Amazon’s move into AI chip pressures Nvidia

Amazon developing AI chip to work on Alexa-powered devices

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Amazon developing AI chip to work on Alexa

Amazon (AMZN) is developing a chip designed for artificial intelligence to work on the Echo and other hardware powered by Alexa, according to The Information, citing a person familiar with the matter.

The chip should allow Alexa-powered devices to respond more quickly to commands, the report added.

The effort makes Amazon the latest major tech company, following Google (GOOG; GOOGL) and Apple (AAPL), to design its own AI chips, which may have major ramifications for chip companies like Intel (INTC) and Nvidia (NVDA), the publication said.

Recently, Nvidia announced major accomplishments in the AI space.

On January 10th, NVIDIA (NVDA) unveiled details of its functional safety architecture for NVIDIA DRIVE, its AI autonomous vehicle platform, which uses redundant and diverse functions to enable vehicles to operate safely, even in the event of faults related to the operator, environment or systems.

Nvidia pullback after Q2 beat a buying opportunity. See Stockwinners.com Market Radar for more
Nvidia lower on Amazon move into AI space

On January 8th, Volkswagen announced it plans to use Nvidia to build AI into new electric microbus  Volkswagen (VLKAY) and NVIDIA (NVDA) shared their vision for how AI and deep learning will shape the development of a new generation of intelligent Volkswagen vehicles using the NVIDIA DRIVE IX platform to create new cockpit experiences and improve safety.

In November, GE Healthcare (GE) and Nvidia (NVDA) announced they will deepen their 10-year partnership to bring the most sophisticated artificial intelligence to GE Healthcare’s 500,000 imaging devices globally and accelerate the speed at which healthcare data can be processed.

Amazon’s move into AI chip for Alexa powered devices could pave the way for Amazon to expand its reach into autonomous driving space

In Monday’s trading, shares of Nvidia have dropped more than 2% to $227. AMZN is up more than 1% to $1355.


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Barron’s is bullish on banks, bearish on Twitter and Snap

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names:

Stockwinners offers Barron's review of Stockwinners offers stocks to buy, stocks to watch, upgrades, downgrades, earnings, Stocks to Buy On Margin
Stockwinners offers Barron’s review of stocks to buy, stocks to watch

BULLISH   MENTIONS: 

Bigger bank payouts amid looser regulation – Helped by higher capital levels and more leeway from regulators, large-cap banks should be increasing dividends over the next several years, Lawrence Strauss writes in this week’s edition of Barron’s. Those include Bank of America (BAC), BB&T (BBT), Citigroup (C), Citizens Financial (CFG), Fifth Third Bancorp (FITB), PNC Financial (PNC), Regions Financial (RF), SunTrust (STI), U.S. Bancorp (USB) and Wells Fargo (WFC), the report notes.

Delta, Apple among stocks merit a look – Shares of Delta (DAL), Apple (AAPL), Starbucks (SBUX), D.R. Horton (DHI), Verizon (VZ), American Electric Power (AEP) and NextEra Energy (NEE) have fallen but estimates for their earnings have risen, Jack Hough writes in this week’s edition of Barron’s. These names should be worth consideration by bargain hunters, he adds.

Wells Fargo looks inexpensive, regulatory risks remain– Shares of Wells Fargo (WFC) have badly trailed rivals as the bank grapples with the fallout from scandals, Ben Walsh write’s in this week’s edition of Barron’s. And while Wells Fargo looks inexpensive relative to some other big banks, regulatory risks remain and changing the bank’s aggressive culture will not be easy, the report adds.

Market volatility putting bitcoin to the test – Bitcoin started to rebound last week, but its usefulness as a hedge against stock market volatility has lately been called into questions, Avi Salzman writes in this week’s edition of Barron’s. While Bulls argue that short-term price action does not change the longer trend, bitcoin price drop has been fueled by the same problems that it has had for year, namely unreliable exchanges and worries about manipulation and fraud, the report notes. If bitcoin is to survive as an alternate currency, the hype will have to fade and it will have to become useful, Salzman adds

BEARISH  MENTIONS

Twitter/Snap ‘hot for now,’ may not last – Results from Twitter (TWTR) and Snap (SNAP) beat expectations last week and both notched double-digit percentage gains, but this cannot last, with the thrill likely to fade in coming weeks, Tiernan Ray writes in this week’s edition of Barron’s. Twitter and Snap have years ahead of them to develop their product and innovate in ways that may give them a broader appeal, but for now they are boutiques in an advertising market of giants that includes not only Facebook (FB) but Alphabet (GOOG; GOOGL) and Amazon (AMZN), Ray adds.


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Amazon.com enters delivery business

Amazon.com to directly compete with United Parcel Service and FedEx

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Amazon.com to directly compete with United Parcel Service and FedEx

Amazon.com Inc. (AMZN) is preparing to launch a delivery service for businesses, positioning it to directly compete with United Parcel Service Inc. and FedEx Corp.

Amazon is planning to launch a delivery services for businesses called “Shipping with Amazon” that would compete with FedEx (FDX) and UPS (UPS), The Wall Street Journal reports.

The service would involve Amazon picking up packages from businesses and shipping them to consumers, people familiar with the matter say.

The tech giant expects to roll out the SWA service in Los Angeles “in the coming weeks” with third-party merchants that sell products through its website, the people say, and could expand the service to more cities as soon as this year.

Amazon’s business delivery is expected to roll out in Los Angeles in the coming weeks with third-party merchants that sell goods via its website. More cities are to follow.

UPS said it is still a partner of Amazon.

“UPS continues to support Amazon and many other customers and we don’t make comments about their business strategies or decisions regarding their utilization of UPS services,” a spokesperson for the company said.

In pre-market trading, FedEx is down about 2% and UPS dropped 3.5%.


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Barron’s is bullish on Danaher and GM

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names:  

Stockwinners offers Barron's review of Stockwinners offers stocks to buy, stocks to watch, upgrades, downgrades, earnings, Stocks to Buy On Margin
Stockwinners offers Barron’s review of stocks to buy, stocks to watch

BULLISH   MENTIONS:

Danaher among more reliable stocks– Danaher’s (DHR) results were met with cries of sell even though they were stellar as ever, sending the shares into negative territory on Monday, Ben Levisohn writes in this week’s edition of Barron’s. Fast-forward to Friday, the stock market was in freefall but the stock weathered the blast, he notes, adding that there is something to be said for Danaher’s consistency. While it will never be the fastest grower, it has grown sales at 4%-5%, quarter after quarter, while cutting costs and improving efficiency to grow earnings, making it one of the more reliable stocks out there, the report says.

General Motors shares could rise more than 35% – General Motors (GM) has been turning in strong profits, which have helped it fund research into autonomous and electric cars, Jack Hough writes in this week’s edition of Barron’s. When Tesla’s (TSLA) stock-market value surpassed General Motors last year, it was big news, but recently the latter has edged back into the top spot, he adds. Selling at just seven times forward earnings, General Motors shares have room to rise more than 35% in the year ahead, Hough contends.

Cisco, Oracle among stocks with rising dividend estimates – Some of the large-cap companies whose dividend estimates for their current fiscal year have increased by at least 2% since July include Cisco (CSCO), Texas Instruments (TXN), UnitedHealth (UNH), Oracle (ORCL), Comcast (CMCSA), 3M (MMM), AbbVie (ABBV), Boeing (BA), Union Pacific (UNP), Bank of America (BAC), Citigroup (C), Wells Fargo (WFC) and JPMorgan (JPM), Lawrence Strauss writes in this week’s edition of Barron’s.

TD Ameritrade adding round-the-clock trading – TD Ameritrade  (AMTD) is offering customers more social media capabilities and has added round-the-clock trading in 12 exchange-traded funds, from Sunday evening through Friday evening using its thinkorswim trading platform or TD Ameritrade Mobile Trader app, Theresa Carey writes in this week’s edition of Barron’s.

Apple, Facebook facing challenges, shares still holding up well – Considering the challenges they face, both Apple (AAPL) and Facebook (FB) shares held up well, Tiernan Ray writes in this week’s edition of Barron’s. Apple offered a forecast for its March quarter that missed expectations, and Wall Street now thinks that the company is reaching a bit too far in pricing the iPhone X at $999-$1150, he notes. Nonetheless, Apple is still an empire very much in control of its destiny, Ray contends. Meanwhile, Facebook said people are spending less time than before on the site, but Mark Zuckerberg calmly assured the Street that he thinks it is a good thing, the report points out.

Cisco, Salesforce among most sustainable companies – Cisco (CSCO) tops Barron’s first annual list of most sustainable companies, followed by Salesforce (CRM), Best Buy (BBY), Intuit (INTU), HP Inc. (HPQ), Texas Instruments (TXN), Microsoft (MSFT), Oshkosh (OSK), Clorox (CLX) and Xylem (XYL).

Spirit Air offers plenty of potential upside – Following a steep decline, shares of Spirit Airlines (SAVE) now trade for less than 12 times forward earnings estimates, a good value or growth play, Brett Arends writes in this week’s edition of Barron’s. Long-term investors may need to be patient because short-term headwinds pop up so frequently for airline stocks, but in return for its risks, Spirit offers reasonable valuations and plenty of potential upside, he argues

BEARISH  MENTIONS:

Musk new compensation package sets wrong targets – Tesla’s  (TSLA) new 10-year compensation package, which considers that Elon Musk could grow the company’s market capitalization from the current $58B to $650B in 2028, is not shareholder-friendly as it emphasizes market cap goals, not sustainable profits, Vito Racanelli writes in this week’s edition of Barron’s.


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Alibaba buys a third of Ant Financial 

Alibaba to take 33% equity stake in Ant Financial 

Alibaba to take 33% equity in Ant Financial. Stockwinners.com
Alibaba to take 33% equity in Ant Financial

Alibaba Group (BABA) and Ant Small and Micro Financial Services Group announced that pursuant to 2014 transaction agreements, Alibaba will acquire a 33% equity interest in Ant Financial.

The parties have agreed to certain amendments to their 2014 transaction agreements to facilitate the transaction.

Under the terms of the amended agreements, Alibaba will acquire newly-issued equity from Ant Financial in exchange for certain intellectual property rights owned by Alibaba exclusively related to Ant Financial. There will be no cash impact to Alibaba following completion of the transaction.

Upon closing, the companies will terminate the current profit-sharing arrangement under which Ant Financial pays royalty and technology service fees in an amount equal to 37.5% of its pre-tax profits to Alibaba.

Daniel Zhang, CEO of Alibaba Group, said, “This transaction is a significant step for Alibaba to enhance our long-term strategic relationship with Ant Financial as we continue to pursue our mission to make it easy to do business anywhere.

Importantly, an equity stake in Ant Financial enables Alibaba and our shareholders to participate in the future growth of the financial technology sector, as well as the benefits of user growth and improved customer experience.”

The transaction was reviewed and approved by a committee of non-executive directors, the majority of whom are independent under NYSE rules, the audit committee of Alibaba’s board and the full Alibaba board of directors.

The closing of the transaction is subject to customary conditions. Alibaba will acquire the equity interest in Ant Financial through a Chinese domestic subsidiary.

Morrison & Foerster and King & Wood Mallesons acted as legal advisors, Credit Suisse acted as financial advisor and PricewaterhouseCoopers acted as tax advisor to the Alibaba Independent Committee.

Wachtell, Lipton, Rosen & Katz, Sidley Austin LLP and Fangda Partners acted as legal advisors to Ant Financial.


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Amazon, Berkshire Hathaway, JPMorgan to partner on employee healthcare

Amazon, Berkshire Hathaway, JPMorgan to partner on employee healthcare

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Amazon, Berkshire Hathaway, JPMorgan to partner on employee healthcare

Amazon (AMZN), Berkshire Hathaway (BRK.A, BRK.B) and JPMorgan Chase & Co. (JPM) announced that they are partnering on ways to address healthcare for their U.S. employees, with the aim of improving employee satisfaction and reducing costs.

Amazon, Berkshire Hathaway, JPMorgan to partner on employee healthcare
Amazon, Berkshire Hathaway, JPMorgan to partner on employee healthcare. Stockwinners.com
Amazon, Berkshire Hathaway, JPMorgan to partner on employee healthcare

The three companies, which bring their scale and complementary expertise to this long-term effort, will pursue this objective through an independent company that is free from profit-making incentives and constraints.

The initial focus of the new company will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost.

The effort announced today is in its early planning stages, with the initial formation of the company jointly spearheaded by Todd Combs, an investment officer of Berkshire Hathaway; Marvelle Sullivan Berchtold, a Managing Director of JPMorgan Chase; and Beth Galetti, a Senior Vice President at Amazon.

The longer-term management team, headquarters location and key operational details will be communicated in due course.

Health insurance companies are lower in pre-market trading on the news.

Shares of the owners of pharmacy benefit managers, including Express Scripts (ESRX), CVS Health (CVS) and UnitedHealth (UNH), are sliding after Amazon (AMZN), Berkshire Hathaway (BRK.A, BRK.B) and JPMorgan Chase (JPM) announced that they are partnering on “ways to address healthcare for their U.S. employees, with the aim of improving employee satisfaction and reducing costs.” The three companies will pursue this objective through an independent company that is “free from profit-making incentives and constraints,” they announced earlier this morning.


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Bed Bath & Beyond tumbles on competition

Bed Bath & Beyond sinks after analyst says sell with competition rising

Bed Bath & Beyond tumbles on competition. Stockwinners.com
Bed Bath & Beyond tumbles on competition

Shares of Bed Bath & Beyond (BBBY) dropped in Friday morning trading after an analyst downgraded the stock to his firm’s equivalent of a Sell rating, citing concerns over the growth and margin outlook relative to peers.

ANALYST TURNS BEARISH

JPMorgan analyst Christopher #Horvers downgraded Bed Bath & Beyond to Underweight, his firm’s equivalent of a Sell rating, and cut his price target for the shares to $18 from $21.

In a note to clients titled “If you can’t comp positively now…”, Horvers noted that the stock has run up 16% since the House passed the tax bill in November, and recent estimate revisions suggest the Street is assuming 50% flow through of tax savings.

He believes this could prove “aggressive” considering the increased competition in the home furnishings space and Bed Bath & Beyond’s need to invest in advertising, price and infrastructure.

Horvers doesn’t see a turn “in sight” for the company’s comps given that the retailer was unable to post positive same-store sales during the critical holiday season despite a “robust” consumer backdrop.

Bed Bath & Beyond posted a 0.3% decline in SSS last quarter despite including November, “which was arguably the best month of the year for retailers.”

Additionally, the analyst noted that his work indicates that trends have slowed sequentially quarter-to-date, in contrast to a string of positive pre-announcements from retailers. He sees margin pressure getting worse before getting better and believes that sales may take longer to rebound.

COMPETITORS

Bed Bath & Beyond competes with offerings from Amazon (AMZN) and Target (TGT), as well as companies including Kohl’s (KSS), Overstock (OSTK) and Wayfair (W).

Earlier this month, Loop Capital said Amazon has become “more aggressive” in its pricing strategy, and that in a study across a basket of 50 items for both companies, Bed Bath & Beyond prices were on average 19.8% more expensive than Amazon.

Target recently said that its comparable sales in the combined November/December period grew 3.4%, which was better than the company previously said that it expected, and Target raised its FY17 earnings view.

Kohl’s, meanwhile, said that its total and comparable sales for the November and December combined period were up 6.9% over last year.

Kohl’s Chief Executive Officer Kevin Mansell noted that “All lines of business and all regions reported positive comp sales” for the critical holiday period.

In December, Bed Bath & Beyond beat analysts’ estimates on the top and bottom line and backed its FY17 adjusted EPS view.

The company forecast FY17 revenue flat to slightly positive and SSS down in the low single-digit percentage range.

PRICE ACTION

Bed Bath & Beyond is down about 6% in morning trading to $21.70.


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