Global Market Comments
September 13, 2024
Fiat Lux
Featured Trade:
(The Mad SEPTEMBER traders & Investors Summit is ON!)
(SEPTEMBER 13 BIWEEKLY STRATEGY WEBINAR Q&A),
(USO), (UUP), (FXA), (FXE), (FXC), (FXB), (DJT), ($INDU), (JPM), (BRK), (TSLA), (NVDA), (IBM), (CCJ), (BRK/B)
Global Market Comments
March 6, 2024
Fiat Lux
Featured Trade:
(WHY THE DOW IS GOING TO 240,000)
(X), IBM (IBM), (GM), (MSFT), (INTC), (DELL), (NVDA), (NFLX), (AMZN), (META), (GOOGL), (BITO)
Global Market Comments
August 30, 2023
Fiat Lux
Featured Trades:
(GOOGLE’S MAJOR BREAKTHROUGH IN QUANTUM COMPUTING),
(GOOGL), (IBM)
CLICK HERE to download today's position sheet.
Mad Hedge Technology Letter
February 24, 2023
Fiat Lux
Featured Trade:
(PART 2: THE BEST OF THE REST IN QUANTUM COMPUTING)
(GOOGL), (QUBT), (IBM), (MSFT), (AMAT)
Alphabet (GOOGL)
In 2019, Google claimed that it had achieved what it called quantum supremacy. The company claimed to have built a computer with capabilities far beyond those of traditional computers.
In a report published in Nature, Google said its quantum computer managed to calculate something that would take a normal machine 10,000 years.
What practical applications Google's performance will have in the real world is still unclear. The initial computation was a demonstration of capability rather than a product that will have a significant commercial impact any time soon.
Having a horse in the race will also mean they can turn it up a notch once they receive more direction on where this might lead.
Like so many of its other companies, Alphabet invests heavily in the latest computer technology.
Many of these ventures probably won't bring in much money; others, on the other hand, will likely recoup the company's entire research budget and then some. And the good thing about Alphabet is that it's so busy that a single project, such as B. quantum computing, will not decide on the entire investment.
I am not going to sit here and say that Google is a quantum computing company because it’s not, but they are ready to pounce if the opportunity presents itself.
Quantum Computing (QUBT)
Quantum Computing is an innovative company focused on its namesake. It sees a market opportunity in the ability to create a service that coordinates computing needs.
There are providers of quantum computers, such as IonQ or Rigetti. Then there are customers in large companies, universities, or research laboratories. Quantum Computing sits in the middle, making software to help customers manage their quantum computing needs.
Currently, quantum computing has almost no revenue. Management acknowledges that the company is still in the early stages of market development and understanding customer use cases.
QUBT stock is highly speculative, as are most other companies in the sector. However, as the market for quantum computing vendors and customers grows, a brokerage service that connects the two could represent a fairly profitable niche.
IBM (IBM)
Tech analysts like to compare IBM to companies like Radio Shack and Eastman Kodak (KODK) as a dinosaur inevitably heading towards the dustbin of history.
However, the truth is much more nuanced.
IBM still achieves $60 billion a year in total revenue, and that number is actually on the rise again. They also have a PE ratio of 21 as its ongoing operations in consulting, services, and cloud, among others, are very profitable. And IBM continues to invest heavily in research and development, including quantum computing.
IBM's quantum computing division promises to unlock information beyond the reach of even the world's fastest supercomputers. The IBM partnership for quantum computing already involves 160 Fortune 500 companies as well as national laboratories and academic institutions. These partners work in areas such as finance, chemistry, and logistics.
Microsoft (MSFT)
Like IBM, Microsoft wants to take the lead in the emerging field of quantum computing. Microsoft has an inbuilt advantage, as its Azure cloud platform already has a massive installed base with a variety of Fortune 500 customers.
Now Microsoft is building its quantum computing capabilities directly into Azure. Microsoft describes this as “the world’s first full-featured, open cloud ecosystem for quantum computing.”
It makes a lot of sense that this would be offered as part of a cloud package. After all, most customers probably don't need their own supercomputer. Rather, they want the ability to buy that computing power only when they need it.
If Microsoft can seamlessly integrate this experience into its native Azure platform, it could be a major win, both for this product and for securing greater market share in cloud computing.
Applied Materials (AMAT)
Another approach to betting on quantum computing stocks is to be long on suppliers. Given that the technology is still very new, it can be difficult to determine which companies will ultimately be among the winners in this space. What is certain, however, is that if quantum computing catches on, we will need faster and more powerful semiconductors.
Applied Materials is one of the industry leaders in terms of patents and industry know-how when it comes to manufacturing chips that will be used in quantum computing hardware. During a gold rush, you want to be the one selling the shovels. Applied Materials should be the shovel dealer for the quantum computing industry.
In the meantime, Applied Materials' existing business is extremely profitable.
Global Market Comments
August 3, 2022
Fiat Lux
Featured Trade:
(GOOGLE’S MAJOR BREAKTHROUGH IN QUANTUM COMPUTING),
(GOOGL), (IBM)
MongoDB’s latest earnings’ results validate the concept open source software as a rival to the opposed closed-source software grid.
A keen rival of MongoDB’s RedHat was also acquired by IBM (IBM) a few years ago showing the vitality of the sub-sector.
Don’t sleep on these companies as another one Cloudera (CLDR) were taken private by private equity firms KKR and Clayton, Dubilier & Rice.
These are highly valuable assets and I’m not the only one shouting from the rooftops.
How did this all first start?
The first open-source projects were not really businesses, they were counter attacks against the unfair profits that closed-source software companies were reaping.
Microsoft (MSFT), Oracle (ORCL), SAP (SAP), to name a few, were enforcing monopoly-like “rents” for software that were substandard in quality.
The latest evolution of open source came when developers evolved the projects with two important elements.
The first is that the open-source software is now developed largely within the confines of businesses.
Often, more than 90% of the lines of code in these projects are written by the employees of the company that commercialized the software.
Second, these businesses offer their own software as a cloud service from inception.
In a sense, these are Open Core / Cloud service hybrid businesses that can obtain multiple pathways to monetize their product and that is exactly what MongoDB did.
By offering the products as SaaS, these businesses can interweave open-source software with commercial software so customers no longer have to worry about which license they should be taking.
MongoDB Atlas is a great example of this evolution and can become the dominant business model for software infrastructure.
This is their hottest product which is a fully-managed cloud database and Atlas handles all the complexity of deploying, managing, and healing deployments on the cloud service provider of your choice like Amazon or Google.
MongoDB changed how open-source software is licensed, and they introduced the new cloud service that required them and partners to compete with the largest cloud providers.
Looking quickly at second-quarter financial results, they generated revenue of $199 million, a 44% year-over-year increase and above the high-end of guidance. They grew subscription revenue 44% year over year.
Mongo Atlas revenue grew 83% year over year and now represents 56% of revenue, and they had another strong quarter of customer growth, ending the quarter with over 29,000 customers.
Businesses that can develop software faster are able to ultimately outgrow their competition.
MongoDB’s results are a clear indication that customers view MongoDB as a critical platform to accelerate their digital innovation agenda.
Customers of all types are choosing MongoDB because they can develop so much faster using this platform to build new applications and replatform legacy applications across a broad range of use cases to drive business forward.
Even though MongoDB open-source software is lower cost per unit, it makes up the total market size by leveraging the elasticity in the market. When something is cheaper, more people buy it. That’s why open-source companies have such massive and rapid adoption when they achieve product-market fit.
The model now is that companies are venturing as far as actually open sourcing all their software but applying a commercial license to parts of the software base. The premise being that real enterprise customers would pay whether the software is open or closed, and they are more incentivized to use commercial software if they can actually read the code.
Observing how airline JetBlue deployed MongoDB is how these new approaches and improved products manifest themselves in the topline revenue.
JetBlue came to the decision to overhaul their core e-commerce app, and JetBlue chose the MongoDB application data platform.
MongoDB's flexible data model allowed JetBlue to build a dynamic customer experience with modern ticketing applications, as well as predictive analytics in real-time.
An avalanche of firms is leveraging the tools of MongoDB tools to up their digital game.
Management has steered the narrative to include the ease of use and expanding the capabilities of the MongoDB platform to make it more compelling for customers to standardize on MongoDB.
For example, a serverless, customer can get started with MongoDB without having to pick a specific machine type or size. The application connects to Atlas, and they handle the elastic scaling of compute and storage seamlessly, whether an application scales fast or becomes popular. Customers no longer must do capacity planning or manual intervention to adjust the size of the deployment.
The verdict is in and deploying MongoDB to harness in-house developers to build unique commercial applications has been a winning formula.
Not only are they sheltered from rigid closed-source software, but customers can even integrate the code first, then pay later when it is deployed, and this licensing model has been extremely beneficial for developers who need to test out whether certain code is valuable or not.
Atlas is now the cash cow for MongoDB and forecasts predict acceleration in top-line growth.
Yes, this company is still small procuring revenue of just $166 million in 2018, but 2023 will see annual revenue surpass $1 billion which is why everyone wants to hop on MondoDB’s train.
I would consider any dips to deploy capital in MongoDB, I would call it a rising star of the software world, and a gem in the developers’ world.
Global Market Comments
September 10, 2021
Fiat Lux
Featured Trade:
(SEPTEMBER 8 BIWEEKLY STRATEGY WEBINAR Q&A),
(TLT), (PLTR), (TSLA), (FCX), (PYPL), (TAN), (FSLR), (SPWR), (GBTC),
(ETHE), (BRKB), (USO), (UNG), (HD), (IBM), (SQ), (AA), (UBER), (UROY)
Global Market Comments
August 26, 2021
Fiat Lux
Featured Trade:
(GOOGLE’S MAJOR BREAKTHROUGH IN QUANTUM COMPUTING),
(GOOGL), (IBM)
Global Market Comments
October 14, 2020
Fiat Lux
Featured Trade:
(GOOGLE’S MAJOR BREAKTHROUGH IN QUANTUM COMPUTING),
(GOOGL), (IBM)
