Day: September 27, 2024

Artificial intelligence (AI) platforms let businesses develop and deploy machine learning models across use cases like content generation, predictive insights, and decision-making, and demand is increasing rapidly. “AI platforms will be the fastest growing technology in the years to come,” according to Andrea Minonne, research manager at the International Data Corporation (IDC).

IDC estimates AI-platform spending will compound at 51% annually through 2028. That bodes well for Palantir Technologies (NYSE: PLTR) and Amazon (NASDAQ: AMZN), but Wall Street analysts expect the stocks to move in opposite directions over the next year.

• Palantir has a median price target of $27 per share, based on the estimates of 24 analysts. That implies a 27% downside from the current share price of $37.

• Amazon has a median price target of $220 per share, based on the estimates of 64 analysts. That implies a 15% upside from its current share price of $191.

Here’s what investors should know about these AI stocks.

1. Palantir

Palantir specializes in data analytics software. Its primary platforms, Foundry and Gotham, let businesses integrate data, develop machine learning models, and interact with those digital assets through prebuilt and custom applications that improve decision-making. AIP (Artificial Intelligence Platform) enhances Foundry and Gotham by adding support for large language models and generative artificial intelligence.

Palantir’s introduction of AIP last year captured the attention of analysts, and the company has been praised for its technological prowess. In August, Forrest Research recognized the company’s leadership in AI and machine learning platforms. And in September, Dresner Advisory Services awarded Palantir the No. 1 spot in its AI, data science, and machine learning market study.

Palantir reported strong financial results in the second quarter. Revenue increased 27% to $678 million, and non-GAAP earnings jumped 80% to $0.09 per diluted share. Chief Executive Officer (CEO) Alex Karp attributed the strong performance to an “unrelenting wave of demand from customers for artificial intelligence systems that go beyond merely performative and academic.” In other words, businesses want products that make AI useful in real-world situations, and Palantir provides that with AIP.

The problem with Palantir is its valuation. Wall Street expects adjusted earnings to grow at 21% annually through 2026. That makes the current valuation of 115 times adjusted earnings look outrageously expensive.

Shares charged higher after the second-quarter report, and the stock continued climbing when Palantir was added the S&P 500 this month. But at the stock’s current price, investors should avoid the stock and consider trimming their positions.

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2. Amazon

Amazon has a strong presence in e-commerce, digital advertising, and cloud computing, and the company is gaining share across all three markets. According to eMarketer, the company will account for 40.4% of online retail sales in the U.S. this year, up from 39.6% last year. Amazon will also capture 13.9% of domestic digital ad spending this year, up from 12.5% last year, due to its dominance in the quickly growing retail media market.

Meanwhile, Amazon Web Services (AWS) accounted for 32% of cloud infrastructure and platform services spending in the second quarter, up from 31% in the previous quarter, according to Synergy Research Group. And chief information officers (CIOs) recently surveyed by Morgan Stanley selected Microsoft Azure and AWS as the public clouds most likely to gain share in generative AI over the next three years. For AWS, that hints at strong demand for its AI platforms SageMaker and Bedrock.

Amazon reported mixed results in the second quarter. Total revenue increased 10% to $148 billion, falling short of the $148.6 billion analysts forecasted. The reason for the shortfall was light advertising revenue. But GAAP earnings still jumped 94% to $1.26 per diluted share, crushing the consensus estimate of $1.03 per diluted share. However, the stock declined sharply when management provided underwhelming guidance, but patient investors have good reason to be optimistic.

Three tailwinds should make Amazon more profitable in the next few years. First, the company is regionalizing its fulfillment network to streamline logistics and lower costs. Second, revenue is growing more quickly in the high-margin cloud and advertising segments, as compared to the low-margin retail segment. Third, cooling inflation should encourage consumer and business spending.

With that in mind, Wall Street expects Amazon’s earnings to grow at 25% annually through 2026. That makes the current valuation of 46 times earnings seem reasonable, which lends credit to the median price target of $220 per share. More importantly, I think investors who buy a position in Amazon today will be very happy with their decision in five years.

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Former President Donald Trump has recently ramped up his criticism of President Biden and Vice President Kamala Harris, claiming inflation has caused severe financial strain for American families.

During a Sept. 13 rally in Las Vegas, Trump asserted that “the worst inflation in American history” has cost the average American household a whopping $28,000. He repeated the figure at rallies in Wisconsin, Pennsylvania and Arizona, raising eyebrows and fueling debate.

But is Trump’s claim accurate? Economists and analysts have weighed in, providing some clarity on the matter.

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It’s true that under President Biden, inflation reached its highest level in decades, peaking at 9.1% in June 2022. However, inflation has since moderated, falling to 2.5% in August 2024, the lowest rate in three years. While the rate of price increases has slowed, prices themselves haven’t come down.

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As CBS News reports, the cost of household essentials remains elevated compared to pre-pandemic times.

So, where did Trump get that figure of $28,000? According to economists, the number holds some truth, but there’s more to the story. It aligns closely with an estimate from Republicans on Congress’ Joint Economic Committee. Based on data from the Bureau of Economic Analysis, their tracker follows personal consumption expenditures at the state level.

Since January 2021, the study monitored the monthly expenses of an average American household across all states. By July 2024, the cumulative increase in household costs, fueled by inflation, reached an average of $27,950 for households in all 50 states and Washington, D.C.

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These numbers reflect cumulative cost increases over three and a half years. But it’s important to note that while expenses have surged, so have incomes. Many households have seen wage growth partially offset inflation’s sting.

Economists interviewed by CBS News confirmed that the $28,000 estimate is mostly accurate, but they caution against focusing solely on price hikes without considering income growth.

There’s no denying that inflation has made life more expensive for most Americans. But how does the Biden administration compare to the Trump era in this regard? According to government data, prices rose under Trump too, though to a lesser extent.

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During his four years in office, the Consumer Price Index (CPI) for all items rose by about 8%. By contrast, consumer prices have surged by roughly 20% since Biden took office. The difference is stark, but so are the circumstances each president faced. Trump’s administration benefited from low inflation and strong job growth for much of his term.

However, the COVID-19 pandemic disrupted the economy in his final year. When Biden took office, the economy was recovering, with inflation spiking due to supply chain disruptions and surging demand.

Many countries worldwide experienced similar inflation spikes during this period, with some exceeding U.S. levels. Inflation is a normal part of a growing economy and the Federal Reserve aims to keep it around 2% annually. Deflation or falling prices, is typically viewed as harmful by economists.

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This article Trump Claims Inflation Has Cost American Households $28,000 – Is He Right? Here’s What Financial Experts And Analysts Are Saying originally appeared on Benzinga.com

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Key Takeaways

• Caterpillar shares hit a record high Thursday and are up more than 30% this year.

• Reports of fresh Chinese stimulus measures drove a broad market rally.

• Caterpillar stands to benefit from a rebound in China’s housing market, which has struggled in recent years.

Caterpillar (CAT) shares rose more than 3% to a record high Thursday as reports of fresh Chinese stimulus efforts drove a wider market rally.

The Chinese government said Thursday that it would institute “necessary fiscal expenditures” and stabilize the country’s struggling real estate sector, according to the state-run Xinhua News Agency. Bloomberg also reported that Beijing is planning to inject around $140 billion into its largest state lenders to prop up the economy.

Caterpillar shares had advanced 4% Tuesday as China laid out a massive monetary stimulus package to boost the economy.

Caterpillar Likely Would Benefit From Rebound in Chinese Housing Market

Caterpillar stands to benefit from expansion in China’s housing market. The construction equipment company is considered a bellwether stock as a proxy for domestic and global economic expansion or contraction.

Shares of Caterpillar recently were 3.2% higher at $390.49 after earlier hitting record $397.22. The stock is up about 32% year-to-date.

Last month, the company reported second lower second-quarter revenue than analysts had anticipated but slightly better-than-expected profit.

Read the original article on Investopedia.

• A surfer who never graduated from college has made billions in the biotech industry.

• Summit Therapeutics CEO Bob Duggan is worth about $16 billion after a 1,100% stock gain in 12 months.

• Duggan, 80, ranks 129th on the global rich list and is the 23rd biggest wealth gainer this year.

A surfer without a college degree has gone from baking cookies to building robots, minting billions in biotech, and ranking among the world’s richest people.

Bob Duggan, 80, is the co-CEO and chairman of Summit Therapeutics, a cancer drug developer. He has tripled his net worth to $15.9 billion this year, making him the 23rd biggest wealth gainer of 2024 and the 129th richest person on the planet, per the Bloomberg Billionaires Index as of Thursday.

His net worth has soared thanks to his more than 550 million shares of Summit, a roughly 75% stake. The company’s stock price has surged by over 1,100% in the past 12 months, lifting its market value to over $16 billion.

Summit stock jumped from about $12 on September 6 to a record high of $32 on September 13, but has retreated to around $23 since then. It spiked after the company released late-stage trial data showing one of its drugs, Ivonescimab, performed better than Merck’s blockbuster Keytruda medication in some lung cancer patients.

Duggan stands out in the biotech industry, where most bosses rely on their advanced degrees to navigate complex, jargon-heavy medical research.

He spent six years taking classes at UC Santa Barbara in the 1960s, but never intended to get a degree as he was focused on finding ways to make money, he recently told The Wall Street Journal. Those included investing in Ethernet companies.

Duggan opened a bakery called Cookie Muncher’s Paradise in 1976 with the help of his then-brother-in-law. They converted it into a luxury sandwich chain, grew it to 16 locations, and then sold it for about $6 million in 1987, according to Bloomberg.

“People laugh that I was in the cookie business. But you know what? It was the bestselling chocolate-chip cookie ever,” he told WSJ. “You know why? Because we engineered it. We engineered it specifically so that it would be soft, so that when you pulled it away, it was like a pizza.”

Duggan became the CEO and chairman of Computer Motion, a robotic surgery company, in 1990. Intuitive Surgical acquired it for $67 million in stock in 2003, allowing Duggan to cash out his stake for over $150 million eventually.

Spurred on by his son’s death from brain cancer, Duggan started building a stake in Pharmacyclics, a maker of cancer drugs, in 2004. Pharmaceutical titan AbbVie bought the business for $21 billion in cash and stock in 2015, netting Duggan more than $3 billion, per Bloomberg.

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He joined Summit’s board in 2019 and became CEO and chairman in 2020, making cancer drugs his principal focus. He appears to have caught lightning twice in the brutal biotech space, where many companies pour tons of money and years of work into medications that turn out to be duds.

Duggan is also a megadonor to the Church of Scientology, and has backed himself to find and bet on more winning businesses as the head of his own venture capital firm, Duggan Investments.

Read the original article on Business Insider