McDonald’s Corp.’s stock fell 1.3% in premarket trading on Monday after the fast-food giant missed Wall Street analysts’ estimates for revenue and same-store sales, while citing an impact from war in the Middle East.
The global fast-food giant said it expects “macro challenges” to persist in 2024.
McDonald’s
MCD,
said its fourth-quarter net income rose by 7% to $2.04 billion, or $2.80 a share, from $1.9 billion, or $2.59 a share, in the year-ago quarter.
McDonald’s said the latest quarter’s results included 15 cents a share in one-time charges.
Breaking those charges out, McDonald’s would have earned $1.95 a share. Analysts expected McDonalds to earn $1.83 a share, according to FactSet data.
Revenue rose 8% to $6.41 billion, short of the FactSet consensus estimate of $6.45 billion.
Fourth-quarter global comparable-store sales increased by 3.4%, including a 4.3% rise in the U.S.. Analysts expected same-store sales growth of 4.7%.
McDonald’s said its comparable sales fell in the Middle East as a reflection of war in the region since Oct. 7.
All other same-stores sales rose in international developmental licensed markets.
Total international developmental licensed markets same-store sales rose by 0.7%, well below the result in the previous quarter, which saw a 10.5% increase.
Looking back at the balance of 2023, McDonald’s said its net income rose by 37% to $8.47 billion.
Revenue jumped by 10% in 2023 to $25.49 billion.
Free cash flow for 2023 increased to $7.25 billion from $5.49 billion.
Before Monday’s moves, McDonald’s stock was up by 10.9% in the past year.
Investors bought up shares of Etsy Inc. on Thursday after the online crafts marketplace added to its board of directors a partner of hedge fund Elliott Investment Management L.P., which recently acquired a “sizable” stake in the company.
Etsy
ETSY,
said Marc Steinberg, who is responsible for public- and private-equity investments at Elliott, has been appointed to the board, effective Feb. 5, and will also join the board’s audit committee.
“Etsy has a highly differentiated position in the e-commerce landscape and a uniquely attractive business model, supported by a distinctive and engaged community,” Steinberg said. “We became a sizable investor in Etsy and I am joining its board because I believe there is an opportunity for significant value creation.”
Etsy’s stock shot up 8% in afternoon trading, to pare earlier gains of as much as 14.2%. The stock was headed for its best one-day gain since it climbed 9.2% on July 11.
Elliott’s stake was acquired in recent months, as the fund’s disclosure of equity holdings through the third quarter did not list Etsy shares.
“Marc’s appointment reflects our ongoing commitment to enhance the perspectives and expertise on the Etsy Board,” said Etsy Chairman Fred Wilson. “We look forward to benefiting from his voice in the boardroom as a seasoned and experienced investor as we continue our journey of creating a leading global e-commerce platform.”
Etsy now has 10 board members.
Etsy’s stock has run up 18.6% over the past three months, but has tumbled 48.5% over the past 12 months. That’s compared with the S&P 500 index’s
SPX
18.7% rally over the past year.
Read (December 2023): Etsy to cut 11% of staff as CEO says company is on ‘unsustainable trajectory’
At an investor conference in December, Chief Executive Josh Silverman said business has slowed since the post-pandemic boom, as people have “had enough of buying things” and are now spending primarily on eating out and travel. Inflation and the loss of government subsidies was also weighing on spending.
Still, Silverman said, Etsy is now about two and a half times bigger than it was before the pandemic, and the company has more active buyers than it did at the peak of the pandemic.
JetBlue Airways Corp. and Spirit Airlines Inc. said late Friday that they have appealed a court ruling that earlier this week blocked their planned merger.
JetBlue
JBLU,
and Spirit
SAVE,
announced the appeal in a terse press release that provided no more details, adding only that the process is “consistent with the requirements of the merger agreement.”
Wall Street was split on whether the airlines would be legally obliged to appeal the Tuesday ruling, which sided with the Justice Department in saying that a merger between low-cost JetBlue and ultra-low-cost Spirit would hurt competition.
Shares of Spirit rallied 12% after hours Friday, while JetBlue shares fell nearly 2%. Analysts at JP Morgan said this week that the ruling freed JetBlue from a “costly merger.”
Earlier Friday, Spirit sought to reassure investors about its liquidity and issued an upbeat fourth-quarter revenue guidance. Spirit has amassed about $5.5 billion in debt, and is reportedly seeking advisers to help restructure it.
The likelihood of Spirit attracting a new merger or takeover bid is considered low without a debt restructuring. Frontier Group Holdings Inc.
ULCC,
and JetBlue competed for Spirit in 2022, with Frontier ultimately bowing out in July of that year.
Raymond James analyst Savanthi Syth said in a note earlier Friday that it was “clear to us that Spirit is pressing JetBlue to appeal the antitrust ruling, but we continue to believe the chances of success are low.”
Syth has estimated that an appeal would take some four to five months.
Shares of Spirit have lost 67% in the past 12 months, while shares of JetBlue are down 41%. The U.S. Global Jets ETF
JETS
has lost 9% in the same period. Those losses contrast with gains of 24% for the S&P 500 index
SPX.
Spirit Airlines stock was falling again Thursday as the ultra-low-cost carrier’s predicament worsened.
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In an effort to keep up in the accelerating AI arms race, cloud-services provider Hewlett Packard Enterprise Co. on Tuesday agreed to buy Juniper Networks, Inc. in a deal worth around $14 billion.
Under the terms of the deal, Hewlett Packard Enterprises
HPE,
will acquire Juniper
JNPR,
— which makes communications-networking products and also has an AI segment called Mist AI — for $40 a share. The companies expect the deal to close late this year or in early 2025.
“The acquisition is expected to double HPE’s networking business, creating a new networking leader with a comprehensive portfolio that presents customers and partners with a compelling new choice to drive business value,” the companies said in a release.
After the deal is completed, Juniper Chief Executive Rami Rahim will lead the combined HPE networking business, and report to HPE CEO Antonio Neri.
“This transaction will strengthen HPE’s position at the nexus of accelerating macro-AI trends, expand our total addressable market, and drive further innovation for customers as we help bridge the AI-native and cloud-native worlds, while also generating significant value for shareholders,” Neri said in a statement.
HPE said the addition of Juniper will boost margins and result in up to $450 million in annual cost savings within three years of the deal’s completion, as well as accelerate growth. HPE’s networking segment was the company’s top source of quarterly earnings before taxes, $401 million, on $1.4 billion in revenue.
HPE’s deeper plunge into networking closes a chapter of sorts. Then-Hewlett-Packard Co. acquired Aruba Networks for about $3 billion in March 2015, months before Silicon Valley’s original garage startup split in half, resulting in the formation of HPE, which sells servers and other equipment for data centers, and HP Inc.
HPQ,
which makes PCs and printers.
The Wall Street Journal reported the possibility of a deal on Monday, sending shares of Juniper higher.
Shares of Juniper
JNPR,
rose 0.5% after hours, after jumping 21.8% during regular trading hours. Hewlett Packard
HPE,
shares were down 0.4% after hours, after falling 8.9% during the day.
As of Tuesday’s close, Juniper had a market cap of $9.64 billion, while HPE’s was $23.04 billion.
The companies hope the deal can provide a much-needed jolt after a series of lackluster quarterly earnings. Juniper shares have gained 15.7% over the past 12 months, while HPE shares are down 5.4% over that span. The S&P 500
SPX,
in comparison, is up about 21.4% over the past year.
For decades, Juniper has lagged rival Cisco Systems Inc.
CSCO,
in the networking-equipment market. In its most recent quarter, Juniper reported net income of $76 million on revenue of $1.4 billion, down 1% from the same quarter a year earlier.
AMC Entertainment Holdings Inc. extended its losing streak to five days Friday, with the stock ending the session down 2.5% to $5.15.
AMC
AMC,
shares are now on their longest losing streak since a seven-day slide that ended on Aug. 29, 2023. The movie-theater chain and onetime meme-stock darling ended Thursday’s session at a then-record-low close of $5.30. AMC was a top trending symbol on Stocktwits, a social platform for investors and traders, at Friday’s open.
The stock’s previous record closing low had been $6.07, which was set on Dec. 21, 2023, according to Dow Jones Market Data, citing available information dating back to Dec. 18, 2013.
Related: AMC hits another record-low close, extends losing streak to four days
The decline in AMC’s share price is a far cry from its meme-stock heyday, when it hit an all-time closing high of $339.05 on June 2, 2021.
In a regulatory filing Tuesday, AMC said that between Dec. 28 and Dec. 29, 2023, the company entered into a series of privately negotiated exchange agreements to issue nearly 3.26 million shares of Class A common stock in exchange for $22.5 million of its notes due in 2026. The common stock issued had an implied value of $6.94 per share, according to AMC. “The company may engage in similar transactions in the future but is under no obligation to do so,” AMC said in the filing.
The move is the latest in AMC’s attempts to tackle its debt burden, which reached more than $5 billion in 2022. That year, AMC launched its APE special dividend, and in 2023 it completed the conversion of the APEs into AMC common stock and a reverse 1-for-10 split of common stock.
Related: AMC CEO slams ‘prophets of doom,’ says company is ‘blazing new trails’ as it enters 2024
In December, AMC also completed its latest at-the-market equity offering, raising approximately $350 million. AMC CEO Adam Aron has repeatedly warned that the company faces liquidity challenges.
AMC shares are down 84.8% in the last 12 months, compared with S&P 500 index’s
SPX
gain of 20.6%.
Shares of Medical Properties Trust plummeted after the real estate investment trust said it is ramping up efforts to recover uncollected rent and outstanding loans from its largest tenant.
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Mark Zuckerberg cashed in on his company’s 2023 stock rally in a big way — selling nearly $428 million worth of shares in Meta Platforms Inc. over the final two months of the year.
The Meta
META,
co-founder and chief executive offloaded just under 1.8 million shares over the course of every trading day between Nov. 1 and the end of last year, according to a regulatory filing with the U.S. Securities and Exchange Commission on Tuesday.
The sales were in accordance with a Rule 10b5-1 trading plan adopted by Zuckerberg in July and saw him capitalize on Meta’s rebounding stock price, which soared 194.1% in 2023 — and nearly threefold since it hit a seven-year low in November 2022. By comparison, the S&P 500
SPX
and the Nasdaq Composite
COMP
indexes gained 24.2% and 43.4%, respectively, in 2023.
The moves also broke a two-year hiatus, dating back to November 2021, during which Zuckerberg did not sell any of his stock in the Facebook parent company, according to Bloomberg, which first reported the news. Zuckerberg, who owns roughly 13% of Meta, is ranked the seventh-richest person in the world with a net worth of $125 billion, according to the Bloomberg Billionaires Index.
Nasdaq-listed Meta shares, which fell 0.5% on Wednesday to $344.47, are now roughly 11% off their all-time closing high of $382.18 from September 2021.
Representatives for Meta could not immediately be reached for comment.
(Updated with Friday’s closing prices.)
The 2023 rally for stocks in the U.S. accelerated as more investors bought the idea that the Federal Reserve succeeded in its effort to bring inflation to heel.
The S&P 500
SPX
ended Friday with a 24.2% gain for 2023, following a 19.4% decline in 2022. (All price changes in this article exclude dividends). Among the 500 stocks, 65% were up for 2023. Below is a list of the year’s 20 best performers in the benchmark index.
This article focuses on large-cap stocks. MarketWatch Editor in Chief Mark DeCambre took a broader look at all U.S. stocks of companies with market capitalizations of at least $1 billion, to list 10 with gains ranging from 412% to 1,924%.
The Fed began raising short-term interest rates and pushing long-term rates higher in March 2022 by allowing its bond portfolio to run off. That explains the poor performance for stocks in 2022, as bonds and even bank accounts because more attractive to investors.
The central bank hasn’t raised the federal-funds rate since moving it to the current target range of 5.25% to 5.50% in July, and its economic projections point to three rate cuts in 2024.
Investors are anticipating the return to a low-rate environment by scooping up 10-year U.S. Treasury notes
BX:TMUBMUSD10Y,
whose yield ended the year at 3.88%, down from 4.84% on Oct. 27 — the day of the S&P 500’s low for the second half of 2023.
Read: Treasury yields end mostly higher but little changed on year after wild 2023
Before looking at the list of best-performing stocks of 2023, here’s a summary of how the 11 sectors of the S&P 500 performed, with the full index and three more broad indexes at the bottom:
| Sector or index | 2023 price change | 2022 price change | Price change since end of 2021 | Forward P/E | Forward P/E at end of 2022 | Forward P/E at end of 2023 |
| Information Technology | 56.4% | -28.9% | 11.5% | 26.7 | 20.0 | 28.2 |
| Communication Services | 54.4% | -40.4% | -7.6% | 17.4 | 14.3 | 21.0 |
| Consumer Discretionary | 41.0% | -37.6% | -11.4% | 26.2 | 21.7 | 34.7 |
| Industrials | 16.0% | -7.1% | 8.0% | 20.0 | 18.7 | 22.0 |
| Materials | 10.2% | -14.1% | -4.9% | 19.5 | 15.8 | 16.6 |
| Financials | 9.9% | -12.4% | -3.4% | 14.6 | 13.0 | 16.3 |
| Real Estate | 8.3% | -28.4% | -21.6% | 18.3 | 16.9 | 24.7 |
| Healthcare | 0.3% | -3.6% | -3.3% | 18.2 | 17.7 | 17.3 |
| Consumer Staples | -2.2% | -3.2% | -5.4% | 19.3 | 20.6 | 21.4 |
| Energy | -4.8% | 59.0% | 51.8% | 10.9 | 9.8 | 11.1 |
| Utilities | -10.2% | -1.4% | -11.4% | 15.9 | 18.7 | 20.4 |
|
S&P 500 SPX |
24.2% | -19.4% | 0.4% | 19.7 | 16.8 | 21.6 |
|
Dow Jones Industrial Average DJIA |
13.7% | -8.8% | 3.8% | 17.6 | 16.6 | 18.9 |
|
Nasdaq Composite COMP |
43.4% | -33.1% | -3.5% | 26.9 | 22.6 | 32.0 |
|
Nasdaq-100 NDX |
53.8% | -33.0% | 3.5% | 26.3 | 20.9 | 30.3 |
| Source: FactSet | ||||||
A look at 2023 price action really needs to encompass what took place in 2022 for context. The broad indexes haven’t moved much from their levels at the end of 2022 (again, excluding dividends). We have included current forward price-to-earnings ratios along with those at the end of 2021 and 2022. These valuations have declined a bit, which may provide some comfort for investors wondering how likely it is for stocks to continue to rally in 2024.
Here are the 20 stocks in the S&P 500 whose prices rose the most in 2023:
| Company | Ticker | 2023 price change | 2022 price change | Price change since end of 2021 | Forward P/E | Forward P/E at end of 2022 | Forward P/E at end of 2021 |
| Nvidia Corp. |
NVDA, |
239% | -50% | 68% | 24.9 | 34.4 | 58.0 |
| Meta Platforms Inc. Class A |
META, |
194% | -64% | 5% | 20.2 | 14.7 | 23.5 |
| Royal Caribbean Group |
RCL, |
162% | -36% | 68% | 14.3 | 14.9 | 232.4 |
| Builders FirstSource Inc. |
BLDR, |
157% | -24% | 95% | 14.2 | 10.7 | 13.3 |
| Uber Technologies Inc. |
UBER, |
149% | -41% | 47% | 56.9 | N/A | N/A |
| Carnival Corp. |
CCL, |
130% | -60% | -8% | 18.7 | 41.3 | N/A |
| Advanced Micro Devices Inc. |
AMD, |
128% | -55% | 2% | 39.7 | 17.7 | 43.1 |
| PulteGroup Inc. |
PHM, |
127% | -20% | 81% | 9.1 | 6.3 | 6.2 |
| Palo Alto Networks Inc. |
PANW, |
111% | -25% | 59% | 50.2 | 38.0 | 70.1 |
| Tesla Inc. |
TSLA, |
102% | -65% | -29% | 66.2 | 22.3 | 120.3 |
| Broadcom Inc. |
AVGO, |
100% | -16% | 68% | 23.2 | 13.6 | 19.8 |
| Salesforce Inc. |
CRM, |
98% | -48% | 4% | 28.0 | 23.8 | 53.5 |
| Fair Isaac Corp. |
FICO, |
94% | 38% | 168% | 47.1 | 29.3 | 28.7 |
| Arista Networks Inc. |
ANET, |
94% | -16% | 64% | 32.7 | 22.3 | 41.4 |
| Intel Corp. |
INTC, |
90% | -49% | -2% | 26.6 | 14.6 | 13.9 |
| Jabil Inc. |
JBL, |
87% | -3% | 81% | 13.5 | 7.9 | 10.3 |
| Lam Research Corp. |
LRCX, |
86% | -42% | 9% | 25.2 | 13.5 | 20.2 |
| ServiceNow Inc. |
NOW, |
82% | -40% | 9% | 56.0 | 42.6 | 90.1 |
| Amazon.com Inc. |
AMZN, |
81% | -50% | -9% | 42.0 | 46.7 | 64.9 |
| Monolithic Power Systems Inc. |
MPWR, |
78% | -28% | 28% | 49.1 | 27.3 | 57.9 |
| Source: FactSet | |||||||
Click on the tickers for more about each company.
Don’t miss: Nvidia tops list of Wall Street’s 20 favorite stocks for 2024
Shares of Nike Inc. tumbled after hours Thursday after the athletic-gear giant warned of a “softer second-half revenue outlook” on its quarterly earnings call, and said it is targeting up to $2 billion in cost cuts over the next three years as it looks to shed management and focus on women customers and its Jordan brand.
Nike
NKE,
said that the savings could come from simplifying its product selection and using more automation and technology. But the athletic-gear giant has also reportedly begun to lay workers off, and said it expected to book pre-tax restructuring charges of around $400 million to $450 million, much of it in the company’s fiscal third quarter, “primarily associated with employee-severance costs.”
Nike did not immediately respond to questions about job cuts at the company, or how many staff have been or could be laid off. But on the company’s earnings call, management said its plans included “reducing management layers.”
In Nike’s earnings release, Chief Financial Officer Matthew Friend said the company’s fiscal second quarter — in which per-share profit beat expectations while sales were roughly in line — marked “a turning point in driving more-profitable growth.”
But investors appeared skeptical after hours on Thursday, as shares slid more than 11%.
Nike announced the cost-cutting drive as clothing and shoe brands try to steer through weaker demand overall and a broader price-cutting battle in retail stores for inflation-battered customers. Those customers have had to set aside more money to cover the costs of ever-pricier essential goods, at the expense of things like sportswear and sneakers.
“We are seeing indications of more cautious consumer behavior around the world in an uneven macro environment,” Friend said during the call.
Nike executives said consumer demand was strong through the back-to-school season, Black Friday and Cyber Monday, but lagged in between. Demand wobbled online, and in China and Europe.
They also said that the money they planned to save would be reinvested into helping Nike become more nimble and more responsive to consumer preferences, after years of shifting away from selling shoes and gear through traditional retail chains in favor of doing business through its own stores and e-commerce channels. They added that those efforts “added complexity and inefficiencies” as competition grew steeper.
Chief Executive John Donahoe said on the call that the Nike-brand women’s segment was already a $9 billion business. But he said new products — like bras, leggings, retro-themed running shoes and other offerings that span both sports and lifestyle — would help draw more women customers.
Within the Jordan category, Donahoe cited opportunities beyond basketball sneakers. Clothing and golf-, soccer- and football-related products, along with offerings targeted toward women and children, would also help drive growth, he said.
But for the rest of its fiscal year, Nike’s expectations were dimmer. The company said it forecasted “slightly negative” sales growth for its fiscal third quarter. For its fourth quarter, executives expect low-single-digits sales gains. And they said they now anticipate Nike’s full-year sales to increase around 1%, compared to an outlook in September for mid-single-digits gains.
In its fiscal second quarter, which ended on Nov. 30, Nike reported net income in the period of $1.58 billion, or $1.03 a share, compared with $1.33 billion, or 85 cents a share, in the same quarter last year. Revenue rose 1% year over year, to $13.4 billion.
Analysts polled by FactSet expected adjusted earnings per share of 84 cents, on sales of $13.39 billion.
Gross margin rose to 44.6%, helped by price increases and lower costs for ocean-freight shipping.
Outlooks this year from athletic-gear retailers like Foot Locker Inc.
FL,
and Dick’s Sporting Goods Inc.
DKS,
have also been cautious, and Nike has faced competition from the likes of Adidas
ADDYY,
and On Running
ONON,
Nike management also said in their previous earnings call in September that they aimed to do more to attract women and running-shoe customers. However, they noted that demand for the company’s products remained solid and they were “cautiously planning for modest markdown improvements for the balance of the year,” as the company tightens up its supplies of sneakers and clothing in stock.
On Thursday’s call, executives said that demand for higher-priced products had been “resilient,” and that they didn’t have to cut prices as much as their rivals. And they said new releases — like the Sabrina 1 and Luka 2 sneakers — were the best way to stand out in a sea of discounts.
“We know in an environment like this, when the consumer is under pressure and the promotional activity is higher, that it’s newness and innovation which causes the consumer to act,” Friend said.
Nio stock surged in premarket trade on Monday after the Chinese electric vehicle maker said it’s received a $2.2 billion investment from an Abu Dhabi investor.
Terms call for CYVN to invest $2.2 billion for 294 million shares at $7.50 each. Nio stock closed Friday at $7.98.
Nio’s U.S.-listed shares
NIO,
jumped 8% to $8.64 in premarket trade.
CYVN in July previously invested $738.5 million in Nio, as well as bought $350 million of shares in Nio from Tencent
700,
The new deal at closing will give the Abu Dhabi group a 20% stake in the EV maker that focuses on the high-end of the market, and will give it the right to nominate two directors.
“With the enhanced balance sheet, Nio is well prepared to sharpen brand positioning, bolster sales and service capabilities, and make long-term investment in core technologies to navigate the intensifying competitive landscape, while continually improving execution efficiency and system capabilities,” said William Li, founder, chairman and chief executive officer of Nio, in a statement.
Nio has been cutting jobs and reducing projects that aren’t making financial contributions, as it fends off a price war from rivals including Tesla
TSLA,
U.S. Steel Stock Soars on $14.9 Billion Acquisition by Nippon Steel
One-time pandemic darling DocuSign Inc. may be looking to sign a deal of its own.
The e-signature company is working with advisers as it considers a sale, the Wall Street Journal reported Friday afternoon. A deal for DocuSign
DOCU,
valued at upwards of $11 billion, could result in one of the largest recent leveraged buyouts, the report said, noting that private-equity firms and technology companies were among the potential suitors.
DocuSign shares were up more than 11% in afternoon trading Friday following the report.
A DocuSign spokesperson said the company doesn’t comment on rumors or speculation.
The company was a pandemic-era poster child as businesses looked for ways to get signatures on contracts, mortgages and other documents in a virtual world. But DocuSign has struggled to match its earlier growth rates as offices have resumed in-person activity, and management acknowledged a tough macroeconomic environment when DocuSign last posted earnings.
DocuSign shares traded above $310 at their highest point in September 2021, but they closed Thursday near $56. The stock was changing hands just south of $64 Friday amid the intraday rally.
While Advanced Micro Devices Inc. shares didn’t enjoy a Wednesday bump during the company’s artificial-intelligence event, they were rallying sharply Thursday as analysts reflected on the chip maker’s presentation.
Chief Executive Lisa Su and her team “put together one of the most impressive new product event/launches by our reckoning in the last decade, perhaps ever,” Rosenblatt Securities analyst Hans Mosesmann wrote in a note to clients.
The launch of AMD’s
AMD,
MI300X AI/graphics-processing-unit accelerator “was not just a speeds and feeds geek fest (it was that for sure, with AMD claiming superiority in AI inferencing), but an industry movement coalescing around the concept of ‘open’ sourced technologies are preferred (demanded really), to address the insanely fast/accelerating life-changing thing that AI has become,” Mosesmann continued.
Opinion: AMD’s new products represent the first real threat to Nvidia’s AI dominance
He was also impressed by the company’s talk of its software platform ROCm, which he thinks is catching up to Nvidia Corp.’s
NVDA,
CUDA.
“Of course, Nvidia is not going away, and we are quite sure will remain the dominant AI player for years to come but AMD we feel made the case yesterday that they will be an important AI innovator on a secular basis,” Mosesmann noted, as he kept his outperform rating and $200 target price on the stock.
AMD shares were up 6% in Thursday morning trading.
Baird’s Tristan Gerra was also impressed.
“Rapidly unfolding hyperscaler engagements, highly competitive AI architecture specs, along with accelerated new product roadmap, bode well for share gains and continued acceleration in AI-related revenue for AMD beyond 2024, while faster-than-expected rate of adoption so far could potentially drive upside in the AI revenue outlook for 2024, in our view,” he wrote.
Gerra also sees the potential for “high-volume deployments,” thanks to the “significant software milestones” AMD is showing. He rates the stock at outperform with a $125 target price.
TD Cowen’s Matthew Ramsay said that AMD’s event reinforced his belief that the company “is well positioned to meaningfully participate” in the large total addressable market for AI accelerators.
The company called out Microsoft Corp.
MSFT,
Meta Platforms Inc.
META,
and Oracle Corp.
ORCL,
as customers, announcements that were “strong” but not “surprising,” in Ramsay’s view.
“We remain encouraged that AMD is making an impressive case (and is getting customer support) to provide adaptive computing solutions for both training and inference in increasingly large [generative-AI] infrastructure builds,” he wrote. “We believe this signifies a strong AI strategy of delivering a broad portfolio of [central processing unit], GPU, and [field-programmable gate array] assets, with open software that enables easily deployed AI workloads while leveraging the company’s existing partnerships to accelerate its AI ramps at-scale.”
Ramsay has an outperform rating and $130 target price on AMD shares.
Shares of UiPath Inc. soared late Thursday after the automation-software company reported fiscal-third-quarter earnings and revenue that rose above expectations, amid strength in the licenses and subscription-services businesses.
The stock
PATH,
shot up 11% in after-hours trading, putting it on a path to trade at the highest closing levels seen since April 2022.
Net losses for the quarter to Oct. 31 narrowed to $31.5 million, or 6 cents a share, from $57.7 million, or 10 cents a share, in the same period a year ago. Excluding nonrecurring items, such as stock-based compensation expenses, adjusted earnings per share rose to 12 cents from 5 cents to beat the FactSet consensus of 7 cents.
Total revenue grew 24% to $325.9 million, above the FactSet consensus of $315.6 million.
Licenses revenue jumped 25.3% to $148.1 million, well above the FactSet consensus of $137.5 million, and subscription-services revenue climbed 28.7% to $167.5 million to top expectations of $166.9 million. Meanwhile, professional services and other revenue dropped 28.4% to $10.3 million, to miss forecasts of $11.2 million.
Annual recurring revenue increased 24% to $1.38 billion, above the FactSet consensus of $1.36 billion.
For the fourth quarter, the company expects revenue of $381 million to $386 million, which surrounds the FactSet consensus of $383 million.
The stock, which fell 0.6% during Thursday’s regular session after closing the previous session at a 15-month high, has run up 26.6% over the past three months, while the SPDR S&P Software & Services ETF
XSW,
has tacked on 1.3% and the S&P 500
SPX,
has edged up 1.2%.