We’re Trimming Our Alphabet Price Target and Asking This Big Question
After last night’s earnings and cloud details, we must ask if GOOGL shares will be higher one year from now or not….
Microsoft Stuns, Google Sinks, Oracle Offers Hope: 8 Key Items Shaping the Stock Market Thursday
Marvell’s potential Lumentum bid, Samsung’s comments on chip capacity, and other headlines are moving the market this morning.
Microsoft Up, Alphabet Down: Same Growth, Different Outcomes
Microsoft is rewarded for trimming its spending plans. Alphabet is hit on profitability, and it may be its worst earnings reaction ever.
PPS
Bookings shrunk and backlog did not grow!
The after-market move in Microsoft (MSFT) reminds me of the up move Meta ($META) had based on the print and EPS, before the market figured out the internals — and then hammered the stock.
Obviously Google ($GOOGL) wet the bed too:
https://www.zerohedge.com/markets/msft-rises-azure-beat-bookings-shrink-and-backlog-stalls
Position: None
Market Postscript
* Here are my thoughts following the plethora of EPS releases after the close…
With Google’s ($GOOGL) miss (the deceleration in its core business was unanticipated by every panelist on “the show”), Meta’s ($META) continued awful share price action, Nvidia’s ($NVDA) price rollover threatening chart support, Amazon’s ($AMZN) lackluster share price action (and underperformance) and some possible toppiness in Apple’s ($AAPL) share price, we are left with one… Microsoft ($MSFT).
Meanwhile, ServiceNow’s ($NOW) disappointing results (the company cut subscription revenues for the full year) will likely weigh heavily on software stocks (which were market leaders) tomorrow morning.
I remain independent in view.
As I said in response to subscriber jryan, most stocks do not meet my standards to buy and I won’t change my process or discipline — even if Perma Bulls Tom Lee and Dan Ives (confidently) see clear skies ahead…
The S&P Short Range Oscillator registered 1.84% (more overbought than the prior day) and I ended the day with a large short positioin in $SPY.
Position: Short SPY (L)
Microsoft Beats, Alphabet Misses and Fed Holds Steady
Oracle reassurance moved the market more than the Fed did.
Piling Up Cash as I Brace for the Storm
As we await the Anthropic IPO, the Fed and the possibility of renewed Iran fighting, I’m taking the path of Buffett.
My List of 12 Items Investors Should Watch Today
Here’s what I’m keeping a close eye on this morning — from Israel’s elections, to the Fed, to Meta and Treasuries.
Increasing Exposure to This Chip Name as Shortage Endures
Plus, two other Portfolio positions we’re keeping close tabs on.
SK Hynix Gives Another Boost to Chip Stocks
The chip rebound got another boost overnight as SK Hynix ($SKHY) reported record third-quarter results, saying it has sold out of DRAM and high-bandwidth memory (HBM) through 2029 and that HBM demand is double what it can supply, per Reuters. It also unveiled about 60 trillion won (roughly $45 billion) of additional buybacks and dividends. Its shares closed up 10.9% in Seoul, Samsung Electronics rose 9% and the Kospi gained 6.6%, per CNBC. The iShares Semiconductor ETF ($SOXX) is indicated up another 1% premarket as of 8:30 a.m. ET after gaining nearly 7% over the past two sessions.
SK Hynix, which holds almost half the HBM market and supplies the memory for Nvidia’s ($NVDA) AI chips, saw revenue more than quadruple from a year earlier to a record 104.6 trillion won ($78.9 billion), beating the 98.3 trillion won LSEG estimate. Operating profit rose more than sevenfold to a record 83.3 trillion won, versus 76.7 trillion won expected. DRAM average selling prices rose by a high-20s percentage from the prior quarter, and server DDR5 shipments jumped more than 40%, per CNBC. One analyst though sees that accelerating through the end of the year: “Given that the fourth quarter is traditionally stronger, operating profit could approach 100 trillion won,” NH Investment & Securities’ Ryu Young-ho told Reuters. Not everything beat, though: net profit of 39.8 trillion won fell well short of the 61.4 trillion won FactSet consensus, per the WSJ.
The outlook is moving the group. SK Hynix expects the memory shortage to last through 2030. It has long-term agreements, typically five years, with 14 major customers covering more than half its 2027-2028 capacity, and it plans to raise capex “significantly” next year from at least 40 trillion won this year. Memory already accounts for about a third of AI data center costs, and Macquarie expects HBM prices to more than double in 2027, per Bloomberg.
And in a sharp contrast with Meta’s equity raise, SK Hynix is sending money to shareholders. After Meta Platforms ($META) announced this week it is raising $98 billion from investors to fund its AI spending, SK Hynix is returning about 100 trillion won (roughly $75 billion) to shareholders this year. That comprises more than 30 trillion won in dividends and more than 60 trillion won in buybacks and cancellations, including the 40 trillion won announced in August.
The rebound has ground to make up. SK Hynix shares have more than doubled this year but are still about half their June record, per Reuters, and nearly every chip stock has fallen since the end of June, per Bloomberg. Samsung reports Thursday.
