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Why You Should Be Taking Profits On Tesla Supplier Nvidia’s Stock

Tesla ( TSLA ) chip supplier Nvidia ( NVDA ) is flying to a new all-time high in the stock market today on the heels of its estimate-beating quarterly report late Thursday. The marker of graphics chips for the auto and gaming markets said Q1 EPS jumped 38% while sales climbed 13%. Its guidance also was well above forecasts. Nvidia received several upgrades and price target hikes from analysts after the report. Shares gapped up 13.9% in giant volume, hitting a fresh high and clearing the 20% profit-taking zone. Nvidia initially cleared a cup-with-handle buy point of 33.16 about a month ago, and briefly pulled back to find support at the 50-day line ahead of the report. Meanwhile, Tesla is trading at two-month lows, about 27% below its 52-week high. Shares were up 0.8% intraday Friday. The stock got knocked from recent highs as analysts felt Tesla’s 2018 production target was too lofty. But Evercore defended the luxury electric carmaker Thursday, saying the production target is achievable. And Tesla partner Mobileye ( MBLY ), which makes advanced driver-assistance systems, said Thursday it has made deals with two unnamed automakers to create fully autonomous cars by 2019. Aside from Tesla, General Motors ( GM ), Ford ( F ) and Alphabet ( GOOGL )-owned Google are also working on self-driving technology. Mobileye breached its 50-day line last week after the company’s quarterly earnings report, though it beat views. The stock is looking to retake that level in Friday’s session, rising 2%. Shares are now about 42% below their high reached last August.

Cisco At Risk As Workloads Shift To Public Cloud, Amazon: JPMorgan

Corporate America may need fatter communications pipes for cloud computing, but the trend toward lower-cost hardware in data centers — including networking gear — doesn’t bode well for Cisco Systems ( CSCO ), says a JPMorgan report. Despite the rise of Amazon.com’s ( AMZN ) Web Services unit and Microsoft ’s ( MSFT ) Azure, money spent on public cloud computing services will account for only 7% of the $215 billion global data center market in 2016, JPMorgan analyst Rod Hall said in a recent note to clients. Hall forecasts that from 2016 to 2020, traditional data center infrastructure spending will fall at a 2% rate annually. The bigger problem for legacy information technology suppliers is that computer workloads are moving at a faster rate to infrastructure-as-a-service, or IaaS, providers, he says. Amazon Web Services is the biggest IaaS provider, through which customers rent computer servers and data storage systems via the Internet. Microsoft is No. 2, with Alphabet ’s ( GOOGL ) Google third. According to a JPMorgan survey of chief information officers, more than 40% of workloads could shift to the public cloud in five years. “A near-tripling of public cloud workloads represents a monumental architectural shift, which shows no signs of abating and is likely to create a major ripple effect across the entire technology landscape,” wrote Hall. “(We) continue to believe it represents material earnings risk for companies like Cisco.” Hall added: “Though companies like Cisco focus on the increased bandwidth required for big data they miss the fact that this inevitably drives companies to want to deploy commodity (data center) solutions faster in our opinion.” Cisco reports fiscal third-quarter earnings on May 18 after the market close.

Apple Gets Lift From China Ride-Hailing Service Investment

Apple ( AAPL ) stock rose Friday on news that the iPhone maker is investing $1 billion in Chinese ride-hailing service Didi Chuxing , a rival to U.S.-based Uber Technologies. Apple shares were up 1%, above 91, in midday trading on the stock market today . On Thursday, Apple stock fell to its lowest level in nearly two years, below 90. Apple CEO Tim Cook told Reuters that the investment is strategic and will help it better understand the Chinese market. Backed by Chinese Internet giants Alibaba ( BABA ) and Tencent ( TCEHY ), Didi Chuxing is the dominant ride-hailing service in China, operating in more than 400 cities. But Didi Chuxing has been losing billions in a costly battle with Uber for market share in China, Reuters said. The Didi Chuxing investment comes as Apple reportedly is spending heavily on R&D related to automotive technologies. Observers widely believe Apple is working on an electric, self-driving car. Apple Shoring Up China Relations Apple also is trying to shore up its presence in China, where it has faced increased regulatory scrutiny. Last month, Chinese authorities shut down Apple’s online book and video stores, following the introduction of strict regulations on online publishing, especially for foreign companies. “The (Didi Chuxing) investment makes sense as it should help improve Apple’s relationship with the Chinese government amid regulatory concerns (iBooks and iTunes Movies recently blocked in China),” Angelo Zino, equity analyst at S&P Global Market Intelligence, said in a research report. “Also, we view the connected car space as a major growth opportunity for Apple and this investment could help the company with those initiatives.” The inclusion of Apple Pay within Didi vehicles is a likely outcome of the investment, Zino said. Plus, the investment is a smart use of Apple’s overseas cash stockpile, he said. Drexel Hamilton analyst Brian White on Friday reiterated his buy rating on Apple stock, with a price target of 185. “China is one of the most important markets in the world for Apple and we believe this announcement represents an attractive investment, enhances the Apple ecosystem, opens up new opportunities for Apple Pay, offers the opportunities to learn more about the Chinese consumer, hows support for the country and provides Apple with a potential customer in the future for an ‘Apple Car,’ ” White said in a report. Apple’s estimated 5% ownership stake in Didi Chuxing, which is valued at $20 billion, isn’t going to break the bank for Apple. The company reported $21.5 billion in cash and equivalents as of March 26, and another $33.8 billion in short-term securities. “While this is an investment at the riskier end of Apple’s normal appetite, it has scope for upside and Apple might just learn some interesting things and make some important friends,” Richard Windsor, an analyst at Edison Investment Research, said in a statement. “For Apple, this represents an investment of 0.6% of its net cash balance and two days of cash flow from operations. Consequently, if it all goes wrong, it will be virtually unnoticed, but given the current valuation of Uber, Apple could double or triple its money quite easily.” RELATED: Apple Falls Anew Amid iPhone 7 Worries, Chip Stocks Follow