note, Wedbush emphasized that AI initiatives are going to emerge from the Trump administration, so that it could be "substantially" favourable for major tech companies such as Microsoft (MSFT), Amazon (AMZN) and Google (GOOG), with the Department of Defence and other federal agencies "playing a pivotal role" in boosting AI development, positively impacting "companies like Palantir (PLTR) and Oracle (ORCL)". “While the Inflation Reduction Act would see some major changes/revisions under a Trump Administration which would be a negative for Intel (INTC) and others, the focus on AI will be front and center in our view and benefit Big Tech,” the group of analysts said, adding that the potential departure of Lina Khan from the Federal Trade Commission (FTC) is "seen as another positive development for the tech industry" to catalyse more deal flow and remove a significant barrier that has challenged tech sector deals, "including the recent broader investigation into Microsoft (MSFT)".

Again, according to Wedbush, Tesla's (TSLA) "unmatched scale and scope" will give it a "distinct competitive edge" in a non-subsidy EV market after the removal of tax incentives and rebates, while higher tariffs on China imports will "hinder" Chinese EV manufacturers from entering the American market, further benefiting Tesla (TSLA). Moreover, accelerating some of Tesla's (TSLA) full self-drive initiatives are expected once Trump is in the White House. As Tesla (TSLA) maybe looks a bit overbought right at the moment, its futures prospect for the second half of 2025 seem to us very promising.

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