When the AI revolution represented by Nvidia lifted hope for the US stock market and even the US economy, Tesla and Apple, the "brothers and brothers" among the seven giants, were joining hands to welcome a fierce "spin off".
The seven giants of the US stock market, which performed exceptionally well last year, parted ways at the beginning of this year.
According to a summary by a reporter from First Financial, driven by the trend of artificial intelligence, Nvidia, Meta, and Amazon have seen year-on-year increases of 79.11%, 40.15%, and 14.1%, respectively. Compared to this, Apple and Tesla have experienced a cumulative decline of 12.16% and 28.95% respectively this year.
"Seven giants" minus one
According to Dow Jones market data, Tesla's market value has evaporated by $228 billion so far this year.
On Wednesday local time, Tesla closed 2.3% lower at $176.54, marking the third consecutive trading day of decline. The cumulative decline since the beginning of the year is 28.95%, and the closing market value has dropped to $562.24 billion. At this point, Tesla has fallen out of the top ten companies by market value in the United States, marking the first time in 13 months that the company has fallen out of the top ten. On that day, Visa entered the list with a market value of $563.37 billion.
Morgan Stanley analyst Adam Jonas, who was once bullish on Tesla, warned in his report that if Tesla's automotive business were to record losses based on Generally Accepted Accounting Principles, it could be this year.
Jonas stated that despite repeated price reductions, demand for electric vehicles continues to slow down, and hybrid vehicles are becoming strong competitors. While Tesla may be the "most technologically advanced car company in the world," its product lineup may be the oldest among major car manufacturers.
Analysts have lowered Tesla's sales forecast for this year to below 2 million vehicles, with a year-on-year growth of slightly over 10%. Meanwhile, the 2024 earnings per share forecast will be lowered from $1.54 to 99 cents, and the adjusted earnings per share forecast will be lowered from the previous $2.04 to $1.51.
Morgan Stanley expects that Tesla may cancel its price reduction measures to defend profit margins and cash flow.
Jonas lowered the company's stock target price from $345 to $320, still more than 80% higher than Wednesday's closing price. According to FactSet data, analysts' average target price for Tesla hovers around $211.
In the past 12 months, Tesla's stock price has fallen by 8%. During the same period, the S&P 500 index rose by approximately 26%.
Coincidentally, Ben Kallo, an analyst at securities firm Baird, wrote in a report that "potential fluctuations in price cuts and cost improvements suggest that profit margins may not have bottomed out yet." Although gross profit margins improved in the fourth quarter of 2023 compared to the previous quarter, Kallo expects a decline in gross profit in the first quarter.
He stated that although vehicle delivery expectations have been lowered, there is still room for decline.
On the other hand, Ark Invest, led by Cathie Wood, revealed daily trading that the fund bought 79956 Tesla stocks on Tuesday, costing $14.45 million based on Tuesday's closing price of $180.74.
JW Warren Capital CEO Li Junheng is still optimistic about Tesla's fundamentals, considering that Cybertruck and Model 2 will go public in the next two years. If Tesla's stock price is further under pressure, it will attract funds to enter.
"The problem now is that Tesla's former followers have all gone to buy NVIDIA stocks," Li Junheng told a reporter from First Financial.
Apple "never reaches its darkest hour"?
Despite Apple's decline of over 12% this year, analysts warn that the "darkest moment" may not yet come.
In a report released this week, Mizuho analyst Jordan Klein wrote that if Apple's largest non ETF shareholder, Warren Buffett's Berkshire Hathaway, further reduces its stake, Apple's stock price may be "slaughtered".
According to its filing with the US Securities and Exchange Commission last month, Berkshire Hathaway sold approximately 10 million shares of Apple Inc. in the last quarter of 2023, accounting for approximately 1% of its holdings. As of the end of last year, Berkshire Hathaway still holds approximately 905 million shares of Apple stock.
Klein believes that given Apple's predicament, Buffett may have already sold more of his holdings of Apple stocks.
"Buffett knows that when the 13F report reveals its start of selling off, retail investors will rush to follow suit," Klein added.
In January of this year, Microsoft took over the title of the world's most valuable company from Apple. At present, the former has a market value of nearly $3 trillion, while the latter has a market value of $2.62 trillion.
Due to concerns about lower than expected iPhone sales and unclear blueprints in the field of artificial intelligence, Goldman Sachs removed Apple from its preferred investment philosophy - Directors Cut list last Friday.
Since the release of the list in June last year, Apple's stock price has remained almost unchanged, during which the S&P 500 index has risen by nearly 22%.
However, Goldman Sachs analyst Michael Ng still maintains a buy rating for Apple and believes that "the market's focus on slowing growth in Apple's product revenue masks the strength of its ecosystem and the persistence and visibility of related revenue.".
At the end of last month, Apple announced its decision to abandon its automotive research and development project, Project Titan, which began in 2014. Relevant personnel will be partially transferred to the artificial intelligence research and development department. Subsequently, CEO Tim Cook stated at the annual shareholder meeting that he plans to disclose more plans regarding the use of generative artificial intelligence later this year, further joining the industry boom.
Guo Minggui, an analyst at Tianfeng International Securities, recently warned that if Apple fails to launch a generative AI service that exceeds market expectations within the year, its market value may be surpassed by Nvidia.
At present, the market value difference between the two has narrowed to $400 billion.
"In the current stage of artificial intelligence development, Nvidia remains almost the only game in town for investors by 2025," Wedbush analyst Dan Ives told First Financial reporters
"Indeed, Nvidia is just the tip of the iceberg in the spending trend in the field of artificial intelligence," added Aives. In addition, software companies are expected to join chip companies and the AI wave this year.
From FAANG to the Big Seven, a new round of rotation in the US stock market may have set sail