Friday, August 18, 2023

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Apple Inc. (AAPL), NVIDIA Corporation (NVDA) and Bank of America Corporation (BAC). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Apple shares have struggled lately, with the stock losing losing -11.6% of its value since the start of August, lagging the Zacks Tech sector's -7.3% decline and the S&P 500 index's -4.6% pullback. This recent weakness notwithstanding, the stock has been a standout performer this year, handily outperforming the Tech sector as well as the broader market.

The company is benefiting from increasing customer engagement in the services segment. The expanding content portfolio of Apple TV+ and Apple Arcade, as well as the launch of its high-yield savings account with Apple Card, helped in driving subscriber growth.

Apple’s results also benefited from strong growth in emerging markets and growing adoption among enterprises. Apple expects iPhone and Services’ year-over-year growth to accelerate in fiscal fourth-quarter as compared with the June quarter.

However, revenues for both Mac and iPad are expected to decline by double digits on a year-over-year basis due to difficult comparison. Unfavorable forex is expected to hurt top-line.

(You can read the full research report on Apple here >>>)

As is the case with Apple, NVIDIA shares have struggled lately as well, with the stock lagging the Tech sector as well as the S&P 500 index this month (-9.4% vs. -7.3% for the Tech sector & -4.6% for the index). That said, Nvidia's performance this year is one for the record books, with the stock up +192.9% this year vs. +32.7% for the Tech sector and +15.2% for the market.

Nvidia has literally been in a league of its own since its last quarterly release on May 24th when it raised guidance by a magnitude that we have never seen from another company. With the company on deck to report results on Wednesday, August 23rd, it is under the spotlight as to whether the preceding quarter's numbers were a one-off or the start of a sustained period of outperformance.

The company is gaining from strong growth of artificial intelligence, high-performance computing and accelerated computing, which is boosting its Compute & Networking revenues.

A surge in Hyperscale demand and a solid uptake of artificial intelligence-based smart cockpit infotainment solutions are acting as tailwinds. Collaboration with Mercedes-Benz and Audi is likely to advance its presence in autonomous vehicles and other automotive electronics space.

However, NVDA’s near-term prospects look gloomy due to weakening demand for chips used in gaming and professional visualization end markets. While macroeconomic headwinds are impacting gaming and professional visualization chip demand, higher channel inventory levels are hurting chip prices.

(You can read the full research report on NVIDIA here >>>)

Shares of Bank of America have underperformed the Zacks Banks - Major Regional industry over the past six months (-10.9% vs. -15.9%). The tough economic backdrop is expected to keep weighing on investment banking (IB) business. This, along with the volatile nature of the capital markets, might hurt non-interest income. Moreover, inflationary pressure will likely result in mounting expenses.

Nevertheless, Higher interest rates and decent loan demand will likely keep aiding the company’s net interest income (NII) growth. The opening of financial centers and improving digital capabilities is expected to bolster the top line.

(You can read the full research report on Bank of America here >>>)

Other noteworthy reports we are featuring today include SAP SE (SAP), NIKE, Inc. (NKE) and Prologis, Inc. (PLD).

Director of Research

Sheraz Mian

Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>