Market scorecard
Monday was a good day for markets, despite Trump's unveiling of tariffs on steel and aluminium imported into the US. Companies like US Steel, Cleveland-Cliffs and Nucor rose, while companies that use steel, like General Motors, fell. What a pain.
In company news, Meta Platforms set a new record, rising for 15 straight days in a row. Elsewhere, embattled Super Micro Computer announced that they will give a business update today, and shares soared 17.6%. Chip stocks like Nvidia, Broadcom and Micron rose, as Wall Street becomes comfortable with the idea that DeepSeek's low-cost AI gains will be good for the industry as a whole.
In summary, the JSE All-share closed up 0.33%, the S&P 500 rose by 0.67%, and the Nasdaq ended an impressive 0.98% higher. Ah, the joys.
Our 10c worth
One thing, from Paul
Amazon had good Q4 numbers out last week but the market seemed too focused on a modest deceleration in the fortunes of their AWS division, so the shares sold off by 4% the next day.
I'm here to remind you that such short-term share price movements are irrelevant, and that Amazon is a great company that you ought to own more of, not less.
We first added Amazon as a recommended stock in April 2011, when they traded at $9 per share. Now, they are at $233. The all-time high is just above $242. It hasn't been a smooth ride, but it's always been a good one to "buy and hold".
Amazon started out as an e-retailer, and made losses for a long time as it built out its distribution network. Now it's very profitable, thanks to high-margin activities like cloud hosting, advertising, subscriptions and third-party services. Both its sales and its margins have expanded enormously over the last decade.
Amazon says it will incur about $104 billion in capital expenditure in 2025. Much of this is to underpin their AI offerings, called Nova, Bedrock, SageMaker and Amazon Q, where clients such as Palantir, Robinhood, SAP, Deloitte, the US Army, Intuit, PayPal, Northrop Grumman, Japan Airlines and many others build their AI apps on AWS.
Margins in the e-retailing business are improving, thanks to both inward and outbound supply chain developments and automation. International operations are expanding. Have you used Amazon in South Africa? If not, why not?
Amazon remains a compelling buy. Load up!
Byron's beats
We love to share the "There's always a reason to sell" chart every few months. It is a great reminder that stocks usually trend upwards despite facing various obstacles along the way. Sounds like most journeys in life.
The latest update to the list of reasons for selling was the DeepSeek scare which already seems to have dissipated. Do you remember some of the others? The Japanese tsunami, Ebola, the Taper Tantrum, US debt downgrade, the fiscal cliff, Covid, surprise rate hikes, Silicon Valley Bank collapse and the Yen carry trade.
If your 'gut feel' tells you to sell because the next big sell-off is coming, I hope this puts your mind at rest. There is always a reason to sell, but there are also many more reasons to buy. Rather listen to the positive side of your brain.
Michael's musings
Rumours are swirling that Netflix is the lead contender to win the multi-year broadcasting rights for F1 in the US. This is arguably the streaming giant's biggest move into live sports so far.
Disney, through ESPN, is the current rights holders, but it seems they have stepped out of the running. In 2022, ESPN signed a three-year broadcasting deal worth between $75 and $90 million a year. Before 2022, ESPN was only paying $5 million a year!
One of the reasons for the 1 500% price hike on the broadcasting rights is the popularity of Netflix's Drive to Survive series, which made F1 a mainstream sport again. Given that Netflix can claim some of the glory for F1's revival, it only makes sense that they become the live broadcaster too.
Bright's banter
Cloudflare was founded in 2009 by Matthew Prince, Michelle Zatlyn, and Lee Holloway, as a project to protect websites from spam and cyber threats. It has since grown into a major player in web security, content delivery, and cloud infrastructure, serving businesses globally with its edge computing and cybersecurity solutions.
In the fourth quarter, Cloudflare posted strong results, with revenue up 27% year-on-year to $460 million, coming in slightly ahead of expectations.
AI enthusiasm is lifting the stock. Prince (the current CEO) highlighted improvements in AI inference efficiency, drawing comparisons to DeepSeek's breakthroughs.
While Cloudflare is a strong business with long-term potential, we prefer CrowdStrike in the cybersecurity space. The latter has a stronger competitive moat, superior revenue growth, and proven execution in AI-powered threat detection.
Linkfest, lap it up
The employment market is changing quickly. This is how your kids should be preparing themselves - The fastest-growing jobs in the US.
Does getting richer make you happier? Always comparing yourself to others definitely doesn't - Ben Carlson says $7 - 10 million is the perfect level of wealth.
Signing off
Asian markets are mostly lower this morning as traders worry about new US tariffs. Trump seems to be making this stuff up as he goes along, shooting first, and asking questions later. Even South Africa is experiencing that first hand.
In local company news, Telkom released a very pleasing trading update. Mobile subscribers grew by an impressive 21.6% to a record 24 million, and its prepaid segment grow by 25% to 21 million subscribers. Telkom's share price was up 7.8% yesterday.
US futures are pointing to a lower open this afternoon and the currency is currently trading at $/R18.46. Companies reporting earnings today include Coca-Cola, BP and Shopify.
Have a good Tuesday.