Author: The INO.com Team

3 Renewable Energy Stocks Aligning Shareholder Values Amidst BAC Environmental Backlash

Posted on by The INO.com Team

Two years ago, The New York Times disclosed Bank of America’s (BAC) decision to cease financing coal mines, coal-burning power plants, and Arctic drilling projects due to environmental concerns. However, the bank has now reversed its stance, subjecting such projects to “enhanced due diligence” in its latest environmental and social-risk policy.

Amid mounting Republican opposition to corporate consideration of environmental and social factors, Texas and West Virginia have introduced financial regulations to resist denying banking services to fossil fuel companies. In New Hampshire, legislators aim to outlaw ESG (environmental, social, and governance) practices in business, reflecting a broader political backlash.

In this context, coupled with global tensions in Europe and the Middle East, banks such as BAC and JPMorgan are shifting focus away from ESG principles, as evidenced by JPMorgan's retreat in its annual climate report, toward practices emphasizing energy security.

Simultaneously, the combustion of fossil fuels remains the primary driver of global warming. The United Nations warns that rising temperatures alter weather patterns and disrupt natural equilibrium, intensifying extreme weather events like hurricanes, droughts, and heatwaves, exacerbating their frequency and severity.

These shifts are already manifesting tangible impacts. In 2023, the Amazon basin faced drinking water shortages due to historically low rainfall. Catalonia, Spain, declared a state of emergency earlier this year due to the "worst drought in modern history," illustrating the immediate consequences of climate change.

Given the recent backlash against BAC's environmental stance and the urgency of climate change, it's crucial to prioritize sustainable investments and align portfolios with ecological values. The three renewable energy stocks discussed below exemplify solid environmental commitments and long-term sustainability goals.

NextEra Energy, Inc. (NEE)

NextEra Energy, Inc. (NEE), a prominent utility giant, is reshaping the renewable energy panorama with remarkable advancements in wind and solar energy production. Leveraging its subsidiary, Florida Power & Light, and substantial investments in clean energy, the company has emerged as a pivotal force driving the nation's shift towards sustainable power origins.

In 2023, NEE achieved more than 9% growth in full-year adjusted earnings per share compared to 2022. The success was attributed to robust operational and financial performance across FPL and NextEra Energy Resources, surpassing adjusted earnings expectations and consistently delivering long-term shareholder value.

Over the past decade, NEE has consistently delivered compound annual growth in adjusted EPS of approximately 10%, the highest among the top-10 power companies. In contrast, other top companies in the sector have seen an average compound annual growth in adjusted EPS of around 2% during the same period.

NEE achieved its best-ever year for new renewables and storage origination in 2023, adding approximately 9,000 megawatts to its backlog. Anticipating a substantial surge in electricity demand due to factors like artificial intelligence, electrification, and cloud capacity, CEO John Ketchum forecasts an 81% increase in electricity demand over the next five years.

Renewable generation could triple or more, reaching 370 to 450 gigawatts, to meet this demand. To meet this increasing demand, NEE has developed a system to identify suitable locations for new data centers based on solar and wind resources and transmission line access. This should bode well for the company's growth.

For fiscal 2024, NEE maintains its adjusted earnings per share expectations between $3.23 and $3.43. Projected growth for 2025 and 2026 is set at 6% to 8% based on the 2024 range, translating to $3.45 to $3.70 for 2025 and $3.63 to $4.00 for 2026.

Clearway Energy, Inc. (CWEN)

Clearway Energy, Inc. (CWEN) is one of the United States’ largest renewable energy proprietors, boasting approximately 6,000 net megawatts (MW) of installed wind, solar, and energy storage projects. Among its assets are about 8,500 net MW, including roughly 2,500 net MW of environmentally friendly, highly efficient natural gas generation facilities.

The preceding year, CWEN committed around $215 million to new long-term corporate capital investments and secured new Resource Adequacy contracts at Marsh Landing and El Segundo, providing greater visibility into future growth opportunities.

In December 2023, CWEN's indirect subsidiary acquired a stake in Texas Solar Nova 1, a 252 MW operational solar venture in Kent County, Texas, for $23 million in cash. Supported by power purchase agreements with reliable counterparties, this project showcases CWEN's dedication to sustainable energy initiatives.

With total liquidity reaching $1,505 million by December 31, 2023, a $139 million increase from the previous year, CWEN demonstrated robust financial health. This was bolstered by refinancing the revolving credit facility, raising its total capacity to $700 million, and additional project-level restricted cash from growth investments.

In 2023, CWEN's Cash Available for Distribution (CAFD) landed within its revised guidance range of $330 million to $360 million, totaling $342 million. In the fourth quarter, the company achieved commercial operations on Daggett 2 and Texas Solar Nova 1, positioning itself for further CAFD growth in 2024 and beyond.

Committing approximately $215 million to new corporate capital deployments in 2023, CWEN aims for an average five-year annual CAFD yield of about 10%, diversifying its portfolio further. The company announced a 1.7% dividend increase for the quarter, targeting a 7% growth rate for 2024.

Reaffirming its CAFD guidance of $395 million for 2024, CWEN remains on track to achieve its long-term growth targets. Moreover, with a sponsor's 29-gigawatt renewable pipeline, CWEN anticipates significant asset additions to its portfolio by the mid-decade, ensuring sustained growth and delivering competitively priced energy while reducing risk.

Investors can anticipate a robust growth trajectory from CWEN's sponsor, which will translate into substantial asset augmentation for CWEN's portfolio in the coming years.

Atlantica Sustainable Infrastructure plc (AY)

Atlantica Sustainable Infrastructure plc (AY) specializes in sustainable infrastructures, focusing on renewable energy assets with a robust portfolio of 2.2 GW operating assets spread across North and South America and the EMEA region.

In March, AY finalized the acquisition of two wind assets in Scotland, marking its entry into the United Kingdom market. These assets are regulated under U.K. green attribute regulations and have a combined installed capacity of 32 MW.

AY also saw significant progress in its U.S. development team last year, with several new solar assets reaching commercial operation. Presently, the company has three fully contracted projects under construction or about to start construction in the U.S. Southwest, benefiting from the Investment Tax Credit (ITC).

The company's renewal pipeline has expanded by 12% compared to last year. On March 1, 2024, AY committed or earmarked $175 million to $220 million in new investments, predominantly allocated to solar and storage projects in the United States, representing a significant portion of its investment target.

AY expects to supplement this with additional developments and targeted acquisitions. Most of the company’s investments will be directed toward solar and storage projects already contracted in the United States, including Coso 1, Coso 2, and a new project called Overnight, alongside investments in other geographies such as South America and Europe.

Such strategic investments are poised to enhance AY's prospects significantly. In full-year 2023, AY's revenue remained stable at $1,099.9 million, with adjusted EBITDA reaching $794.9 million, showcasing a 1.7% increase from 2022. Cash available for distribution totaled $235.7 million, aligning with yearly guidance.

Looking ahead to 2024, AY anticipates adjusted EBITDA in the range of $800 million to $850 million and cash available for distribution from $220 million to $270 million, reflecting its continued growth trajectory and commitment to sustainable infrastructure development.

Bottom Line

The transition toward renewable energy is one of our time's most significant investment trends, with trillions of dollars set to be invested in decarbonizing the economy over the upcoming decades. This investment surge is expected to fuel above-average growth for companies focused on renewable energy sectors in the years ahead.

Despite natural gas maintaining its position as the primary fuel source for U.S. power generation, accounting for more than 40% of generation in the fourth quarter of 2023, most new capacity additions have been concentrated in renewable energy sources such as solar, wind, and battery storage.

Natural gas benefits from its abundant availability and low cost in the United States, while coal's contribution to generation fell to 16% in the fourth quarter of 2023, down from 19% in the same period in 2022. Renewables (excluding hydroelectricity) saw their market share increase to 16% in the fourth quarter of 2023, with solar accounting for approximately 3.5% and wind comprising 12.5% of utility-scale generation.

Further, forecasts predict wind and solar to rise to nearly 45% of generation by 2032, marking a significant increase from current levels. Much of this growth is expected to come at the expense of coal, which is forecasted to continue declining due to its high emission profile.

Investing in renewable energy stocks presents a compelling opportunity amid changing environmental landscapes and evolving market dynamics. These companies are distinguished by their strong commitments to sustainable energy initiatives and consistent financial performance.

Leading utility company NEE is at the forefront of renewable energy transformation, with substantial investments in wind and solar energy production driving the nation's transition towards sustainable energy sources. The company's consistent growth in adjusted earnings per share highlights its resilience and potential for long-term value creation.

Emerging players such as CWEN and AY are also making significant strides in renewable energy ownership, boasting diverse portfolios of wind, solar, and energy storage projects. Their strategic investments and steady cash flow generation position them for continued growth in alignment with the rising demand for renewable energy solutions.

As renewable energy stocks are expected to remain relevant amid growing efforts to combat climate change worldwide, consider adding NEE, CWEN, and AY to your portfolio now.

The Intel (INTC) Conundrum: When Will the Bleeding Stop?

Posted on by The INO.com Team

Prominent chipmaker Intel Corporation’s (INTC) shares plunged more than 14% over the past five days. This downward trend follows the revelation that Intel incurred a significant operating loss of $7 billion last year for its chip-manufacturing unit, also called the foundry business, about 35% worse than in 2022. The unit reported revenue of $18.90 billion for 2023, down 31% year-over-year.

During an investor presentation, INTC’s CEO Patrick Gelsinger discussed the company's projections, stating that 2024 would likely mark the peak of operating losses for its chipmaking division. He mentioned that Intel anticipates reaching break-even on an operating basis by around 2027.

Pat Gelsinger further acknowledged challenges in the company’s foundry business, attributing to poor decisions, including one year ago against extreme ultraviolet (EUV) machines from the Dutch company ASML Holding N.V. (ASML). Although these machines can cost more than $150 million, they are considered more cost-effective compared to earlier chip-making tools.

Partially due to these missteps, Intel has outsourced approximately 30% of its total wafer production to external contract manufacturers like TSMC, Gelsinger added. The company’s goal is to lower this number to around 20%.

Additionally, the semiconductor giant has now transitioned to using EUV tools, which are expected to handle an increasing portion of production requirements as older machinery is phased out.

“In the post EUV era, we see that we're very competitive now on price, performance (and) back to leadership,” Gelsinger stated. “And in the pre-EUV era we carried a lot of costs and (were) uncompetitive.”

However, on a negative note, investment bank Bernstein analysts recently remarked that there is no compelling reason to hold Intel stock until 2030.

Bernstein recognizes the potential for improvement in Intel’s foundry business, given the significant loss incurred last year and the optimistic projection for achieving a 25-30% operating margin by 2030.

However, analysts cautioned, suggesting that the road ahead for INTC might be challenging, even with the seemingly ambitious targets. They noted that reaching break-even may not happen until after 2027, and the ambitious goals set for 2030 are speculative and dependent on achieving optimal progress, which remains a topic of debate.

In the last reported earnings, INTC surpassed analysts’ estimates on revenue and EPS. However, the chipmaker announced a weak forecast for the current quarter. For the quarter that ended December 31, 2023, INTC’s net revenue increased 10% year-over-year to $15.40 billion. This surpassed the consensus revenue estimate of $15.17 billion.

Also, net income attributable to Intel was $2.70 billion, compared to a net loss of $700 million in the previous year’s period. The company reported an EPS of $0.63, compared to analysts’ estimate of $0.22, and a loss per share of $0.16 in the same quarter of 2022.

However, as of September 30, 2023, the company’s cash and cash equivalents stood at $7.07 billion versus $11.14 billion as of December 31, 2022.

Intel’s fourth-quarter 2023 report marked a return to growth after eight consecutive quarters of decreasing earnings and seven straight quarters of declining sales on a year-over-year basis. But for the first quarter, the chip company projected adjusted EPS of just $13 on sales of $12.70 billion. Analysts expect earnings of $0.14 per share on revenue of $12.78 billion.

During an earnings call, Intel CEO Patrick Gelsinger stated that the company’s first-quarter sales would be impacted by difficulties at Mobileye, where Intel holds a majority stake, and in its programmable chip unit.

Gelsinger also mentioned that Intel’s core businesses, particularly PC and server chips, were performing strongly, with sales expected to fall within the lower end of the seasonal range.

On March 21, INTC announced plans to invest $100 billion in constructing and expanding chip factories across four states in the U.S., following securing $19.50 billion in federal grants and loans and wishes to secure another $25 billion in tax breaks.

Intel’s primary focus in its five-year spending plan is to convert undeveloped land near Columbus, Ohio, into what CEO Pat Gelsinger described as “the largest AI chip manufacturing site in the world,” with potential commencement in 2027.

In addition, the chip giant intends to revamp sites in New Mexico and Oregon while expanding its presence in Arizona. This initiative aligns with rival Taiwan Semiconductor Manufacturing Company Ltd. (TSM) construction of a massive factory in Arizona, leveraging President Joe Biden's efforts to bolster advanced semiconductor manufacturing in the U.S.

Intel was at the forefront of the semiconductor industry for decades and was known for producing the fastest and smallest chips. The company commanded premium prices for its products and reinvested its profits into continuous research and development (R&D), aiming to stay ahead of its competitors.

However, in the 2010s, INTC’s manufacturing superiority waned, particularly in comparison to TSM. This shift resulted in a significant drop in profit margins as Intel had to lower prices to maintain its market share, even though its products were perceived as less competitive than its rivals.

In 2021, Gelsinger unveiled a strategy to restore Intel to its former top position in the semiconductor market, acknowledging the necessity of government support to ensure the plan’s profitability. With the federal support secured, the chipmaker is now gearing up for substantial investments.

Gelsinger mentioned that approximately 30% of the $100 billion budget will be earmarked for construction expenses, covering labor, piping, and concrete. The remaining funds will be utilized to acquire chipmaking tools from firms like ASML, Tokyo Electron, Applied Materials, Inc. (AMAT), and KLA Corporation (KLAC), among others.

Moreover, Intel's strategy for business turnaround hinges on persuading external companies to use its manufacturing services. In February, INTC announced that Microsoft Corporation (MSFT) plans to use its services to manufacture a tailored computing chip. Moreover, the company expressed optimism about exceeding its internal target of surpassing TSM in advanced chip manufacturing before 2025.

As a part of this plan, INTC recently told investors it would start reporting the results of its manufacturing operations as a separate unit.

Intel’s new reporting structure, effective from the first quarter of 2024, includes operating segments such as Client Computing Group (CCG), Data Center and AI (DCAI), Network and Edge (NEX), Intel Foundry, Altera (now Intel’s Programmable Solutions Group), Mobileye, and Other. CCG, DCAI, and NEX will be collectively known as Intel Products, while Altera, Mobileye, and Other will be referred to as All Other.

The newly established Intel Foundry segment, including foundry technology development, foundry manufacturing and supply chain, and foundry services, will recognize revenues generated from external foundry customers and Intel Products, along with technology development and product manufacturing costs historically allocated to Intel Products.

Intel’s CFO, Dave Zinsner stated, “This model is designed to unlock significant cost savings, operational efficiencies and asset value. As it begins to take hold, we expect to accelerate on our path toward achieving our ambition of 60% non-GAAP gross margins and 40% non-GAAP operating margins in 2030. Ultimately, improved cost competitiveness will help us deliver process technology, product, and foundry leadership while driving significant financial upside for Intel and our owners.”

Bottom Line

Last week, INTC confirmed its intention to separate the financial results of its foundry business, providing investors with a closer look at its historical performance. However, the revealed figures were disappointing: the foundry business suffered losses of nearly $7 billion in 2023, a 35% increase in losses compared to 2022, alongside a 31% decrease in sales.

Along with these figures, the company stressed that the new financial reporting structure is designed to boost cost discipline and higher returns by offering enhanced transparency, accountability, and incentives across the business. Moreover, this transition is expected to unlock unrealized value across Intel’s about $100 billion in capital assets.

Last month, Intel unveiled plans to spend those $100 billion on building or expanding chip factories in four U.S. states. As part of its turnaround strategy, the chipmaker aims to convince external companies to utilize its manufacturing services. The company has been heavily investing to compete with its main chipmaking rivals, including TSM and Samsung Electronics Co Ltd.

Despite Intel’s optimism about turning the business around and achieving break-even by 2027, with a projected adjusted operating profit margin of 30% by 2030, analysts, including those at Bernstein, are cautious. They view Intel’s forecast as overly ambitious, suggesting that actual margins might only reach 25% by 2030.

Further, CNBC’s Jim Cramer advises investors to avoid investing in Intel despite the company’s turnaround plans.

While INTC is actively pursuing its turnaround initiatives, it currently encounters significant challenges, including underperformance within its foundry business, fierce competition, and cash burn. So, it could be wise to steer clear of this stock now.

Buying the Dip or Selling the Rally: Timing Your Moves in Boeing’s Stock

Posted on by The INO.com Team

The Boeing Company (BA), renowned for its innovation and dominance in the aerospace sector, has recently found itself in turbulent skies. In January 2024, the company faced severe criticism following an unfortunate incident involving a commercial Boeing 737 Max 9. During ascent, the door panel dislodged, resulting in a substantial opening on the side of the aircraft.

This unsettling event marked the start of a challenging year for BA in 2024 and brought renewed attention to the Boeing 737 Max planes, which have already been involved in two past crashes in 2018 and 2019, killing almost 346 people.

In addition, it also highlighted broader concerns about the quality control of BA’s planes, including how they are made, parts storage, and the rush to meet production deadlines.

According to an investigation by the Federal Aviation Administration (FAA), BA failed 33 out of 89 product audits related to its plane manufacturing, which is highly concerning. As a prominent commercial aircraft manufacturer, Boeing plays a crucial role in the aviation industry; however, its recent errors have raised significant concerns about the overall integrity of the industry.

As a result of this January mishap, which was followed by heightened scrutiny from the FAA, BA is experiencing a major production slowdown. The FAA has set a production limit of 38 jets per month for BA, but the actual output has often fallen well below this threshold, dipping to single digits by late March.

Conversely, Airbus SE (EADSF), BA’s major industry rival, maintains a comparably strong production pace for its A320neo-family jets, with an average of 46 flights per month in the first quarter of 2024. According to BA’s Chief Financial Officer, Brian West, the company is implementing various measures to tackle quality issues and boost confidence among stakeholders.

Despite BA's attempts to restore confidence in the company's prospects among its stakeholders, the recent news of BA’s CEO David Calhoun stepping down underscores the immense pressure BA is currently facing.

Furthermore, BA’s chairman, Larry Kellner, has opted not to stand for re-election as a board director. Instead, the board has chosen former Qualcomm CEO Steve Mollenkopf to take his place.

Meanwhile, Stan Deal, the CEO of BA Commercial Airplanes, is retiring, and Stephanie Pope, who has been serving as BA’s chief operating officer since January, will step into his role.

In a letter addressed to BA employees, Calhoun characterized the January Alaska Airlines incident as a critical juncture for BA. Highlighting his intentions to step down, Calhoun emphasized the global scrutiny the company is facing. The letter further assured stakeholders of the company's commitment to resolving the issues and guiding it toward recovery and stability.

Calhoun’s departure amid intense criticism from major airline CEOs further highlights the company's difficulties. For instance, some of BA’s key customers, including Michael O’Leary, the CEO of Ryanair, Europe's biggest airline, and Scott Kirby, the CEO of United Airlines, have expressed disappointment with BA’s quality issues and delivery delays.

CEO Scott Kirby of United Airlines referred to the Alaska Airlines incident as a tipping point in their plans to acquire the BA’s Max 10 this year as originally intended. Consequently, they are now exploring the option of purchasing aircraft from BA’s competitor, Airbus, to replace the Max 10s they had ordered.

Bottom Line

With its shares down roughly 23% over the past three months, there is no denying that BA is currently going through its worst-ever crisis. The company's future is uncertain as the company’s CEO steps down, and the successor remains undecided.

Meanwhile, BA's recent quarterly results exceeded analyst expectations. The airline company reported fourth-quarter revenue of $22.02 billion, surpassing the $19.98 billion revenue in the prior year quarter and the consensus estimate of $21.08 billion.

During the same quarter, the company reported a non-GAAP core loss per share of $0.47, an improvement from the loss per share of $1.75 in the prior-year quarter and lower than analysts' estimate of $0.79. However, its free cash flow dropped 5.8% from the year-ago value, reaching $2.95 billion.

The company has reaffirmed its financial targets for 2025 and 2026, which include reaching approximately $10 billion in free cash flow and achieving $100 billion in revenue by as early as next year.

Despite exceeding analyst expectations for the fourth quarter, BA’s forthcoming quarterly results could hinder the company’s financial goals due to production delays and major airline customers choosing to procure aircraft from Airbus.

Furthermore, the company’s decision to withhold 2024 guidance during the recent earnings highlights the uncertainty surrounding its commercial airplane deliveries for this year. This uncertainty, ongoing production challenges, leadership shakeup, and customer preference shifts cast a shadow over BA’s prospects.

To that end, investing in BA’s shares might not be wise now. Investors could monitor the company for further developments and wait for clarity on its future direction.

Anticipating Bitcoin's Halving Event and Investment Implications

Posted on by The INO.com Team

The cryptocurrency market remains highly active lately as investors are increasingly interested in new spot bitcoin (BTC) exchange-traded funds ahead of the upcoming bitcoin halving event in April. This event typically generates significant attention and anticipation in the crypto market.

Simultaneously, there’s a growing focus on the global digital asset regulatory environment. Last month, European regulators passed new anti-money laundering legislation, and the U.S. Securities and Exchange Commission (SEC) has initiated actions that could lead to Ethereum (ETH) being classified as a security ahead of a critical May deadline on various spot Ethereum ETF applications.

Historically, the period from February through April has shown strength in bitcoin prices, and investors are optimistic that the crypto rally observed in early 2024 will extend into the second quarter.

The cryptocurrency market has continued its strong upward trend this year, building on the significant gains seen in 2023, when Ethereum surged by 85% and bitcoin by more than 150% in 2023. Heading into April, bitcoin prices are up about 64% year-to-date, and Ethereum prices have rallied more than 51%.

During the first half of March, bitcoin prices surged to reach a new intraday all-time high of $73,750.16. However, the latter part of the month saw bitcoin trading within a broad range of approximately $60,000 to $72,000. By the end of March, bitcoin prices closed at $70,849, marking a monthly gain of 14%.

In contrast, Ethereum prices experienced a more modest increase of 5.8% for the month, ending at $3,611.

Spot Bitcoin ETFs in the Spotlight

Bitcoin’s price surged above $71,000 multiple times last week, and this increase was supported by significant net inflows exceeding $243.4 million into bitcoin exchange-traded funds (ETFs) on Thursday.

Notably, the Ark 21Shares Bitcoin ETF (ARKB) recorded net inflows of $200.7 million last Wednesday alone, making it the third bitcoin ETF to surpass the $200 million mark since the SEC approved the listing and trading of 11 spot bitcoin exchange-traded product (ETP) shares after years of repeated rejections in January.

Before ARKB, BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity Advantage Bitcoin ETF (FBTC) crossed this $200 million mark in a single day.

According to James Wo, founder and CEO of Digital Finance Group, the spot bitcoin ETFs continue to play a central role in the 2024 crypto rally.

“Bitcoin broke past its all-time high in March as the bitcoin ETFs saw a daily net inflow of over $1 billion, an amount higher than the inflow experienced from the launch date. As more participants seek to gain exposure to cryptocurrencies, the bitcoin ETFs provided easier access to this asset class, which fueled the strong demand in March, pulling up the rest of the crypto market with it,” Wo stated.

Bitcoin Halving Event: The Primary Catalyst for a Prolonged Climb in Cryptocurrency’s Value

Bitcoin’s recent surge and its overall value proposition are primarily driven by increasing anticipation surrounding the upcoming “Bitcoin halving” event, scheduled to occur on April 19, 2024. This event is a built-in feature of Bitcoin’s protocol that reduces the rate of bitcoin production, with the block reward expected to decline from 6.25 BTC to 3.125 BTC.

The halving event holds significance on multiple fronts. Firstly, it directly impacts the economics of Bitcoin mining. As the block reward decreases, miners earn fewer Bitcoins, potentially affecting the profitability of mining operations. This could lead some miners to cease operations if mining costs outweigh the rewards, resulting in adjustments to the network’s hash rate and mining difficulty.

Additionally, the halving sparks heightened speculation and interest from investors and traders. Historically, Bitcoin halving events have been linked to bull markets and price surges due to reduced supply and sustained or increased demand. The halving underscores Bitcoin’s deflationary nature and scarcity. With the issuance rate halved, Bitcoin becomes scarcer over time, potentially driving up demand and long-term price appreciation.

Historically, halving events have led to substantial price increases for Bitcoin. For instance, after the 2012 halving, Bitcoin’s price surged from $12 to over $900 within a year. Likewise, following the second halving in 2026, the price climbed from about $600 to $2,500.

Further, the third halving event held in May 2020 saw the price jump from around $8,000 to over $40,000 within a year.

In the past, bitcoin’s price typically showed stability before its halving events, often due to an uptick in supply available on exchanges. However, this time, there’s a notable difference, as pointed out by Austin Arnold, a crypto market analyst and the founder of “Altcoin Daily.”

He added that an unprecedented level of excitement and institutional fear of missing out (FOMO) surrounding Bitcoin, fueled by a quest for inflation-resistant assets, contributes to a potential supply-and-demand shock even before the actual halving occurs.

Arnold further projected a doubling of Bitcoin’s price within a year post-halving, potentially reaching between $100,000 and $150,000, guided by the fundamental principle of supply and demand dynamics.

Bottom Line

Several major cryptocurrencies experienced a rally lately, fueled by various potential catalysts such as significant net inflows into bitcoin ETFs, notable filings for spot Ether ETFs, and anticipation surrounding the upcoming “bitcoin halving” event scheduled on April 19.

The bitcoin halving event, which is the fourth in bitcoin’s history, with prior halvings in 2012, 2016, and 2020, involves cutting miners’ rewards in half to control the introduction of new bitcoins until the maximum limit of 21 million bitcoins is reached. Historically, bitcoin’s price has surged after each halving event, leading investors to speculate on a potential rally next month.

Analysts speculate that the current Bitcoin price of around $66,000 could potentially reach approximately $150,000 post-halving, highlighting the anticipation and impact of this event on Bitcoin’s market dynamics. The halving event brings significant attention to the crypto space, attracting new investors and contributing to increased trading activity.

While Bitcoin halving events have been associated with bull markets and substantial price rallies, past performance does not indicate future results. So, investors should exercise caution and conduct thorough analysis before making investment decisions, as the crypto market is known for its volatility and unpredictability.

Microsoft (MSFT): Analyzing Investor Opportunities Amidst New Generative AI Tools

Posted on by The INO.com Team

The enthusiasm for the transformative potential of generative artificial intelligence (AI) is mounting. Companies from various sectors are actively exploring its applications, be it enhancing worker productivity, facilitating communication with stakeholders, or streamlining operational processes to foster efficiency and growth.

Despite widespread adoption among other C-suite executives, many traditionally cautious CFOs hesitate to embrace generative AI. Concerns over return on investment (ROI) and cost containment persist, hindering their full engagement in leveraging this technology's potential benefits.

According to the CNBC CFO Council survey for the first quarter of 2024, only a third of respondents anticipate increased capital expenditures over the next year. Of this group, merely 7% intend to allocate funds toward new AI capabilities, ranking lower than other investment priorities like market expansion or facility development.

Yet, a suite of specialized tools tailored for CFOs and finance teams is emerging from various business software providers. Microsoft Corporation (MSFT) is at the forefront, launching Microsoft Copilot for Finance. The tool empowers financial professionals within Microsoft 365, offering AI-driven support for critical decision-making processes.

Cory Hrncirik, modern finance lead at MSFT, has emphasized the significance of leveraging generative AI to blend structured and unstructured data sets. He asserts that comparing data from different systems is “something every finance team on the planet does a lot of.”

Furthermore, MSFT’s Copilot drastically reduces the time spent on reconciliation tasks for thousands of financial planning and analysis professionals. Previously, individuals would allocate one or two hours weekly to this process, whereas with Copilot, the task now only demands 10 to 20 minutes.

MSFT’s commitment to advancing business applications through AI-driven solutions underscores its dedication to addressing challenges organizations face. Copilot for Finance represents a significant step forward in empowering finance professionals to navigate complexities and drive success in today’s dynamic business landscape.

Strategic Collaborations and Expansion Avenues

MSFT’s commitment to AI extends beyond individual projects, encompassing strategic collaborations to bolster its AI capabilities. One such venture is the proposed “Stargate” project with OpenAI, involving a $100 billion investment to construct a massive supercomputing cluster supporting advanced AI models.

For perspective, MSFT’s expenditure on building clusters for training OpenAI’s GPT-4 model exceeded several hundred million dollars. OpenAI, in turn, is currently developing a successor to GPT-4, likely named GPT-5, utilizing MSFT’s existing data centers.

In parallel, data security firm Rubrik is eyeing a New York Stock Exchange listing, aiming to raise $500 million to $700 million. Backed by MSFT, which has held a stake in Rubrik since 2021, the IPO underscores the company's interest in expanding its presence in data security.

Moreover, MSFT and NVIDIA Corporation (NVDA) have deepened their collaboration, integrating NVIDIA’s generative AI and Omniverse™ technologies into Microsoft Azure, Azure AI services, Microsoft Fabric, and Microsoft 365. The partnership aims to provide customers with comprehensive platforms and tools across the Copilot stack, facilitating breakthroughs in AI capabilities.

From introducing the GB200 Grace Blackwell processor to Azure to enhancing integrations between DGX Cloud and Microsoft Fabric, these initiatives underscore MSFT's commitment to empowering customers with radical AI solutions spanning hardware and software domains.

Upbeat Financial Results Serve as Evidence

In the fiscal 2024 second-quarter earnings release, MSFT reported a remarkable 33% surge in profit for the October-December quarter, propelled by substantial investments in artificial intelligence. The company's focus on AI within its cloud-computing unit drove significant growth, surpassing Wall Street expectations.

MSFT’s earnings per share for the quarter came in at $2.93, beating the consensus estimate of $2.77. Its revenue stood at $62.02 billion, surpassing analyst expectations of $61.13 billion and up 17.6% year-over-year.

In addition, the company's cloud-centric segment witnessed robust growth, with revenue climbing 20% year-over-year to $25.88 billion. Office Suite and LinkedIn revenue grew by 13% year-over-year to $19.25 billion, and the personal computing business, including Xbox, surged by 19% to $16.89 billion, notably bolstered by the addition of Activision Blizzard.

Jeremy Goldman, director of briefings at Insider Intelligence, has hailed MSFT as a frontrunner in the AI realm, predicting its potential to expand into digital advertising. His firm anticipates the company's worldwide ad revenues to reach $14.93 billion, reflecting a 12% increase this year.

Looking ahead, Wall Street expects MSFT's revenue to increase 15.3% year-over-year to $244.34 billion for the fiscal year ending June 2024. Moreover, the company's EPS is estimated to rise 19.2% from the previous year to $11.69. Furthermore, MSFT has topped the consensus revenue and EPS estimates in all four trailing quarters, which is impressive.

Bottom Line

With staggering market projections, artificial intelligence is poised to become the paramount Next Big Thing. Statista forecasts the AI market to hit approximately $305 billion this year and nearly $740 billion by 2030, although some skeptics argue it’s mere hype.

Notably, Wall Street analysts pinpoint MSFT as a major beneficiary of the AI surge. CEO Satya Nadella emphasized the company’s wholehearted embrace of AI, citing its integration across the entire data stack and its substantial productivity enhancements.

Wedbush tech analyst Dan Ives has raised MSFT’s price target to $500 from $475, citing the transformative potential of Copilot and the accelerating adoption of AI technology. He anticipates a significant increase in Azure cloud deal flow as AI applications proliferate throughout the enterprise landscape.

Ives predicts that 70% of MSFT's enterprise base will utilize AI-driven functionality within three years, fundamentally altering the company's trajectory. He estimates Copilot alone could contribute $25-30 billion to the company’s revenue by 2025, underscoring its pivotal role in its growth.

Concurrently, Bank of America Corporation (BAC) maintains a bullish outlook on MSFT, labeling it a “top pick” with a buy rating and a $480 stock price target. Also, Jefferies Financial Group Inc. (JEF) analyst Brent Thill echoes this sentiment, raising the price target to $550 and affirming MSFT as the leading AI player, poised to capitalize on transformative opportunities in infrastructure and applications.

Given these factors, MSFT emerges as a compelling investment choice with the potential for substantial returns amid the burgeoning AI landscape.