To The Moon

Big-Tech’s Performance

After Q2 earnings, the market experienced a pullback along with CPI. The performance just decide how and where the big-techs are going. Divergences continues.

As closing on August 10th, the strongest performers of the past week were $Amazon.com(AMZN)$ , with a gain of 8.69% after impressive post-earnings performance, and $Alphabet(GOOG)$ with a gain of 1.34%.

Other big techs all in negative territory,, including $Tesla Motors(TSLA)$ down 2.66%, $Microsoft(MSFT)$ down 0.94%, $Meta Platforms, Inc.(META)$ down 1.35%, $NVIDIA Corp(NVDA)$ down 3.22%, and $Apple(AAPL)$ down 7.10%.

Big-Tech’s Top Newsfeed

• Insights in the Tech Sphere $Taiwan Semiconductor Manufacturing(TSM)$ reported a rise in July revenue driven by iPhone 15 and HPC orders.

• The US Supreme Court allows Apple to temporarily maintain the current 30% commission fee rule for the App Store.

• Apple is expected to release iPhone 15 on September 12th, with a launch around September 22nd.

• Apple is testing an M3 MAX chip with a 16-core CPU and 40-core GPU, expected to be released next year.

• Microsoft's Bing chat tool will be available on third-party browsers, including mobile devices. FTC might soon sue Amazon, primarily targeting its logistics.

• Amazon is in talks to become an anchor investor in ARM's US IPO.

• Google faces collective consumer lawsuits over browser privacy settings.

• Google reduces its holdings in $Robinhood(HOOD)$ the online brokerage platform.

• Norway plans to fine Meta nearly $100,000 daily, citing privacy infringements.

• Meta releases the open-source AI tool AudioCraft, aiding users in music and audio creation.

• After an unsatisfactory result from a nuclear magnetic resonance test, Musk's octagon cage fight might be canceled.

• Chinese internet giants order $5 billion worth of NVIDIA chips. $Alibaba(BABA)$ $Tencent(00700)$

• NVIDIA launches the new GH200 Grace Hopper super chip, set to begin production in Q2 2024.

Big-Tech’s Key insights

What Happend To Apple?

Apple Leads the Market Decline Since announcing financial results last week, Apple's stock has been consistently declining, firmly staying below the $3 trillion mark. The main reasons are a lack of optimistic guidance from the company, coupled with its valuation above historical averages. This retraction is within the realm of normalcy. Furthermore, despite continuous investments by Apple's suppliers in India and Southeast Asia, mainland China still holds a significant share in the assembly of Apple products.

The second-quarter results for hardware were relatively average, which puts considerable pressure on the upcoming iPhone 15. According to reports from Bloomberg, the top-tier iPhone 15 Pro model of the year will feature a new A17 processor built using the cutting-edge 3nm process, similar to its M3 chip. This technological advancement is poised to outclass competing Android devices. Though there's talk of iPhone 15 price hikes, there's no substantial breakthrough, indicating a customary upgrade cycle.

The current reasons for the poor market expectations are as follows:

1. Incomes have declined for three consecutive quarters, and it is unlikely that they will not decline on a year-on-year basis in the next quarter;

2. More expensive hardware products may be restrained in demand during times of high inflation and high interest rates;

3. Apple's tax may sooner or later face challenges from regulation and anti-monopoly actions;

4. There is a lack of AI products that can be commercialized in the short term;

5. The high price of Vision Pro is difficult to meet expectations.

Given the current lack of upward momentum and the era of high interest rates, investors have higher return rate requirements for their funds. Therefore, it might be more prudent to withdraw from Apple stocks and choose currency funds for greater stability.

Tesla CFO Resigns – What's the Impact?

Tesla announced suddenly on Monday that CFO Zach Kirkhorn, who has been in the position for 13 years, has unexpectedly tendered his resignation. Of course, he will continue to work until the end of the year to assist in the transition. An Indian-origin Chief Accountant will succeed him.

Since Zach took office, Tesla's financial situation has been thriving. Not only has the company turned losses into gains, but it has also increased its profit margin while expanding production capacity, earning high praise within the industry. Of course, with Tesla's increase in production capacity, improved economies of scale, and profitability are naturally expected.

Furthermore, Tesla's foray into the cryptocurrency realm, thanks in part to Kirkhorn, is notable. Not only did he humorously add "Crypto Master" to his title, but he also introduced some Bitcoin assets into Tesla's portfolio.

The market's response was a 4% decrease. However, considering Tesla's volatility and the broader market's retracement, this impact is relatively minor. Tesla is still under Musk's leadership, and the more concerning issue for investors is its struggle against regulatory challenges, given its trillion-dollar valuation.

AI trend be peaking?

Morgan Stanley strategists believe that the bubble in artificial intelligence stocks is nearing its peak.

The reason is that NVIDIA's stock price has risen by over 200% this year, and bubbles typically see a median increase of 154% in the three years leading up to their peak, indicating that the rapid surge might be in the "second half." Conclusions about the speed of bubble rise and fall can only be drawn at the index level.

NVIDIA represents AI chips and dominates this wave of AI market. Broader AI benchmarks, such as the MSCI USA IMI Robotics and Artificial Intelligence Select Net USD Index, have only seen an increase of about 47%, which pales in comparison.

The Big-Tech Portfolio

We combine the seven most weighted companies into a portfolio, known as the "TANMAM" portfolio.

By equally weighting and readjusting the weights quarterly, backtesting reveals that this portfolio has outperformed the S&P 500 since 2015, with a total return of 1313.89%, compared to the same period's 153.24% return for $SPDR S&P 500 ETF Trust(SPY)$

Since the beginning of the year, the total return of this portfolio is 86.8%, with a Sharpe ratio of 6.6, while SPY has returned 17.5% during the same period.

In the past week, the portfolio performance was -1.7%, while SPY was -0.7%.