The latest Market Talks covering Technology, Media and Telecom. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.
1447 ET - Preorders for Apple's foldable iPhone Duo suggest that demand is higher than expected, Yorkville Ives analysts write in a note. Shipping estimates for the phone were slipping to January across all models and colors just minutes after preorders opened on Friday. This is "a clear sign that demand at a $1,999 entry price is running well ahead of what anyone expected," they write, adding that the demand "reinforces our view that the Duo is the first major new hardware innovation out of Cupertino since the AirPods a decade ago." The volume of iPhones that have gone without upgrades for more than four years suggests that demand could stay high "well into 2027," the analysts add, projecting 20 million to 25 million units in 2027. (elias.schisgall@wsj.com)
1331 ET - Major cryptocurrencies are weaker, with sizably-lower volumes seen in afternoon trading, according to data from Coinglass. Trading volumes for bitcoin over the past 24 hours are off 39%, to $49.2 billion. Other tokens are seeing larger decreases in volume, with ethereum volume off 42% to $34.3 billion, HYPE volume down 41% to $1.8 billion, and XRP falling 42% to $2.1 billion. Outflows in bitcoin futures have picked up in the last 5 minutes, according to Coinglass--with outflows seen at $75.2 million and inflows at $31 million. Bitcoin is down 1% to $81,177, ethereum falls 1.3% to $2,419, and XRP slides 2.8% to $1.30. (kirk.maltais@wsj.com)
1249 ET - Proofpoint CEO Sumit Dhawan suggests the company will consider re-entering public markets following its roughly $6.3 billion acquisition of Varonis Systems. "We think that the combined company is going to be attractive to public investors, and as we close this transaction, we're going to assess it," Dhawan says on CNBC, adding that his current focus is closing the deal. Proofpoint itself was taken private by private-equity firm Thoma Bravo in 2021. (elias.schisgall@wsj.com)
1245 ET - Proofpoint's roughly $6.3 billion acquisition of cybersecurity firm Varonis Systems is a play to dominate the market for data security services, Proofpoint CEO Sumit Dhawan says on CNBC. "Data has become the next frontier of protection for cybersecurity," Dhawan says, adding that enterprises need data security in order to deploy AI safely. "Proofpoint and Varonis together become the largest cybersecurity player solving data security," he says. "None of the other providers were designed and built for protecting data, and Proofpoint and Varonis is." Varonis shares trade up 2.9% at $48.69 (elias.schisgall@wsj.com)
1235 ET - Shopify's tapping into strong growth and a growing recognition as an AI leader, according to RBC's Paul Treiber. In a report, the analyst points to U.S. Census data showing ecommerce sales rose 8.2% year-over-year in the two-month period of August-September. Moreover, Store Leads data shows Shopify's total merchant base grew 15% year-over-year in 3Q, while high-margin Shopify Plus merchants accelerated to 24%, its fastest growth rate since late 2021. Over the same period, he notes that rival ecommerce platforms saw active merchant counts fall 14% on average. He says the data suggest Shopify's growth momentum "remains robust," increasing the likelihood that 3Q results and 4Q guidance top consensus expectations. (adriano.marchese@wsj.com)
1132 ET - Quantinuum is a standout among pure-play quantum computing companies, Morgan Stanley analysts write in a note, upgrading the stock to overweight. The analysts consider the progress of four pure-play quantum stocks in their coverage - Quantinuum. Xanadu, Infleqtion, and IonQ - and find that Quantinuum seems to be furthest along its roadmap. "Quantinuum stands out on technology and execution: it is furthest along among the pure plays and has the strongest execution record, yet the market assigns it the lowest multiple of our 2030 revenue in the group," the analysts write. IonQ comes in second, while Infleqtion and Xanadu are at earlier stages, the analysts write. (elias.schisgall@wsj.com)
1109 ET - A solid rise in U.S. industrial production in September still leaves some lukewarm indicators. Production rises 0.7% in the month. Citi's Veronica Clark and Andrew Hollenhorst say in a note that "manufacturing production has moved mostly sideways since the spring and remains below production levels of 2014-18." They add that manufacturing production rose "a more modest" 0.3%. "While strong AI-demand has boosted business investment, much of this investment is imported, implying domestic production has not been as strong," Clark and Hollenhorst say. They add that higher interest rates and fading fiscal support represent headwinds to non-AI manufacturing into 2027. (paulo.trevisani@wsj.com; @ptrevisani)
0529 ET - Ericsson delivered strong results, with a sharp increase in sales and good cost control supporting resilient gross margins, UBS analyst Francois-Xavier Bouvignies writes. "While clearly positive for the near-term outlook, the sudden acceleration in networks revenues surprised us and may partly reflect equipment purchases brought forward ahead of price increases." The bank therefore continues to see a challenging outlook, with demanding comparatives and inflation constraining customer spending. Price increases are helping offset the impact of rising component costs, but UBS believes further price increases to sustain a 50% networks gross margin could ultimately weigh on demand. It reiterates its sell rating and increases its price target to 73 Swedish kronor from 68 kronor. Shares rise 1.2% to 104.97 kronor. (dominic.chopping@wsj.com)
0413 ET - Ericsson's third-quarter outperformance and fourth-quarter outlook points to year-on-year growth in 2027, Jefferies analyst Janardan Menon writes. Despite management's component-cost warnings, margins have held up due to mitigation measures, and Jefferies doesn't expect a material headwind in 2027 either. In addition, Ericsson's lack of AI exposure makes it resilient amid the current market scepticism on the sustainability of AI investment strength, Jefferies says. A flat radio access network market and the lack of margin upside limits earnings growth, but a new buyback program at the 2027 AGM could provide some upside, it adds. The bank reiterates its hold rating on the stock and raises its price target to 105 Swedish kronor from 98 kronor. Shares rise 1.1% to 104.85 kronor. (dominic.chopping@wsj.com)
0339 ET - Kuaishou Technology's Kling could gain market share from ByteDance's Seedance, Citi analysts say in a research note. The AI video unit of Kuaishou officially launched Kling 4.0 on Thursday with upgrades. While the updated model has shown significant improvement in the continuity and consistency of complex movements, it may still be slightly behind Seedance 2.5, Citi says. However, Kling's cost per second is slightly lower than Seedance's. With pricing below Seedance 2.5 and video effects close to Seedance 2.5, Kling 4.0 could gain some market share and improve its grossing trajectories ahead, Citi adds. Kuaishou's shares are 2.3% higher at HK$29.24. (sherry.qin@wsj.com)
0036 ET - Samsung SDS appears better positioned than its domestic information-technology peers to capitalize on artificial-intelligence demand, Nomura analyst Angela Hong says. The Samsung Group affiliate's planned AI infrastructure capacity could be supported by computing demand from its parent conglomerate, reducing its reliance on large outside customers, Hong writes in a note. External enterprise demand, including third-party data center design-build-operate projects, could provide additional growth opportunities, she says. The analyst points to the company's plan to expand its AI data-center capacity to 230 megawatts from 110MW by 2029 and more than 800MW--including 500MW from DBO projects--by 2031. Nomura initiates coverage of the stock with a buy rating and 250,000 won target price. Shares are up 3.7% at 201,500 won. (kwanwoo.jun@wsj.com)
0005 ET - Network capacity and efficiency are expected to improve as CelcomDigi and Maxis secure additional spectrum adjacent to their existing holdings, Hong Leong IB analyst Toh Woo Kim says in a note. The awards, worth 381.8 million ringgit for CelcomDigi and 203 million ringgit for Maxis, give both operators direct ownership of spectrum previously accessed through partners, he notes. The additional capacity should support rising data demand without requiring as much spending on new network sites, he says. The financial impact is expected to be broadly neutral, as spectrum costs should be offset by lower network spending, he adds. Hong Leong maintains an overweight rating on the Malaysian telco sector, pegging Telekom Malaysia and CelcomDigi as its top picks.
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