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Yahoo
22 minutes ago
- Yahoo
Chipmaker Onsemi's CEO Warns of 'Cautious' Customer Behavior. The Stock Is Falling
Key Takeaways ON Semiconductor, or Onsemi, was the worst-performing stock in the S&P 500 Monday, after its CEO warned customers are being "cautious" and sales slide. CEO Hassane El-Khoury said that "both Europe and North America are weak," and that he believes "there's a lot of uncertainty in the automotive market." Onsemi's automotive revenue fell 4% quarter-over-quarter to $733 Semiconductor (ON), or Onsemi, was the worst-performing stock in the S&P 500 Monday, sinking 13% as its chief executive warned customers are being "cautious" and sales slide. The Scottsdale, Ariz., maker of semiconductors and other products focused on automotive and industrial end markets reported second-quarter adjusted earnings per share of $0.53, matching the consensus estimate of analysts surveyed by Visible Alpha. Revenue fell 15% year-over-year to $1.47 billion, but came in a tick better than expected. For the current quarter, Onsemi sees adjusted EPS between $0.54 and $0.64 on revenue between $1.465 billion and $1.565 billion. Analysts were looking for $0.58 and $1.495 billion, respectively. "We are beginning to see signs of stabilization across our end markets, and we remain well-positioned to benefit from a market recovery," Onsemi CEO Hassane El-Khoury said in the company's earnings release. 'Uncertainty in the Automotive Market' Onsemi's automotive revenue fell 4% quarter-over-quarter to $733 million. Asked about headwinds in the automotive sector on the company's call with analysts, El-Khoury said that "both Europe and North America are weak," and that he believes "there's a lot of uncertainty in the automotive market," according to an AlphaSense transcript. Asked for further comment, El-Khoury said, "You have the tariff and you have just the general uncertainty of end market demand. So you see customers waiting to the last minute to place an order and an end." Including today's sharp declines, ON Semiconductor shares have lost more than a fifth of their value in 2025. Read the original article on Investopedia Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNBC
25 minutes ago
- CNBC
What a September rate cut would mean for stocks, plus a bullish call on AI spending
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Markets: Wall Street is putting together a strong bounce-back session Monday after wrapping up last week on a sour note thanks to a weak jobs report. All three major benchmarks — the S & P 500 , tech-heavy Nasdaq and 30-stock Dow — added more than 1% in afternoon trading. It's a broad-based rally, with 10 of the 11 sectors in the S & P 500 in the green. Energy is the laggard, weighed down in large part by declines in shares of ExxonMobil and Chevron , by far the two largest constituents in the sector. We took advantage of the positive day to lighten up on shares of Abbott Laboratories , our third sale since July 21. If not for our trading restrictions, we would've used some of the cash raised in that sale to buy more Starbucks , consistent with what Jim said last week following the coffee chain's post-earnings decline. BLS drama: President Donald Trump on Monday was again posting on social media that last week's big July nonfarm payrolls miss and the massive combined downward revisions to May and June were rigged. Those comments echoed the ones that came Friday as he fired the head of the Bureau of Labor Statistics. On CNBC Monday morning, National Economic Council Director Kevin Hassett, one of Trump's top advisers, was asked directly if the BLS numbers were rigged. Hassett pivoted. He acknowledged the longstanding problem of jobs data collection that pre-dated Trump but said, "All over the U.S. government, there have been people who have been resisting Trump everywhere they can." Hassett, who has been talked about as a possible Trump choice for Federal Reserve chairman, also said, "To make sure that the data are as transparent and as reliable as possible, we're going to get highly qualified people in there that have a fresh start and a fresh set of eyes on the problem." Ironically, the weak jobs numbers bolster Trump's case for the Fed to cut interest rates. Jim Cramer said Monday that he is not here to opine on whether Trump is doing the right thing or not. However, Jim said he is here to help Club members make money. He concluded that the jobs numbers point to a weakening economy and suggest the Fed should not wait any longer to cut rates. If the Fed cuts rates at its September meeting, as the market expects, Jim said the stock market should go up, even ahead of the move, and investors should make money. Keep on spending: The generative AI boom isn't slowing down anytime soon, according to Morgan Stanley's analysis of capital expenditure (capex) plans. In a note to clients, analysts said the 11 largest hyperscalers — including Club holdings Meta Platforms , Microsoft , Amazon and Apple — are projected to significantly increase their spending on cloud computing and other AI-related infrastructure into next year. Analysts expect the global capex from these companies to grow 56% year over year in 2025 and 31% in 2026. The estimates are based on second-quarter earnings reports from the aforementioned tech giants, along with those from Alphabet -owned Google, IBM , CoreWeave and Oracle , along with the Chinese tech firms Tencent , Alibaba , and Baidu . Additionally, Morgan Stanley analysts said they wouldn't be surprised to see 2026 capex commitments "move materially higher" by this time next year due to the continued growth in AI model output and cloud providers still mentioning that demand for compute is outstripping supply. "This earnings season, most management teams highlighted the need to accelerate infrastructure deployment timelines/address tight supply and support increasingly complex cloud/AI workloads, and executives across MSFT, META, AMZN and GOOGL signaled: (1) greater confidence in generating a return on these investments; and (2) a willingness to sustain elevated levels of spending into 2026," the analysts wrote. This is all promising news for the generative AI trade. As these hyperscalers pour billions into AI infrastructure, it signals that management teams are taking the technology — and the demand for it — even more seriously than before. We hope this means improved AI offerings from our portfolio companies, too. Apple, in particular, is in desperate need of one, which is why we were pleased to hear CEO Tim Cook say on the conference call that the company is "significantly growing" its AI investments. Apple has comparatively spent much less on capex in recent years compared with the likes of Meta, Microsoft and Amazon. The iPhone maker has had a lackluster rollout of its suite of AI tools called Apple Intelligence since last year. Buzzy new AI features could mean more upside in device sales and revenues in its high-margin services unit. With Apple, "we're actually trying figure out what they really want to do," Jim said during Monday's Morning Meeting. As for Microsoft, Amazon and Meta, we've been largely impressed by their AI plans. "The market wanted to see a lot of [AI] spend because that's where the return is," Jim said. He continued, "You may think they spent too much money. That doesn't matter. People want to see a lot of spend." It's not just Big Tech and their cloud customers that benefit from all the AI outlays. Industrial stocks and Club holdings like Eaton , GE Vernova and Dover all benefit in their own ways from the continued construction of data centers and the electricity infrastructure needed to fuel the power-hungry buildings. Earlier Monday, we published an in-depth look at how GE Vernova's gas turbines became such a hot commodity in the AI race. Up next: Club name Coterra Energy is among the companies reporting earnings after the close Monday, with its conference call set for Tuesday morning. We'll wait for the call before publishing our earnings analysis, given management's comments, particularly on its planned fix for problematic wells in part of the Permian Basin, will help shape our thinking on the results. Some other notable companies reporting Monday night include high-flying Palantir , obesity drug compounder Hims & Hers , Taser maker Axon Enterprise , e-commerce marketplace MercadoLibre and non-opoid pain medication maker Vertex Pharmaceuticals . On Tuesday morning, we'll get results from Club names DuPont and Eaton. Economic bellwether Caterpillar, private-equity giant Apollo Global Management and hotel operator Marriott International also are on the docket. It's an overall quiet week of economic data, though on Tuesday the Institute for Supply Management's monthly look at activity in the U.S. services sector is due out at 10 a.m. ET. (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Business Insider
25 minutes ago
- Business Insider
Wall Street thinks the party for Palantir can continue even after a wild rally in 2025 — but there's one key risk
Wall Street thinks the Palantir party can keep going. The stock is already up by about 113% this year as it heads into its second-quarter earnings report after the bell on Monday, but analysts see reasons to believe the gains can pile up further. The Alex Karp -led software giant is benefiting from a slew of government contracts, roaring AI demand, and a cultlike following among retail investors in 2025. Shares of the company have soared from around $75 a share at the start of 2025 to above $160 on Monday. That ascent has made Palantir the best-performing stock in the S&P 500 this year. Analysts are bullish about Palantir's second-quarter earnings. They estimate the tech giant will report $939.3 million in revenue for the three-month period, up around 38% year over year. Here are some of the reasons they see the growth story continuing — and one key risk. 1. The AI trade is still running hot Palantir will likely keep up growth in its commercial segment, thanks to the ongoing hype surrounding AI. Accelerating AI adoption is creating a greater need to integrate data, which is good news for the stock, analysts at Mizuho wrote in a note. The bank said it conducted checks on Palantir's enterprise inbound activity, which gave it confidence that the company would be able to beat its commercial growth guidance in 2025. Palantir expects the US commercial side of its business to grow 68% for the year. "PLTR's recent execution and momentum is stunning, including material upward revisions across its commercial and government segments that we very much underestimated," Mizuho analysts wrote. Analysts at UBS said they also conducted checks on Palantir's enterprise businesses, and lifted their estimates for the company's revenue growth from 31% to 38% for the year. "We see potential tailwinds from the increasing adoption of AI across enterprise," Citi analysts wrote, adding that its checks and its conversation with Palantir's chief finance officer were also positive. Government contracts A large part of Palantir's growth story has been fueled by its contracts with the federal government. In April, the software company secured a $30 million deal with the US Immigration and Customs Enforcement for software to monitor visas and track deportations. In May, the firm teamed up with Fannie Mae, and said it would provide AI tools to support the government-sponsored mortgage financier's Crime Detection Unit. It also secured a $795 million contract with the Department of Defense's AI arm, and last week, locked a deal to help streamline the US Army for up to $10 billion for the next decade. The deal consolidates 75 existing contracts into a single agreement. "We believe this deal represents an additional tailwind for PLTR with AI initiatives across the US government accelerating with AI a strategic focus on the federal front and Palantir in the sweet spot to benefit from a tidal wave of federal spending on AI," analysts at Wedbush Securities wrote last week, calling Palantir one of the top tech stocks to own in 2025. "We remain positive on the public sector pipeline, which appears durable given ongoing geopolitical instability. Net, we believe PLTR will likely be able to continue growing its Government revenue >40% Y/Y over at least the near-term," Mizuho said. "We continue to view Palantir as well positioned to continue to deliver best-in-class growth given the secular trend towards enterprise AI adoption; the continued push for efficiency and technology adoption in the US government; and adoption of Operation Warp Speed among new defense entrants, traditional defense companies, and the broader manufacturing industry," analyst at Goldman Sachs wrote in a note following Palantir's first-quarter earnings report in May. High bar But there's one risk Wall Street is eyeing: the valuation is at eye-watering levels. As of Monday afternoon, the trailing 12-month price-to-earnings ratio was above 690x. Despite a bullish short-term outlook, Goldman Sachs, UBS, and Mizuho are among those on Wall Street who rated Palantir as "neutral" headed into its second-quarter earnings. Analysts at Citi, meanwhile, rated the stock as "Neutral/High Risk." "We maintain our Neutral/High Risk rating on the stock on valuation concerns and our view that second derivative/revision trends could moderate limiting upside," Citi added in a note. "That said, we are equally stunned by the multiple that PLTR has attained, which places its valuation dramatically above anything else in software," Mizuho analysts said, adding they would "continue to worry" that the stock could see a reversion sometime in the next several quarters. "We continue to be very impressed by the fundamental story (we have been since our launch) but valuation remains our key hurdle, we remain Neutral rated," UBS said.
