Just this week, Tesla boasted as anxieties swirled over tariffs on automobiles.
“Btw, Teslas are the most American-made cars,” the official Tesla account posted on X on Sunday.
That’s true, at least according to one measure. The company has dominated Car.com’s American-Made Index since 2021, based on criteria including assembly location, where the parts are made, engine origin, transmission origin and US manufacturing workforce.
“Tesla’s manufacturing, both as location of final assembly and the componentry of the vehicles, is all as high (a score on the index) as you could possibly get for a US-made vehicle,” Patrick Masterson, lead researcher for the Cars.com index, told CNN.
Tesla’s American-produced cars could partially protect the company from the new auto tariffs, which industry experts say will raise car prices for consumers by the thousands. The 25% tariffs, which were announced Wednesday, will affect all imported cars and car parts beginning April 3. Analysts maintain that the EV maker will be largely shielded, unlike other American automakers like General Motors, which has factories in Mexico.
But car manufacturing “is a complicated process, and no one’s going to be immune from these tariffs,” Masterson said.Even US-made cars depend on parts from Mexico and Canada, thanks to free trade agreements.
Although Tesla produces 100% of its vehicles in the United States at its Texas and California factories, there is truly no 100% “American-made” car — as Musk himself contended Wednesday after the tariffs announcement.
“Important to note that Tesla is NOT unscathed here,” Musk posted on X. “The tariff impact on Tesla is still significant.”
As ‘American-made’ as you can get
Tesla hasn’t publicly said how much its cars depend on international parts. An October 2024 document from the National Highway Traffic Safety Administration shows that 20% to 25% of components for all Tesla cars were imported, though it did not specify from which countries. Between 60% to 75% of components were made in the US or Canada, according to the document.
Cars.com didn’t have data on where specific components are made, but Masterson said Tesla’s “final assembly, engine country of origin, the battery country of origin” are all based in the United States.
And for now at least, car parts made in the US or Canada are grouped together, as part of the American Automobile Labeling Act, even though Trump’s tariffs target Canada as well.
“Tesla in particular is known to source a greater proportion of components installed on its US-built vehicles in comparison to other automakers (both foreign and domestic) producing vehicles in the U.S.,” analysts at JP Morgan said in a note, which pointed out that Tesla and fellow EV maker Rivian would be the least impacted among carmakers.
However, Wolfe Research predicted Thursday a potential annual headwind of $1.6 billion for Tesla, primarily because of the car components made in Mexico.
A small win for Tesla in EV race
The tariffs give Tesla a boost in the electric vehicle competition, especially among its unionized American rivals — Ford, General Motors and Stellantis.
“In the electric vehicle segment, tariffs are a boon to fiercely anti-union Tesla, which will benefit from the disarray of competitors (including the Big Three) who need time to rethink production strategies and retool factories. Any new automotive jobs will be overwhelmingly nonunion,” Cornell University’s School of Industrial and Labor Relations research professor Ian Greer said over email.
In another sign of a potential turnaround, Tesla’s flailing stock is staging somewhat of a comeback, closing higher Wednesday for the sixth straight day, though it dipped again by the end of the week. Meanwhile, shares of Stellantis, Ford and General Motors all fell in after-hours trading after the tariffs announcement Wednesday.
While Tesla may experience a bump in the United States, its CEO, Elon Musk, still faces sharp scrutiny for his outsized role in the federal government as head of the Department of Government Efficiency. Sales have fallen sharply in Europe and China due to an influx of competition, and even the used Tesla market is floundering.
US stocks tanked on Friday as Wall Street grappled with President Trump’s escalating trade war and weighed signs of reinvigorated inflation pressures amid souring consumer sentiment.
The Dow Jones Industrial Average (^DJI) dropped more than 700 points or nearly 1.7%, while the benchmark S&P 500 (^GSPC) fell almost 2%. The Nasdaq Composite (^IXIC) dropped 2.7% as tech stocks led the declines.
The major averages fell on Friday after the release of a hotter-than-expected Personal Consumption Expenditures index reading, which includes the Federal Reserve’s preferred inflation gauge of “core” PCE. The reading showed prices increased more than expected last month, rising 0.4% month over month and 2.8% year over year, continuing a stubborn plateau on the path to the Fed’s 2% target.
Meanwhile, US consumer sentiment in March plummeted to its lowest level since November 2022. The latest reading from the University of Michigan came in at 57, down from a 64.7 reading in the prior month, as consumers fretted about inflation and the broader economy, perhaps most notably in the labor market.
On Friday President Trump said he had a “very good talk” with Canadian Prime Minister Mark Carney, his first conversation with him since Carney was elected earlier this month. When asked about tariffs however, the president said he will “absolutely” follow through with levies against the country.
Stocks have had a roller coaster week, starting off on a high on hopes that Trump would temper his tariff plans and then abruptly diving beginning on Wednesday upon news of new duties on auto imports.
Markets continued to slide Thursday as Wall Street digested Trump’s 25% levies on foreign cars along with more hawkish comments on what lies ahead in the trade war. April 2, the date when broad reciprocal tariffs are set to take effect, is looming large.
Fed officials have projected higher inflation and slower economic growth amid new tariffs, though Fed Chair Jerome Powell has reassured Wall Street that rising prices will likely be “transitory.”
But Powell’s words are fading into the background as Trump’s trade war escalates and more Fed officials say they aren’t exactly sure where the economy goes next, with one policymaker describing the situation as “zero visibility” in a “dense fog.”
The Federal Reserve Bank of Atlanta’s GDPNow index now forecasts that US gross domestic product (GDP) will fall 2.8% in the first quarter, compared to a previous projection of a 1.8% decline released two days ago.
The nuclear industry is racing to launch advanced small reactors by the early 2030s, aiming to meet the deep-pocketed technology sector’s growing need for electricity to fuel artificial intelligence.
The world has relied largely on the same pressurized-water reactor technology for the past 70 years, but those plants have proven incredibly expensive to build in the U.S. in the 21st century.
The first new nuclear plant completed in decades, reactors 3 and 4 at Plant Vogtle in Georgia, infamously cost about $18 billion more than expected and opened seven years behind schedule. Each of those reactors can generate 1,114 megawatts of electricity, enough for more than 800,000 homes.
“Doing these new builds with that older, high pressure technology is just unaffordable,” Chris Levesque, CEO of TerraPower, an advanced reactor company co-founded and backed by Bill Gates, told CNBC.
Despite growing interest in restarting closed reactors, such as Palisades in Michigan and Three Mile Island in Pennsylvania, as a quicker and cheaper near-term solution, there remains “a whole lot of hesitation about a brand new plant,” Levesque said.
The advanced reactors under development promise to have smaller, lighter footprints that could make them cheaper and quicker to build when they are fully commercialized. But the industry is crowded with more than 90 different technologies in various stages of development around the world, according to the Nuclear Energy Agency.
The utility and tech sectors need to winnow down the field to five or 10 companies with the right technology, said John Ketchum, CEO of NextEra Energy, the largest power company by market capitalization in the U.S.
“A lot of them are under capitalized,” Ketchum said of the small nuclear startups designing advanced reactors. “So we’ve got to pick out the ones that we really want to get behind and make the bets,” the CEO said at the CERAWeek energy conference in Houston earlier this month.
Ketchum sees the first advanced reactor coming online around 2031 in the U.S., with more units potentially on the way around 2035. Technology companies will serve as a catalyst, with Levesque saying they are a “huge force” that can drive the industry forward due to their immense demand for electricity coupled with their deep pockets. Alphabet, Amazon, Meta and Microsoft together are worth seven times the value of the entire S&P 500 utility sector.
The following are some of the leading players in the U.S. market to revive nuclear power, all three of them private but with significant financial backing — often from tech companies — and customers already lined up.
TerraPower
TerraPower is the first advanced reactor company in the U.S. to move from design to construction, breaking ground on its first plant near a former coal site in Kemmerer, Wyoming in the summer of 2024. The company aims to start dispatching power by the end of 2030 to Warren Buffett’s PacifiCorp.
TerraPower’s Natrium reactor operates at atmospheric temperature, a feature that Levesque says will reduce construction costs.
The U.S. currently relies on reactors that operate at about 300 Celsius (572 degrees Fahrenheit) and are cooled by water. The system operates under high pressure — water boils at 100 degree Celsius — to keep the coolant liquid, and the plants need heavy, expensive components to contain the pressure, Levesque said.
TerraPower uses sodium, rather than water, as a coolant. Liquid sodium boils at 900 Celsius, much higher than the Natrium reactor’s operating temperature of around 500 Celsius. That means the plant does not need to be pressurized, Levesque said.
Using a low-pressure, lighter plant to avoid high pressure systems “reduces tons of steel, tons of concrete, labor hours, numbers of systems,” Levesque said. He estimates that Natrium plants will cost about half as much to build as a traditional nuclear plant, with prices coming down as more are built.
The Natrium reactor has a power capacity of 345 megawatts, enough for more than 250,000 homes. A plant will have the ability to ramp up to 500 megawatts for several hours by storing heat in a thermal battery made of molten salt, Levesque says. The idea is to be able to dispatch power on demand to the grid when renewable solar and wind power fade because the sun isn’t shinning or winds are slack.
TerraPower has the financial backing of its key founder Bill Gates, SK Group, one of South Korea’s largest energy providers, and ArcelorMittal, a steelmaker. Gates and SK Group led TerraPower’s $830 million funding round in 2022. The Wyoming project is backed by $2 billion from the Department of Energy, which TerraPower says it will match dollar for dollar.
TerraPower filed its construction license application with the Nuclear Regulatory Commission in 2024 and expects the regulator will issue a permit in December 2026.
“We’re trying to show folks we’re inevitable,” Levesque said.
X-Energy
Of all the advanced reactor companies, X-Energy is the first to win a direct investment from a tech company, securing hundreds of millions of dollars from Amazon to build its Xe-100 reactor.
“What this sector needs is risk capital to invest in plants because U.S. utilities aren’t doing it today,” X-Energy CEO Clay Sell told CNBC.
X-Energy’s most recent financing round raised $700 million, led by Amazon and with additional capital from Citadel founder Ken Griffin, Ares Management, Segra Capital Management, Jane Street Capital and the University of Michigan, among others.
“One of the largest corporations in America, a company that is in size larger than the entirety of the investor-owned utility sector in the U.S., was stepping forward and saying we want to facilitate the new nuclear future in the United States,” Sell said of Amazon’s investment.
The cash will largely go to completing the reactor design so it’s ready for construction, and finishing the first phase of X-Energy’s fuel facility, Sell said.
The Xe-100 is an 80 megawatt reactor sold in a pack of four units to construct 320 megawatts in total, the CEO said. The multiple units create redundancy and the small size allows the biggest component, the reactor vessel, to ship from a factory via road to the construction site, Sell said.
The reactor uses helium gas as a coolant rather than water. X-Energy has its own proprietary fuel made of graphite pebbles that contain uranium kernels encased in ceramic. Sell said the graphite can’t melt, which makes the plant “intrinsically safe.”
Amazon’s investment will finance four Xe-100 reactors in Washington state that will be built, owned and operated by Energy Northwest, a utility, with plants coming online in the early 2030s. The intent is to scale up to a dozen Xe-100s in Washington, Sell said.
X-Energy is also working with Dow Inc. to deploy four reactors at the chemical company’s manufacturing facility in Seadrift, Texas. The Department of Energy has awarded X-Energy up to $1.2 billion to develop and deploy its technoloy.
X-Energy aims to become the first company to commission an operational advanced reactor in the U.S., Sell said.
Kairos Power
Kairos Power signed a contract with Alphabet’s Google unit last year to deploy multiple, advanced reactors, aiming to supply the YouTube company with 500 megawatts of power. The first reactor is expected to come online in 2030, with additional deployments through 2035.
Financial terms of the deal weren’t disclosed, but the Google contract is “immensely important,” allowing Kairos to “plan the infrastructure not just for one project but for a series of projects,” CEO Mike Laufer told CNBC.
“It allows us to scale our infrastructure, production — our manufacturing capabilities,” Laufer said.
The 75-megawatt Kairos’ reactor will be deployed in pairs to provide 150 megawatts of total power. Similar to TerraPower, Kairos’ reactor operates at near atmospheric pressure using molten fluoride salt instead of water as coolant. Like X-Energy, Kairos uses fuel that encases uranium kernels in ceramic and graphite pebbles that can’t melt in high-temperature reactors, according to the company.
Kairos is building a low-power, demonstration reactor in Oak Ridge, Tennessee to showcase its ability “to deliver clean, safe, and affordable nuclear heat.” Oak Ridge, site of a national laboratory about 25 miles west of Knoxville, was where uranium was enriched as part of the Manhattan Project to build the first atomic bombs.
Today, there will be a “natural thinning” in the number of advance reactor companies, Kairos CEO Laufer said: “It’s going to be driven by who can actually be in a position to execute projects,” he said.
Originally appeared on E! Online
A little bird told us more changes are afoot for the company formerly known as Twitter.
Elon Musk—who bought Twitter in 2022 and changed the social media platform’s name to X the following year—revealed that his artificial intelligence startup xAI has acquired the brand in a lucrative, all-stock deal.
“The combination values xAI at $80 billion and X at $33 billion ($45B less $12B debt),” Musk wrote in a March 28 post to X. “Since its founding two years ago, xAI has rapidly become one of the leading AI labs in the world, building models and data centers at unprecedented speed and scale.”
He continued, “X is the digital town square where more than 600M active users go to find the real-time source of ground truth and, in the last two years, has been transformed into one of the most efficient companies in the world, positioning it to deliver scalable future growth.”
More than one year after Grok—an AI-powered chatbot created by xAI that’s similar to ChatGPT—was launched on X, Elon said it was officially time to “take the step to combine the data, models, compute, distribution and talent.”
“xAI and X’s futures are intertwined,” he explained. “The combined company will deliver smarter, more meaningful experiences to billions of people while staying true to our core mission of seeking truth and advancing knowledge. This will allow us to build a platform that doesn’t just reflect the world but actively accelerates human progress.”
The Tesla CEO ended his message thanking the teams from both companies for their hard work and dedication, noting, “This is just the beginning.”
After Musk’s announcement, CEO of X Linda Yaccarino echoed his outlook, reposting his update with her own words, writing, “The future could not be brighter.”
As for how X users felt about the business deal? There were chirps all around.
“I’m so curious as to why X folded into xAI and not the other way around,” one user wrote. “It seems like X has the broader base as a platform and that xAI would literally just be a medium/small feature on X.”
Another simply commented, “Wow. Didn’t see this coming.”
While Elon’s business portfolio continues to expand, so does his family. Read on for a deep dive into the many branches of his family tree.
WASHINGTON, March 27 (Reuters) – The U.S. Congressional Budget Office on Thursday projected significant increases in federal budget deficits and debt over the next 30 years, in part due to rapidly rising interest costs, as it sketched out sluggish economic growth and a shrinking workforce.
The CBO’s latest long-term budget projections show federal deficits accelerating to 7.3% of the economy in fiscal year 2055 from 6.2% in 2025. That is up from the 30-year average from 1995 to 2024 of 3.9%.
The U.S. public debt meanwhile is seen rising alarmingly, to 156% of GDP in 2055 from 100% in 2025.
As the non-partisan budget analyst for Congress, the CBO bases its projections on current law, which could change significantly in the short-term.
That is due in part to the push now underway by President Donald Trump and his fellow Republicans who control the U.S. Senate and House of Representatives to slash federal spending and the government’s workforce, while also extending costly tax cuts that are due to expire at the end of this year under current law.
“As bad as this outlook is, it represents an ‘optimistic scenario,’ because policymakers are currently considering adding trillions more in tax cut extensions, which would add to the debt,” said Michael Peterson, head of the Peter G. Peterson Foundation, which advocates fiscal policy reforms.
There are estimates that extending those tax cuts for a decade could add around $4.6 trillion to deficits and debt. House Republicans have proposed spending cuts, including to federal healthcare programs, to achieve some savings.
Trump also has ordered tough border security measures and efforts to deport immigrants that experts see potentially denting the economy as a result of labor shortages.
Whether or not Congress will be able to pass legislation implementing Trump’s agenda could be determined over the next several months.
Another unknown factor is the outcome of court challenges to Trump policies that already are pending. The CBO does not include any consideration of the outcome of those court cases in its long-term projections.
The report also does not factor in the potential impact on the U.S. economy from a broad range of tariffs Trump is implementing against foreign goods.
“Mounting debt would slow economic growth, push up interest payments to foreign holders of U.S. debt and pose significant risks to the fiscal and economic outlook,” the Long-Term Budget Outlook: 2025 to 2055 stated.
Of particular note, government interest payments on its ballooning debt were projected at 5.4% of GDP in fiscal year 2055, up from the anticipated 3.2% in the current fiscal year that ends on September 30.
Core consumer inflation in Japan’s capital stayed above the central bank’s target and accelerated in March on steady gains in food costs, data showed on Friday, keeping alive market expectations of a near-term interest rate hike.
Service-sector inflation also perked up as rent prices rose ahead of the April start of Japan’s new fiscal year, backing up the Bank of Japan’s view that price pressures were broadening.
The data will be among key factors the BOJ will scrutinise at its next policy meeting on April 30-May 1, when the board is set to issue fresh quarterly growth and price forecasts.
“Judging from today’s data, nationwide core inflation will accelerate above 3% in the first half of this year before slowing as the boost to import costs from the weak yen eases,” said Masato Koike, economist at Sompo Institute Plus.
“Consumption is weak, so the key is whether households can swallow further price hikes,” he said.
The Tokyo consumer price index (CPI), which excludes volatile fresh food costs, rose 2.4% in March from a year earlier, data showed, faster than a median market forecast for a 2.2% increase. It accelerated from a 2.2% gain in February.
A separate index for Tokyo that strips away both fresh food and fuel costs – closely watched by the BOJ as a measure of domestic demand-driven prices – rose 2.2% in March from a year earlier after a 1.9% rise in February, the data showed.
This chart depicts the core and core-core inflation levels in Tokyo across the time.
The main driver of the increase was food prices, which rose 5.6% in March for their fastest year-on-year pace of gain since January 2024 – and compared with a 5.0% rise in February.
The cost of Japan’s staple rice surged 92.4% in March, the largest increase since 1976, a sign of the pain households were feeling from rising living costs.
“The rise in food and beverage prices is gradually becoming permanent,” said Saisuke Sakai, chief economist at Mizuo Research & Technologies, adding that such persistent price gains could prod the BOJ to hike interest rates in June or July.
Service-sector inflation accelerated to 0.8% in March from 0.6% in February due partly to a 1.1% increase in rent, which was the fastest year-on-year rise since 1994, the data showed.
The BOJ exited a decade-long, radical stimulus programme last year and raised short-term interest rates to 0.5% in January on the view Japan was on the cusp of sustainably hitting its 2% inflation target.
Governor Kazuo Ueda has said the BOJ will keep pushing up borrowing costs if continued wage gains underpin consumption and allow firms to raise prices, thereby maintaining inflation stably around its 2% target.
The rising cost of living has drawn the attention of some BOJ board members, who warned at their March policy meeting that sticky food inflation could affect broader price moves and public perceptions of future inflation.
A Reuters poll showed many analysts expect the BOJ’s next rate hike to come in the third quarter, most likely in July.
As the Q4 earnings season wraps, let’s dig into this quarter’s best and worst performers in the branded pharmaceuticals industry, including Pfizer (NYSE:PFE) and its peers.
The branded pharmaceutical industry relies on a high-cost, high-reward business model, driven by substantial investments in research and development to create innovative, patent-protected drugs. Successful products can generate significant revenue streams over their patent life, and the larger a roster of drugs, the stronger a moat a company enjoys. However, the business model is inherently risky, with high failure rates during clinical trials, lengthy regulatory approval processes, and intense competition from generic and biosimilar manufacturers once patents expire. These challenges, combined with scrutiny over drug pricing, create a complex operating environment. Looking ahead, the industry is positioned for tailwinds from advancements in precision medicine, increasing adoption of AI to enhance drug development efficiency, and growing global demand for treatments addressing chronic and rare diseases. However, headwinds include heightened regulatory scrutiny, pricing pressures from governments and insurers, and the looming patent cliffs for key blockbuster drugs. Patent cliffs bring about competition from generics, forcing branded pharmaceutical companies back to the drawing board to find the next big thing.
The 11 branded pharmaceuticals stocks we track reported a mixed Q4. As a group, revenues beat analysts’ consensus estimates by 1.3%.
While some branded pharmaceuticals stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.4% since the latest earnings results.
Pfizer (NYSE:PFE)
With roots dating back to 1849 when two German immigrants opened a fine chemicals business in Brooklyn, Pfizer (NYSE:PFE) is a global biopharmaceutical company that discovers, develops, manufactures, and sells medicines and vaccines for a wide range of diseases and conditions.
Pfizer reported revenues of $17.76 billion, up 21.9% year on year. This print exceeded analysts’ expectations by 3%. Overall, it was a strong quarter for the company with a solid beat of analysts’ organic revenue and EPS estimates.
Pfizer Total Revenue
The stock is down 3.8% since reporting and currently trades at $25.22.
Is now the time to buy Pfizer? Access our full analysis of the earnings results here, it’s free.
Best Q4: Supernus Pharmaceuticals (NASDAQ:SUPN)
With a diverse portfolio of eight FDA-approved medications targeting neurological conditions, Supernus Pharmaceuticals (NASDAQ:SUPN) develops and markets treatments for central nervous system disorders including epilepsy, ADHD, Parkinson’s disease, and migraine.
Supernus Pharmaceuticals reported revenues of $174.2 million, up 6% year on year, outperforming analysts’ expectations by 12.2%. The business had a very strong quarter with an impressive beat of analysts’ EPS estimates and full-year operating income guidance topping analysts’ expectations.
Supernus Pharmaceuticals Total Revenue
Supernus Pharmaceuticals scored the biggest analyst estimates beat among its peers. However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $32.79.
Is now the time to buy Supernus Pharmaceuticals? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: Zoetis (NYSE:ZTS)
Originally spun off from Pfizer in 2013 as the world’s largest pure-play animal health company, Zoetis (NYSE:ZTS) discovers, develops, and sells medicines, vaccines, diagnostic products, and services for pets and livestock animals worldwide.
Zoetis reported revenues of $2.32 billion, up 4.7% year on year, in line with analysts’ expectations. It was a softer quarter as it posted a significant miss of analysts’ full-year EPS guidance estimates.
As expected, the stock is down 7.1% since the results and currently trades at $161.61.
Read our full analysis of Zoetis’s results here.
Bristol-Myers Squibb (NYSE:BMY)
With roots dating back to 1887 and a transformative merger in 1989 that gave the company its current name, Bristol-Myers Squibb (NYSE:BMY) discovers, develops, and markets prescription medications for serious diseases including cancer, blood disorders, immunological conditions, and cardiovascular diseases.
Bristol-Myers Squibb reported revenues of $12.34 billion, up 7.5% year on year. This print surpassed analysts’ expectations by 6.6%. Zooming out, it was a mixed quarter as it also produced an impressive beat of analysts’ EPS estimates but a significant miss of analysts’ full-year EPS guidance estimates.
The stock is flat since reporting and currently trades at $59.20.
Organon (NYSE:OGN)
Spun off from Merck in 2021 to create a company dedicated to addressing unmet needs in women’s health, Organon (NYSE:OGN) is a global healthcare company focused on improving women’s health through prescription therapies, medical devices, biosimilars, and established medicines.
Organon reported revenues of $1.59 billion, flat year on year. This number topped analysts’ expectations by 0.9%. However, it was a slower quarter as it logged full-year revenue guidance missing analysts’ expectations significantly.
IT distribution giant TD SYNNEX (NYSE:SNX) missed Wall Street’s revenue expectations in Q1 CY2025 as sales rose 4% year on year to $14.53 billion. Next quarter’s revenue guidance of $14.3 billion underwhelmed, coming in 2.7% below analysts’ estimates. Its non-GAAP profit of $2.80 per share was 3.6% below analysts’ consensus estimates.
TD SYNNEX (SNX) Q1 CY2025 Highlights:
Revenue: $14.53 billion vs analyst estimates of $14.79 billion (4% year-on-year growth, 1.7% miss)
Adjusted EPS: $2.80 vs analyst expectations of $2.91 (3.6% miss)
Adjusted EBITDA: $427.1 million vs analyst estimates of $435.3 million (2.9% margin, 1.9% miss)
Revenue Guidance for Q2 CY2025 is $14.3 billion at the midpoint, below analyst estimates of $14.7 billion
Adjusted EPS guidance for Q2 CY2025 is $2.70 at the midpoint, below analyst estimates of $3.03
Operating Margin: 2.1%, in line with the same quarter last year
Free Cash Flow was -$789.5 million, down from $343.6 million in the same quarter last year
Market Capitalization: $10.58 billion
“The strength of our business model allowed us to grow ahead of the market in Q1. Our end-to-end strategy, global reach and specialist go to market approach continues to empower us to capture a wide range of IT spend,” said Patrick Zammit, CEO of TD SYNNEX.
Company Overview
Serving as the crucial middleman in the technology supply chain, TD SYNNEX (NYSE:SNX) is a global technology distributor that connects thousands of IT manufacturers with resellers, helping businesses access hardware, software, and technology solutions.
IT Distribution & Solutions
IT Distribution & Solutions will be buoyed by the increasing complexity of IT ecosystems, rising cloud adoption, and demand for cybersecurity solutions. Enterprises are less likely than ever to embark on these complicated journeys solo, and companies in the sector boast expertise and scale in these areas. However, cloud migration also means less need for hardware, which could dent demand for large portions of the product portfolio and hurt margins. Additionally, planning for potentially supply chain disruptions is ongoing, as the COVID-19 pandemic showed how damaging a pause in global trade could be in areas like semiconductor procurement.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.
With $59.01 billion in revenue over the past 12 months, TD SYNNEX is a behemoth in the business services sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices.
As you can see below, TD SYNNEX’s sales grew at an incredible 21.2% compounded annual growth rate over the last five years. This shows it had high demand, a useful starting point for our analysis.
TD SYNNEX Quarterly Revenue
We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. TD SYNNEX’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 2.4% over the last two years.
TD SYNNEX Year-On-Year Revenue Growth
This quarter, TD SYNNEX’s revenue grew by 4% year on year to $14.53 billion, falling short of Wall Street’s estimates. Company management is currently guiding for a 2.5% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 5.9% over the next 12 months, an improvement versus the last two years. This projection is above the sector average and implies its newer products and services will spur better top-line performance.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) stock benefiting from the rise of AI. Click here to access our free report one of our favorites growth stories.
Operating Margin
Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.
TD SYNNEX was profitable over the last five years but held back by its large cost base. Its average operating margin of 1.9% was weak for a business services business.
Analyzing the trend in its profitability, TD SYNNEX’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.
This quarter, TD SYNNEX generated an operating profit margin of 2.1%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
TD SYNNEX’s flat EPS over the last five years was below its 21.2% annualized revenue growth. However, its operating margin didn’t change during this time, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.
TD SYNNEX Trailing 12-Month EPS (Non-GAAP)
We can take a deeper look into TD SYNNEX’s earnings to better understand the drivers of its performance. A five-year view shows TD SYNNEX has diluted its shareholders, growing its share count by 63.9%. This has led to lower per share earnings. Taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.
TD SYNNEX Diluted Shares Outstanding
In Q1, TD SYNNEX reported EPS at $2.80, down from $2.99 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects TD SYNNEX’s full-year EPS of $11.48 to grow 15.9%.
Key Takeaways from TD SYNNEX’s Q1 Results
We struggled to find many positives in these results. Its revenue guidance for next quarter missed significantly and its EPS guidance for next quarter fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 9.7% to $113.32 immediately after reporting.
CoreWeave on Thursday said it priced shares at $40 in the company’s IPO, raising $1.5 billion in the biggest U.S. tech offering since 2021.
The company, which provides access to Nvidia graphics processing units for artificial intelligence training and workloads, had planned to sell shares for between $47 and $55 each. At the top end of the range, that would’ve valued CoreWeave at about $26.5 billion, based on Class A and Class B shares outstanding.
The offering is down from 49 million shares to 37.5 million, CoreWeave said in a statement. Bloomberg was first to report on the $40 price. At that level, CoreWeave’s valuation will be closer to $19 billion, though the market cap will be higher on a fully diluted basis.
Earlier on Thursday, CNBC reported that Nvidia, one of CoreWeave’s largest shareholders, was targeting a $250 million order at $40 per share.
CoreWeave’s shares are set to start trading on the Nasdaq on Friday under the ticker symbol “CRWV.”
The IPO is a major test for tech startups and the venture capital market after an extended lull in new offerings dating back to the beginning of 2022, when soaring inflation and rising interest rates pushed investors out of risky assets. Other tech-related companies that have filed to go public in recent weeks include digital health startup Hinge Health, online lender Klarna and ticketing marketplace StubHub. Bloomberg reported on Wednesday that chat app maker Discord is working on an IPO.
The last venture-backed tech company that raised at least $1 billion for a U.S. IPO was Freshworks in 2021. Last year Reddit and Rubrik each raised about $750 million in their offerings.
After Donald Trump’s election victory in November, Goldman Sachs CEO David Solomon said he expected renewed IPO activity, but President Trump’s imposition of tariffs in recent weeks added uncertainty to economic forecasts and led to increased volatility to tech stocks.
CoreWeave counts Microsoft as its biggest customer by far. Other clients include Meta, IBM and Cohere. Revenue soared more than 700% last year to almost $2 billion, but the company recorded a net loss of $863 million. CoreWeave’s model is capital intensive, requiring hefty purchases of equipment and expenditures on real estate.
A week after filing to go public, CoreWeave announced a contract with OpenAI worth up to $11.9 billion over five years. OpenAI agreed to buy $350 million in CoreWeave stock as part of the deal.
CoreWeave is trying to compete with some of the biggest tech companies in the world, including Amazon, Microsoft and Google, the three leading providers of public cloud infrastructure in the U.S.
After GameStop closed about a quarter of its locations within the past year, shuttering 1,000 stores across the world, the company said it’s not close to done. And as the struggling company closes stores, it will invest cash in cryptocurrencies.
GameStop revealed in a regulatory filing Tuesday that it expects to close a “significant number” of additional locations in the coming months, although the “specific set of stores has not been identified for closure.”
A majority of the closures occurred in its biggest market, the United States, with 590 locations shutting down and reducing its store count to 2,325 as of February 1. More than 330 locations closed across Europe, plus nearly 50 stores in Canada and Australia.
Globally, 3,203 GameStops remain — down drastically from its peak of about 6,000 a decade ago.
GameStop has closed hundreds of stores over the past several years because it has struggled to adapt to customers’ changing habits of buying games online and streaming. The company was also center of the “meme stock” craze in 2021, which briefly boosted its stock.
GameStop joins a number of other well-known retailers closing stores or completely disappearing, including Joann, Forever 21, Kohl’s and Macy’s. Among the reasons contributing to the retail exodus is continuing inflationary pressure on consumers’ wallets, pressure from private equity and retailers not quickly adapting to changing shopping habits.
As part of GameStop’s pivot away from retail, the company also said that it’s getting into bitcoin as a treasury reserve asset, announcing that a “portion of our cash or future debt and equity issuances” might be invested in the digital currency.
“The pivot to bitcoin is really a defense against irrelevance,” Neil Saunders, an analyst at GlobalData Retail told CNN, adding that it’s “an odd thing as it’s basically saying the strategy isn’t retail but to act as some kind of cryptocurrency investment vehicle.”
Nevertheless, the crypto announcement helped juice the stock: GameStop (GME) shares soared 16% in premarket trading Wednesday.
