This article first appeared on our U.S. website.

Artificial intelligence (AI) has been all the rage since early last year, helping to ignite and sustain an ongoing market rally. Generative AI has shown the potential to streamline time-consuming tasks, which will increase productivity and boost profits for companies that adopt this groundbreaking technology.

Nvidia (NASDAQ: NVDA) is widely regarded as the flag-bearer for AI, so when Nvidia sneezes, other AI stocks catch a cold. Furthermore, a rate hike in Japan had unintended consequences for global markets.

With that as a backdrop, several of the world’s most renowned AI companies suffered setbacks today. Palantir Technologies (NYSE: PLTR) fell 2.6%, Super Micro Computer (NASDAQ: SMCI) dropped 2.5%, and Broadcom (NASDAQ: AVGO) slipped 1.2%.

Let’s see what set those declines in motion — and what it means for the future.

A stunning one-two punch

Word broke over the weekend that Nvidia had discovered a design flaw in its next-generation Blackwell AI processor, which could set back the release date by three months, according to a report in The Information.

Nvidia’s graphics processing units have been widely acknowledged as the gold standard when it comes to training and running AI systems. Demand has been unquenchable as companies scramble to unleash AI and capture their part of the expected windfall.

Furthermore, Nvidia’s Blackwell processor is a major component of the company’s GB200 Grace Blackwell Superchip, which reportedly offers a 30X performance increase for inference and 4X for training compared to its predecessor, while reducing energy consumption by 25 times. This stunning increase in performance had customers lining up to buy these next-generation chips, so the resulting delay could cost billions.

In an unrelated development, the Bank of Japan announced an interest rate hike in a bid to tame inflation, increasing its benchmark rate from 0.10% to 0.25%. Unfortunately, the move had unintended consequences.

Investors had been taking advantage of Japan’s historically low interest rates to underpin a carry trade. This involved borrowing the Japanese yen and using the funds to invest in the stock market — in this case, many AI-related stocks.

However, the rate hike boosted the value of the yen, making it more expensive to buy. This in turn sent traders scrambling to unwind these trades and replace the borrowed yen. This sparked a stock market sell-off that spread around the globe like wildfire.

But what does this mean for AI investors?

So, what does this mean for investors in Palantir Technologies, Super Micro Computer, and Broadcom? In a word: nothing.

To be clear, it’s unnerving to see the stocks you own slump on no company-specific news. The good news is that the initial global panic that helped take down our trio of stocks by double-digit percentages is already beginning to subside as clearer heads prevail.

AI remains a once-in-a-generation opportunity. Estimates vary, but generative AI could have a market value of between $2.6 trillion and $4.4 trillion annually, according to global management consulting firm McKinsey & Company.

Furthermore, investors should consider this trio of stocks in light of each one’s AI potential:

• Palantir has developed boot camp sessions that companies can attend to create AI solutions for real-world problems — and demand has been off the charts.
• Super Micro Computer provides the cutting-edge servers that businesses need to deploy AI, and the company has been expanding its production facilities to keep up with soaring demand.
• Demand for AI-related products has also been a boon to Broadcom, driving robust growth.

After generating big gains over the past year, this group of stocks has seen a resulting increase in their valuations. Palantir, Broadcom, and Super Micro are currently selling for 72 times, 30 times, and 18 times forward earnings, so Super Micro is already relatively cheap.

However, this doesn’t take into account the expected growth trajectory resulting from strong demand for AI. When measured using the more appropriate forward price/earnings-to-growth (PEG) ratio, each sports a multiple of less than 1, the standard for an undervalued stock.

That helps explain why Palantir, Super Micro Computer, and Broadcom represent compelling opportunities for savvy long-term investors.

The post Why Palantir Technologies, Super Micro Computer, and Other Artificial Intelligence (AI) Stocks Stumbled Today appeared first on The Motley Fool Canada.

More reading

• What Is One of the Best Tech Stocks to Own for the Next 10 Years?
• Got $5,000? 5 Tech Stocks to Buy and Hold for the Long Term
• Here’s the Average TFSA and RRSP at Age 45

Danny Vena has positions in Nvidia, Palantir Technologies, and Super Micro Computer. The Motley Fool recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.

What happened

A broad cross section of the stock market was firmly in rally mode on Thursday, resuming its upsurge from earlier this week. This helped many stocks gain ground, riding the coattails of the broader market indexes as they climbed higher. Many technology stocks have been beaten down over the past year, and investors are increasingly looking for bargains amid the rubble, particularly on the off chance that the worst of the bear market is behind them — and evidence suggests they may be right.

As a result, Shopify (TSX:SHOP) surged 8%, Nvidia (NASDAQ:NVDA) jumped 4.9%, and Roku (NASDAQ:ROKU) gained 4.4% as of 11:47 a.m. ET.

So what

A check of all the usual sources — earnings reports, regulatory filings, changes to analysts’ opinions, etc. — didn’t reveal anything in the way of company-specific news driving Shopify, Nvidia, and Roku higher today. Rather, in a continuation of the positive sentiment that prevailed on Wall Street earlier this week, investors appear to be viewing the economic glass as half full, hoping the market might be able to maintain its recent uptrend. This potential for long-term gains sent bargain hunters out in full force, in search of high-growth stocks dragged down by persistent economic challenges.

Technology stocks have been hit particularly hard since late last year, as investors moved into safer pastures to ride out the market downturn. This has pushed the tech-heavy Nasdaq Composite down nearly 33% from last year’s high. Since then, cautious investors have forsaken high-growth stocks, docking in safe harbors and parking their cash until the economic storm subsides. Our threesome of stocks show how investor attitudes have soured on technology, as Nvidia has fallen 62%, Shopify is down by 82%, and Roku has dropped 85% from last year’s highs.

This week, however, investors have been increasingly optimistic as evidence grows that the central bank’s persistent battle with inflation may finally be yielding results.

In a virtual event this week, Federal Reserve Bank of Minneapolis President Neel Kashkari said the Fed could potentially pause its interest rate hikes next year if there’s convincing evidence that core inflation begins to slow. While that might not seem like much, it’s the first such admission by policymakers that the Fed’s campaign of rising interest rates might be nearing an end. “My best guess right now is yes, I do think inflation is going to level out over the next few months, the services, the core inflation, and then that would position us some time next year to potentially pause,” Kashkari said.

This helped fuel gains by the broader market indexes, with the S&P 500 and the Nasdaq gaining 3.8% and 4.7%, respectively, so far this week and putting them back in positive territory for October.

Now what

While investors are optimistic this week, the prevailing mood can turn on a dime, so Nvidia, Shopify, and Roku shareholders should buckle in for a bumpy ride, as there’s likely more volatility ahead.

Nvidia’s livelihood depends on consumers and businesses buying its graphics processing units (GPUs) used in video games, cloud computing, and data center applications. If the downturn persists, demand could soften further. Likewise, Shopify has taken it on the chin as shoppers returned to in-store shopping, resulting in slowing adoption of e-commerce. Furthermore, Roku’s streaming video platform has experienced slowing growth as viewers put down the remote and got back to their lives.

These factors and the broader economic upheaval have weighed on Shopify, Nvidia, and Roku’s stocks, and expectations of further pain ahead have kept many investors on the sidelines, resulting in some compelling price points. That isn’t to say these stocks won’t fall further — they likely will. Yet calling a bottom almost never works and these stocks are currently trading at their cheapest valuations in years, so the time to act is now.

Still, these high-growth stocks aren’t for everyone. Nvidia and Shopify still aren’t cheap in terms of traditional valuation metrics, currently selling for 10 times and six times next year’s sales. Roku has fallen into bargain basement territory, with its price-to-sales ratio hitting 2.

I own all these stocks and will happily add to any of them, but I think Nvidia is particularly compelling. In fiscal 2022 (ended Jan. 30), the company generated record revenue of $26.9 billion, up 61%, while earnings per share also hit a record $3.85, up 123%. These clearly aren’t the metrics of a company on the brink, showing it’s temporarily weighed down by macro factors beyond its control. As the old saying goes, “This too shall pass.”

That said, for investors with a cast-iron constitution and a time horizon of three to five years, buying shares of the innovative companies while their valuations are lower than they’ve been in years represents a clear opportunity to generate big gains over time.

The post Why Shopify, Nvidia, and Roku Stocks Rallied Early Thursday appeared first on The Motley Fool Canada.

More reading

• What is One of the Best Tech Stocks to Own for the Next Decade?
• Billionaires Are Selling Amazon Stock and Betting on This TSX Stock
• Shopify Just Moved: 2 Canadian Tech Stocks to Buy Next
• A Scorching Hot Stock Worth the Growth Jolt
• AI Spending Is Poised to Hit US$700 Billion in 2026: 2 Top Stocks to Buy to Capitalize on This Massive Number

The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends Nvidia and Roku. The Motley Fool has a disclosure policy.

Shopify (TSX:SHOP)(NYSE:SHOP) announced on Tuesday the release of Shop, a mobile shopping app designed to help consumers find products and connect with local businesses. The app encourages shoppers to review a feed of recommended products and learn about local brands. The company was quick to point out that the app contains no advertising and focuses on brands customers have already shown an interest in.

The company cited social distancing, stay-at-home measures, and the reliance on e-commerce as the reason it chose to develop the app, which contains a number of features designed to help businesses better connect with customers in a world that is increasingly separated. This includes filters that help users find local merchants, while also providing information about shopping, pick-up and delivery options, and return policies.

Shop provides customized recommendations including newly released products, as well as specialized deals based on a user’s shopping history. Once connected, the app ushers customers through the shopping process by providing fast and easy checkout with Shop Pay. It also delivers real-time order and tracking information via Arrive, which provides the status of each package, all in one place on the app.

“Shopify has focused the last decade on solving complex problems for entrepreneurs by making commerce seamless and accessible,” said Carl Rivera, General manager of Shop. “Now, we want to do the same for customers. We set out to solve the common pain points in the customer’s shopping journey today, while developing specific features, like local business discovery, that will be relevant today and in the future.”

This is an expansion of Shopify’s existing Arrive app, which was originally designed to help customers track packages, which the company said has already been used by more than 16 million shoppers.

The post Shopify (TSX:SHOP) Launches Shop App to Connect Consumers With Local Businesses appeared first on The Motley Fool Canada.

More reading

• 3 Canadian Stocks to Buy This Spring
• 3 Dividend Stocks That Look Worth Adding More Of
• A Smart Strategy to Use Your TFSA to Effectively Double Your $7,000 Contribution
• 4 Canadian Stocks to Buy and Hold Through 2026
• The Ultimate Dividend Stock to Buy With $1,000 Right Now

This article was originally published on Fool.com.

The silver lining to an otherwise dark-cloud-filled bear market we have been experiencing over the past two months has been the opportunity for investors to buy quality stocks for much lower prices than they could get just weeks before. While some shareholders gave in to the fear and ran for the exits, others saw the significant stock market declines as a chance to buy great companies on the cheap.

One of the most tantalizing prospects was clearly e-commerce platform Shopify (TSX:SHOP)(NYSE:SHOP), which has skyrocketed 70% over the past 10 trading sessions. Even after the bear market rout, the stock is up more than 48% year-to-date.

Let’s take a look at what drove those remarkable gains, what has investors so bullish on the stock, and whether or not it’s still a buy.

A port in the storm

Shopify provides a platform that allows merchants to quickly and easily set up and maintain an online store, while also integrating many of the tools necessary to succeed, like payments, inventory control, and shipping.

Early this month, Shopify’s management provided an update on the impact of the COVID-19 pandemic on the company’s business operations. Given the uncertainty caused by efforts to control the spread of the disease and the duration and magnitude of the stay-at-home orders, Shopify pulled its full-year financial guidance.

The company also announced a number of steps it was taking to support the merchants on its platform, including extended 90-day free trials, creating gift card availability on all plans for all merchants, and supporting local in-store and curbside pickup and delivery for its point-of-sale merchants.

The news wasn’t all bad, however, as Shopify reported early indications that brick-and-mortar businesses were pivoting to online sales channels, owing to the decline in foot traffic from stay-at-home policies, and playing to Shopify’s greatest strength.

The biggest recent driver, however, came last week when Jean-Michel Lemieux, the company’s chief technology officer, announced on Twitter that Shopify was “handling Black Friday level traffic every day!”

As we help thousands of businesses to move online, our platform is now handling Black Friday level traffic every day!

It won’t be long before traffic has doubled or more.

Our merchants aren’t stopping, neither are we. We need to scale our platform.https://t.co/e2JeyjcEeC pic.twitter.com/6lqSrNUCte

— Jean-Michel Lemieux (@jmwind) April 16, 2020

This illustrates that Shopify is providing merchants with a viable alternative to physical retail. In the current environment, the opportunity to sell goods online can mean the difference between making ends meet and financial ruin — for even the most established merchants.

A stunning fall from grace

It’s important to acknowledge that the overall decline of the stock market between February and March — and of Shopify stock in particular — were big factors in the company’s recent run.

Looking back to just before the bear market began, Shopify had already gained nearly 37% year-to-date, with the stock driven higher by the company’s stellar fourth-quarter earnings report.

Total revenue grew by 47% year over year, accelerating from 45% in the third quarter, and easily topping expectations. Subscription revenue, which is a good barometer of future results, grew 37%. The merchant solutions segment provided a big boost for the quarter, up 53%, the result of soaring amounts of merchandise sold on Shopify’s platform. Those results send the bulls running, with the stock gaining 20% on the day following the earnings release.

However, as the market began its bear market slump on Feb. 19, and investors ran for cover, Shopify stock fell a massive 41% in the 26 days that followed, giving up all the years’ gains and more.

What drove the significant decline? At the time, Shopify had a frothy price-to-sales (P/S) ratio of 40 times sales, with an only slightly more reasonable forward valuation of 27. To put that into context, the S&P 500 typically sports a P/S ratio of between one and two, making Shopify extremely susceptible to volatility. It’s also worth noting that its PS has returned to its previous heady levels, at 42 times sales and a forward valuation of 34.

The bottom line

After such spectacular gains — particularly over such a short time — the question remains “Should you buy Shopify stock right now?”

Much of the answer is personal and depends on you as an investor. While I find the growth story and the long-term opportunity for this software-as-a-service (SaaS) company capitalizing on the growing e-commerce trend equally compelling, there are those investors who tend to avoid stocks with high valuations and don’t have the stomach for excessive volatility, even it if means the potential for extraordinary gains.

If, however, you have the willingness and temperament to endure a high valuation, the associated risk, and a roller coaster ride of volatility for the chance at stellar gains (and assuming you have the appropriate long-term investing time horizon), then Shopify probably deserves a place in your portfolio.

The post Should You Buy Shopify (TSX:SHOP) Stock Right Now? appeared first on The Motley Fool Canada.

More reading

• What is One of the Best Tech Stocks to Own for the Next Decade?
• Billionaires Are Selling Amazon Stock and Betting on This TSX Stock
• Shopify Just Moved: 2 Canadian Tech Stocks to Buy Next
• A Scorching Hot Stock Worth the Growth Jolt
• AI Spending Is Poised to Hit US$700 Billion in 2026: 2 Top Stocks to Buy to Capitalize on This Massive Number

To cap off its first day of operations, Disney (NYSE: DIS) announced that Disney+ launched with 10 million subscribers, sending shares of the media giant up 7% on the day of the announcement to new all-time highs. The high subscriber tally (which could drop by next week since the service offers a free seven-day trial offer) lent credence to the company’s plans to ultimately attract between 60 million and 90 million subscribers. Wall Street had been forecasting just 8 million subs for Disney+ by the end of the year, a goal the company has quickly dispatched.

Apple (NASDAQ: AAPL) debuted its streaming offering, Apple TV+, to much less fanfare on Nov. 1, and to date, investors are left wondering just how many subscribers have signed up. However, based on what we already know, Apple could easily close out its first year with more than 100 million subscribers, leaving Disney’s early viewer numbers in the dust. Here’s how Apple gets there — and why it won’t matter.

Fun with numbers

Apple recently announced that customers who purchase a new device — including an iPhone, iPad, iPod Touch, Apple TV, or Mac — would be entitled to one year of Apple TV+ for free. We can’t know with any certainty how many devices Apple will sell over the coming year, but historical records and analysts’ estimates can give us a good jumping-off point.

Aggregating iPhone, iPad, and Mac sales from fiscal 2018 — the last year for which Apple reported unit sales — the company sold a total of 279 million devices. Since then, however, iPhones have experienced year-over-year sales declines, the result of higher prices and economic weakness in China. The recent positive reception of the iPhone 11 has Apple optimistic it can ship more than 200 million iPhones next year.

Barclay’s analyst Tim Long said he expects Apple to sell about 222 million “hardware devices” over the coming 12 months. Each customer will be entitled to one free year of Apple TV+, and Long expects about half will sign up for the trial offer. By the end of that first year, subscriber churn will begin to take a toll, but new additions will more than offset the customers who opt out.

Using Long’s math, it’s easy to see how Apple TV+ subscribers could easily balloon to more than 100 million.

Smoke and mirrors?

It sounds a lot like the tech giant will rob Peter to pay Paul, as the saying goes. In accordance with generally accepted accounting principles (GAAP), Apple will likely take the $60 cost of the annual subscription (about $5 per month), subtract that from its hardware revenue, then add the $5 monthly Apple TV+ subscription price to its services segment — essentially making the transaction a wash overall from a revenue standpoint.

Apple admitted as much, saying “We do not expect the introduction of Apple TV+, including the accounting treatment for the service, to have a material impact on our financial results.”

Apple is hoping that by giving away a year of its streaming service for free, it will encourage users who like its programming to renew while providing an incentive to customers who might be on the fence about buying a new iPhone.

Not an Apples-to-apples comparison

While most Apple TV+ subscribers won’t have any impact on Apple’s financial statements, Disney is another story. Assuming Disney+ is able to maintain the 10 million subscribers it attracted on Day One, Disney could bank as much as $838 million in the first year, all things being equal — which of course they aren’t.

Disney attracted many of its early customers with discounts and promotional deals, but since it has yet to launch in most international markets, its subscriber numbers have nowhere to go but up from here. This is merely fun with numbers, but it does illustrate that each Disney+ subscriber will be much more valuable to the House of Mouse than an Apple TV+ subscriber will be to the iPhone maker.

Additionally, Apple is only just beginning to build out its library of programming, with about a dozen shows listed on the Apple TV+ website. The iPhone maker will need a much more robust library of content to entice subscribers to stick around.

Disney+, by contrast, hit the ground running with 7,500 television episodes and more than 500 movies from its vault, as well as creating original, exclusive content, including 25 new series and 10 movies. Many of Disney’s most successful franchises and beloved characters are represented on Disney+, including those from its Marvel, Pixar, Lucasfilm, and Disney Animation studios, as well as some recent arrivals like The Simpsons and National Geographic.

Over the coming year, Apple could end up with way more subscribers, but Disney will be laughing all the way to the bank.

The post Here’s How Apple TV+ Could Bank 100 Million Subscribers in Just 1 Year appeared first on The Motley Fool Canada.

More reading

• 3 Canadian Stocks to Buy This Spring
• 3 Dividend Stocks That Look Worth Adding More Of
• A Smart Strategy to Use Your TFSA to Effectively Double Your $7,000 Contribution
• 4 Canadian Stocks to Buy and Hold Through 2026
• The Ultimate Dividend Stock to Buy With $1,000 Right Now

Even before Apple (NASDAQ: AAPL) confirmed its entry into the streaming video market, rumors regarding everything from price to content offerings ran rampant. Even analysts got in on the game, trying to compute just how much such an offering would mean to the Cupertino company’s revenue. Another popular area of conjecture late last year was whether Apple would release a bundle that would include streaming video, news, and music — even before these services debuted.

Apple is apparently ready to bow to public pressure. The iPhone maker is said to be considering a hefty services bundle that could debut as early as next year.

Everything an Apple fan could want

Apple is contemplating a package that would bundle the company’s three most high-profile services. The deal would include Apple TV+, Apple Music, and Apple News+ at a discounted price, according to a report by Bloomberg. Apple is considering the move in a bid to boost its subscriber numbers.

The report cites evidence that suggests Apple may even have planned this move all along. The company included terms in its contracts with publishers that would allow Apple to bundle News+ with its other paid digital services.

That’s not all. Apple is thought to be considering a plan that would include an iPhone and some of its digital services all for one monthly subscription price.

Apple’s not the only one

While it’s not an apples-to-apples comparison, the iPhone maker isn’t the only one trying to attract consumers by providing several of its offerings at a discounted price. Earlier this week, Disney (NYSE: DIS) launched its much-ballyhooed streaming service, Disney+, quickly attracting more than 10 million subscribers.

Part of the strategy employed by the House of Mouse was providing deep discounts to its most fervent fans, but the company also offered consumers a bundle that included Disney+, Hulu’s ad-supported service, and ESPN+ for a low monthly package price of $12.99 — a savings of about $5 per month. Disney went further, offering Hulu Premium subscribers ($11.99 per month) a workaround that lets them adds Disney+ and ESPN+ and still get a $6 monthly discount.

A leg up for Apple TV+?

Apple may have come to the realization that subscribers may need additional incentive to sign up for Apple TV+. The streaming service debuted on Nov. 1 to lukewarm reviews, with some questioning whether the service could hold its own against the likes of Netflix (NASDAQ: NFLX) or Disney. Apple TV+ — which costs $4.99 per month — currently only offers about a dozen programs in all, which pales in comparison to its rivals.

Disney said earlier this year that it planned to launch Disney+ with 7,500 television episodes and over 500 movies, as well as a number of new and exclusive series and films. Some estimates put the size of Netflix’s catalog at more than 13,000 titles worldwide early last year, though the company hasn’t publicly spoken about the size of its library. This is understandable given that Netflix operates in more than 190 countries worldwide, and the number of programs varies by country due to licensing agreements.

Both numbers make Apple’s catalog seem positively dismal by comparison. By bundling Apple TV+ with other services, the tech giant may be able to boost its subscriber numbers while it builds out its content library.

The post Apple’s Long-Rumored Digital Bundle Could Hit Next Year appeared first on The Motley Fool Canada.

More reading

• 3 Canadian Stocks to Buy This Spring
• 3 Dividend Stocks That Look Worth Adding More Of
• A Smart Strategy to Use Your TFSA to Effectively Double Your $7,000 Contribution
• 4 Canadian Stocks to Buy and Hold Through 2026
• The Ultimate Dividend Stock to Buy With $1,000 Right Now

This is the first record-sharing platform of its kind for VA patients, making this a huge deal for Apple. The VA is the largest medical system in the United States, providing service to more than 9 million veterans across 1,243 facilities, including hospitals and clinics.

Apple first announced the partnership earlier this year, adding the VA to the growing list of health providers that are opting to use the cutting-edge software feature.

Portable digital health records

Veterans only need to sign into their providers’ patient portals in the Health app, allowing the users to access all of their health records in one place. The app aggregates a patient’s medical information from across participating medical institutions and organizes the data in one view. This includes details regarding allergies, medical conditions, immunizations, medications, and lab results. The system also lists procedures and displays vital signs. Apple said the Health app “continually updates these records giving VA patients access to a single, integrated snapshot of their health profile whenever they want, quickly and privately,” according to the press release. The app also gathers information from Apple’s other health tracking functions from devices like the iPhone and Apple Watch.

The VA joins a host of other medical facilities that Apple has already recruited to support the Health records feature on iOS, including Johns Hopkins University, University of California San Diego, Quest Diagnostics, Allscripts, and 400 other healthcare provider organizations, laboratory networks, and electronic health records vendors.

The functionality is accessible to U.S. veterans across the U.S., as well as those in Puerto Rico, Guam, Cuba, Philippines, and the U.S. Virgin Islands.

Additionally, all Health records data is encrypted and protected by the user’s iPhone passcode, Touch ID, or Face ID.

A continuing trend

Over the past several years, Apple has made a noticeable push into the healthcare arena. This began in earnest when Apple collaborated with Stanford Medicine in late 2017, recruiting Apple Watch owners to participate in a clinical trial to test the ability of the device to detect atrial fibrillation (also known as AFib). This serious medical condition is the most common type of irregular heartbeat, which can result in blood clots that can lead to strokes or heart attacks.

The response was unheard of, with 419,093 Apple Watch users in 50 states signing up to be part of the research. The results of the study, which was published earlier this year, concluded, “wearable technology can safely identify heart rate irregularities that subsequent testing confirmed to be atrial fibrillation, a leading cause of stroke and hospitalization in the United States.”

The company’s move into healthcare continued in 2019. In early September, Apple announced the release of a new research app for the Apple Watch that allows device users to participate in health studies. The app lets users share health-related data collected by the Watch with researchers. At the same time, Apple announced a trio of new health studies focusing on the heart, hearing, and women’s health.

CEO Tim Cook believes the field will be something of a legacy for Apple. “If you zoom out into the future, and you look back, and you ask the question, ‘What was Apple’s greatest contribution to mankind?’ it will be about health.”

Ahead of the curve

Earlier this year, the U.S. Department of Health and Human Services (HHS) proposed new rules that would require healthcare providers to make electronic health information available to their patients and to do so at no cost. The regulations would require “open data sharing technologies” by 2020, making it easier for patients to change healthcare providers — as well as insurers.

Apple is among the first providers of such portable data, giving the company a distinct edge as medicine moves deeper into the digital age.

The post Apple’s Partnership With America’s Biggest Medical System Is Up and Running appeared first on The Motley Fool Canada.

More reading

• 3 Canadian Stocks to Buy This Spring
• 3 Dividend Stocks That Look Worth Adding More Of
• A Smart Strategy to Use Your TFSA to Effectively Double Your $7,000 Contribution
• 4 Canadian Stocks to Buy and Hold Through 2026
• The Ultimate Dividend Stock to Buy With $1,000 Right Now

Google-parent Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) reported the results of its third quarter, and the market shrugged. While revenue growth was strong, profits fell far short of expectations.

Shareholders were initially disappointed at the results, with shares slipping about 2%. However, a careful review of the underlying information shows that things aren’t what they appeared. Let’s dig a little deeper into the results, which shows that investors’ first impressions were based on a misreading of the numbers.

Revenue up, profits down

Alphabet reported revenue of $40.5 billion, up 20% year over year, or 22% in constant currency. This easily surpassed analysts’ consensus estimates, which were calling for revenue of $40.33 billion. It also accelerated from Alphabet’s 19% growth in the second quarter.

The bottom line, on the other hand, was a source of investor disappointment. Alphabet’s operating margins slipped to 23% this quarter, down from 25% in the year-ago quarter. Net income of $7.068 billion fell 23% year over year, generating diluted earnings per share (EPS) of $10.12 — also down about 23% — and falling far short of expectations of $12.28.

Strong advertising gains

Excluding “other” revenue, Google advertising grew to $33.92 billion, up 17% year over year. This was also an acceleration from the 16% growth in Q2 and 15% in Q1. The company had continued success improving the rate of traffic acquisition costs (TAC), the payments made to partners like Apple for directing its users to Google’s web search. Similar to last quarter, TAC of $7.49 billion declined to 22% of Google’s advertising revenue, down from 23% in the prior-year quarter.

Paid clicks on Google properties rose 18% year over year, while cost-per-click for the quarter declined by 2%. Impressions on Google Network Members’ properties increased 12% compared to the prior-year quarter, while the cost-per-impression declined by 3%.

Google’s “other” revenue

Outside of its core advertising, Google’s “other revenue” segment — which is made up of Alphabet’s high-growth segments, including cloud computing, Pixel phones, Nest cameras, Google Play Store, and other hardware — climbed to $6.4 billion, up 39% year over year. It’s also worth noting that these businesses now account for nearly 16% of Alphabet’s total revenue. The biggest contributor is cloud computing, which recently achieved a run rate of $8 billion, though Alphabet continues to keep the actual numbers close to the vest.

Revenue from Alphabet’s “other bets” — which includes its self-driving-car segment Waymo, Google Fiber, life sciences division Verily, drone unit Wing, and balloon segment Loon — edged higher during the quarter, with revenue of $155 million, up 6% year over year. While the amount of revenue from these segments is minimal, they represent the high-growth areas of tomorrow.

A big misunderstanding

As uninspiring as Alphabet’s bottom line appears at first glance, there were two one-time items that sorely skewed the tech giant’s results, making the earnings look far less impressive than they actually were.

On the conference call, CFO Ruth Porat pointed out that the increase in general and administrative expenses was “primarily due to a $554 million charge” related to a French tax settlement. The company also recorded a $1.48 billion loss on equity investments (compared to a gain of $1.35 billion in the prior-year quarter).

With Alphabet having about 690 million shares outstanding, those two factors alone reduced the company’s earnings per share by $2.95. Added back to Alphabet’s reported EPS of $10.12, that would have resulted in EPS of $13.07, easily surpassing expectations.

For long-term investors, however, this quarter will be just one of many. Alphabet’s ability to continue to improve its search results, while financing the next generation of moneymakers, will ultimately lead to success.

The post Alphabet’s Earnings Don’t Tell the Whole Story appeared first on The Motley Fool Canada.

More reading

• 3 Canadian Stocks to Buy This Spring
• 3 Dividend Stocks That Look Worth Adding More Of
• A Smart Strategy to Use Your TFSA to Effectively Double Your $7,000 Contribution
• 4 Canadian Stocks to Buy and Hold Through 2026
• The Ultimate Dividend Stock to Buy With $1,000 Right Now

Earning the label of “known quantity” has made a number of these shows must-have properties, especially as a group of soon-to-debut streaming services looks to take on the incumbents.

With that in mind, here are three tantalizing developments in the streaming space from this past week.

1. Pretty as a Peacock

NBCUniversal, a division of Comcast (NASDAQ: CMCSA), announced the name of its upcoming streaming service and gave an estimate of when it will debut. The offering — which has been dubbed Peacock — will launch in April 2020. The name is a nod to the broadcast network’s iconic logo.

Earlier this year, NBC revealed that it had signed a deal for The Office, a hit show that ran nine years on the broadcast network. The program, which currently appears on Netflix (NASDAQ: NFLX), will be the centerpiece of Peacock’s offering when it returns to NBCUniversal in 2021. Reports suggest the company paid a whopping $500 million, outbidding Netflix, Disney-controlled Hulu, and Amazon to secure the rights to the fan-favorite program.

Peacock plans to stand out in the crowded field with a heady mix of original programming, news, sports, late-night, and reality shows. The streaming service will also offer a host of popular programs including 30 Rock, Bates Motel, Brooklyn Nine-Nine, Cheers, and Will and Grace, among others. It will also feature box-office hits from NBC’s Universal Pictures division and Spanish-language programming from Telemundo.

2. A show about nothing

There was much wailing and gnashing of teeth among Netflix investors when the company recently lost the streaming rights to two of its most popular series. After it ceded The Office and Friends to the competition, many were concerned that with the loss of these two headliners, Netflix subscribers would have no choice but to spend their streaming dollars elsewhere.

However, armed with billions of dollars for content and algorithms to guide its choices, Netflix has struck back. The tech giant reached a five-year deal with Sony — reportedly worth more than $500 million — to nab all 180 episodes of Seinfeld for its 151 million viewers around the world, beginning in 2021.

This illustrates just how savvy Netflix is when it comes to programming. The company secured a global streaming rights deal, while the agreements for The Office and Friends for NBCUniversal and AT&T‘s (NYSE: T) HBO Max, respectively, only covered domestic streaming — giving Netflix much more bang for its buck. And speaking of bang…

3. Bazinga!

HBO Max scored another coup, this time winning the U.S. streaming rights to The Big Bang Theory. All 279 episodes will appear on the service when it launches in spring of 2020. While the terms of the agreement were not officially released, it was called an “easily record-setting five year deal” by The Hollywood Reporter, part of a “multi-billion dollar” agreement that included syndication rights to keep the show on WarnerMedia’s TBS network — also part of AT&T.

The comedy has become a global phenomenon since its debut in 2007. In its 12-year tenure on CBS, it became the longest-running multicamera comedy series, stealing the crown from Cheers. It was also CBS’s No. 1 scripted half-hour show among the important 18-to-49 demographic.

The addition of The Big Bang Theory and Friends has netted HBO Max two of the most-watched sitcoms of the past two decades.

The post 3 Must-See Streaming Announcements You May Have Missed This Week appeared first on The Motley Fool Canada.

More reading

• Billionaires Are Selling Amazon Stock and Betting on This TSX Stock

NBCUniversal, a division of Comcast (NASDAQ: CMCSA), revealed the name of its upcoming streaming service on Tuesday — Peacock — and said it would roll out in April 2020. The company said the moniker was a nod to NBC’s “iconic logo,” but it also distinguishes itself from several competitors like the new Disney and Apple streaming services by avoiding the “plus” designation used in both Disney+ and AppleTV+.

Peacock will be headlined by several of the broadcast network’s biggest hits, including The Office and Parks and Recreation, which the company touted as two of the most watched streaming series. The new service will feature more than 15,000 hours of content when it debuts and will have both ad-supported and subscription options. NBC said it will announce the final decision on pricing and an exact launch date as it gets closer to its debut.

A compelling mix of programming?

NBC is hoping that a diverse mix of content will set Peacock apart from the host of other streaming services entering the marketplace. Peacock will include not only television programs and hit movies but also news, sports, late-night, and reality programming.

Original content has been a key ingredient to the success of other streaming services, and Peacock will have its share. The company said in a press release that it would offer a broad slate of original shows, including Dr. Death, based on the true-crime podcast, and Brave New World, based on the dystopian novel by Aldous Huxley. The service will also offer reboots of the popular shows like Battlestar Galactica, Saved By the Bell, and Punky Brewster — which features Soleil Moon Frye reprising her role as an adult.

Peacock will feature a laundry list of NBC’s most popular current and classic television series, including 30 Rock, Bates Motel, Brooklyn Nine-Nine, Cheers, Will and Grace, and many more. The platform will also offer a robust slate of critically acclaimed films and box-office hits from NBC’s Universal Pictures division, including American Pie, Bridesmaids, A Beautiful Mind, Back to the Future, and E.T. The Extra Terrestrial. The service will also feature a number films from the popular Bourne, Despicable Me, and Fast & Furious franchises.

The company will cater to the U.S. Hispanic audience by including 3,000 hours of programming from the No. 1 Spanish-language network, Telemundo — another network owned by NBCUniversal — including both new shows and hit programs from its library, like 100 Dias Para Volver, Betty in NY, El Baron, and Preso No. 1.

Another distinguishing characteristic of Peacock’s streaming offering will be sports coverage, as the service will be included in NBCUniversal’s cross-platform coverage of the 2020 Summer Olympic Games in Tokyo between July 24 and Aug. 9.

Writing fat checks

The streaming wars are heating up, and the newest players and tech giants alike are relying on headline television programs to draw in viewers.

NBCUniversal announced earlier this year that The Office would be leaving Netflix (NASDAQ: NFLX) in 2021 and that NBC is in talks to reboot the iconic series to headline its streaming service. At the same time, Netflix lost Friends to AT&T‘s upcoming HBO Max service, in a deal said to be worth $425 million.

HBO Max has reportedly won the U.S. streaming rights to the hit comedy The Big Bang Theory, which concluded its 12-year run on CBS earlier this year. While the terms of the agreement weren’t disclosed, reports suggest that the five-year deal was worth nearly $500 million. Netflix has the international streaming distribution rights for the show.

Netflix reportedly paid more than $500 million for the worldwide streaming rights to Seinfeld after losing the The Office and Friends. The show will make its debut on Netflix in 2021 after finishing its current run on Disney’s Hulu.

This illustrates just how critical must-watch content is to attracting viewers, and NBC is hoping that a diverse slate of content headlined by The Office will buttress its upcoming service.

The post NBC Will Debut Its “Peacock” Streaming Service in April appeared first on The Motley Fool Canada.

More reading

• 3 Canadian Stocks to Buy This Spring
• 3 Dividend Stocks That Look Worth Adding More Of
• A Smart Strategy to Use Your TFSA to Effectively Double Your $7,000 Contribution
• 4 Canadian Stocks to Buy and Hold Through 2026
• The Ultimate Dividend Stock to Buy With $1,000 Right Now