Companies

Over the last seven years, we’ve made a habit of offering a few predictions for the year ahead. Here’s what we’re anticipating for 2024: IWO will outperform the S&P500. The iShares Russell 2000 Growth ETF (IWO) will outperform the SPDR…

Google's been a little slow getting up to speed in the AI game. While the company's video preview of Gemini was edited, it still served as a reminder to investors that Google is one of three companies leading in the AI race. Gemini's capabilities are impressive given they are the most advanced display of multimodality, which brings text, voice, and images into the generative interface. Previously these models (GPT, Claude, Grok, Llama) have predominately been interacted with by text-only. By keeping pace with OpenAI, Google's in a favorable position to evolve Search and capitalize on generative AI.

The Cybertruck was released at a price 25% higher than most were expecting. That means demand will be limited for the next couple of years until pricing comes down. Importantly, the Cybertruck is the latest evidence that Tesla makes the best electric vehicles in the world and is pulling ahead as traditional auto mistakenly slows their EV pursuit.

Since the beginning of time retailers have marked up products before putting them on sale to make the discount make more attractive. We spot-checked 50 random items advertised on Amazon's Cyber Monday page and found broad-based discounting continued after the end of the holiday. In other words, the discounts are not as attractive after a second glance.

NVIDIA reported impressive October results and raised guidance for January above Street expectations. Outside of the noise of the quarter, including China chip restrictions, Nvidia has no competition and remains the primary beneficiary of what will likely be a 5+ year AI infrastructure build-out.

Over the past month, there has been a surprise twist in the battle between Big Auto and Tesla: Traditional carmakers are slowing investment in EVs and autonomy. While the move is good for traditional auto profits over the next 1-3 years, it will likely make the inevitable EV transition more costly. In the end, I believe Tesla will emerge in a better long-term competitive position.

The December outlook was better than it first appeared. Adjusting for the number of weeks in the quarter, growth in December should be 7% y/y compared to the Street that was at 5%. Additionally, the active installed base, Services, China, and gross margin showed surprising strength, evidence that the Apple revenue flywheel is rock solid.

Netflix reported its September quarter, highlighted by subscriber adds that exceeded expectations by 60% and sent shares of NFLX up about 17%. Over the past year the company has pulled three levers to restart growth: raising prices, introducing an ad model, and cracking down on password sharing. While these new initiatives are working, the company will soon face tough comps and the creator economy.

Tesla's September results and outlook commentary revealed a double whammy of pressures on the business, prolonged margin pressure, and dampened demand outlook. While this next year will be the most difficult period for the company since the ramp of Model 3 in 2019, I believe the long-term opportunity remains intact: The company has a pole position in what will be a massive market transition to electrification.

For Tesla earnings it's all about the margins. While I expect a miss in September, I believe margins will rebound in December. In this scenario, the case that Tesla should be viewed as a tech company will remain intact.

The collective investing community is skeptical that Vision Pro will become a measurable part of Apple's business, because the utility of spatial computing is still unknown. As developers build exciting apps, demand and sales will increase.

WSJ reported that Meta is considering offering paid versions of Facebook and Instagram to European users in an effort to navigate EU privacy regulations. We think there is 25% chance that this comes to fruition. If it does, we estimate it would add between 2-10% to overall revenue for European availability and 3-15% if available in US and Europe.