Author: The INO.com Team

DOGE's Bullish Signal Amidst Crypto Market Volatility

Posted on by The INO.com Team

With a market cap of over $20 billion, Dogecoin (DOGE), the world’s leading meme cryptocurrency, appears poised to replicate the bullish “golden cross” technical pattern that presaged its surge in early January 2021.

DOGE has shown impressive performance, with a price increase of more than 62% year-to-date, surpassing the nearly 46% surge in Bitcoin (BTC), the largest cryptocurrency by market cap. Moreover, DOGE has gained approximately 80% over the past three months, while BTC has surged around 24%.

Is the Golden Cross a Bullish Signal for Dogecoin?

A golden cross is a technical chart pattern where a shorter-term moving average, like the 50-day simple moving average (SMA), crosses over a longer-term moving average, such as a 200-week SMA. This crossover indicates that short-term price momentum is faster than long-term momentum, potentially signaling the beginning of a prolonged uptrend.

Traders often rely on moving average crossovers as part of a systematic approach to identifying entry and exit points in the market. The upcoming golden cross on DOGE’s chart, the first in over three years, could potentially trigger a significant price rally, as historical data suggests.

The path to the impending golden cross began when Dogecoin price crossed over its 200-week SMA In March 2023, with a more than 70% rise within a week. Since then, the cryptocurrency has managed to maintain a foothold above this key average, further reinforcing the bullish sentiment surrounding DOGE.

Dogecoin’s Historical Golden Cross

The previous golden cross for DOGE was seen in January 2021, resulting in a remarkable surge in its price. Dogecoin surged from $0.0096 to an all-time high of more than $0.73 by May 2021, a staggering increase of nearly 8,000%. If history repeats itself, a similar surge could occur in the future.

However, the last golden cross in 2021 resulted in significant volatility. Following a massive surge, there was a 90% decline in the subsequent months. Afterward, Dogecoin stabilized and traded within the range of $0.05 to $0.10 from May 2022 to February 2024.

This underscores the highly volatile nature of cryptocurrency investments, particularly in meme tokens such as DOGE, which are highly vulnerable to market sentiment and speculative trading.

Current Macro Conditions and Analysts’ Views

During Dogecoin’s early 2021 run, interest rates were either near or below zero, leading to increased risk-taking across all corners of the financial market. However, the current scenario is different, as interest rates in the U.S. are at a multi-year high of 5.25% to 5.5%.

So, in contrast to the favorable macroeconomic conditions in 2021, the current financial environment presents higher interest rates and escalating geopolitical tensions, which could impact speculative investments differently.

Despite these macro challenges, well-known crypto analyst World of Charts indicates that DOGE is approaching a critical descending trendline, a breakout that could lead to a strong bullish rally in the range of $0.27 to $0.30 in the upcoming days.

According to CoinDCX, Dogecoin’s price in 2024 and beyond will vary, with expectations of a bullish momentum that could help it reach highs of $0.5 by the end of the year.

Although the upcoming golden cross presents a positive outlook for Dogecoin, the volatile history after such events advises caution.

Bottom Line

The golden cross, where the short-term SMA crosses above the long-term SMA, is viewed as a potential reversal of the previous bearish trend and the start of a new upward trend in DOGE’s price. It indicates that new buyers are gaining ground more quickly than long-term holders.

Golden crosses typically lead to increased trading activity as investors react to the bullish signal. This heightened activity may result in higher trading volumes and liquidity in Dogecoin markets, offering more opportunities for traders to enter or exit positions.

The path to the impending golden cross, which would be the first in over three years, began when Dogecoin surpassed its 200-week SMA in March 2023 with a dramatic 70% price surge in just one week. The previous golden cross, which occurred in January 2021, presaged a remarkable price rally where DOGE surged by more than 8,000% to an all-time high exceeding $0.76 by May.

However, the last 2021 run, which resulted in a massive price surge in Dogecoin, was followed by a 90% decline in the subsequent months before stabilizing, highlighting the volatile nature of the cryptocurrency.

As meme coins like DOGE primarily rely on speculation, they are susceptible to fiat liquidity, interest-rate expectations, and other macroeconomic conditions. Unlike the favorable macro environment of 2021, the current financial landscape is characterized by elevated interest rates and growing geopolitical tensions, potentially affecting speculative investment differently.

While the golden cross validates a bullish signal in Dogecoin from a technical analysis perspective, investors should exercise caution and consider other factors, including fundamental analysis, market conditions, and risk management strategies, before making any decisions.

Understanding the Bearish Signals in This Chipmaker's Stock Chart

Posted on by The INO.com Team

Intel Corporation’s (INTC) shares plunged nearly 31% in April, marking their worst month in more than two decades, as the prominent chipmaker continues to grapple with executing a turnaround. Moreover, the stock has dropped approximately 40% year-to-date.

Most of INTC’s sell-off occurred after its recent financial results, which included a bleak forecast, indicating that the company’s turnaround efforts will require more time and investment. Further, Intel’s factory operations faced challenges in March, adding to investor concerns.

Mixed First-Quarter Earnings and Weak Forecast

During the first quarter that ended March 30, 2024, INTC’s net revenue increased 8.6% year-over-year to $12.72 billion. However, that missed analysts’ estimate of $12.78 billion. Also, the company’s Foundry business reported $4.40 billion in revenue, down 10% year-over-year.

The chipmaker’s gross margin rose 30.2% from the prior year’s quarter to $5.22 billion. Its operating loss was $1.07 billion, compared to $1.47 billion in the previous year’s period. However, Intel Foundry posted a $2.50 billion operating loss during the quarter. In 2023, this unit reported a hefty operating loss of $7 billion.

Furthermore, INTC’s net income came in at $437 million versus $2.77 billion in the same quarter of 2023. Also, the loss per share attributable to Intel was $0.09, compared to $0.66 in the prior year’s quarter. That surpassed the consensus loss per share estimate of $0.15.

Intel’s primary business remains manufacturing chips for PCs and laptops, categorized as Client Computing Group (CCG). This business unit revenue amounted to $7.50 billion, a 31% increase year-over-year.

In addition, Intel produces central processors for servers and other components and software, which are classified under its Data Center and AI business segment. Sales in this segment rose by 5% year-over-year to $3 billion. However, the chipmaker faces stiff competition in the server market, particularly against AI chips from companies like NVIDIA Corporation (NVDA).

In addition, for the second quarter of fiscal 2024, the company expects its revenue to come between $12.5 billion and $13.5 billion. It projects a loss per share of $0.05 for the current quarter, and its non-GAAP earnings per share are expected to be $0.10.

INTC recently revised its current-quarter revenue guidance after the U.S. Department of Commerce revoked certain export licenses intended to send its chips to the Chinese tech company Huawei.

On May 7, the chipmaker said in an 8-K filing with the SEC that it had received a notification from federal regulators that they were “revoking certain licenses for exports of consumer-related items to a customer in China, effective immediately.”

On Wednesday, Intel announced that due to the Commerce Department's directive, it expects revenue for the second quarter to fall below the midpoint of the original range of $12.5 billion to $13.5 billion. However, the company continues to expect full-year revenue and earnings to be higher than in 2023.

Intel Faces Fierce Competition

INTC, a longstanding leader in the semiconductor industry, has been facing rigid competition from rivals, including Advanced Micro Devices, Inc. (AMD) and Nvidia. Intel remains dominant in the PC chip market, but AMD is gaining ground in server, desktop, and mobile segments, as per the latest figures from Mercury Research.

Intel remains the leading player in the server CPU segment, with a market share of 79.2% during the first quarter; however, this is down from 82% in the year-ago quarter, indicating some erosion in its market share. On the other hand, AMD made gains in this segment, rising from just 18% a year ago to 23.6% in the first quarter of 2024.

Also, Intel's market share in the mobile CPU segment was 80.7% in the first quarter of 2024, compared to 83.8% in the prior year’s quarter. However, AMD’s 19.3% market share in the first quarter was 3.1% up from the same period in 2023. Further, AMD gained on Intel, with its 23.9% desktop share in the fiscal 2024 first quarter, up 4.7% a year ago.

Besides, INTC continues to fight for server market share against competitor NVDA, particularly in AI chips. Nvidia commands around 80% of the AI chip market with its graphics processors (GPUs), which AI builders have favored over the past year.

Earlier in April, Intel introduced its latest AI chip, Gaudi 3, as competition from NVDA intensified. The company claimed the new Gaudi 3 chip is over twice as power-efficient and can run AI models 1.5 times faster than Nvidia’s H100 GPU. Also, it is available in various configurations, such as a bundle of eight Gaudi 3 chips on a single motherboard or a card designed to fit into existing systems.

Intel tested the chip on models like Meta's open-source Llama and Falcon, backed by Abu Dhabi. It highlighted that Gaudi 3 could be instrumental in training or deploying models, including Stable Diffusion and OpenAI’s Whisper model for speech recognition.

Also, Intel is losing market share to rivals such as Arm Holdings PLC (ARM), Samsung Electronics, and Taiwan Semiconductor Manufacturing Ltd. (TSM).

Analysts Lowered Price Targets for Intel Shares

Goldman Sachs analysts slashed their price target for INTC stock from $39 to $34 and lowered their adjusted EPS estimates for the 2024-2026 period by an average of 18%. Also, they reaffirmed their “Sell” rating for the stock, which has been in effect since July 2020.

“We worry the company will continue to cede wallet share within the overall Data Center Compute market to the likes of Nvidia and Arm,” Goldman analysts said.

Meanwhile, Bank of America Corporation (BAC) cut its price objective to $40 from $44, citing higher costs, lower growth, and fierce competition. According to BofA analysts, the bleak second-quarter revenue guidance highlights that “topline growth remains lukewarm on limited AI exposure, while underutilized manufacturing and elevated costs.”

They added that Intel’s “enterprise incumbency, US-based manufacturing assets and weak investor sentiment provide turnaround potential.”

Bottom Line

INTC’s first-quarter 2024 earnings surpassed Wall Street’s expectations for EPS but fell short on sales. The chipmaker also provided a weak forecast for the current quarter.

After the U.S. Department of Commerce recently revoked certain licenses for exports of chips to Huawei in a bid to curb China’s tech power, Intel revised its second-quarter revenue guidance, anticipating below the initial range of $12.5 billion to $13.5 billion.

INTC’s stock fell more than 30% in April, making its biggest decline since June 2002. Moreover, the stock is trading below its 50-day and 200-day moving averages of $38.33 and $39.74, respectively, indicating a downtrend.

Despite INTC’s more than 50 years of dominance in the semiconductor industry, it now faces intense competition from competitors like AMD, NVDA, TSM, Samsung, ARM, and more. Also, the ongoing AI boom has caused a shift in enterprise spending away from Intel’s traditional data center chips.

With limited AI exposure, the intensifying competition raises doubts about Intel’s future dominance in the semiconductor industry.

INTC’s CEO Pat Gelsinger told investors on an earnings call to focus on the company’s long-term potential.

Analysts expect INTC’s revenue to increase marginally year-over-year to $13.06 billion for the second quarter ending June 2024. However, its EPS for the current quarter is expected to decline 18.2% year-over-year to $0.11. For the fiscal year 2024, the chipmaker’s revenue and EPS are expected to grow 3.3% and 4.8% year-over-year to $55.99 billion and $1.10, respectively.

“While 2024 should mark a bottom in many aspects of the business, the pace of the climb back up is unlikely to remain unclear,” Stifel stated in a note to clients.

Given INTC’s disappointing revenue guidance, regulatory issues, and fierce competition, it could be wise to avoid investing in this stock now.

Neurocrine Biosciences (NBIX) Nears Buy Point Amid Rising Enthusiasm

Posted on by The INO.com Team

Neurocrine Biosciences, Inc. (NBIX), a leading neuroscience-focused biopharmaceutical company, approaches the buy point amid growing market enthusiasm. The stock has surged more than 19% over the past six months and nearly 42% over the past year.

One factor fueling this optimism is NBIX's flagship product, INGREZZA®, which targets tardive dyskinesia, a movement disorder associated with certain antipsychotic medications, and its diagnosis rates have been rising. INGREZZA’s launch in 2017 has brought attention to this lesser-known condition.

Moreover, Neurocrine's early-stage initiatives targeting muscarinic receptors in the brain have captured investor interest. This research could potentially lead to new treatments for various movement disorders, schizophrenia, and other central nervous system conditions.

Now, let’s delve deeper into NBIX’s fundamentals and growth prospects:

Promising Recent Developments

On May 8, NBIX announced the initiation of its Phase 1 first-in-human clinical study to assess the safety, tolerability, pharmacokinetics, and pharmacodynamics of investigational compound NBI-1117567 in adult participants. NBI-1117567 is an oral, investigational, M1/M4 (M1 preferring) selective muscarinic agonist for the potential treatment of psychiatric and neurological disorders.

On April 30, NBIX announced that the FDA approved INGREZZA® SPRINKLE capsules, introducing a new oral granules version of INGREZZA® capsules prescribed for treating adults with tardive dyskinesia and chorea linked to Huntington's disease. INGREZZA SPRINKLE offers an alternative option, particularly beneficial for individuals experiencing dysphagia or having difficulty with swallowing.

Also, Neurocrine reported positive topline data for its Phase 2 SAVITRI™ study on April 23. This was a randomized, double-blind, placebo-controlled dose-finding trial designed to evaluate the efficacy and safety of NBI-1065845 in adults with major depressive disorder (MDD).

NBI-1065845 is an investigational alpha-amino-3-hydroxy-5-methyl-4-isoxazole propionic acid (AMPA) positive allosteric modulator (PAM) for the potential treatment for patients with MDD who have not responded adequately to at least one antidepressant during their current episode of depression.

Furthermore, in the same month, NBIX and Sentia Medical Sciences Inc. extended their research collaboration to discover novel, long-acting corticotropin-releasing factor (CRF) receptor antagonist peptide therapeutics.

The partnership will continue to leverage Sentia’s proprietary peptide-based platform and Neurocrine’s drug development expertise in CRF biology to develop, manufacture, and commercialize medicines with the potential to treat various hypothalamic-pituitary-adrenal (HPA) axis-modulated diseases.

In March, Neurocrine announced the initiation of its Phase 1 clinical study to evaluate the safety, tolerability, pharmacokinetics, and pharmacodynamics of the investigational compound NBI-1065890 in healthy adult subjects.

NBI-1065890 is a next-generation, highly potent, internally discovered, oral, selective vesicular monoamine transporter-2 (VMAT2) inhibitor for the potential treatment of certain neurological and neuropsychiatric conditions.

Moreover, NBIX is well-poised to become a leader in neuroscience, with the recent New Drug Application submissions for crinecerfont and optimistic Phase 2 results for NBI-'845 (a potential first-in-class medication for major depressive disorder).

Solid First-Quarter 2024 Financial Results

For the first quarter that ended March 31, 2024, NBIX’s revenues increased 22.6% year-over-year to $515.30 million. That surpassed the analysts’ estimate of $512.01 million. Its net product sales rose 22.7% year-over-year to $509 million, and INGREZZA net product sales were $506 million, up 23% from the prior year’s quarter.

The year-over-year growth in INGREZZA product sales was driven by solid underlying patient demand and improvement in gross-to-net dynamics. In addition, Neurocrine’s non-GAAP net income and earnings per share were $124.80 million and $1.20, compared to non-GAAP net loss and loss per share of $49.50 million and $0.51 in the first quarter of 2023, respectively.

Furthermore, as of March 31, 2024, the company’s total cash, cash equivalents and marketable securities came in at $1.91 billion, compared to $1.72 billion as of December 31, 2023.

Optimistic Analyst Expectations

Analysts expect NBIX’s revenue to increase 20.9% year-over-year to $547.13 million for the second quarter ending June 2024. The consensus EPS estimate of $1.49 for the current quarter indicates an improvement of 19.3% year-over-year. Moreover, Neurocrine has topped consensus revenue and EPS estimates in three of the trailing four quarters, which is remarkable.

Additionally, NBIX’s revenue and EPS for the fiscal year (ending December 2024) are expected to grow 17.7% and 54.8% year-over-year to $2.22 billion and $5.98, respectively. For the fiscal year 2025, Street expects the company’s revenue and EPS to increase 14.4% and 22.9% from the previous year to $2.54 billion and $7.34, respectively.

Pharma Industry’s Favorable Trends And Dynamics

The growing population worldwide, aging demographics, and increasing prevalence of chronic diseases are boosting the demand for pharmaceutical products and healthcare services. Furthermore, regulatory agencies are increasingly implementing expedited review pathways and flexible approval processes to accelerate innovation and access to new treatments.

According to Statista, the revenue in the pharmaceuticals market is projected to reach $1.16 trillion in 2024. In global comparison, the U.S. is expected to generate the highest revenue of $636.90 billion this year. Looking ahead, the revenue in this sector is expected to grow at a CAGR of 6.2% from 2024 to 2028, resulting in a market volume of $1.47 trillion by 2028.

Moreover, biopharmaceutical advancements, growing adoption of precision medicine approaches, increasing investments in specialty drugs targeting specific diseases or patient populations, and orphan drugs for rare diseases are key trends shaping the pharma sector.

As per IQVIA, U.S. medicines spending is projected to grow 4 to 7% through 2028. This growth will be fueled by the adoption of newly launched innovative products, with an average of 50-55 new medicines launching per year over the next five years, such as those in oncology or with orphan status, alongside a few traditional therapies in diabetes, neurology, and obesity.

Accelerating Profitability

NBIX’s trailing-12-month gross profit margin of 68.54% is 21.7% higher than the 56.34% industry average. Likewise, the stock’s trailing-12-month EBIT margin and levered FCF margin of 23.73% and 36.29% are significantly higher than the industry average of 0.53%, respectively.

Moreover, the stock’s trailing-12-month net income margin of 18.65% compared to the industry average of negative 5.52%. Its trailing-12-month ROCE, ROTC, and ROTA of 18.16%, 12.36%, and 10.65% favorably compared to the respective industry averages of negative 40.87%, negative 20.89%, and negative 29.54%.

Bottom Line

Neurocrine reported outstanding first-quarter 2024 results, with revenue exceeding analyst expectations. The neuroscience-focused biopharmaceutical company’s INGREZZA® net product sales were a significant contributor, posting a 23% year-over-year growth, driven by solid patient demand and improvements in gross-to-net-dynamics. 

NBIX’s CEP, Kevin Gorman, Ph.D., highlighted the continued need for treatment for patients with tardive dyskinesia, expressing confidence in the company's lead product, INGREZZA.

For the fiscal year 2024, the company expects INGREZZA net product sales to range from $2.10 to $2.20 billion.

Moreover, Neurocrine is actively pursuing strategic initiatives to develop medicines to alleviate the burden of debilitating diseases and disorders. This includes their ongoing research and development (R&D) efforts to create new effective treatments for neurological, neuroendocrine, and neuropsychiatric conditions.

Wells Fargo analyst Mohit Bansal maintained a Buy rating on NBIX, with a price target of $170. Mohit Bansal has given a Buy rating due to several factors indicating a solid business foundation and bright future developments for Neurocrine. The company’s flagship product, INGREZZA, has been a robust performer, contributing to operating margin expansion and serving as a solid base for the business.

Furthermore, according to the analyst, Neurocrine is actively preparing to launch crinecerfont, its upcoming new drug, with management expressing confidence in its chances for priority review by the FDA. Bansal also highlights the company's proactive approach to ensuring study quality, which bodes well for future clinical trials.

Considering these factors, it could be wise to scoop up shares of NBIX for potential gains.

Investing Like a Billionaire: Everything Berkshire Hathaway Offers to Ordinary Investors

Posted on by The INO.com Team

With a $867.46 billion market cap, Berkshire Hathaway (BRK.A) (BRK.B), a diversified holding company, is led by Warren Edward Buffett, who is one of the world’s renowned investors with a long track record of successful capital allocation and value creation. As of May 8, 2024, he has a net worth of $133.50 billion, making him the eighth-richest person in the world.

Buffett’s substantial wealth primarily stems from his significant holdings in Berkshire Hathaway, a conglomerate with assets exceeding $1 trillion. Under Buffett’s expertise and exceptional leadership, Berkshire has historically delivered robust and consistent long-term growth, outperforming various other investment options.

From 1965, when Warren Buffett took control of the company, to 2023, Berkshire’s share price surged by a staggering 4,384,748%, surpassing the total return of the S&P 500 with dividends included of 31,223%. Additionally, Berkshire has continued its solid performance into 2024, with a double-digit percentage gain.

Berkshire’s Portfolio Reflects Buffett’s Investment Strategy

Known as the “Oracle of Omaha,” Warren Buffett stands out as one of the most accomplished investors of all time. He follows the Benjamin Graham school of value investing, seeking out securities with unreasonably low prices compared to their intrinsic worth. He often assesses the company’s long-term potential rather than short-term market trends.

Buffett considers company performance, profit margins, management team, and business model. He believes in investing in high-quality businesses with solid competitive advantages or “economic moats,” enabling them to maintain or expand their market share over time.

Sticking to his investment policy, Buffett’s holding company, Berkshire Hathaway, aims to “buy ably-managed businesses” possessing various characteristics, such as enduring competitive advantage, at extremely low prices.

For instance, the acquisition of See’s Candies in 1972 demonstrated Buffett’s strategy, as the company's robust brand and loyal customer base made it a highly profitable long-term investment. He favors companies with strong brands and business models that own their market niche, creating formidable barriers for competitors trying to enter and beat them at their game.

Berkshire Offers Diversification Across Industries

Berkshire Hathaway’s top holding is Apple Inc. (AAPL). Thanks to its strong brand and customer loyalty, it has remained one of Buffett’s favorite stocks for a long time. He has previously referred to AAPL as the “best business I know in the world.”

BRK.B recently disclosed that it had cut its stake in Apple by around 13% in the first quarter. It was reported that Berkshire’s Apple bet was worth $135.4 billion, implying nearly 790 million shares. Despite this trim, the iPhone maker is still Berkshire’s biggest holding by far, with a 39.8% weight in its publicly traded portfolio.

Another consumer goods company that Buffett loves is The Coca-Cola Company (KO). He recognized the company’s iconic brand, attractive dividends, and market advantages. Coca-Cola’s robust brand has enabled it to mitigate the impact of inflation by transferring higher costs to customers while still being able to generate growth.

At around 6.9%, KO is the fourth-largest holding in Berkshire’s portfolio. Berkshire owns a 9.3% stake in the company.

Meanwhile, Warren Buffett holds significant investments in the energy sector. During the fourth quarter of 2023, Buffett’s Berkshire increased its stakes in two major oil and gas companies, Chevron Corporation (CVX) and Occidental Petroleum Corporation (OXY).

Berkshire Hathaway owns about a 6.7% stake in CVX. According to Berkshire’s February shareholder letter, the firm also holds a 27.8% stake in OXY and has warrants to increase its ownership further at a fixed price.

Chevron (about 5.5% of the portfolio’s total weight) and Occidental (4.5%) provide investors with exceptionally good returns amid the inflationary periods and pay attractive dividends.

In addition, Buffett is fond of financial institutions and insurance companies, viewing them as a strategic bet on the long-term health of the U.S. economy. Berkshire's top two financial holdings are Bank of America Corporation (BAC) and American Express Company (AXP). These financial stocks comprise approximately 21% of the Berkshire portfolio’s total weight.

Outstanding First-Quarter Operating Earnings and Record Cash Hoard

For the first quarter that ended March 31, 2024, Berkshire’s total revenues increased 5.3% year-over-year to $89.87 billion. Revenues from Railroad, Utilities and Energy rose 11.2% year-over-year, and revenues from Insurance and Other grew 3.2%.

The Warren Buffett-led conglomerate reported first-quarter operating profit, which encompasses earnings from the company’s wholly-owned businesses, grew 39% from the year-ago period to $11.22 billion. This remarkable surge was led by a 185% year-over-year increase in insurance underwriting earnings to $2.60 billion. Insurance investment also soared 32% to over $2.50 billion.

However, net earnings attributable to Berkshire Hathaway shareholders declined by 64.2% year-over-year to $12.70 billion.

During the first quarter, the company’s cash pile reached a record high of $188.99 billion, up from $167.60 billion in the fourth quarter.

“We had much-improved earnings in insurance underwriting. And then our investment income was almost certain to increase,” Buffett said at Berkshire’s annual shareholder meeting in Omaha, Nebraska. “And I said that in the annual report because yields are so much higher than they were last year. And we have a lot of fixed, short-term investments that are very responsive to the changes in interest rates.”

Bottom Line

Berkshire Hathaway, led by a well-known investor, Warren Buffett, follows an intrinsic value investing approach, aiming at buying undervalued companies with solid fundamentals, competitive advantages, and long-term growth potential. Berkshire owns a diverse portfolio of businesses, including insurance, utilities, transportation, retail, and technology, among others.

Moreover, Berkshire’s top five holdings pay attractive dividends, which indicates Warren Buffett’s interest in stocks that offer a stable income stream.

Buffett’s conglomerate recently reported a significant surge in operating earnings in the first quarter of fiscal 2024, primarily driven by an increase in insurance underwriting earnings and a record cash pile that nears $200 billion.

USB analyst Brian Meredith maintained a Buy rating on Berkshire, citing the recent earnings beat and noting that Geico is on track to catch up to rivals Progressive and others on data analytics by 2025.

Berkshire Hathaway has historically delivered impressive and consistent returns. From 1965 to 2023, its share price skyrocketed 4,384,748%, more than 140 times the total return of the S&P 500, with dividends included. Moreover, Berkshire shares have already outperformed this year, with each share class having advanced more than 12%, while the S&P is up by nearly 8%.

Shares of BRK.B have gained approximately 16% over the past six months and more than 22% over the past year.

Looking ahead, analysts expect BRK.B’s EPS for the fiscal year (ending December 2024) to increase 14.6% year-over-year to $19.70. Further, the company’s EPS and revenue for the fiscal year 2025 are expected to grow 1.4% and 5.6% from the prior year to $19.97 and $376.61 billion, respectively.

Thus, by owning BRK.B shares, investors can gain exposure to Berkshire’s diversified portfolio of businesses, Buffett’s expertise, and stable growth and performance.

Why Super Micro Computer (SMCI) Could Be a Hidden Gem for Growth Investors

Posted on by The INO.com Team

In March 2024, Super Micro Computer, Inc. (SMCI) became the latest artificial intelligence (AI) company to join the S&P 500 index, just a little more than a year after joining the S&P MidCap 400 in December 2022. Shares of SMCI jumped by more than 2,000% in the past two years, driven by robust demand for its AI computing products, which led to rapid sales growth.

Moreover, SMCI’s stock has surged nearly 205% over the past six months and more than 520% over the past year. A historic rally in the stock has pushed the company’s market cap past $48 billion.

SMCI is a leading manufacturer of IT solutions and computing products, including storage and servers tailored for enterprise and cloud data centers, purpose-built for use cases such as AI, cloud computing, big data, and 5G applications. The company has significantly benefited from the ongoing AI boom in the technology sector.

According to ResearchAndMarkets.com’s report, the global AI server market is expected to reach $50.65 billion by 2029, growing at a CAGR of 26.5% during the forecast period (2024-2029).

Specializing in servers and computer infrastructure, SMCI maintains long-term alliances with major tech companies, including Nvidia Corporation (NVDA), Intel Corporation (INTC), and Advanced Micro Devices, Inc. (AMD), which have fueled the company’s profitability and growth.

Let’s discuss Super Micro Computer’s fundamentals and growth prospects in detail:

Recent Strategic Developments

On April 9, SMCI announced its X14 server portfolio with future support for the Intel® Xeon® 6 processor with early access programs. Supermicro’s Building Block Architecture, rack plug-and-play, and liquid cooling solutions, along with the breadth of the new Intel Xeon 6 processor family, enables the delivery of optimized solutions for any workload and at any scale, offering superior performance and efficiency.

The upcoming processor family will be available with Efficient-core (E-core) SKUs rising performance-per-watt for cloud, networking, analytics, and scale-out workloads, and Performance-core (P-core) SKUs increasing performance-per-core for AI, HPC, Storage and Edge workloads. 

Also, the upcoming processor portfolio will feature built-in Intel Accelerator Engines with new support for FP16 on Intel Advanced Matrix Extensions.

In the same month, SMCI expanded its edge compute portfolio to accelerate IoT and edge AI workloads with a new generation of embedded solutions.

“We continue to expand our system product line, which now includes servers that are optimized for the edge and can handle the demanding workloads where massive amounts of data are generated,” said Charles Liang, president and CEO of SMCI.

“Our building block architecture allows us to design and deliver a wide range of AI servers that give enterprises the solutions they need, from the edge to the cloud. Our new Intel Atom-based edge systems contain up to 16GB of memory, dual 2.5 GbE LAN ports, and a NANO SIM card slot, which enables AI inferencing at the edge where most of the world's data is generated,” Liang added.

Also, on March 19, Supermicro unveiled its newest lineup aimed at accelerating the deployment of generative AI. The Supermicro SuperCluster solutions offer foundational building blocks for the present and the future large language model (LLM) infrastructure.

The full-stack SuperClusters include air- and liquid-cooled training and cloud-scale inference rack configurations with the latest NVIDIA Tensor Core GPUs, Networking, and NVIDIA AI Enterprise software.

Further, SMCI announced new AI systems for large-scale generative AI featuring NVIDIA's next-generation of data center products, such as the latest NVIDIA GB200 Grace™ Blackwell Superchip, the NVIDIA B200 Tensor Core, and B100 Tensor Core GPUs.

Supermicro is upgrading its existing NVIDIA HGX™ H100/H200 8-GPU systems for seamless integration with the NVIDIA HGX™ B100 8-GPU, thus reducing time to delivery. Also, the company strengthens its broad NVIDIA MGX™ systems range with new offerings featuring the NVIDIA GB200, including the NVIDIA GB200 NVL72, a comprehensive rack-level solution equipped with 72 NVIDIA Blackwell GPUs.

Additionally, Supermicro is introducing new systems to its portfolio, including the 4U NVIDIA HGX B200 8-GPU liquid-cooled system.

Solid Third-Quarter 2024 Results

For the third quarter that ended March 31, 2024, SMCI’s revenue increased 200.8% year-over-year to $3.85 billion. Its non-GAAP gross profit grew 163.9% from the year-ago value to $600.59 million. Its non-GAAP income from operations was $434.42 million, up 290.7% year-over-year.

The server assembler’s non-GAAP net income rose 340% from the prior year’s quarter to $411.54 million. Its non-GAAP net income per common share came in at $6.65, an increase of 308% year-over-year.

As of March 31, 2024, Super Micro Computer’s cash and cash equivalents stood at $2.12 billion, compared to $440.46 million as of June 30, 2023. The company’s total current assets were $8.06 billion versus $3.18 billion as of June 30, 2023.

Charles Liang, President and CEO of Supermicro, said, “Strong demand for AI rack scale PnP solutions, along with our team’s ability to develop innovative DLC designs, enabled us to expand our market leadership in AI infrastructure. As new solutions ramp, including fully production ready DLC, we expect to continue gaining market share.”

Raised Full-Year Revenue Outlook

SMCI expects net sales of $5.10 billion to $5.50 billion for the fourth quarter of fiscal year 2024 ending June 30, 2024. The company’s non-GAAP net income per share is anticipated to be between $7.62 and $8.42.

For the fiscal year 2024, Supermicro raised its guidance for revenues from a range of $14.30 billion to $14.70 billion to a range of $14.70 billion to $15.10 billion. Its non-GAAP net income per share is expected to be from $23.29 to $24.09.

CEO Charles Liang said he expects AI growth to remain solid for several quarters, if not years, to come. To support this rapid growth, the company had to raise capital through a secondary offering this year, Liang added.

Meanwhile, finance chief David Weigand said that the company’s supply chain continues to improve.

Bottom Line

SMCI’s fiscal 2024 third-quarter results were exceptional, with a record revenue of $3.85 billion and a non-GAAP EPS of $6.65. This year-over-year revenue growth of 200% and year-over-year non-GAAP EPS growth of 308% significantly outpaced its industry peers.

After reporting outstanding financial performance, the company raised its full-year revenue forecast as it points to solid AI demand.

Super Micro Computer, which joined the S&P 500 in March, has a unique edge among server manufacturers aiming to capitalize on the generative AI boom. Notably, the server maker’s close ties with Nvidia allow it to launch products superior to competitors, including Dell Technologies Inc. (DELL) and Hewlett Packard Enterprise Company (HPE).

The company has a history of being among the first to receive AI chips from NVDA and AMD as it assists them in checking server prototypes, giving it a head start over rivals. This has positioned SMCI as a key supplier of servers crucial for generative AI applications, leading to a remarkable 192% surge in shares so far this year.

According to an analyst at Rosenblatt Securities, Hans Mosesmann, “Super Micro has developed a model that is very, very quick to market. They usually have the widest portfolio of products when a new product comes out from Nvidia or AMD or Intel.”

Moreover, analysts at Bank of America project that SMCI’s share of the AI server market will expand to around 17% in 2026 from 10% in 2023. Argus analyst Jim Kelleher also seems bullish about SMCI. Kelleher maintained a Buy rating on SMCI’s stock.

According to the analyst, Super Micro Computer is a leading server provider for the era of generative AI. Alongside a comprehensive range of rack and blade servers for cloud, enterprise, data center, and other applications, SMCI offers GPU-based systems for deep learning, high-performance computing, and various other applications.

Given solid financials, accelerating profitability, and robust near-term growth outlook, investors could consider buying this stock for substantial gains.