To The Moon

• The SPDR S&P 500 ETF recorded a 1.18% increase in the third week of January 2024 and a year-to-date rise of 1.53%.

• The Magnificent Seven is responsible for 69% of the S&P 500's gains in the third week of 2024 and 77% of the S&P 500's year-to-date return. This indicates a lack of breadth in the US equity market, with the majority still being driven by the AI theme.

• Noteworthy stocks that outperformed the broader market and significantly contributed to the S&P 500's year-to-date return include Broadcom, AMD, and Eli Lilly.

• Both Broadcom and AMD ( $Advanced Micro Devices(AMD)$ ) are reaping the benefits of the AI craze. AMD's AI chips serve as a viable alternative to Nvidia's, suggesting that AMD may continue its upward trajectory in 2024 as companies seek AMD's latest AI chips to erode Nvidia’s hefty pricing power.

• For further insights into Eli Lilly's outlook, please refer to my previous article titled "Could Eli Lilly Become the First Trillion-dollar Drug Company in History?" dated January 15, 2024.

Important Recap of Magnificent Seven

Tesla ( $Tesla Motors(TSLA)$ ):

• Tesla witnessed a 3% decline in its share price last week, primarily attributed to the company reducing car prices across Europe following similar cuts in China. Additionally, Elon Musk's pursuit of obtaining 25% voting control contributed to this decline. It appears that Tesla is prioritizing increased car sales over profit margins.

• Investors may further penalize Tesla's stock price due to the risk of CEO Elon Musk's departure if he is not provided with a new compensation plan to secure a 25% voting right. We also do not rule out the possibility that a decline in the share price could work in favor of Elon Musk's plan to acquire voting rights, as the board of directors may recognize the negative share price impact of Elon Musk leaving the company.

• Tesla will release its earnings on January 24 after the market closes. As the delivery numbers have been published, the remaining uncertainties are profit margins and earnings growth.

• While recent news may be perceived as a short-term negative, we maintain a long-term bullish outlook on Tesla. Investors might find opportunities to accumulate Tesla during periods of weakness.

• Our belief is that the next-gen platform, expected to roll out no earlier than 2025, will eventually generate heightened investor interest in Tesla stock and represent a significant factor in enhancing Tesla's profitability.

 Apple( $Apple(AAPL)$ ):

• The Apple Vision Pro headset began preorders on January 19 and is set to launch in the US on February 2. However, major streaming services including Netflix, Google's YouTube, and Spotify have stated that they do not plan to release a new app for the Apple Vision Pro.

• It is anticipated that the Apple Vision Pro will contribute less than 1% of the total revenue in 2024.

• The US Court of Appeals for the Federal Circuit ruled that Apple  cannot sell Series 9 and Ultra 2 Apple Watches with the blood oxygen feature.

• Reports suggest that Apple is considering removing the blood-oxygen feature from its latest smartwatches to circumvent a US ban. Alternatives include redesigning to bypass the import ban or paying Masimo a royalty fee to continue selling. The current legal battle could extend for another year.

• While the Apple Watch ban may appear unfavorable to investors, it is estimated that smartwatches account for only 1% of Apple's total revenue.

• Apple is reducing iPhone prices in China, indicating heightened competition in the Chinese market.

• The recent launch of Samsung's Galaxy S24 models, featuring more AI, might prompt Apple to incorporate more built-in AI in its September iPhone 16 launch. We believe this AI upgrade could stimulate a new upgrade cycle in the smartphone market.

• Despite a week full of bad news, Apple managed to climb 3% higher by the end of the week.

• We believe that most risks are manageable and anticipate Apple to deliver better-than-expected earnings results this year.