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Tim Cook calls it the biggest iPad day since its introduction. (0:16) Disney sinks on revenue miss. (2:17) Reasons not to sell in May. (4:45)
This is an abridged transcript of the podcast.
Apple (NASDAQ:AAPL) took the wraps off its latest iPads, showcasing a new iPad Air, iPad Pro, and more.
CEO Tim Cook called it “the biggest day for the iPad since its introduction.”
Among the updates:
The new iPad Air is nearly 50% faster than the previous iPad Air, with up to three times more performance. Apple also touted the iPad Air’s artificial intelligence capabilities, with better machine learning capabilities.
The new iPad Pro offers a new display, bringing Tandem OLED, which improves color and pixel performance. The iPad Pro also offers nano texture-glass, which reduces glare, and comes with Apple’s latest chip, the 3 nanometer M4.
The new M4 also comes with a powerful CPU with four performance cores and six efficiency cores and a new 10-core GPU, bringing ray tracing—widely used to enhance gaming—to the iPad for the first time.
Apple also showed off new versions of its content editing apps, Final Cut Pro and Logic Pro.
The unveiling comes as Apple’s iPad business has experienced ongoing weakness in recent memory. Revenue attributed to the iPad fell 17% year-over-year to $5.56B in the most recently reported quarter.
In today’s trading
It’s another day lacking real macro drivers, and the major averages are little changed.
Treasury yields are lower on the long end, with the 10-year (US10Y) back below 4.45%.
With earnings season close to winding down, J.P. Morgan strategist Marko Kolanovic says forecasts for the S&P EPS to rise 17% by Q4 looks optimistic.
“To achieve this, one needs to assume very high topline growth or a very strong expansion in profit margins (i.e., a strong expansion in the EPS to Sales Per Share ratio). We are skeptical of both.”
Both “revenue and earnings growth for the S&P 500 are converging towards a mid-single digit (i.e., close to 5%) growth pace rather than the exuberant high double-digit consensus growth estimate for this year,” he added.
Among active stocks
Disney (DIS) slumped following a slight miss on revenue, despite profitability in streaming for the quarter.
Looking ahead, Disney said it remains on track to generate approximately $14 billion of cash provided by operations and over $8 billion of free cash flow this fiscal year. Guidance for full-year adjusted EPS growth was set at 25%, which works out to around $4.70 vs. $4.71 consensus against prior guidance of $4.60. Notably, the combined streaming business is expected to be profitable in fiscal Q4.
Goldman Sachs raised its earnings estimates and price target for Nvidia (NVDA) amid “robust” AI server demand and better supply. Analyst Toshiya Hari raised his price target to $1,100 from $1,000 and reiterated his Buy rating on Nvidia, raising his earnings estimates for fiscal years 2025 to 2027 on average by 8%.
But famed investor Stanley Druckenmiller revealed in an interview that he had trimmed his Nvidia stake in March, saying he just needed “break” after the stock made a “hell of a run.” He said AI may be “overhyped” in the near term, with potential maybe taking four to five years to be realized, but it is underhyped in the long term.
Palantir Technologies (PLTR) shares may have slumped after the company released first-quarter results and guidance, but Wedbush says investors should be buying the dip.
Analyst Dan Ives said: “We are laser focused on the AI story playing out with [Artificial Intelligence Platform] leading the way, and Palantir delivered robust numbers on this front yet again. We believe any modest sell-off post print is a golden buying opportunity for this pure play AI name.” Ives has an Outperform rating and a $35 price target on the stock.
Peloton Interactive (PTON) surged following a report that a number of private equity firms have been considering a buyout of the fitness company. In recent months, Peloton has had talks with at least one firm, according to a CNBC report. The firm’s current level of interest in purchasing Peloton is unclear, and it’s also not clear if any other firms have had formal discussions.
In other news of note
Copper briefly breached the $10,000/ton mark today. Goldman Sachs raised its year-end copper price target to $12,000/ton from $10,000 previously, anticipating the world’s mines will struggle to match growing demand.
They said, “We continue to forecast a shift into open-ended and mounting metal deficits from 2024 onwards, highlighting the potential for a “stockout episode,” in which inventories run extremely low, by this year’s Q4.
And in the Wall Street Research Corner
BlackRock’s is making the case on why investors should stick with the equity market.
Wei Li, chief global investment strategist, says, “Sell in May and go away? I think not, and here is why.
- The Federal Reserve crystallized high for longer and pushed against highER for longer.
- While still strong, the labor market may be getting less tight.
- There is a buyback boom, and “not just the big names we read in the news.”