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The Zacks Analyst Blog Highlights: Micron, Intel, Broadcom and Google
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For Immediate Release
Chicago, IL – July 1, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Micron (MU - Free Report) , Intel (INTC - Free Report) , Broadcom (AVGO - Free Report) and Google (GOOGL - Free Report) .
Here are highlights from Friday’s Analyst Blog:
Huawei’s Ban in the U.S. & Its Consequences
The G-20 summit begins and the US-Chine trade war ensues as both parties appear increasingly tenacious. President Trump and China’s president Xi are meeting Saturday morning in Osaka (tonight in the US) as the summit kicks off. President Trump is going into the meeting with optimism saying that, “At a minimum, it will be productive”, while Beijing is insistent that a list of demands be met, including lifting the ban on Huawei, for a trade deal to progress. In this article I will be discussing the implication of Huawei’s restrictions on some of the US’s biggest tech stocks.
Huawei was blacklisted last month by the Trump administration for national security reasons, stating that Huawei is involved in espionage for Beijing. This means that US companies are restricted from doing business with Huawei.
36% of Huawei suppliers are in the US, including semiconductor companies Micron, Intel and Broadcom. Pulling a customer of this size from these firms revenue stream is going to have an impact on their top line. As you can see below all three of these stocks have been struggling since the beginning of the 2nd quarter (ban started mid-May).
Huawei denies all claims of wrongdoing and the evidence against Huawei remains somewhat ambiguous to the public. Some are speculating that this is an attempt by Washington to hamper Chinese tech growth. Huawei phones are handicapped immediately when they enter the US, being limited to slower speeds by the telecommunication companies who want to ensure that their current phone contracts aren’t at risk.
Google has completely cut off Huawei, restricting their access to further Android updates as well as its app store. The implication of this customer displacement is yet to be seen in the financials, but GOOGL has taken a hit this quarter, far underperforming the market. The stock price decline can also be attributed to the antitrust probe that seems to be continually haunting Alphabet Inc.
Micron and Intel have resumed selling chips to the world’s largest telecommunications equipment maker, with their lawyers finding trade loopholes that allow them to continue distributing anything with less than 25% American made components. These firms support their decision to resumed trade with Huawei by voicing that they don’t believe Huawei is involved in malpractice.
Huawei Unbanned as a Part of Trade Concessions?
Trump has discussed the Huawei restriction as being part of a deal in the past but Washington officials are saying that they would like to keep the national security threat and the trade dispute separate. The opacity of evidence against Huawei combined with the apparent competitive element with US smartphone manufacturers like Apple, lead me to believe that this restriction is more trade leverage than a national security threat.
Although Washington wants to keep the two issues separate, I don’t think they will succeed due to the obvious correlations. Both Trump and Xi are too deep into this trade war to back down without looking weak to their nations.
A temporary cease-fire might be exactly what both sides need to regroup and find common ground. This truce might include opening up the Huawei restriction, considering that US companies are already resuming trade with them.
If this were to happen, look for a bounce in the semiconductor suppliers I mentioned above as well as Google if they are willing to resume business with Huawei.
Take Away
The actual effects of the Huawei ban will materialize in Q2’s earnings results expected to be reported in the next month or two. The trade discussions between Trump and Xi this evening US time, (Saturday morning in Osaka) will provide further color into how cooperative these two are willing to be and how ready they are for a deal.
Expect Huawei to be a focal point of the discussions and keep an eye on the stocks I have mentioned tomorrow morning once the trade talks are able to be priced into the market.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
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 http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Micron, Intel, Broadcom and Google
For Immediate Release
Chicago, IL – July 1, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Micron (MU - Free Report) , Intel (INTC - Free Report) , Broadcom (AVGO - Free Report) and Google (GOOGL - Free Report) .
Here are highlights from Friday’s Analyst Blog:
Huawei’s Ban in the U.S. & Its Consequences
The G-20 summit begins and the US-Chine trade war ensues as both parties appear increasingly tenacious. President Trump and China’s president Xi are meeting Saturday morning in Osaka (tonight in the US) as the summit kicks off. President Trump is going into the meeting with optimism saying that, “At a minimum, it will be productive”, while Beijing is insistent that a list of demands be met, including lifting the ban on Huawei, for a trade deal to progress. In this article I will be discussing the implication of Huawei’s restrictions on some of the US’s biggest tech stocks.
Huawei was blacklisted last month by the Trump administration for national security reasons, stating that Huawei is involved in espionage for Beijing. This means that US companies are restricted from doing business with Huawei.
36% of Huawei suppliers are in the US, including semiconductor companies Micron, Intel and Broadcom. Pulling a customer of this size from these firms revenue stream is going to have an impact on their top line. As you can see below all three of these stocks have been struggling since the beginning of the 2nd quarter (ban started mid-May).
Huawei denies all claims of wrongdoing and the evidence against Huawei remains somewhat ambiguous to the public. Some are speculating that this is an attempt by Washington to hamper Chinese tech growth. Huawei phones are handicapped immediately when they enter the US, being limited to slower speeds by the telecommunication companies who want to ensure that their current phone contracts aren’t at risk.
Google has completely cut off Huawei, restricting their access to further Android updates as well as its app store. The implication of this customer displacement is yet to be seen in the financials, but GOOGL has taken a hit this quarter, far underperforming the market. The stock price decline can also be attributed to the antitrust probe that seems to be continually haunting Alphabet Inc.
Micron and Intel have resumed selling chips to the world’s largest telecommunications equipment maker, with their lawyers finding trade loopholes that allow them to continue distributing anything with less than 25% American made components. These firms support their decision to resumed trade with Huawei by voicing that they don’t believe Huawei is involved in malpractice.
Huawei Unbanned as a Part of Trade Concessions?
Trump has discussed the Huawei restriction as being part of a deal in the past but Washington officials are saying that they would like to keep the national security threat and the trade dispute separate. The opacity of evidence against Huawei combined with the apparent competitive element with US smartphone manufacturers like Apple, lead me to believe that this restriction is more trade leverage than a national security threat.
Although Washington wants to keep the two issues separate, I don’t think they will succeed due to the obvious correlations. Both Trump and Xi are too deep into this trade war to back down without looking weak to their nations.
A temporary cease-fire might be exactly what both sides need to regroup and find common ground. This truce might include opening up the Huawei restriction, considering that US companies are already resuming trade with them.
If this were to happen, look for a bounce in the semiconductor suppliers I mentioned above as well as Google if they are willing to resume business with Huawei.
Take Away
The actual effects of the Huawei ban will materialize in Q2’s earnings results expected to be reported in the next month or two. The trade discussions between Trump and Xi this evening US time, (Saturday morning in Osaka) will provide further color into how cooperative these two are willing to be and how ready they are for a deal.
Expect Huawei to be a focal point of the discussions and keep an eye on the stocks I have mentioned tomorrow morning once the trade talks are able to be priced into the market.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>
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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 http://www.zacks.com/performance for information about the performance numbers displayed in this press release.