Top Insights for February 24th
1. The S&P 500 is likely to open with little movement today, following a notable dip yesterday. Meanwhile, Bitcoin has dropped below $63,000 as investors react to rising tariff tensions. Tonight, President Trump is set to deliver the State of the Union address, which will likely concentrate on economic and trade issues.
2. The impact of the Citorini paper is still relevant. We discussed it last night on “Mad Money.” It makes sense that enterprise software companies might be overvalued. Take ServiceNow, for instance; they’ve been engaging in aggressive stock buybacks along with significant insider purchases. Adobe has also faced changes. It’s curious how, despite software being cheaper than sectors like consumer staples, the worth of a company could hinge on an unverifiable research report.
3. Meta Platforms has entered into a long-term agreement with Advanced Micro Devices (AMD), planning to utilize up to 6 gigawatts of AMD’s GPUs in their data centers. This news follows last week’s commitment from Meta to incorporate millions of Nvidia GPUs.
4. Home Depot’s stock climbed over 2% after posting its highest quarterly earnings in a year. I was expecting some cuts and shortages, but those didn’t materialize. It’s surprising yet encouraging, especially for us owning Home Depot, in case interest rates shift downwards with Trump’s potential nomination for the Federal Reserve chair.
5. JP Morgan upgraded Domino’s Pizza from hold to buy, even though they adjusted their price target down from $460 to $450. They praised the company’s stable franchise-focused model. Personally, I’m fond of this brand. CEO Russell Weiner has really made it a well-functioning entity by diversifying distribution methods.
6. TD Cowen cut CrowdStrike’s price target from $580 to $480, taking into account its recent stock decline. The club name faced back-to-back losses recently and dropped 17% amid AI disruption fears. It’s steady this morning, but analysts predict similar results in the upcoming earnings report. We’re not abandoning cybersecurity stocks, though.
7. Notable Change: Deutsche Bank downgraded Blue Owl Capital from “buy” to “hold” and revised its price target from $15 to $10. The analysts seem uncertain about the replacement manager concept. In my Sunday column, I revealed some of the hurdles facing Blue Owl and the private equity sector due to ties with enterprise software. We’ll dive deeper into these issues at our Friday meeting for club members.
8. Goldman Sachs bumped Quanta Services’ price target up from $495 to $685 while keeping a buy rating. Their focus on building and repairing essential infrastructure has paid off, particularly with last week’s data center expansions. Goldman projects an EPS growth rate of 17% to 18% from 2025 to 2030.
9. Wells Fargo raised Qualcomm’s price target from $135 to $150 and upgraded its rating from sell to hold. The analysts indicated that the company’s data center strategy might improve investor sentiment. However, I find myself agreeing with Mr. Wells’ initial sell rating. Personally, I would prefer to invest in Advanced Micro Devices.
10. Dilemma: Citi believes MongoDB is still performing well, maintaining a buy rating. Yet, they lowered their price target from $525 to $435. It’s tough to determine how much to value a stock that has seen a 27% drop this year. Analysts generally view MongoDB as a resilient software option that shouldn’t be grouped with others.
