| Written by Jea Yu 
President Trump announced his plan for a federal agency called the “External Revenue Service” to handle the collection of tariffs and fees from other nations. Trump had previously stated he would charge a universal tariff of 10% to 25% to all nations and up to 60% for China on exports. The agency would eventually replace the Internal Revenue Service as the federal government would be funded through tariffs, not from its citizens. The plan would need to be approved by Congress, but the Republicans already control the House and Senate. If the plan were to come to fruition, it would result in a surge in consumer spending and saving as taxpayers would get to keep up to 37% of their income that would have gone to the IRS. Here are three stocks that would benefit if the External Revenue Service (ERS) became a reality. Charles Schwab: A Savings, Investing, and Trading Benefactor The pandemic-driven stimulus checks illustrated how consumer spending, investing, and saving activity would bump up if citizens were given a piece of their tax money back. The financial service sector would be a prime benefactor with all the excess money returning to taxpayers. Charles Schwab Co. (NYSE: SCHW) is the largest retail broker in the United States, with $9.92 trillion in assets under management (AUM). They would bolster their bottom line with a surge in wealth management fees, trading volumes, and net interest income. Schwab generates the most net interest income among the retail brokers. In its third quarter of 2024, Schwab was already recording record year-to-date (YTD) flows into Schwab Wealth Advisory, up 65% year-over-year (YoY). Around 35% of that came from converting over retail Ameritrade customers. Net assets gathering grew by 10% to $95 billion. Schwab generated $2.2 billion in net interest revenue in the quarter. The creation of an ERS would skyrocket these figures. Target: Consumer Discretionary Spending Benefactor The formation of an ERS agency would benefit both the consumer staples and consumer discretionary sectors thanks to the surge in disposable income for most Americans. Target Co. (NYSE: TGT) is a big box department store that offers both staples like groceries and discretionary items like video games, TVs, apparel, and jewelry. It was the exposure to discretionary items that hurt its bottom line in its third quarter 2024 earnings report, sending shares lower by 22% the following morning. While Walmart Inc. (NYSE: WMT) has less exposure to discretionary items, it is also the nation's largest importer and would have to deal with the impact of export tariffs (squeezing margins) that the same ERS agency would be in charge of collecting. Tapestry: Fashion Apparel and Accessories Benefactor With a surplus of discretionary spending funds, consumers often gravitate to spending on luxury designer items like purses, handbags, and footwear. Tapestry Inc. (NYSE: TPR) operates luxury brands Coach, Kate Spade and Stuart Weitzman. Its $8.5 billion acquisition attempt for Capri Holdings Ltd. (NYSE: CPRI) was squashed by the U.S. Federal Trade Commission (FTC) over antitrust concerns. The deal would have created a fashion powerhouse, and Tapestry would have added additional luxury brands, such as Jimmy Choo, Versace, and Michael Kors, to its portfolio. Tapestry decided to move on. Putting the Past Behind and Moving Onward and Upward Shareholders expressed a huge sigh of relief when Tapestry announced the termination of its merger attempt on Nov 14, 2024, especially when CPRI was trading 64% below its original $57 per share buyout price. Tapestry didn’t lose much stride as the company reported fiscal Q1 2025 EPS of 84 cents, missing consensus estimates by 9 cents, and revenue fell 0.4% YoY to $1.51 billion, still beating $1.47 billion consensus estimates. Tapestry also raised its fiscal full-year guidance 2025 EPS guidance of $4.50 to $4.55, up from the $4.45 to $4.50 previous guidance versus $4.45 consensus estimates. FY 2025 revenues are expected to come in at over $6.75 billion, up from its previous estimate of $6.7 billion versus $6.71 billion consensus estimates. Tapestry announced a $2 billion stock buyback program to underscore its commitment to its shareholders. Unfortunately, Capri Holdings shareholders were not so lucky as the company was much worse for wear, reporting an 8-cent EPS miss, a 16.4% YoY revenue drop, and no further guidance.  Read This Story Online | |
| Written by Chris Markoch 
Analyst ratings can have a significant impact on stock price performance. That might be the reason that shares of Advanced Micro Devices Inc. (NASDAQ: AMD) are up 4.2% in the week ending January 17, 2025. In this case, it was Loop Capital that initiated coverage on AMD stock with a Buy rating and a $175 price target. Loop Capital is only one analyst firm that is bullish on AMD stock. The Advanced Micro Devices analyst forecasts on MarketBeat give the stock a $178.61 price target which is 49% higher than its price on January 17. That's why it’s helpful to understand why analysts give a stock a particular rating. In this case, Loop believes that AMD stock, which is still down 24.4% in the last 12 months even after the recent rally, doesn’t accurately reflect “some degree of success in accelerated computing...and idiosyncratic market share expansion opportunities in general-purpose compute within PC and general server markets.” That has to be music to the ears of AMD shareholders who got walloped last year despite the company posting higher year-over-year revenue and earnings. However, it seems that analysts like Loop Capital may be coming around to the opportunity that exists in AMD stock. MI300X: The Reason AMD Is Playing the Long Game Among technology stocks, the chip market is frequently a "what have you done for me lately" sector, and AMD’s slow and steady performance hasn’t been enough to excite investors. In fact, despite announcing a substantial list of products the company will release in 2025, AMD stock dropped as investors continued to be narrowly focused on the GPU market when it comes to chip stocks. However, that’s where the bullish case for AMD emerges. The company is launching its MI300X graphic processing units (GPUs) in Q1 2025. The company didn’t provide many details about the GPUs at the Consumer Electronics Show (CES) in January. That’s a little odd because this is where the company stands to be most likely to capture market share from NVIDIA Corp. (NASDAQ: NVDA). To begin with, AMD will have GPUs to deliver at a time when enterprises are looking for alternatives to NVIDIA. And with NVIDIA’s Blackwell units sold out, there’s an opportunity for another company to get its foot in the door. Driving Revenue and Earnings Growth Before considering an investment in AMD stock, you’ll want to consider why the MI300X series is so important to the company. The MI300X features unmatched memory and bandwidth and is designed to handle AI inference workloads. To answer the next question many investors will have, AI inference is what happens when an AI model starts recognizing patterns in data that it hasn’t seen before. This allows the model to reason and make predictive analysis similar to human abilities. Now, consider that the growing demand for AI training and inference is expected to be the biggest reason for believing that AI workloads will grow at a compound annual growth rate (CAGR) through 2027. And what’s the opportunity for Advanced Micro Devices? The AI market is expected to grow from $780 billion to $990 billion by 2027. So Advanced Micro Devices only needs to capture a small market share to possibly double its current annual data center revenue, which could add close to 50% to the company’s annual topline. Getting Involved With AMD Stock With that as a backdrop, you can start to understand why Advanced Micro Devices may be undervalued relative to the opportunity in front of it. That means this may be the ideal time to begin averaging into a position to ensure you can catch a strong move to the upside after the report. The technical outlook is favorable for traders. AMD stock is trading at a discount to its 50-day moving average and is close to its 52-week low. Plus, the Relative Strength Indicator (RSI) is around 40, which puts the stock near the oversold range. The company reports earnings on February 4, and options traders are relatively bullish. The Options Chain on AMD stock for February 7 shows the highest volume of Call options being made with AMC stock at a price of $130. That price would push it close to an inflection point with its 50-day SMA. Read This Story Online | Did you miss out on the 1000%+ gains of Bitcoin over the past 5 years?
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| Written by Leo Miller 
Qualcomm (NASDAQ: QCOM) is one of the leaders in the semiconductor space whose stock might just be ready to take off in 2025. In 2024, shares were having an incredible year, rising 57% by mid-June. However, by the time early Aug. rolled around, shares had plummeted, losing over 30% of their value from the peak. Detrimental developments surfaced, crushing the optimism that many had. The shares recovered slightly from September to October but ended the year lower than their August low. Now that the company has resolved key issues and/or mitigated them. A new bullish cycle may await the stock. This has somewhat already started to materialize. As of noon Eastern time trading on Jan. 17, Qualcomm shares are up over 7% yearly. Additionally, based on new analysts' ratings tracked by MarketBeat, Wall Street sees a solid upside in shares. The average of two price targets released in January from Barclays and Mizuho implies a 21% upside. Below, I’ll detail the developments that put a dark cloud over Qualcomm in the second half of 2024 and show how they played out. I’ll also describe new developments around the firm that could be growth drivers in the new year. Qualcomm’s Apple Problem and Efforts to Mitigate One of the issues surrounding Qualcomm for years now has been its relationship with key customer Apple (NASDAQ: APPL). For a long time, Qualcomm has been supplying the 5G modems that Apple puts into its immensely popular iPhone devices. These modems are essentially the chips that allow Apple devices to connect to 5G networks. For at least "half a decade," Apple has been, according to Bloomberg tech analyst Mark Gurman, building its own 5G modem. In 2023, Qualcomm renewed its deal to supply the iPhone until 2027. But, in mid-2024, rumors spread that Apple would use its own modems sooner. Those rumors appeared to be true, as the company will be putting its own modem into its lower-end iPhone SE in 2025. By 2027, Apple expects to fully phase out Qualcomm modems. Still, Qualcomm has known this was an essential inevitability for a long time. It has been diversifying its business significantly due to this. The company’s automotive and Internet of Things (IoT) businesses now exceed the size of its business with Apple. Last year, it generated around $2.6 billion in revenue, while its Apple revenue was approximately in the lower $2 billion range. Additionally, Qualcomm expects the automotive and IoT businesses to grow much faster. In Q1 2025, the company expects a "mid-single-digit" increase in handset revenue from last year's quarter. However, it expects IoT revenues to grow by more than 20% and automotive revenues to increase by 50%. For the next several years, the company sees combined growth in these segments exceeding 20% annually. ARM Dispute Win, AI-PCs Can Provide Growth Another issue hanging over the firm was its litigation with ARM (NASDAQ: ARM). In December, a jury found that Qualcomm's AI-PC chips were properly licensed with Arm. This gives the company the go-ahead to keep selling the components and grow its PC business, a central pillar of its IoT growth strategy. Arm says it will pursue further litigation, but this remains a win for Qualcomm. Still, Qualcomm’s AI-PCs have other issues and news surrounding them. In 2024, reports indicated that many applications were incompatible with the chips. This includes popular games like Fortnite and League of Legends. Overall, industry analysts note that other laptops have superior gaming performance. However, Qualcomm also recently announced that its latest chips will power AI-enabled laptops for $600. This lower price could boost PC sales. The company aims to capture billions in revenue from this market over the next few years. Also, Qualcomm's poor laptop gaming abilities may not matter to many customers. Data from 2023 shows that gamers massively prefer playing on desktop computers to laptops. Only 13% of gamers are likely to be playing on laptops. This suggests that Qualcomm's laptop gaming issues might not push many customers away. Qualcomm Set for a Big 2025? Overall, with several issues largely behind them or mitigated, Qualcomm shares could be ready to take off in 2025. The issues with its laptops may be overblown, meaning they could overperform expectations. The company's automotive and IoT growth drivers show promise. They soften the blow of the Apple relationship wind-down. Additionally, the company has a nice added bonus in being a chip stock that provides a solid dividend yield of 2%. Read This Story Online | |
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