Silicon Valley produces a lot of winners; however, I believe investors should be careful with both of these IPOs due to bubble-like valuations, accelerating net losses, and a lack of geographic expansion opportunities. Yet, another concern is the liquidity event the large cap IPO provides, and the level of PR that can be bought leading up to the IPO, which will likely focus on the growing sales…
AI may seem like an auxiliary technology to how we live our daily lives today, however, it will soon be the primary driver across the tech industry. PricewaterhouseCoopers estimates the world economy will reach an additional 15.7 trillion in value by 2030 due to artificial intelligence. To put this into perspective, the top 5 technology companies today have a combined value of about $4 trillion, which includes Apple, Amazon, Microsoft, Google and Facebook. Over the next decade, AI will drive a market 5x the size of tech’s current global spend. Although this growth is exciting on many levels, the panelists at MWC 2019 voiced concerns about the handling of inherent biases that comes from data, as clearly discrimination by age, race, gender, education or other factors within audience segmentation is counterproductive to the advancement of society that AI promises.
The financing firm Greensill puts the total cost for 5G at $2.7 trillion through the end of 2020. The issue is that it’ll take a few years to see any returns, which will put networks in the red until applications catch up. This, of course, is the fine print to 5G that the lights, camera and action of the booths at MWC didn’t portray. In fact, there was a panel where Mike Fries, the CEO of Liberty Global, pointed out that carriers in Europe have not recouped costs on 4G yet. “You’ve had 10 straight years of declining mobile revenues in Europe with the biggest issue being price,’ he said.
Facebook has financial statements that Wall Street dreams are made of. Profit margins are at 40 percent, free cash flow outperforms due to low capex, and annual growth exceeds 20 percent year-over-year. In fact, FB posted 35 percent growth this past year with lots of runway to go. Meanwhile many of its FAANG peers struggle with high capex (Netflix) and diminishing growth (Apple).
To put it simply, Facebook’s cash flow and profit margins are not only some of the best in the S&P 500, but the best in the world. The ad dollar machine has incredible inertia and advertisers simply can’t turn away. If you are looking at the income statements, then you have every reason to go all-in on this company.
Hybrid is what will drive near future adoption for IaaS. This means security is still the dominant concern while data accuracy and productivity are the primary benefits to IaaS. Therefore, small and mid-cap companies that assist with either of these can benefit from IaaS growth. Below are a few of the more popular stocks in the cloud space. Although it is my belief some of these are overbought, and will have to prove themselves if we do go through a bear market, it most certainly doesn’t hurt to have them on the radar and to look for the right entry point.
On a micro-level, mobile is hitting saturation, social media faces privacy regulations, chip makers are getting hurt in the trade war, and meanwhile, 5G, artificial intelligence, and autonomous vehicles are too nascent to see returns in the near term. This is one reason I continue to hammer on IaaS as a safe, secular bet. Companies are going through a major transition right now by transferring work loads into the cloud.
Nvidia and Intel had a different tone at CES this year in regards to autonomous vehicles. Nvidia’s launch of DRIVE AutoPilot is a smart strategy to boost sales in the short term while the AV future of Level 3 or Level 4 sorts itself out. The Mercedes CLA class is another great example of a strong Level 2 automation strategy. Intel is clearly betting on China, especially Baidu, although China is not …
To experience CES this year was to experience the sensation of exiting a large football stadium. You essentially walk in a continuous herd of over 180,000 people. There were many noteworthy displays and freebies, as long as you don’t mind standing in line for two hours or having hundreds of people blocking your view. (The only line I stood in was for Starbucks). I’m also not one for flying taxis or the never-ending release of new television screens. At this point, if you buy an 8K television, it will take years for content producers to catch up to 8K content…
In 2019, the biggest cloud customer in the world will be the United States Department of Defense. The DoD is currently reviewing bids to award a single cloud provider a multi-year contract. Obviously, this isn’t your typical enterprise IT department, transferring from on-premise servers, or a startup who needs the flexibility of cloud infrastructure to scale. The program is called the Joint Enterprise Defense Initiative, or JEDI, and its purpose is to move the DoD’s massive computing systems into the cloud. This one contract is worth $10 billion, or 25% of the current market, which currently stands at $40 billion…
The cloud infrastructure market is expected to reach $83.5 billion by 2021, up from $40.8 billion in 2018. Amazon Web Services was launched in 2006, which means it took twelve years for the infrastructure-as-a-service (IaaS) market to reach $40 billion – but will take only three years for the next $40 billion to accumulate. Therefore, the investment window for cloud infrastructure stocks is far from over. The IaaS segment is currently Amazon’s most profitable revenue stream comprising 55% of its quarterly operating profit, and is also the top growth-driver for Microsoft at 89%. Considering these are two of the three…
This week, General Motors Company cut more than 14,000 salaried staff and factory workers with plans to close seven factories worldwide in what Bloomberg calls a “sweeping realignment to prepare for a future of electric and self-driving vehicles.” Unfortunately for GM, and their employees, the future of autonomous vehicles is much farther off than what the company represents. Investors in GM stock should be cautious, and realistic, as to when new revenue streams will occur, as cutting costs, even to the tune of a net savings of $4.5 billion, might not be enough to wait out the innovation cycle. In…
Tech stocks are getting slammed right now, and Nvidia may be one of Wall Street’s biggest losers in the sell-off that began last month and continued into this week. Nvidia’s stock has seen a 30-day high of $292 and a whiplash low of $176 – equaling a 40% plunge in the matter of four weeks. Today, it stands at $197.60. Economic indicators and earnings from tech companies have not exactly warranted this reaction from the market. Fears the semi-conductor industry is slowing down based off Advanced Micro Devices earnings report were negated when Intel reported strong Q3 earnings. And while…
Roku’s earnings report for Q3 is scheduled on a potentially volatile trading day depending on how the broader markets react to the mid-term elections. The uncertainty around this outcome, along with rising rates, geopolitical trade uncertainty, and a host of companies tempering their Q4 outlook has caused a style rotation, which has pummeled tech stocks. Regardless, Roku is a mid-cap growth stock in the tech sector that will continually prove itself against headwinds as the company is poised to become one of the most opportunistic growth stories in the market by 2023. The reason for this is simple: connected TV…
Summary: According to Q3 earnings calls, Spotify may seek to broker user data in order to keep average revenue per user afloat. Known as programmatic advertising, this method of monetizing data to supplement music revenue may be Spotify’s only hope to stave off competitors who nip at the heels of the music-streaming app Portions of this article were originally published September 27th, 2018 under 8 Reasons Spotify will be a Sell Recommendation by 2019 at $184 per share. This analysis has been updated to include the recent partnership with Google and programmatic offering Ad Studio. Half Full or Half Empty? -6%…
Facebook’s earnings call today may be the most anticipated call of Q3. The stock has tumbled since the last quarterly earnings call from a high of $217 in July to a low of $142. Three months ago, Street analysts did not think this was possible – and many still have price targets at $200. I believe bullish financial analysts are distracted by Facebook’s security costs, news feed fatigue and Instagram while underestimating the most important number on Facebook’s earnings call tomorrow –user growth rate. Background on Facebook’s User Growth Trajectory Facebook’s rampant growth from 2004-2017 was due to a viral…
Last month, Autonomous Vehicles fell into the “trough of disillusionment,” which is the downward slope that analyst firm Gartner publishes to show the hype cycle for certain technologies. You can think of this as “winter is coming” for tech products – a time when all of the buzz and excitement finally meets reality (note: artificial intelligence winter is a well-documented thing). The reality for autonomous vehicles includes regulations, production cycles, and delays in implementation for what is an extraordinarily difficult problem to solve – how to get machines to respond like humans at crucial moments. This gap between investor expectations…
It’s understandable if you missed the headlines that Apple may buy Tesla. That piece of speculative news, like most news about Tesla, has been overshadowed by the PR storm that surrounds the CEO’s behavior rather than based on the technology behind the product. Here’s some background information for those who missed it. Simultaneously with the CEO’s investigation for violation SEC law 10b-5, rumors began to circulate that Apple may buy Tesla. Some of these rumors were started by Ross Gerber, a Tesla investor, while others sourced the VC firm Loup Ventures, and the gossip is still being echoed a month…
Bandwagons are easy to jump on but it can be hard to decide when it’s time to get off, especially considering Spotify stock has famous hedge funds like Soros Fund Management, Philippe Laffont of Coatue Management, and Louis Bacon’s Capital Management holding sizeable stakes. Since its IPO in April, Spotify has seen an $8 billion rally in market value for an all-time high market cap of $34 billion following Q2 earnings. The bull storyline is that Spotify is the leader in streaming music with nearly 40% of market share in 2017 – which is double what Apple Music holds and…
Roku’s stock (ROKU) is getting a lot of attention after it reported stellar second-quarter results due to 57% year-over-year revenue growth to $156.8 million beating the analyst forecast of $141 million. Compare this to 37% year-over-year revenue growth in Q1. However, as I stated in my Q1 article, the platform revenue is where Roku will continue to see a majority of the gains. The video streaming platform revenue was up 96% during the period to $90.3 million with player revenue up 24% to $66.5 million. Some of the analysis below is taken from an article I wrote last quarter on Seeking Alpha. The…
This is a crucial time to point out to investors that my predictions were correct. Last April, I published an in-depth analysis on Seeking Alpha along with predictions for Facebook (FB) stock. The analysis urged readers to ignore post-Cambridge Analytica hype as Facebook’s quarterly earnings would miss as a result of GDPR. Specifically, I stated the culprit would be revenue and data sources outside of the Facebook “family of apps.” However, with this article, I’d like to explore this point even further and explain with granularity why the issues have only begun and what Facebook isn’t telling you (source for Facebook…
To summarize, the $5 Billion Antitrust Fine on Google is due to the following issues: Google has required manufacturers to pre-install the Google Search app and browser app (Chrome), as a condition for licensing Google’s app store (the Play Store); Google made payments to certain large manufacturers and mobile network operators on condition that they exclusively pre-installed the Google Search app on their devices; and Google has prevented manufacturers wishing to pre-install Google apps from selling even a single smart mobile device running on alternative versions of Android that were not approved by Google (so-called “Android forks”) source: European Commission…
Summary: Infrastructure as a service (IaaS) is the fastest growing cloud segment and will continue to be with AI, machine learning and connected cars. Gartner, an authority in tech analysis, placed Oracle in the “niche player quadrant” (not the leader quadrant) for Infrastructure as a Service (IaaS) May 22. In addition to IaaS, Oracle’s Data as a Service business model will weaken as marketers fail to get proper consent for ad targeting. Cloud infrastructure is hot right now and for good reason. The world increasingly relies on cloud data centers due to server virtualization, smartphones, movies and entertainment, chatbots, office…
Summary: This analysis answers the following questions: Search is a large driver of revenue and doesn’t require data but what other portions of Alphabet’s advertising model will be affected by the GDPR? How much revenue do the higher risk methods currently contribute to earnings? Where is Alphabet most likely to incur GDPR fines? How will non-personalized ads affect earnings and network sites? Alphabet (GOOG) was announced in 2015 as a holding company to help separate Google’s advertising business from the sprawling investments in Fiber internet, cloud computing, smart home products and connected car products. While these new gadgets and the…
Summary: Despite knee jerk volatility, Roku will become a large cap stock in OTT (over-the-top) within 2-5 years. While Pay TV operators continue to bleed subscribers, Roku has the best business model to capitalize on these losses compared to highly fragmented OTT and SVOD competitors. In addition, Roku has maintained competitive vigor as the number one streaming device in the United States while remaining vendor agnostic. Going global will cement this position. Roku (ROKU) stock prices have fluctuated wildly from being one of the hottest stocks in 2017 with a 400% return from the IPO price of $14 to a…
Next month, when General Data Privacy Regulations (GDPR) take effect, there will be a seismic shift across many technology stocks reflecting a private data drought. Facebook is a half a trillion-dollar profit machine because of a business model dependent on first-party data which will come under scrutiny May 25 under the new GDPR policies. Average revenue per user (ARPU) currently stands at $26.76 compared to $4.08 at IPO. With strict policies for data control, consent, erasure and portability, ARPU and earnings will drop significantly. Editor’s note: This article was published on Seeking Alpha on April 17th, 2018 Investors should…
In episode 2 of Tech Lightning Rounds, Beth Kindig goes directly to the source of robotics expertise and hosts discussions with technologists who specialize in the field. Interviews are held in “lightning round” format, which are rapid interviews with tech experts for immediate depth on each topic. In episode 2, Zach Bonefas from John Deere discusses why it is crucial for the agriculture industry to adopt robotics. The global population will reach 10 billion people by 2050 and this will require growing fifty percent more food than we are growing right now. Meanwhile, the number of farmable acres is decreasing…
The goal of automating entire processes, rather than individual tasks, is to remove the human from the equation in order to increase gross margin for return on investment (GMROI). As Kass Dawson of SoftBank discusses, the more inventory a retailer has in the store that is not selling, the less they’re making money, and they then lose out on an opportunity through over-indexed inventory…
In episode 1 of Tech Lightning Rounds, Beth Kindig goes directly to the source of AV expertise and hosts discussions with technologists who specialize in the field. Interviews are held in “lightning round” format, which are rapid interviews with tech experts for immediate depth on each topic. Please subscribe to the podcast and leave a review to support Beth’s production of Tech Lightning Rounds. Please Subscribe and Leave a Review for the Podcast Here In episode 1 of Tech Lightning Rounds, we interview Anuja Sonalker, CEO of Steer, who has a PhD in network security and has held executive-level security positions before founding…
Robotics can be a controversial topic as the advancement in automation is seen as a threat to employment. Beth Kindig interviews Kass Dawson of SoftBank Robotics and asks “Will robots take jobs,” after he explains how SoftBank intends to remove the human from the equation in retail. The podcast also features John Deere, who is using robotics to combat one of the biggest threats to our food supply — which is the growing population. Once we reach 10 billion people, food supplies become questionable. Lastly, Richard Margolin of RoboKind introduces his robot, Milo, who is helping autistic children increase engage 40x more in classrooms when compared to a human teacher.
In episode 1 of Tech Lightning Rounds, Intertrust Technologies goes directly to the source of AV expertise and hosts discussions with technologists who specialize in the field. Beth Kindig, holds discussions in “lightning round” format, which are rapid interviews for immediate depth on the topic. Please subscribe to the podcast and leave a review the production of Tech Lightning Rounds. Please Subscribe and Leave a Review for the Podcast Here In episode 1, Beth Kindig interviews Michael Fleming, CEO of Torc, who has been developing autonomous vehicles for twelve years, which is a very long time for AV technology. Torc Robotics placed third…
In episode 1, Jill Sciarappo, Director of Autonomous Driving at Intel, is candid as she discusses areas where AV companies can improve on safety and how a new coalition called PAVE can help. PAVE stands for the Partners of Automated Vehicle Education initiative, which was launched at CES 2019 in Las Vegas, to help bring “realistic, factual information to policymakers and the public.”
Jill and Beth also chat about the confusion consumers have around AV and why press headlines need to be a little more accountable. Jill is from Arizona, where a lot of AV testing occurs, and Jill raises the question: “What level of best practices or validation do we need to have these companies prove they can accomplish before we let them on our city streets?” She goes on to answer this question in the podcast by drawing parallels to the various ways this has been solved in the past.
