Inseego Shares Fall on Q3 Earnings Miss, Revenues Increase Y/Y

Shares of Palantir Technologies Inc. PLTR hit an all-time high of $63.39 on Nov. 13 before closing a tad lower at $60.7.

It has risen a whopping 180.3% in the past six months. This rally significantly outperforms the broader industry’s 34.8% rise and the Zacks S&P 500 composite’s 14.1% growth.

6 Months Price Performance

The S&P 500 Index today is down -0.12%, the Dow Jones Industrials Index is down -0.04%, and the Nasdaq 100 Index is down -0.19%.

Stocks today are mostly lower on long liquidation ahead of this afternoon’s speech from Fed Chair Powell. Also, some profit-taking is weighing on stocks as today’s strength in US economic news may keep the Fed from aggressively cutting interest rates. The 10-year T-note yield rose to a 4-1/2 month high today before turning lower after weekly initial unemployment claims fell more than expected to a 5-1/2 month low, and October producer prices rose more than expected, hawkish factors for Fed policy.

Some positive corporate news today is bullish for stocks. Walt Disney is up more than +7% after reporting better-than-expected Q4 adjusted EPS and raising its adjusted EPS growth forecast for fiscal 2025. Also, chip stocks are climbing today after ASML Holding NV affirmed its long-term guidance. In addition, airline stocks are moving higher today, as Barclays said a convergence in improving fundamentals and investor sentiment may drive a “powerful” rally for airline stocks next year.

US weekly initial unemployment claims fell -4,000 to a 5-1/2 month low of 217,000, showing a stronger labor market than expectations of 220,000.

US Oct PPI final demand rose +2.4% y/y, stronger than expectations of +2.3% y/y. Oct PPI ex-food and energy rose +3.1% y/y, stronger than expectations of +3.0% y/y.

Stocks have rallied sharply over the past week, with the S&P 500, Dow Jones Industrials, and the Nasdaq 100 posting new record highs on speculation President-elect Trump will boost corporate profits through tax cuts and reduced regulation.

The markets are looking ahead to today’s comments from Fed Chair Powell, who will speak on the economic outlook this afternoon at an event at the Dallas Fed. Also, Friday’s report on retail sales will be looked at to see if consumer spending is holding up. Oct retail sales are expected to be up +0.3% m/m, and Oct retail sales ex-autos are also expected to be up +0.3% m/m. In addition, the Q3 earnings season is wrapping up, with more than 50 companies scheduled to report quarterly results this week.

Of the 85% of companies in the S&P 500 that have released Q3 earnings so far, 75% surpassed the estimates, slightly below the 3-year average. According to Bloomberg Intelligence, companies in the S&P 500 have reported an average +8.4% y/y increase in quarterly earnings in Q3, more than double the preseason forecast.

The markets are discounting the chances at 76% for a -25 bp rate cut at the December 17-18 FOMC meeting.

Overseas stock markets today are mixed. The Euro Stoxx 50 is up +1.90%. China's Shanghai Composite Index closed down -1.73%. Japan's Nikkei Stock 225 fell to a 1-week low and closed down -0.48%.

Interest Rates

December 10-year T-notes (ZNZ24) today are up +3 ticks. The 10-year T-note yield is down -2.0 bp to 4.432%. Dec T-notes today recovered from a 4-1/2 month low and moved higher, and the 10-year T-note yield fell back from a 4-1/2 month high of 4.481%. Short covering emerged in T-notes today on carryover strength in German bunds after the dovish account of the ECB’s Oct 16-17 policy meeting sparked a rally in 10-year German bunds.

T-notes today initially moved lower on US economic news that showed Oct producer prices rose more than expected, and after weekly jobless claims fell more than expected to a 5-1/2 month low, hawkish factors for Fed policy. Also, anticipation that President-elect Trump’s pro-growth policies could quicken inflation continues to weigh on T-note prices.

European government bond yields today are mixed. The 10-year German bund yield is down -3.0 bp to 2.360%. The 10-year UK gilt yield is down -2.2 bp to 4.498%.

Eurozone Sep industrial production fell -2.0% m/m, weaker than expectations of -1.4% m/m and the biggest decline in 8 months.

ECB Vice President Guindos said the economic "recovery we were anticipating in the Eurozone is not happening with the intensity we expected."

The account of the ECB's Oct 16-17 meeting was seen as dovish as policymakers see inflation continuing to decline, saying "there was wide agreement that the incoming data since the September meeting had increased confidence in an ongoing disinflation process and that inflation would converge to the medium-term target."

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 27% for a -50 bp rate cut at the same meeting.

US Stock Movers

Super Micro Computer is down more than -8% to lead losers in the S&P 500 and Nasdaq 100 after the company delayed another quarterly 10-Q filing as it continue to search for a new accounting firm.

Stocks with big government contracts are under pressure today after President-elect Trump named Elon Musk and Vivek Ramaswamy to lead a government spending cut commission called the Department of Government Efficiency. As a result, Leidos Holdings is down more than -5%, and L3Harris Technologies is down more than -4%. Also, General Dynamics and RTX Corp are down more than -3%. In addition, Northrop Gruman , Lockheed Martin , and Huntington Ingalls Industries are down more than -2%.

Cisco Systems is down more than -2% to lead losers in the Dow Jones Industrials after forecasting 2025 revenue of $55.3 billion-$56.3 billion, the midpoint below the consensus of $55.88 billion.

Ibotta is down more than -15% after forecasting Q4 revenue of $100 million-$106 million, below the consensus of $1110.38 million.

Tetra Tech is down more than -9% after forecasting 2025 net revenue of $4.57 billion-$4.77 billion, the midpoint below the consensus of $4.68 billion.

Papa John’s International is down more than -3% after KeyBanc Capital Markets downgraded the stock to sector weight from overweight.

Kilroy Realty is down more than -1% after Scotiabank downgraded the stock to underperform from sector perform with a price target of $38.

Walt Disney is up more than +7% to lead gainers in the Dow Jones Industrials after reporting Q4 adjusted EPS of $1.14, above the consensus of $1.10 and said it sees high-single-digit adjusted EPS growth in fiscal 2025, above the consensus of +4%.

Tapestry is up more than +12% to lead gainers in the S&P 500 after announcing it ended a $8.5 billion planned merger with Capri Holdings Ltd due to US antitrust regulators’ objections.

Chip stocks are moving higher today after ASML Holding NV affirmed its long-term guidance and pledged “growing dividends and share buybacks.” As a result, ASML Holding NV is up more than +5% to lead gainers in the Nasdaq 100, and Qualcomm is up more than -2%. Also, Nvidia , Applied Materials , Lam Research , Marvell Technology , and Intel are up more than +1%.

Airline stocks are climbing today after Barclays said a convergence in improving fundamentals and investor sentiment may drive a “powerful” rally for airline stocks next year. As a result, American Airlines Group , Alaska Air Group , Delta Air Lines , Southwest Airlines , and United Airlines Holdings are up more than +1%.

Wynn Resorts Ltd is up more than +7% after a 13D filing showed billionaire Tilman Fertitta reported a 9.9% stake in the company.

Charles Schwab is up more than +3% after reporting core new net assets brought to the company by new and existing clients for October was $24.6 billion.

CNH Industrial NV is up more than +6% after activist investor David Einhorn revealed a new position in the company.

Beazer Homes USA is up more than +15% after reporting Q4 revenue of $806.2 million, stronger than the consensus of $777.8 million.

Earnings Reports (11/14/2024)

Advance Auto Parts Inc (AAP), Applied Materials Inc (AMAT), Globant SA (GLOB), Post Holdings Inc (POST), Walt Disney Co/The (DIS).

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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policyhere.

ASML Holding NV shared its strategic roadmap during the 2024 Investor Day, highlighting key growth drivers and market expectations through the decade’s end.

The semiconductor equipment maker projected significant revenue expansion, with scenarios estimating annual sales of $46.51 billion – $63.43 billion (44 billion euros – 60 billion euros) by 2030, alongside a gross margin target of 56%-60%.

CEO Christophe Fouquet sees the company’s extended lithography portfolio and scalable EUV (Extreme Ultraviolet) technology as crucial assets in capturing the potential of these emerging opportunities.

Also Read: Taiwan Semi Boosts Advanced Chipmaking with Record EUV Expansion, Grabs 56% Global Share

ASML expects robust demand from the semiconductor sector, with projected global sales surpassing $1 trillion by 2030.

This outlook translates to an annual market growth rate of around 9% from 2025 to 2030. The firm anticipates a double-digit CAGR for EUV lithography spending within the same period, focusing on advanced Logic and DRAM nodes.

According to ASML, the integration of AI across industries presents a substantial opportunity for semiconductor firms. The company plans to leverage its EUV capabilities to accommodate the rising need for high-performance chips used in AI applications.

The scalability of EUV technology allows for efficient multi-patterning, which ASML expects will drive greater customer adoption through cost-effective manufacturing processes.

ASML’s CFO, Roger Dassen, highlighted the company’s confidence in its financial targets, citing a strong pipeline of product demand and increasing lithography spending.

He restated the company’s capital allocation strategy, which includes substantial returns to shareholders through dividends and share buybacks.

The company is navigating geopolitical tensions between Washington and China as a U.S. ally.

ASML CEO Christophe Fouquet acknowledges rising U.S. pressure to restrict chip technology sales to China. Despite this, China remains ASML’s top market, primarily for sales of mature chips rather than the advanced AI semiconductors targeted by U.S. export restrictions.

ASML dominates the market for specialized lithography machines, essential for companies like Taiwan Semiconductor Manufacturing Co in producing cutting-edge chips used in Apple Inc smartphones and Nvidia Corp AI processors.

Reports suggest that Taiwan Semiconductor plans to purchase advanced ASML lithography equipment by the end of the year, with each unit priced at $350 million.

Price Actions: ASML stock traded higher by 5.09% at $707.67 at the last check on Thursday.

Also Read:

• Mastercard’s 2030 Vision: A Future Without Passwords, Card Numbers

Photo via ASML

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

ServiceNow NOW is adding Generative AI (GenAI) and governance innovations to the Now platform to foster responsible AI. NOW is adding more than 150 GenAI innovations to its portfolio, including new, expanded Now Assist capabilities with an AI Governance feature for secure and compliant AI practices.

NOW’s expanding GenAI portfolio and rich partner base have been driving top-line growth. A strong partner base, which includes the likes of Five9 FIVN, Visa, Microsoft MSFT, NVIDIA NVDA, Zoom, Siemens, Rimini Street, Siemens, IBM, Genesys, Fujitsu, Equinix, Boomi and Infosys, is strengthening ServiceNow’s AI capabilities.

NOW and Five9 recently signed an expanded partnership to deliver a turnkey AI-powered solution for unified end-to-end employee and customer experiences by combining ServiceNow Customer Service Management and the Five9 platform.

NOW’s prospects remain bright, with shares appreciating 48% year to date, outperforming the Zacks Computer & Technology sector and the Zacks Computers – IT Services industry’s returns of 30% and 15.8%, respectively.

ServiceNow shares are trading above the 50-day and 200-day moving averages, indicating a bullish trend.

NOW Trades Above 50-day & 200-day SMA

Let us dig deeper to find out the factors driving NOW’s prospects.

YTD Performance

ServiceNow Raises Subscription Revenue Guidance

For 2024, NOW expects subscription revenues of $10.655-$10.66 billion (up from previous guidance of $10.575-$10.585 billion), which suggests a rise of 23% from the 2023 actuals on a GAAP basis and 22.5% on a non-GAAP basis.

ServiceNow expects the non-GAAP subscription gross margin to be 84.5% and the non-GAAP operating margin to be 29.5%. The free cash flow margin is expected to be 31%.

For fourth-quarter 2024, subscription revenues are projected between $2.875 billion and $2.88 billion, suggesting a year-over-year improvement of 21.5-22% on a GAAP basis. At cc, subscription revenues are expected to grow in the 20.5%.

Current Remaining Performance Obligation is expected to grow 21.5% year over year on both non-GAAP and GAAP basis.

ServiceNow expects a non-GAAP operating margin of 29% for the current quarter.

The Zacks Consensus Estimate for 2024 earnings is pegged at $13.87 per share, up 0.4% over the past 30 days, indicating a 28.66% year-over-year increase.

ServiceNow, Inc. Price and Consensus

ServiceNow, Inc. price-consensus-chart | ServiceNow, Inc. Quote

The consensus mark for 2024 revenues is pegged at $10.97 billion, suggesting growth of 22.33% over the 2023 reported figure.

Strong Portfolio Aids NOW’s Prospects

ServiceNow is extensively leveraging AI and machine learning technologies to boost the potency of its solutions. NOW’s expanding GenAI capabilities are noteworthy, as its total addressable market is expected to hit $275 billion in 2026.

ServiceNow’s latest update, Xanadu, offers AI-powered, purpose-built industry solutions for domains, including telecom, media, and technology, financial services and the public sector.

The Xanadu update adds the latest AI capabilities to boost customer agility, enhance productivity and improve employee experiences. It expands the GenAI portfolio to enterprise functions, including Security, and Sourcing & Procurement Operations.

NOW plans to integrate Agentic AI into the ServiceNow platform and unlock 24/7 productivity at a massive scale. This service will be available this November for Customer Service Management AI Agents and IT Service Management AI Agents. It is expected to reduce the time to resolve an issue and make live agents more productive.

Strong Liquidity Makes NOW Stock Attractive

A strong liquidity position, with a cash balance of $5.295 billion as of Sept. 30, 2024, is noteworthy. ServiceNow generated a free cash flow of $471 million in the third quarter of 2024.

NOW expects the free cash flow margin to be 31% for 2024.

The strong liquidity position allows ServiceNow to pursue various growth opportunities, including acquisitions and share repurchases.

In third-quarter 2024, NOW repurchased roughly 272,000 shares for $225 million and had $562 million available for future share repurchases under the existing program.

NOW’s Strong Prospects Justify Premium Valuation

However, the NOW stock is not so cheap, as the Value Score of F suggests a stretched valuation at this moment.

In terms of the forward 12-month Price/Sales ratio, NOW is trading at 16.7X, higher than its median of 13.72X and the sector’s 6.37X.

Price/Sales Ratio (F12M)

We believe that the strong growth prospect justifies ServiceNow’s premium valuation.

Conclusion

ServiceNow’s robust GenAI portfolio and strong partner base are expected to drive its clientele, boosting subscription revenues. The Growth Score of B makes the stock attractive for growth-oriented investors.

ServiceNow currently has a Zacks Rank #2 (Buy), which implies that investors should start accumulating the stock right now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research

Hewlett Packard Enterprise HPE shares have gained 21.6% in the past six months, outperforming the Zacks Computer and Technology Sector and the S&P 500 index’s return of 11.7 and 12.7, respectively. HPE also outperformed the Zacks Computer - Integrated Systems industry's decline of 2.3% in the past six months. HPE’s outperformance reflects investors’ confidence in the company’s innovative portfolio, which is demonstrating significant growth in the high-performance computing (HPC) and artificial intelligence (AI) space.

HPE recently extended its footprint in the HPC and AI space with the introduction of new products, including new cooling systems, networking and storage components, AI-optimized servers and user service software. HPE’s new portfolio of compute systems also leverage accelerators from Advanced Micro Devices AMD, Intel INTC and NVIDIA NVDA, enabling users-tailored performance.

The newly launched HPE Cray Supercomputing EX4252 Gen 2 Compute Blade features a one-rack unit system capable of carrying up to 98,304 cores in a single cabinet. The accelerator is equipped with eight 5th Gen AMD EPYC processors for high performance workloads. Another accelerator namely the HPE Cray Supercomputing EX154n is capable of accommodating up to 224 NVIDIA Blackwell GPUs in a single cabinet.

On the networking front, HPE has launched Slingshot interconnect 400, which integrates network interface controllers, cables and switches to offer 400 gigabit-per-second of data speed. HPE has also unveiled Cray Supercomputing Storage Systems E2000, which doubles the input-output operations compared to the previous generation. Based on an open source Lustre file system, the E2000 optimizes CPU and GPU-based operations by cutting down the idle time.

Its latest servers include the ProLiant Compute XD680 server and XD685 server. The ProLiant Compute XD680 server is integrated with Intel Gaudi 3 AI accelerators while the XD685 server will either come with NVIDIA H200 SXM Tensor Core GPUs or NVIDIA Blackwell GPUs. Both these servers are AI-optimized and developed with price-for-performance efficiency. HPE has also launched user service software to enable its customers to optimize power consumption and system efficiency and offer flexibility across various devices.

Hewlett Packard Enterprise 6 Month Performance

Amid concerns over potential trade penalties from the U.S., Yang Chin-long, the governor of Taiwan’s central bank, has voiced optimism for Taiwan Semiconductor Manufacturing Co.’s upcoming $65 billion investment in U.S. factories.

What Happened: During a legislative session, Yang highlighted the strategic significance of semiconductors and tech products manufactured in Taiwan, noting their essential role in the U.S. supply chain, Reuters reported on Thursday.

He stated, “Chips and information and telecommunications products are what the U.S. needs most. I don’t think the United States would penalise Taiwan.”

Yang mentioned that TSMC’s plan to invest $65 billion in new factories in Arizona would help address the trade imbalance. However, he warned that President-elect Donald Trump‘s planned new tariffs could impact Taiwan’s export-driven economy. Taiwan’s trade surplus with the U.S. is expected to reach $50 billion this year.

See Also: Apple’s Next Big Bet? Think Smaller, Says Analyst: ‘There Will Never Be Another... iPhone’

Why It Matters: In late October, Trump criticized Taiwan’s semiconductor industry during an episode in “The Joe Rogan Podcast.”

"You know, Taiwan, they stole our chip business ... and they want protection," he said, pledging to impose tariffs on Taiwanese chips if elected, which could significantly impact the company, a key supplier to tech giants like Apple Inc. and Nvidia Corp .

Despite Trump’s election win, TSMC announced that its U.S. expansion plans remain unchanged, continuing with a $65 billion investment in advanced semiconductor facilities in Arizona.

Additionally, TSMC faces new U.S. restrictions, as the U.S. Department of Commerce ordered a halt on AI chip sales to China, reflecting ongoing efforts to limit China’s access to advanced technology.

Read Next:

• Bill Gates Introduced Windows 41 Years Ago Today: Here’s How Much You’d Have If You Invested $1000 In Microsoft When It Went Public

Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

Photo by Sundry Photography on Shutterstock

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.