Last week, Fed Chair Jerome Powell pointed to tough inflation and put a “double-sized” rate hike on the table for May. The markets turned tail and ran, and, for the most part, haven’t looked back; the tech-centric NASDAQ Composite is off more than 10% for the month and the S&P 500 is off 7%. We’re doing much better right now, though. Biomarin Pharmaceuticals Inc. (BMRN), for instance, is up nearly 6% since Michael recommended it, and his recent defense tech picks like Lockheed Martin Corp. (LMT) are up virtually across the board.
Earnings to Watch
Tesla Inc. (TSLA) crushed earnings last week, despite the worldwide chip shortage, with revenue up 81%. On the complete opposite end of the spectrum, Netflix Inc (NFLX) stock fell off a cliff – down nearly 40% – as it reported losing 200,000 subscribers for the first time ever and dropped in value. This week’s earnings could be a mixed bag, too. Microsoft Corp (MSFT) and Alphabet Inc. (GOOG) announce earnings tomorrow, April 26 and then Amazon.com Inc. (AMZN) and Apple Inc. (APPL) follow up on Thursday. Analysts aren’t expecting much in the way of “Wow!” in any of these tech mega-caps, and any selling by the crowd should be seen as a buying opportunity. In markets like this, when the chips are stacked against big tech firms, it pays to remember this tech investing strategy – and put it to work.
Strategic Tech Updates
The Russia-Ukraine War Is Increasing Global Defense Budgets
The United States alone has pledged $3 billion in military assistance to help Ukraine in the war against Russia; NATO and allied countries’ assistance will bring that figure even higher. At the same time, these countries are boosting their defense spending at levels we haven’t seen since the Cold War – even Germany is pledging to bring its military spending up to 2% of GDP in short order. All told, the United States and other world powers are looking to spend more than $1 trillion, and it seems at least $845 billion of that will go to companies here.
The EV Battery Shortage Could Be More Pronounced than the Chip Shortage
Rivian Automotive Inc. (RIVN) CEO RJ Scaringe warned that supplies for batteries for electric vehicles could be tighter, or worse, than the microchip supply – that’s still catching up to pre-COVID levels. Companies such as BMW, Ford Motor Co. (F), and General Motors Co. (GM) have slashed vehicle production because of a shortage of chips, and ambitious plans for a transition to electric vehicles hang in the balance now, too. Ultimately, though, Michael expects the EV revolution will be an unstoppable trend, and this is one of his favorite ways to play it.
Coinbase Launched its NFT Platform
Last Wednesday, Coinbase Global Inc. (COIN) opened up its non-fungible token (NFT) marketplace to early subscribers. STI team members were impressed by the ease to sign up and connect the NFT platform to existing Coinbase accounts. The NFT market is still in early innings, but there’s no denying its popularity; it’s expected to top $147 billion by 2026. The NFT Marketplace will ultimately be a profit catalyst for Coinbase, and a potentially irresistible “on-ramp” to the Metaverse. Before that happens, check out some more Metaverse stocks here.
Cheers and good investing,
The Strategic Technology Investor Team