Stock Chat... What are you looking at?

[jyl]

Originally Posted by cabmandone

^^^ My cousin invested like that. I'm really just getting into investing in stocks. I'm not trying to hit any home runs, just looking for solid future growth. My hope is that once I have some loose ends tied up, I'll have more time to spend researching stocks that represent opportunity for growth.

Some interesting points in the linked Bloomberg article
"If the US continues to build high-voltage transmission infrastructure at its current rate, it will take at least 80 years to deliver what we need over the next decade."

"In the US, 55 GW of data center IT capacity is expected to come online in the next five years. For comparison, this is 10 times the average power capacity used by New York City"

The share of data centers projected to have at least some on site generation by 2030 went from 13% to 30%.

The thing I'm going to try to research is which source, whether that's gas turbine, fuel cell, or other technology represents the fastest installation to service time. The article touches on timely access to power. It would seem to me that removing diesel fired as an option due to cost puts natural gas fired turbines in the lead from a standpoint of cost to operate and time it would take to bring the power on line.

Interested to know what you find. Seems just as hard to pipe NG to a data center site as to build a transmission line. I wonder if we'll start seeing more LNG used domestically, trucked in (virtual pipeline) and regasifed on-site?

[Paul T]

I think the small modular nuclear reactors have promise for AI/Datacenters, but obviously a few years off. https://www.valaratomics.com/ is one I’ve been watching, but there are several others that are in development. Seems this administration is doing what they can to eliminate red tape in this area as well. Given the absolute astronomical power needs that are being forecasted, I kind of like this solution if it can be done safely and effectively.

There are also some interesting companies working on power packs that sit in between the grid and the data center for those that are connected to a traditional grid - sort of like a giant UPS. From what I understand, even if the total power requirements are there, most grids can’t handle the quick load variations that the DC’s have so these sit in between to handle the surges till the grid can catch up.

[jyl]

Originally Posted by cabmandone

Looking at fuel cells, Bloom Energy seems to have made the jump. Haven't looked, but based on their stock price jump, they must be a big player in data centers. Don't know about more upside. Fuel Cell Energy stock is cheap.

Companies that build transmission lines. Quanta Services, Mastec, MYR Group, Michels Power

I'm thinking ETF might be a good way to go to gain exposure to the bigger players.

BE trading at 10X sales, a valuation that implies sustained very very high growth or extremely high margins. Consensus has sales growing about 20%, which is not very high much less very very. EBITDA margin 12% which is modest. There are other fuel cell companies, none of their stocks are doing anything. So need to figure out why 1) BE has something that other fuel cell companies don’t and can’t have, 2) BE’s growth will accelerate a lot , 3) margins will rise substantially. Or figure out some other reason why it’s priced so high. Or entertain the notion that it’s just a meme name.

[cabmandone]

Originally Posted by jyl

Interested to know what you find. Seems just as hard to pipe NG to a data center site as to build a transmission line. I wonder if we'll start seeing more LNG used domestically, trucked in (virtual pipeline) and regasifed on-site?

I'd think one of the main site criteria would be proximity to gas supply lines when you consider the growth in point of use generation. I don't recall the exact figures, but from working with community Solar developers I learned that just increasing service lines was a staggering dollar amount. Then there's upgrades to substations.

[cabmandone]

Did a little search on Fuel Cell Energy (FCEL).

https://finance.yahoo.com/news/fuelcell-energy-just-landed-data-134502593.html

[cabmandone]

I did some looking into the differences between BE and FCEL. BE uses what is supposed to be superior technology in the form of Solid Oxide fuel cell (SOFC) whereas FCEL uses older Molten Carbonate fuel cells (MCFC).

In June, FCEL abandoned SOFC research as part of a cost cutting effort. It appears they have a very high cash burn and have been losing money for a while. Seems like all the stock for all the big boys using SOFC have shot up pretty well.

It looks like BE made a big play on data centers before anyone else in the fuel cell industry did.

Watt Fuel Cell out of PA is in funding stage series B (I'm learning new stuff!) They seem to be one pulling in the most funding from a list I looked at.

[HardDrive]

I am doing some financial house cleaning. Decided to put a tiny bet on 2 Chinese EV makers, NIO and XPeng. I have zero justification for this, I'm throwing darts.

[jyl]

Originally Posted by cabmandone

I did some looking into the differences between BE and FCEL. BE uses what is supposed to be superior technology in the form of Solid Oxide fuel cell (SOFC) whereas FCEL uses older Molten Carbonate fuel cells (MCFC).

In June, FCEL abandoned SOFC research as part of a cost cutting effort. It appears they have a very high cash burn and have been losing money for a while. Seems like all the stock for all the big boys using SOFC have shot up pretty well.

It looks like BE made a big play on data centers before anyone else in the fuel cell industry did.

Watt Fuel Cell out of PA is in funding stage series B (I'm learning new stuff!) They seem to be one pulling in the most funding from a list I looked at.

FCEL does look like it’s circling the drain.

Related, Mitsubishi Heavy said it will double its gas turbine production capacity, the first of the big boy turbine makers to jump - the others are still wary about overcapacity.

[cabmandone]

Originally Posted by jyl

FCEL does look like it’s circling the drain.

Related, Mitsubishi Heavy said it will double its gas turbine production capacity, the first of the big boy turbine makers to jump - the others are still wary about overcapacity.

Thanks for updating that! I've been busy trying to get the properties I have under contract closed so I haven't spent much time researching lately.

[William930t]

Great timing, FCEL quarterly report will be released before market opens tomorrow 9/09. Analysist expectations are $48.3 million in revenue and $-1.63 in EPS. Cash burn continues.

[William930t]

FCEL earnings released this morning, $46.7 million revenue slightly missed estimates on top line, but beat (loss of $-.95) on bottom line eps. Company sees opportunities in surging power demand from data centers. Backlog now $1.24 billion. Consensus is a hold.

[cabmandone]

Originally Posted by William930t

FCEL earnings released this morning, $46.7 million revenue slightly missed estimates on top line, but beat (loss of $-.95) on bottom line eps. Company sees opportunities in surging power demand from data centers. Backlog now $1.24 billion. Consensus is a hold.

I thought about putting some money in FCEL but I read something the other day and one of the scores, I don't recall what it was, put them at high risk of bankruptcy in the next two years. I don't like the sounds of that!

[jyl]

Stepping back for the big picture view of the near term, like next few months . . . just my opinion and not advice etc . . .
1. FOMC will start cutting FF rates and could cut 200-300bp in next 18 month . . . whether the economic data supports cuts or not!
2. Earnings revisions for S&P 500 were negative in 1H25 but have flipped to positive L3M
3. Economy is weakening (employment, consumer, housing, etc) but investors don't care until/unless it hits spending and then corporate profits
4. Inflation is rising but equity investors don't care until/unless it hits corporate profits or drives up interest rates - in the short term, higher inflation flatters reported revenue growth
5. Investors mostly do not care about the long term, and many don't care about the medium term - a 6 month investment horizon is commonplace

[cabmandone]

Intel is getting a nice bump.

https://finance.yahoo.com/news/nvidia-bets-big-intel-5-110333928.html

It doesn't do anything now for the foundry but it seems like this could develop as Intel works to develop 14A. If Intel could bring on even a small amount of NVIDIA's chips it would be huge for the foundry side.

"Under the deal announced Thursday, Intel is planning to design custom data center central processors that Nvidia will package with its AI chips, known as GPUs. A proprietary Nvidia technology will let the Intel and Nvidia chips communicate at higher speeds than before."

Meanwhile, FCEL has had a nice little run. Dang it! I just gotta go with my gut. The problem is, it only seems to want ice cream and Sam Adams Octoberfest.

[Scott Watkins]

[cabmandone]

^^^^
I immediately liked that guy due to the footballs on the shelf behind him.

[jyl]

pasting in my notes on INTC today. Not investment advice, I’ve only lost money on this stock in recent years.

INTC

NVDA and INTC announce joint development of data center/PC chips. NVDA-customized x86 CPUs with native NVLink connectivity, x86-RTX CPU system-on-chips.
NVDA investing $5BN in INTC at $23.28.
Separately, NVDA says still committed to ARM. Also seen negative for AMD, but that’d be only for AMD’s CPU biz and the valuation relies on AMD’s AI/GPU biz.

Stock +24%.

I’ve given up trying to model INTC in detail – too much uncertainty, things change monthly – but this will take cash to $26BN vs debt $50BN. Also:
- Sale of Alterra interest raised $0.8BN (disappointing).
- Amended CHIPS Act deal should release $5.6BN funds to INTC with more planned (in return for 274MM shares to USG, warrants to buy 240MM more, and 158MM shares in escrow to be transferred as remaining $2BN CHIPS funds released). Also eliminated profit-sharing and some restrictions.
So in theory that is $34BN cash on hand and to be received.

Cost cutting is supposed to drive opex down to guided $16BN, from LTM $20BN. If gross profit unch, that would put INTC roughly breakeven EBIT, less interest expense appx $1BN/yr and (unpredictable) non-oper and unusual inc/exp (net -$6.5BN LTM). Operating cash flow LTM $10BN, capex LTM $21BN, FCF LTM -$10BN. So call it run-rate EBIT $zero, FCF maybe -$7BN, or 5 years cash runway. Yes, INTC is kind of like a biotech here.

I’ve also given up trying to value INTC in detail, but if revenues rise a little to $60BN (vs now $53BN and peak $70-ish BN), EBIT margin recovers to 20% (less than half of old INTC or current TSM at 40%-ish, lower than AMD’s 30%-ish, but twice GlobalFoundries’ 10%), implies EPS $2.20 someday, put 15X on that and get $33, so that is maybe what INTC at $30.55 is discounting.

Bull case might be $70BN rev, 25% margin, $3.30 EPS, 20X, $66 stock. Bear case is INTC gets the Bear, Fannie, AIG, GM, C treatment – survives as a critical national asset with common shareholders tossed overboard.

[jyl]

I’m astonished how investors are swallowing ORCL’s line about $500BN or whatever it is in bookings which will drive enormous revenue growth. Even after everyone figured out that almost all of that is from one customer, Open AI, which recently raised its projected cash losses through 2029 to a cumulative $115BN versus a mere $8BN in both this year.

Where is Open AI supposed to get $115BN to fund its losses and pay ORCL? That’s a metric f-ton of money even from the biggest investors in the world. And some investors surely read the 10Q and saw that ORCL is going to “restructure” and layoff enough people to require $1.4BN in severance payments. Call me old-fashioned but a massive restructuring usually means things aren’t going so well. Is ORCL going to layoff so many ahead of supposedly huge growth because it is expecting to blow away estimates?

I’m not unhappy about ORCL’s move, it was veddy nice for portfolios, but it seems s-t-u-p-i-d. Maybe I’m the stupid one for not believing every possible spectacular prediction about AI. Maybe I am just wired to try to make money the old fashioned way, by being skeptical and conservative.

[cabmandone]

I think all Intel needs for the snowball to really start rolling is an announcement that they've secured a major chip contract. My hunch, that's the next step with NVIDIA but it will take time for INTEL to improve 18A and then get 14A up and rolling. As I understand it, 18A achieved remarkably low yields. From other reading that is somewhat expected for a node in risk production. Yields are expected to improve as things are tweaked. I'm hanging on to Intel for the long haul.

I think the question now is, what does AMD do?

[red 928]

ACKY
Bought a pile last week.

it's supposed to mimic the trading of Bill Ackman.
The goal of the ETF is to return 15% per year to shareholders.
We'll see.