1. Apple investors focusing on the positives.

All eyes were on the largest company in the world ahead of its earnings results, with hopes high that it could set the tone for the rest of the market. So far, shares are up marginally after the bell, jumping on management’s guidance.

“Total revenue growth rose 4% YoY, but iPhone revenue growth remains near the flatline as it has for much of the last few years.

Analysts were hoping that its “Apple Intelligence” (AI) integration would be a catalyst for the next major iPhone upgrade cycle, but that has not been the case so far.

Rebounds in other business segments and strength in its high-margin services business helped buoy results as the tech giant develops an iPhone solution. It also pays a $0.25 per share dividend and bought back $30 billion in shares last quarter to reward investors for sticking with it.

Source: Finchat

2. Tesla earnings were another miss and JPMorgan was not exactly shy about their view on the stock.

“Tesla shares continue to strike us as having become completely divorced from the fundamentals. 4Q24 EBIT reported yesterday was as mentioned a -38% miss vs. the amount expected by consensus earlier that day, but was a -82% miss vs. the amount expected 10 quarters ago, even as TSLA shares are +75% over this time!”

“For how much longer can the stock remain divorced from the fundamentals? It has continued for far longer than we would ever have suspected, but we don’t think it can continue forever. Given the considerable run up in the shares as performance and expected future performance have by equal measure deteriorated, we sense a high risk of mean reversion.”

They have a target of $135!

3. “In bubbles, investors treat the leading companies – and pay for their stocks – as though the firms are sure to remain leaders for decades. Some do and some don’t, but change seems to be more the rule than persistence.” - Howard Marks

4. Overweight technology is a crowded trade.

"Goldman Sachs: Most of our clients expect Technology to outperform in 2025."

5. Deepseek upsets the AI market with low prices.

The price of using an AI model commercially is usually broken down into the use of tokens (the smallest AI model processing unit, around 4 characters long).

Uploading 1 million tokens into DeepSeek-R1 costs just 55 cents, according to the DocsBot website. Downloading 1 million tokens cost $2.19, according to the latest data.

An even cheaper option based on open-source technology is Nvidia's Llama 3.1 Nemotron 70B Instruct. The text-only model uses Meta's Llama AI and has received good marks from users as well as on performance tests.

6. Luxury companies’ margins under pressure.

“Luxury stocks enjoyed a stellar resurgence since the end of November, with the sector getting close to reclaiming last year’s highs. It was a bounce that closely resembled one seen almost exactly a year earlier. Optimism based on consumer-boosting stimulus in China, resilient global growth and strong results from Richemont jacked up expectations, only for these to be dashed when LVMH reported this week. Swatch’s earnings didn’t bode well either after a sharp drop in profit that was driven by slumping Chinese consumer demand. “

Suddenly, the sector is back in trouble.

Analysts have said they will respond to LVMH’s update with cuts to estimates, especially given concerns over the pressure on margins from rising costs.

More broadly, operating margin forecasts for the sector have plummeted in the past year, and a recent bounce in estimates now looks at risk of fizzling. “LVMH has not yet experienced a major inflection point in demand in any of its key geographies,” Citi analyst Thomas Chauvet says. “Together with the 2H24 Ebit miss and mixed tone of the analyst meeting, this supports our view that 2025 could be a year of modest sales and margin recovery for LVMH.

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