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Spotify Technology and Lamb Weston have been highlighted as Zacks Bull and Bear of the Day
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For Immediate Release
Chicago, IL – September 4, 2024 – Zacks Equity Research shares Spotify Technology (SPOT - Free Report) as the Bull of the Day and Lamb Weston (LW - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Advanced Micro Devices (AMD - Free Report) , Microsoft (MSFT - Free Report) and NVIDIA (NVDA - Free Report) .
Spotify Technology, a current Zacks Rank #1 (Strong Buy), provides a music streaming platform that includes commercial-free music and ad-supported services to subscribers. Analysts have taken their earnings expectations higher across the board.
In addition to favorable earnings estimate revisions, the stock resides in the Zacks Technology Services industry, currently ranked in the top 25% of all Zacks industries. Let's take a closer look at how the company currently stacks up.
Spotify
Spotify's set of quarterly results came in well above expectations, beating our Zacks Consensus EPS estimate by a sizable 32%. The company's growth has continued to be stellar, with EPS growing 185% and sales posting 19% growth relative to the year-ago periods.
The company posted record profitability, aided by healthy subscriber gains and improved monetization. Monthly Active Users (MAUs) grew 14% year-over-year, whereas Premium Subscribers saw 12% growth from the year-ago period.
In addition, the company enjoyed margin expansion throughout the period, seeing its gross margin finish at a record high of 29.2%.
Shares are expensive, reflective of investors' high growth expectations. Still, investors are paying a fair price for the forecasted growth, reflected by the current 0.6X PEG Ratio.
Bottom Line
Investors can implement a stellar strategy to find expected winners by taking advantage of the Zacks Rank – one of the most powerful market tools that provides a massive edge.
The top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.
Spotify would be an excellent stock for investors to consider, as displayed by its Zack Rank #1 (Strong Buy).
Lamb Weston, a current Zacks Rank #5 (Strong Sell). is a leading global manufacturer, marketer, and distributor of value-added frozen potato products.
Analysts have taken a bearish stance on the company's earnings outlook, landing it into a Zacks Rank #5 (Strong Sell).
Let's take a closer look at how the company stacks up.
Lamb Weston Faces Demand Pressure
The company's latest set of quarterly results caused shares to plunge, with LW falling short of the Zacks Consensus EPS estimate by 37% and reporting sales 5% below expectations. The results reflected its second consecutive period of falling short of both earnings and revenue expectations.
Down 40% in 2024, shares have faced pressure following back-to-back quarterly releases.
The company delivered a spooky message following the print, with CEO Tom Werner stating, 'We expect fiscal 2025 to be another challenging year. The operating environment has changed rapidly over the past twelve months as global restaurant traffic and frozen potato demand softened due to menu price inflation continuing to negatively affect global restaurant traffic. This has resulted in an increase in available capacity in North America and Europe.'
To put it simply, consumers have had their wallets pinched, and the results fully reflect the demand pullback that's followed.
Bottom Line
Negative earnings estimate revisions, resulting from soft quarterly results, paint a challenging picture for the company's shares in the near term.
Lamb Weston is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company's earnings outlook.
For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.
Additional content:
AMD Rises +10% in a Month: How Should Investors Play the Stock?
Advanced Micro Devices shares have gained 10%, outperforming the broader Zacks Computer & Technology sector's return of 9.7%.
The semiconductor chip provider has been riding on strong performance of the Data Center segment. In the second quarter of 2024, Data Center revenues surged 114.5% year over year to $2.83 billion and accounted for 48.6% of total revenues. Sequentially, revenues increased 21%.
Exiting second-quarter 2024, AMD had more than 900 public cloud instances available, with Netflix and Uber selecting fourth-gen EPYC public cloud instances. In the data center AI business, MI300 quarterly revenues exceeded $1 billion for the first time.
Enterprise and Cloud AI customer pipeline remains robust. AMD and its partners, including Microsoft and others, have instinct platforms in production.
So, the question that really arises in an investor's mind is - Will momentum in AMD's share price continue on the data center strength and acquisitions? Let's analyze.
AMD Stock Rides on Accretive Acquisitions
AMD's acquisitiveness is aimed at primarily reducing the technological gap with NVIDIA in the ongoing race for AI dominance. It has been on an acquisition spree to strengthen its AI ecosystem.
In the past 12 months, AMD has spent $125 million on a dozen of acquisitions. Nod.ai and Mipsology are some other notable acquisitions in the recent past.
It recently closed the acquisition of Helsinki, Finland-based Silo AI. AMD is strengthening its data center AI footprint with the announced acquisition of ZT Systems for roughly $4.9 billion in cash and stock.
The ZT System deal, expected to close in the first half of 2025, will expand AMD's data center AI footprint. ZT System serves a number of the world's largest hyperscalers through its AI and general-purpose compute infrastructure offerings.
The acquisition will help AMD offer optimized rack-scale solutions in the data center AI accelerator market, which is expected to hit roughly $400 billion in 2027.
AMD expects the transaction to be accretive on a non-GAAP basis by the end of 2025.
AMD Stock Rides on Strong Data Center Demand
Both AMD and NVDA have been the darlings of investors, driven by the massive proliferation of AI that has created a strong demand for GPU chips required to power AI models. The AI space is expected to remain robust with increased spending by cloud computing providers like Microsoft.
In the second quarter of 2024, Microsoft expanded its usage of MI300X accelerators to power GPT-4 Turbo and multiple co-pilot services, including Microsoft 365 Chat, Word and Teams. It also became the first large hyperscaler to announce the general availability of public MI300X instances.
AMD's initiatives to expand its portfolio are making it well-positioned to challenge NVDA not only in the data center market but also in the growing AI-enabled consumer PC market.
New offerings like the Instinct MI325X accelerator are helping to expand AMD's footprint in the data center market. AMD has launched the Ryzen AI 300 Series, the third generation of AMD AI-enabled mobile processors, and Ryzen 9000 Series processors for laptop and desktop PCs.
AMD's Estimate Revision Shows Upward Trend
AMD expects third-quarter 2024 revenues to be $6.7 billion (+/-$300 million). At the mid-point of the revenue range, this represents year-over-year growth of approximately 16% and sequential growth of approximately 15%.
The Zacks Consensus Estimate for third-quarter 2024 revenues is pegged at $6.71 billion, indicating 15.71% growth year over year. The consensus mark for earnings is pegged at 91 cents per share, up by a penny over the past 30 days and suggests 30% year-over-year growth.
AMD Stock Overvalued
AMD stock is overvalued, as the Value Score of F suggests a stretched valuation at this moment.
The stock is trading at a premium with a forward 12-month Price/Sales of 7.98X compared with the Zacks Computer and Technology sector's 6.23X.
Conclusion
AMD's expanding portfolio, thanks to acquisitions of Silo AI and ZT Systems, is expected to boost its top-line growth. Investors who already own the stock may expect the company's growth prospects to be rewarding over the long term.
However, AMD's near-term prospects are dull, given the weakness in the Gaming segment amid stiff competition from NVIDIA. AMD has a Growth Style Score of D, which makes the stock unattractive for growth-oriented investors.
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Spotify Technology and Lamb Weston have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – September 4, 2024 – Zacks Equity Research shares Spotify Technology (SPOT - Free Report) as the Bull of the Day and Lamb Weston (LW - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Advanced Micro Devices (AMD - Free Report) , Microsoft (MSFT - Free Report) and NVIDIA (NVDA - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Spotify Technology, a current Zacks Rank #1 (Strong Buy), provides a music streaming platform that includes commercial-free music and ad-supported services to subscribers. Analysts have taken their earnings expectations higher across the board.
In addition to favorable earnings estimate revisions, the stock resides in the Zacks Technology Services industry, currently ranked in the top 25% of all Zacks industries. Let's take a closer look at how the company currently stacks up.
Spotify
Spotify's set of quarterly results came in well above expectations, beating our Zacks Consensus EPS estimate by a sizable 32%. The company's growth has continued to be stellar, with EPS growing 185% and sales posting 19% growth relative to the year-ago periods.
The company posted record profitability, aided by healthy subscriber gains and improved monetization. Monthly Active Users (MAUs) grew 14% year-over-year, whereas Premium Subscribers saw 12% growth from the year-ago period.
In addition, the company enjoyed margin expansion throughout the period, seeing its gross margin finish at a record high of 29.2%.
Shares are expensive, reflective of investors' high growth expectations. Still, investors are paying a fair price for the forecasted growth, reflected by the current 0.6X PEG Ratio.
Bottom Line
Investors can implement a stellar strategy to find expected winners by taking advantage of the Zacks Rank – one of the most powerful market tools that provides a massive edge.
The top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.
Spotify would be an excellent stock for investors to consider, as displayed by its Zack Rank #1 (Strong Buy).
Bear of the Day:
Lamb Weston, a current Zacks Rank #5 (Strong Sell). is a leading global manufacturer, marketer, and distributor of value-added frozen potato products.
Analysts have taken a bearish stance on the company's earnings outlook, landing it into a Zacks Rank #5 (Strong Sell).
Let's take a closer look at how the company stacks up.
Lamb Weston Faces Demand Pressure
The company's latest set of quarterly results caused shares to plunge, with LW falling short of the Zacks Consensus EPS estimate by 37% and reporting sales 5% below expectations. The results reflected its second consecutive period of falling short of both earnings and revenue expectations.
Down 40% in 2024, shares have faced pressure following back-to-back quarterly releases.
The company delivered a spooky message following the print, with CEO Tom Werner stating, 'We expect fiscal 2025 to be another challenging year. The operating environment has changed rapidly over the past twelve months as global restaurant traffic and frozen potato demand softened due to menu price inflation continuing to negatively affect global restaurant traffic. This has resulted in an increase in available capacity in North America and Europe.'
To put it simply, consumers have had their wallets pinched, and the results fully reflect the demand pullback that's followed.
Bottom Line
Negative earnings estimate revisions, resulting from soft quarterly results, paint a challenging picture for the company's shares in the near term.
Lamb Weston is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company's earnings outlook.
For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.
Additional content:
AMD Rises +10% in a Month: How Should Investors Play the Stock?
Advanced Micro Devices shares have gained 10%, outperforming the broader Zacks Computer & Technology sector's return of 9.7%.
The semiconductor chip provider has been riding on strong performance of the Data Center segment. In the second quarter of 2024, Data Center revenues surged 114.5% year over year to $2.83 billion and accounted for 48.6% of total revenues. Sequentially, revenues increased 21%.
Exiting second-quarter 2024, AMD had more than 900 public cloud instances available, with Netflix and Uber selecting fourth-gen EPYC public cloud instances. In the data center AI business, MI300 quarterly revenues exceeded $1 billion for the first time.
Enterprise and Cloud AI customer pipeline remains robust. AMD and its partners, including Microsoft and others, have instinct platforms in production.
So, the question that really arises in an investor's mind is - Will momentum in AMD's share price continue on the data center strength and acquisitions? Let's analyze.
AMD Stock Rides on Accretive Acquisitions
AMD's acquisitiveness is aimed at primarily reducing the technological gap with NVIDIA in the ongoing race for AI dominance. It has been on an acquisition spree to strengthen its AI ecosystem.
In the past 12 months, AMD has spent $125 million on a dozen of acquisitions. Nod.ai and Mipsology are some other notable acquisitions in the recent past.
It recently closed the acquisition of Helsinki, Finland-based Silo AI. AMD is strengthening its data center AI footprint with the announced acquisition of ZT Systems for roughly $4.9 billion in cash and stock.
The ZT System deal, expected to close in the first half of 2025, will expand AMD's data center AI footprint. ZT System serves a number of the world's largest hyperscalers through its AI and general-purpose compute infrastructure offerings.
The acquisition will help AMD offer optimized rack-scale solutions in the data center AI accelerator market, which is expected to hit roughly $400 billion in 2027.
AMD expects the transaction to be accretive on a non-GAAP basis by the end of 2025.
AMD Stock Rides on Strong Data Center Demand
Both AMD and NVDA have been the darlings of investors, driven by the massive proliferation of AI that has created a strong demand for GPU chips required to power AI models. The AI space is expected to remain robust with increased spending by cloud computing providers like Microsoft.
In the second quarter of 2024, Microsoft expanded its usage of MI300X accelerators to power GPT-4 Turbo and multiple co-pilot services, including Microsoft 365 Chat, Word and Teams. It also became the first large hyperscaler to announce the general availability of public MI300X instances.
AMD's initiatives to expand its portfolio are making it well-positioned to challenge NVDA not only in the data center market but also in the growing AI-enabled consumer PC market.
New offerings like the Instinct MI325X accelerator are helping to expand AMD's footprint in the data center market. AMD has launched the Ryzen AI 300 Series, the third generation of AMD AI-enabled mobile processors, and Ryzen 9000 Series processors for laptop and desktop PCs.
AMD's Estimate Revision Shows Upward Trend
AMD expects third-quarter 2024 revenues to be $6.7 billion (+/-$300 million). At the mid-point of the revenue range, this represents year-over-year growth of approximately 16% and sequential growth of approximately 15%.
The Zacks Consensus Estimate for third-quarter 2024 revenues is pegged at $6.71 billion, indicating 15.71% growth year over year. The consensus mark for earnings is pegged at 91 cents per share, up by a penny over the past 30 days and suggests 30% year-over-year growth.
AMD Stock Overvalued
AMD stock is overvalued, as the Value Score of F suggests a stretched valuation at this moment.
The stock is trading at a premium with a forward 12-month Price/Sales of 7.98X compared with the Zacks Computer and Technology sector's 6.23X.
Conclusion
AMD's expanding portfolio, thanks to acquisitions of Silo AI and ZT Systems, is expected to boost its top-line growth. Investors who already own the stock may expect the company's growth prospects to be rewarding over the long term.
However, AMD's near-term prospects are dull, given the weakness in the Gaming segment amid stiff competition from NVIDIA. AMD has a Growth Style Score of D, which makes the stock unattractive for growth-oriented investors.
AMD currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.