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SUMMARY
Jeremy Lefebvre discusses the continued rise of AMD and Micron amid a broader decline in major tech stocks, offering analysis on opportunities and risks in the current market environment. He also reacts to market outlooks from Tom Lee and JP Morgan, emphasizing long-term investing strategies and the potential impact of upcoming IPOs and Federal Reserve policy changes.
MAIN POINTS
- AMD and Micron continue to outperform while other major tech stocks like Palantir, Netflix, ServiceNow, and Salesforce experience significant declines.
- SpaceX faces downward pressure due to upcoming insider lockup expirations and lack of near-term profitability, impacting broader market sentiment.
- Lefebvre highlights the importance of accumulating shares of high-quality tech companies during periods of heavy discounting and market weakness.
- Palantir, ServiceNow, and Salesforce are compared on valuation and growth metrics, with Lefebvre noting the market's heavy discounting of these stocks.
- Tom Lee predicts a potential bear market later in the year, suggesting that further declines could present major buying opportunities for tech investors.
- JP Morgan's strategist argues that the market rally has been driven by strong earnings, particularly in tech, and sees potential for further gains if earnings growth broadens.
- Despite robust earnings, many investors remain skeptical due to ongoing macroeconomic and geopolitical concerns, contributing to a 'hated' rally.
- Lefebvre concludes by stressing the irrelevance of short-term market noise and encourages investors to focus on long-term accumulation of undervalued assets.
DETAILED ANALYSIS
The current market environment is characterized by a stark divergence between a handful of outperforming semiconductor stocks and widespread weakness across other major technology names. AMD and Micron have experienced significant gains, with AMD alone contributing over $1.1 million in Lefebvre's public account. This performance is notable given the broader context of declining prices for many large-cap tech stocks, including Palantir, Netflix, ServiceNow, and Salesforce, all of which have seen their valuations fall sharply from recent highs.
The resilience of AMD and Micron is attributed to robust anticipated demand for GPUs and CPUs, as well as expectations for rapid earnings growth and favorable guidance in upcoming quarters. Lefebvre expresses no intention to sell his AMD holdings unless the stock price exceeds $700, reflecting his confidence in the company's future prospects.
In contrast, SpaceX has come under pressure, dropping over 13% as insider lockup periods expire, allowing more shares to enter the market. Many early investors are now facing losses or diminished gains, leading to persistent selling pressure. The lack of near-term profitability for SpaceX—potentially not achievable until the 2030s—deters experienced investors from entering at current valuations.
Lefebvre notes that while some retail investors may remain loyal due to their admiration for Elon Musk, most market participants are unwilling to hold a stock with such a distant profit horizon. The decline in SpaceX's valuation has also had a negative spillover effect on broader indices, given its significant market capitalization.
The weakness in high-growth stocks like Palantir is further compounded by a lack of momentum in risk-on assets such as Bitcoin and Ethereum, both of which are currently stagnant. Palantir and similar companies are also grouped with SaaS stocks, a sector that has struggled to gain traction. ServiceNow, Salesforce, and even Microsoft have suffered from this association, with their share prices continuing to fall.
Lefebvre advises long-term investors to capitalize on these periods of heavy discounting by accumulating shares in high-quality companies, emphasizing a strategy of gradual accumulation over months or even years rather than attempting to time the bottom with lump-sum purchases. He cites his own approach to stocks like Netflix and Cheesecake Factory, where he has consistently added to his positions over extended periods.
A comparative analysis of Palantir, ServiceNow, and Salesforce reveals that while Palantir appears expensive at a forward P/E of 79, its projected earnings and revenue growth rates justify the valuation relative to its peers. ServiceNow and Salesforce, with lower forward P/E ratios and more modest growth expectations, are seen as particularly undervalued given their current market prices. Lefebvre suggests that the market is excessively discounting these stocks, presenting attractive entry points for patient investors.
Market outlooks from industry experts add further nuance to the discussion. Tom Lee of Fundstrat suggests that while the Federal Reserve's recent communications may have been misinterpreted as hawkish, the underlying stance remains dovish, with the potential for an abrupt bear market later in the year. Lee identifies several catalysts for such a shift, including changes in Federal Reserve policy, the impact of major IPOs like SpaceX, Anthropic, and OpenAI, and potential supply chain disruptions.
Lefebvre interprets this as a possible opportunity for long-term investors, recalling the significant discounts available during the 2022 tech crash and expressing optimism about the potential for similar buying opportunities should another downturn occur.
JP Morgan's strategist echoes the view that the current rally has been driven by strong corporate earnings, particularly in the technology sector and AI-related capital expenditures. The base case for the S&P 500 is continued growth, with the potential for even higher gains if earnings momentum broadens beyond the largest tech names. Risks to this outlook include a slowdown in tech revenue growth, capex reductions, and the emergence of speculative excess rather than fundamentals as the primary driver of market gains.
The strategist also notes that financials have lagged despite improving earnings, largely due to concerns about private credit, energy prices, and potential AI disruption.
Despite strong earnings, the rally remains 'hated' by many investors, who are wary due to persistent macroeconomic and geopolitical uncertainties. Lefebvre attributes this sentiment to the uneven distribution of gains, with only a few stocks delivering outsized returns while many household names remain deeply discounted. He concludes by reiterating the importance of ignoring short-term market fluctuations and focusing on the long-term accumulation of undervalued assets, encouraging investors to take advantage of current opportunities and maintain discipline in their investment approach.
LINKS
- Application page for Jeremy Lefebvre's private group, closing to new members in 4 days.
- Patreon page to support the channel and view weekly stock buys.
- Free investing workshops relevant to various stages of the investing journey.
- Jeremy Lefebvre's official Instagram account.
- Jeremy Lefebvre's X (formerly Twitter) account.
- Jeremy Lefebvre's Facebook profile.
- Jeremy Lefebvre's official website.
- 1000XStocks Instagram account.
- 1000XStocks X (formerly Twitter) account.