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Pan American Silver, the silver mining company is undervalued, according to Wolfteam Ltd.'s projections and estimates.
Pan American Silver's intrinsic worth is 220 % the current market capitalization of the company or Pan American Silver is intrinsically 2.2 times more valuable, in Wolfteam Ltd.'s view.
Petroleo Brasileiro or Petrobras reported its Q1 2024 earnings yesterday.
Net profit was 3.239 billion USD for 1st Quarter 2024, compared with 9.652 billion USD for 1st Quarter 2023. Petroleo Brasileiro's stock price open today with near 10 % fall, paring after that the decline.
Petrobras is also a dividend play. Yesterday, there weren't any major dividends' changes announcements. Which turns the attention to Petrobras' underlying main business are of deep sea oil production.
Petroleo Brasileiro is undervalued, according to Wolfteam Ltd.'s projections and estimates.
Petroleo Brasileiro's intrinsic values is around double + 10 % its current market capitalization of 100.00 billion USD, in Wolfteam Ltd.'s view.
Base metals mining companies are undervalued on possible higher demand caused by geopolitics.
Rio Tinto, BHP Biliton and Vale, leading base metals mining companies are undervalued on average by 50 % according to Wolfteam Ltd.'s projections and estimates.
Apple has staked its future strategy on Apple Services, namely the App Store revenue.
Now Apple will add ChatGPT features to its App Store, so it can increase the attractiveness of its services.
Even though the services business is growing quickly, Apple still needs to develop a hardware breakthrough product to substantiate its current 2.85 trillion USD market capitalization and provide for future growth, in Wolfteam Ltd.'s view.
Simply because there is certain satiation of the market with the pricey iPhones, iPads and Macintosh computers. Apple has to remain on the cusp of innovation.
AI and AI technology stocks are inversely related to US interest rates, due to investing recycling and investing in new AI tech capacity of US and global venture capital funds.
AI is overvalued, akin to the internet during the Dot Com boom an bust. But this time the Nasdaq Composite will fall somewhere above 50 % from its peak, contrary to the 80 % + fall of the Nasdaq from its peak in the Dot Com boom and bust.
Artificial Intelligence, AI is just not ready to produce the revenues and profits Wall Street equity research and fixed income research analysts seem to be inputting in their models. Or at least, not s quickly as openly assumed.
AI is simply very difficult to scale. Yes, the picks and shovels, namely the graphical processing units, computer processing units and other computer chips needed can be sold for hundreds of billions of USDs. That is why, NVIDIA's current market capitalization is 2.26 trillion USD currently.
The quantitative models, which are basically the AI and which power the computer chips are very difficult to scale. Nonlinear modelling is extremely difficult and requires huge computing power, which according to Wolfteam Ltd.'s estimates is not yet available.
All in all, AI, like almost every branch of science develops in leaps. The first leap came with Bitcoin and the blockchain algorithm, which huge computing power needs created an explosion in AI computer chips manufacturing. Currently, data centers computing needs provide from a smaller AI leap.
The next AI leap will come in more than 10 years, according to Wolfteam Ltd.'s projections and estimates. Much depends on how Wall Street research analysts and investors model, discount the future in their models and expectations. Namely, much hangs on whether investors are ready to wait long enough, 5-7 years for their AI investment ideas to come to fruition.
Apple
Currently Apple uses AI via the Google search engine. Apple adapts its hardware M1, M2 and M3 latest computer chips, so they can process AI tasks most efficiently. Apple shuns away from gathering user data to drive AI applications. There are news reports that Apple will soon integrate ChatGPT in the App Store. Actually, via the App Store apple has gathered huge amount of information, which could prove helpful in AI development. App Store, namely Apple's services business is very lucrative for Apple with its 30 % fee cut. Actually, App Store or Apple's services business is at the heart of Apple's future strategy.
Microsoft
Microsoft is currently leading the AI field with its 49 % stake involvement in ChatGPT. ChatGPT is a chat robot, a quasi search engine which gathers, analyses users' data and data from the internet to produce search query results. Initially ChatGPT was taking the world by storm and Microsoft, being almost a majority, but definitely a controlling shareholder was leading the AI field. ChatGPT's technology uses much of Google's Large Language Models technology and is pulling the AI field forward. Microsoft benefited tremendously from the ChatGPT and AI and is currently the most valuable listed company in the world surpassing Apple's nearly 3 trillion USD market capitalization
Alphabet
Alphabet Inc is also leading the AI pack with its Google search engine, which has utilized AI to produce search results for more than a decade now. Google has developed Gemini, its own Large Language Models Chat bot to compete efficiently with ChatGPT in the AI race. Alphabet Inc, actually most probably has the largest data treasure trove of any company in the world, which can be modeled via AI, machine learning algorithms to produce actionable insights, better search results and ultimately higher revenues and profits for Alphabet, Inc.
Amazon
Amazon is using AI intensively in its Amazon Web Services, AWS or cloud computing offering. AI algorithms are utilized within AWS to store, analyze data and produce actionable machine learning insights. Amazon is the leader in cloud computing, which actually is the application of AI and this provides Amazon with a significant competitive advantage. Cloud computing is a huge market by itself and Amazon AWS's dominance in cloud computing provides Amazon with edge in developing AI technology. In the last 5 years Amazon is developing very actively an internet advertisements business and now Amazon is the third largest company globally in terms of revenue from internet advertisements. Via internet ads Amazon gathers huge amount of information which together with the information Amazon gathers from corporate users of its AWS cloud offering could serves as a springboard for Amazon in AI software development.
Meta
Meta Platforms, Facebook's owner is also in the AI Large Language Models, LLMs AI competition by developing and open-sourcing LLAMAs, its own Large Language Model based software algorithm. Meta, after Google, undoubtedly has the broadest span of user information, which if modeled correctly could be a treasure trove of insights to power user engagement on Facebook, Messenger, Instagram, WhatsApp and other Meta Platforms properties. Actually, open-sourcing LLAMA is a shrewd move by Meta, which will definitely be liked and attract following by the AI developer community. And make no mistake, whichever company has the largest number and highest quality software programmers writing code for its AI models, will be at the forefront of the AI modelling and ultimately computing race.
NVIDIA
The poster child of the current AI boom is NVIDIA and its stock price. NVIDIA is currently valued at 2.25 trillion USD on the Nasdaq stock market. NVIDIA makes the graphical processing units, GPUs that power the AI servers. So basically NVIDIA is producing the picks and shovels for the current AI gold rush. NVIDIA has its roots in gaming, which high demand for computer processing power ensured NVIDIA has the know-how to build high producing, quality chips. In one interview some years ago, Jensen Huang, the founder and CEO said NVIDIA doubles the transistors in its chips or the quality of its GPUs every year. And that was some years ago. That is how advanced NVIDIA's production know-how is. Companies like ChatGPT, where Microsoft owns 49 % and Alphabet Inc, Google's owner produce software that makes AI, but they need server stations, which require chips, which NVIDIA and several other manufacturers like Intel, AMD produce.
Tesla
Tesla is touted as the seventh member of the Magnificent 7 of AI technology companies. Tesla relies on the drivers' information it has acquired to produce self-driving cars in the not too distant future. Tesla has advanced AI know-how, but driving a car is extremely complicated and designing fully autonomous cars is a distant way off. Tesla has to achieve a breakthrough in electric vehicles production technology in the short-run, so as to produce electric cars profitably without tax subsidies. Meanwhile, its AI software engineers are working actively in developing fully autonomous driving technology.
Ferrari is circa 30 % overvalued, according to Wolfteam Ltd.'s projections and estimates.
Ferrari is trading under the ticker BIT: RACE on the Italian stock exchange and is valued currently at circa 74 billion EURs.
The market is implying too high both growth and profitability rates for Ferrari, if it is too substantiate its current market capitalization. Back of the napkin calculations show that Ferrari has to achieve around 25 % revenue growth year on year and net profit margin of 23.5 % in the next 7 years to justify its market capitalization. This compares to Ferrari's current yearly revenue growth rate of 18 % and yearly net profit margin of 20.97 % for the calendar 2023.
The above market assumptions seem very optimistic, in Wolftteam Ltd.'s view.
Microsoft's intrinsic worth is 1.7 trillion USD, in Wolfteam Ltd.'s view, far from its current market capitalization of 3.05 trillion USD.
Microsoft is overvalued on the AI hype.
If the Federal Reserve lowers interest rate levels, small capitalization technology stocks will prove undervalued. If the Federal Reserve lowers interest rates, small capitalization technology stocks will prove overvalued.
Small capitalization technology stocks have the most leveraged economic models. That is, with higher capital and human resources, their productivity rises exponentially. Lack of resources, capital, human and technology could easily cause them to fail.
Small capitalization technology stocks hence are very dependent on the economic cycle, which the Federal Reserve is trying usually to smooth.
Loss making, small capitalization, high growth technology stocks could benefit the most if the Federal Reserve lowers the Federal Funds Rate and thus the interest rates levels in the USA and by extension globally.
Small capitalization, high growth technology companies have the most operational leverage. At such companies fresh capital could produce the highest operational leverage and fast path to profitability. Lower interest rates levels could bring much needed, fresh capital at a lower price to small capitalization, high growth technology companies and thus explode their growth and profitability trajectory.
The Magnificent 7 Stocks, namely Apple, Microsoft, Alphabet, Amazon, Meta, Tesla and NVIDIA are overvalued on too optimistic AI expectations, according to Wolfteam Ltd.'s projections and estimates.