The Wolfe Tech Universe closed down 0.5% last week, slightly ahead of the S&P 500’s 0.8% decline. Semis was the only group rising. Best performers were MongoDB (+14%), AMD (+13%), SK hynix (+12%), and Wix.com (+10%). Decliners included Infinera (-9%), GrubHub (-9%), Teradata (-8%), and Tencent Music (-7%). Tech skews toward overbought though less so now; Cloudera is the only stock with an RSI under 30 (p3).
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Horace Dediu has been known for his Apple analysis, but he also has become a leading proponent of “micromobility,” transportation by bikes and scooters. At the Clay Christensen Institute he looked for disruptive innovation in transportation but had trouble finding an attack from the low end until he took his first ebike ride.
The Wolfe Tech Universe increased 3.2% the past week vs the S&P 500’s 2.9% rise. Software led with Semis close behind thanks to a 3% Friday jump for the SOX. Top stocks were MongoDB (+35%), Snap (+18%), Momo (+18%), and Dell (+15%). Laggards included Cloudera (-16%), Wirecard (-15%), Renesas (-13%), and Roku (-12%). A list too long to name is overbought while no stocks have an RSI <30—it may be time to take some risk off (p3). Apple short interest has rocketed by 141% (p4).
Earnings reports were surprisingly negative for NetApp, Nutanix, Pure Storage, and HP Inc while Cisco, Dell, and HPE cruised through. We caught up with reseller contacts, particularly those serving larger enterprises. They did see a spending slowdown in January with some improvement in Feb and early March. The comments mirror NetApp’s that Jan slowed markedly. Dec quarter spending was quite strong due to both budget flush and buy-aheads as some were concerned about tariff-driven price hikes in the new year. Enterprises held back spending early in 2019.
The Wolfe Tech Universe’s declined by 2.9% the past week, worse than the S&P 500’s 2.2% fall. Internet was the only outperforming sector and has surpassed Software over 3-months. Semis have faded a bit and IT Hardware lags over 3- and 12-months. Top performers this week included Ctrip.com (+19%) and BlackBerry (+6%). Underperformers were SINA (-15%), Infinera (-12%), Renesas (-11%), Okta (-9%), and Ciena (-9%). LARGAN, Universal Display, Mellanox, Cadence, and Wayfair are among the overbought names while HP Inc, Juniper, Nutanix, and Citrix are oversold (p3). Celestica, Take-Two, EA, ADP, and Alphabet have seen material increases in short interest recently (p4).
Some on Twitter are calculating that for every ride Lyft effectively pays $0.14 to Amazon for use of AWS. Whether that calculation is correct or not, it led to interesting threads regarding the decision to use public cloud. Here we highlight two views, from Hemant Mohapatra, formerly of Google, and Steven Sinofsky, formerly of Microsoft. On a related note, read our recent summary of RightScale’s annual cloud survey: RightScale State of the Cloud Report
We summarize findings from the latest RightScale State of the Cloud Report. The average respondent is running apps in 3.4 clouds and experimenting with 1.5 more. Companies plan to spend 24% more on public cloud this year compared with 8% growth for private cloud. There is an increasing mix of cloud use with 58% employing hybrid cloud. Slightly more workloads are run in private than public cloud though the private definition may just mean virtualization of legacy.
The Wolfe Tech Universe’s 0.3% gain the past week was in line with the market and broke the string of outperformances. Software continues to be the leading sector though Internet is catching up over three months. Top stocks this week included zScaler (+22%), MercadoLibre (+21), Wayfair (+13), and JD.com (+11%). zScaler and Wayfair had high short interest (p4). Victims of earnings season included Nutanix (-37%), AAC Tech (-22%), Box (-18%), and HP Inc (-17%). Some of these disappointments now are oversold, but in general tech is heavily overbought (p3).
Dell moderately beat estimates and as important is getting the Street on the same page by providing a F20 outlook. Our model is in line with company expectations, so we are making few changes. We see gradual improvement as earnings momentum improves in F2H and a narrowing valuation discount as Dell executes. We maintain our Outperform and increase our target price from $58 to $65. Although we don’t see the repatriation of workloads back on-prem that Dell does, we do think it can gain on-prem share while VMware/AWS becomes a favored cloud alternative.
The Wolfe Tech Universe at a 3.3% increase again edged out the market’s 2.5% rise the past week. Software continues to be the standout performer with Internet, Semis, and IT Hardware tightly bunched (Exhibit 1). Hardware and Semis caught up a bit. Top stocks were Super Micro (+28%), Renesas (+18%), Ingenico (+17%), Insperity (+17%), and Arista (+16%). Laggards included Trend Micro (-8%), Twilio (-7%), Yandex (-5%), and DXC (-5%).
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