Club holdings Apple (AAPL), Nvidia (NVDA) and Walt Disney (DIS) all made headlines Monday. Here’s how the news impacts our investment case for each. Apple (AAPL) AAPL YTD mountain Apple’s stock performance so far in 2023. The news: Apple’s push into financial services, including an iPhone subscription plan , has hit snags, Bloomberg reported Sunday. Those initiatives — which also include a savings account and a buy now, pay later service — have been beset by “engineering and technical setbacks,” according to Bloomberg. The savings account and buy now, pay later offerings were first announced last October and June, respectively. However, Apple has yet to officially unveil its hardware subscription plan for iPhones. The Club take: An iPhone subscription program aligns with our Apple thesis, which characterizes the company as a consumer staple worthy of a premium valuation and an investment to hold for the long term, not trade based on cyclical whims. Apple’s multiyear push to grow its services revenue — which is more stable than hardware sales and, therefore, is viewed more favorably by investors — has bolstered our conviction in the company. Offering a hardware subscription akin to an auto-leasing program would lock in that investment view. It also would take us closer to ascertaining the lifetime value of an Apple customer, which Jim Cramer has wanted the company to disclose for years . Nvidia (NVDA) NVDA YTD mountain Nvidia’s stock performance so far in 2023. The news: Morgan Stanley said “the most exciting market in semiconductors” is Nvidia’s deep-learning capabilities, which include the Microsoft (MSFT)-backed ChatGPT and other similar large-language models that demonstrate artificial intelligence’s (AI) recent strides. Nvidia’s graphics processing units (GPUs) play a central role in training those models so that they’re capable of responding to queries with generated, human-like answers. “First of all, ChatGPT is a very, very big deal,” Nvidia CEO Jensen Huang said recently at an event hosted by the University of California, Berkeley. He called it the “iPhone moment” for AI that will deliver technological innovation to a number of industries. The Club take: As AI has begun to dominate conversations around technology in recent weeks, we’ve tried to keep our expectations relatively in check because we know investing around buzzwords is a risky business. We’ve tried to emphasize the quality companies in the AI arena whose technology lays the groundwork for this innovation — including Nvidia . The company’s cloud business — in which AI operations figure prominently — continues to be a key driver of growth long term, despite industry-wide inventory challenges. That’s a key reason we’re invested for the long term, and ChatGPT is just one tangible illustration of the investment opportunity we see. Disney (DIS) DIS YTD mountain Disney’s stock performance so far in 2023. The news: Disney shares could climb by more than additional 20% by the end of the year , according to JPMorgan. The bank maintains an overweight, or buy, rating on the entertainment giant’s stock and a $135 price target. Shares were mainly flat Monday, at roughly $108 apiece, but have climbed nearly 25% so far this year. “While we are cautious on the media landscape overall due to sustained streaming losses and advertising headwinds, Disney is our favorite name among the group due to the company’s strong asset mix and what we expect to be a rapid decline in streaming losses in the next year,” JPMorgan analysts wrote in a research note. The Club take: Disney’s turnaround plan under CEO Bob Iger, who returned to the top job in November, is underway and we largely concur with JPMorgan’s view. The company has incredibly beloved franchises, like Star Wars. And now, with a more disciplined approach to capital spending, the stock could soar even higher this year. Fortunately, Iger realized excessive losses in the streaming division had become a big problem for investors; subscriber growth at any cost was no longer acceptable. Iger’s restructuring and reorganization plan could allow the streaming division to become profitable by the end of the company’s fiscal year 2024. (Jim Cramer’s Charitable Trust is long AAPL, NVDA, DIS. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Analysts have been debating the demand for Apple’s iPhone 14 models amid a backdrop of rampant inflation, rising interest rates and fears of a global recession.
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Club holdings Apple (AAPL), Nvidia (NVDA) and Walt Disney (DIS) all made headlines Monday. Here’s how the news impacts our investment case for each.
