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Tesla (TSLA) stock is staying strong in trading Thursday after the company delivered earnings that largely surprised Wall Street and Elon Musk delivered a new round of optimistic forecasts.

The automaker reported improved operating profit margins, automotive gross profit margins excluding the benefits of regulatory credits, and better earnings per share than analysts had expected for the July to September quarter. It also reported better than expected net income and its lowest cost per goods sold ever, at about $35,100 per vehicle.

It’s the first time in seven quarters — that’s almost two years — that Tesla has grown its earnings.

Cannacord Genuity analyst George Gianarikas reiterated a buy rating and raised his price target to $278 per share from $254 per share. A number of analysts across firms like KGI Securities and Goldman Sachs (GS) likewise raised their price targets. J.P. Morgan (JPM) analysts maintained an underweight rating and raised their price target to $135 per share from $130 per share.

“There is more wood to chop for Tesla and this recovery story still has some challenges ahead to convince the Street that 2025 will be a true inflection point year,” Wedbush Securities analyst Dan Ives said in a note Thursday, adding that the Tesla has taken its “first major step” to recovery. Wedbush maintained its $300 per share price target and an outperform rating.

Tesla stock was down roughly 2% when the market closed on Wednesday. As of early Thursday morning, shares have gained more than 13%, returning the stock to about here it was before Tesla’s “underwhelming” robotaxi product demonstration left Wall Street with more questions than answers.

On Wednesday, Musk gave investors a lot to look forward to, assuming that his promises and “best guess” estimates ring true. He reiterated that the company aims to begin scaling production of its Cybercab robotaxis in 2026, with plans to eventual make between 2 million and 4 million units per year; that’s more units than Tesla sells electric vehicles.

“That will be in more than one factory, but I think it’s at least 2 million units a year, maybe 4 million ultimately,” Musk said, adding that he’s talking about his “best guesses.”

Musk also said Tesla expects to begin offering rideshare services next year in at least two states, California and Texas, where he also plans to get regulatory approval for “fully autonomous unsupervised” Full Self-Driving (FSD). Many valuations of Tesla’s current and future stock price account for a planned robotaxi network, which Musk has called a “combination of Airbnb (ABNB) and Uber (UBER).”

Tesla has been operating its own rideshare network for employees at its facilities in California’s Bay Area using current models and a driver at the wheel, executives said Wednesday. Palo Alto, California, is in talks to use Tesla’s newly-unveiled robotaxi in its rideshare program, but the company doesn’t plan to begin making those cars until 2026.

Tesla has, so far, sold more than 1.29 million electric vehicles in 2024, including 462,890 units delivered between July and September. That doesn’t give the company much wiggle room to reach or beat 1.8 million sales — its 2023 record — by the end of the year. But the automaker said it expects “slight growth” in deliveries this year, which would require fourth-quarter sales of more than 516,000 units.

Musk said his “best guess” is for deliveries to reach 20% to 30% growth next year, citing Tesla’s plans to begin selling more affordable models in early 2024.

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A little over two months ago, on Aug. 14, investors received what can arguably be described as the most important data release of the third quarter — and I’m not talking about any inflation report.

No later than 45 calendar days following the end to a quarter, institutional investors with at least $100 million in assets under management (AUM) are required to file Form 13F with the Securities and Exchange Commission. This filing tells investors which stocks, exchange-traded funds (ETFs), and occasionally options, Wall Street’s top money managers purchased and sold in the latest quarter (in this case, the June-ended quarter).

As you might imagine, professional and everyday investors are particularly interested in seeing how Wall Street’s smartest asset managers are approaching artificial intelligence (AI) stocks. AI has been the hottest trend over the last two years, with the analysts at PwC expecting this technology to provide a $15.7 trillion boost to the global economy by 2030.

Interestingly, 13Fs from the second quarter show that billionaire investors, including Citadel’s Ken Griffin, have a mixed view of the companies powering the AI revolution.

Since its inception in 1990, Citadel’s hedge fund has been more successful generating investment gains than any other hedge fund. It’s why investors wisely pay attention to what Griffin and his team are buying and selling.

During the June-ended quarter, Griffin oversaw the disposition of a sizable percentage of his fund’s stake in market-leading AI stock Nvidia (NASDAQ: NVDA), but chose pile into another AI company that appears to have a virtually insurmountable moat.

Let me preface this discussion by pointing out that Citadel is an active hedge fund with countless positions, and it often hedges its common stock holdings with put and/or call options. With this being said, perhaps no sell-side activity stood out more during the second quarter than Griffin and his crew shedding 79% of their fund’s stake in Nvidia.

Since 2023 began, Nvidia’s stock has gained 844%, as of the closing bell on Oct. 18, 2024, and tacked on close to $3 trillion in market cap. These are never-before-seen gains from a market-leading business, which suggests that profit-taking played at least some role in Citadel reducing its sizable position. But there’s a reasonable chance this selling activity is about more than benign profit-taking.

To start with, competition is coming at Nvidia from all angles. Rival chipmakers are developing and ramping production of AI-graphics processing units (GPUs) designed to complete with Nvidia’s ultra-popular H100 GPU and next-generation Blackwell GPU architecture. Although Nvidia’s hardware shouldn’t have any trouble maintaining a computing advantage in AI-accelerated data centers, competing chips are cheaper and may be easier for businesses to get their hands on.

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To build on this point, competition from within can be even more dangerous. All four of Nvidia’s top customers by net sales are developing AI-GPUs for use in their data centers. Nvidia’s hardware maintaining computing advantages may not be enough when compared to the cost advantages of internally developed chips. This suggests Nvidia could lose out on precious data center real estate down the road.

Ken Griffin and his team at Citadel may also be taking their cues from Nvidia’s management team. While CEO Jensen Huang has been incredibly optimistic about his company’s future and the successor Blackwell chip, it’s coming up on four years since the last time any company insider purchased shares of their stock on the open market. A barrage of insider selling paints a picture that implies Nvidia’s stock has gotten ahead of itself.

Lastly, Griffin may be letting history act as a guide. In spite of the buzz surrounding the rise of AI, no game-changing innovation or technology has avoided an early stage bubble in 30 years. Professional and retail investors consistently overestimate the adoption and utility of new technologies, which eventually leads to disappointment and a bubble-bursting event. Since no stock has benefited more than Nvidia from the AI revolution, it would, presumably, be hit the hardest if the AI bubble bursts.

But while billionaire Ken Griffin was meaningfully cutting back his fund’s stake in Nvidia, he was buying into another AI company, with well-defined competitive advantages, hand over fist.

The high-flying artificial intelligence stock that caught the attention of Citadel’s brightest investors, including Griffin, is none other than cloud-based data-mining specialist Palantir Technologies (NYSE: PLTR). Citadel’s hedge fund increased its stake in the company by roughly 1,140% during the second quarter.

The best answer to “why Palantir?” is because it’s irreplaceable at scale.

Palantir’s two core operating segments are Gotham and Foundry. Gotham is an AI-driven platform that helps government entities collect data and plan various missions. This includes the autonomous tasking of satellites and drones.

Meanwhile, Foundry is Palantir’s AI and machine learning-inspired platform that’s geared toward businesses. It’s tasked with making sense of large sums of data and helps businesses streamline their operations. While there are companies that handle bits and pieces of what Gotham and/or Foundry bring to the table, nothing else is close to the scale of Palantir. Wall Street tends to reward uniqueness, irreplaceability, and sustainable moats.

Much of Palantir’s growth has been fueled by Gotham. Many of the contracts Palantir secures from government agencies last multiple years, leading to highly predictable operating cash flow. But Gotham’s long-term growth potential is also reasonably limited given that Palantir will only allow the U.S. and its allies access.

Palantir’s future is very much reliant on the success of Foundry. Although it’s still very early in its expansion, the company’s commercial segment appears to be finding its footing. Enterprise customer count jumped 55% to 467 from the prior-year period, as of June 30, with sales from this segment climbing 33%. Considering the addressable market for Foundry has no glass ceiling like Gotham, it has the potential to become a considerably larger profit driver in the latter-half of this decade.

The one notable drawback with Palantir is its valuation. While Citadel got in well ahead of its recent run-up, it’s a tough task trying to validate Palantir’s forward price-to-earnings (P/E) ratio of 100! Though it looks to have all the tools and intangibles needed for success over the long run, Palantir’s stock may find the short-term sledding difficult.

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $879,935!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

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Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.

Billionaire Ken Griffin Sold 79% of Citadel’s Stake in Nvidia and Is Piling Into Another Artificial Intelligence (AI) Stock With a Competitive Moat was originally published by The Motley Fool

Dividend stocks with substantial yields tend to outperform when the Federal Reserve begins lowering interest rates. These moves reflect portfolio managers shifting capital away from bonds and into stable, income-producing equities.

Among companies paying dividends above 4%, five stand out for their market strength and sustainable payouts. With yields ranging from 4.5% to 8.7%, these businesses have the cash flow and competitive positions to maintain their attractive dividends. Read on to find out more about these five top dividend payers.

British American Tobacco (NYSE: BTI) is a global tobacco powerhouse, operating in over 180 markets worldwide. The company rewards shareholders with an exceptional 8.71% dividend yield, prudently supported by a 59.1% payout ratio.

Despite a robust 19.1% gain year to date, British American Tobacco shares remain remarkably affordable at just 7.29 times forward earnings. The company’s strategic approach is twofold: maximizing profitability from traditional cigarettes through strong pricing power, while aggressively expanding into reduced-risk, next-generation products to ensure long-term sustainability.

With a commanding presence in emerging markets, the company is well-positioned for future growth. Its substantial investments in vapor and heated tobacco products underscore management’s commitment to innovation and sustainable business practices in an evolving industry landscape.

Altria Group (NYSE: MO) dominates the U.S. tobacco market through its iconic Marlboro brand. Offering pure-play exposure to American tobacco, the company boasts an attractive 8.32% dividend yield. Even after a meteoric 24.1% rise year to date, Altria shares remain a compelling value at just 9.48 times forward earnings.

With Marlboro commanding over a 40% market share, Altria Group wields exceptional pricing power to counter volume declines. The company’s strategic $2.75 billion acquisition of NJOY in 2023 — one of few FDA-approved e-cigarette manufacturers — demonstrates its commitment to expanding beyond traditional tobacco.

This proven business model combines premium pricing with operational efficiency to maintain robust profit margins. While U.S. cigarette volumes decline, Altria’s sophisticated pricing strategy and targeted investments in smokeless alternatives position the company for sustained profitability.

Pfizer (NYSE: PFE), a global pharmaceutical leader, produces a broad range of medicines and vaccines. The company offers investors an attractive 5.81% dividend yield, while shares trade at a modest 10.3 times forward earnings.

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As a pharmaceutical powerhouse, Pfizer combines a diverse drug portfolio with a robust development pipeline, creating multiple pathways for future growth. While the current 443% payout ratio appears elevated due to post-pandemic revenue adjustments, the company’s strong cash flow and deep pipeline reinforce dividend sustainability.

Strategic acquisitions have bolstered Pfizer’s presence in high-value markets, particularly in rare diseases and oncology. Backed by substantial research and development investments, the company continues to advance promising therapies across multiple treatment areas.

AT&T (NYSE: T) is a telecommunications leader, serving millions of wireless subscribers and broadband customers across the United States. The company has demonstrated its commitment to strategic transformation through key moves like the $7.6 billion DirecTV stake sale to TPG.

AT&T shares have risen by a whopping 28.1% year to date. Still, its shares offer a healthy 5.08% dividend yield with a sustainable payout ratio of 63.7%. Trading at 9.53 times forward earnings, AT&T represents a compelling value, compared to both industry peers and the broader S&P 500.

The company’s growth strategy centers on aggressive 5G network expansion, positioning AT&T to capitalize on next-generation wireless opportunities. Additionally, its strategic fiber deployment targets high-potential markets with minimal competition, enhancing potential returns on investment.

Philip Morris International (NYSE: PM) markets Marlboro and other cigarette brands exclusively in international markets. The stock offers investors a 4.54% dividend yield and trades at a forward price-to-earnings ratio (P/E) of 17.4. The one drawback is the tobacco giant does sport an elevated payout ratio of 92%.

The company’s broad geographic footprint provides natural diversification across markets with different consumption patterns. Since acquiring U.S. rights to iQOS in 2022, the company has expanded its presence in the U.S., the world’s largest market for smoke-free products.

The company’s strategic pivot toward smoke-free alternatives has shown strong momentum in key regions, while its established presence in emerging economies helps insulate the business from localized economic pressures.

Before you buy stock in British American Tobacco, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and British American Tobacco wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $879,935!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of October 21, 2024

George Budwell has positions in AT&T, Pfizer, and Philip Morris International. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends British American Tobacco P.l.c. and Philip Morris International and recommends the following options: long January 2026 $40 calls on British American Tobacco and short January 2026 $40 puts on British American Tobacco. The Motley Fool has a disclosure policy.

5 High-Yield Dividend Stocks to Buy Without Hesitation was originally published by The Motley Fool

Investing.com — Quantumscape Corp (NYSE:QS) saw its shares soar more than 17% in premarket trading Thursday after the company reported Q3 results and offered an update on battery cell testing for automotive customers.

For Q3, the company posted a loss per share of $0.23, matching analyst expectations.

The battery maker reported an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $71.6 million, which was slightly higher than the anticipated $70.5 million loss.

The San Jose-based battery developer also provided guidance, indicating it is on track to record an adjusted EBITDA loss between $280 million and $300 million for the year. This forecast aligns with the company’s original projections, although it tends toward the upper end of the range.

Most notably, QuantumScape revealed it has started the production of low volumes of its first B-sample cells, which are now being shipped for testing by automotive customers. Achieving this milestone was highlighted as the company’s most critical goal for 2024.

The B-samples of QuantumScape’s initial product, the QSE-5, have demonstrated an energy density exceeding 800 watt-hours per liter (Wh/L) and a fast-charging capability that allows charging from 10% to 80% in less than 15 minutes.

The company stated that, to the best of its knowledge, these cells are the first anode-free solid-state lithium-metal cells to be manufactured for use in next-generation automotive applications.

“Now that the product design and performance profile is set, and we have established a baseline process, we will continue to ship samples, get customer feedback, and iterate to refine our processes,” said QuantumScape.

It also noted that it has to notably improve on metrics such as cell reliability, yield and equipment productivity, among others.

“We need higher volumes to achieve these targets, and that requires bringing our advanced Cobra separator process into production, which we continue to target for 2025,” stated the company.

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