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Tag: Semiconductors

  • Earnings Watch: Microsoft, Tesla and Intel are about to face the doubters

    Earnings Watch: Microsoft, Tesla and Intel are about to face the doubters

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    After one of the worst years in Wall Street’s history, investors have some serious questions for companies. As holiday returns roll in — and with them, forecasts for the months or year ahead — many have the chance to answer those questions, or avoid them.

    In the busiest week of the holiday-earnings season so far, three big names will take the stage on back-to-back-to-back afternoons. Here is what to expect:

    Microsoft Corp.

    Microsoft
    MSFT,
    +3.57%
    shed $737 billion in market value last year, the third-most of any S&P 500 company, then announced plans to lay off some 10,000 workers this month. Previously a Wall Street darling thanks to the phenomenal growth of its Azure cloud-computing offering, Microsoft now faces a cutback in enterprise spending on cloud and other products, as companies seek to cut their bills after spending wantonly during the early years of the COVID-19 pandemic.

    First Take: Big Tech layoffs are not as big as they appear at first glance

    When the company announced layoffs, Chief Executive Satya Nadella admitted customers were cutting, saying “as we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less.” Analysts believe Azure may be holding up better than rivals, however, and will expect to hear about it when Microsoft results hit Tuesday afternoon.

    “Our Azure checks were mixed, but generally better than public cloud sentiment that has turned highly negative over the past few months,” Mizuho analysts wrote. “More specifically, we have heard of increasing levels of optimization, but it is being partially offset by many organizations prioritizing digital transformation.”

    From October: The cloud boom has hit its stormiest moment yet, and it is costing investors billions

    As cloud growth slows down, expect Microsoft to point to the next big buzzword in tech: Artificial intelligence, specifically ChatGPT, the chatbot product developed by OpenAI, which Microsoft has invested heavily in and expects to incorporate into its products. D.A. Davidson analyst Gil Luria this month wrote that Microsoft’s investments in OpenAI would help it build out more AI technology, including in its search engine Bing.

    Tesla Inc.

    Tesla
    TSLA,
    +4.91%
    stock suffered a much larger percentage decline than Microsoft in 2022,as the electric-vehicle maker’s shares closed out their worst year on record with their worst quarter and month ever. After the year ended, Tesla began slashing prices in China and the U.S. in hopes of qualifying for more consumer tax incentives and reinvigorating demand, which could lead to questions about previously fat margins.

    In-depth: Tesla investors await clues on demand, board actions and weigh downside risks in 2023

    For Tesla, which reports fourth-quarter results Wednesday, the results will offer more context on production of the Cybertruck — currently set to start in the middle of the year — demand in China, competition and the impact of price cuts. Auto-information website Edmunds on Thursday said that Tesla’s decision to slash prices by as much as 20% in the U.S. and Europe led to a jump in interest in the vehicles.

    While those cuts seem likely to hurt profit, Deutsche Bank analyst Emmanuel Rosner called it “a bold offensive move, which secures Tesla’s volume growth, puts its traditional and EV competitors in great difficulty, and showcases Tesla’s considerable pricing power and cost superiority.” And a survey from Wedbush analysts found that “76% of EV Chinese consumers are considering buying a Tesla in 2023.” But Toni Sacconaghi, an analyst at Bernstein, said Tesla needed more low-cost electric-vehicle offerings, which might not ship until 2025.

    Tesla earnings preview: Price cuts in focus as stock hovers around 2-year low

    With Tesla’s stock in the gutter, some analysts have raised the possibility of a share buyback to spur investor interest, and Chief Executive Elon Musk said such a plan was being discussed in the previous earnings call. Musk is not in great favor with many investors right now, however, following some heavy selling of Tesla shares in the wake of his purchase last year of Twitter, which some on Wall Street have said has distracted him from the needs of the auto maker. Musk’s tweets have landed him in trouble elsewhere: Opening arguments began last week for a trial centered on allegations that Musk put investors at risk when he tweeted in 2018 that he was “considering” taking Tesla private and had secured the money to do so.

    ‘He broke the stock’: Why a prominent Tesla investor wants Elon Musk to put him on the board

    Intel Corp.

    Intel’s
    INTC,
    +2.81%
    questions were not fresh in 2022, as the chip maker for years has seen rivals like Advanced Micro Devices Inc.
    AMD,
    +3.49%
    and Nvidia Corp.
    NVDA,
    +6.41%
    challenge it in ways that would have been unthinkable in previous generations. Shares still dove more than 43% last year, as declining sales led to plans for $3 billion in cost cuts.

    There’s little hope for a big rebound when Intel reports Thursday afternoon. Personal-computer sales have experienced their biggest year-over-year declines ever recorded, and Intel’s long-delayed new data-center offering that is meant to answer AMD’s challenge only began selling this year.

    Opinion: The PC boom and bust is already ‘one for the record books,’ and it isn’t over

    Intel CEO Pat Gelsinger, though, has a chance to lay out his vision for a long-term Intel rebound, as he attempts to make Intel a chip-manufacturing powerhouse again after years of struggles. He was forced to trim his annual outlook multiple times last year, so it will be important for him to provide attainable numbers this time, but without reducing hopes in the path forward.

    This week in earnings

    Expectations remain low for fourth-quarter earnings season overall, with consumers squeezed by higher prices and interest rates, and hopes fading for any relief from the holiday shopping season. But even with a low bar, the fourth-quarter results from companies so far have been worse than the historical norm, with FactSet senior earnings analyst John Butters writing Friday that “the fourth-quarter earnings season for the S&P 500 is not off to a strong start.”

    So far, 11% of S&P 500 companies have reported fourth-quarter results, with roughly one-third reporting earnings better than estimates, Butters reported. That’s lower than the 10-year average of 73%.

    Still, Wall Street generally expects strong profit margins for companies in the S&P 500, as earlier price increases — which help businesses offset their own costs and test the limits of consumer demand — mix with more recent cost cuts.

    For the week ahead, 93 companies in the S&P 500 index
    SPX,
    +1.89%    ,
    and 12 of the 30 Dow Jones Industrial Average
    DJIA,
    +1.00%
    components, are set to report quarterly results.

    Mark your calendars! Here is MarketWatch’s full earnings calendar for the week

    Among the highlights: General Electric Co.
    GE,
    +1.07%
    reports Tuesday for the first time since splitting off its GE HealthCare Technologies
    GEHC,
    +4.43%
    business. 3M Co.
    MMM,
    +1.87%
    — which makes Post-it Notes, duct tape, air filters, adhesives and coatings — also reports Tuesday, after the company in October said the costs of raw materials, a big driver of inflation, were showing signs of easing.

    And as demand for goods eases amid worries about a downturn, a number of railroad operators that ship those goods report during the week. Union Pacific Corp.
    UNP,
    +1.54%    ,
    whose lines ship across the Western half of the U.S., reports on Tuesday, while CSX Corp.
    CSX,
    +1.46%    ,
    which covers much of the East, reports Wednesday. Norfolk Southern Corp.
    NSC,
    +1.51%
    also reports Wednesday.

    Telecom giants Verizon Communications Inc.
    VZ,
    -0.15%    ,
    AT&T Inc.
    T,
    +1.53%
    and Comcast Corp.
    CMCSA,
    +3.22%
    report Tuesday, Wednesday and Thursday, respectively. Results there will offer a clearer sense of the state of demand for Apple Inc.’s
    AAPL,
    +1.92%
    iPhones, as premium models suffer from production snags, and for broadband, which saw heightened demand when more people were staying home due to the pandemic.

    The call to put on your calendar

    Southwest, post-meltdown: Southwest Airlines Co.
    LUV,
    +1.67%    ,
    which reports on Thursday, will offer executives with plenty to answer for, after bad weather and an overloaded, aging scheduling system caused thousands of flight cancellations over the holidays.

    For more: Southwest Airlines turns to repairing its reputation after holiday meltdown

    The implosion has raised questions about the air carrier’s investments in its own technology — after restarting dividend payments shortly before the disruptions — and airlines’ ability to handle the post-lockdown travel rebound. The breakdown has underscored the airline industry’s bigger issues with understaffing, after 2020’s wave of departures, as carriers try to reload flight schedules to meet pent-up travel demand.

    Scott Kirby, chief executive at United Airlines Holdings Inc.
    UAL,
    +2.25%    ,
    said during his company’s earnings call last week that he felt the industry’s goals to expand their flight coverage this year and beyond were “simply unachievable.” And he said that airlines that tried to follow prepandemic patterns were destined to face trouble. He said manufacturers were suffering from delays in building jets, engines and other parts, and that airlines had outgrown their technology infrastructure.

    For more: United Airlines swings to profit despite ‘worst’ winter storm’

    “All of us, airlines and the FAA, lost experienced employees and most didn’t invest in the future,” he said. “That means the system simply can’t handle the volume today, much less the anticipated growth.”

    American Airlines Group Inc.
    AAL,
    +0.37%    ,
    Alaska Air Group Inc.
    ALK,
    +0.85%
    and JetBlue Airways Corp.
    JBLU,
    +0.94%
    are also expected to report results Thursday morning, along with Southwest.

    The numbers to watch

    Visa, Mastercard and consumer spending: The return of travel and entertainment, along with rising prices, have helped prop up consumer spending. But as Visa Inc.
    V,
    +1.77%    ,
    Mastercard Inc.
    MA,
    +2.27%    ,
    American Express Co.
    AXP,
    +3.23%
    and Capital One Financial Corp.
    COF,
    +6.40%
    prepare to report, their finance-industry counterparts are getting nervous — and taking more steps to pad themselves against the fallout from consumers struggling to pay their bills.

    Credit-card issuer Capital One reports results on Tuesday, while card payments-network providers Visa and Mastercard report on Thursday, with Amex on Friday morning. They’ll report after shares of Discover Financial Services
    DFS,
    +4.16%
    got hit last week after the company, which also offers credit cards and loans, set aside more money to cover souring credit, and reported a bump in its net charge-off rate — a measure of debt a company thinks is unlikely to be recovered.

    Larger banks, like JPMorgan Chase & Co.
    JPM,
    +0.24%    ,
    have also set aside more money to guard against credit losses.

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  • The Federal Reserve is testing how climate change could hurt big banks | CNN Business

    The Federal Reserve is testing how climate change could hurt big banks | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN
     — 

    The largest six banks in the United States have been given until July to show the Federal Reserve what effects disastrous climate change scenarios could have on their bottom lines.

    Noting the risks could be “material,” the Fed said the banks will have to show how their finances fare under a number of climate stress tests, including heat waves, wildfires, floods and droughts, according to details of a new Fed pilot program released on Tuesday.

    “The pilot exercise includes physical risk scenarios with different levels of severity affecting residential and commercial real estate portfolios in the Northeastern United States and directs each bank to consider the impact of additional physical risk shocks for their real estate portfolios in another region of the country,” wrote the Fed.

    The Federal Reserve first announced the pilot program in September, noting that Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo would participate.

    Climate activists said that the project was long overdue (Federal Reserve Chair Jerome Powell has been questioned about it multiple times over the last year), and that other central banks are far ahead of the Fed on climate risk assessments. The Bank of England ran a similar exercise in 2021.

    They also said the proposal lacked any real teeth. In its announcement the Federal Reserve stressed that the exercise “is exploratory in nature and does not have capital consequences.” It also said that it would not publish individual banks’ results.

    San Francisco Federal Reserve President Mary Daly told CNN in October Thursday that this was a learning and exploratory exercise for the Federal Reserve. It would be “incredibly premature to jump to the conclusion that any new policies or programs would come out of it,” she said.

    The other side: Critics of the pilot program have argued that the Federal Reserve was overstepping its boundaries and that they might soon begin to enforce financial penalties.

    “The Fed’s new ‘pilot’ program is the first step toward pressuring banks into limiting loans to and investments in traditional energy companies and other disfavored carbon-emitting sectors,” wrote former Republican Senator Pat Toomey, then a ranking member of the Senate Banking Committee. “The real purpose of this program is to ultimately produce new regulatory requirements.”

    Powell said last week that the central bank would not become a “climate policymaker.”

    “Today, some analysts ask whether incorporating into bank supervision the perceived risks associated with climate change is appropriate, wise, and consistent with our existing mandates,” Powell said last Tuesday. “In my view, the Fed does have narrow, but important, responsibilities regarding climate-related financial risks. These responsibilities are tightly linked to our responsibilities for bank supervision. The public reasonably expects supervisors to require that banks understand, and appropriately manage, their material risks, including the financial risks of climate change.”

    The discovery, movement and use of oil has played an outsized role in shaping geopolitics over the past century and a half. But over the next 50 years, global interaction and wealth are more likely to be influenced by microchips, Intel CEO Pat Gelsinger told CNN Tuesday.

    “Where the technology supply chains are, and where semiconductors are built, is more important for the next five decades,” Gelsinger said in an interview with CNN’s Julia Chatterley at the World Economic Forum in Davos, Switzerland.

    Intel (INTC) is betting those predictions prove true. The company announced in 2021 it would invest $20 billion to build two new US chipmaking facilities, as well as up to $90 billion in new European factories, aimed at reasserting its position as the leader of the semiconductor industry, reports my colleague Clare Duffy.

    Gelsinger said the company’s investment in new manufacturing facilities in the United States, Europe and elsewhere is important not only for the company’s future, but for the “globalization of the most critical resource to the future of the world.”

    “We need this geographically balanced, resilient supply chain,” he said.

    The announcements also came amid concerns about the concentration of manufacturing for chips, in Asia, particularly China and Taiwan, during the Covid-19 pandemic and as geopolitical tensions grew. Issues in the chip supply chain in recent years have caused shortages and shipping delays of everything from desktop computers and iPhones to cars.

    “If we’ve learned one thing from the Covid crisis and this multi-year journey that we’ve been on it’s we need resilience in our supply chains,” Gelsinger said, adding that Intel’s manufacturing investments are aimed at “leveling that playing field so that good investment decisions can be made.”

    The years following the peak of the Covid pandemic have not been good for wealth equality.

    The world’s wealthiest residents have been getting far richer, far faster than everyone else over the past two years, reports my colleague Tami Luhby.

    The fortune of the 1% soared by $26 trillion during that period, while the bottom 99% only saw their net worth rise by $16 trillion, according to Oxfam’s annual inequality report released Sunday.

    And the wealth accumulation of the super-rich accelerated during the pandemic. Looking over the past decade, they netted just half of all the new wealth created, compared to two-thirds during the last few years.

    Meanwhile, many of the less fortunate are struggling. Some 1.7 billion workers live in countries where inflation is outpacing wages. And poverty reduction likely stalled last year after the number of global poor skyrocketed in 2020.

    “While ordinary people are making daily sacrifices on essentials like food, the super-rich have outdone even their wildest dreams,” said Gabriela Bucher, executive director of Oxfam International.

    “Just two years in, this decade is shaping up to be the best yet for billionaires — a roaring ’20s boom for the world’s richest,” she said.

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  • Intel CEO: Chip supply chains will shape geopolitics more than oil over the next 50 years | CNN Business

    Intel CEO: Chip supply chains will shape geopolitics more than oil over the next 50 years | CNN Business

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    New York
    CNN
     — 

    Global politics will be dominated by the availability, trade and investment in microchips for the next several decades, Intel CEO Pat Gelsinger told CNN Tuesday.

    The location of “oil reserves [has] defined geopolitics for the last five decades,” Gelsinger said in an interview with CNN’s Julia Chatterley at the World Economic Forum in Davos. “Where the technology supply chains are, and where semiconductors are built, is more important for the next 5 decades.”

    Gelsinger said the company’s investment in new manufacturing facilities in the United States, Europe and elsewhere is important not only for the company’s future, but for the “globalization of the most critical resource to the future of the world.”

    “We need this geographically balanced, resilient supply chain,” he said.

    Intel

    (INTC)     said last year it would invest $20 billion to build two new US chipmaking facilities, as well as up to $90 billion in new European factories, aimed at reasserting its position as the leader of the semiconductor industry. The announcements also came amid concerns about the concentration of manufacturing for chips, in Asia, particularly China and Taiwan, during the Covid-19 pandemic and as geopolitical tensions grew. Issues in the chip supply chain in recent years have caused shortages and shipping delays of everything from desktop computers and iPhones to cars.

    “If we’ve learned one thing from the Covid crisis and this multi-year journey that we’ve been on it’s we need resilience in our supply chains,” Gelsinger said, adding that Intel’s manufacturing investments are aimed at “leveling that playing field so that good investment decisions can be made.”

    Gelsinger — who took over as Intel’s chief executive two years ago during a difficult period for the company — acknowledged that the company’s investments in a decades-long strategy are coming during a difficult economic period.

    “It’s a touch economic environment in the near term — Covid and China, Ukraine and energy in Europe, inflation in the US — you look across that and ask, ‘Where’s the good news?’” he said. “But at the same time, we need to make long-term investments, three quarter economic environments cannot dictate five- and six-year capital investment cycles … It’s a challenge to be a CEO these days.”

    A US law passed last year to boost domestic chipmaking should help. The CHIPS and Science Act will invest more than $200 billion to help companies grow US domestic chip-making and research.

    Now, Gelsinger said, Intel and other chipmakers are just waiting for the funds from the law to get dispersed, after President Joe Biden last year directed a steering committee including Commerce Secretary Gina Raimondo to determine how to implement the law and deploy the funds.

    “We expect we’ll see those this year,” Gelsinger said of the CHIPS Act funds. “I’m investing, please show up with the money. Because we’re assuming they’ll help us make these massive investments.”

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  • World’s top chip maker mulls global expansion with plants in Europe, Japan | CNN Business

    World’s top chip maker mulls global expansion with plants in Europe, Japan | CNN Business

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    New Delhi
    CNN
     — 

    Semiconductor giant Taiwan Semiconductor Manufacturing Company (TSMC) may expand its global manufacturing footprint even further.

    The company is considering opening its first plant in Europe and a second one in Japan, its CEO CC Wei said in an earnings call on Thursday.

    TSMC, which produces an estimated 90% of the world’s super-advanced chips, has already upped its investment in the United States. The company announced last year that it’s building a second semiconductor factory in Arizona and raising its investment there from $12 billion to $40 billion.

    Speaking about TSMC’s new plans on Thursday, Wei said that in Europe “we’re engaging with customers and partners to evaluate the possibility of building a specialty fab, focusing on automotive-specific technologies, based on the demand from customers and level of government support.”

    A fab refers to a semiconductor fabrication plant.

    The company is also considering building a second fab in Japan, “as long as the demand from customers and the level of government support makes sense,” he said.

    These plans come amidst falling demand for semiconductors because of a weakening global economy.

    “In the first half of 2023, we expect our revenue to decline [by] mid- to high single-digit percent over the same period last year in US dollar terms,” Wei said, adding that he expects revenue to increase in the second half of the year.

    “For the full year of 2023, we forecast the semiconductor market, excluding memory, to decline approximately 4%,” he added.

    TSMC is considered a national treasure in Taiwan and supplies tech giants including Apple and Qualcomm. It mass produces the most advanced semiconductors in the world, components that are vital to the smooth running of everything from smartphones to washing machines.

    The company is perceived as being so valuable to the global economy, as well as to China — which claims Taiwan as its own territory despite having never controlled it — that it is sometimes even referred to as forming part of a “silicon shield” against a potential military invasion by Beijing.

    TSMC’s presence gives a strong incentive to the West to defend Taiwan against any attempt by China to take it by force, analysts say.

    The company’s international expansion has caused deep unease in Taiwan.

    Apart from the risk that TSMC will take its most advanced technology with it — stripping Taiwan of one of its unique assets and reducing employment opportunities locally — there are fears that a diminished presence for the company could expose Taipei, Taiwan’s capital, to greater pressure from Beijing.

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  • 18 stock picks in a ‘Goldilocks’ scenario for U.S. consumers

    18 stock picks in a ‘Goldilocks’ scenario for U.S. consumers

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    It may not have been a surprise to see the consumer discretionary sector of the S&P 500 get hammered last year amid talk of a looming recession while the Federal Reserve jacked up interest rates to push back against inflation.

    But the stock market always looks ahead. Following a decline of 19.4% for the S&P 500
    SPX,
    +0.42%
    in 2022 and a 37.6% drop for the benchmark index’s consumer discretionary sector, this may be the time to begin looking for bargains.

    And now, analysts at Jefferies have lifted the sector to a “bullish” rating.

    In a note to clients on Jan. 10, Jefferies’ global equity strategist, Sean Darby, wrote: “A Goldilocks scenario might be unfolding for the U.S. consumer — falling inflation but steady employment conditions.”

    He sees consumer confidence improving, in part because “households are still sitting on [about] $1.4 trillion of Covid savings.”

    Darby pointed to a list of 18 consumer discretionary stocks favored by Jefferies analysts that was published on Jan. 6. Those are listed below, along with three stocks in the sector the analysts rate “underperform.”

    The ratings of the Jefferies analysts for individual stocks is based on their 12-month outlooks for the companies, in keeping with Wall Street tradition.

    So we have added another list further down, showing which companies in the S&P 500 consumer discretionary sector are expected by analysts polled by FactSet to increase sales the most through 2024.

    The Jefferies 18

    Here are the 18 consumer discretionary stocks recommended by Jefferies analysts with “buy” ratings on Jan. 6, sorted by how much upside the firm sees for the shares from closing prices on Jan. 9:

    Company

    		 Ticker

    		 Jan. 9 price

    		 Jefferies price target

    		 Implied 12-month upside potential

    		 Three-year estimated sales CAGR through 2022

    		 Two-year estimated sales CAGR through 2024
    Topgolf Callaway Brands Corp.

    		 MODG,
    -0.22%         		$20.76

    		 $56

    		 170%

    		 32.8%

    		 10.0%
    Bloomin’ Brands Inc.

    		 BLMN,
    +3.87%         		$22.08

    		 $35

    		 59%

    		 2.4%

    		 3.7%
    Coty Inc. Class A

    		 COTY,
    +1.23%         		$9.38

    		 $14

    		 49%

    		 -7.1%

    		 3.7%
    MGM Resorts International

    		 MGM,
    +1.71%         		$37.64

    		 $56

    		 49%

    		 -0.1%

    		 6.6%
    Chewy Inc. Class A

    		 CHWY,
    +1.63%         		$40.13

    		 $57

    		 42%

    		 28.0%

    		 10.6%
    Planet Fitness Inc. Class A

    		 PLNT,
    +0.69%         		$82.36

    		 $115

    		 40%

    		 10.4%

    		 13.9%
    Molson Coors Beverage Co. Class B

    		 TAP,
    +0.67%         		$50.21

    		 $69

    		 37%

    		 0.5%

    		 1.4%
    Fox Factory Holding Corp.

    		 FOXF,
    +3.95%         		$99.90

    		 $135

    		 35%

    		 28.1%

    		 6.6%
    Hasbro Inc.

    		 HAS,
    +0.99%         		$63.70

    		 $85

    		 33%

    		 9.1%

    		 3.6%
    Hostess Brands Inc. Class A

    		 TWNK,
    +0.33%         		$23.10

    		 $30

    		 30%

    		 14.2%

    		 5.0%
    Lowe’s Cos. Inc.

    		 LOW,
    +0.08%         		$199.44

    		 $250

    		 25%

    		 10.6%

    		 -1.9%
    Walmart Inc.

    		 WMT,
    -0.27%         		$144.95

    		 $175

    		 21%

    		 4.9%

    		 3.3%
    Dollar General Corp.

    		 DG,
    -0.26%         		$241.05

    		 $285

    		 18%

    		 10.9%

    		 6.7%
    Church & Dwight Co. Inc.

    		 CHD,
    -1.17%         		$82.25

    		 $97

    		 18%

    		 7.0%

    		 4.6%
    McDonald’s Corp.

    		 MCD,
    +0.39%         		$267.25

    		 $315

    		 18%

    		 2.4%

    		 4.0%
    Estee Lauder Cos. Inc. Class A

    		 EL,
    +0.39%         		$261.63

    		 $304

    		 16%

    		 2.8%

    		 5.8%
    Mondelez International Inc. Class A

    		 MDLZ,
    -0.04%         		$67.24

    		 $75

    		 12%

    		 6.3%

    		 4.1%
    Tapestry Inc.

    		 TPR,
    +0.73%         		$41.25

    		 $45

    		 9%

    		 3.3%

    		 3.2%
    Sources: Jefferies, FactSet

    Click on the tickers for more information about the companies.

    Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

    The two right-most columns on the table show estimated compound annual growth rates (CAGR) for the companies over the past three calendar years and expected sales CAGR for two years through calendar 2024, based on the companies’ financial reports and consensus estimates among analysts polled by FactSet.

    (We used calendar-year numbers, some of which are estimated by FactSet for prior years, because some companies have fiscal years or even months that don’t match the calendar.)

    The stock pick with the highest 12-month upside potential, based on Jefferies’ price target, is Topgolf Callaway Brands Corp.
    MODG,
    -0.22%    .
    This company has the highest estimated three-year sales CAGR on the list, and has the third-highest projected sales CAGR through 2024, after Planet Fitness Inc.
    PLNT,
    +0.69%
    and Chewy Inc.
    CHWY,
    +1.63%    .

    On Jan. 6, the Jefferies analysts also listed three stocks in the sector they rated “underperform.” Here they are, sorted by how much the analysts expect the stocks to decline over the next 12 months:

    Company

    		 Ticker

    		 Jan. 9 price

    		 Jefferies price target

    		 Implied 12-month upside potential

    		 Three-year estimated sales CAGR through 2022

    		 Two-year estimated sales CAGR through 2024
    Lululemon Athletica Inc.

    		 LULU,
    +2.98%         		$298.66

    		 $200

    		 -33%

    		 26.3%

    		 14.6%
    Williams-Sonoma Inc.

    		 WSM,
    +1.75%         		$122.17

    		 $98

    		 -20%

    		 14.1%

    		 -0.3%
    Harley-Davidson Inc.

    		 HOG,
    +0.35%         		$43.25

    		 $39

    		 -10%

    		 -2.8%

    		 4.4%
    Sources: Jefferies, FactSet
    Screen of consumer discretionary sales growth

    A look head at which companies are expected to increase sales the most over the next two years might serve as a good starting point for your own research.

    Bear in mind that some of the companies in travel-related industries suffered declining sales for three years through 2022 because of the coronavirus pandemic. Some of those are on this new list of 20 stocks in the S&P 500 consumer discretionary sector expected to show the highest two-year sales CAGR through calendar 2024:

    Company

    		 Ticker

    		 Two-year estimated sales CAGR through 2024

    		 Three-year estimated sales CAGR through 2022

    		 Share “buy” ratings

    		 Jan. 9 price

    		 Consensus price target

    		 Implied 12-month upside potential
    Las Vegas Sands Corp.

    		 LVS,
    +1.59%         		59.2%

    		 -32.6%

    		 79%

    		 $52.78

    		 $53.53

    		 1%
    Norwegian Cruise Line Holdings Ltd.

    		 NCLH,
    +1.67%         		39.6%

    		 -9.3%

    		 44%

    		 $13.78

    		 $16.96

    		 23%
    Carnival Corp.

    		 CCL,
    +1.64%         		35.2%

    		 -14.7%

    		 30%

    		 $9.47

    		 $10.11

    		 7%
    Tesla Inc.

    		 TSLA,
    -1.83%         		34.3%

    		 49.7%

    		 64%

    		 $119.77

    		 $232.43

    		 94%
    Wynn Resorts Ltd.

    		 WYNN,
    +2.01%         		29.3%

    		 -17.5%

    		 53%

    		 $94.33

    		 $96.07

    		 2%
    Royal Caribbean Group

    		 RCL,
    +2.22%         		28.4%

    		 -6.8%

    		 53%

    		 $57.29

    		 $66.43

    		 16%
    Chipotle Mexican Grill Inc.

    		 CMG,
    -0.17%         		13.4%

    		 15.9%

    		 71%

    		 $1,446.74

    		 $1,778.81

    		 23%
    Amazon.com Inc.

    		 AMZN,
    +2.61%         		12.2%

    		 22.1%

    		 92%

    		 $87.36

    		 $133.76

    		 53%
    Booking Holdings Inc.

    		 BKNG,
    +0.37%         		11.9%

    		 3.9%

    		 63%

    		 $2,208.41

    		 $2,307.67

    		 4%
    Aptiv PLC

    		 APTV,
    +1.66%         		11.9%

    		 6.4%

    		 70%

    		 $97.98

    		 $117.23

    		 20%
    Starbucks Corp.

    		 SBUX,
    +1.28%         		11.2%

    		 7.2%

    		 42%

    		 $104.74

    		 $103.44

    		 -1%
    Etsy Inc.

    		 ETSY,
    +3.56%         		11.1%

    		 45.3%

    		 50%

    		 $120.99

    		 $124.04

    		 3%
    Hilton Worldwide Holdings Inc.

    		 HLT,
    +0.06%         		10.1%

    		 -2.9%

    		 38%

    		 $129.08

    		 $146.17

    		 13%
    Expedia Group Inc.

    		 EXPE,
    +0.39%         		9.0%

    		 -0.9%

    		 50%

    		 $93.77

    		 $125.65

    		 34%
    NIKE Inc. Class B

    		 NKE,
    +0.68%         		8.1%

    		 5.8%

    		 62%

    		 $124.85

    		 $126.15

    		 1%
    Marriott International Inc. Class A

    		 MAR,
    +0.47%         		7.5%

    		 -1.2%

    		 30%

    		 $152.53

    		 $172.81

    		 13%
    BorgWarner Inc.

    		 BWA,
    +1.82%         		7.1%

    		 15.3%

    		 53%

    		 $42.24

    		 $46.93

    		 11%
    Tractor Supply Co.

    		 TSCO,
    +1.06%         		6.8%

    		 19.0%

    		 61%

    		 $217.48

    		 $232.34

    		 7%
    Yum! Brands Inc.

    		 YUM,
    -0.76%         		6.7%

    		 6.4%

    		 47%

    		 $129.76

    		 $137.79

    		 6%
    Dollar General Corp.

    		 DG,
    -0.26%         		6.7%

    		 10.9%

    		 67%

    		 $241.05

    		 $267.54

    		 11%
    Source: FactSet

    Among the companies on this list that didn’t suffer sales declines from 2019 levels, Tesla Inc.
    TSLA,
    -1.83%
    is expected to achieve the highest two-year sales CAGR through 2022.

    Dollar General Corp.
    DG,
    -0.26%
    is the only company to appear on this list based on consensus sales growth estimates and the Jefferies recommended list.

    Don’t miss: These 15 Dividend Aristocrat stocks have been the best income builders

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  • Samsung estimates quarterly profit sank to 8-year low on demand slump | CNN Business

    Samsung estimates quarterly profit sank to 8-year low on demand slump | CNN Business

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    Seoul
    Reuters
     — 

    Samsung Electronics flagged on Friday its quarterly profit tumbled to an eight-year low as a weakening global economy hammered memory chip prices and curbed demand for electronic devices.

    Profits at the world’s largest memory chip, smartphone and TV maker are expected to shrink again in the current quarter, analysts said, after Samsung announced its October-December operating profit likely fell 69% to 4.3 trillion won ($3.37 billion) from 13.87 trillion won a year earlier.

    It was Samsung

    (SSNLF)    ’s smallest quarterly profit since the third quarter of 2014 and fell short of a 5.9 trillion won Refinitiv SmartEstimate, which is weighted toward forecasts from analysts who are more consistently accurate.

    “All of Samsung’s businesses had a hard time, but chips and mobile especially,” said Lee Min-hee, analyst at BNK Investment & Securities.

    Quarterly revenue likely fell 9% from the same period a year earlier to 70 trillion won, Samsung said in a short preliminary earnings release. Asia’s fourth-biggest listed company by market value is due to release detailed earnings later this month.

    Rising global interest rates and cost of living have dampened demand for smartphones and other devices that Samsung makes and also for the semiconductors it supplies to rivals including Apple

    (AAPL)    .

    “For the memory business, the decline in fourth-quarter demand was greater than expected as customers adjusted inventories in their effort to further tighten finances,” Samsung said in the statement.

    Its mobile business’ profit declined in the fourth quarter as smartphone sales and revenue decreased due to weak demand resulting from prolonged macroeconomic issues, Samsung added.

    “Memory chip prices fell in the mid-20% during the quarter, and high-end phones such as foldable didn’t sell as well,” said BNK Investment’s Lee.

    Three analysts said they expected Samsung’s profits to dive again in the current quarter, with a likely operating loss for the chips business as a glut drives a further drop in memory chip prices.

    Samsung shares rose 0.3% in Friday morning trade, underperforming a 0.6% rise in the wider market. Shares of rival memory chip maker SK Hynix rose 1%.

    “The reason shares are rising despite the poor earnings result is… investors are hoping Samsung will need to reduce production, like Micron or SK Hynix said they would, which would help the memory industry overall,” said Eo Kyu-jin, an analyst at DB Financial Investment.

    Samsung had said in October that it did not expect much change to its 2023 investments. Analysts said that Samsung has a history of not announcing production cuts in memory chips, but could organically adjust investment by delaying bringing in equipment or through other ways.

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  • CES 2023: AMD, Nvidia, auto applications get the hype, but analysts say this one chip maker ruled

    CES 2023: AMD, Nvidia, auto applications get the hype, but analysts say this one chip maker ruled

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    As CES 2023 draws to a close, much of the attention in the chip world was lauded on companies like Advanced Micro Devices Inc. and Nvidia Corp. but a lower profile chip maker appears better positioned coming out of the convention.

    Morgan Stanley analyst Joseph Moore said there’s still a lot of caution about overall chip demand especially with softness in China, but autos appear to be one of the strong themes of CES 2023, he said.

    “The areas that have been weak remain somewhat weaker – notably memory, semi cap, and generally PC and cloud builds – while the markets that have been strong (such as automotive and industrial) remain strong but with lead times clearly starting to normalize, which likely points to longer term revenue pressures particularly in a weaker economy,” Moore said.

    “Still, the longer term themes remain positive, especially for autos (which is increasingly the focus of CES),around themes such as EVs, ADAS and autonomous.”

    Such was the case when Nvidia Corp.
    NVDA,
    +4.16%
     said on Tuesday it was partnering with Hon Hai Technology Group
    2317,
    +0.41%
     , or Foxconn, best known for being the manufacturer of Apple Inc.’s
    AAPL,
    +3.68%
    iPhone, to make electric vehicles that use Nvidia’s Drive Orin chips and sensors, and bringing its GeForce Now streaming video game service to autos made by Hyundai Motor Group
    005380,
    +0.31%    ,
    BYD
    1211,
    -2.60%    ,
    and Swedish EV maker Polestar.

    “We generally think that Nvidia numbers are likely OK from here, though there was some caution on sell through in China for gaming, and a clear awareness that while the company’s position within cloud is very good, that pressure in cloud budgets leads to somewhat lower visibility,” Moore said. “But we would say that generally we think that they are past the worst of the pressures in their business, in contrast to most of the semiconductor group where there are still likely numbers cuts ahead.”

    Meanwhile, Advanced Micro Devices Inc.
    AMD,
    +2.62%
    used the CES keynote to introduce the Instinct MI300 chip as “world’s first data-center integrated CPU + GPU.” The  combined central processing unit and graphics processing unit meant for AI inference, the months-long process where data centers spend millions of dollars a year on electricity to train and develop artificial intelligence. AMD Chief Executive and Chair Lisa Su said the MI300 can reduce the time it takes for an inference modeling process from months to weeks.

    But one chip maker that doesn’t get a lot of attention appeared to emerge from CES best positioned for the year: ON Semiconductor Corp.
    ON,
    +4.57%    ,
    which focuses on electric vehicles and advanced driver assistance systems as primary growth drivers, leveraging its legacy position in auto chips.

    “Most notably, the company’s push into [Silicon Carbide] remains on track, and expect to still exit the year at a run-rate where the majority of crystal driving the business is internally sourced,” Moore said. “The company remains confident that demand in the EV space will far outpace supply for a long time and have thus shifted their focus over to execution on the production side.”

    Citi Research analyst Christopher Danley lauded ON as being the most bullish chip maker of CES 2023.

    “ON remains on track to triple Silicon Carbide revenue YoY from roughly $300 million in 2022 to $1.0 billion in 2023,” Danley said. “The company stated it is sold out through 2023.”

    But ON aside, Danley said everyone at CES is “nervous” about “cracks” in data-center demand, “and they should be.”

    “There was a tone of nervousness on the data center outlook with many execs and investors cautious and talking about ‘uncertainty’ in data center outlooks from both hyperscalers and enterprise customers,” Danley said. “We continue to believe data center correction will happen given a multitude of datapoints and leading indicators.”

    Back in early December, Danley said his checks “indicate order rates from the data center end market are fading with downside from the enterprise end market (roughly 40% of the data center end market) and Facebook,” which is owned by parent company Meta Platforms Inc.
    META,
    +2.43%
    “We continue to expect a correction in the data center end market in 1H23,” Danley said.

    That said, Danley said his top pick was and continue to believe a correction there is inevitable. We remain cautious on semis until all end markets and companies correct and our top pick remains chip maker Analog Devices Inc.
    ADI,
    +3.65%

    Back to autos: Ambarella Inc.
    AMBA,
    +6.77%
    on Thursday, Ambarella said it was partnering with Continental AG
    CON,
    +2.32%
    to develop hardware and software for assisted driving using AI with the ultimate goal of an autonomous driving system. The companies hope to have systems in production in 2026.

    Moore said Ambarella’s tech “continues to impress,” and said the Continental partnership will provide software revenue that’s shared but with the larger portion going to Continental.

    At CES 2023, “the companies are showing a full L2+ ADAS implementation for a 10-camera system running on a single chip, which per AMBA was only using 8% of the compute value of the chip.”

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  • AMD Stock Should Benefit From Next-Generation Computer Chips

    AMD Stock Should Benefit From Next-Generation Computer Chips

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    These reports, excerpted and edited by Barron’s, were issued recently by investment and research firms. The reports are a sampling of analysts’ thinking; they should not be considered the views or recommendations of Barron’s. Some of the reports’ issuers have provided, or hope to provide, investment-banking or other services to the companies being analyzed.

    Advanced Micro Devices AMD-Nasdaq

    Buy (four stars out of five) • Price $64.52 on Dec. 23

    by CFRA

    Our Buy recommendation reflects our expectation for significant share gains on the central-processing-unit data-center side from the ramp-up of AMD’s next-generation EPYC processor, greater momentum for AMD’s graphics processing units, and our expectation for balance sheet improvement.

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  • These 20 stocks were the biggest losers of 2022

    These 20 stocks were the biggest losers of 2022

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    This has been the year of reckoning for Big Tech stocks — even those of companies that have continued to grow sales by double digits.

    Below is a list of the 20 stocks in the S&P 500
    SPX,
    -0.72%
    that have declined the most in 2022.

    First, here’s how the 11 sectors of the benchmark index have performed this year:

    S&P 500 sector

    		 2022 price change

    		 Forward P/E

    		 Forward P/E as of Dec. 31, 2021
    Energy

    		 57.8%

    		 9.6

    		 11.1
    Utilities

    		 -0.5%

    		 18.8

    		 20.4
    Consumer Staples

    		 -2.7%

    		 20.9

    		 21.8
    Healthcare

    		 -3.2%

    		 17.4

    		 17.2
    Industrials

    		 -6.7%

    		 18.0

    		 20.8
    Financials

    		 -12.1%

    		 11.7

    		 14.6
    Materials

    		 -13.4%

    		 15.6

    		 16.6
    Real Estate

    		-27.7%

    		 16.2

    		 24.2
    Information Technology

    		 -28.8%

    		 19.6

    		 28.1
    Consumer Discretionary

    		 -37.4%

    		 20.7

    		 33.2
    Communication Services

    		 -40.4%

    		 14.0

    		 20.8
    S&P 500

    		 -19.2%

    		 16.5

    		 21.4
    Source: FactSet

    The energy sector has been the only one to show a gain in 2022, and it has been a whopper, even as West Texas Intermediate crude oil
    CL.1,
    +0.41%
    has given up most of its gains from earlier in the year. Here’s why investors are still confident in the supply/demand setup for oil and energy stocks.

    Looking at the worst-performing sectors, you might wonder why the consumer discretionary and communication services sectors have fared worse than information-technology, the core tech sector. One reason is that S&P Dow Jones Indices can surprise investors with its sector choices. The consumer discretionary sector includes Tesla Inc.
    TSLA,
    +0.70%
    and Amazon.com Inc.
    AMZN,
    -1.17%    ,
    which has fallen nearly 50% this year. The communications sector includes Meta Platforms Inc.
    META,
    -1.21%    ,
    along with Match Group Inc.
    MTCH,
    +0.50%    ,
    which is down 69% for 2022, and Netflix Inc.
    NFLX,
    -0.44%    ,
    which is down 52% this year.

    There have been many reasons easy to cite for Big Tech’s decline, such as a questionable change in strategy for Facebook’s holding company, Meta, as CEO Mark Zuckerberg has put so much of the company’s resources into developing a new world that most people don’t wish to enter, at least yet. Meta’s shares were down 64% for 2022 through Dec. 29.

    You might also blame the Twitter-related antics and sales of Tesla shares by CEO Elon Musk for the 65% decline in the electric-vehicle maker’s stock this year. But Tesla had a forward price-to-earnings ratio of 120.3 at the end of 2021, while the S&P 500
    SPX,
    -0.72%
    traded for 21.4 times its weighted forward earnings estimate, according to FactSet. Those P/E ratios have now declined to 21.7 and 16.4, respectively. So Tesla no longer appears to be a very expensive stock, especially for a company that increased its vehicle deliveries by 42% in the third quarter from a year earlier.

    Analysts polled by FactSet expect Tesla’s stock to double during 2023. It nearly made this list of 20 EV stocks expected to rebound the most in 2023.

    The worst-performing S&P 500 stocks of 2022

    Here are the 20 stocks in the S&P 500 that fell the most for 2022 through the close on Dec. 29.

    Company

    		 Ticker

    		 2022 price change

    		 Forward P/E

    		 Forward P/E as of Dec. 32, 2021
    Generac Holdings Inc.

    		 GNRC,
    -0.84%         		-71.4%

    		 13.7

    		 30.2
    Match Group Inc.

    		 MTCH,
    +0.50%         		-68.9%

    		 20.1

    		 48.5
    Align Technology Inc.

    		 ALGN,
    -0.52%         		-67.7%

    		 27.4

    		 48.7
    Tesla Inc.

    		 TSLA,
    +0.70%         		-65.4%

    		 21.7

    		 120.3
    SVB Financial Group

    		 SIVB,
    -0.38%         		-65.4%

    		 10.8

    		 23.0
    Catalent Inc.

    		 CTLT,
    -0.40%         		-64.6%

    		 13.0

    		 32.5
    Meta Platforms Inc. Class A

    		 META,
    -1.21%         		-64.2%

    		 14.7

    		 23.5
    Signature Bank

    		 SBNY,
    -0.34%         		-64.1%

    		 6.2

    		 18.6
    PayPal Holdings Inc.

    		 PYPL,
    -0.01%         		-62.6%

    		 14.8

    		 36.0
    V.F. Corp.

    		 VFC,
    +0.15%         		-62.5%

    		 11.9

    		 20.4
    Warner Bros. Discovery Inc. Series A

    		 WBD,
    -1.64%         		-59.9%

    		 N/A

    		 7.5
    Carnival Corp.

    		 CCL,
    -0.23%         		-59.8%

    		 38.1

    		 N/A
    Stanley Black & Decker Inc.

    		 SWK,
    -0.42%         		-59.8%

    		 17.0

    		 15.9
    Lumen Technologies Inc.

    		 LUMN,
    -1.79%         		-57.8%

    		 7.7

    		 7.8
    Zebra Technologies Corp. Class A

    		 ZBRA,
    -0.44%         		-56.7%

    		 14.5

    		 30.1
    Dish Network Corp. Class A

    		 DISH,
    -0.96%         		-56.5%

    		 8.6

    		 10.9
    Caesars Entertainment Inc.

    		 CZR,
    +0.24%         		-55.7%

    		 51.4

    		 144.5
    Lincoln National Corp.

    		 LNC,
    +0.26%         		-55.1%

    		 3.4

    		 6.2
    Advanced Micro Devices Inc.

    		 AMD,
    -0.97%         		-55.0%

    		 17.8

    		 43.1
    Seagate Technology Holdings PLC

    		 STX,
    -0.55%         		-53.1%

    		 15.0

    		 12.4
    Source: FactSet

    Click on the tickers for more information about the companies.

    Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

    Another way of measuring the biggest stock-market losers of 2022

    It is one thing to have a large decline based on the share price, but that doesn’t tell the entire story. How much of a decline have investors seen in the holdings of their shares during the year? The S&P 500’s total market capitalization declined to $31.66 trillion as of Dec. 28 (the most recent figure available) from $40.36 trillion at the end of 2021, according to FactSet.

    Shareholders of these companies have suffered the largest declines in market cap during 2022.

    Company

    		 Ticker

    		 2022 market capitalization change ($bil)

    		 2022 price change
    Apple Inc.

    		 AAPL,
    -0.63%         		-$851

    		 -27.0%
    Amazon.com Inc.

    		 AMZN,
    -1.17%         		-$832

    		 -49.5%
    Microsoft Corp.

    		 MSFT,
    -1.15%         		-$728

    		 -28.3%
    Tesla Inc.

    		 TSLA,
    +0.70%         		-$677

    		 -65.4%
    Meta Platforms Inc. Class A

    		 META,
    -1.21%         		-$465

    		 -64.2%
    Nvidia Corp.

    		 NVDA,
    -1.37%         		-$376

    		 -50.3%
    PayPal Holdings Inc.

    		 PYPL,
    -0.01%         		-$141

    		 -62.6%
    Netflix Inc.

    		 NFLX,
    -0.44%         		-$138

    		 -51.7%
    Walt Disney Co.

    		 DIS,
    -1.62%         		-$123

    		 -43.7%
    Salesforce Inc.

    		 CRM,
    -0.96%         		-$118

    		 -47.8%
    Source: FactSet

    So there is your surprise for today: Apple is this year’s biggest stock-market loser.

    Don’t miss: Best stock picks for 2023: Here are Wall Street analysts’ most heavily favored choices

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  • This company has wiped out more investor wealth in 2022 than Tesla

    This company has wiped out more investor wealth in 2022 than Tesla

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    Elon Musk has been trying this week to defend Tesla’s abysmal stock performance in 2022. The electric vehicle giant has seen its stock plummet by 61% this year, making it the 11th-worst performing stock in the S&P 500 in 2022.

    “As bank savings account interest rates, which are guaranteed, start to approach stock market returns, which are *not* guaranteed, people will increasingly move their money out of stocks into cash, thus causing stocks to drop,” Musk tweeted.

    You might expect that Tesla’s stock drop has wiped out more investor wealth than any other stock in the world this year. But you would be wrong.

    If we look at declines in market capitalization — the value of companies’ common-shares outstanding — Tesla
    TSLA,
    -1.76%
    has been the fourth worst-performing stock in the benchmark S&P 500 this year, as of 1 p.m. ET on Dec. 21:

    Company

    		 Ticker

    		 2022 market cap change ($bil)

    		 Intraday market cap on Dec. 21 ($bil)

    		 Dec. 31, 2021 market cap ($bil)

    		 2022 price change
    Amazon.com Inc.

    		 AMZN,
    +1.74%         		-$805

    		 $886

    		 $1,691

    		 -48%
    Apple Inc.

    		 AAPL,
    -0.28%         		-$753

    		 $2,160

    		 $2,913

    		 -24%
    Microsoft Corp.

    		 MSFT,
    +0.23%         		-$700

    		 $1,825

    		 $2,525

    		 -27%
    Tesla Inc.

    		 TSLA,
    -1.76%         		-$622

    		 $439

    		 $1,061

    		 -61%
    Meta Platforms Inc. Class A

    		 META,
    +0.79%         		-$466

    		 $318

    		 $784

    		 -64%
    Nvidia Corp.

    		 NVDA,
    -0.87%         		-$329

    		 $406

    		 $735

    		 -44%
    PayPal Holdings Inc.

    		 PYPL,
    +0.67%         		-$143

    		 $79

    		 $222

    		 -63%
    Netflix Inc.

    		 NFLX,
    -0.94%         		-$134

    		 $133

    		 $267

    		 -51%
    Walt Disney Co.

    		 DIS,
    +1.55%         		-$122

    		 $160

    		 $282

    		 -44%
    Salesforce Inc.

    		 CRM,
    +0.19%         		-$119

    		 $131

    		 $250

    		 -49%
    Source: FactSet

    On a percentage basis, all these stocks have performed worse than the full S&P 500, which has fallen 19%, excluding dividends.

    Amazon.com Inc.
    AMZN,
    +1.74%
    has erased more shareholder wealth than any other publicly traded company in 2022. In total, investors in Amazon have lost $804.6 billion this year. The stock is down 48% in 2022.

    Apple Inc.
    AAPL,
    -0.28%
    and Microsoft Corp.
    MSFT,
    +0.23%
    have also suffered larger market-cap declines than Tesla, by virtue of their sheer size.

    The companies have different fiscal and annual period ends, but if we look at data for the past three reported quarters and compare to the same period a year earlier, here’s how the four stack up:

    Company

    		 Ticker

    		 Change in sales for three quarters from year-earlier period

    		 Change in EPS for three quarters from year-earlier period
    Amazon.com Inc.

    		 AMZN,
    +1.74%
     

    		 10%

    		 N/A
    Apple Inc.

    		  
    AAPL,
    -0.28%         		6%

    		 2%
    Microsoft Corp.

    		  
    MSFT,
    +0.23%         		14%

    		 -2%
    Tesla Inc.

    		  
    TSLA,
    -1.76%         		58%

    		 169%
    Source: FactSet

    Amazon showed a net loss of $3 billion for the first three quarters of 2022 as the company neared the end of its extraordinary multiyear effort to build out its warehouse and fulfillment infrastructure. For the first three quarters of 2021, the company booked $19 billion in profits. When announcing Amazon’s third-quarter results CEO Andy Jassy said the company was working methodically toward “a stronger cost structure for the business moving forward.”

    The incredible growth of Amazon’s cloud business has stalled and disappointed the expectations the company had nurtured on Wall Street. The Amazon Web Services business is facing increasing competition from the likes of Microsoft and its customers are pulling back. Meanwhile, retail sales have also come in weak going into the Christmas and holiday season. 

    Amazon’s stock has declined 22% since it closed at $110.96 on Oct. 27, right before it disappointed investors not only with its third-quarter results, but with its outlook: It expects to break even during the holiday quarter. Analysts polled by FactSet had previously expected a profit of more than $5 billion.

    Tesla stands in contrast to Amazon, as you can see on the table above. Its sales grew by 58% during the first three quarters of 2022 from the year-earlier period and its earnings per share rose nearly threefold.

    This has been a year of significant declines for shares of giant tech-oriented companies, especially those that had traded at lofty price-to-earnings valuations — that group includes Amazon and Tesla. In fact, these companies have given up all their pandemic era gains int he stock market.

    But with Tesla’s results so outstanding through the first three quarters of 2022, it raises the question: How much of the drop in the electric car makers share price was tied to Musk’s actions as CEO of Twitter, which he acquired on Oct. 27 after a monthslong saga? And how much of a relief rally, if any, might there be for Tesla if Musk, as expected, steps down as Twitter CEO?

    How about some bottom-feeding?

    Here’s the same list of 10 stocks in the S&P 500 that have seen the largest declines in market cap this year, with a summary of analysts’ ratings, consensus price targets and declines in their forward price-to-earnings ratios:

    Company

    		 Ticker

    		 Share “buy” ratings

    		 Dec. 21 closing price

    		 Cons. price target

    		 Implied 12-month upside potential

    		 Forward P/E as of Dec. 20

    		 Forward P/E as of Dec. 31, 2021
    Amazon.com Inc.

    		 AMZN,
    +1.74%         		91%

    		 $85.19

    		 $134.85

    		 58%

    		 49.3

    		 64.9
    Apple Inc.

    		 AAPL,
    -0.28%         		74%

    		 $132.30

    		 $173.44

    		 31%

    		 21.4

    		 30.2
    Microsoft Corp.

    		 MSFT,
    +0.23%         		91%

    		 $241.80

    		 $293.06

    		 21%

    		 23.7

    		 34.0
    Tesla Inc.

    		 TSLA,
    -1.76%         		63%

    		 $137.80

    		 $272.64

    		 98%

    		 24.6

    		 120.3
    Meta Platforms Inc. Class A

    		 META,
    +0.79%         		63%

    		 $117.09

    		 $145.45

    		 24%

    		 14.5

    		 23.5
    Nvidia Corp.

    		 NVDA,
    -0.87%         		68%

    		 $160.85

    		 $195.72

    		 22%

    		 39.2

    		 58.0
    PayPal Holdings Inc.

    		 PYPL,
    +0.67%         		71%

    		 $68.76

    		 $104.32

    		 52%

    		 14.5

    		 36.0
    Netflix Inc.

    		 NFLX,
    -0.94%         		47%

    		 $288.19

    		 $302.89

    		 5%

    		 28.4

    		 45.6
    Walt Disney Co.

    		 DIS,
    +1.55%         		82%

    		 $87.02

    		 $119.60

    		 37%

    		 19.8

    		 34.2
    Salesforce Inc.

    		 CRM,
    +0.19%         		78%

    		 $128.45

    		 $195.18

    		 52%

    		 23.4

    		 53.5
    Source: FactSet

    A majority of analysts see a golden path ahead for 2023 for all of these stocks except for Netflix.

    For more information about any of these companies, click the tickers.

    Click here for a detailed guide to the wealth of information available for free on the MarketWatch quote page.

    Don’t miss: 11 high-yield dividend stocks that are Wall Street’s favorites for 2023

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  • Nvidia, AMD, and Lam Research Slide After Micron Disappoints

    Nvidia, AMD, and Lam Research Slide After Micron Disappoints

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    Nvidia, AMD, and Lam Research Slide After Micron Disappoints

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  • Micron sales could dive more than 50%, and more belt-tightening is expected before outlook improves

    Micron sales could dive more than 50%, and more belt-tightening is expected before outlook improves

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    Micron Technology Inc.’s revenue declines could worsen to more than 50% before inventory-saturated customers work though that product and boost sales in the second half of 2023, but before then the memory-chip maker is implementing some austerity measures.

    Micron
    MU,
    +1.01%
    said it expects an adjusted loss of between 72 cents and 52 cents a share on revenue of $3.6 billion to $4 billion for the fiscal second quarter, with the midpoint 51% lower than last year’s second-quarter revenue total of $7.78 billion. Analysts had forecast an adjusted loss of 32 cents a share on revenue of $3.92 billion.

    In a filing with the Securities and Exchange Commission, the memory-chip specialist disclosed that management plans to cut about 10% of its staff in 2023, “through a combination of voluntary attrition and personnel reductions.” About $30 million in restructuring costs are expected, all in the fiscal second quarter.

    Along with headcount reductions, Micron said in 2023 it will also suspend share buybacks, productivity programs and company bonuses, and that executive salaries would be “cured” for the rest of the fiscal year. Sanjay Mehrotra, Micron’s chief executive, also told analysts after the release of results that he expected profitability to remain challenged through 2023.

    Micron specializes in DRAM, or dynamic random access memory, the type of memory commonly used in PCs and servers, and NAND chips, which are the flash memory chips used in smaller devices like smartphones and USB drives.

    Micron shares were down less than 1% after hours, following a 1% rise to close the regular session at $51.19. Micron shares are down 45% for the year compared with a 19% fall by the S&P 500 index
    SPX,
    +1.49%
    and a 32% drop by the Nasdaq Composite Index
    COMP,
    +1.54%
    and a 33% drop on the PHLX Semiconductor Index
    SOX,
    +2.36%    .

    Mehrotra said he expects DRAM growth to rise by about 10% and NAND to rise by around 20%. “For both years, demand in DRAM and NAND is well below historical trends and future expectations of growth largely due to reductions in the end demand in most markets, high inventories at customers, the impact of the macroeconomic environment and the regional factors in Europe and China,” Mehrotra said.

    “But the largest impact to the profitability and financial outlook for us is the supply-demand balance, and the rate and pace of this improvement is going to be a function of aligning supply with demand, and we’re taking decisive actions on CapEx and utilization to address it,” Mark Murphy, Micron’s chief financial officer, told analysts on the call.

    Data-center and cloud sales were considered relatively safe, but in another potentially developing crack, Mehrotra said the current environment showed some softness in cloud data-center demand, given tighter consumer spending.

    “We do absolutely expect that once we get past the current macroeconomic environment and macroeconomic weakening, longer-term trends for cloud will remain strong,” Mehrotra said. “In terms of the current environment, yes, inventory adjustments and some impact of cloud and demand weakening as well. That’s impacting our overall data-center outlook.”

    The CEO also told analysts he expects customers to be in a much better position in the burning off of their inventories by the middle of 2023.

    “By mid-calendar ’23, we are projecting, even though we don’t have perfect visibility, but based on all of our discussions with our customers, we are projecting that inventory at customers will be in relatively healthier position by that time.”

    “And that’s where we say that our second half of fiscal-year revenue will be greater than first half, and we would expect continued improvements beyond the second half as well,” the CEO said.

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  • Taiwan’s military has a problem: As China fears grow, recruitment pool shrinks | CNN

    Taiwan’s military has a problem: As China fears grow, recruitment pool shrinks | CNN

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    Taipei, Taiwan
    CNN
     — 

    Taiwan has noticed a hole in its defense plans that is steadily getting bigger. And it’s not one easily plugged by boosting the budget or buying more weapons.

    The island democracy of 23.5 million is facing an increasing challenge in recruiting enough young men to meet its military targets and its Interior Ministry has suggested the problem is – at least in part – due to its stubbornly low birth rate.

    Taiwan’s population fell for the first time in 2020, according to the ministry, which warned earlier this year that the 2022 military intake would be the lowest in a decade and that a continued drop in the youth population would pose a “huge challenge” for the future.

    That’s bad news at a time when Taiwan is trying to bolster its forces to deter any potential invasion by China, whose ruling Communist Party has been making increasingly belligerent noises about its determination to “reunify” with the self-governed island – which it has never controlled – by force if necessary.

    And the outlook has darkened further with the release of a new report by Taiwan’s National Development Council projecting that by 2035 the island can expect roughly 20,000 fewer births per year than the 153,820 it recorded in 2021. By 2035, Taiwan will also overtake South Korea as the jurisdiction with the world’s lowest birth rate, the report added.

    Such projections are feeding into a debate over whether the government should increase the period of mandatory military service that eligible young men must serve. Currently, the island has a professional military force made up of 162,000 (as of June this year) – 7,000 fewer than the target, according to a report by the Legislative Yuan. In addition to that number, all eligible men must serve four months of training as reservists.

    Changing the mandatory service requirement would be a major U-turn for Taiwan, which had previously been trying to cut down on conscription and shortened the mandatory service from 12 months as recently as 2018. But on Wednesday, Taiwan’s Minister of National Defence Chiu Kuo-cheng said such plans would be made public before the end of the year.

    That news has met with opposition among some young students in Taiwan, who have voiced their frustrations on PTT, Taiwan’s version of Reddit, even if there is support for the move among the wider public.

    A poll by the Taiwanese Public Opinion Foundation in March this year found that most Taiwanese agreed with a proposal to lengthen the service period. It found that 75.9% of respondents thought it reasonable to extend it to a year; only 17.8% were opposed.

    Many experts argue there is simply no other option.

    Su Tzu-yun, a director of Taiwan’s Institute for National Defense and Security Research, said that before 2016, the pool of men eligible to join the military – either as career soldiers or as reservists – was about 110,000. Since then, he said, the number had declined every year and the pool would likely be as low as 74,000 by 2025.

    And within the next decade, Su said, the number of young adults available for recruitment by the Taiwanese military could drop by as much as a third.

    “This is a national security issue for us,” he said. “The population pool is decreasing, so we are actively considering whether to resume conscription to meet our military needs.

    “We are now facing an increasing threat (from China), and we need to have more firepower and manpower.”

    Taiwan’s low birth rate – 0.98 – is far below the 2.1 needed to maintain a stable population, but it is no outlier in East Asia.

    In November, South Korea broke its own world record when its birth rate dropped to 0.79, while Japan’s fell to 1.3 and mainland China hit 1.15.

    Even so, experts say the trend poses a unique problem for Taiwan’s military, given the relative size of the island and the threats it faces.

    China has been making increasingly aggressive noises toward the island since August, when then-US House Speaker Nancy Pelosi controversially visited Taipei. Not long after she landed in Taiwan, Beijing also launched a series of unprecedented military exercises around the island.

    Since then, the temperature has remained high – particularly as Chinese leader Xi Jinping told a key Communist Party meeting in October that “reunification” was inevitable and that he reserves the option of taking “all measures necessary.”

    Chang Yan-ting, a former deputy commander of Taiwan’s air force, said that while low birth rates were common across East Asia, “the situation in Taiwan is very different” as the island was facing “more and more pressure (from China) and the situation will become more acute.”

    “The United States has military bases in Japan and South Korea, while Singapore does not face an acute military threat from its neighbors. Taiwan faces the greatest threat and declining birth rate will make the situation even more serious,” he added.

    Roy Lee, a deputy executive director at Taiwan’s Chung-hua Institution for Economic Research, agreed that the security threats facing Taiwan were greater than those in the rest of the region.

    “The situation is more challenging for Taiwan, because our population base is smaller than other countries facing similar problems,” he added.

    Taiwan’s population is 23.5 million, compared to South Korea’s 52 million, Japan’s 126 million and China’s 1.4 billion.

    Besides the shrinking recruitment pool, the decline in the youth population could also threaten the long-term performance of Taiwan’s economy – which is itself a pillar of the island’s defense.

    Taiwan is the world’s 21st largest economy, according to the London-based Centre for Economics and Business Research, and had a GDP of $668.51 billion last year.

    Much of its economic heft comes from its leading role in the supply of semiconductor chips, which play an indispensable role in everything from smartphones to computers.

    Taiwan’s homegrown semiconductor giant TSMC is perceived as being so valuable to the global economy – as well as to China – that it is sometimes referred to as forming part of a “silicon shield” against a potential military invasion by Beijing, as its presence would give a strong incentive to the West to intervene.

    Lee noted that population levels are closely intertwined with gross domestic product, a broad measure of economic activity. A population decline of 200,000 people could result in a 0.4% decline in GDP, all else being equal, he said.

    “It is very difficult to increase GDP by 0.4%, and would require a lot of effort. So the fact that a declining population can take away that much growth is big,” he said.

    Taiwan’s government has brought in a series of measures aimed at encouraging people to have babies, but with limited success.

    It pays parents a monthly stipend of 5,000 Taiwan dollars (US$161) for their first baby, and a higher amount for each additional one.

    Since last year, pregnant women have been eligible for seven days of leave for obstetrics checks prior to giving birth.

    Outside the military, in the wider economy, the island has been encouraging migrant workers to fill job vacancies.

    Statistics from the National Development Council showed that about 670,000 migrant workers were in Taiwan at the end of last year – comprising about 3% of the population.

    Most of the migrant workers are employed in the manufacturing sector, the council said, the vast majority of them from Vietnam, Indonesia, Thailand and the Philippines.

    Lee said in the long term the Taiwanese government would likely have to reform its immigration policies to bring in more migrant workers.

    Still, there are those who say Taiwan’s low birth rate is no reason to panic, just yet.

    Alice Cheng, an associate professor in sociology at Taiwan’s Academia Sinica, cautioned against reading too much into population trends as they were affected by so many factors.

    She pointed out that just a few decades ago, many demographers were warning of food shortages caused by a population explosion.

    And even if the low birth rate endured, that might be no bad thing if it were a reflection of an improvement in women’s rights, she said.

    “The educational expansion that took place in the 70s and 80s in East Asia dramatically changed women’s status. It really pushed women out of their homes because they had knowledge, education and career prospects,” she said.

    “The next thing you see globally is that once women’s education level improved, fertility rates started declining.”

    “All these East Asian countries are really scratching their head and trying to think about policies and interventions to boost fertility rates,” she added.

    “But if that’s something that really, (women) don’t want, can you push them to do that?”

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  • China challenges US chip curbs at WTO, citing ‘trade protectionism’ | CNN Business

    China challenges US chip curbs at WTO, citing ‘trade protectionism’ | CNN Business

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    Hong Kong
    CNN
     — 

    China has challenged a move by the United States to block sales of advanced computer chips and chip-making equipment to Chinese companies by launching a trade dispute at the World Trade Organization, calling the measures “trade protectionism.”

    The country’s commerce ministry filed a formal complaint against the United States with the WTO on Monday, according to a statement. The two countries are both members of the trade body, which has a mechanism for resolving disputes.

    “China’s filing of a lawsuit at the WTO is to resolve China’s concerns through legal means and is a necessary way to defend its legitimate rights and interests,” the ministry said.

    On October 7, the Biden administration unveiled a sweeping set of export controls that ban Chinese companies from buying advanced chips and chip-making equipment without a license. The rules also restrict the ability of US citizens or green card holders to support the “development or production” of chips at certain manufacturing facilities in China.

    The commerce ministry blasted the US move as threatening global supply chain stability and called it “a typical practice of trade protectionism.” The complaint is the first action China has taken at the global trade body against the US chip sanctions.

    US officials say the export controls were intended to protect national security interests.

    Analysts widely consider the measures to be a major threat to China’s tech ambitions, as the global semiconductor industry is heavily dependent on the United States and countries aligned with it for chip design, the tools that make them, and fabrication. It also comes as the United States is looking to bolster its domestic chip manufacturing abilities, after chip shortages earlier in the pandemic highlighted the country’s dependence on imports from abroad.

    Washington has also pressured its security partners to comply with chip-related curbs on China. Jake Sullivan, the White House national security adviser, said on Monday that Washington had spoken with its partners including Japan and the Netherlands to tighten chip-related exports to China, according to Reuters.

    Beijing has tried to push back against the sanctions. Last month, Chinese President Xi Jinping met with leaders from South Korea and the Netherlands, both key to the global chip-making supply chain, at the G20 summit in Bali, Indonesia. He called for both countries to boost cooperation in high-tech manufacturing and avoid “the politicization of economic and trade issues.”

    Chips are a growing source of tension between the United States and China. In recent years, Washington has turned up the pressure on China’s tech sector by limiting access to cutting-edge chip components and machinery.

    Before the October sanctions, the US government had already banned sales of certain tech products to specific Chinese companies, such as Huawei. It also ordered top chipmakers Nvidia and AMD to halt their shipments to China.

    To secure its own chip supplies, Beijing has stepped up efforts to boost domestic semiconductor production in recent years.

    In November 2018, just months after Washington hit Chinese telecoms giant ZTE Corp with an export ban, the Chinese government set up an industry alliance of companies and research institutes as part of efforts to design advanced chips. The group’s focus is on developing Risc-V, an open-source chip design architecture that has increasingly become a rival to Softbank

    (SFTBF)    ’s Arm, the current global leader. Members of the consortium include the Chinese Academy of Sciences, Alibaba

    (BABA)    , Tencent

    (TCEHY)    , and Baidu

    (BIDU)    .

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  • As the world courts TSMC, Taiwan worries about losing its ‘silicon shield’ | CNN Business

    As the world courts TSMC, Taiwan worries about losing its ‘silicon shield’ | CNN Business

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    Hong Kong
    CNN
     — 

    Semiconductor giant TSMC was feted this week by US President Joe Biden and Apple CEO Tim Cook during a ceremony to unveil its $40 billion manufacturing site in Arizona — a huge investment designed to help secure America’s supply of the most advanced chips.

    But back home in Taiwan, there is deep unease over the growing political and commercial pressure being applied to the world’s most important chipmaker to expand internationally. The company is building a facility in Japan and considering investing in Europe.

    “They’re like the Hope Diamond of semiconductors. Everybody wants them,” said G. Dan Hutcheson, vice chair of TechInsights, a research organization specializing in chips. (The Hope Diamond is the world’s largest blue diamond, which now resides at the Smithsonian Institute’s National Museum of Natural History in Washington.)

    “Customers in China want them to build there. Customers in the US want them there. And customers in Europe want them there too,” he added.

    Apart from the risk that TSMC will take its most advanced technology with it — stripping Taiwan of one of its unique assets and reducing employment opportunities locally — there are fears that a diminished presence for the company could expose Taipei to greater pressure from Beijing, which has vowed to take control of the self-ruled island, by force if necessary.

    TSMC is considered a national treasure in Taiwan and supplies tech giants including Apple

    (AAPL)     and Qualcomm

    (QCOM)    . It mass produces the most advanced semiconductors in the world, components that are vital to the smooth running of everything from smartphones to washing machines.

    The company is perceived as being so valuable to the global economy, as well as to China — which claims Taiwan as its own territory despite having never controlled it — that it is sometimes even referred to as forming part of a “silicon shield” against a potential military invasion by Beijing. TSMC’s presence gives a strong incentive to the West to defend Taiwan against any attempt by China to take it by force.

    “The idea is that if Taiwan became a powerhouse in semiconductors, then America would have to support and defend it,” said Hutcheson. “The strategy has been super successful.”

    A day before Tuesday’s Phoenix ceremony Chiu Chenyuan, a lawmaker with the opposition Taiwan People’s Party, grilled Foreign Minister Joseph Wu about whether there is a “secret deal” with the United States to disadvantage Taiwan’s chip industry.

    Chiu claimed that the chip giant was under political pressure to move its operations and its most advanced technology to the US. He cited the transfer of 300 people, including TSMC engineers, to the Arizona plant. In response, Wu said there was no secret deal, nor was there any attempt to diminish the importance of Taiwan to TSMC.

    Patrick Chen, the Taipei-based head of research at CL Securities Taiwan, said there was a common concern on the island about TSMC’s growing international importance, the pressure it is facing to expand, and what that means for Taiwan.

    “It is similar to what happened in the US in the 70s and 80s when manufacturing jobs were being shifted away from the States into other countries. Many local jobs were lost and cities bankrupted,” he said.

    CNN has asked TSMC for comment about its expansion plans.

    Its CEO, CC Wei, had previously said: “Every region is important to TSMC,” adding that it would “continue to serve all the customers all over the world.”

    Founded in 1987 by Morris Chang, TSMC is not a household name outside Taiwan, even though it produces an estimated 90% of the world’s super-advanced computer chips.

    Semiconductors are an indispensable part of just about every electronic device. They are difficult to make because of the high cost of development and the level of knowledge required, meaning much of the production is concentrated among a handful of suppliers.

    Concerned about losing access to crucial chips, particularly as tension has escalated between China and the United States, as well as between Beijing and Taipei, governments and major consumer-facing companies like Apple have asked semiconductor companies to localize their operations, according to experts.

    “TSMC’s decision to expand its Arizona investment is evidence that politics and geopolitical risks will play a bigger role than previously in supply chain decisions,” said Chris Miller, author of “Chip War: the Fight for the World’s Most Critical Technology”.

    “It also suggests that TSMC’s customers are asking for more geographic diversification, which is something that wasn’t previously a key concern of major customers.”

    On Tuesday, TSMC said it was increasing its investment in the US by building a second semiconductor factory in Arizona and raising its total investment there from $12 billion to $40 billion.

    Chang had previously said its plant in Arizona would produce 3-nanometer chips, the company’s most advanced technology, as advances in chip manufacturing require etching ever-smaller transistors onto silicon wafers.

    These announcements alarm politicians like Chiu of the Taiwan People’s Party’s. He frets about the island losing out as TSMC is courted globally.

    Chen of CL Securities said national security concerns among governments globally are driving TSMC’s expansion. But he believes the company will continue to manufacture its most advanced technology at home.

    “This would make economic sense given [the] lower salaries [and] higher quality of Taiwanese engineers,” he said, adding that the company needs the approval of the Taiwan Ministry of Economic Affairs to move its most advanced technologies abroad, which it was unlikely to give.

    Many experts believe that by the time 3-nanometer chips are being made in Arizona, TSMC’s Taiwan operations would be producing even smaller, more advanced chips.

    Hutcheson also believes TSMC will keep its most cutting-edge development teams in Taiwan.

    “Once you have a team of people doing development work, they work very closely together. You don’t want to disrupt that. It’s not an easy thing to do,” he said.

    — CNN’s Wayne Chang contributed to this report.

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  • TSMC ups its Arizona chipmaking investment to $40 billion ahead of Biden’s visit | CNN Business

    TSMC ups its Arizona chipmaking investment to $40 billion ahead of Biden’s visit | CNN Business

    [ad_1]


    New York
    CNN Business
     — 

    Taiwan Semiconductor Manufacturing Company is upping its investment in the United States, announcing Tuesday that it’s building a second semiconductor factory in Arizona and raising its investment there from $12 billion to $40 billion.

    TSMC’s plans come as tensions between Washington and Beijing are rising over chips, with President Joe Biden imposing a sweeping set of controls on the sale of advanced chips and chip-making equipment to Chinese firms.

    Biden visited the manufacturer’s site in Phoenix and spoke about bringing jobs and investment to Arizona, calling TSMC’s $40 billion commitment “the largest foreign investment in the history of this state.” Other lawmakers and business leaders also attended the event, including Apple CEO Tim Cook.

    “American manufacturing is back, folks,” Biden said at the event. “These are the most advanced semiconductor chips on the planet, chips that will power iPhones and MacBooks, as Tim Cook can attest … It could be a game changer.”

    In his remarks, Cook said: “As many of you know, we work with TSMC to manufacture the chips that help power our products all over the world, and we look forward to expanding this work in the years to come as TSMC forms new and deeper roots in America.” He added that with the opening of the new facility, Apple’s own Silicon chips “can be proudly stamped ‘Made in America.’”

    TSMC previously announced that it was building a $12 billion facility in Arizona that will eventually manufacture 3-nanometer chips, TSMC’s most advanced technology. Between the two factories, thousands of “high-paying high-tech jobs” will be added to the state and 600,000 wafers per year will be produced, the company said.

    TSMC accounts for an estimated 90% of the world’s super-advanced computer chips, supplying tech giants including Apple

    (AAPL)     and Qualcomm

    (QCOM)    .

    Chips are an indispensable part of everything from smartphones to washing machines — but are also difficult to make because of the high cost of development and the level of knowledge required, meaning much of the production is concentrated among a handful of suppliers.

    The White House is touting the new investments as a direct result of Biden’s economic plan, including the $200 billion CHIPS and Science Act. Biden has been visiting communities where companies like TSMC and Intel have announced new investments since the passage of the law this summer.

    “It means more workers in these major factories, but it also means more opportunities for suppliers and contractors, good paying construction jobs, opportunities for small and medium sized manufacturers and suppliers,” National Economic Council Director Brian Deese told reporters in a call on Monday. “It means economic opportunity for communities that have often been left behind in economic cycles, including traditional energy communities that have powered our nation for generations and tribal nations.”

    The global chip shortage first surfaced at the beginning of the pandemic, which upended supply chains and changed consumer shopping patterns. Automakers cut back on their orders for chips while tech companies, whose products were boosted by lockdown living, snapped up as many as they could.

    The facility Biden will visit Tuesday in Phoenix is slated to begin producing chips in 2024. The new facility should start production in 2026.

    – CNN’s Nikki Carvajal, Wayne Chang, Clare Duffy and Diksha Madhok contributed to this report.

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  • $3,000 gold and more outrageous market predictions investors shouldn’t brush aside.

    $3,000 gold and more outrageous market predictions investors shouldn’t brush aside.

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    Monday served as another smackdown for investors who are banking on a Goldilocks economy and a less aggressive Fed.

    Some are now not ruling out a Grinch-like turn from the central bank — a 0.75% hike next week instead of the 0.50% markets have been pinning hopes on — following strong data on services, jobs and wages.

    It all goes along with the theme of 2022 — expect the unexpected. The relief of moving out of a crippling pandemic was quickly replaced by the biggest war on Europe’s shores in decades, that sparked worldwide inflation surges.

    What comes next is anyone’s guess and that brings us to our call of the day via Saxo Bank’s annual “Outrageous Predictions” for 2023.

    While some of these will sound crazy, note that the Saxo team, led by Chief Investment Officer Steen Jakobsen, have nailed a few wild prophecies in the past decade. Those include: a Brexit prediction in 2015, a 25% drop for the S&P 500 from its 2007 high in 2008, a tripling of Bitcoin’s value forecast in 2017.

    The focus for 2023’s prediction is that “a return to the disinflationary prepandemic dynamic is impossible because we have entered into a global war economy, with every major power across the world now scrambling to shore up their national security on all fronts; whether in an actual military sense, or due to profound supply-chain, energy and even financial insecurities that have been laid bare by the pandemic experience and Russia’s invasion of Ukraine,” says Jakobsen.

    As for those predictions, here we go:

    • Gold crosses $2,075 then rockets to $3,000 on unstoppable inflation. “Fed policy tightening and quantitative tightening drives a new snag in U.S. treasury markets that forces new sneaky ‘measures’ to contain Treasury market volatility that really amounts to new de facto quantitative easing,” says Saxo. And China’s end of zero-COVID drives up demand, commodity prices and inflation.

    • Widespread price controls to cap official inflation due to war economy mentality. “In 2023, expect broadening price and even wage controls, maybe even something like a new National Board for Prices and Incomes being established in the U.K. and the U.S.,” said Saxo. Market fallout? Fuel for gold’s
      GC00,
      +0.19%
      climb.

    • There’s a new reserve asset in town. Non U.S.-allied countries move away from the U.S. and IMF to create an “international clearing union (ICU) and a new reserve asset, called the Bancor (currency code KEY)” that borrows from economist John Maynard Keynes idea of resisting U.S. power over the international monetary system. Nonaligned central banks slash U.S. dollar reserves, Treasury yields soar and the dollar
      DXY,
      +0.09%
      drops 25% against a basket of currencies that trade with Bancor.

    • Japan pegs USDJPY to 200. Pressure intensifies on the already weak yen
      USDJPY,
      +0.04%
      into 2023 as currency intervention fails and inflation soars. The government resets the financial system, erasing all debt, recapitalizing banks, as trillions of yen return to Japan shores. But the yen still weakens by year-end.

    • A $10 trillion-dollar Manhattan project. A team of major tech leaders form a mega research-and-development effort for energy infrastructure and ground-breaking technologies — the Third Stone. Companies tied to the project soar in an overall weak environment for investing.

    • Tax haven ban kills private equity. The OECD launches a full ban on the biggest tax havens in the world in 2023 and in the U.S., carried interest tax as capital gains is shifted to ordinary income. It’s a body blow for private equity and venture capital — the valuation of publicly listed private-equity firms fall 50%.

    The rest of their predictions are here, such as the formation of an EU Armed Forces in 2023 and an “UnBrexit” referendum.

    Read: Why Monday’s stock-market rout should be a wake up call for investors

    The markets

    MarketWatch

    Stocks
    DJIA,
    -0.96%
     
    SPX,
    -1.40%
     
    COMP,
    -1.77%
    are drifting into the red, with Treasury yields
    TMUBMUSD10Y,
    3.571%
     
    TMUBMUSD02Y,
    4.395%
    steady, the dollar
    DXY,
    +0.09%
    lower and oil
    CL.1,
    -3.43%
     
    BRN00,
    -3.73%
    also down.

    For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

    The buzz

    BioVie stock
    BIVI,
    -18.43%
    is climbing after positive results from the clinical-stage biopharmaceutical company on a drug for Parkinson’s and Alzheimer’s.

    NRG Energy
    NRG,
    -15.79%
    agreed to buy Vivint Smart Home
    VVNT,
    +32.31%
    in a $5.2 billion deal. Vivint shares are soaring.

    MEI Pharma
    MEIP,
    -33.52%
    shares are tumbing after drugmaker said it would stop developing cancer treatment zandelisib outside of Japan and announces job cuts. Herbalife shares
    HLF,
    -18.85%
    are down 10% after an offering of convertible notes 

    Powell Industries
    POWL,
    +19.11%
    stock is up 9% after the electrical equipment maker’s well-received results and new orders. Within software Sumo Logic
    SUMO,
    +11.65%
    and GitLab shares
    GTLB,
    +5.71%
    are surging on upbeat results and forecasts.

    Layoffs extending beyond tech? PepsiCo 
    PEP,
    -0.86%
    is reportedly cutting hundreds of workers at its North American headquarters.

    Home builder Toll Brothers
    TOL,
    -1.56%
    will report results after the close.

    The October trade deficit jumped 5.4% to $78,2 billion.

    The U.S. and EU are reportedly considering fresh steel and aluminum tariffs on China to fight carbon emissions.

    Best of the web

    “Nothing to be glad about.” An empty, lonely and cold formerly occupied Ukraine city.

    Morocco’s World Cup team leans on its secret weapon of parents in the stands.

    Why human composting could be the next big thing.

    The chart

    Headed into the holidays, consumers are using savings and credit, says a team of Jefferies analysts led by Corey Tarlowe. “The savings rate continues to trend lower and credit card balances are growing +15% Y/Y. We believe these trends indicate that the consumer is stretched.”

    Against this backdrop, they like Costco
    COST,
    -1.34%    ,
    Dollar General
    DG,
    -1.52%    ,
    Target
    TGT,
    +0.13%
    and Walmart
    WMT,
    -0.98%    .


    FactSet/Jefferies

    The tickers

    These were the top-searched tickers on MarketWatch at 6 a.m.:

    Ticker

    		 Security name
    TSLA,
    -2.00%         		Tesla
    GME,
    -5.32%         		GameStop
    AMC,
    -9.00%         		AMC Entertainment
    NIO,
    +2.37%         		NIO
    BBBY,
    -8.86%         		Bed Bath & Beyond
    AAPL,
    -1.83%         		Apple
    APE,
    -5.40%         		AMC Entertainment Holdings preferred shares
    COSM,
    -17.49%         		Cosmos
    AMZN,
    -2.26%         		Amazon.com
    MULN,
    -3.08%         		Mullen Automotive
    Random reads

    Tributes pour after “Cheers” star Kirstie Alley dies at 71.

    Happy 190th birthday to the world’s oldest tortoise.

    A green Grinchy dog for Christmas? Not everyone’s heart grew three sizes.

    Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

    Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passy and economist Stephanie Kelton

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  • 20 dividend stocks with high yields that have become more attractive right now

    20 dividend stocks with high yields that have become more attractive right now

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    Income-seeking investors are looking at an opportunity to scoop up shares of real estate investment trusts. Stocks in that asset class have become more attractive as prices have fallen and cash flow is improving.

    Below is a broad screen of REITs that have high dividend yields and are also expected to generate enough excess cash in 2023 to enable increases in dividend payouts.

    REIT prices may turn a corner in 2023

    REITs distribute most of their income to shareholders to maintain their tax-advantaged status. But the group is cyclical, with pressure on share prices when interest rates rise, as they have this year at an unprecedented scale. A slowing growth rate for the group may have also placed a drag on the stocks.

    And now, with talk that the Federal Reserve may begin to temper its cycle of interest-rate increases, we may be nearing the time when REIT prices rise in anticipation of an eventual decline in interest rates. The market always looks ahead, which means long-term investors who have been waiting on the sidelines to buy higher-yielding income-oriented investments may have to make a move soon.

    During an interview on Nov 28, James Bullard, president of the Federal Reserve Bank of St. Louis and a member of the Federal Open Market Committee, discussed the central bank’s cycle of interest-rate increases meant to reduce inflation.

    When asked about the potential timing of the Fed’s “terminal rate” (the peak federal funds rate for this cycle), Bullard said: “Generally speaking, I have advocated that sooner is better, that you do want to get to the right level of the policy rate for the current data and the current situation.”

    Fed’s Bullard says in MarketWatch interview that markets are underpricing the chance of still-higher rates

    In August we published this guide to investing in REITs for income. Since the data for that article was pulled on Aug. 24, the S&P 500
    SPX,
    -0.29%
    has declined 4% (despite a 10% rally from its 2022 closing low on Oct. 12), but the benchmark index’s real estate sector has declined 13%.

    REITs can be placed broadly into two categories. Mortgage REITs lend money to commercial or residential borrowers and/or invest in mortgage-backed securities, while equity REITs own property and lease it out.

    The pressure on share prices can be greater for mortgage REITs, because the mortgage-lending business slows as interest rates rise. In this article we are focusing on equity REITs.

    Industry numbers

    The National Association of Real Estate Investment Trusts (Nareit) reported that third-quarter funds from operations (FFO) for U.S.-listed equity REITs were up 14% from a year earlier. To put that number in context, the year-over-year growth rate of quarterly FFO has been slowing — it was 35% a year ago. And the third-quarter FFO increase compares to a 23% increase in earnings per share for the S&P 500 from a year earlier, according to FactSet.

    The NAREIT report breaks out numbers for 12 categories of equity REITs, and there is great variance in the growth numbers, as you can see here.

    FFO is a non-GAAP measure that is commonly used to gauge REITs’ capacity for paying dividends. It adds amortization and depreciation (noncash items) back to earnings, while excluding gains on the sale of property. Adjusted funds from operations (AFFO) goes further, netting out expected capital expenditures to maintain the quality of property investments.

    The slowing FFO growth numbers point to the importance of looking at REITs individually, to see if expected cash flow is sufficient to cover dividend payments.

    Screen of high-yielding equity REITs

    For 2022 through Nov. 28, the S&P 500 has declined 17%, while the real estate sector has fallen 27%, excluding dividends.

    Over the very long term, through interest-rate cycles and the liquidity-driven bull market that ended this year, equity REITs have fared well, with an average annual return of 9.3% for 20 years, compared to an average return of 9.6% for the S&P 500, both with dividends reinvested, according to FactSet.

    This performance might surprise some investors, when considering the REITs’ income focus and the S&P 500’s heavy weighting for rapidly growing technology companies.

    For a broad screen of equity REITs, we began with the Russell 3000 Index
    RUA,
    -0.04%    ,
    which represents 98% of U.S. companies by market capitalization.

    We then narrowed the list to 119 equity REITs that are followed by at least five analysts covered by FactSet for which AFFO estimates are available.

    If we divide the expected 2023 AFFO by the current share price, we have an estimated AFFO yield, which can be compared with the current dividend yield to see if there is expected “headroom” for dividend increases.

    For example, if we look at Vornado Realty Trust
    VNO,
    +1.03%    ,
    the current dividend yield is 8.56%. Based on the consensus 2023 AFFO estimate among analysts polled by FactSet, the expected AFFO yield is only 7.25%. This doesn’t mean that Vornado will cut its dividend and it doesn’t even mean the company won’t raise its payout next year. But it might make it less likely to do so.

    Among the 119 equity REITs, 104 have expected 2023 AFFO headroom of at least 1.00%.

    Here are the 20 equity REITs from our screen with the highest current dividend yields that have at least 1% expected AFFO headroom:

    Company

    		 Ticker

    		 Dividend yield

    		 Estimated 2023 AFFO yield

    		 Estimated “headroom”

    		 Market cap. ($mil)

    		 Main concentration
    Brandywine Realty Trust

    		 BDN,
    +2.12%         		11.52%

    		 12.82%

    		 1.30%

    		 $1,132

    		 Offices
    Sabra Health Care REIT Inc.

    		 SBRA,
    +2.41%         		9.70%

    		 12.04%

    		 2.34%

    		 $2,857

    		 Health care
    Medical Properties Trust Inc.

    		 MPW,
    +2.53%         		9.18%

    		 11.46%

    		 2.29%

    		 $7,559

    		 Health care
    SL Green Realty Corp.

    		 SLG,
    +2.25%         		9.16%

    		 10.43%

    		 1.28%

    		 $2,619

    		 Offices
    Hudson Pacific Properties Inc.

    		 HPP,
    +1.41%         		9.12%

    		 12.69%

    		 3.57%

    		 $1,546

    		 Offices
    Omega Healthcare Investors Inc.

    		 OHI,
    +1.23%         		9.05%

    		 10.13%

    		 1.08%

    		 $6,936

    		 Health care
    Global Medical REIT Inc.

    		 GMRE,
    +2.55%         		8.75%

    		 10.59%

    		 1.84%

    		 $629

    		 Health care
    Uniti Group Inc.

    		 UNIT,
    +0.55%         		8.30%

    		 25.00%

    		 16.70%

    		 $1,715

    		 Communications infrastructure
    EPR Properties

    		 EPR,
    +0.86%         		8.19%

    		 12.24%

    		 4.05%

    		 $3,023

    		 Leisure properties
    CTO Realty Growth Inc.

    		 CTO,
    +2.22%         		7.51%

    		 9.34%

    		 1.83%

    		 $381

    		 Retail
    Highwoods Properties Inc.

    		 HIW,
    +0.99%         		6.95%

    		 8.82%

    		 1.86%

    		 $3,025

    		 Offices
    National Health Investors Inc.

    		 NHI,
    +2.59%         		6.75%

    		 8.32%

    		 1.57%

    		 $2,313

    		 Senior housing
    Douglas Emmett Inc.

    		 DEI,
    +0.87%         		6.74%

    		 10.30%

    		 3.55%

    		 $2,920

    		 Offices
    Outfront Media Inc.

    		 OUT,
    +0.89%         		6.68%

    		 11.74%

    		 5.06%

    		 $2,950

    		 Billboards
    Spirit Realty Capital Inc.

    		 SRC,
    +1.15%         		6.62%

    		 9.07%

    		 2.45%

    		 $5,595

    		 Retail
    Broadstone Net Lease Inc.

    		 BNL,
    -0.30%         		6.61%

    		 8.70%

    		 2.08%

    		 $2,879

    		 Industial
    Armada Hoffler Properties Inc.

    		 AHH,
    +0.00%         		6.38%

    		 7.78%

    		 1.41%

    		 $807

    		 Offices
    Innovative Industrial Properties Inc.

    		 IIPR,
    +1.42%         		6.24%

    		 7.53%

    		 1.29%

    		 $3,226

    		 Health care
    Simon Property Group Inc.

    		 SPG,
    +1.03%         		6.22%

    		 9.55%

    		 3.33%

    		 $37,847

    		 Retail
    LTC Properties Inc.

    		 LTC,
    +1.42%         		5.99%

    		 7.60%

    		 1.60%

    		 $1,541

    		 Senior housing
    Source: FactSet

    Click on the tickers for more about each company. You should read Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.

    The list includes each REIT’s main property investment type. However, many REITs are highly diversified. The simplified categories on the table may not cover all of their investment properties.

    Knowing what a REIT invests in is part of the research you should do on your own before buying any individual stock. For arbitrary examples, some investors may wish to steer clear of exposure to certain areas of retail or hotels, or they may favor health-care properties.

    Largest REITs

    Several of the REITs that passed the screen have relatively small market capitalizations. You might be curious to see how the most widely held REITs fared in the screen. So here’s another list of the 20 largest U.S. REITs among the 119 that passed the first cut, sorted by market cap as of Nov. 28:

    Company

    		 Ticker

    		 Dividend yield

    		 Estimated 2023 AFFO yield

    		 Estimated “headroom”

    		 Market cap. ($mil)

    		 Main concentration
    Prologis Inc.

    		 PLD,
    +1.63%         		2.84%

    		 4.36%

    		 1.52%

    		 $102,886

    		 Warehouses and logistics
    American Tower Corp.

    		 AMT,
    +0.75%         		2.66%

    		 4.82%

    		 2.16%

    		 $99,593

    		 Communications infrastructure
    Equinix Inc.

    		 EQIX,
    +0.80%         		1.87%

    		 4.79%

    		 2.91%

    		 $61,317

    		 Data centers
    Crown Castle Inc.

    		 CCI,
    +0.93%         		4.55%

    		 5.42%

    		 0.86%

    		 $59,553

    		 Wireless Infrastructure
    Public Storage

    		 PSA,
    +0.19%         		2.77%

    		 5.35%

    		 2.57%

    		 $50,680

    		 Self-storage
    Realty Income Corp.

    		 O,
    +0.72%         		4.82%

    		 6.46%

    		 1.64%

    		 $38,720

    		 Retail
    Simon Property Group Inc.

    		 SPG,
    +1.03%         		6.22%

    		 9.55%

    		 3.33%

    		 $37,847

    		 Retail
    VICI Properties Inc.

    		 VICI,
    +0.81%         		4.69%

    		 6.21%

    		 1.52%

    		 $32,013

    		 Leisure properties
    SBA Communications Corp. Class A

    		 SBAC,
    +0.27%         		0.97%

    		 4.33%

    		 3.36%

    		 $31,662

    		 Communications infrastructure
    Welltower Inc.

    		 WELL,
    +3.06%         		3.66%

    		 4.76%

    		 1.10%

    		 $31,489

    		 Health care
    Digital Realty Trust Inc.

    		 DLR,
    +0.63%         		4.54%

    		 6.18%

    		 1.64%

    		 $30,903

    		 Data centers
    Alexandria Real Estate Equities Inc.

    		 ARE,
    +1.49%         		3.17%

    		 4.87%

    		 1.70%

    		 $24,451

    		 Offices
    AvalonBay Communities Inc.

    		 AVB,
    +0.98%         		3.78%

    		 5.69%

    		 1.90%

    		 $23,513

    		 Multifamily residential
    Equity Residential

    		 EQR,
    +1.46%         		4.02%

    		 5.36%

    		 1.34%

    		 $23,503

    		 Multifamily residential
    Extra Space Storage Inc.

    		 EXR,
    +0.31%         		3.93%

    		 5.83%

    		 1.90%

    		 $20,430

    		 Self-storage
    Invitation Homes Inc.

    		 INVH,
    +2.15%         		2.84%

    		 5.12%

    		 2.28%

    		 $18,948

    		 Single-family residental
    Mid-America Apartment Communities Inc.

    		 MAA,
    +1.83%         		3.16%

    		 5.18%

    		 2.02%

    		 $18,260

    		 Multifamily residential
    Ventas Inc.

    		 VTR,
    +2.22%         		4.07%

    		 5.95%

    		 1.88%

    		 $17,660

    		 Senior housing
    Sun Communities Inc.

    		 SUI,
    +2.12%         		2.51%

    		 4.81%

    		 2.30%

    		 $17,346

    		 Multifamily residential
    Source: FactSet

    Simon Property Group Inc.
    SPG,
    +1.03%
    is the only REIT to make both lists.

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  • The US-China chip war is spilling over to Europe | CNN Business

    The US-China chip war is spilling over to Europe | CNN Business

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    Hong Kong
    CNN Business
     — 

    Two European chip deals have run into trouble over their links with China, a sign of concern spreading in the West over potential Chinese control of critical infrastructure.

    Last week, the new owner of Britain’s biggest chipmaker was ordered to unwind its takeover, just days after another chip factory sale was blocked in Germany. Both transactions were hit by national security concerns, and had involved acquisitions by Chinese-owned companies.

    In the United Kingdom, Nexperia, a Dutch subsidiary of Shanghai-listed semiconductor maker Wingtech, was told by the government to sell at least 86% of its stake in Newport Wafer Fab, more than a year after taking control of the factory. Staffers have since been protesting the decision, saying it puts nearly 600 jobs at risk.

    In Germany, the economic ministry barred Elmos Semiconductor, an automotive chipmaker, from selling its factory in the city of Dortmund to Silex, a Swedish subsidiary of China’s Sai Microelectronics.

    Chipmaking was already emerging as a new front in US-China tensions. Now the two troubled deals illustrate how the pressure is also rising in Europe, particularly as Western officials face calls for key sectors to be kept out of Chinese control.

    “These decisions mark a shift towards tougher stances regarding Chinese investment in critical industries in Europe,” said Xiaomeng Lu, director of geo‑technology at Eurasia Group.

    “US pressure definitely contributed to these decisions. [A] growing sense of technology sovereignty also likely prompted these moves — governments around the world are increasingly [viewing the] semiconductors industry as a strategic resource and seek to protect them from foreign takeovers.”

    Legal experts said the two decisions were notable because each deal was initially thought to have been cleared.

    The Newport Wafer case is “the first completed acquisition” that needs to be unwound under a UK national security and investment (NSI) act, which took full effect in January, according to Ian Giles, head of antitrust and competition for Europe, the Middle East and Asia for Norton Rose.

    Nexperia said last week that it was “shocked” by the decision, and that “the UK government chose not to enter into a meaningful dialogue with Nexperia or even visit the Newport site.”

    The company added that it had offered to avoid “activities of potential concern, and to provide the UK government with direct control and participation in the management of Newport,” a 28-acre site in south Wales.

    The factory makes silicon wafers, the basis for making computer chips. Many of its products eventually power cars and medical equipment. Nexperia has indicated that workers at the facility now face an uncertain future.

    In an open letter to the UK government last Thursday, the Nexperia Newport Staff Association said that it was “in disbelief” that employees’ livelihoods had been “put in jeopardy in the run-up to Christmas.”

    “This is clearly a deeply political decision,” the group wrote, rejecting the idea that the deal would undermine British security. “You must see sense and protect our jobs by allowing Nexperia to keep their Newport factory.”

    For Elmos, German authorities had initially indicated that they would issue a conditional approval, and even shared a draft approval after an intense review process lasting about 10 months, the company said in a statement following the injunction.

    Tim Schaper, head of antitrust and competition for Germany at Norton Rose, said government intervention was also significant given that “Elmos’ technology is said to be quite old, state of the art in the 1990s, and allegedly not of great industrial importance.”

    “The transaction became the plaything of a public debate about Chinese investors’ acquiring stakes in key German technologies,” he said.

    A company sign of Elmos Semiconductor, seen on Nov. 9 in the German city of Dortmund.

    It’s possible that regulators were concerned about an outflow of technical know how, according to Alexander Rinne, the Munich-based head of international law firm Milbank’s European antitrust practice.

    “Elmos is known for making chips for the automotive sector, which is Germany’s core industry and the pride of the country,” he said in an interview.

    Elmos and Nexperia both declined interview requests. A Nexperia spokesperson told CNN Business on Tuesday that it was “considering its options regarding the UK government’s decision.”

    Chips are a growing source of tension between the United States and China. Washington has declared a shortage of the materials a national security issue, and highlighted the importance of remaining competitive in advanced technology capabilities.

    This year, the United States ramped up its own restrictions and pressed allies to enact their own, according to Lu. In August, the US government ordered two top chipmakers, Nvidia

    (NVDA)     and AMD

    (AMD)    , to halt exports of certain high-performance chips to China.

    Two months later, the Biden administration unveiled sweeping export controls that banned Chinese companies from buying advanced chips and chip-making equipment without a license. The rules also restricted the ability of American citizens or US green card holders to provide support for the development or production of chips at certain manufacturing facilities in China.

    The pressure is mounting. On Monday, NATO Secretary General Jens Stoltenberg urged the West to “be careful not to create new dependencies” on China. Speaking at a NATO parliamentary assembly in Madrid, Stoltenberg said he was seeing “growing Chinese efforts” to control Western critical infrastructure, supply chains, and key industrial sectors.

    “We cannot give authoritarian regimes any chance to exploit our vulnerabilities and undermine us,” he said.

    China has pushed back on the handling of the two European semiconductor cases.

    “We firmly oppose the UK’s move, and call on the UK to respect the legitimate rights and interests of Chinese companies and provide a fair, just, and (a) non-discriminatory business environment,” Chinese Foreign Ministry Spokesperson Mao Ning told a press briefing last Friday when asked about the Newport Wafer order. “The UK has overstretched the concept of national security and abused state power.”

    Zhao Lijian, another Chinese Foreign Ministry spokesperson, called on Germany and other countries to “refrain from politicizing normal economic and trade cooperation” at a press conference earlier this month, without addressing Elmos specifically.

    Germany has shown greater scrutiny of Chinese buyers this year. Last month, a bid by Chinese state shipping giant Cosco for a stake in a Hamburg port terminal operator sparked similar controversy. Under pressure from some members of the government, the size of the investment was later limited.

    Attorneys say if the chipmakers appeal, they could face an uncertain battle that may drag on for years.

    In each case, they would need to file a challenge in court within roughly a month of regulators’ decisions, barring exceptional circumstances, according to Norton Rose.

    Both Britain and Germany have recently added rules that expand government oversight over such decisions, making outcomes harder to predict. In Germany, a change to foreign direct investment rules in 2020 meant the government can intervene in prospective deals “if there is a ‘probable impairment of public order and security,’” said Schaper.

    Previously, by contrast, it could only impose restrictions “if there was an ‘actual, sufficiently serious threat to public order and security,’” he told CNN Business.

    In the UK, the ability of the government to retroactively review deals under the NSI Act “was really something that was considered surprising and far-reaching,” said Andrea Hamilton, a London-based partner at Milbank.

    “If challenged, as Nexperia apparently intends, it will also become a test case as to [the] extent of the NSI Act’s limits,” she said.

    Elsewhere, attention is shifting to the Netherlands. The Dutch government is currently facing pressure from the United States to limit exports to China, particularly from ASML

    (ASML)    , a semiconductor equipment maker that holds a dominant position in the lithography machine market, according to Lu at Eurasia Group.

    “It will become the next case study,” she told CNN Business.

    The Netherlands has made clear it will form its own position.

    Asked about the issue this month, Dutch Minister for Foreign Trade Liesje Schreinemacher said the country would “not copy the US export restrictions for China one-to-one.”

    “We make our own assessment,” she said in an interview with Dutch newspaper NRC.

    — CNN’s Zahid Mahmood, Rose Roobeek-Coppack and Laura He contributed to this report.

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  • The PC boom has gone bust, and we are about to see the results ahead of Black Friday

    The PC boom has gone bust, and we are about to see the results ahead of Black Friday

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    The pandemic-fueled personal-computer boom has ended, so how will that affect demand and pricing for PCs and the retailers that sell them this holiday season?

    A sense of the fallout will be provided in the week ahead with results due from PC makers Dell Technologies Inc.
    DELL,
    +0.67%
    and HP Inc.
    HPQ,
    +0.17%    ,
    along with videoconferencing platform Zoom Video Communications Inc.
    ZM,
    -1.15%
    and electronics chain Best Buy Co Inc.
    BBY,
    +2.88%

    All of those companies will report amid signs of deep holiday discounting for products such as clothing and electronics, after many customers — stuck at home in 2020 and 2021 — loaded up on laptops and other goods and turned Zoom into a digital conference room. But this year, decades-high inflation, and a return to prepandemic spending on travel and hanging out in person, have forced retailers and electronics makers to adjust to a world where more people are spending on essentials.

    PC shipments have fallen at rates not seen since at least the 1990s. Adobe
    ADBE,
    -2.06%
    has said online holiday discounts for electronics have been as steep as 17%. For computers, they’ve run for as much as 10% less. TVs are also being sold for cheaper. Holiday-season forecasts have generally called for sales increases, helped by price increases and enduring demand despite those price increases.

    In-depth: The pandemic PC boom is over, but its legacy will live on

    However, results from Target
    TGT,
    +0.54%
    on Wednesday missed big on third-quarter earnings, and the big-box retailer said it was bracing for a possible decline in fourth-quarter same-store sales, citing “softening sales and profit trends that emerged late in the third quarter and persisted into November.” Results from Walmart
    WMT,
    +1.51%
    were almost the opposite, however, detailing earnings that beat by a wide margin and a raised full-year outlook.

    Among smaller retailers, discounter Ross Stores Inc.
    ROST,
    +9.86%
    hiked its full-year profit forecast, citing sales momentum but easier year-over-year comparisons up ahead. But Williams-Sonoma Inc.
    WSM,
    -6.15%
    noted “macro uncertainty” and “increasingly inconsistent” demand.

    This week in earnings

    The companies report during a shortened, quieter week — thanks to Thanksgiving — and after concerns about a recession have hung over much of the year. With 94% of S&P 500
    SPX,
    +0.48%
    companies having already reported third-quarter results, only a dozen are set to release earnings in the week ahead.

    But among those 94%, there are signs that preoccupations with a downturn might be easing, after the economy grew during the third quarter and reversed after two quarters of declines.

    FactSet senior analyst John Butters, in a report on Thursday, said 179 companies have mentioned the term “recession,” during earnings calls in the third quarter. That’s still above the average over 10 years, but it’s below the 242 companies that mentioned a recession in the second quarter.

    Previously: Executives seem pretty convinced a recession is coming

    Elsewhere on Monday, J.M. Smucker Co.
    SJM,
    +1.11%
    — best known for Folgers and Jif — reports results, following concerns about higher food prices and how much higher they might go. Life-sciences electronics maker Agilent Tecnologies Inc.
    A,
    +1.21%
    report results on Monday as well. Fast-food chain Jack in the Box Inc.
    JACK,

    reports Tuesday. Tractor and construction-vehicle Deere & Co.
    DE,
    +0.31%
    reports Wednesday, following production and supply-chain snarls but steady demand.

    The calls to put on your calendar

    Clothing demand, discount demand: Urban Outfitters Inc.
    URBN,
    +2.44%
    reports Monday, while Burlington Stores Inc.
    BURL,
    +4.63%    ,
    Nordstrom Inc.
    JWN,
    +1.71%
    and dollar-store chain Dollar Tree Inc.
    DLTR,
    -0.21%
    report on Tuesday.

    The discounting wave across clothing retailers, an effort to clear inventories, might attract more consumers, but it’s worried Wall Street analysts focused on margins and the bottom line. Still, some analysts have said that more younger shoppers feel like their wardrobes are getting stale, and they say Nordstrom, whose customers tend to have more money, is best geared for “an upcoming wardrobe refresh.”

    Off-price clothing and home-goods retailer Burlington, meanwhile, will report after rival discounters Ross and TJX received a lift from investors this week.

    See also: The holiday-shopping season has a different problem this year than last — and it could lead to some deals

    Ross’ chief executive, Barbara Rentler, noted that rising prices had hurt its lower-income consumers. But Jefferies analysts said that Burlington and other discounters, which often buy up goods that other retailers don’t want, stood to benefit from the inventory purge.

    Dollar Tree, meanwhile, reports as more shoppers seek cheaper grocery options, but as food prices rise nonetheless. But Bank of America analysts, in a note last month, said traffic data implied a “slowdown” heading into the results.

    The numbers to watch

    Demand trends for PCs, electronics: Dell and HP report in the wake of deeper job cuts across the tech industry, while Zoom tries to tack on more features — such as calendar and email functions — to appeal to small business and adapt to a hybrid-work world.

    The PC boom’s demise hit home at Dell during its prior quarter, reported in August, after personal-computer sales at the company came in below estimates. Executives, at that time, said PC demand had fallen and that “customers are taking a more cautious view of their needs given the uncertainty.”

    Opinion: Tech earnings are about to dive, and there’s no life preserver in sight

    Some analysts, however, signaled that some degree of investor pessimism was already baked into the stock prices.

    “We recognize the deteriorating industry fundamentals in relation to PCs as well as incremental slowdown in IT Infrastructure. That said, we believe the magnitude of the cuts last quarter set up Dell to be less exposed to another round of material earnings revisions,” JPMorgan analysts said in a note. And even as HP feels similar pain, analysts there said share buybacks could be “a bright spot.”

    Results from HP and Dell could also have implications for Best Buy, which sells laptops, TVs, phones and other electronic devices.

    “Recall that initial expectations for the year were that BBY would face pressure as it lapped stimulus-fueled spending and broad-based demand for technology products and services,” Wedbush analysts said in a note on Friday.

    “However, the macro has been more volatile than expected with consumers facing significant inflationary pressures and lower-income households are making decisions to trade down in some categories such as televisions.”

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