In a notable development for the tech sector, Meta has announced a commitment to purchase millions of Nvidia chips for its AI data centers. This move echoes a time when major tech firms fiercely competed for Nvidia’s chips, leading to a modest rise of nearly 2% in Nvidia’s shares, while Meta’s stock remained steady. Both companies are included in the portfolio of the CNBC Investing Club.
Meanwhile, Palo Alto Networks, a club member, reported stronger-than-expected quarterly results, yet its shares fell over 6%. This decline was attributed to the company lowering its full-year earnings guidance, as CEO Nikesh Arora explained that an increase in share count resulting from recent acquisitions contributed to the adjustment. Despite this setback, there remains a belief that cybersecurity is a sector that should not be hastily grouped into the broader software sell-off trend.
In leadership news, Workday saw a downgrade from “buy” to “hold” at Citizens after co-founder Aneel Bhusri resumed the CEO role, replacing Carl Eschenbach. Eschenbach had focused on AI acquisitions but struggled to address perceived risks posed by AI to the software-as-a-service (SaaS) market.
Elliott Management, a prominent activist investment firm, has acquired over a 10% stake in Norwegian Cruise Line, advocating for improved profitability to counter a sustained period of stock underperformance. Elliott is collaborating with Adam Goldstein, a former executive at Royal Caribbean, as a potential nominee for the board, raising questions about the opportunities for new CEO John Chidsey, formerly of Subway.
In another significant investment move, Berkshire Hathaway recently took a stake in the New York Times, coinciding with Warren Buffett’s final quarter as CEO. The firm also reduced its position in Amazon, which currently pays the New York Times between $20 million and $25 million annually for licensing AI-generated content. Following a record close for NYT shares, they gained over 2% in early trading.
In corporate performance news, Cadence Design Systems saw its shares soar by 7% after reporting better-than-expected results and guidance. The company specializes in software for semiconductor design and had witnessed a downward trend prior to this announcement, which is also favorable news for its partner, Nvidia.
On the SaaS front, several price-target reductions were issued for Salesforce, the solitary SaaS entity in the Club’s portfolio aside from cyber. Wells Fargo lowered its target from $265 to $235 while maintaining a “hold” rating. BTIG revised its forecast from $335 to $260, but kept its “buy” rating intact. Citibank, which holds a “hold” rating on Salesforce, adjusted its target down from $257 to $197, citing “underwhelming” performance of its Agentforce product as a potential hindrance to organic growth.
McKesson’s stock received a boost as Barclays raised its price target from $960 to $1,050, affirming a “buy” rating. Analysts view McKesson as a safe investment within the healthcare sector, albeit noting its current valuation is about 15% higher than its average over the past three years.
In the world of ticketing, Citi upgraded StubHub to a “hold” rating from “sell,” while decreasing the price target from $13 to $9, pointing to valuation factors amid a challenging performance since its September IPO, with shares plummeting over 40% in the last month.
Lastly, Western Digital is looking to divest a portion of its stake in Sandisk for over $3 billion in an effort to reduce debt. Sandisk had been experiencing a decline in stock price, marking three consecutive down days; however, the stock has still achieved a remarkable gain of over 140% year-to-date, prompting recommendations to buy.
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