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Roula Khalaf, editor of the FT, selects her favorite stories in this weekly newsletter.
The problem with the future is that it has not yet happened. Betting on companies whose value is largely in educated assumptions is therefore not for the weak of the stomach. Nvidia, Palantir, Applovine and Microstrategy-Die four best powerful US technology shares from 2024-bring investors through their steps.
Nvidia inspires more cortisol than most others with its sheer size. The 3 dollar chip maker, whose silicon operates the boom for artificial intelligence, almost tripled in 2024, but has dropped by about 6 percent this year. The earnings in the fourth quarter have conveniently exceeded the expectations of the analysts, but investors focus more on what comes next.
At the moment everything will plan. The head Jensen Huang says that the company’s new high-performance blackwell chips is “surprising”. The profitability is pressed a little by the new areas, but sales for the current three -month period should be higher than previously assumed. The problem is that the detail is difficult to grasp. Each quarter is a new nail biter.
The purchase of a company’s shares is always a bet on remote income flows. The value share of the lion comes from the “terminal value”. For example, if we take the estimates of the analysts of analysts from Nvidias Cashflows worth the next five years, so visible Alpha has returned to 10 percent a year today and today they have a little more than $ 500 billion. This means that 80 percent of the market value of NVIDIA consists of the 3 -TN market value of 3 participants from the money due after 2030.
A lot can happen in these short time windows. Just ask the millions of investors who had never heard of Nvidia five years ago. And technical shares are unusual sensitive to sudden shifts. Nvidia, for example, receives about a third of his income from only three customers, who in turn sell its goods to others. Sales to China is subject to collective bargaining policy, which, as the Trump government has already shown several times, can switch on a cent.
The other members of these fantastic four have a harder time. The software company Palantir has reported that the Pentagon wants to reduce budgets, which may not be helpful to a company who has more than half of his revenue of governments. However, it is still about 50 times ahead, which feels positively occupied Nvidia’s 16 -fold. Microstrategy now has its own unique quirks: It is mainly a piggy bank with Bitcoin, the price of which – always Mercurial – is tapped.
Applovine’s reversal is particularly sudden. The company, which was organized in the gaming apps, refueled after two empty seller reports suggested that its quick growth could be less sustainable than it looked. Slow moving, more predictable companies are much less susceptible to this type of attack on the future trust of investors.
At least some things are safe for Nvidia. The largest customers – companies such as Microsoft and Amazon – have cash and are determined to spend it for chips. At the moment they only have a few, if at all, other options when it comes to AI processors. And investors are relaxed for the time being. The stress test was passed; Another will be early enough.
