Great article, would you like

Like
Comment
Favorite

Great article, would you like to share it?

UBS Downgrades "Big 6" on Earnings Momentum Reversal; Maintains Overweight in Rest of TECH+

Big 6 SelloffFrom its January 2023 lows to its April 2024 peak, Big 6 TECH+ stocks (AAPL, AMZN, GOOGL, META, MSFT, NVDA) advanced 117%. They have since declined 8%. As highlighted in Figure 2, each of

UBS Downgrades "Big 6" on Earnings Momentum Reversal; Maintains Overweight in Rest of TECH+

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Report

Comment

Top
Latest

No comments yet

Most Discussed

Terms and Conditions·Privacy Policy

Company: TTMF Limited. Tech supported by Xiangshang Yixin.

Email：uservice@ttm.financial

{"i18n":{"language":"en_US"},"data":{"magic":2,"id":298285953138944,"tweetId":"298285953138944","gmtCreate":1713852492480,"gmtModify":1713852495860,"author":{"id":3579479350969407,"authorId":3579479350969407,"authorIdStr":"3579479350969407","name":"DdAlpha1","avatar":"https://static.tigerbbs.com/2b87e35294ae070b87a67eabcf83f904","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":3,"crmLevelSwitch":1,"individualDisplayBadges":[],"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"html":"<html><head></head><body>Great article, would you like to share it?</body></html>","htmlText":"<html><head></head><body>Great article, would you like to share it?</body></html>","text":"Great article, would you like to share it?","highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"link":"https://ttm.financial/post/298285953138944","repostId":1143841422,"repostType":2,"repost":{"id":"1143841422","weMediaInfo":{"introduction":"Providing stock market headlines, business news, financials and earnings ","home_visible":1,"media_name":"Tiger Newspress","id":"1079075236","head_image":"https://static.tigerbbs.com/8274c5b9d4c2852bfb1c4d6ce16c68ba"},"pubTimestamp":1713848266,"share":"https://www.laohu8.com/m/news/1143841422?lang=&edition=full","pubTime":"2024-04-23 12:57","market":"us","language":"en","title":"UBS Downgrades \"Big 6\" on Earnings Momentum Reversal; Maintains Overweight in Rest of TECH+","url":"https://stock-news.laohu8.com/highlight/detail?id=1143841422","media":"Tiger Newspress","summary":"Big 6 SelloffFrom its January 2023 lows to its April 2024 peak, Big 6 TECH+ stocks (AAPL, AMZN, GOOGL, META, MSFT, NVDA) advanced 117%. They have since declined 8%. As highlighted in Figure 2, each of","content":"<html><head></head><body>Big 6 SelloffFrom its January 2023 lows to its April 2024 peak, Big 6 TECH+ stocks (AAPL, AMZN, GOOGL, META, MSFT, NVDA) advanced 117%. They have since declined 8%. As highlighted in Figure 2, each of these stocks—along with TSLA—have pulled back from their recent highs, with the electric vehicle maker and NVDA down -50% and -20%.Downgrading Big 6 on Earnings Momentum ReversalInvestors attribute the run in mega cap stocks to animal spirits and the impact of AI; however, our work indicates that surging earnings momentum (change in forward growth projections) fueled this upside. Unfortunately, this momentum is collapsing, with Big 6 EPS growth expected to decline from 42% to 16% over the next year, while the rest of TECH+ and non-TECH+ stocks accelerate.It&#39;s a Cyclical/Momentum ThingUBS downgrades the Big 6—from Overweight to Neutral—is not predicated on extended valuations, or doubts about AI. Rather, it is an acknowledgement of the difficult comps and cyclical forces weighing on these stocks. These forces do not apply to other TECH+ companies or the rest of the market in the same way. This was a natural fallout of the pandemic and post-pandemic earnings cycles.<img src=\"https://community-static.tradeup.com/news/915cc463786d7a7e3c58df2067b66f7e\" tg-width=\"966\" tg-height=\"658\"/><img src=\"https://community-static.tradeup.com/news/aa9dbec05a9cb3853585b4dfc4cbbfac\" tg-width=\"1170\" tg-height=\"715\"/>TECH+ includes all of the Technology Sector, Internet Retail within Discretionary, and Interactive Media &amp; Services, Interactive Home Entertainment, and Netflix from Movies &amp; Entertainment within Communication Services.<h3 id=\"id_647539908\">Pandemic Sets Off Asynchronous Earnings Cycles</h3>Like a stone dropped in a lake, the pandemic set off a series of ripples. The Big 6 experienced these in 4 distinct cyclical waves:1. Covid-driven earnings growth: A house-bound consumer increased demand for PCs, online shopping, social media, and gaming. Companies invested heavily in capex and personnel in response to this demand.2. Earnings decline on reopening economy: Profits suffered on waning Tech demand, elevated expenses, and difficult comps. EPS contracted sharply between 2Q-4Q22.3. V-shaped earnings bounce: Profits surged on easy comps and a reduction in expenses. 4Q23 marks the peak in profit EPS growth, 1 year after trough.4. Forecasted deceleration/normalization: Earnings are projected to quickly renormalize in mega cap Tech, following a sharp decline in profit growth from 4Q23-3Q24.The description above is not meant to ignore the impact of AI, cloud computing or bitcoin mining on Tech earnings. It simply refocuses the conversation on the cyclical nature of this profit cycle, and its pandemic origins. A focus on the cyclical nature helps explain the pending decline in profit growth over the next several quarters.<img src=\"https://community-static.tradeup.com/news/4d3647ce552c94089d8d11abdcb67eb6\" tg-width=\"1170\" tg-height=\"519\"/>Broadly speaking, other TECH+ stocks did not participate in the Covid-driven boom—at least not to the same extent. Consensus forecasts for the next 4 quarters reflect a reacceleration in earnings for TECH+ companies beyond the Big 6. Deceleration in large cap Tech and acceleration in mid cap Tech should lead to a reversal in stock leadership.<img src=\"https://community-static.tradeup.com/news/565133fe1b87b616276c95efa7e0d7a6\" tg-width=\"1021\" tg-height=\"484\"/>The pandemic had a clear impact on non-TECH+ earnings; however, this was out of sync with the Big 6 and other TECH+ companies. The broad market also experienced 4 waves:1. Covid earnings recession: Traditional industries ground to a halt as consumer spending retreated and supply chains impaired business output.2. Reopening earnings bounce: Government support, increased consumer spending, and easy comps resulted in a surge in profits across most groups.3. Mid-cycle slowdown: Earnings contracted modestly between 2Q23-1Q24, driven by difficult Health Care comps (vaccines) and oil prices (not Covid-driven).4. Economic strength: With GDP estimates rising and tail risk receding, non-TECH+ EPS is forecasted to reaccelerate and outpace the Big 6 over the next 12 months.<img src=\"https://community-static.tradeup.com/news/ed94e8b23e8c1175860bd5e765a20665\" tg-width=\"1170\" tg-height=\"546\"/>The table below highlights the trends described above, with additional detail provided for each of the Big 6 companies. Earnings for NVDA, META, AMZN, and GOOGL are all expected to decelerate meaningfully over the next 12 months. MSFT is expected to deliver flat profits, and AAPL is expected to reaccelerate from current lows.<img src=\"https://community-static.tradeup.com/news/818762fde0f7cda5ccf9f4d50487f92e\" tg-width=\"1170\" tg-height=\"514\"/>While a rotation out of Tech may be disruptive in the near term, we remain constructive on stocks and maintain our 5400 target for the S&amp;P 500 for year-end 2024. This target remains supported by broadly positive fundamentals and a robust economy. With the exception of the Big 6, all other sector recommendations remain in place (see Figure 3).</body></html>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>UBS Downgrades \"Big 6\" on Earnings Momentum Reversal; Maintains Overweight in Rest of TECH+</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nUBS Downgrades \"Big 6\" on Earnings Momentum Reversal; Maintains Overweight in Rest of TECH+\n</h2>\n\n<h4 class=\"meta\">\n\n\n<a class=\"head\" href=\"https://laohu8.com/wemedia/1079075236\">\n\n\n<div class=\"h-thumb\" style=\"background-image:url(https://static.tigerbbs.com/8274c5b9d4c2852bfb1c4d6ce16c68ba);background-size:cover;\"></div>\n\n<div class=\"h-content\">\nTiger Newspress \n2024-04-23 12:57\n</div>\n\n</a>\n\n\n</h4>\n\n</header>\n<article>\n<html><head></head><body>Big 6 SelloffFrom its January 2023 lows to its April 2024 peak, Big 6 TECH+ stocks (AAPL, AMZN, GOOGL, META, MSFT, NVDA) advanced 117%. They have since declined 8%. As highlighted in Figure 2, each of these stocks—along with TSLA—have pulled back from their recent highs, with the electric vehicle maker and NVDA down -50% and -20%.Downgrading Big 6 on Earnings Momentum ReversalInvestors attribute the run in mega cap stocks to animal spirits and the impact of AI; however, our work indicates that surging earnings momentum (change in forward growth projections) fueled this upside. Unfortunately, this momentum is collapsing, with Big 6 EPS growth expected to decline from 42% to 16% over the next year, while the rest of TECH+ and non-TECH+ stocks accelerate.It&#39;s a Cyclical/Momentum ThingUBS downgrades the Big 6—from Overweight to Neutral—is not predicated on extended valuations, or doubts about AI. Rather, it is an acknowledgement of the difficult comps and cyclical forces weighing on these stocks. These forces do not apply to other TECH+ companies or the rest of the market in the same way. This was a natural fallout of the pandemic and post-pandemic earnings cycles.<img src=\"https://community-static.tradeup.com/news/915cc463786d7a7e3c58df2067b66f7e\" tg-width=\"966\" tg-height=\"658\"/><img src=\"https://community-static.tradeup.com/news/aa9dbec05a9cb3853585b4dfc4cbbfac\" tg-width=\"1170\" tg-height=\"715\"/>TECH+ includes all of the Technology Sector, Internet Retail within Discretionary, and Interactive Media &amp; Services, Interactive Home Entertainment, and Netflix from Movies &amp; Entertainment within Communication Services.<h3 id=\"id_647539908\">Pandemic Sets Off Asynchronous Earnings Cycles</h3>Like a stone dropped in a lake, the pandemic set off a series of ripples. The Big 6 experienced these in 4 distinct cyclical waves:1. Covid-driven earnings growth: A house-bound consumer increased demand for PCs, online shopping, social media, and gaming. Companies invested heavily in capex and personnel in response to this demand.2. Earnings decline on reopening economy: Profits suffered on waning Tech demand, elevated expenses, and difficult comps. EPS contracted sharply between 2Q-4Q22.3. V-shaped earnings bounce: Profits surged on easy comps and a reduction in expenses. 4Q23 marks the peak in profit EPS growth, 1 year after trough.4. Forecasted deceleration/normalization: Earnings are projected to quickly renormalize in mega cap Tech, following a sharp decline in profit growth from 4Q23-3Q24.The description above is not meant to ignore the impact of AI, cloud computing or bitcoin mining on Tech earnings. It simply refocuses the conversation on the cyclical nature of this profit cycle, and its pandemic origins. A focus on the cyclical nature helps explain the pending decline in profit growth over the next several quarters.<img src=\"https://community-static.tradeup.com/news/4d3647ce552c94089d8d11abdcb67eb6\" tg-width=\"1170\" tg-height=\"519\"/>Broadly speaking, other TECH+ stocks did not participate in the Covid-driven boom—at least not to the same extent. Consensus forecasts for the next 4 quarters reflect a reacceleration in earnings for TECH+ companies beyond the Big 6. Deceleration in large cap Tech and acceleration in mid cap Tech should lead to a reversal in stock leadership.<img src=\"https://community-static.tradeup.com/news/565133fe1b87b616276c95efa7e0d7a6\" tg-width=\"1021\" tg-height=\"484\"/>The pandemic had a clear impact on non-TECH+ earnings; however, this was out of sync with the Big 6 and other TECH+ companies. The broad market also experienced 4 waves:1. Covid earnings recession: Traditional industries ground to a halt as consumer spending retreated and supply chains impaired business output.2. Reopening earnings bounce: Government support, increased consumer spending, and easy comps resulted in a surge in profits across most groups.3. Mid-cycle slowdown: Earnings contracted modestly between 2Q23-1Q24, driven by difficult Health Care comps (vaccines) and oil prices (not Covid-driven).4. Economic strength: With GDP estimates rising and tail risk receding, non-TECH+ EPS is forecasted to reaccelerate and outpace the Big 6 over the next 12 months.<img src=\"https://community-static.tradeup.com/news/ed94e8b23e8c1175860bd5e765a20665\" tg-width=\"1170\" tg-height=\"546\"/>The table below highlights the trends described above, with additional detail provided for each of the Big 6 companies. Earnings for NVDA, META, AMZN, and GOOGL are all expected to decelerate meaningfully over the next 12 months. MSFT is expected to deliver flat profits, and AAPL is expected to reaccelerate from current lows.<img src=\"https://community-static.tradeup.com/news/818762fde0f7cda5ccf9f4d50487f92e\" tg-width=\"1170\" tg-height=\"514\"/>While a rotation out of Tech may be disruptive in the near term, we remain constructive on stocks and maintain our 5400 target for the S&amp;P 500 for year-end 2024. This target remains supported by broadly positive fundamentals and a robust economy. With the exception of the Big 6, all other sector recommendations remain in place (see Figure 3).</body></html>\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"MSFT":"微软","GOOG":"谷歌","META":"Meta Platforms","AMZN":"亚马逊","GOOGL":"谷歌A","TSLA":"特斯拉","AAPL":"苹果","NVDA":"英伟达"},"source_url":"","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1143841422","content_text":"Big 6 SelloffFrom its January 2023 lows to its April 2024 peak, Big 6 TECH+ stocks (AAPL, AMZN, GOOGL, META, MSFT, NVDA) advanced 117%. They have since declined 8%. As highlighted in Figure 2, each of these stocks—along with TSLA—have pulled back from their recent highs, with the electric vehicle maker and NVDA down -50% and -20%.Downgrading Big 6 on Earnings Momentum ReversalInvestors attribute the run in mega cap stocks to animal spirits and the impact of AI; however, our work indicates that surging earnings momentum (change in forward growth projections) fueled this upside. Unfortunately, this momentum is collapsing, with Big 6 EPS growth expected to decline from 42% to 16% over the next year, while the rest of TECH+ and non-TECH+ stocks accelerate.It's a Cyclical/Momentum ThingUBS downgrades the Big 6—from Overweight to Neutral—is not predicated on extended valuations, or doubts about AI. Rather, it is an acknowledgement of the difficult comps and cyclical forces weighing on these stocks. These forces do not apply to other TECH+ companies or the rest of the market in the same way. This was a natural fallout of the pandemic and post-pandemic earnings cycles.TECH+ includes all of the Technology Sector, Internet Retail within Discretionary, and Interactive Media & Services, Interactive Home Entertainment, and Netflix from Movies & Entertainment within Communication Services.Pandemic Sets Off Asynchronous Earnings CyclesLike a stone dropped in a lake, the pandemic set off a series of ripples. The Big 6 experienced these in 4 distinct cyclical waves:1. Covid-driven earnings growth: A house-bound consumer increased demand for PCs, online shopping, social media, and gaming. Companies invested heavily in capex and personnel in response to this demand.2. Earnings decline on reopening economy: Profits suffered on waning Tech demand, elevated expenses, and difficult comps. EPS contracted sharply between 2Q-4Q22.3. V-shaped earnings bounce: Profits surged on easy comps and a reduction in expenses. 4Q23 marks the peak in profit EPS growth, 1 year after trough.4. Forecasted deceleration/normalization: Earnings are projected to quickly renormalize in mega cap Tech, following a sharp decline in profit growth from 4Q23-3Q24.The description above is not meant to ignore the impact of AI, cloud computing or bitcoin mining on Tech earnings. It simply refocuses the conversation on the cyclical nature of this profit cycle, and its pandemic origins. A focus on the cyclical nature helps explain the pending decline in profit growth over the next several quarters.Broadly speaking, other TECH+ stocks did not participate in the Covid-driven boom—at least not to the same extent. Consensus forecasts for the next 4 quarters reflect a reacceleration in earnings for TECH+ companies beyond the Big 6. Deceleration in large cap Tech and acceleration in mid cap Tech should lead to a reversal in stock leadership.The pandemic had a clear impact on non-TECH+ earnings; however, this was out of sync with the Big 6 and other TECH+ companies. The broad market also experienced 4 waves:1. Covid earnings recession: Traditional industries ground to a halt as consumer spending retreated and supply chains impaired business output.2. Reopening earnings bounce: Government support, increased consumer spending, and easy comps resulted in a surge in profits across most groups.3. Mid-cycle slowdown: Earnings contracted modestly between 2Q23-1Q24, driven by difficult Health Care comps (vaccines) and oil prices (not Covid-driven).4. Economic strength: With GDP estimates rising and tail risk receding, non-TECH+ EPS is forecasted to reaccelerate and outpace the Big 6 over the next 12 months.The table below highlights the trends described above, with additional detail provided for each of the Big 6 companies. Earnings for NVDA, META, AMZN, and GOOGL are all expected to decelerate meaningfully over the next 12 months. MSFT is expected to deliver flat profits, and AAPL is expected to reaccelerate from current lows.While a rotation out of Tech may be disruptive in the near term, we remain constructive on stocks and maintain our 5400 target for the S&P 500 for year-end 2024. This target remains supported by broadly positive fundamentals and a robust economy. With the exception of the Big 6, all other sector recommendations remain in place (see Figure 3).","news_type":1},"isVote":1,"tweetType":1,"viewCount":25,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"upFlag":false,"length":35,"xxTargetLangEnum":"ORIG"},"commentList":[],"hasMoreComment":false,"orderType":2}