Latest news with #Chongqing
Forbes
3 days ago
- Business
- Forbes
What's Behind PLUG Stock's Deep Dive?
CHONGQING, CHINA - MAY 11: In this photo illustration, the logo of Plug Power Inc. is displayed on a ... More smartphone screen, with the company's green branding visible in the background, on May 11, 2025, in Chongqing, China. (Photo illustration by) Plug Power (NASDAQ: PLUG), a company specializing in hydrogen fuel cells, is facing severe financial difficulties, resulting in a 60% decline in its stock price year-to-date. Currently priced at just below $1, the stock has dropped over 70% from its 52-week peak of around $3.50. This decline largely stems from the company's significant cash outflow, which has rightly alarmed investors. If you're in search of better prospects with a more stable experience than holding individual stocks, consider examining diversified portfolios that have historically surpassed the S&P, such as the Trefis High Quality portfolio, which has generated returns exceeding 91% since it began. Separately, see – Nvidia Stock's 1 Big Risk Plug Power's financial condition is unstable, as indicated by its crucial metrics for the past four quarters: In addition to its substantial losses, Plug Power's balance sheet is further compromised by a large debt burden: As of the latest quarter, Plug Power's debt reached $1.1 billion, significantly surpassing its market capitalization of $999 million (as of May 29, 2025). This discrepancy leads to a severely poor Debt-to-Equity Ratio of 108%. Although the company's overall financial outlook remains grim, Plug Power did reveal some minor progress in its most recent quarterly results: Despite Plug Power's involvement in the promising hydrogen fuel cell sector, its present financial circumstances pose significant questions regarding its long-term viability as an investment. The combination of substantial operational losses, a heavy debt load, and disappointing future revenue forecasts presents considerable risks for potential investors. Considering the numerous stronger investment choices available in today's market, prospective investors should carefully assess whether PLUG signifies a genuine turnaround opportunity or a continued downward trajectory, even with the planned cost-cutting measures. Just keep in mind – PLUG stock still represents a volatile investment, and as a long-term investment option, you might want to explore the Trefis High Quality (HQ) Portfolio, which is grounded in quality and aims for reliability, predictability, and compounding growth. Comprising 30 stocks, it has consistently outperformed the S&P 500 over the past four years. Why is that? As a group, HQ Portfolio stocks have generated higher returns with lower risk than the benchmark index; it offers a smoother investment experience, as illustrated in HQ Portfolio performance metrics.
Forbes
3 days ago
- Business
- Forbes
50% Upside For MRVL Stock?
CHONGQING, CHINA - MARCH 3: In this photo illustration, the Marvell Technology Inc. logo is ... More displayed on a smartphone screen on March 3, 2025, in Chongqing, China. (Photo by) Marvell Technology (NASDAQ:MRVL), a firm focused on manufacturing semiconductor integrated circuits for data centers, has recently revealed its Q1 fiscal 2026 results. The company slightly surpassed analyst predictions, disclosing earnings of $0.62 per share on revenues of $1.9 billion, compared to consensus estimates of $0.61 and $1.88 billion, respectively. In spite of this positive outcome, Marvell's stock fell by 3% in after-hours trading and has declined by 43% since the start of the year. A considerable part of this downturn took place in March, following a disappointing outlook. Investors looking for steady returns may want to consider investigating diversified investment options such as the Trefis High Quality portfolio, which has shown remarkable performance, achieving over 91% returns since its inception. Additionally, see – Nvidia Stock's 1 Big Risk Considering the stock's fluctuations and the recent decline, you might be questioning whether Marvell is currently a good buy. From a valuation perspective, MRVL stock seems appealing. At approximately $62 per share, it is trading at 8.3 times trailing revenues and 32 times trailing adjusted earnings. This is significantly lower than its three-year average price-to-sales (P/S) ratio of 10.4 times and price-to-earnings (P/E) ratio of 42 times. While a decrease in valuation multiples may appear justified given the company's average revenue growth of only 10% over the last three years and a shrinkage in its adjusted net income margin from 30.5% in fiscal 2023 to 26.3% currently, this does not convey the complete picture. Marvell's Q1 results demonstrated impressive growth, with overall revenues soaring by 63% year-over-year. This was fueled by a strong 76% rise in core data center sales, reaching $1.44 billion. This increase is largely due to the rising demand for custom AI chips. Although the adjusted gross margin decreased by 240 basis points year-over-year to 59.8%, the company's bottom line witnessed a substantial enhancement, reporting earnings of $0.62 per share, marking a 158% increase from $0.24 in the same quarter last year. In the future, Marvell expects Q2 sales to be around $2.0 billion, which aligns with market expectations. Building upon the valuation discussion, Marvell is currently experiencing growth at a much quicker rate than it has over the past three years. Analysts estimate that sales are projected to grow by 42% this year and an additional 20% next year. This accelerated growth trajectory is anticipated to have an even greater influence on earnings, which are expected to rise by 2.3 times during this period. This swift growth trend calls for an upward adjustment in valuation multiples. Notably, the average analyst price target of $96 for MRVL indicates a considerable upside potential of more than 50%. Marvell's strategic foray into the AI sector began with its interconnect solutions for data centers. However, the greater opportunity lies in the creation of application-specific integrated circuits (ASICs), which function as custom AI chips. These tailored chips for hyperscaler data centers offer numerous benefits over general-purpose GPUs, such as those provided by Nvidia and AMD. Specialized chips can lower costs, enhance energy efficiency, and optimize performance for specific functionalities, unlike general-purpose GPUs intended for a wider range of applications. Marvell has been strengthening its alliances with significant AI stakeholders, including Amazon Web Services, which has expanded its agreements for data center semiconductors, including bespoke AI products. While the valuation of MRVL stock seems enticing, it is essential to take potential risks into account. Historically, Marvell's stock has underperformed in comparison to the broader market during economic downturns. For example, during the inflation shock of 2022, it fell by 62% from its peak, in contrast to a 25.4% decline for the S&P 500. Similarly, amid the COVID-19 pandemic correction in 2020, it dropped by 40% versus a 33.9% decrease for the S&P 500. This trend indicates that MRVL stock is more vulnerable to negative macroeconomic conditions. In addition, there are ongoing concerns regarding the slow rollout of Amazon's Trainium chips amid weak external demand, which could potentially hinder future revenue growth. Therefore, while Marvell stock might seem attractive from a valuation angle, investors should carefully assess these risks. You may want to purchase MRVL during this current dip, but investing in a single stock, regardless of its potential, carries risks. If you aim to mitigate that risk while still positioning yourself for strong upside, consider the High Quality portfolio, which has surpassed the S&P 500 and achieved returns exceeding 91% since its launch. Why is that? As a collective, HQ Portfolio stocks have offered superior returns with lower risk compared to the benchmark index; presenting a smoother ride, as evidenced in HQ Portfolio performance metrics.
Forbes
3 days ago
- Business
- Forbes
Nvidia Stock's 1 Big Risk
CHONGQING, CHINA - MAY 25: In this photo illustration, the logo of NVIDIA is displayed on a ... More smartphone screen, with the company's signature green branding visible in the background, on May 25, 2025, in Chongqing, China. (Photo illustration by) Nvidia's (NASDAQ:NVDA) primary customers — Microsoft, Google, Meta, and Amazon — each spent tens of billions on their chips last year. Can these tech giants realistically double their spending on Nvidia chips again next year, and the year after, when their own revenues are only growing by about 15% annually? Absolutely not. The music of Nvidia's 80-100% growth has to stop. When this high-pitched growth finally slows, Nvidia's valuation will drop significantly. The point is, even slowing growth can be devastating. In fact, Nvidia has experienced strong declines time and again. Earlier this year, the stock saw a large correction amid the rise of DeepSeek. It was again hit over tariff concerns and issues with H20 chips. Looking back slightly further, the impact on Nvidia stock has been worse than the benchmark S&P 500 index during some recent downturns. For instance, Nvidia stock fell 66% during the 2022 inflation shock, versus a peak-to-trough decline of 25.4% for the S&P 500. Now, Nvidia's phenomenal growth is a recent phenomenon and might not last. The entire AI boom could fizzle, or perhaps large AI models could be deemed unnecessary. DeepSeek's demonstration that smaller models can perform just as well without Nvidia's latest chips raises serious questions. What are the odds that demand for Nvidia's chips will suddenly vanish? That's where the speculation truly begins. Nvidia's revenues have surged by more than 80% annually for the past three years, exceeding 100% growth last year. But can this growth decelerate to 60% or even 40%? It almost certainly has to — and soon! As mentioned, Nvidia's largest customers cannot sustain 2x year-over-year increases in spending on Nvidia chips when their own revenues are growing in the mid-teens. When this rapid expansion concludes, Nvidia's valuation will likely drop significantly. However, growth could then stabilize at a more sustainable pace of 20-30%, which, while not exceptionally high, is still respectable. That's why you build a portfolio — a resilient one — to balance risk and reward. We did exactly that with the Trefis High Quality (HQ) portfolio. Balancing risk-reward is precisely how HQ outperformed the S&P 500, the Nasdaq, and the Russell 2000, clocking over 91% returns since inception!
Forbes
4 days ago
- Business
- Forbes
NVDA Stock Overvalued At $140?
CHONGQING, CHINA - MAY 25: In this photo illustration, the logo of NVIDIA Corporation is displayed ... More on a smartphone screen, with the latest stock market chart of the company in the background, reflecting investor sentiment and recent trading activity, on May 25, 2025, in Chongqing, China. NVIDIA is a leading American technology company renowned for its graphics processing units (GPUs), artificial intelligence (AI) computing platforms, and data center solutions. (Photo Illustration by) Yes, we think so. Currently, Nvidia (NASDAQ; NVDA) stock trades at 44 times its trailing earnings of $3.19 per share. This figure aligns with the stock's average P/E ratio over the last two years, and growth has remained solid thus far. The real question is whether this growth will continue, which we'll delve into in the sections below. First, let's examine what happened in the recently reported Q1. Nvidia recently announced its fiscal first-quarter results for the period ending April 2025, reporting adjusted earnings of $0.96 per share on revenues of $44.1 billion. This represents a significant 69% year-over-year increase in sales and a 57% growth in earnings. The company performed better than Wall Street's expectations, which had projected adjusted earnings of $0.93 per share on sales of $44.3 billion. However, the company's outlook of $45 billion in Q2 sales missed the Street's estimates of around $46 billion. This weaker guidance was primarily due to an expected $8 billion hit to the top line from recent export restrictions on the company's H20 chips bound for China. During the quarter, the company spent $14.1 billion on share repurchases and paid $244 million in dividends. Separately, see – Buy, Sell, or Hold AVGO Stock? After exceeding analyst estimates, Nvidia's stock surged around 5% in after-hours trading on Wednesday, May 28. That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative - having outperformed the S&P 500 and generated returns exceeding 91% since its inception. Looking at segments, data center revenue reached $39.1 billion, marking a 73% year-over-year increase. Gaming & AI PC was up 42%, Professional Visualization sales grew 19%, and Automotive & Robotics revenue increased by 72%. This growth was primarily driven by continued strong demand for the company's GPU chips, which are heavily used in generative AI applications. Nvidia has also ramped up large-scale production of its latest Blackwell AI supercomputers. These new chips, with their advanced AI capabilities and premium pricing, have contributed significantly to top-line growth. Nvidia's Blackwell cloud is now available on major platforms including AWS, Google Cloud, Microsoft Azure, and Oracle Cloud Infrastructure. Microsoft has been a substantial buyer of these Blackwell chips. However, the company's gross margins of 61% were down 1,790 basis points from 78.9% in the year-ago quarter. Excluding the one-time charge from H20 sales restrictions, the gross margin would have been 71.3%. Nvidia stock is a market darling, and its Q1 performance may lead to a further spike, possibly pushing it towards its 52-week high. However, consider this: can such growth truly be sustained? Is a valuation of 44 times trailing earnings justified? Nvidia's phenomenal growth is a recent phenomenon, and it might not last. Indeed, the entire AI boom could fizzle, or perhaps large AI models, in particular, could be deemed unnecessary. Deepseek's demonstration that smaller models can perform just as well, without even utilizing Nvidia's latest chips, raises questions. However, what are the odds that Nvidia's chips will cease to be in high demand? That's where the speculation begins. Nvidia's revenues have grown by more than 80% annually for each of the last three years, with last year exceeding 100% growth. Could this growth decelerate to 60% or even 40%? It almost certainly has to—and soon! Why? Nvidia's largest customers include tech giants like Microsoft, Google, Meta, and Amazon. Each of these companies spent tens of billions last year on Nvidia chips. Can these companies continue to increase their spending on Nvidia chips by 100% year after year, especially when their own revenues are growing at only about 15% annually? No, absolutely not. The era of Nvidia's 80-100% growth must eventually come to an end. When this period of rapid expansion concludes, Nvidia's valuation will likely drop significantly. In fact, we currently estimate Nvidia's Valuation to be around $100 per share, reflecting a downside of over 25% from the current levels. Note that we will revise our model shortly to reflect the latest quarterly results. However, growth could then stabilize at a more sustainable pace of 20-30%, which, while not exceptionally high, is still respectable. That's why you build a portfolio. A resilient one. Balance risk-reward. We did it in spades with the Trefis High Quality (HQ) portfolio. Balancing risk-reward is how HQ outperformed the S&P 500, the Nasdaq, and the Russell 2000. HQ outperformed all of them, and clocked >91% returns since inception!
Forbes
5 days ago
- Business
- Forbes
How Does UnitedHealth Group Make Money?
CHONGQING, CHINA - APRIL 14: In this photo illustration, the UnitedHealthcare logo is displayed on a ... More smartphone screen, with the company's latest stock price performance and candlestick chart visible in the background, reflecting market volatility and investor sentiment on April 14, 2025, in Chongqing, China. (Photo by) UnitedHealth Group stock (NYSE: UNH) has recently faced significant scrutiny, with its stock experiencing a decline of over 50% since April. While the reasons for this drop are explored in more detail here – What Sparked UNH Stock Crash? – this analysis focuses on how UnitedHealth Group generates its revenue by examining its key segments. We'll also assess the size of the Medicare segment, which is currently under criminal investigation. UnitedHealth Group operates two primary businesses: UnitedHealthcare and Optum. UnitedHealthcare encompasses four divisions: Optum consists of three main segments: UNH Value Breakdown Revenue generation is roughly balanced between these two main businesses. In 2024, Optum accounted for 46% of total revenues, while UnitedHealthcare contributed 54%. However, Optum's contribution to overall sales has been growing, increasing from 41% in 2021 to 46% in 2024. Conversely, UnitedHealthcare's share decreased from 59% to 54% over the same period. Our dashboard on How Does UnitedHealth Group Make Money has more details. We will delve into the specific performance and contributions of each segment. For investors looking for potential gains with less volatility, the High Quality portfolio has comfortably outperformed the S&P 500, delivering over 91% returns since inception. The UnitedHealthcare segment within UnitedHealth Group primarily focuses on providing a full range of health benefits and insurance products. This is also the business currently facing the pressure on its profit margins, amid rising medical costs. This division serves individuals aged 65 and older with Medicare Advantage plans, Medicare Part D (prescription drug plans), Medicare Supplement plans, and group retiree services. This is the segment currently under criminal investigation for possible fraud. In 2024, Medicare & Retirement generated $139.5 billion in revenue and $8.4 billion in EBITDA, representing 25% of the company's total revenue and 23% of its EBITDA. This segment offers health benefit plans and services to large national employers, small businesses, and individuals. It garnered $74.5 billion in gross revenue and $4.5 billion in EBITDA in 2024, accounting for 13% of the company's revenue and 12% of its total EBITDA. This division serves state programs for economically disadvantaged and medically underserved populations, primarily managing Medicaid programs. In 2024, Community & State reported $80.6 billion in revenue and $4.9 billion in EBITDA, making up 15% of the company's total revenue and 13% of its EBITDA. This segment provides international health insurance benefits and related services to multinational companies and globally mobile populations. In 2024, International revenues were $3.7 billion with EBITDA of approximately $222 million. This segment now accounts for less than 1% of the company's sales and profits, following UnitedHealth Group's exit from Brazil in the first quarter of 2024. The Optum segment of UnitedHealth Group is focused on modernizing and improving the healthcare system through technology, data, and direct care delivery. Unlike UnitedHealthcare, which primarily deals with health insurance and benefits, Optum provides a range of health services and solutions to various stakeholders, including patients, providers, payers, employers, and life sciences companies. Optum's business can be broken down by its three key sub-segments: This segment delivers comprehensive, patient-centered care through its own medical groups, clinics, and physician practices. It emphasizes value-based care models, behavioral health services, in-home care, and population health management. Optum Health has been a key growth driver for UnitedHealth Group, with sales rising at an average rate of 25% since 2021 (compared to 14% for the overall company). Its contribution to overall sales increased from 14% to 19% over this period. Last year, it generated $105.4 billion in gross revenue and, notably, enjoys higher margins, accounting for 24% of the company's total EBITDA. This segment focuses on data, analytics, and technology-enabled services for the healthcare industry. It provides solutions for revenue cycle management, data analytics, consulting, and software to enhance efficiency and decision-making for healthcare organizations. Last year, Optum Insight sales were $18.8 billion, accounting for just 3% of total revenues. However, it garnered $3.6 billion in EBITDA, contributing an estimated 9% of the company's total EBITDA. This segment operates as a pharmacy benefit manager (PBM), aiming to provide access to affordable prescription medications. Optum Rx manages pharmacy benefits, negotiates with drug manufacturers, operates home delivery pharmacies, and offers programs to control specialty drug costs and promote medication adherence. Potential calls to eliminate or significantly curtail PBM services could have a profound impact on Optum Rx. In 2024, this segment generated $133.2 billion in gross revenue and $6.8 billion in EBITDA, accounting for 24% of the company's overall revenues and 18% of total EBITDA. This segment operates on high volume and thin margins. Overall, UnitedHealth Group is at a pivotal moment, with intense scrutiny directly impacting its stock. Our analysis has highlighted the clear division of its core businesses: UnitedHealthcare, which provides a wide array of health benefits (including Medicare & Retirement), and Optum, the innovative engine behind healthcare services, technology, and pharmacy management. While UnitedHealth Group's diverse structure has historically offered stability, the current climate demands significant strategic shifts. Optum's increasing contribution to overall sales underscores its crucial role in the company's future growth and innovation. However, this growth faces considerable challenges, particularly from the potential political dismantling or major changes to the PBM landscape impacting Optum Rx. Separately, the outcome of the criminal investigation into Medicare fraud, which falls under UnitedHealthcare, also presents a significant challenge that could independently alter the company's trajectory. In fact, regulatory risk is just a small part of risk assessment framework we apply while constructing the Trefis High Quality (HQ) Portfolio which, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.
