Tag: 2024

Why Long-Term Investors Should Eye TSLA's Robotaxi Potential

Posted on by The INO.com Team

Tesla, Inc. (TSLA) is set to release its second-quarter delivery update in early July, which is expected to show a decline for the second straight quarter. Analysts have adjusted their estimates for TSLA deliveries downward due to concerns over consumer demand and intense competition in China. In January, the company cautioned that delivery growth in 2024 would be “notably lower” as the impact of months-long price cuts diminishes.

According to an average estimate derived from forecasts by 12 analysts polled by LSEG, the EV maker is expected to deliver 438,019 vehicles for the April-June period. Seven of these analysts have slashed their expectations in the past three months.

Further, Barclays analyst Dan Levy revised his deliveries forecast to 415,000 vehicles, marking an 11% year-over-year drop. He stated that “a soft delivery result could turn attention back to the currently challenging fundamental environment for Tesla.” Meanwhile, RBC Capital Markets and UBS have set their delivery estimates at 410,000 and 420,000 vehicles, respectively.

For comparison, Tesla delivered 386,810 vehicles in the first quarter of 2024 and 466,140 vehicles in the second quarter of 2023, with its highest deliveries tally in the fourth quarter of the previous year at 484,507 units.

Despite the anticipated dip in quarterly deliveries, many analysts suggest that investor focus is shifting from quarterly deliveries to TSLA’s long-term projects, particularly the highly anticipated Robotaxi event scheduled later this summer.

High-Profile Robotaxi Event

CEO Elon Musk officially announced on X that the company will unveil its long-promised Robotaxi on August 8, 2024. The upcoming autonomous vehicle will be built on Tesla’s next-generation vehicle platform. Musk has long hinted at the possibility of a Tesla Robotaxi, even showcasing a fully covered vehicle during a 2023 event unveiling the company's third Master Plan.

Musk previously stated that Tesla will eventually produce a car without human control. He further mentioned that Tesla vehicles equipped with Full Self-Driving Capability will, through software updates, continuously improve their driving skills. He also emphasized that Tesla owners could generate income from their autonomous cars by sending them to pick up and drop off passengers.

That would be a part of the “Tesla Network,” as described in Musk’s Master Plan Part Deux. “You will also be able to add your car to the Tesla shared fleet just by tapping a button on the Tesla phone app," he added, “and have it generate income for you while you’re at work or on vacation, significantly offsetting and at times potentially exceeding the monthly loan or lease cost.”

Several years later, Musk’s vision expanded even further. In 2019, he declared, "By the middle of next year, we'll have over a million Tesla cars on the road with Full Self-Driving hardware." He also claimed that Tesla’s Full Self-Driving (FSD) feature would be so dependable that drivers could “go to sleep.” However, it should be noted that Teslas equipped with FSD software are not fully autonomous, and drivers should not sleep while using them.

While Musk’s promises may not always align perfectly with reality, the success of Autopilot and FSD proves that he remains at the forefront of a societal shift from human-powered vehicles to those piloted by AI.

TSLA’s stock has witnessed a continuous downturn, with a decline of nearly 15% year-to-date and more than 25% over the past year. However, the stock has surged around 16% over the past month as investors increasingly focus on the upcoming Robotaxi event.

While delivery data is crucial for an EV company, investors are looking beyond that. Ben Kallo, an analyst at Robert W. Baird, noted, “Compared to Q124 when investor attention was intensely focused on near-term delivery estimates being too high, we see a growing number of investors shifting their outlook to the Robotaxi event on August 8 and the opportunity related to FSD.”

Ben Kallo anticipates that investor attention will remain toward the long term until the Robotaxi launch, which could include details on low-cost, next-gen vehicles. Meanwhile, Wedbush Securities analyst Dan Ives doesn’t anticipate significant fireworks for the June quarter but believes the 8/8 Robotaxi debut will be a substantial catalyst for TSLA.

UBS, however, is more skeptical about the Robotaxi event being an immediate catalyst for TSLA’s stock price. Nonetheless, the firm acknowledges that the EV maker has made significant technical progress in its Robotaxi and Optimus plans. And it is more likely than most companies to capitalize on AI in the physical world, with long-term benefits for its financial model.

Potential Risks and Challenges

While the upcoming Robotaxi event holds promise, it also has inherent risks and challenges. Autonomous driving technology faces stringent regulatory scrutiny. Tesla must navigate complex legal landscapes to deploy its Robotaxi fleet, which could delay implementation and affect timelines.

TSLA must continue to invest heavily in research and development (R&D) to ensure the reliability and safety of its autonomous vehicles. Critics argue that Musk exaggerates the capabilities of the technology, often with fatal consequences. There have been hundreds of crashes involving Tesla vehicles using FSD and Autopilot, resulting in dozens of deaths. The EV giant currently faces several wrongful death lawsuits.

While the Robotaxi initiative has long-term potential, it requires substantial upfront investment. The financial burden of developing and deploying autonomous vehicles could impact Tesla’s short-term profitability.

Bottom Line

TSLA is scheduled to release its second-quarter deliveries report this week, with analysts expecting to show a decline for the second consecutive quarter amid weak demand due to a lack of affordable new models and stiff competition in China. The deliveries report will be released just a few weeks before the company’s second-quarter earnings release.

Street expects Tesla’s revenue for the second quarter (ended June 2024) to decrease 4.2% year-over-year to $23.88 billion. The consensus EPS estimate of $0.58 for the same period indicates a decline of 35.9% year-over-year.

Despite the expected drop in deliveries and weak quarterly earnings, several market experts suggest that investor focus is shifting to Tesla’s long-term projects, particularly the high-profile Robotaxi event set for August this year. As the EV maker navigates the challenges and opportunities ahead, the Robotaxi initiative is a pivotal development that could redefine its future trajectory.

While short-term concerns persist, including weak consumer demand, regulatory hurdles, and ongoing legal challenges, long-term investors increasingly focus on Tesla’s ambitious autonomous driving vision. The event is poised to showcase the company’s technological advancements and could serve as a catalyst for renewed investor confidence.

Top Travel Stocks for the 4th of July

Posted on by The INO.com Team

As the 4th of July approaches, the demand for transportation services surges, driven by the nation’s eagerness to travel and celebrate. The American Automobile Association (AAA) expects 70.9 million individuals to travel 50 miles or more from home over the Independence Day holiday period, surpassing levels witnessed before the pandemic.

For the first time, AAA has analyzed the entire week of July 4th, including the Saturday before and the Sunday after the holiday. This year’s projected number of travelers represents a 5% growth compared to last year and an 8% increase over 2019.

“With summer vacations in full swing and the flexibility of remote work, more Americans are taking extended trips around Independence Day,” stated Paula Twidale, Senior Vice President of AAA Travel. “We anticipate this July 4th week will be the busiest ever with an additional 5.7 million people traveling compared to 2019.”  

The travel group projects a record 60.6 million Americans will travel by car the July 4th week, a rise of 2.8 million travelers compared to 2023. This year's figure also exceeds the 55.3 million people who traveled by car during Independence Day week in 2019.

The number of air travelers is also anticipated to reach a new record. AAA projects that 5.74 million people will fly to their July 4th destinations, marking an increase of approximately 7% year-over-year and a 12% rise over 2019. According to AAA booking data, domestic airfare is 2% cheaper this Independence Day week compared to last year, with the average price for a domestic roundtrip ticket at $800.

The increase in mobility presents a unique investment opportunity in the travel sector, particularly for companies such as Uber Technologies, Inc. (UBER), Southwest Airlines Co. (LUV), and Delta Air Lines, Inc. (DAL). These companies are strategically positioned to capitalize on the holiday rush through operational efficiencies, route expansions, and customer service innovations.

Here’s an in-depth look at why these stocks are attractive investments during peak travel seasons.

Uber Technologies, Inc. (UBER)

Valued at a market cap of $151.87 billion, Uber Technologies, Inc. (UBER) is a leading global ride-hailing company. It connects consumers with a wide range of transportation modalities, including ridesharing, carsharing, public transit, taxis, rentals, micromobility, and other modalities; it also provides riders with several vehicle types.

UBER’s platform leverages advanced algorithms and data analytics to match drivers with passengers efficiently. During peak travel times like the 4th of July, Uber’s dynamic pricing model ensures supply meets demand, optimizing driver availability and minimizing passenger wait times. This operational efficiency is crucial in managing the high volume of holiday travelers.

Features like upfront pricing, real-time tracking, and a robust safety protocol contribute to a seamless travel experience for Uber users.

Moreover, Uber continues to expand its service offerings and geographic reach. It introduced a shuttle service in the U.S. at its GO-GET annual event. The ridesharing company announced that Uber Shuttle users can now reserve up to five seats in advance on buses operating in high-traffic areas such as airports, concerts, and sports events. Uber will collaborate with local fleet operators for this service, utilizing vehicles with capacities ranging from 14 to 55 seats.

Notably, the company has increased its presence in key tourist destinations and expanded its ride options to include shared rides, luxury cars, and eco-friendly transportation, catering to a diverse customer base and enhancing its appeal during the holiday season.

For the first quarter that ended March 31, 2024, UBER’s gross bookings rose 20% year-over-year to $37.70 billion, with Mobility Gross Bookings of $18.70 billion (up 25% year-over-year). Its revenue increased 15% from the year-ago value to $10.10 billion. Its income from operations was $172 million, compared to a loss from operations of $262 million in the same quarter of 2023.

Furthermore, the company’s adjusted EBITDA grew 81.6% from the prior year’s period to $1.38 billion. Its free cash flow came in at $1.36 billion, an increase of 148% year-over-year.

For the second quarter of 2024, Uber expects gross bookings of $38.75 billion to $40.25 billion, representing 18% to 23% year-over-year growth on a constant currency basis. The company’s adjusted EBITDA is expected to be $1.45-$1.53 billion, representing 58%-67% year-over-year.

Analysts expect UBER’s revenue and EPS for the second quarter (ended June 2024) to increase 14.3% and 70% year-over-year to $10.55 billion and $0.31, respectively. For the fiscal year 2024, the company’s revenue and EPS are expected to grow 15.8% and 4.3% year-over-year to $43.18 billion and $0.91, respectively.

UBER’s stock is up around 14% over the past month and has gained more than 64% over the past year. Further gains could come with the July 4th rally.

Delta Air Lines, Inc. (DAL)

Delta Air Lines, Inc. (DAL) is a leading global airline headquartered in Atlanta, Delta, with a market cap of $30.61 billion. The company served over 190 million customers in 2023 – safely, reliably, and with industry-leading customer service innovation – and was recognized as North America’s most on-time airline by Cirium.

Delta Air Lines operates significant hubs and markets in Amsterdam, Atlanta, Boston, Lima, London-Heathrow, Los Angeles, New York-JFK and LaGuardia, Paris-Charles de Gaulle, Salt Lake City, Santiago (Chile), São Paulo,  Seoul-Incheon, and Tokyo. The airline maintains strategic partnerships with Aeromexico, Air France-KLM, China Eastern, Korean Air, LATAM, Virgin Atlantic, and WestJet.

DAL’s extensive network and strategic alliances allow it to offer numerous direct flights, reducing layover times and enhancing passenger convenience. Thus, the company is well-positioned to capture a larger share of the holiday travel market and meet the increased demand effectively.

DAL’s operating revenue increased 8% year-over-year to $13.75 billion for the first quarter that ended March 31, 2024. Its adjusted operating income grew 17.2% from the previous year’s period to $640 million. Its adjusted net income and earnings per share were $288 million and $0.45, up 43.4% and 44.4% year-over-year, respectively.

As of March 31, 2023, the company’s cash and cash equivalents amounted to $3.88 billion, compared to $2.74 billion as of December 31, 2023. Its current assets were $11.58 billion versus $10.27 billion as of December 31, 2023.

After an outstanding first-quarter performance, Delta is expected to continue solid business momentum. For the second quarter of 2024, the company expects total revenue growth of 5%-7% year-over-year. Its operating margin is expected to be 14% to 15%, and earnings of $2.20 to $2.50 per share.

For the fiscal year 2024, DAL projects earnings of $6 to $7 per share. The company’s free cash flow is expected to be $3-$4 and adjusted debt to EBITDAR of 2x-3x.

Analysts expect Delta’s revenue and EPS for the fiscal year (ending December 2024) to increase 3% and 5.9% year-over-year to $59.77 billion and $6.62, respectively. Also, the company has topped the consensus revenue and EPS estimates in all four trailing quarters, which is impressive.

Shares of DAL have surged more than 16% over the past six months and nearly 17% year-to-date.

Southwest Airlines Co. (LUV)

With a market cap of $17.12 billion, Southwest Airlines Co. (LUV) is a prominent passenger airline company that offers scheduled air transportation services in the U.S. and near-international markets.

As of December 31, 2023, the company had a total fleet of 817 Boeing 737 aircraft and served around 121 destinations in 42 states, the District of Columbia, and the Commonwealth of Puerto Rico, as well as near-international countries, including Mexico, Aruba, Costa Rica, Jamaica, the Bahamas, Belize, Cuba, the Dominican Republic, the Cayman Islands, and Turks and Caicos.

Southwest Airlines is well-known for its low-cost, high-efficiency operational model. As a part of its birthday celebration, LUV announced a sale on flights starting as low as $53 one-way. Also, in May, the company introduced Cash + Points, a new flexible payment option for Rapid Rewards® Members. Southwest Rapid Rewards® Members can now use a combination of cash and points on hotel bookings.

The airline's flexible booking policies and extensive network of direct flights make it a preferred choice for many travelers. Southwest Airlines’ route expansion and new destinations are aligned with its strategy to capture the leisure travel market, which peaks during holidays like the 4th of July.

Southwest has consistently been recognized for its customer service, emphasizing a hassle-free travel experience. The airline is ranked first in customer satisfaction among economy-class passengers by J.D. Power for the third consecutive year.

During the first quarter that ended March 31, 2024, LUV’s passenger operating revenues increased 11.9% year-over-year to $5.71 billion. Its total operating revenues grew 10.9% from the prior year’s quarter to $6.33 billion. As of March 31, 2024, the company’s cash and cash equivalents stood at $8.37 billion, and current assets were $13.28 billion.

Street expects LUV’s revenue for the second quarter (ended June 2024) to increase 5.1% year-over-year to $7.39 billion. Similarly, the consensus revenue estimate of $27.69 billion for the fiscal year (ending December 2024) indicates an improvement of 6.1% year-over-year.

LUV’s stock has surged more than 6% over the past month.

Bottom Line

AAA projects a record of around 71 million people to make trips for the Independence Day travel period this year. UBER, DAL, and LUV are well-positioned to benefit from the increased demand for transportation services during the 4th of July. Their operational efficiencies, route expansions, and customer service innovations provide a strong foundation for capturing a larger share of the leisure travel market.

Given robust financial performances and bright growth outlooks, these stocks present attractive investment opportunities during peak travel seasons.

Intel's $8.5 Billion Gamble: Can It Rival Nvidia?

Posted on by The INO.com Team

Intel Corporation (INTC), a leading player in the semiconductor industry, is making headlines with its ambitious plans to transform its operations, spurred by a substantial $8.5 billion boost from the CHIPS and Science Act. The roughly $280 billion legislative package, signed into law by President Joe Biden in 2022, aims to bolster U.S. semiconductor manufacturing and research and development (R&D) capabilities.

CHIPS Act funding will help advance Intel’s commercial semiconductor projects at key sites in Arizona, New Mexico, Ohio, and Oregon. Also, the company expects to benefit from a U.S. Treasury Department Investment Tax Credit (ITC) of up to 25% on over $100 billion in qualified investments and eligibility for federal loans up to $11 billion.

Previously, CHIPS Act funding and INTC announced plans to invest more than $1100 billion in the U.S. over five years to expand chipmaking capacity critical to national security and the advancement of cutting-edge technologies, including artificial intelligence (AI).

Notably, Intel is the sole American company that both designs and manufactures leading-edge logic chips. Its strategy focuses on three pillars: achieving process technology leadership, constructing a more resilient and sustainable global semiconductor supply chain, and developing a world-class foundry business. These goals align with the CHIPS Act’s objectives to restore manufacturing and technological leadership to the U.S.

The federal funding represents a pivotal opportunity for INTC to reclaim its position as a chip manufacturing powerhouse, potentially rivaling giants like NVIDIA Corporation (NVDA) and Advanced Micro Devices, Inc. (AMD).

Intel’s Strategic Initiatives to Capitalize on AI Boom

At Computex 2024, INTC introduced cutting-edge technologies and architectures that are well-poised to significantly accelerate the AI ecosystem, from the data center, cloud, and network to the edge and PC.

The company launched Intel® Xeon® 6 processors with E-core (Efficient-core) and P-core (Performance-core) SKUs, delivering enhanced performance and power efficiency for high-density, scale-out workloads in the data center. The first of the Xeon 6 processors debuted is the Intel Xeon 6 E-core (code-named Sierra Forest), available beginning June 4. Further, Xeon 6 P-cores (code-named Granite Rapids) are expected to launch next quarter.

Beyond the data center, Intel is expanding its AI footprint in edge computing and PCs. With over 90,000 edge deployments and 200 million CPUs distributed across the ecosystem, the company has consistently enabled enterprise choice for many years. INTC revealed the architectural details of Lunar Lake, the flagship processor for the next generation of AI PCs.

Lunar Lake is set to make a significant leap in graphics and AI processing capabilities, emphasizing power-efficient compute performance tailored for the thin-and-light segment. It promises up to a 40% reduction in System-on-Chip (SoC) power3 and over three times the AI compute8. It is scheduled for release in the third quarter of 2024, in time for the holiday shopping season.

Also, Intel unveiled pricing for Intel® Gaudi® 2 and Intel® Gaudi® 3 AI accelerator kits, providing high performance at up to one-third lower cost compared to competitive platforms. A standard AI kit, including Intel Gaudi 2 accelerators with a UBB, is offered to system providers at $65,000. Integrating Xeon processors with Gaudi AI accelerators in a system presents a robust solution to make AI faster, cheaper, and more accessible.

Intel CEO Pat Gelsinger said, “Intel is one of the only companies in the world innovating across the full spectrum of the AI market opportunity – from semiconductor manufacturing to PC, network, edge and data center systems. Our latest Xeon, Gaudi and Core Ultra platforms, combined with the power of our hardware and software ecosystem, are delivering the flexible, secure, sustainable and cost-effective solutions our customers need to maximize the immense opportunities ahead.”

On May 1, INTC achieved a significant milestone of surpassing 500 AI models running optimized on new Intel® Core™ Ultra processors due to the company’s investment in client AI, the AI PC transformation, framework optimizations, and AI tools like OpenVINO™ toolkit. These processors are the industry’s leading AI PC processors, offering enhanced AI experiences, immersive graphics, and optimized battery life.

Solid First-Quarter Performance and Second-Quarter Guidance

During the first quarter that ended March 30, 2024, INTC’s net revenue increased 8.6% year-over-year to $12.72 billion, primarily driven by growth in its personal computing, data center, and AI business. Revenue from the Client Computing Group (CCG), through which Intel continues to advance its mission to bring AI everywhere, rose 31% year-over-year to $7.50 billion.

Furthermore, the company’s non-GAAP operating income was $723 million, compared to an operating loss of $294 million in the previous year’s quarter. Its non-GAAP net income and non-GAAP earnings per share came in at $759 million and $0.18, compared to a net loss and loss per share of $169 million and $0.04, respectively, in the same quarter of 2023.

For the second quarter of fiscal 2024, Intel expects its revenue to come between $12.5 billion and $13.5 billion, and its non-GAAP earnings per share is expected to be $0.10.

Despite its outstanding financial performance and ambitious plans, INTC’s stock has plunged more than 38% over the past six months and nearly 40% year-to-date.

Competing with Nvidia: A Daunting Task

Despite INTC’s solid financial health and strategic moves, the competition with NVDA is fierce. Nvidia’s market performance has been stellar lately, driven by its global leadership in graphics processing units (GPUs) and its foray into AI and machine learning markets. The chip giant has built strong brand loyalty among developers and enterprise customers, which could be challenging for Intel to overcome.

Over the past year, NVIDIA has experienced a significant surge in sales due to high demand from tech giants such as c, Alphabet Inc. (GOOGL), Microsoft Corporation (MSFT), Meta Platforms, Inc. (META), and OpenAI, who invested billions of dollars in its advanced GPUs essential for developing and deploying AI applications.

Shares of the prominent chipmaker surged approximately 150% over the past six months and more than 196% over the past year. Moreover, NVDA’s stock is up around 2,938% over the past five years. Notably, after Amazon and Google, Nvidia recently became the third U.S. company with a market value surpassing $3 trillion.

As a result, NVDA commands a dominant market share of about 92% in the data center GPU market. Nvidia’s success stems from its cutting-edge semiconductor performance and software prowess. The CUDA development platform, launched in 2006, has emerged as a pivotal tool for AI development, with a user base exceeding 4 million developers.

Bottom Line

Proposed funding of $8.5 billion, along with an investment tax credit and eligibility for CHIPS Act loans, are pivotal in Intel’s bid to regain semiconductor leadership in the face of intense competition, particularly from Nvidia. This substantial federal funding will enhance Intel’s manufacturing and R&D capabilities across its key sites in Arizona, New Mexico, Ohio, and Oregon.

While INTC possesses the resources, technological expertise, and strategic vision to challenge NVDA, the path forward is fraught with challenges. Despite Intel’s recent strides in the AI ecosystem, from the data center to edge and PC with products like Xeon 6 processors and Gaudi AI accelerators, Nvidia’s dominance in data center GPUs remains pronounced, commanding a significant market share.

Future success will depend on Intel’s ability to leverage its strengths in manufacturing, introducing innovative product lines, and cultivating a compelling ecosystem of software and developer support. As Intel advances its ambitious plans, industry experts and stakeholders will keenly watch how these developments unfold, redefining the competitive landscape in the AI and data center markets.

Long-Term vs. Short-Term: The Investment Dilemma with Palantir (PLTR)

Posted on by The INO.com Team

Palantir Technologies Inc. (PLTR), a prominent data-analytics software company, is at a crossroads, presenting a dilemma for investors grappling with the dichotomy between its promising long-term growth potential supported by its strategic AI initiatives and the short-term risks posed by its elevated valuation and volatility.

Long-Term Growth Potential: Riding the AI Wave

Palantir has established itself as a leading player in data analytics, leveraging its sophisticated software platforms to cater to diverse sectors, including government, healthcare, and finance.

Bloomberg Intelligence report projects generative AI to be a $1.30 trillion market by 2032, growing at a CAGR of roughly 43% over the next ten years. Surging demand for generative AI products could add around $318 billion in software spending by 2032. PLTR is well-poised to capitalize on industry trends as businesses continue to prioritize data analytics and AI integration into their operational frameworks.

In mid-2023, PLTR launched its Artificial Intelligence Platform (AIP) to help corporations develop and deploy AI applications, which has proven highly successful. AIP leverages machine learning and AI technologies to transform data into actionable insights, enabling organizations to make better decisions and optimize their operations.

Later last year, the company introduced AIP Bootcamps, a hands-on-keyboard acceleration program for customers to go from zero to use case in just a few hours. Since its launch, approximately 850 AIP Bootcamps have been completed in the U.S. and worldwide — with concentrations of customers in Detroit, Chicago, New York City, Washington D.C., and more.

Earlier this month, PLTR and Tampa General Hospital (TGH), one of the nation’s leading academic health systems, announced a significant step forward in their long-term partnership to deliver an ambitious vision for the future of AI in healthcare. TGH plans to deploy Palantir’s AIP to provide a Care Coordination Operating System. Also, it will leverage this platform to bring automation to other system workflows, like streamlining revenue cycle management.

In May, Palantir’s subsidiary, Palantir USG, Inc., was selected by the Department of Defense Chief Digital and Artificial Intelligence Office (CDAO) to participate in scaling data analytics and AI capabilities across the Department of Defense. Beginning with an initial order of $153 million to support specific Combatant Commands and the Joint Staff, further awards may reach up to $480 million over a span of 5 years.

Also, PLTR and Intelligent power management company Eaton extended their partnership to bring Palantir’s AIP to Eaton’s operations.

Palantir’s First-Quarter Results Signal Robust Enterprise AI Adoption

For the first quarter that ended March 31, 2024, PLTR reported revenue of $634.34 million, beating analysts’ estimate of $617.61 million. That compared to the revenue of $525.19 million in the same quarter of 2023. The company’s commercial revenue rose 27% from the year-ago value to $299 million, and its government revenue grew 16% year-over-year to $335 million.

Palantir’s U.S. commercial revenue grew 40% year-over-year to $150 million. The U.S. commercial customer count increased 74% from the prior year’s period to 262 customers. The rapid growth in the company’s U.S. commercial division is aided by the robust demand for its new Artificial Intelligence Platform (AIP). PLTR intends to make its AIP the most dominant infrastructure in the market and power the effective deployment of AI and LLMs across institutions.

The data analytics software maker’s adjusted income from operations was $226 million, an increase of 81% year-over-year, and represented a margin of 13%. It is the sixth consecutive quarter of expanding adjusted operating margins. PLTR’s adjusted EBITDA rose 76% from the previous year’s quarter to $234.90 million.

Palantir’s adjusted net income attributable to common stockholders rose 83.4% from the prior year’s period to $196.94 million. The company posted an adjusted EPS of $0.08, up 60% year-over-year. That surpassed the consensus EPS estimate by 4.1%. Further, PLTR’s adjusted free cash flow was $148.63 million for the quarter, representing a 23% margin.

Business Outlook

For the second quarter of fiscal 2024, PLTR expects revenue of between $649-$653 million. Also, the company’s adjusted income from operations is expected to be $209 million to $213 million.

For the full year 2024, the data analytics software giant increased its revenue guidance to between $2.677-$2.689 billion. However, the mid-point figure still fell short of $2.70 billion. Palantir raised its U.S. commercial revenue guidance in excess to $661 million, representing a growth rate of at least 45%. Further, the company increased its guidance for adjusted income from operations to between $868-$880 million.

Short-Term Risks: Stretched Valuation

Despite its compelling long-term prospects, Palantir has not been immune to market volatility and scrutiny over its valuation. In terms of forward non-GAAP P/E, PLTR is trading at 74.40x, 220.5% higher than the industry average of 23.22x. Likewise, the stock’s forward EV/Sales and EV/EBITDA of 18.95x and 56.04x are significantly higher than the respective industry averages of 2.91x and 14.59x.

Additionally, the stock’s forward Price/Sales of 20.27x is 609.6% higher than the industry average of 2.86x. Its forward Price/Cash Flow multiple of 66.52 is 183.2% higher than the industry average of 23.49.

Monness, Crespi, Hardt & Co. analyst Brian White recently downgraded Palantir’s stock to Sell from Neutral and set a $20 price target. Following a challenging earnings season for enterprise software companies, the analyst believes the market will shift away from stocks with inflated valuations.

PLTR’s stock, which surged around 167% in 2023 and continued to rally in the first half of 2024 with a nearly 43% gain year-to-date, has raised alarms among investors and analysts alike as they believe its valuation has reached a gluttonous extreme. Last month, the company filed a solid quarterly report, but shares plunged anyway, with Wall Street underlining the stretched valuation.

The stock was down approximately 6% over the past five days, while the S&P 500 index declined marginally.

Bottom Line

A nuanced approach is advisable for investors while approaching PLTR stock to balance potential returns with near-term risks. Investors with a long-term horizon and high-risk tolerance may find Palantir an attractive investment. PLTR’s AI expertise, strategic partnerships, and ongoing technological innovation position the company to capitalize on favorable industry trends.

Given the recent volatility and valuation concerns highlighted by analysts like Brian White, conservative investors may opt for caution in the short term. Market corrections or shifts in investor sentiment toward high-growth stocks could lead to price adjustments, potentially offering better entry points for those considering PLTR.

Before making investment decisions, thorough due diligence is essential. Assessing Palantir’s financial health, competitive positioning, and market dynamics can provide a better understanding of its risk-reward profile. So, while its AI capabilities and expanding market reach present a compelling case for long-term potential in PLTR, investors are advised to remain vigilant of short-term volatility and inflated valuation impacting stock performance.

Chinese EV Companies: Top Leaders in the Global Shift to Electric Vehicles

Posted on by The INO.com Team

In the rapidly evolving landscape of electric vehicles (EVs), Chinese manufacturers are emerging as dominant players, reshaping global markets traditionally led by Western automakers. As the U.S. and Europe impose tariffs and trade barriers, China’s EV upstarts are strategically expanding into developing markets, including Brazil, Mexico, and Southeast Asia.

In May, the Biden administration announced plans to slap new tariffs on Chinese EVs, advanced batteries, and other goods intended to protect U.S. manufacturers. Moreover, the European Commission (EU) will impose extra duties of up to 38.1% on imported Chinese electric cars starting in July, raising concerns about possible retaliation from Beijing.

According to data compiled by technology intelligence firm ABI Research for Business Insider, Chinese automakers have already established significant dominance in several emerging markets. In Brazil, China’s carmakers captured around 88% of the EV market, while in Thailand, they held a 70% share during the first quarter.

Despite their current small size, the EV markets in most of these countries are experiencing rapid growth.

Chinese EV companies such as BYD Company Limited (BYDDY), NIO Inc. (NIO), and XPeng Inc. (XPEV) are at the forefront of this transformation, leveraging technological prowess and strategic market expansions to solidify their positions worldwide.

BYD Company Limited (BYDDY)

With a $95.78 billion market cap, BYD Company Limited (BYDDY) is one of China’s leading automobile manufacturers that engages in new EVs and power batteries internationally. The company operates in two segments: Mobile Handset Components, Assembly Service and Other Products; and Automobiles and Related Products and Other Products.

BYDDY’s strategic approach combines technological leadership, market diversification, and strategic partnerships and investments to solidify its position as a frontrunner in the global EV industry. The company has expanded its footprint in regions, including Brazil, Mexico, Australia, and Southeast Asia, capitalizing on growing world demand for EVs.

According to ABI Research figures, BYD accounted for about 71% of EV sales in Brazil and 45% in Thailand in the first quarter.

On May 16, BYD launched its first pickup truck, BYD SHARK, in Mexico. BYD SHARK is positioned as a new energy-intelligent luxury pickup featuring the DMO Super Hybrid Off-road Platform. This model represents the latest addition to BYD's product range, tailored for global markets, marking the company’s first global product launch outside China.

Stella Li, Executive Vice President of BYD and CEO of BYD Americas, said, “With the introduction of our inaugural new energy pickup, BYD SHARK, we’re poised to redefine the conventional fuel pickup landscape through advanced technology, providing users with a lifestyle characterized by boundless opportunities. BYD is now ushering in the era of the global new energy pickup.”

Also, in March, BYDDY launched its third electric car, Seal, a premium electric sedan with a price starting at around $49,458, in India’s booming EV market. In 2023, the company sold 1,877 cars in India, an increase of 314% year-over-year.

Notably, in the same month, BYD Company became the world’s first automaker to roll off its seven millionth new energy vehicle, the DENZA N7, which was introduced at its Jinan factory in China, underscoring another groundbreaking accomplishment for the brand.

For the first quarter that ended March 31, 2024, BYDDY’s operating revenue increased 4% year-over-year to RMB124.94 billion ($17.20 billion). Net profit attributable to shareholders of the listed company rose 10.6% from the year-ago value to RMB4.57 billion ($629.28 million). Its earnings per share came in at RMB1.57, up 10.6% from the previous year’s quarter.

Analysts expect BYDDY’s revenue and EPS for the fiscal year (ending December 2024) to increase 25.7% and 15.9% year-over-year to $104.92 billion and $3.14, respectively. For the fiscal year 2025, the company’s revenue and EPS are expected to grow 13.3% and 9.2% from the prior year to $118.86 billion and $3.43, respectively.

BYDDY’s stock is up nearly 14% over the past month and has gained more than 11% year-to-date.

NIO Inc. (NIO)

With a $9.27 billion market cap, NIO Inc. (NIO) has gained prominence for its focus on high-performance, smart EVs and innovative battery-swapping technology. Based in Shanghai, China, the company provides five and six-seater electric SUVs, as well as smart electric sedans. It also offers power solutions, including Power Home, Power Swap, Power Charger and Destination Charger, Power Mobile, Power Map, and more.

Besides its solid presence in China, NIO has established footholds in global markets such as Southeast Asia, Latin America, and Europe, aiming to capitalize on the growing demand for luxury EVs. Moreover, NIO plans to expand to the Middle East in 2024, CEO William Li stated on an earnings call, adding that deliveries of its lowest-priced brand will begin in the first half of the following year.

On April 8, NIO officially inaugurated its Smart Driving Technology Center in Schönefeld near Berlin. It is the first center outside China, underscoring the company's expanding international footprint.

NIO delivered 20,544 vehicles in May, indicating a substantial increase of 233.8% year-over-year. The deliveries comprised 12,164 premium smart electric SUVs and 8,380 premium smart electric sedans. Also, in April, the company delivered 15,620 vehicles. As of May 31, 2024, cumulative deliveries of NIO vehicles reached a staggering 515,811.

“Despite the intensifying market competition, NIO’s premium brand positioning, industry-leading technologies, and innovative ‘chargeable, swappable, upgradeable’ power experience have been recognized for their exceptional competitiveness, leading to solid sequential growth in vehicle deliveries in recent months,” said William Bin Li, chairman and CEO of NIO.

“In April 2024, we launched the 2024 ET7 Executive Edition, featuring 180 upgrades tailored to the needs of business travelers and professionals, further enhancing our competitiveness in the premium sedan market. In addition, with a commitment to create better family life, our new smart electric vehicle brand, ONVO, along with its inaugural product L60, was unveiled in May 2024,” he added.

Further, NIO extended its strategic cooperation on battery swapping by collaborating with GAC Group and FAW Group. These add to NIO’s existing network of strategic alliances with Changan Automobile, Geely Group, JAC Group, Chery Automobile, and Lotus Technology. NIO remains dedicated to advancing its evolving battery-swapping ecosystem, aiming to deliver efficient and convenient recharging solutions for its customers.

During the first quarter that ended March 31, 2024, NIO reported vehicle sales of $1.16 billion, and its total revenues were $1.37 billion. Its gross profit grew 200.5% from the prior year’s quarter to $67.60 million. As of March 31, 2024, the company’s cash and cash equivalents, restricted cash, short-term investment and long-term time deposits stood at $6.30 billion.

Analysts expect NIO’s revenue for the fiscal year (ending December 2024) to increase 21.4% year-over-year to $9.38 billion. Likewise, the company’s revenue for the fiscal year 2025 is anticipated to grow 43.7% year-over-year to $13.48 billion. Also, NIO’s stock has surged approximately 2% over the past five days.

XPeng Inc. (XPEV)

With a $7.48 billion market capitalization, XPeng Inc. (XPEV) designs, develops, and markets Smart EVs in China that appeals to the large, growing base of tech-savvy consumers. It provides SUVs under the G3, G3i, and G9 names; four-door sports sedans under the P7 and P7i names; and family sedans under the P5 name.

XPeng’s competitive pricing appeals to budget-conscious consumers without compromising quality or innovation. The company has expanded its operations into Europe and Southeast Asia, leveraging local partnerships and market insights to adapt its offerings to regional preferences.

XPEV delivered 10,146 Smart EVs in May, an increase of 35% year-over-year and 8% over the previous month. The XPENG X9 notably achieved monthly deliveries of 1,625 units, reaching a cumulative total of 11,456 units. Since its launch, it has continuously led sales in both the all-electric MPV and three-row model segments in China. XPENG has delivered 41,360 Smart EVs year-to-date, marking a 26% rise year-over-year.

On May 20, XPEV launched XOS 5.1.0, Tianji, the industry’s first AI-powered in-car OS. It features end-to-end large model technology, promoting the smart driving experience for XPENG car owners. The company will offer intelligent and personalized in-car AI assistant services through AI assistant Xiao P, AI Chauffeur, and AI Bodyguard. The recent launch outlines XPeng’s new market positioning as the global pioneer and promoter of AI smart driving.

In the first quarter that ended March 31, 2024, XPEV’s total revenues increased 62.3% year-over-year to $910 million, and revenues from vehicle sales were $770 million, up 57.8% from the prior year’s quarter. The company’s gross margin was 12.9% for the first quarter, compared to 1.7% for the same period of 2023. As of March 31, 2024, its cash and cash equivalents, restricted cash, short-term investments and time deposits were $5.73 billion.

XPENG’s physical sales network reached 574 stores, covering about 178 cities as of March 31, 2024. Also, its self-operated charging station network had a total of 1,171 stations, including 359 XPENG S4 ultra-fast charging stations, at the end of the first quarter.

Xiaopeng He, Chairman and CEO of XPENG, further stated, “Through our strategic partnership with the Volkswagen Group, XPENG is at the forefront of monetizing in-house developed smart technologies as a technology enabler. Our industry-leading technologies are expected to gain greater market influence and yield better financial returns.”

Street expects XPEV’s revenue for the second quarter (ending June 2024) to increase 63.2% year-over-year to $1.13 billion. Similarly, the consensus revenue estimate for the fiscal year (ending December 2024) of $6.12 billion indicates an improvement of 43.6% year-over-year. Also, the company has topped the consensus revenue and EPS estimates in three of the trailing four quarters.

Shares of XPEV have surged more than 7% over the past five days.

Bottom Line

China’s EV newcomers seem to be strategizing for global dominance. They are expanding into developing markets, including Brazil, Mexico, Indonesia, Thailand, and India, amid tariff and trade barriers imposed by the U.S. and Europe.

Chinese manufacturers like BYDDY, NIO, and XPEV are leveraging their technological prowess and strategic market expansions to establish themselves as leaders in the global EV industry. These companies lead in cost-effective manufacturing and are at the forefront of advancements in battery technology, autonomous driving, and user-centric design.

With ambitious global expansion plans and a commitment to sustainability, these China-based EV giants are poised to reshape the automotive industry, setting new standards for electric mobility worldwide.