Tech remains the major growth theme pushing multiple stocks and indexes higher, with Naspers and the S&P 500 reaching record highs in recent days. With strong forecasts emerging that the AI boom is unlikely to lose steam anytime soon, few would bet against the records to keep tumbling.
AI boom pushes Micron higher
Micron Technology Inc. (MU-NASQ), the largest US maker of computer memory chips, surged 17% after delivering surprisingly strong sales and profit forecasts, helped by forecasts that suggest demand for artificial intelligence (AI) gear is set to boom.
Semiconductors a $1 trillion industry by 2030
McKinsey & Company predicts that the global semiconductor industry is “poised for a decade of growth and is projected to become a trillion-dollar industry by 2030”. A McKinsey analysis based on a range of macroeconomic assumptions suggests the industry’s aggregate annual growth could average 6-8% a year up to 2030, which would make it a $1 trillion industry by the end of the decade, with three sectors: automotive, computation and data storage, and wireless, predicted to drive about 70% of this growth.
Arm takes aim at Intel division
Bloomberg reports that Arm Holdings Plc approached Intel Corp. (INTC-NASQ) about potentially buying the ailing chipmaker’s product division, only to be told that the business isn’t for sale. Intel has two main units: a product group that sells chips for personal computers, servers and networking equipment, and another that operates its factories. Representatives for Arm and Intel declined to comment. Intel, once the world’s largest chipmaker, has become the target of takeover speculation since a rapid deterioration of its business this year. The company delivered a disastrous earnings report last month, which sent its shares on their worst rout in decades and it is slashing 15,000 jobs to save money. It’s also scaling back factory expansion plans and halting its dividend. As part of turnaround efforts, Intel is separating the chip product division from its manufacturing operations. The move is aimed at attracting outside customers and investors but also lays the groundwork for the company to be split.
Naspers hits record high on Tencent surge
Morgan Stanley increased its target price on Tencent stock, citing its strength in the domestic gaming market and a potential recovery in advertising business following China’s recent stimulus. Bloomberg reported that Morgan Stanley lifted its target to HK$480 from HK$450, and maintains its overweight rating. Bloomberg also reported that Tencent is set to sell its stake in Sporta Technologies Ltd, the parent company of Dream11, to Tiga Investment Pte Ltd for over $150 million, in addition to a share sale of Chinese brokerage platform operator Futu Holdings Ltd. Tencent shares have climbed 15% over the past week. As its largest holding, this performance pushed Naspers (NPN-JSE) shares up 6.7%, helping the stock hit a record high after five straight days of gains.
Show me the money, says Angle CEO
Anglo American (AALL-TRQX) chief executive Duncan Wanblad has called on potential suitors for the mining giant to “pay the right number” as he defended his strategy to sell off four major parts of the business in the wake of BHP’s (BHPL-TRQX) failed takeover attempt. The Financial Times reports that under London takeover rules, BHP will become eligible to make a renewed offer for Anglo on November 29, six months after it withdrew its earlier offer.
China weighs on Richemont
Weak demand for luxury watches in China could hit Richemont (CFR-JSE), according to a note by Bryan Garnier analysts Loic Morvan and Paul Rouviere. According to the latest data on Swiss watch exports shared by Bloomberg, demand for Swiss timepieces remains weak in China, a key market for these products, which is grappling with an economic malaise. The analysts believe the Swiss luxury group is expected to face the impact of lower demand, coupled with further deterioration in Chinese consumer confidence.
NEPI going big on bonds
NEPI Rockcastle (NRP-JSE) advised stakeholders that, further to the announcement released on 23 September 2024 regarding a proposed bond offering, the company will undertake a book build for an unsecured green bond issue.
More SA consumer tailwinds
SA motorists can expect major fuel price cuts in October when fuel prices are adjusted. The AA says unaudited data from the Central Energy Fund (CEF) points to significant reductions in fuel prices across the board, marking the fifth consecutive decrease in 2024. According to the CEF’s figures, ULP95 petrol is expected to cost R1.13/l less while ULP93 is set to drop by about R1.05/l. Diesel is predicted to decrease between R1.12/l and R1.10/l while illuminating paraffin will decrease by about R1.08/l. “The expected decreases are welcome and will provide additional relief to motorists,” said the AA. “If these decreases are realised, the cumulative impact of this fifth decrease is substantial,” noted the AA in a Business Day article.
Stock focus: Astral
Investec expects higher risks of a negative earnings surprise in the second half of FY24E for Astral (ARL-JSE) given sharply weaker poultry selling prices and soft volumes. While medium-term earnings prospects remain robust, with consumer spending set to improve as the economy recovers and interest rates decline, and a retreat in the SAFEX price of yellow maize should the La Nina weather event materialise to support a much-improved maize harvest in 2025, there are no guarantees in this regard. Moreover, the benefit of lower input costs will mostly be felt in FY26. The stock has rallied 29% year-to-date and by 39% during the past year, which may prove premature given the current challenges. However, earnings momentum is positive, and this may be favourably regarded by investors.
Trading update : 3 October 2024
Tech remains the major growth theme pushing multiple stocks and indexes higher, with Naspers and the S&P 500 reaching record highs in recent days. With strong forecasts emerging that the AI boom is unlikely to lose steam anytime soon, few would bet against the records to keep tumbling.
AI boom pushes Micron higher
Micron Technology Inc. (MU-NASQ), the largest US maker of computer memory chips, surged 17% after delivering surprisingly strong sales and profit forecasts, helped by forecasts that suggest demand for artificial intelligence (AI) gear is set to boom.
Semiconductors a $1 trillion industry by 2030
McKinsey & Company predicts that the global semiconductor industry is “poised for a decade of growth and is projected to become a trillion-dollar industry by 2030”. A McKinsey analysis based on a range of macroeconomic assumptions suggests the industry’s aggregate annual growth could average 6-8% a year up to 2030, which would make it a $1 trillion industry by the end of the decade, with three sectors: automotive, computation and data storage, and wireless, predicted to drive about 70% of this growth.
Arm takes aim at Intel division
Bloomberg reports that Arm Holdings Plc approached Intel Corp. (INTC-NASQ) about potentially buying the ailing chipmaker’s product division, only to be told that the business isn’t for sale. Intel has two main units: a product group that sells chips for personal computers, servers and networking equipment, and another that operates its factories. Representatives for Arm and Intel declined to comment. Intel, once the world’s largest chipmaker, has become the target of takeover speculation since a rapid deterioration of its business this year. The company delivered a disastrous earnings report last month, which sent its shares on their worst rout in decades and it is slashing 15,000 jobs to save money. It’s also scaling back factory expansion plans and halting its dividend. As part of turnaround efforts, Intel is separating the chip product division from its manufacturing operations. The move is aimed at attracting outside customers and investors but also lays the groundwork for the company to be split.
Naspers hits record high on Tencent surge
Morgan Stanley increased its target price on Tencent stock, citing its strength in the domestic gaming market and a potential recovery in advertising business following China’s recent stimulus. Bloomberg reported that Morgan Stanley lifted its target to HK$480 from HK$450, and maintains its overweight rating. Bloomberg also reported that Tencent is set to sell its stake in Sporta Technologies Ltd, the parent company of Dream11, to Tiga Investment Pte Ltd for over $150 million, in addition to a share sale of Chinese brokerage platform operator Futu Holdings Ltd. Tencent shares have climbed 15% over the past week. As its largest holding, this performance pushed Naspers (NPN-JSE) shares up 6.7%, helping the stock hit a record high after five straight days of gains.
Show me the money, says Angle CEO
Anglo American (AALL-TRQX) chief executive Duncan Wanblad has called on potential suitors for the mining giant to “pay the right number” as he defended his strategy to sell off four major parts of the business in the wake of BHP’s (BHPL-TRQX) failed takeover attempt. The Financial Times reports that under London takeover rules, BHP will become eligible to make a renewed offer for Anglo on November 29, six months after it withdrew its earlier offer.
China weighs on Richemont
Weak demand for luxury watches in China could hit Richemont (CFR-JSE), according to a note by Bryan Garnier analysts Loic Morvan and Paul Rouviere. According to the latest data on Swiss watch exports shared by Bloomberg, demand for Swiss timepieces remains weak in China, a key market for these products, which is grappling with an economic malaise. The analysts believe the Swiss luxury group is expected to face the impact of lower demand, coupled with further deterioration in Chinese consumer confidence.
NEPI going big on bonds
NEPI Rockcastle (NRP-JSE) advised stakeholders that, further to the announcement released on 23 September 2024 regarding a proposed bond offering, the company will undertake a book build for an unsecured green bond issue.
More SA consumer tailwinds
SA motorists can expect major fuel price cuts in October when fuel prices are adjusted. The AA says unaudited data from the Central Energy Fund (CEF) points to significant reductions in fuel prices across the board, marking the fifth consecutive decrease in 2024. According to the CEF’s figures, ULP95 petrol is expected to cost R1.13/l less while ULP93 is set to drop by about R1.05/l. Diesel is predicted to decrease between R1.12/l and R1.10/l while illuminating paraffin will decrease by about R1.08/l. “The expected decreases are welcome and will provide additional relief to motorists,” said the AA. “If these decreases are realised, the cumulative impact of this fifth decrease is substantial,” noted the AA in a Business Day article.
Stock focus: Astral
Investec expects higher risks of a negative earnings surprise in the second half of FY24E for Astral (ARL-JSE) given sharply weaker poultry selling prices and soft volumes. While medium-term earnings prospects remain robust, with consumer spending set to improve as the economy recovers and interest rates decline, and a retreat in the SAFEX price of yellow maize should the La Nina weather event materialise to support a much-improved maize harvest in 2025, there are no guarantees in this regard. Moreover, the benefit of lower input costs will mostly be felt in FY26. The stock has rallied 29% year-to-date and by 39% during the past year, which may prove premature given the current challenges. However, earnings momentum is positive, and this may be favourably regarded by investors.
Information correct at time of publishing. It is important to conduct thorough research and analysis using a combination of fundamental and technical analysis techniques to make informed trading decisions. Additionally, consider your risk tolerance, investment objectives, and time horizon when assessing company performance for trading.