Your portfolios in brief
Google's parent company, Alphabet Inc. is much more than a conventional company. Founded with the idea of doing big and meaningful things, Alphabet has always sought to innovate and explore new horizons. Since its creation, it has launched revolutionary products such as Google Maps, YouTube, Chrome and Android, each of which now has over a billion users.
- Highlights in 2023
Sales for the quarter: Alphabet reported sales of $76.6 billion for the quarter, with advertising revenues of $59.6 billion.
Segment performance: Alphabet's cloud segment underperformed, but 9% annual growth in advertising revenues indicates a recovery from declines in Q4 2022 and Q1 2023.
Adjusted earnings forecasts: Alphabet maintained solid earnings forecasts despite an uncertain economic environment.
Performance versus Wall Street expectations: despite excellent results, the stock has seen a decline since filing its quarterly results due to concerns about competition in the AI and cloud sector.
- Gemini launch
Alphabet has launched Gemini, an advanced artificial intelligence (AI) model designed to rival OpenAI and Microsoft. Gemini is a multimedia model with sophisticated reasoning and advanced coding capabilities. It is the first AI model to outperform human experts in industry-standard tests such as the MMLU, which assesses reasoning abilities in various fields.
Gemini can analyze and interpret multimedia data (text, audio, video, images and code) and justify its reasoning. For example, it can identify objects, play music and answer complex questions.
Google is rolling out three versions of Gemini: Gemini Ultra for complex tasks, Gemini Pro for intermediate applications, and Gemini Nano for mobile devices like the Pixel 8 Pro. Gemini Pro has already been integrated into the Bard chatbot, enhancing its comprehension, summarizing, reasoning, coding and planning capabilities.
Google is already experimenting with Gemini in Search via its Search Generative Experience, reducing latency by 40% in the English version of the application in the US. Gemini will also be integrated into Search, Chrome, Ads and Duet AI over the coming months.
- Why is this a stock to watch?
With the launch of Gemini, Alphabet positions itself at the forefront of generative AI, a rapidly expanding field. This technological breakthrough strengthens Alphabet's position as an innovation leader and opens up new prospects for the company in a variety of fields, from digital advertising to more complex applications requiring multimodal understanding. Its shares have recorded gains of 55% since the start of the year, and closed Thursday's trading session up 5%.
- Conclusion
At Pratte Portfolio Management, we firmly believe in Alphabet's potential. Holding this stock in our portfolio has been a wise decision, and we look forward to seeing what the future holds for this innovative company, particularly with the development and integration of Gemini into its products and services. Experts consider Alphabet to be a resilient and innovative company, capable of adapting to market changes. Its dominant position and capacity for innovation make it a solid choice for investors.
Markets in brief
Monday
-Wall Street down, impacted by the technology sector
Dow Jones: The index edged down 0.11%, closing at 36,204.44 points.
NASDAQ: The index was down 0.84%, closing at 14,185.49 points.
S&P 500: The index fell by 0.54%, closing at 4569.78 points.
Wall Street closed lower, mainly due to a slowdown in the technology sector. This comes after a robust November and just before the release of US employment figures. Technology stocks were particularly hard hit, with notable declines for Nvidia, Microsoft and Meta. This trend marks a setback after a period of strong market growth. The S&P 500 reached its highest close since March 2022, with annual gains of almost 20%. The Dow Jones and NASDAQ also posted solid performances in 2023.
This consolidation phase reflects a reassessment of investors' expectations, particularly concerning the Federal Reserve's monetary policy. Despite Jerome Powell's attempts to moderate rate cut expectations, markets remain optimistic about a possible interest rate cut next year.
-Stockss in brief
Meta (Facebook) (-1.48%): Mark Zuckerberg sold $185 million worth of shares in November, the first time since 2021.
Nvidia (-2.68%): Semiconductor stocks suffered in the wake of statements by the US Secretary of Commerce advocating tighter controls on chip exports to China.
Uber (+2.28%): The stock benefited from its inclusion in the S&P 500 index.
Spotify (+7.44%): The platform was praised for its decision to reduce its workforce by 17%.
Alaska Air (-14.25%): The airline saw its share price fall after announcing its intention to buy Hawaiian Airlines.
Hawaiian Airlines (+192.59% to $14.22): The stock climbed on the back of Alaska Air's takeover bid.
Coinbase (+5.48%): The cryptoasset exchange platform was boosted by the rise of bitcoin.
Uber (+2.28% to $58.65): The stock benefited from its inclusion in the S&P 500 index.
Spotify (+7.44%): The downsizing was well received by the market.
Tuesday
-Wall Street: Balance and expectation
Dow Jones: The index edged back 0.22% to close at 36,124.56 points.
NASDAQ: The index gained 0.31% to close at 14,229.91 points.
S&P 500: The broad index stagnated, losing 0.06% to close at 4,567.18 points.
The New York Stock Exchange ended the session on a mixed note, hovering close to equilibrium. The JOLTS U.S. job vacancy survey revealed a sharp drop in job vacancies in October, far more than analysts expected, with a total of 8.7 million compared with 9.4 million in September. This decline, the largest in over two years, indicates that the Fed's monetary policy is beginning to cool the job market. This slowdown in the labor market is positive for monetary policy and the Fed's fight against inflation, and has helped to steer rates in a favorable direction. A drop in bond yields was seen on Tuesday, with a notable fall to 4.17%, marking the lowest since early September.
-Stockss in brief
Apple (+2.11%), Amazon (+1.41%) and Alphabet (+1.35%): The technology megacap benefited from the fall in rates, with a notable rise in their shares.
CVS Health (+3.71%): The pharmacy chain's shares climbed after it announced an upward revision of its sales forecasts for 2024 and an increase in its quarterly dividend.
Take-Two Interactive (-0.51%): The video game publisher saw its share price drop slightly following the release of a trailer for the next "Grand Theft Auto".
AT&T (+3.36%): The stock surged after the announcement of a major contract with Ericsson for the deployment of 5G technology in the United States.
American Express (-1.48%): The company suffered a setback after reporting a slowdown in consumer purchases in October.
Pfizer (-0.65%): The stock fell slightly following the withdrawal from clinical trials of a new anti-obesity drug.
Wells Fargo (-1.40%): The bank announced a significant increase in severance costs, negatively impacting its share price.
-Falling oil prices
The global oil market is currently experiencing a period of significant price declines. West Texas Intermediate (WTI), a key US oil barometer, fell to its lowest level in five months, closing at $72.32 a barrel. This downward trend was also seen in the price of North Sea Brent crude, which fell to $77.20 a barrel.
This fall in prices is attributed to several key factors. On the one hand, there is growing uncertainty about the effectiveness of OPEC+ commitments, particularly with regard to pledges of production cuts. Markets are expressing doubts about the effective implementation of these cuts, especially by countries such as Iraq and the United Arab Emirates, which have historically produced in excess of their quotas.
In addition, the USA is playing an increasingly important role in the global oil market, with production reaching record levels and exports approaching six million barrels per day. This abundant supply of US oil, combined with additional contributions from countries such as Brazil and Guyana, is contributing to a supply glut on the world market.
Wednesday
-Down session
The session began on a positive note, boosted by encouraging news of falling employment costs in the USA. However, this initial trend reversed, leading to a bearish close. This reflects growing concerns about an excessive slowdown in the economy.
Dow Jones: The index edged down 0.19%, closing at 36,054.43 points.
NASDAQ: This technology-dominated index fell by 0.58%, ending the day at 14,146.71 points.
S&P 500: The broad index fell by 0.39%, closing at 4549.34 points.
On the bond market, yields on US Treasuries continued to fall, moving away from the peaks reached at the end of October.
The yield on the 10-year Treasury note fell to 4.17%, from 4.26% late on Monday, giving equities and other markets a little more room to maneuver. It had exceeded 5% and reached its highest level in over a decade in October.
The yield on the 2-year Treasury note, which more closely tracks expectations of the Federal Reserve, fluctuated following the economic reports. It rose from 4.61% just before the release of the reports to 4.57%, then fluctuated before stabilizing at 4.55%.
-Energy Sector
The sharp fall in oil prices had a significant impact on the market. The price of a barrel of West Texas Intermediate (WTI) closed below $70, the first time this has happened in five months. Energy stocks followed this trend, with notable declines for ExxonMobil (-1.26%) and ConocoPhillips (-2.25%).
-Titles in brief
Shopify (-4.79%): The e-commerce platform fell after an investor information day.
Citigroup (+2.48%): Share price rises following CFO's announcement of group reorganization.
Semiconductor sector: Declines were observed at Nvidia (-2.28%), Intel (-1.55%) and AMD (-1.32%).
Robinhood (+7%): Boosted by the strong performance of cryptocurrencies, particularly bitcoin.
-Summary of the Bank of Canada's key interest rate decision
The Bank of Canada has announced that it will maintain its key rate at 5%, a decision in line with market expectations. This decision reflects the central bank's strategy of seeing inflation continue to fall on a sustainable basis before considering a change in monetary policy. Despite the fall in the inflation rate, the Bank of Canada remains vigilant and does not rule out the possibility of raising the key rate again if necessary.
Current interest rates are the highest in 20 years, and the central bank is maintaining a firm stance in its fight against inflation. Although many economists were expecting the Bank of Canada to signal an end to the rate hike, the bank chose to maintain its message of caution. The slowdown in the Canadian economy, marked by a slight rise in the unemployment rate and high interest rates holding back spending, makes a further increase in the key rate unlikely. The Bank of Canada continues to monitor wage growth, which is holding steady at between 4% and 5%, and is seeing less pressure on prices. The next rate decision is scheduled for January 24, accompanied by an update of the Bank of Canada's economic forecasts.
Thursday
-Wall Street on the rise
The New York Stock Exchange ended higher, supported by a technical rebound and positive momentum in technology stocks, ahead of a much-anticipated jobs report.
Dow Jones: The index closed up 0.17% at 36,117.38 points.
NASDAQ: The index gained 1.37%, closing at 14,339.99 points.
S&P 500: The broad index gained 0.80%, closing at 4,585.59 points.
-Technology sector
The technology sector was a key growth driver, with AMD (+9.89%) capitalizing on the presentation of its new MI300 chip, while other big names such as Intel (+2.13%), Qualcomm (+2.29%) and Nvidia (+2.40%) also benefited.
Alphabet (+5.34%) continued to benefit from the launch of its new AI platform, Gemini, considered a significant innovation and a serious competitor to OpenAI. Other stocks such as Meta (+2.88%), Amazon (+1.63%), and Apple (+1.01%), which closed above the $3,000 billion capitalization threshold, also enjoyed a good session.
- Stockss in brief
C3.ai (-10.77%): The AI software publisher posted a decline after weaker-than-expected quarterly sales.
Nikola (-23.39%): The electric truck manufacturer fell on the announcement of a capital increase and convertible bond issue.
Gamestop (+10.24%): The video game store chain saw its share price climb after limiting its quarterly losses.
JetBlue Airways (+15.2%): The company announced that it could report better-than-expected results for the last three months of the year. The company also slightly reduced its maximum fuel cost forecast for year-end 2023.
Friday
- Indices down after jobs report
Stock markets posted a mixed performance at the open, as investors assessed a stronger-than-expected U.S. jobs report, driving yields higher. Here's a look at the performance of the main indices:
Dow Jones: The DJIA index rose slightly, adding 26 points.
NASDAQ: The NASDAQ index fell slightly, down 0.1%.
S&P 500: The S&P 500 index was virtually unchanged, reflecting investors' cautious stance.
The jobs report showed an unexpected drop in the unemployment rate to 3.7% in November, from 3.9% the previous month, with 199,000 jobs added, slightly above expectations. This strength in the labor market has raised concerns that inflation may not cool sufficiently for the Federal Reserve to start reducing its high interest rate policy.
