Wall Street delivered fresh research on three tech club holdings Monday, with bullish takeaways for Amazon (AMZN), Apple (APPL) and Nvidia (NVDA). Amazon Analyst case: Wells Fargo highlighted Amazon in a note on ecommerce dynamics, calling out a normalization in brick-and-mortar and ecommerce growth trajectories. “We’ve now rounded the worst on the [ecommerce] giveback” to brick-and-mortar stores, the analysts wrote in a note. At the same time, Amazon is in a position to grow into the excess capacity it invested in during the height of the Covid-19 pandemic. The analysts note they have “seen indications of AMZN leveraging capacity to go on offense and expand its [third-party] footprint.” Club take: As the pandemic subsided over the past year, shoppers moved from ecommerce back to brick-and-mortar stores, denting demand at online outlets like Amazon. The normalization of growth rates suggests that trend has peaked. If demand growth for ecommerce is back on track, then Amazon has an opportunity to leverage the warehouse investments it made at the peak of the pandemic. There is also good reason to believe that the worst of the fundamental pressure on the business is behind us. That said, this remains a high-multiple stock and, as a result, upside may well be limited unless we see more action on cost cuts, including headcount. Apple Analyst take: “After years of slow progress, Apple Pay’s online usage appears to be inflecting, ” analysts at Bernstein wrote in a note. The mobile payment service that launched 8 years ago has struggled to gain traction, but Bernstein now thinks it’s reached a “tipping point… in terms of consumer adoption and merchant acceptance.” T he bank analysts cite the growth of in-person contactless payments as helping the uptake of Apply Pay. Club take: While the increased adoption of Apple Pay is welcome news, given that the analysts peg revenue from the payment service at less than 0.2% of total company sales and less than 1% of services revenue, this update is hardly a needle mover for the stock. But the uptake does make clear the pervasiveness of the Apple ecosystem in many of our daily lives and Apple’s ability to harness that for additional revenue streams — whether it be financially, medically, or for entertainment. As a result, we maintain our “own it, don’t trade it” mantra on the belief that long-term investors will continue to be rewarded, even if slower iPhone sales put the company under pressure in the short term. Nvidia Analyst case: “NVIDIA is the leader in accelerated [computing] and the key enabler for AI across vertical industries – full stop,” analysts at Cowen wrote in a research note. They argued that headwinds the chipmaker has faced, including a “big gaming reset, China AI bans, and inventory write-downs [are] all behind us.” In their view, 2023 will be characterized by several strong product cycles and, as a result, Nvidia is their “best idea” for the new year. Shares should benefit from significant strength in the company’s data center on the back of new chips, along with “early signs of channel normalization in gaming, opening the opportunity for a return to growth in that business.” Club take: Although we are hesitant to be as certain in the view that the noted headwinds are behind us at at this point in time, we agree on Nvidia’s leading position in accelerated computing and AI. We also expect most of the headwinds to subside in the first half of next year. As a result, we don’t see a rush to purchase shares, especially given the roughly 52% jump in the stock seen since its 2022 low in October. We expect patience to be rewarded and that 2023 is shaping up to be a much better year for the company. (Jim Cramer’s Charitable Trust is long AMZN, APPL, NVDA. See here for a full list of the stocks. ) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER. NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
An Amazon worker moves a cart filled with packages at an Amazon delivery station on November 28, 2022 in Alpharetta, Georgia.
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Wall Street delivered fresh research on three tech club holdings Monday, with bullish takeaways for Amazon (AMZN), Apple (APPL) and Nvidia (NVDA).
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