Santoli's Thursday market wrap-up: July wholesale-inflation report forces a short detour
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Yahoo
an hour ago
- Yahoo
Apple's 10% Stock Pop: Time to Invest in the Technology Giant Embracing America?
Key Points Apple has increased its spending plans in the United States from $500 billion to $600 billion. There are positives and negatives to the announcement from an investor's perspective. Shares of Apple stock look expensive today relative to its growth rate. 10 stocks we like better than Apple › Investors are back on the Apple (NASDAQ: AAPL) train. The stock of the multinational technology giant is still down slightly in 2025 but popped over 10% in the last week after management announced new planned spending in the U.S. CEO Tim Cook even visited the White House in a joint press conference with President Donald Trump to announce this new planned spending on components for the iPhone as well as other Apple products in America. It has helped the company achieve some breathing room around potential tariffs on semiconductors, iPhone components, and iPhones themselves getting imported to America. Apple's stock got its mojo back on this upsized spending news, but should you actually buy shares today? Here's what the numbers say. A $600 billion investment Earlier this year, Apple announced that it would spend $500 billion over the next four years in the United States. Last week, it upped its estimate to $600 billion, or $150 billion annually. This is different than a company's announced capital expenditure plans, such as when Amazon promises $100 billion in investments related to data centers and its delivery network. Apple is spending money with its suppliers, including advanced glass screens and various semiconductor manufacturers. It is more of an announcement around committed orders for products, which will spur demand for factory work in the United States. Apple is a sprawling company, and the announced spending will occur in all 50 states, impact 450,000 jobs, and involve 79 different factories. It is astounding how complex Apple's supply chain for the iPhone and other computing hardware is today. However, Apple is still not at the point of a "Made in America iPhone" as assembly and other services are performed in China and India, with Apple negotiating with the U.S. government around what is feasible to bring to the United States. Investors applauded the spending plans as a way to shy away from tariff risks on iPhone and semiconductor imports, which could have added huge costs to Apple's supply chain, damaging its profits. Now, it seems to be in good standing with the U.S. government and regulation authorities again. Does the announcement matter? In regard to tariffs, this spending announcement won't necessarily hurt the company, it just prevents Apple from having future cost increases across its supply chain. However, since the U.S. has higher salaries and labor standards, this investment may lead to higher input costs for product components, which could lead to margin compression. Apple's operating margin has steadily risen since the COVID-19 pandemic, hitting a record high of 32% over the last 12 months. Sourcing components in the United States may reverse this expansion. What matters more at the end of the day is demand for Apple's products. Last quarter, the company released solid figures for the three months ending in June. Total revenue grew just under 10% year over year, driven by services revenue and iPhone revenue growth. Even though the iPhone is almost 20 years old, it remains the bread and butter of Apple's business today. This puts the company in a tough spot. Even though the iPhone remains wildly popular, unit volumes have stagnated for years, meaning Apple is only able to grow revenue by increasing prices. This is not an ideal position to be in. Price increases may be necessary just to maintain profit margins in the future if input costs grow due to the Made-in-America investments. All in all, this announcement does matter. It just might be a negative for Apple's business, contrary to the stock's initial reaction. The truth about Apple stock There are a lot of arguments to be made -- both bearish and bullish -- for Apple stock. Bulls might say this is a fantastic brand with major lock-in effects along with a growing services division with strong profit margins. Bears may say that Apple's unit volumes for the iPhone have fallen with no new successful products coming down the pipeline. For example, the Apple Vision Pro has turned into a total product bust, likely losing the company billions if not tens of billions of dollars. A deciding factor in this debate could be the stock's valuation. Apple's price-to-earnings ratio (P/E) is 35. This is quite expensive for a business with low revenue growth. Compare that to Alphabet, which has grown its revenue significantly faster than Apple over the last few years but trades at a more reasonable P/E ratio of 22. Apple may be a great business, but that doesn't mean you should ignore the price you pay when analyzing its stock. Avoid buying shares of Apple after this post-announcement pop. Should you invest $1,000 in Apple right now? Before you buy stock in Apple, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Apple wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $663,630!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,115,695!* Now, it's worth noting Stock Advisor's total average return is 1,071% — a market-crushing outperformance compared to 185% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 13, 2025 Brett Schafer has positions in Alphabet and Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, and Apple. The Motley Fool has a disclosure policy. Apple's 10% Stock Pop: Time to Invest in the Technology Giant Embracing America? was originally published by The Motley Fool Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Business Insider
an hour ago
- Business Insider
‘Joyride Might Be Over,' Says Top Investor About Nvidia Stock
Nvidia (NASDAQ:NVDA) stock has built a reputation for consistently shattering quarterly earnings projections – a fact seasoned investors know all too well. But that winning streak can be a double-edged sword, as even a solid beat doesn't always translate into immediate post-earnings gains. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. That dynamic makes Nvidia's upcoming fiscal Q2 2026 earnings on August 27 especially intriguing. Momentum is already firmly in the bulls' corner, with NVDA shares up 91% since hitting a trough in early April. Expectations remain strong, though not at the triple-digit pace NVDA has delivered in its best quarters. The average analyst estimate of $45.75 billion points to year-over-year growth of 52.31%, with margins expected to hold at an impressive 72%. On paper, such results could still tempt investors to add shares ahead of the report – even if history suggests a short-term lull is possible afterward. But not everyone is convinced. One top investor, known as Oakoff Investments, is taking a far more cautious stance. 'I don't like the setup formed in NVDA's price action as it approaches the Q2 earnings release date,' warns the 5-star investor, who is among the top 4% of TipRanks' stock pros. Oakoff's caution stems largely from concerns about Nvidia's sales to China. While previous U.S. restrictions appear to have been lifted, there are signs the Chinese government may impose its own limits. That also possibility raises the stakes for Nvidia to deliver outsized growth in other regions to sustain investor enthusiasm – a task Oakoff believes is becoming increasingly difficult. 'If the market gets a slight hint towards further deterioration on this front, the stock may sell off badly even if NVDA beats the headline numbers as strongly as it did during the past 2 years,' Oakoff opined. Valuation is another sticking point. After months of gains, Oakoff argues the rally has been fueled by multiple expansion, pushing NVDA's Forward P/E ratio to an 'unsustainable' 42.5x. The result, according to Oakoff, is a setup vulnerable to disappointment. Given these risks, the investor is leaning toward profit-taking before the earnings call. 'I maintain a Hold rating, believing NVDA stock's high valuation and the new China uncertainty outweigh the likelihood of a strong Q2 beat,' Oakoff says. (To watch Oakoff Investments' track record, click here) Wall Street, in contrast, remains almost 'all in' on NVDA. With 35 Buys, 3 Holds, and a solitary Sell rating, the stock enjoys a Strong Buy consensus rating. (See NVDA stock forecast) To find good ideas for AI stocks trading at attractive valuations, visit TipRanks' Best Stocks to Buy, a tool that unites all of TipRanks' equity insights.
Los Angeles Times
an hour ago
- Los Angeles Times
Bessent says he's not pushing Fed cuts, just touting models
U.S. Treasury Secretary Scott Bessent said he isn't calling for a series of interest-rate cuts from the Federal Reserve, just pointing out that models suggest a 'neutral' rate would be about 1.5 percentage points lower. 'I didn't tell the Fed what to do,' Bessent said Thursday in an interview on Fox Business, referring to his comments a day before about how the central bank 'could go into a series of rate cuts here.' Bessent said Thursday that 'what I said was that to get to a neutral rate on interest, that that would be approximately a 150-basis-point cut.' The so-called neutral rate is the level at which policy neither stimulates nor restricts the economy. Fed Chair Jerome Powell said July 30 that there are 'a range of views of what the neutral rate is at this moment for our economy' and that his own estimate was that the current setting was 'modestly restrictive.' 'I believe that there is room, if one believes in the neutral rate,' for a series of rate cuts, Bessent said. 'I'm not calling for one. I didn't call for one. I just said that a model of a neutral rate is approximately 150 basis points lower.' The Fed last month kept its target range for the benchmark rate at 4.25% to 4.5%. The median estimate of the neutral rate among Fed officials over the long run is 3%. Powell and many of his colleagues have for months argued that more time was needed to assess any impact on inflation and inflation expectations from President Donald Trump's tariff hikes. Trump has regularly criticized Powell for holding rates. Bessent, after taking the Treasury's helm, said he would only address past Fed actions, not future ones, but later weighed in on what he thought markets were expecting monetary policymakers to do. This week, he has taken to referring to economic models, and has repeatedly suggested a 50-basis-point rate cut is possible at the Fed's September meeting. 'It's not really the role of the Treasury secretary to opine' on the neutral rate, said Julia Coronado, founder of the research firm MacroPolicy Perspectives and a former Fed economist. 'The fact that the most senior economic official in the administration is saying these things publicly is direct, public pressure on what he wants the Fed to do.' Former Treasury Secretary Lawrence Summers, who served under Democratic President Bill Clinton, said he was 'surprised' to see Bessent's remarks on Wednesday. 'Usually that kind of judgment is not made by administration officials, and I'm not sure it's helpful for the administration to be publicly prescribing on monetary policy,' Summers said on Bloomberg Television's Wall Street Week with David Westin. Summers, a paid contributor to Bloomberg TV, also suggested that a measure of the neutral rate should incorporate the effects of large budget deficits and elevated demand for funds to pay for data centers — along with higher asset prices that reduce the flow of funds into savings. Against that backdrop, 'you wouldn't be prescribing a 175 basis point cut in rates unless we see a recession.' Interest-rate futures as of Thursday morning reflect bets that the Fed will cut rates by less than a cumulative 150 basis points by the end of next year. They also show slightly less confidence in a 25-basis-point reduction at the September meeting. The retreat came after a release on US wholesale inflation showed those prices climbed by the most in three years. Speaking to Bloomberg Television on Wednesday, Bessent said 'if you look at any model' it suggests that 'we should probably be 150, 175 basis points lower' on the Fed's benchmark. He also said that officials might have cut rates if they'd been aware of the revised data on the labor market that came out a couple of days after the latest meeting. 'I suspect we could have had rate cuts in June and July,' Bessent said. 'I don't know what model he's talking about,' said Jim Bianco, president of Bianco Research and a longtime Fed and Treasury watcher. 'There is no model I'm aware of that says it should be that low,' he said of the Fed's benchmark. Other gauges of where the Fed should be, such as the Taylor rule, also aren't arguing that the main rate should be 150 to 175 basis points lower than it is, Bianco said. He added that there have been many instances over the decades of 'cajoling Fed chairs,' and they're 'welcome to offer their opinion,' but it shouldn't change the central bank leader's opinion. Bessent repeated on Thursday that, given the context of the weaker jobs figures and not having cut rates the past couple of months, 'perhaps a 50-basis-point cut in September was warranted.' Two Fed district bank presidents said they're not backing such a move at this point. San Francisco Fed President Mary Daly said in a Wall Street Journal interview Wednesday, 'I just don't see that. I don't see the need to catch up.' St. Louis President Alberto Musalem said on CNBC Thursday, that a 50 basis-point cut would be 'unsupported by the current state of the economy and the outlook for the economy.' Flatley writes for Bloomberg.
