Weekend Update #216
Thank you for your continued support and engagement. Each week, we're sharing what companies we're researching and the what, the who and the how that we think makes the companies interesting and unique. This roundup is brought to you weekly by a group of interns, creative minds, artists and investors who believe that through best in class investing along with the democratization of financial education we can do great things together. Enjoy, Explore and Share.
The market this week had significant volatility as global stock markets experienced declines due to concerns over potential trade wars and their impact on economic growth as President Trump imposed 25% import tariffs on goods from Canada and Mexico, with a 10% tariff on Chinese goods. Markets slightly recovered following additional negotiations, in which the U.S. agreed to delay the tariffs on Canada and Mexico by one month after both countries pledged to enhance border security measures to curb illegal immigration and drug trafficking.
Earnings season continued in full swing this week with several of the "Mag 7” companies reporting their earnings, leading to mixed market reactions as the slowdown in cloud business growth and substantial capital expenditures in AI infrastructure have raised concerns among investors.
In economic news, data showed initial jobless claims picked up, but remained relatively subdued. Separate figures showed labor productivity rose. The US added just 143,000 jobs in January — well below consensus — but average hourly earnings jumped 0.5%, above all estimates. US job growth moderated in January after annual revisions revealed less vigor in the labor market last year than previously thought, with average job growth of 166,000 per month last year compared to the initially reported 186,000 pace. The unemployment rate came in at 4.0%, and the labor market is characterized as "largely stable and healthy" with no reason for the Fed to think about further rate cuts in the short term.
U.S. consumer sentiment dropped to a seven-month low in early February as short-term inflation expectations rose amid tariff concerns. Consumers now anticipate prices to increase 4.3% over the next year and 3.3% over the next five to 10 years. Buying conditions for big-ticket items fell 12%. Sentiment declined across all political groups, with Republicans moderating their confidence, Democrats expressing concern over Trump’s economic policies, and independents also losing confidence.
Corporate Highlights:
Roblox Corp. tumbled after the video-game platform reported daily active users for the fourth quarter that fell short of analysts’ estimates.
Honeywell International Inc. will split into separate publicly traded companies following pressure from an activist investor, the latest in a line of industrial conglomerates seeking a more streamlined portfolio.
Arm Holdings Plc gave a cautious revenue forecast for the current period, adding to recent concern that spending on artificial intelligence computing is slowing.
Apple Inc. plans to unveil a long-anticipated overhaul of the iPhone SE in the coming days, a move that will modernize its lower-cost model in a bid to spur growth and entice consumers to switch from other brands.
Pinterest Inc. posted strong holiday-quarter revenue and gave an upbeat forecast for sales in the current period, a sign that its advertising business continues to grow despite increased competition from much larger rivals in the social networking space.
Expedia Group Inc. posted better-than-expected gross bookings in the final months of 2024, reflecting resilient demand for travel during the winter holiday season.
Ford Motor Co. shares tumbled after warning that profit this year may fall by $2 billion or more due to lower vehicle prices and costly new-model launches, adding to risks posed by potential new tariffs under President Donald Trump.
Friday’s Close (Weekly Performance)
S&P 500 6,025.99 (-0.24%)
Nasdaq 19,523.40 (-0.53%)
Dow Jones 44,303.40 (-0.54%)
Thank you Blue Room Senior Analyst NICK PEART.
EXECUTIVE SUMMARY
Palantir reported strong fourth quarter results, with revenue growth accelerating to 36% year-over-year, surpassing guidance and driven by surging AI demand, particularly in the U.S. The U.S. commercial business grew 64% year-over-year, while the U.S. government segment grew 45%. Full-year revenue reached $2.87 billion, up 29%, with a 31% growth forecast for 2025. Profitability improved, with a record 45% adjusted operating margin and strong cash flow of $517 million for the quarter. The company ended the quarter with $5.43 billion in total remaining deal value and a solid balance sheet with $5.2 billion in cash. With strong momentum, a committed internal culture, and a vision for leading technological advancements over the next 3-5 years, PLTR stock is poised to continue its upward momentum as the AI race heats up.
CORPORATE PROFILE
Palantir Technologies Inc. is a U.S.-based software and data analytics company specializing in artificial intelligence (AI), machine learning, and big data solutions. Founded in 2003, the company provides advanced data integration and analysis platforms primarily for government agencies, defense organizations, and commercial enterprises. Its core products include Palantir Gotham, designed for intelligence and defense applications; Palantir Foundry, which helps businesses integrate and analyze complex data sets; and Palantir Apollo, a continuous delivery platform for AI and software deployment. Palantir is known for its deep ties to the U.S. government, particularly in national security, defense, and law enforcement, but has expanded its commercial business significantly in recent years. The company has positioned itself as a leader in enterprise AI, emphasizing its ontology framework, which enables organizations to operationalize large language models (LLMs) effectively. With a strong focus on data security, transparency, and operational efficiency, Palantir continues to grow in both the government and private sectors, aiming to be a cornerstone of AI-driven decision-making.
EXECUTIVE SUMMARY
Enphase reported Q4 2024 revenue of $382.7 million, shipping 878 MW DC of microinverters and 152.4 MWh of IQ Batteries. Non-GAAP gross margin rose to 53.2% from 48.1% in Q3, while GAAP gross margin increased to 51.8% from 46.8%. Non-GAAP operating expenses grew slightly to $83.3 million due to increased R&D investments, while a restructuring plan aims to reduce expenses to $75-$80 million per quarter by Q2 2025. Q4 non-GAAP net income reached $125.9 million ($0.94 EPS), and GAAP net income was $62.2 million ($0.45 EPS). The company held $1.72 billion in cash and repurchased 2.88 million shares for $199.7 million. ENPH shares will likely remain range bound in the first half of 2025 as the market demand continues to rebound. However, the company has multiple product launches in 2025 that should help reaccelerate growth and stabilize its market share.
CORPORATE PROFILE
Enphase Energy is a global energy technology company that designs, develops, manufactures, and sells home energy solutions that manage energy generation, energy storage, and control and communications on one intelligent platform. The company currently offers solutions targeting the residential and commercial markets in the US, Canada, Mexico, Europe, Australia, New Zealand, India, Brazil, South Africa, and certain other Central American and Asian markets. Enphase Energy has shipped more than 42 million microinverters, and approximately 1.9 million Enphase residential and commercial systems have been deployed in more than 130 countries. The company generates the majority of its revenue in the US.
EXECUTIVE SUMMARY
Coherent reported a record $1.43 billion in revenue for fiscal Q2, marking a 6% sequential and 27% Y/Y increase, driven by strong demand for AI-related datacom transceivers, telecom growth, and industrial end markets. Gross margin improved to 38.2%, progressing toward the 40%+ target, while Adj. EPS surged to $0.95, more than tripling Y/Y. The company continued deleveraging, paying down $132 million in debt. AI-driven datacom growth remained a key driver, with 800G and 400G transceivers performing well, alongside progress on 1.6T and 3.2T transceivers. The company continues to optimize its portfolio, evaluating battery technology divestitures, and expanding its indium phosphide capacity, which tripled Y/Y. With AI-driven demand, telecom recovery, and ongoing operational efficiencies, fiscal 2025 is expected to be a strong growth year, with further insights to be shared at its Investor Day on May 28 at the NYSE.
CORPORATE PROFILE
Coherent Corp. is a global leader in materials, networking, and lasers for the industrial, communications, electronics, and instrumentation markets. The company is headquartered in Saxonburg, Pennsylvania. It was founded in 1971 to manufacture high-quality materials and optics for industrial lasers. Today, the company operates in more than 20 countries around the world. Coherent is focused on delivering innovations that fuel market megatrends while pursuing our mission of enabling the world to be safer, healthier, closer, and more efficient. Coherent empowers market innovators to define the future through breakthrough technologies, from materials to systems.
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