Tag: Motley Fool

The S&P/ASX 200 Index (ASX: XJO) is having a rough session on Thursday. In afternoon trade, the benchmark index is down 1.3% to 7,580.2 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Block Inc (ASX: SQ2)

The Block share price is down 3% to $99.93. This follows a broad selloff in the tech sector overnight on Wall Street which impacted the payments company’s US listed shares. Investors were hitting the sell button after the US Federal Reserve suggested that rate cuts will still some way off.

Resolute Mining Ltd (ASX: RSG)

The Resolute Mining share price is down 6% to 40.25 cents. This follows the release of the gold miner’s fourth quarter update after the market close on Wednesday. Investors appear disappointed that its full-year production dropped year on year to 330,994 ounces from 353,069 ounces. Nevertheless, a stronger gold price meant that full year EBITDA came in 11.5% higher year on year at $165 million.

Sayona Mining Ltd (ASX: SYA)

The Sayona Mining share price is down a further 7.5% to 3.7 cents. Investors have been selling this lithium miner’s shares following the release of its quarterly update this week. That update revealed that its unit operating cost increased to A$1,397 per tonne, which is significantly more than its realised selling price of A$946 per tonne. As this is clearly unsustainable, the market appears to believe a production suspension is inevitable. There may also be questions over the availability of its $200 million lending facility given the current environment.

Syrah Resources Ltd (ASX: SYR)

The Syrah share price is down 11% to 37.5 cents. This is despite UBS retaining its buy rating on the graphite producer’s shares with a lofty price target of $1.00. It was reasonably pleased with the company’s quarterly update. Especially given the tough environment it is operating in at present.

The post Why Block, Resolute Mining, Sayona Mining, and Syrah shares are sinking today appeared first on The Motley Fool Australia.

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More reading

• Sayona Mining share price crashes 12% as weak lithium prices start to bite
• Why Credit Corp, Incitec Pivot, Sayona Mining, and Weebit Nano shares are dropping
• Here are the top 10 ASX 200 shares today
• These are the 10 most shorted ASX shares
• Are ASX growth shares back? How these fundies delivered over 20% upside in 2023

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block. The Motley Fool Australia has positions in and has recommended Block. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) is on course to end its winning streak on Thursday with a sizeable decline. In afternoon trade, the benchmark index is down 1.25% to 7,583.6 points.

Four ASX shares that are not letting that hold them back today are listed below. Here’s why they are rising:

Credit Corp Group Limited (ASX: CCP)

The Credit Corp share price is up 7% to $18.42. This may have been driven by a broker note out of Morgans this morning. While Credit Corp’s half year results missed expectations, the broker remains very positive on the future. As a result, it has retained its add rating and lifted its price target on the debt collector’s shares to $20.60.

Playside Studios Ltd (ASX: PLY)

The Playside Studios share price is up a further 4% to 75.5 cents. Investors have been buying this game developer’s shares this week after it delivered a record quarterly result. Playside posted record quarterly revenue of $20.7 million and positive unaudited EBITDA of $8 million. The latter was close to double what was recorded in the previous quarter.

QBE Insurance Group Ltd (ASX: QBE)

The QBE share price is up 1% to $16.00. This morning, Goldman Sachs reiterated its buy rating and $18.52 price target on the insurance giant’s shares. This was in response to the release of a strong update from one of its global peers.

Skycity Entertainment Group Ltd (ASX: SKC)

The Skycity share price is up 3.5% to $1.83. Investors have been buying this casino and resorts operator’s shares after it released an update on its AUSTRAC proceedings. That update reveals that the two parties have come to an agreement. This will see Skycity hit with a civil penalty and legal costs totalling an estimated A$73 million.

The post Why Credit Corp, Playside, QBE, and Skycity shares are pushing higher today appeared first on The Motley Fool Australia.

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More reading

• What could happen to Telstra shares if interest rates fall?
• Why Bubs, Champion Iron, Playside Studios, and Select Harvests shares are charging higher
• Why Credit Corp, Incitec Pivot, Sayona Mining, and Weebit Nano shares are dropping
• Morgans names the ASX cyclical shares to buy for earnings season
• Brokers say these ASX 200 dividend shares are buys

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Wesfarmers Ltd (ASX: WES) share price has climbed impressively over the last six months, rising by 15%. The S&P/ASX 200 Index (ASX: XJO) has only gone up by 2% over that same time period.

A 15% rise is nowhere near as much of a gain as plenty of other businesses. For example, the JB Hi-Fi Limited (ASX: JBH) share price is up 22% and the Fortescue Ltd (ASX: FMG) share price has gone up 35%.  

Would it be crazy to invest now?

Wesfarmers is one of the best businesses on the ASX, in my eyes. It operates a number of leading businesses like Bunnings, Kmart and Officeworks.

I don’t think it would be a stretch to invest today. The forecast on Commsec puts the Wesfarmers share price at 24 times FY25’s estimated earnings. With the underlying quality of Wesfarmers, this doesn’t seem like an expensive valuation.

The company has done a wonderful job of growing over the long term. It has directed capital towards its strong businesses and moved away from areas it doesn’t think will deliver for shareholders over the long term.

Its move into healthcare is just the kind of thing I’d expect from Wesfarmers because of the long-term growth potential, an ageing population and the digitalisation of healthcare tailwinds. Healthcare is a huge industry, so it makes a lot of sense for Wesfarmers to create a new platform for growth here.

Population growth and the prospect of lowering interest rates are exciting for the potential of earnings growth and Wesfarmers share price growth over the next two or three years.

At the AGM, Wesfarmers indicated that the value offering of Kmart and Bunnings was resonating with customers. This bodes well if there’s an extended period of economic challenges for some households.

Don’t go all in

Investors seem to have become exuberant that inflation is reducing, but there haven’t actually been any interest rate cuts yet.

Sometimes the market can get ahead of itself and then adjust after that.

It’s not as though companies are suddenly being expected to make a lot more profit than they were before. Thus, this rally seems to be based on sentiment about interest rates. In fact, the US Federal Reserve boss has told investors not to expect cuts too early.

There’s no rush to invest. If the last four years have shown us anything, it’s that volatility usually isn’t that far away. We don’t need to FOMO invest in any particular ASX share, including Wesfarmers shares.

Over the long-term, I think Wesfarmers shares can keep rising, but there may be times when it falls below today’s price.

Even so, I’d be comfortable buying a parcel of shares today and buying more in the future at a price I like.

The post Would I be crazy to buy Wesfarmers shares at $58? appeared first on The Motley Fool Australia.

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More reading

• Beginner investors: 5 top Aussie stocks I’d buy for 2024
• Where I’d invest $2,000 in ASX 20 shares today
• Why I prefer buying ASX shares over bonds
• Top brokers name 3 ASX shares to buy next week
• Why this broker just upgraded Wesfarmers shares to a buy rating

Motley Fool contributor Tristan Harrison has positions in Fortescue. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Jb Hi-Fi. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Bapcor Ltd (ASX: BAP) share price is marching higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) auto parts company closed yesterday trading for $5.64. In earlier trade, shares were swapping hands for $5.95 apiece, up 5.5%.

The Bapcor share price has since retraced to $5.73, leaving the stock up 1.6% at time of writing.

That’s a good bit better than the 1% losses posted by the ASX 200 at this same time.

The benchmark index is following US markets lower after Fed chair Jerome Powell dashed investor hopes of a March interest rate cut from the central bank. (See the full story here.)

Here’s why the Bapcor share price looks to be shaking off those macro concerns today.

What did the ASX 200 auto parts company announce?

Investors are bidding up the Bapcor share price after the company announced the appointment of a new CEO and managing director.

Current CEO and managing director, Noel Meehan, will exit his position at the end of this week. Meehan, Bapcor’s CEO since December 2021, was said to be leaving for personal and family reasons.

Paul Dumbrell will take over the reins as CEO and managing director on 1 May.

Meehan will stay on during the transitional period to provide strategic support and facilitate an orderly leadership transition.

Bapcor non-executive director Mark Bernhard, who has more than 30 years of experience in the automotive industry in senior executive roles, will step in as interim CEO and managing director.

ASX 200 investors could be bidding up the Bapcor share price on news that sales at Total Tools almost doubled during the five years that Dumbrell served as the company’s CEO.

Commenting on his appointment to the top job, Dumbrell said:

After leaving Total Tools I had planned to take an extended break, but the opportunity to work alongside the Bapcor team is an exciting opportunity and I am very much looking forward to working with the leadership team and board to drive shareholder value.

I have a long history with Bapcor, and I look forward to seeing the full potential of the broader group realised into the future alongside the exceptional teams within the business.

Current chair, Margie Haseltine also said she would not seek re-election to the board at the 2024 AGM.

“We are focused on ensuring that Bapcor has the right executive team to drive profitable growth and the right board to give strategic oversight to the company,” she said.

Bapcor share price snapshot

After a big slide in October, the Bapcor share price remains down 11% over the past 12 months.

Shares in the ASX 200 auto parts company are up 8% since 24 January.

The post Why is the Bapcor share price racing ahead of the ASX 200 on Thursday? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Here’s why the Bapcor share price is popping 6% today
• Why Bapcor, Domino’s, Santana Minerals, and Woodside shares are charging higher
• Here are the top 10 ASX 200 shares today
• 3 ASX 200 value stocks I’d buy for my portfolio today!

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Bapcor. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX growth shares could be the best way to invest to produce market-beating returns. Businesses that are compounding at a strong rate can lead to good wealth creation because of how they can grow to larger and larger financial numbers.

Australia is a great country to live in and do business in. But it’s the investments that give us exposure to international growth that can do particularly well over time because the US and other countries have much bigger populations and economies than Australia.

With that in mind, below are three ASX growth shares I really like, which is why I’m invested in two of them. If I had $7,000 to invest today, I’d happily split it between these three names.

Lovisa Holdings Ltd (ASX: LOV)

Lovisa is a leading retailer of affordable jewellery with a network of stores around the world.

The business is opening stores across the world at a very fast pace, rapidly diversifying away from Australia. In FY23, the business grew its store network by 27%, or 172 stores, to 801 which included an extra 72 stores in the US to reach 190 stores.

Lovisa earns good margins at each of its stores, and it’s quite cheap for the business to open new stores. Despite the cost of opening all of those new stores and entering new countries, the business was able to grow FY23 net profit after tax (NPAT) by 20.1% (on a 52-week basis) to $68 million.

It has recently entered markets like Mexico, Canada, Hong Kong, China, Spain and Vietnam. Added to other markets like Germany, the UK and the US, Lovisa still has plenty of growth potential ahead. I think it can double its store count over the next five years.

According to the projection on Commsec, the Lovisa share price is valued at 20 times FY26’s estimated earnings.

Johns Lyng Group Ltd (ASX: JLG)

Johns Lyng is another one of my favourite S&P/ASX 200 Index (ASX: XJO) growth shares because it’s growing in a variety of different ways.

Its core offering is rebuilding and restoring buildings and contents after an insured event, including flooding, storms, fire and so on. The company’s main markets are Australia and the US.

The business is rapidly growing its earnings and capabilities in addressing catastrophes. In FY23, catastrophe revenue rose 125.3% to $371.3 million, helping total revenue grow 43.2% to $1.28 billion.

Johns Lyng is growing additional sources of earnings, which are defensive and recurring. It is acquiring body corp/strata service providers, as well as electrical, fire and compliance, testing and maintenance businesses (including Smoke Alarms Australia and Linkfire).

Its growing scale is delivering operating leverage, meaning profit is growing faster than revenue.

The US is a huge potential growth market, and it’s looking at expanding to other markets. It recently entered New Zealand and management has indicated there could be further geographic growth down the track.

According to Commsec, the ASX growth share is valued at 29 times FY24’s estimated earnings.

Vaneck Morningstar Wide Moat ETF (ASX: MOAT)

The exchange-traded fund (ETF) is one of the most exciting ETFs in my mind.

It invests in (US) shares that, in Morningstar’s eyes, have strong competitive advantages that are expected to almost certainly endure for the next decade and more likely than not for two decades. In other words, these businesses need to have long-term economic moats that are hard for competitors to challenge.

The ETF only invests in these businesses when they’re at a good price, compared to what Morningstar thinks they’re worth.

That investment strategy has seen the MOAT ETF deliver net investment returns in the teens over the long term, though this isn’t guaranteed to continue.  

The post The ultimate ASX growth shares I’d buy with $7,000 right now appeared first on The Motley Fool Australia.

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More reading

• Buy and hold these ASX dividend stocks for a decade
• ASX passive income seekers: Invest $10,000 for $520 in monthly income
• Buying ASX retail shares? You’ll want to see these numbers
• 3 excellent ASX ETFs to buy and hold in February
• Why I think Lovisa stock is an amazing ASX 200 buy for both dividends and growth

Motley Fool contributor Tristan Harrison has positions in Johns Lyng Group and Lovisa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Johns Lyng Group and Lovisa. The Motley Fool Australia has recommended Johns Lyng Group, Lovisa, and VanEck Morningstar Wide Moat ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The great thing about exchange-traded funds (ETFs) is that they cater to all investment groups.

Whether you’re a growth investor or an income-focused investor, there’s something out there for you.

Let’s now take a look at two ASX ETFs that could be good options for these investors.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

If you’re an income investor, then you may want to look at the Vanguard Australian Shares High Yield ETF.

It allows you to instantly build a portfolio filled with many of the best ASX dividend shares on the Australian share market.

And it does this with diversity in mind. In order to stop you from owning purely banks and miners, Vanguard limits how much it invests in any particular industry or company.

Among its ~70 holdings are BHP Group Ltd (ASX: BHP), Coles Group Ltd (ASX: COL), Commonwealth Bank of Australia (ASX: CBA), Transurban Group (ASX: TCL), and Wesfarmers Ltd (ASX: WES).

The ETF currently trades with a dividend yield of 5.1%.

BetaShares Global Cybersecurity ETF (ASX: HACK)

Whereas if you’re a growth investor you might want to check out the BetaShares Global Cybersecurity ETF.

This ETF gives investors access to the rapidly growing companies that are leading the way in the global cybersecurity sector.

With cyberattacks continuing to increase and cybersecurity becoming more and more important, the sector has been tipped to grow materially in the future.

For example, a recent McKinsey survey found that the total opportunity amounts to a massive US$1.5 trillion to US$2.0 trillion addressable market.

And while it doesn’t think the “market will reach such a size anytime soon”, it demonstrates how companies in the sector could have very long growth runways.

Among the ETF’s holdings are leaders such as Accenture, Cloudflare, Crowdstrike, Okta, and Palo Alto Networks.

The post Buy these fantastic ASX ETFs for passive income and growth appeared first on The Motley Fool Australia.

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More reading

• Looking for growth? I’d buy these 2 ASX ETFs
• How I’d create investment cash flow in retirement from ASX ETFs
• 5 excellent ASX ETFs to buy when the market reopens
• Could AI be a boon for this ASX ETF?
• 2 excellent ASX ETFs I’d buy for diversification and growth

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Accenture Plc, BetaShares Global Cybersecurity ETF, Cloudflare, CrowdStrike, Okta, Palo Alto Networks, Transurban Group, and Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2025 $290 calls on Accenture Plc and short January 2025 $310 calls on Accenture Plc. The Motley Fool Australia has positions in and has recommended BetaShares Global Cybersecurity ETF, Coles Group, and Wesfarmers. The Motley Fool Australia has recommended CrowdStrike, Okta, and Vanguard Australian Shares High Yield ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) has been enjoying a terrific run, closing in the green each of the past eight trading days.

Yesterday’s 1.1% gain saw the benchmark index close at a record high of 7,680.70, knocking down the prior all-time closing high of 7,628.9 points. That one was set way back on 13 August 2021.

The string of gains put the index up an impressive 4.6% since 18 January.

Which brings us to our headline question.

Why is the ASX 200 taking a tumble today?

What’s pressuring the ASX 200 on Thursday?

While nothing has inherently changed for the worse for the vast majority of the 200 companies listed on the ASX 200 since yesterday, the benchmark index is down 0.8% in morning trade.

Atop some potential profit-taking post-Wednesday’s record close, the biggest headwind dragging on the Aussie markets is blowing out of the United States.

Yesterday (overnight Aussie time), US Federal Reserve chair Jerome Powell threw cold water on investor hopes for a March interest rate cut from the world’s most influential central bank.

That means the official US rate is likely to remain at the current 22-year high 5.25% to 5.50% target range for a while longer yet.

Investors reacted by hitting the sell button, sending the S&P 500 (INDEXSP: .INX) to close down 1.6%. The tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) fared even worse, closing down 2.2%.

Many tech stocks are priced with future earnings growth in mind, which leaves them particularly sensitive to interest rates.

We’re seeing the same thing here in Australia today.

The S&P/ASX All Technology Index (ASX: XTX) – which also contains smaller tech stocks outside of the ASX 200 – is down 1.1 % at the time of writing.

Why is the Federal Reserve unlikely to cut interest rates in March?

US Fed officials revealed yesterday that they’re not yet convinced they have the inflation genie securely back inside its bottle.

The Fed’s statement noted that it doesn’t “expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%”.

Powell did say that Fed officials believe the benchmark rate is “likely at its peak for this tightening cycle”.

But he underlined that rate cuts may be some way off, adding “Based on the meeting today, I would tell you that I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting.”

And with US stocks diving on those words, the ASX 200 is following suit today.

Commenting on the market’s reaction to Powell’s rather hawkish words, Oscar Munoz, macro strategist at TD Securities said (quoted by Bloomberg), “If stock bulls expected a rate cut in March, Powell seems to have closed the door on that.”

Greg McBride, chief financial analyst at Bankrate added:

The Federal Reserve is getting closer to the first interest rate cut, but we’re not there yet. Inflation has come down faster than anticipated, but whether or not this can be sustained is central to the Fed’s decision about when to begin cutting interest rates…

Interest rates took the elevator going up – but are going to take the stairs coming down.

The takeaway for ASX 200 investors here is patience.

Remember, the benchmark index notched new records yesterday. And whether US and Aussie interest rates begin to come down this month, next month, or not for six months or more, come down they will.

And eventually, the cycle will begin all over again.

The post After 8 days of gains and a record high why is the ASX 200 tumbling today? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• These were the best performers on the ASX 200 in January
• Here are the top 10 ASX 200 shares today
• 3 big questions about the Australian stock market in 2024
• Big ASX 200 news! Aussie shares just reached a new record high

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The rage for artificial intelligence (AI) stocks is showing no signs of cooling off. That’s why Microsoft (NASDAQ: MSFT) management made sure to mention AI tech prominently in both the press release and during the conference call detailing its fiscal second quarter of 2024 earnings. 

Those results, divulged just after market hours on Tuesday, beat analyst estimates and featured some impressive numbers. And while AI certainly played a part in that, it was actually another set of offerings from the tech giant that really gave its quarter some muscle.

No cloudy skies with the cloud

Microsoft’s second frame of the fiscal year saw the company book slightly over $62 billion in revenue, which was a sturdy 18% improvement over the same quarter of fiscal 2023 and topped the company’s guidance of $60 billion to $61 billion. Not to be outdone, non-GAAP (adjusted) net income advanced by 26% year over year to hit nearly $22 billion ($2.93 per share).

Analyst expectations for the quarter were relatively modest. On average, they were expecting the tech giant to earn slightly over $61 billion on the top line, and post a per-share, adjusted net income figure of $2.78.

Microsoft posted estimate-beating quarters throughout calendar 2023, but the rise in its shares was due more to its association with top AI app developer OpenAI. Microsoft is a major investor in — and partner of — the company, which is the entity behind the popular ChatGPT app. Microsoft has assertively incorporated OpenAI functionalities into more than a few of its offerings, including the Office software suite.

In the earnings release, the only quote Microsoft attributed to its CEO Satya Nadella was about, yes, AI. The company’s leader briefly enthused about the technology, saying that by applying it at scale, it’s helping to gain new clients and improve productivity throughout its operations.

What didn’t get as much attention, and probably should have, was Microsoft’s cloud computing products and services. The company is the No. 2 provider of such offerings — behind Amazon‘s mighty Amazon Web Services (AWS) — and is doing well in drawing fresh revenue from this source.

During the quarter, the company’s Intelligent Cloud business segment saw its revenue balloon by 20% year over year to nearly $26 billion. Inside that grouping, the still-hot Azure and other cloud services saw their collective take rise at a 30% clip, outpacing the analyst expectations of under 28%.

The AI and cloud combination is already potent

Even if AI — still a relatively young technology — wasn’t a mighty driver of Microsoft’s growth for the quarter, it still made a difference. The company said it now has about 53,000 clients for Azure AI, its anchor cloud-based AI platform. Nadella said that one-third of that figure comprises customers new to Azure within the past year.

This portends very well for Microsoft’s future. However, judging by the market’s rather tepid reaction to the quarterly results — the stock was trading slightly down after hours as of this writing — investors haven’t yet fully considered this potential. So even though the company’s shares zoomed higher in 2023, in this year and beyond, they can certainly hit even loftier heights. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Yes, Microsoft is a star AI stock, but this is what really powered its solid second-quarter results appeared first on The Motley Fool Australia.

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More reading

• Two giants of the Nasdaq just reported their results. Did they smash expectations?
• 3 things ASX investors should watch this week
• Here’s how the ASX 200 market sectors stacked up this week
• Better AI stock: Microsoft vs. Amazon
• Which Nasdaq company just overtook Apple as the world’s largest by market cap?

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Microsoft. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Shares of Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) were falling today after the tech giant reported its fourth-quarter and full-year 2023 results. Alphabet beat analyst estimates on the top and bottom lines in its fourth quarter, but its ad revenue was a bit short of expectations. The sell-off also came after the stock jumped more than 50% in 2023, a sign that investors may believe it had become overheated.

As of 1:11 p.m. ET, shares were down 6.6%.

The ad biz is recovering, but not fast enough

Alphabet reported 13% revenue growth to $86.3 billion, which beat expectations of $85.3 billion. Operating income jumped 30% to $23.7 billion as its operating margin expanded from 24% to 27%.

On the bottom line, earnings per share jumped from $1.05 to $1.64, aided by accounting gains on its equity securities. That result topped the consensus for $1.59.

However, investors seemed to zero in on the ad business, the source of the majority of its profits, where revenue grew just 11% to $65.5 billion due to a decline in its Google Network segment, which shows ads on other websites. Analysts had expected ad revenue to come in at $66.1 billion.

Elsewhere, Google Cloud continued to show strength with revenue up 26% to $9.2 billion, and it reported operating income of $864 million, up by more than $1 billion from the quarter a year ago.

On the call, management talked up its recent artificial intelligence (AI) initiatives like Gemini, but offered little in the way of details on new products or businesses.

Should Alphabet investors be worried?

It’s hard to fault a company the size of Alphabet for only growing ad revenue by 11%, but the results will be more telling after investors see the performance of peers like Meta Platforms, which has been taking ad market share from Alphabet in recent quarters. Losing market share is generally a negative sign for any company, though Alphabet seems to be benefiting from the broader ad market recovery from the lull in 2022.

At this point, there’s little reason to sell the stock on yesterday’s report as its search and YouTube businesses still look solid, and its valuation looks substantially improved. However, investors should keep an eye on the ad business in future quarters to see if the current trend persists. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Alphabet stock was sliding today appeared first on The Motley Fool Australia.

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More reading

• Two giants of the Nasdaq just reported their results. Did they smash expectations?
• Appen shares crash 37% on huge Google blow

Jeremy Bowman has positions in Meta Platforms. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Jeremy Bowman has positions in Meta Platforms. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet and Meta Platforms. The Motley Fool Australia has recommended Alphabet and Meta Platforms. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Many of Australia’s top brokers have been busy adjusting their financial models again, leading to the release of a number of broker notes this week.

Three ASX shares brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Altium Limited (ASX: ALU)

According to a note out of Citi, its analysts have upgraded this electronic design company’s shares to a buy rating with an improved price target of $56.60. The broker is feeling very positive about the company’s outlook thanks to the Altium365 cloud platform. It believes the platform can increase Altium’s addressable market materially outside its existing user base. In addition, the broker sees artificial intelligence tailwinds that could boost revenue. The Altium share price is trading at $49.66 today.

Jumbo Interactive Ltd (ASX: JIN)

A note out of Morgan Stanley reveals that its analysts have retained their overweight rating and $19.20 price target on this digital lottery ticket seller’s shares. The broker believes that Jumbo will benefit greatly from recent Powerball jackpots. In addition, Morgan Stanley is tipping Jumbo as a company that could surprise to the upside during earnings season. The Jumbo share price is fetching $15.71 on Thursday.

Woolworths Group Ltd (ASX: WOW)

Analysts at Goldman Sachs have retained their conviction buy rating on this supermarket giant’s shares with a trimmed price target of $42.30. While the broker was disappointed with the company’s performance in New Zealand, it was pleased with a stronger than expected first half from its key Australian Food business. And with its shares still trading on earnings multiples lower than their five-year average, the broker sees it as a great time to buy. The Woolworths share price is trading at $36.01 this morning.

The post Top brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

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More reading

• Beginner investors: 5 top Aussie stocks I’d buy for 2024
• How big could the 12-month return be on Woolworths shares?
• 5 things to watch on the ASX 200 on Tuesday
• Woolworths share price falls on $1.5b impairment news
• The pros and cons of buying Woolworths shares right now

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium, Goldman Sachs Group, and Jumbo Interactive. The Motley Fool Australia has recommended Jumbo Interactive. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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