News and analysis

ApeCoin (APE) is adding 2.5% to $0.737 this week. This rise is part of a consolidation after a 33% slump in July. However, this slump might not be over yet. The nearest support is at $0.500 per token, and it is very strong, but it is 31.0% down from the current price. The market is slightly recovering, with Bitcoin (BTC) trying to climb above the $60,000 barrier. If BTC succeeds in this effort, the worst-case scenario for APE could be eliminated.

The token is suffering after its related Bored Ape Yacht Club (BAYC) collectibles dropped to a record low of 8.5 ETH in late June and slightly recovered to 9.88 ETH in July. These positive developments could drive APE prices up. However, they will encounter strong resistance at $0.800. If the token fails to surpass this resistance, a drop to $0.500 seems unavoidable.

PepsiCo (PEP) shares lost around 2.25% of its market value at the start of premarket trading on July 11. The point was in moderately weaker demand for its snacks and sodas in its largest market, i.e. North America after average consumer prices on PepsiCo productions were raised by nearly 5%, from mid-April to mid-June, while organic volume (in units of bottles, cans etc) actually became 3% lower.

Revenue volumes at the North America beverages segment were about 30.3% in fiscal 2023 totals, and it has reported revenue of $6.81 billion, compared to $6.76 billion a year ago, which is just an inch below an averagely estimated $6.86 billion. Frito-Lay North America, the company's second largest unit, contributed about 27%, and it has now reported revenue of $5.87 billion, a 0.5% YoY decrease. Some products were recalled at Quaker Oats and Snacks. As a result, the company slightly missed Wall St consensus estimates for Q2 sales. Its net revenue climbed to $22.50 billion in the previous quarter from $22.32 billion (+0.8% Y0Y), while the analyst pool expected it at $22.66 billion on average.

However, PepsiCo's net earnings per share (EPS) rose to $2.28 from $2.09 per share in the same period of 2024, compared to a temporary drop to $1.61 in Q1 2024. The latest number also topped consensus at $2.16 per share. Well, more customers may be opting for smaller packages, because of higher prices, yet the company tries to make better business from each of its packs sold. Thus, PepsiCO CEOs said they projected the full fiscal year 2024 EPS of $8.15 vs the consensus of $8.13, on revenue of $94.31 billion, vs the consensus estimate of $91.06 billion.

It's not that bad, as a matter of fact. Again, they are thinking of an "approximately 4%" growth in organic revenue, while the company's official previous forecast was “at least 4%”, and so we don't feel the big difference here. “For the balance of the year, we will further elevate and accelerate our productivity initiatives and make disciplined commercial investments in the marketplace to stimulate growth", an official statement said. A price dive below $160 per share does not seem as a long-lasting trouble, in this regard. However, a confirmed reverse breakdown of the technical support between $163 and $165 or other expressed bullish sign is necessary before new buy positions can be considered seriously.

In the third decade of May, we have attempted to justify fundamentals under a potential rise of Applied Materials (AMAT) share price to the target around $250. Conclusions were based on the company’s beating expert pool estimates in both revenue and profit lines of its quarterly financial numbers, the company's own better projections and AMAT's universal integration to many manufacturing processes of Global Foundries, Huawei, Taiwan Semiconductor etc. Most of these chip production chains continued to grow fast. And so, AMAT shares already made it all the way from a $220 area, less than two month ago, to $255.

Some investment houses responded that premium valuations for AMAT and some other semiconductor equipment stocks are quite normal at current conditions and may lead to extra growth. The segment is up 46% year-to-date, exceeding the SOX index, Raymond James analysts wrote in a client's note. They are expecting "at least high-single digit growth in 2025/2026", citing "cyclical recovery, long-term demand for next-generation artificial intelligence (Gen AI), geopolitical tailwinds, and increased competition in the foundry space", also mentioning recent capex announcements by Micron Technology (MU) as a sign of "industry-wide investments". The group raised its price targets for Applied Materials to $275 from $235. MU price added 4% during the last trading day, widening its summer price rebound, with NVIDIA and AMD leaders rapidly gathering fresh bullish momentum as well.

We also believe that distributing money with a gradual movement of stop profit orders to levels 3-5% lower than the current ones and retaining at least half of previously purchased stake in AMAT looks an intuitively better solution than immediately closing highly profitable positions in the stock.

Taiwan Semiconductor's (TSM) report this week added another bright chapter in the global AI history. The world's very first dedicated semiconductor foundry and now the exclusive supplier of NVidia's and Apple's most advanced chips announced its revenue for June reached 207.87 billion in Taiwan’s Dollars (roughly $6.4 billion). This marked a substantial growth of nearly 33% YoY, while the company's revenue number for the last 6 months (January through June) has also been 28% better compared to the similar period in 2023. Both figures were above average analyst projections, so that TSM shares listed on NYSE quickly rose by more than 3.5% on July 10, adding one more percentage point at the pre-market on July 11.

US-Sino trade war threats surrounded the island's economy for many years, and so I personally keep myself aside from direct investments into Taiwan stocks. Meanwhile, this prominent chipmaker's shares are not only outperforming the US broad market barometer but are serving as a bellwether for the further stage of the NVidia-led AI rally. For example, some of my long-term favourites like Micron Technology (MU) and Advanced Micro Devices (AMD) already added about 4% to their corresponding market value in sync with TSM's extra step up.

You may say that AMD jump was supported by the acquisition deal of Silo AI, which brought AMD's a reputable European team in open-source, and multilingual large language models. That's true but this bare fact alone was hardly a sufficient reason for many investment houses to instantly raise their target prices for AMD to $200 or above. By the way, the AI behemoth Microsoft added more than 1.5% the same day, while the NVidia flagship suddenly put 2.63% in its piggy bank. Well, this is another stage of the AI trend, which is hard to stop. The S&P 500 (US 500) just closed above 5,600 points for the first time.

It is all obviously coming to more record highs in NVidia, along with the whole circle of its satellite stocks like MU, AVGO, QCOM etc. A perfect moment to swear an oath of holding the entire AI-based part of the stock portfolio at least for two or three more months.