Latest news with #Evercore
Yahoo
9 hours ago
- Business
- Yahoo
'It isn't different this time': Why one strategist sees excessive investor euphoria driving a 15% stock plunge
Investors are overly optimistic as earnings season begins, warns Evercore's Julian Emanuel. The S&P 500 is at a record high, but Emanuel predicts a 7%-15% near-term correction. Tariff negotiations and growing S&P 500 EPS have already been priced into the market, Emanuel says. Investors are optimistic as earnings season kicks off — a little too optimistic, according to Julian Emanuel, Evercore ISI's chief equity strategist. The S&P 500 notched another fresh record high on Monday, and sentiment is skyrocketing as Wall Street banks raise their year-end S&P 500 targets. However, stocks don't just go up: "Every structural bull market since the late 1990's has seen a late stage surge in capital markets activity and a period of intense investor FOMO," Emanuel wrote in a note over the weekend. Evercore is remaining cautious, with Emanuel warning of a 7%-15% correction in the coming months. Evercore's year-end target is 5,600. "FOMO has begun," Emanuel wrote. "Stocks have overdiscounted the potential for continued good news." Emanuel says old-school fund managers who lived through the dot-com bubble are now asking him the four most dangerous words in investing: Is it different this time? The question is a clear signal that FOMO has kicked in as investors become overconfident and play into the cycle of fear and greed. There's a lot of froth in the market: crypto is on a bull run as bitcoin hits all-time highs, zero days to expiration options are becoming popular among retail investors, and investors are counting on the AI story to continue carrying stocks higher. But good vibes aren't reason enough for the stock market to continue rallying. In fact, it's quite the opposite: before the dot-com bubble burst, bulls comprised 75% OF AAII sentiment survey respondents, a level never seen again since. Bullish investors point to strong economic data and an improving tariff backdrop as drivers for the stock market, but those tailwinds are largely already priced in, according to Emanuel. According to an Evercore survey, a majority of institutional investors anticipate tariff rates to come down from present levels of 22% to below 20% by September. They also expect S&P 500 EPS to rise above current levels of $264. With expectations already so elevated, it'll be difficult for economic data to continue surprising to the upside. And while there's much market volatility surrounding the idea of Fed independence and Fed Chairman Jerome Powell's future, markets are still pricing in that Powell will remain at his position by year-end. "Even if there is good news on the tariff front, it is arguably already in stock prices," Emanuel wrote. "Despite the potential for tariff induced guide-downs and the historical tendency of earnings estimates to fall at this point in the cycle, 67% of investors believe earnings estimates for 2025 will be at or above the current $264 on 9/1," Emanuel added. With a trailing price-to-earnings ratio of 24.7x, the S&P 500 is trading at the top decile of valuations since 1960. Emanuel doesn't see a market crash in the cards, as valuations haven't reached the dot-com bubble's 28x price-to-earnings ratio. A near-term pullback is Emmanuel's base case as investors overlook risks associated with ongoing tariff negotiations and the One Big Beautiful Bill posing risks to the bond market. "The asking of 'The Question' shows scant regard for near-term risks. It isn't different this time," Emanuel wrote. Read the original article on Business Insider
Business Insider
12 hours ago
- Business
- Business Insider
'It isn't different this time': Why one strategist sees excessive investor euphoria driving a 15% stock plunge
Investors are optimistic as earnings season kicks off — a little too optimistic, according to Julian Emanuel, Evercore ISI's chief equity strategist. The S&P 500 notched another fresh record high on Monday, and sentiment is skyrocketing as Wall Street banks raise their year-end S&P 500 targets. However, stocks don't just go up: "Every structural bull market since the late 1990's has seen a late stage surge in capital markets activity and a period of intense investor FOMO," Emanuel wrote in a note over the weekend. Evercore is remaining cautious, with Emanuel warning of a 7%-15% correction in the coming months. Evercore's year-end target is 5,600. "FOMO has begun," Emanuel wrote. "Stocks have overdiscounted the potential for continued good news." Emanuel says old-school fund managers who lived through the dot-com bubble are now asking him the four most dangerous words in investing: Is it different this time? The question is a clear signal that FOMO has kicked in as investors become overconfident and play into the cycle of fear and greed. There's a lot of froth in the market: crypto is on a bull run as bitcoin hits all-time highs, zero days to expiration options are becoming popular among retail investors, and investors are counting on the AI story to continue carrying stocks higher. But good vibes aren't reason enough for the stock market to continue rallying. In fact, it's quite the opposite: before the dot-com bubble burst, bulls comprised 75% OF AAII sentiment survey respondents, a level never seen again since. Bullish investors point to strong economic data and an improving tariff backdrop as drivers for the stock market, but those tailwinds are largely already priced in, according to Emanuel. According to an Evercore survey, a majority of institutional investors anticipate tariff rates to come down from present levels of 22% to below 20% by September. They also expect S&P 500 EPS to rise above current levels of $264. With expectations already so elevated, it'll be difficult for economic data to continue surprising to the upside. And while there's much market volatility surrounding the idea of Fed independence and Fed Chairman Jerome Powell 's future, markets are still pricing in that Powell will remain at his position by year-end. "Even if there is good news on the tariff front, it is arguably already in stock prices," Emanuel wrote. "Despite the potential for tariff induced guide-downs and the historical tendency of earnings estimates to fall at this point in the cycle, 67% of investors believe earnings estimates for 2025 will be at or above the current $264 on 9/1," Emanuel added. With a trailing price-to-earnings ratio of 24.7x, the S&P 500 is trading at the top decile of valuations since 1960. Emanuel doesn't see a market crash in the cards, as valuations haven't reached the dot-com bubble's 28x price-to-earnings ratio. A near-term pullback is Emmanuel's base case as investors overlook risks associated with ongoing tariff negotiations and the One Big Beautiful Bill posing risks to the bond market. "The asking of 'The Question' shows scant regard for near-term risks. It isn't different this time," Emanuel wrote.
CNBC
2 days ago
- Business
- CNBC
Top Wall Street analysts are confident about the potential of these 3 stocks
The earnings season is on, and investors are paying attention to how the leading companies are faring. However, tariffs and other challenges remain on the minds of investors. While top Wall Street analysts also watch the quarterly results closely, they generally have a broader focus and assess the company's ability to navigate short-term difficulties and deliver attractive returns over the long term. Here are three stocks favored by the Street's top pros, according to TipRanks, a platform that ranks analysts based on their past performance. First on this week's list is ride-sharing and delivery platform Uber Technologies (UBER). The company is scheduled to announce its second-quarter results on Aug. 6. In a preview note on Uber's Q2 earnings, Evercore analyst Mark Mahaney stated that he expects the company to report a 17% year-over-year growth in gross bookings to $46.8 billion, slightly above the Street's estimate and within the company's guidance. The analyst expects revenue growth of 18%, modestly above the Street's expectations, and EBITDA (earnings before interest, tax, depreciation, and amortization) of $2.09 billion, in line with the consensus estimate. Mahaney's estimates are based on favorable industry checks for consumer demand trends, third-party data checks, and Evercore's non-deal roadshows (NDR) with UBER management. The analyst's expectations are also backed by Evercore's 8th Annual U.S. Ridesharing Survey and insights from its NDR with DoorDash management. Despite the stellar year-to-date rally, Mahaney stated that UBER remains a top pick for Evercore. He attributed the stock's rise to multiple factors, including better-than-expected growth in Mobility and Delivery bookings over the past two quarters and positive key user metrics and the impressive rollout of Waymo in Austin on the Uber network. "Key to our Long Thesis – we believe there will be 'more Austins' – more successful robotaxi partner rollouts for Uber, and not just with Waymo, over the next 12-18 months," said Mahaney and reaffirmed a buy rating on UBER stock with a price forecast of $115. Meanwhile, TipRanks' AI analyst has an "outperform" rating on UBER stock with a price forecast of $108. Mahaney ranks No. 219 among more than 9,800 analysts tracked by TipRanks. His ratings have been profitable 60% of the time, delivering an average return of 15.9%. See Uber Technologies Statistics on TipRanks. We move to Alphabet (GOOGL), the parent company of search engine giant Google. In a Q2 earnings preview of the companies in the internet space, JPMorgan analyst Doug Anmuth reaffirmed a buy rating on GOOGL stock and increased the price forecast to $200 from $195. In comparison, TipRanks' AI analyst has a price target of $199 on GOOGL stock with an "outperform" rating. Anmuth explained that his higher estimates mainly reflect better channel checks and third-party data as well as more favorable forex changes. Anmuth added that his revised price target is based on a multiple of about 20-times his 2026 GAAP earnings per share (EPS) estimate of $9.89. The analyst believes that Alphabet deserves to trade at a premium to the S&P 500, given that it is one of the few companies in this index with a double-digit percent revenue and EPS growth on a very large base. He also highlighted the company's more than 30% GAAP operating income margin. "We believe Alphabet's fundamentals are solid and the company will remain both a driver of and primary beneficiary of an increasingly digital economy & advances in Generative AI," said Anmuth. He highlighted Alphabet's continued focus on innovation. Anmuth sees a healthy runway across Search and YouTube ads, with artificial intelligence (AI) fueling higher return on investment (ROI) and a shift in TV dollars to online channels. Furthermore, he said that Alphabet's non-ad businesses, like Cloud and YouTube subscription services, still have substantial scope to grow. Anmuth also said that the companies within Alphabet's Other Bets division, including Waymo and Verily, provide potential upside. Overall, Anmuth is bullish about Alphabet's ability to innovate around generative AI, control costs and deliver impressive revenue growth. Anmuth ranks No. 56 among more than 9,800 analysts tracked by TipRanks. His ratings have been successful 65% of the time, delivering an average return of 21.6%. See Alphabet Stock News and Insights on TipRanks. Anmuth is also bullish on social media giant Meta Platforms (META) and raised the price target for the stock to $795 from $735 while maintaining a buy rating ahead of the company's Q2 results. In comparison, TipRanks' AI analyst has an "outperform" rating on META stock with a price target of $798. The analyst explained that the upgraded price target is based on about 27-times his 2026 GAAP EPS estimate of $29.53. Anmuth believes that META stock's premium valuation to the S&P 500 is justified, as he has greater confidence in the company's robust top-line growth and ongoing cost efficiencies. "We believe Meta's virtual ownership of the social graph, strong competitive moat, and focus on the user experience position it to become an enduring blue-chip company built for the long term," said Anmuth. The analyst noted Meta Platforms' strength in terms of scale, growth, and profitability, with its extensive reach and engagement continuing to drive network effects. Anmuth also noted the company's targeting abilities that offer huge value to advertisers. Anmuth stated that Meta will invest in the massive growth opportunities offered by the two big tech waves – AI and Metaverse, while also focusing on cost discipline. Despite significant infrastructure investments, the analyst expects Meta Platforms to deliver strong revenue and EPS growth in 2026. He noted Meta's solid track record in delivering returns on higher spending. See Meta Platforms Insider Trading Activity on TipRanks.
Business Insider
5 days ago
- Business
- Business Insider
Evercore Sees Major Revenue Upside for AMD after Trump Lifts China AI Chip Ban
Investment firm Evercore believes that chipmaker Advanced Micro Devices (AMD) could see upside to its 2025 revenue estimates after the company announced it will resume shipments of its MI308X chips to China. Indeed, the U.S. Commerce Department has confirmed that AMD's license applications for these chips are now moving forward for review. Once approved, AMD plans to restart shipments and provide more details during its August 5 earnings call, according to Evercore. 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. Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week. As a result, the firm's analysts, led by five-star-rated Mark Lipacis, anticipate that this will result in a near-term revenue boost of $700 million and a potential $1.5 billion gain in 2025. This is because AMD had previously estimated that export restrictions would lower second-quarter revenue by about $700 million and reduce 2025 revenue by $1.5 billion. It is worth mentioning that Evercore currently expects AMD's GPU revenue for 2025 to be around $6 billion, so restoring access to the Chinese market could be a major help. The analysts also noted that this could improve AMD's profit margins. In April, AMD projected an $800 million write-down due to unsold inventory and supplier agreements, which pushed Q2 gross margin guidance down to 43% from 54%. While it's unclear if the full write-down was booked in Q2, Evercore believes that the MI308X has better margins than AMD's other GPUs. Therefore, if shipments pick up again, it could provide a solid boost to the company's profitability. Is AMD a Buy, Sell, or Hold? Overall, analysts have a Moderate Buy consensus rating on AMD stock based on 25 Buys, 10 Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average AMD price target of $135.97 per share implies 12.6% downside risk.
Business Insider
5 days ago
- Business
- Business Insider
‘Buy the Dip Now,' Says Five-Star Analyst after ASML Stock Sinks
Shares of ASML Holding (ASML) are plunging in today's trading after the semiconductor company released its second-quarter results and gave a cautious outlook. However, Evercore ISI, led by five-star analyst Mark Lipacis, sees this as a buying opportunity. Despite the short-term weakness, Evercore kept its Outperform rating and €803 price target on the firm's European ticker (NL:ASML). Lipacis pointed out that ASML's valuation has already dropped significantly, as its price-to-earnings ratio has compressed by about 35-40% over the past nine months. 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. Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week. As a result, he believes that this decline already reflects negative news, therefore making the current dip a good entry point. He also noted that demand for AI-related chips continues to grow, especially in foundry logic and DRAM, which should help support ASML's long-term growth story. While ASML beat both revenue and earnings expectations for Q2, its forecast for the next quarter came in below what analysts were expecting. Indeed, the company projected Q3 revenue between €7.4 billion and €7.9 billion, which missed market estimates of €8.3 billion. It is also worth noting that Lipacis admitted that ASML's gross margins could decline in the second half of 2025. This is due to how revenue is recognized from its High Numerical Aperture (High NA) technology, as well as a lower mix of high-margin upgrade sales. Still, Evercore believes ASML is on track to hit its 2025 goals and is confident in its long-term potential. Is ASML Stock a Good Buy? Turning to Wall Street, analysts have a Moderate Buy consensus rating on ASML stock based on two Buys, five Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average ASML price target of $877.75 per share implies 17.3% upside potential.
