News and analysis

Google-parent Alphabet (GOOG) rose by nearly 6% in market value to exceed the psychological barrier of $150 per share at some point of the regular trading session on March 18. The search giant got a sudden boost from a Bloomberg News report that Apple is allegedly at a developed stage of business talks on building Google's Gemini artificial intelligence engine into its new iPhone. The report was citing "people familiar with the situation", which was enough for another round of an explosive rise of Google stocks. Journalists detailed the subject of negotiations as licensing Gemini generative AI chatbot, formerly known as Bard, for some features which are going to come to the iPhone software during the year, while particular conditions or branding of a potential agreement have not been decided yet.

A deal may be officially announced in summer, Bloomberg report says, with Apple's annual conference of developers in June as an option. Gemini is now considered by many users as probably the best available option for a conversion of text- and picture- based tasks into multimedia content. Apple stock price recovered only within 2.5% on the news, and then wasted most of its gains, while Google kept about 70% of its initial price jump before the opening bell on the next day. This may be explained by considerations that the cooperative work augurs well for a promising future of Google rather than Apple, which probably cannot rely on its own AI-related know-hows. Meanwhile, Google has a potential to expand its AI services to one or two billion active Apple devices, given that Google is now the default search engine on Apple's Safari web browser, which prevents rival services including Microsoft-sponsored ChatGPT from encroaching on Google's clear search dominance.

Less than one week ago, Microsoft representatives testified before EU antitrust regulators, focusing on the rivalry between Microsoft and Google. In their point of view, Google enjoys "a competitive edge" in the generative AI segment due to its "trove of data" and AI-optimised chips, as its "large sets of proprietary data from Google Search Index and YouTube enable it to train its large language model Gemini". "Today, only one company - Google - is vertically integrated in a manner that provides it with strength and independence at every AI layer from chips to a thriving mobile app store. Everyone else must rely on partnerships to innovate and compete," Microsoft said to the commission. It is YouTube, which hosts an estimated 14 billion videos, so that Google has access to such content, but other AI developers do not, Microsoft lawyers suggested.

So, there are two consecutive reasons in a short to remind investors of Google's even brighter-than-expected prospects in the AI field. Our ideas on Google stock's target price now extend to at least $175 per share, compared to about $147 at the time of this writing. The average Wall Street analysts' 12-month price target is now shifted to $164.17, which is also +11.5% upside from the current levels.

EOS has experienced a decline of 9.4% this week, falling to $0.917. The token faced significant downward pressure, particularly on Tuesday when it reached a monthly low of $0.878. This decline can be attributed to the overall weakness in the market, with Bitcoin (BTC) also losing 7.5% to trade at $64,187.

Notably, EOS seems to be closely following the movements of Bitcoin, mirroring its price fluctuations. The token breached its uptrend support level at $1.000 and subsequently retested it, suggesting potential further downside. As such, there is a possibility for EOS to decline further towards the uptrend support at $0.800.

It's worth noting that there have been no significant internal developments or news to support EOS, further contributing to its downward trajectory.

Bitcoin is trading largely neutral around $68,000 per coin on Monday. The cryptocurrency experienced heightened volatility over the weekend, dropping to $64,560, marking the lows for March 6, before recovering on Sunday.

The decline in Bitcoin's price could be attributed to the downturn in the U.S. stock market, as investors anticipate hawkish comments from the Federal Reserve amidst rising inflation concerns. Of note, BTC prices slipped below the $70,000 support level, indicating potential weakness. The subsequent retest of this level will determine Bitcoin's direction moving forward. Failure to break through this now resistance could activate a downside scenario with targets set at $60,000.

One of my favourite stocks and a leading creative software maker, Adobe Systems (ADBE), has faced an over 10% decline. This happened for the second time in the past couple of months, caused by some softer-than-expected guidance for the current quarter. Yet, the situation still looks very similar to the experience with falling Google price in the last October, when temporary weakness in the only segment of a remarkably strong financial report led to a rapid price fall, but the bearish gap was then purchased and fully recovered over the next few weeks. So, I only bought more Google very soon after appearing that rather absurd local dips on charts, and I am going to add even more Adobe shares to my portfolio after waiting a little time until this initial and purely emotional breakdown passes away.

What actually cited in newswires as a main reason behind the downside move was that Adobe yesterday projected its digital media net new revenue at $440 million for Q2 FY2024, compared to $432 million in Q1 FY2024 and consensus analyst estimates of $460 million for Q2. The numbers were also called as a key metric that is quite possible but disputable against the background of the entire digital media business of the company which is much bigger, giving $3.82 billion at the moment. By the way, the last full number just showed a 12% YoY growth during the recent quarter. A projected slowdown for the "key metric" contribution amounted to less than 5%, and not over 10%, vs previously overestimated numbers.

The same observation could be attributed to the company's own EPS (equity per share) projections, which now lie in a range of $4.35 to $4.40, on revenue of $5.25 billion to $5.30 billion, compared with analyst pool estimates of $4.39 on revenue of $5.31 billion, for the current quarter. The numbers could be considered as huge and not less inspiring. Ultimately, it would be very strange for the crowd to turn a blind eye to freshly achieved all-time records in both last quarter's EPS of $4.48 and last quarter's revenue of $5.18 billion. The same pool of Wall Street analysts, which now tries to stigmatize the previous growth expectations from Adobe, anticipated lower records for EPS of $4.38 on lower revenue of $5.14 billion as well. The previous record in EPS was set at $4.27 three month ago. EPS records became broken by Adobe business for the seven consequent quarters in a row, which barely deserves such a deep correction.

One can indulge more in talking about rising competition in the segment, including a challenge by OpenAI's text-to-video generator Adobe was probably not wasting a lot of its money in vain for AI-related features to increase attractiveness of its products to demanding customers. If so, I bet Adobe price may even continue below its 7-month technical support at $500 per share, or even may decline further to touch the summer 2022 levels between $430 and $450, yet the company's investor day on March 26 would become the event to unveil new products' advantages, and it is going to put everything on its deserved place. The company's fresh announcement of a $25 billion stock buyback program will also help to give more confidence in Adobe to the investment community, when the management itself prefers to invest money in its own business.