The Mag 7's Short-Term, Medium-Term Outlooks Are Unfavorable, Investor Warns
The Mag 7 consists of Nvidia (NVDA), Tesla (TSLA), Meta (META), Apple (AAPL), Amazon (AMZN), Alphabet (GOOG,GOOGL), and Microsoft (MSFT).
Technical and Macro Challenges
Of the Mag 7, only Meta is above its 200-day moving average, and usually "nothing good" happens to stocks when they are below that level, Tuttle said.
On the macro front, Washington's economic plan, including the upcoming tariffs, is unfavorable for the names, he added.
DeepSeek Burst the AI Bubble
DeepSeek was the pin that burst the AI bubble that had previously propelled the Mag 7 higher, according to Tuttle.
"Until DeepSeek, it was thought that all the capex (spent on AI) would be rewarded. Now we're starting to ask uncomfortable questions about that," the investor stated.
Meanwhile, Tesla is being hurt by Elon Musk's foray into politics, Tuttle noted.
"The overall backdrop for the Mag 7 will be tough in the short and medium term," he warned.
While we acknowledge the potential of META as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is as promising as META but trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: The author owns shares of AMZN but has no intention of trading them in the next 48 hours. This article is originally published at Insider Monkey.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Los Angeles Times
2 hours ago
- Los Angeles Times
Pasadena Startup Compute Labs Launches Pilot Program to Tokenize AI Infrastructure
As GPU hardware is overtaxed worldwide, a novel solution is being created utilizing digital currency exchanges A Pasadena startup is looking to capitalize on the AI boom by investing in the infrastructure that powers data centers – the GPUs, or graphic processing units, that make up the data centers supporting large language models. 'Our goal is to democratize access to the infrastructure layer,' said Albert Zhang, chief executive of Compute Labs. 'There is a significant demand over supply situation. Many GPUs are running at 100% utilization. The yield for these assets are really high at the moment.' That moment could have long tail winds as companies such as OpenAI, Google and Meta plan to invest billions of dollars in data center development. For example, Meta reportedly was in discussions with private credit investors including Apollo Global Management KKR, Brookfield, Carlyle and PIMCO to raise $26 billion in debt to finance data centers. Compute Labs raised $3 million in a pre-seed round last year led by Protocol Labs. The company purchases equipment on behalf of accredited investors and then leases it to data centers which pay on a revenue sharing model. The assets are sold to investors through a digital token that is collateralized against the physical asset. These tokens pay regular distributions and can be traded on digital currency exchanges. In this model, the data centers are able to offload a capital expenditure and turn it into a regular operating expense. Otherwise, operators would typically rely on private lenders. It launched its first data center investment in June with $1 million that has all been invested and distributed as tokenized GPUs. It plans to raise $10 million following the pilot deal and has over $100 million in GPUs in its pipeline ready to match with investors. Zhang's background includes working at a Y Combinator company and at a financial technology company. He pivoted to AI in 2022 when OpenAI was released. A discussion with an angel investor from the semiconductor industry told Zhang that if he could have started over, he would have invested in the infrastructure of the business. Companies had started selling assets such as U.S. Treasuries as tokenized digital assets. Plus, Jensen Huang hosted a GPU conference in March 2024 where he said that the computer will be the currency of the future. 'After that, we closed within two weeks,' said Zhang. 'It's like syndicating real estate deals, but the asset class is new. We have a lot of challenges as a super young company without a track record, and investors don't realize that the GPU can yield at such a high rate.' There are additional regulatory challenges, but some of those were addressed with the recently passed Genius Act, which includes a clearer framework around stable coin and real-world assets. Compute Labs is also looking into a SPAC merger, which would make it a public company and give it broader access to capital.
Yahoo
4 hours ago
- Yahoo
Here's the forecast for the Tesla share price
The Tesla (NASDAQ:TSLA) share price is very volatile for a mega-cap stock. The company has long excited investors with its futuristic ambitions, from fully autonomous vehicles to humanoid robots, and even operations on Mars. However, analysts are increasingly cautious about the valuation despite the bold promises. The price target The average 12-month price target from 37 Wall Street analysts is currently $307.23. That's compared to a share price of $335.58 as I write. Forecasts vary widely, with a high of $500 and a low of just $19. The consensus suggests that the stock's overvalued however, it's around fair value if we exclude GLJ Research's incredibly bearish take. But Tesla's valuation metrics should make investors think twice. Its forward price-to-earnings (P/E) ratio's an insane 198.87 times. That's more than 1,000% higher than the consumer discretionary sector median. Other indicators — including enterprise value-to-EBIT, price-to-sales, and price-to-cash flow — are also clearly elevated. Optimism baked in Much of the optimism baked into the share price concerns Tesla's ambitions beyond electric vehicles (EVs). As we know, CEO Elon Musk has repeatedly suggested that Robotaxis and the humanoid robot Optimus could transform the company's future and justify a far higher valuation. However, timelines for both are relatively vague. And there have been a few disappointments of late. The full rollout of Robotaxis has faced several delays, and full regulatory approval for autonomous vehicles remains a significant hurdle. Optimus, meanwhile, still appears far from commercialisation. Even if these technologies prove viable, questions remain over consumer adoption, pricing power, and competitive threats from other automakers and tech firms. In the case of robotaxis, infrastructure, insurance frameworks, and city-level policy are all really important, but none of these are within Tesla's direct control. As for Optimus, while the demo videos have drawn headlines, the path from prototype to scalable, revenue-generating product is uncertain. Investors may be underestimating how long it could take before either platform contributes materially to Tesla's earnings. The bottom line Investors have been here before. Some argue that the firm has a track record of delivering against the odds, particularly in scaling its EV operations. Yet recent numbers suggest growth may be slowing. What's more, the consensus forecasts show earnings per share (EPS) falling 30% in 2025. While there will likely be a rebound in later years, this is a considerable drop. Analysts anticipate EPS growth of 82% by 2028, though such long-range estimates are inherently uncertain. There's also not many analysts forecasting through to 2028. This puts investors in a challenging position. While the long-term vision's exciting, today's share price is heavily reliant on future breakthroughs rather than current performance. For those who believe in Tesla's ability to disrupt multiple industries, the current price might still make sense. However, I believe it's still a rather speculative investment. And that's simply because those valuation figures are incredibly hard to justify. As much as I like the brand, I don't think investors should consider the stock right now. The post Here's the forecast for the Tesla share price appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool James Fox has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Erreur lors de la récupération des données Connectez-vous pour accéder à votre portefeuille Erreur lors de la récupération des données Erreur lors de la récupération des données Erreur lors de la récupération des données Erreur lors de la récupération des données
Yahoo
8 hours ago
- Yahoo
Inside BYD's plan to rule the waves
Elon Musk had a problem. As Tesla struggled to ramp up sales in October 2022, it faced a critical shortage of ships to deliver its EVs. "There weren't enough boats, there weren't enough trains, there weren't enough car carriers," Musk told investors, after Tesla announced it had delivered tens of thousands of cars fewer than it made over the previous quarter. As Tesla struggled, its biggest Chinese rival devised a novel solution. BYD, which is on course to surpass Tesla this year as the world's top seller of EVs, decided in 2022 to build a fleet of seven giant ships, each capable of carrying thousands of cars. Unlike most of its Western rivals, which typically buy space on car carriers operated by shipping companies, BYD has cut out the intermediary as it doubles down on ambitious plans to sell half its cars outside China by 2030. Six of BYD's giant ships, which are emblazoned with the company's livery and a striking red and white color scheme, have entered service in the past year. Data obtained by Business Insider from ship tracking and maritime analytics provider MarineTraffic shows how the Chinese carmaker is using this fleet to drive an unprecedented international expansion, flooding ports in Europe, Brazil, and Mexico as it takes the fight to Tesla and overtakes legacy automakers. EVs on the high seas BYD's first ship set sail in January 2024, when the BYD Explorer No.1 — a 200-meter-long, 13-deck, roll-on roll-off behemoth — went into service. In July, the Zhengzhou, which can carry up to 7,000 vehicles, became the seventh vessel to join the fleet. The largest ship in BYD's armada, the Shenzhen, has a capacity of over 9,000 vehicles, making it one of the world's largest car-carrying vessels. The massive ships have been busy. After launching, Explorer No.1 immediately began a 41-day voyage to Europe, the first of three separate trips there in 2024. Explorer No.1 has also made three voyages to Brazil since May 2024. In May this year, it docked in the Brazilian port of Portocel in its second visit in four months, with two other BYD ships, the Hefei and the Shenzhen, also arriving in Brazil in April and May. All three arrived fully laden and left empty as BYD raced to deliver its vehicles to Brazil ahead of a planned EV tariff rise in July. The voyages to Europe and Brazil coincide with BYD's sales surging in both markets. BYD, which did not respond to a request for comment for this story, sold just 2,500 vehicles in Brazil in the first half of 2023. It's sold over 56,000 vehicles there so far this year, per data from Brazil's National Federation of Automotive Vehicle Distribution. That's more than Nissan, Renault, and Ford, and it has seen BYD take a dominant position in one of the world's fastest-growing EV markets. In Europe, BYD's sales in the first half of the year were more than 300% higher than over the same period in 2024. The Chinese carmaker sold more pure battery-electric vehicles than Musk's automaker in Europe for the first time in April, and its global EV sales have outpaced Tesla's for the past three quarters. Stian Omli, a senior vice president at logistics intelligence firm Esgian, told Business Insider that BYD was essentially operating a "shuttle service" between its production hubs in China and key ports in Europe and Brazil. BYD's strategy is shaking up the car shipping industry, which has been dominated historically by a handful of established shipping companies that usually plan and invest on cycles of a decade or longer. Companies like Norwegian logistics giant Wallenius Wilhelmsen and Japanese firm NYK Line sell space aboard their ships to multiple companies, then try to stop at as many ports as possible and pick up cargo for the return voyages. But Omli said BYD's strategy was to go direct, dump a massive number of EVs at one or two destination ports, and often return to China empty. "Just like they have changed the competitive landscape when it comes to cars, the Chinese are also changing the competitive landscape when it comes to the car carriers," Omli said. China's brutal EV market forces BYD to go global Stephen Dyer, managing director at auto consultancy AlixPartners, told Business Insider that the Chinese EV industry's drive to expand overseas is driven by a "never-ending" price war at home, as over 100 EV brands fight it out in the world's most brutally competitive car market. "If you can succeed outside China, you gain credibility with your core market consumers in China," said Dyer. BYD could do with a boost. In July, the automaker's sales fell for the first time this year, putting its target of selling 5.5 million cars in 2025 at risk. BYD's decision to operate its own ships had its roots in a post-COVID supply crunch between 2021 and 2023, when high demand combined with a shortage of specialised car carriers. This crunch sent the price of one car carrier for a yearlong charter soaring as high as $125,000 per day, far above the typical pre-COVID high of around $25,000, Omli said. This is what made Musk rage and prompted BYD to embark on its radical strategy just as it was beginning to enter international markets in earnest. BYD's setup allows the company to avoid being caught out if prices soar again, Omli said, and also gives it more flexibility to send its cars where and when it wants. Control over its supply chain is a key part of BYD's formula for building EVs quicker and cheaper than its rivals. The company manufactures almost all of its own parts. Executive vice president Stella Li previously said that the tires and windows of BYD's Dolphin hatchback were the only parts not made in-house. "Developing your own component suppliers gives BYD not only some cost leverage over other suppliers, but also the flexibility to do things much faster," Dyer said. "When you have your own fleet, it's the same idea. It allows you to do things quickly and flexibly. You can divert them to anywhere that you want to go, even part of the way on the voyage. You're assured of supply," he added. A costly gambit BYD is not the only Chinese EV company to dabble in deep-sea shipping. Rivals such as SAIC Motors have built even larger fleets, and Omli estimated the share of the global deep-sea car carrier fleet controlled by Chinese companies will rise from 10-15% to as much as 25% in the next few years. It's a hefty investment. Omli estimated that building the first four ships in its fleet cost BYD around $500 million, with such ships typically costing between $100 and $130 million each to build. BYD's fleet shows no signs of slowing down. The automaker's monthly vehicle exports in July were nearly three times higher than a year ago, per company figures, and its vessels have made six voyages to Europe so far this year. Recently, BYD's fleet has deployed its "shuttle service" strategy in Mexico. The 200-meter-long Changzhou became the first BYD vessel to arrive in the country in June, before criss-crossing the Pacific and returning with another load a month later. The Explorer No.1 has just made the same journey, docking at the Mexican port of Lazaro Cardenas on 14 August. BYD recently abandoned plans to build a factory in Mexico, but the company's EVs are still in high demand there. Executives say they expect sales to double this year. Data from Esgian shows that the four BYD vessels it tracks — The Explorer No.1, Shenzhen, Hefei, and Changzhou — have visited the Mexican ports of Mazatlan and Lararo Cardenas, along with Portocel, more than any other ports outside Asia this year. No risk, no reward While BYD's shipbuilding surge has given the company the flexibility to export its EVs at unprecedented volume, the strategy has risks. The company and its Chinese rivals have shipped so many vehicles to Europe over the past two years that it has put shipping infrastructure under pressure and turned some ports into giant parking lots. Germany-based auto analyst Matthias Schmidt told Business Insider that most of BYD's sales in Europe were to companies and dealerships, rather than consumers. Schmidt said he believed BYD's strategy was to flood the market through corporate channels and build enough momentum to become a recognisable brand for European consumers. The shipping supply crunch that pushed BYD to build its fleet has now mostly abated. A wave of car-carrying ships has been launched in the past two years, easing the shortage and bringing prices down to around $50,000 per day for one car carrier on a one-year charter, with Omli estimating they will probably fall to around $30,000. With shipping via external carriers a more affordable option, Schmidt said BYD now has to justify the massive costs of running its own fleet by exporting more vehicles. "That's probably partly behind the high number of vehicles coming to Europe right now. They need to ship those vessels relatively full to maximise utilisation," Schmidt added. Alexander Brown, a senior analyst at the Berlin-based Mercator Institute for China Studies, said that "a lot has changed" since BYD went all in on its own ships three years ago. Since then, Western economies have raised trade barriers to protect their own auto industries from Chinese carmakers, and the Trump administration has set about reordering global trade with tariffs. With this protectionism in mind, BYD has another big investment: factories. It recently began production at its new factory in Brazil, on the site of a plant Ford closed in 2021 after years of poor sales and big losses, ending a century of Ford production in the country. The Detroit automaker also shut down multiple plants in Europe, and Chinese automakers are now filling that gap. BYD is building production sites for the European market in Hungary and Turkey. Brown added that, if BYD had known how much tariffs would rise after going all in on cargo ships, "they may have done things a little bit differently." Graphics by Jinpeng Li. Read the original article on Business Insider Sign in to access your portfolio
