Tesla, QQQ And The Relentless Rise Of The Megacaps

Elon Musk is worth $355bn. Eat your heart out Rockefeller. This guy has real money. His wealth is split around 50:50 between Tesla and Space X with things like X, formerly Twitter, just the crumbs on the table.

His main businesses nearly went bankrupt and needed miracles to save them, but you have to give Musk credit for his balls and tenacity. He is surely the greatest entrepreneur of an era with many great entrepreneurs.

Tesla is doing its best to make him even richer with many exciting ‘something news’ on the horizon. Part of the value of Tesla is the near certainty that this extraordinary man will always come up with ‘something new’.

In a war, I would back Musk to win against most countries even though he starts without military forces. Imagine how exciting life would be if Musk, not Starmer, were the UK prime minister. At the moment the nearest we have to a potential leader who would shake things up is Farage and the UK needs a good shake.

The simplest argument for Tesla shares is that over the coming decade, he will do for humanoid robots and robotaxis what he has done for electric cars. Tesla has the makings of a massive business and that does not even account for the sustainable energy business.

In October, we unveiled our Cybercab and Robovan vehicles, both designed from the ground up for autonomy – without a steering wheel or pedals. Cybercab will be built on our next-generation platform which includes a new powertrain with an estimated 5.5 mi/kWh. This will be our most efficient powertrain yet. In Q3, we produced our 100-millionth 4680 cell and continued to progress our dry-cathode manufacturing lines.

Tesla, shareholder’s letter, Q3 2024, 23 October 2024

Tesla Poised For Next Growth Wave

The company has huge ambitions.

Our company is currently between two major growth waves: the first one began with the global expansion of the Model 3/Y platform and we believe the next one will be initiated by advances in autonomy and introduction of new products, including those built on our next generation vehicle platform. Despite ongoing macroeconomic conditions, we expect to achieve slight growth in vehicle
deliveries in 2024. Energy storage deployments are expected to more than double year-over-year in 2024.

Tesla, shareholder’s letter, Q3 2024, 23 October 2024

“Our record business performance during the September quarter drove nearly $27bn in operating cash flow, allowing us to return over $29bn to our shareholders,” said Luca Maestri, Apple’s CFO. “We are very pleased that our active installed base of devices reached a new all-time high across all products and all geographic segments, thanks to our high levels of customer satisfaction and loyalty.”

Apple, Q4 2024 results, 31 October 2024

Apple And The Next Big Breakthrough

Apple is a great innovator and that is what will drive future growth.

At Apple, across everything we do, we manage for the long term because we’re always thinking about what comes next, the next great challenge, the next innovative idea, the next big breakthrough. As we close out the year, we have the best lineup we’ve ever had going into the holiday season, including Apple Intelligence, which marks the start of a new chapter for our products. This is just the beginning of what we believe generative AI can do, and I couldn’t be more excited for what’s to come.

Tim Cooke, CEO, Apple, 31 October 2024

3.2bn People Use Facebook Apps Every Day

Lots of excitement at Meta Platforms which has an incredible 3.2bn people using at least one of their apps every day; that makes 3.2bn people who know more about technology than I do.

I’m pretty amped about all the work that we’re doing right now. This may be the most dynamic moment that I’ve seen in our industry, and I’m focused on making sure that we build some awesome things and make the most of the opportunities ahead.

Mark Zuckerberg, CEO, Meta Platforms, Q3 2024, 30 October 2024

“As we get into the holiday season, we’re excited about what we have in store for customers,” said Andy Jassy, Amazon President & CEO. “We kicked off the holiday season with our biggest-ever Prime Big Deal Days and the launch of an all-new Kindle lineup that is significantly outperforming our expectations; and there’s so much more coming, from tens of millions of deals, to our NFL Black Friday game and Election Day coverage with Brian Williams on Prime Video, to over 100 new cloud infrastructure and AI capabilities that we’ll share at AWS re:Invent the week after Thanksgiving.”

Andy Jassy, CEO, Amazon.com, Q3 2024, 31 October

Amazon Is A World Of Innovation

Amazon has existed for 30 years. What is it going to achieve over the next 30 years?

Microsoft Is Not A Sell, It’s A Buy

Did I say something in a recent alert about a sell signal for Microsoft? Forget it; I soon will. The long-term chart looks awesome.

The company is blazing a trail with AI.

We now have data centres in over 60 regions around the world. And this quarter, we announced new cloud and AI infrastructure investments in Brazil, Italy, Mexico, and Sweden as we expand our capacity in line with our long-term demand signals. At the silicon layer, our new Cobalt 100 VMs are being used by companies like Databricks, Elastic, Siemens, Snowflake and Synopsys to power their general-purpose workloads at up to 50pc better price performance than previous generations. On top of this, we are building out our next-generation AI infrastructure, innovating across the full stack to optimise our fleet for AI workloads.

Satya Nadella, CEO, Microsoft, Q3 2024, 30 October 2024

The amount of innovation going on at Microsoft is mind-blowing.

In 3 weeks’ time [now past] , we will hold our Ignite Conference, and I look forward to sharing more then about how we are helping every business function use AI to drive growth in this new era.

Satya Nadella, CEO, Microsoft, Q3 2024, 30 October 2024

Another fantastic chart for another fantastic business.

Google’s Extraordinary Momentum

Q3 was another great quarter. The momentum across the company is extraordinary, as you’ve seen in recent product launches, and as you will hear on the call today. Our commitment to innovation as well as a long-term focus and investment in AI are paying off and driving success for the company and for our customers.

We are uniquely positioned to lead in the era of AI because of our differentiated full stack approach to AI innovation, and we are now seeing this operate at scale. It has three components. First, a robust AI infrastructure that includes data centres, chips and a global fiber network. Second, world-class research teams who are advancing our work with deep technical AI research and who are also building the models that power our efforts. And third, a broad global reach through products and platforms that touch billions of people and customers around the world, creating a virtuous cycle.

Sundar Pichai, CEO, Alphabet, Q3 2024, 29 October 2024

Nvidia Crouching For The Next Spring

Nvidia shares have been becalmed for a while but the business looks as exciting as ever.

We’re seeing inference demand go up. We’re seeing inference time scaling go up. We see the number of AI native companies continue to grow. And of course, we’re starting to see enterprise adoption of agentic AI really is the latest rage.

And so, we’re seeing a lot of demand coming from a lot of different places.

Jensen Huang, CEO, Nvidia, Q3 2025, 20 November 2024

It’s important to realize that when we’re able to increase performance and do so at factors at a time, we’re reducing the cost of training. We’re reducing the cost of inferencing. We’re reducing the cost of AI so that it could be much more accessible. But the other factor that’s important to note is that when there’s a data centre of some fixed size and the data centre always is of some fixed size.

It could be, of course, tens of megawatts in the past, and now most data centres are 100 megawatts to several hundred megawatts, and we’re planning on gigawatt data centres, it doesn’t really matter how large the data centres are. The power is limited. And when you’re in the power-limited data centre, the highest performance per watt translates directly into the highest revenues for our partners. And so, on the one hand, our annual road map reduces costs.

But on the other hand, because our perf per watt is so good compared to anything out there, we generate for our customers the greatest possible revenues. And so, that annual rhythm is really important to us, and we have every intention of continuing to do that.

Jensen Huang, CEO, Nvidia, Q3 2025, 20 November 2024

Netflix Keeps Reinventing Entertainment

Nteflix is not a megacap but it was a FAANG and it has a sensational chart.

We’re pleased that we’ve reaccelerated our growth and, as we head into 2025, we expect to deliver solid revenue and profit growth by both improving our core series and film offering while investing in new growth initiatives like ads and gaming. For 2025, based on F/X rates as of 9/30/24, we forecast revenue of $43B-$44bn, which would represent growth of 11pc-13pc off of our 2024 revenue guidance of $38.9bn. We expect revenue growth to be driven by a healthy increase in paid memberships and ARM. We’re targeting a 2025 operating margin of 28pc (also based on F/X rates as of 9/30) vs. our forecast for 27pc in 2024; after delivering outsized margin improvement in 2024, we want to balance near term margin growth with investing appropriately in our business. We still see plenty of room to increase our margins over the long term.

Netflix, Shareholder Letter, Q3 2024, 17 October 2024

The scale of the business is incredible.

With an audience of 600M+ and growing, we’re programming for more tastes, cultures and languages than any company has ever done before. It’s why we invest in a wide variety of TV shows and films, and work so hard to make them great. Because when people love something, they’ll keep coming back (increased retention), talk more about Netflix (increased acquisition) and place a higher value on our service.

Netflix, Shareholder Letter, Q3 2024, 17 October 2024

Netflix is blazing a trail in entertainment that is incredible. Everything that is happening plays to their strengths, AI, bigger and better TVs, the global ubiquity of English although they make programmes in many languages and the sheer value of their offering. Now they have a free ad-funded option and they are starting to mount special events which, I suspect, could become a huge part of their business.

Share Recommendations (11 December 2024)

Tesla TSLA

Apple. AAPL

Meta Platforms. META

Alphabet. GOOGL

Microsoft. MSFT

Nvidia. NVDA

Netflix NFLX

Invesco QQQ. QQQ

Wisdomtree Nasdaq 100 3x Daily Rebalanced. QQQ3

Leverage Shares 5x Long US Tech 100. QQQ5

Strategy – Megacaps Look As Hot As Ever

All the mega caps have great charts and great fundamentals which bodes well for the whole US stock market. Given their weighting in the Nasdaq 100 (presently 46.7pc but set to be capped at 38.5pc) prospects look good for any ETFs tracking the Nasdaq 100, whether leveraged or unleveraged.