To The Moon

Big-Tech’s Performance

This week, the yield on US Treasury bonds rose as market risk aversion increased. The Nasdaq, led by technology stocks, experienced a more pronounced pullback, with major tech companies also showing varying degrees of decline. With the gradual release of 13F reports, the performance of large tech firms continued to diverge.

As of the close on August 17th, the strongest performer of the week was $NVIDIA Corp(NVDA)$ with a gain of +2.81%, while the others experienced notable declines. $Alphabet(GOOG)$ was down -1.07%, $Microsoft(MSFT)$ -2.8%, $Apple(AAPL)$ -3.05%, and $Amazon.com(AMZN)$ -3.66%. $Meta Platforms, Inc.(META)$ -7.42% and $Tesla Motors(TSLA)$ -10.67%.

Big-Tech’s Top Newsfeed

• Apple's iPhone 15 will expand production in India and introduce new iPhone models concurrently with China.

• Apple partner, Industrial and $Foxconn Industrial Internet Co.,Ltd.(601138)$ exceeded Q2 earnings expectations but maintains a cautious outlook for the remaining quarters of the year.

• The creator of ChatGPT stated that the company is not for sale, and the relationship between OpenAI and Microsoft remains strong.

• Amazon plans to display sponsored product advertisements on the $Pinterest, Inc.(PINS)$ , and Buzzfeed platforms.

• $Softbank Group Corp(SFTBY)$ s subsidiary, ARM USA, has received commitments from 28 banking institutions for its IPO, potentially becoming the largest IPO of 2023.

• The DAU of Meta's Threads decreased by over 80% from 49.3 million on July 7th to 10.3 million on August 7th.

• The redesigned Tesla Model 3 may start production in China in September.

• Tesla introduced standard versions of the Model S and Model X, priced around $10,000 lower than the standard variants, aiming to boost demand.

• Tesla plans to establish a domestic operational team of about 20 members to drive the implementation of Full Self-Driving (FSD) technology in the Chinese market.

• Saudi Arabia and the United Arab Emirates are purchasing thousands of high-performance NVIDIA chips, joining the global AI competition.

Big-Tech’s Key insights

Tesla's Price Cut to Sustain Demand?

After introducing the $10,000 cheaper standard version of the Model S and X vehicles than the regular versions, Tesla's stock plummeted by 10% during the week. The new vehicles are expected to be delivered between September and October, primarily aimed at sustaining deliveries during the fall season.

The new models have shorter driving ranges, with 320 miles and 269 miles respectively. Previously, Tesla had also reduced prices for certain Model Y vehicles in China, indicating a slowdown in sales. It's reported that Tesla's deliveries in China dropped to the lowest level this year in July.

Apart from competition with domestic electric vehicle newcomers like XPEV and LI NIO, Tesla is mainly grappling with a decrease in demand. This compels the company to explore additional revenue streams such as monetizing Full Self-Driving (FSD) capabilities.

Tesla's secondary market stock price also experienced a significant retreat this week. One factor is the substantial increase in value this year, prompting more investors to take profits as risks rise. Furthermore, the Vietnamese version of "Tesla," VinFast Auto (VFS), went public through a SPAC this week, displaying substantial fluctuations and attracting speculative investors.

Is NVIDIA Still the Preferred Choice?

Last week, the strategist from Morgan Stanley, who had just stated that the AI stock bubble was nearing its peak, surprisingly released a report this week with a different implication.

The reasoning is that despite NVIDIA's stock having risen over 200% this year, it remains the "preferred" company in the institution's Q2 earnings report. The peculiar supply-demand imbalance is expected to persist for several quarters, and the upcoming Q2 performance might surpass expectations. Hence, this "Sell Off" market correction is viewed as a "favorable buying opportunity."

Consequently, the market retains significant enthusiasm for this highly valued company, making it the only big tech firm to record positive gains this week.

Q2 13F: Have Big Tech Companies Got Increased?

Looking at the overall holdings, among the disclosed 13F reports, almost all major tech companies have gained more institutional holdings, with the exception of GOOG, which saw a decline in the number of institutional investors.

The number of institutions in the top 10 holdings has increased compared to the previous period, with NVDA experiencing a remarkable 40% increase.

Regarding hedge funds' share quantities, TSLA and GOOG saw declines of around 6%, while NVDA, AAPL, and META ranked as the top three in terms of increased holdings.

Please note that these statistics are based on the 13F reports published up to June 30th, and the peak for major tech companies is expected to arrive at the end of July.

The Big-Tech Portfolio

We have combined the seven most weighted companies into an investment portfolio, referred to as the "TANMAM" portfolio.

By equally weighting and quarterly readjusting the portfolio, its performance since 2015 has significantly outperformed the S&P 500, achieving a total return of 1272%, compared to the concurrent return of 147.91% for $SPDR S&P 500 ETF Trust(SPY)$

Year-to-date, the portfolio has yielded a total return of 80.9%, with a Sharpe ratio of 5.8, while SPY returned 15% during the same period.

However, due to a recent pullback in the past week, the portfolio's performance stands at -3.2%, while SPY is at -2.2%.