Big-Tech’s Performance
Market sentiment improved this week as expectations of interest rate hikes declined, leading to a drop in US Treasury yields. As a result, technology stocks led the market with increased trading activity, and most of them experienced a rebound.
As of the closing on August 17th, the strongest performers for the week were $Tesla Motors(TSLA)$ with a +12.19% gain, followed by $Apple(AAPL)$ at +6.51%, $Alphabet(GOOG)$ at +4.92%, $Amazon.com(AMZN)$ at +4.68%, $NVIDIA Corp(NVDA)$ at +4.65%, $Meta Platforms, Inc.(META)$ at +3.19%, and $Microsoft(MSFT)$ at +2.43%.
Big-Tech’s Top Newsfeed
- Apple officially announced a September 12th event, where they may unveil new iPhones and Watches with USB Type-C charging ports.
- Apple is experimenting with 3D printing for the steel chassis of its smartwatch, the Watch.
- Analyst Ming-Chi Kuo predicts that Apple's 2023 iPhone shipments could reach 220-225 million units, surpassing Samsung.
- Apple plans to release the M3 MacBook in October this year, and in 2024, they will make significant updates to the iPad Pro, including a new Magic Keyboard and the M3 chip.
- Microsoft is introducing enterprise-grade Bing Chat chatbot services in its Windows Copilot feature.
- OpenAI has surpassed a revenue rate of over $1 billion.
- Microsoft will unbundle Teams from its Office products in response to competition concerns in Europe.
- Google's new Pixel phone series launch event will take place after Apple's event on September 12th.
- Google has initiated its annual Cloud Next conference, introducing new partnerships, chips, and AI tools.
- Amazon announced the Buy with Prime application for Shopify in Canada.
- Amazon plans to increase interactive ad placements in the fall of 2023.
- NVIDIA and $Advanced Micro Devices(AMD)$ have received requests from the U.S. government to restrict the export of advanced AI chips to some Middle Eastern countries.
- Both Tesla China and Tesla in the United States have lowered prices for existing products.
- Tesla China has announced the launch of a new Model 3, starting at 259,900 yuan, with deliveries expected in the fourth quarter of this year.
- The United States is expanding restrictions on the export of Nvidia and AMD's AI chips to some Middle Eastern countries.
Big-Tech’s Key insights
Is Google being underestimated, is it simply due to lower advertising expectations?
Last week, we discussed that Google has been the top performer in this earnings reporting cycle, primarily due to its advertising business exceeding expectations and a prior market underestimation. Additionally, Google's strength in AI, though slightly lagging behind OpenAI in AI competition, is often overlooked by the market.
During its annual Cloud Next conference, Google announced several new partnerships, new chips, and new artificial intelligence tools, leaving a strong impression on Wall Street. Some key announcements include infrastructure updates like the new Cloud TPU v5e, availability of its A3 virtual machines based on Nvidia (NVDA) H100 GPUs, and the introduction of the multi-cluster GKE Enterprise edition. AI-related updates include Vertex AI and Duet AI, among others.
If its AI products continue to perform strongly throughout the cycle, Google Cloud is projected to maintain a solid 20% growth rate before 2025. As cloud revenue and profitability improve, this will further support its valuation.
Furthermore, Google is planning to hold a new Pixel smartphone and smartwatch launch event after Apple's event.
Is Apple Leading the Market Again? Let's Talk About Event Expectations!
Apple has confirmed September 12th as the date for its fall event, where it is expected to announce the new iPhone 15 and a new iWatch. If history is any indication, they may also introduce a new version of the iOS smartphone operating system. Additionally, there might be updates to the Apple Watch series, possibly the Apple Watch Series 9 and the new Apple Watch Ultra.
It's worth noting that the new iPhone is expected to comply with European regulations, which means it will use a USB-C port for wired charging.
Furthermore, the highly regarded Apple analyst Ming-Chi Kuo has stated that Samsung's smartphone shipments for this year have been reduced to 220 million units. If Apple maintains its 2H24 iPhone orders, it is expected that iPhone shipments in 2023 will reach 220-225 million units, surpassing Samsung to become the largest smartphone brand.
The Big-Tech Portfolio
We have synthesized a portfolio consisting of the seven largest companies with the highest weights, which we refer to as the "TANMAM" portfolio.
By backtesting this portfolio in an equally weighted manner with quarterly rebalancing since 2015, its performance has far surpassed that of the $SPDR S&P 500 ETF Trust(SPY)$ , achieving a total return of 1376.38%, while SPY during the same period returned 155.77%.
Year-to-date, the portfolio has delivered a total return of 95.1% with a Sharpe ratio of 6.4, compared to SPY's total return of 18.7% during the same period.
Over the past week, thanks to the outstanding performance of companies like NVIDIA and Google, the portfolio has yielded a return of 2.16%, whereas SPY returned 0.14%.
Comments
New high coming next week. It’s written in the stars. Nothing will deny Apple’s big run up towards the IPhone event. Happens every year. Hasta $200 😎
Amzn is a no-profit company if you are either a bull or a bear. Until this day, amzn only earns on everage $.25 a quarter or a buck for entire twelve months. If you go back and check, amzn started making some income in 2015 and before that amzn posted as a loss.
Apple usually run up to the annual product launch event and dumps hard after the event. Wait for the event and blindly short this. I have been doing this since last 6 quarters.
The new iPhones better have AI. C'mon Tim. You need to deliver on AI.
Another good green day for MSFT and we longs...