MSFT: $100 billion may be too low

Moody’s ratings are a joke

I stopped by for a quick chat with the super-savvy Stuart Varney this morning ahead of the opening bell. He wanted my take on the latest Moody’s downgrade.

As you can imagine, I didn’t mince words. (Watch)

Rating agencies are lot like the smoke detectors in your house in that the dang things don’t do you a heck of a lot of good if the house burns down before they go off.

Despite having a lot of very smart people who work at Moody’s, the agency is in firm command of the obvious. We already know about the budget crisis, interest rate problems, and the lack of responsible government spending—so there is no new information in their latest report.

The best thing for an investor to do under the circumstances is to focus on the companies that will survive and profit despite the government’s slow-motion train wreck.

Speaking of which…

My new Microsoft target

Many investors lament the fact that they’ve missed great companies like Apple, Microsoft, Tesla, and dozens of others over the years. Now they swear up, down, and sideways that they won’t make that mistake again... yet that’s exactly what many are doing today.

Microsoft, for example, has returned 53.95% YTD and could run substantially higher within the next few years. (Watch)

As I noted to Stuart, my new target is $500 a share and/or a split within the next 24–36 months. I know that sounds outrageous, but the situation reminds me of Tesla in 2012 when very few people saw the upside that I did. (And which I correctly identified.)

Tesla, BTW, has returned 11,173.63% since January 2012, according to FinMasters.

Boeing gets a great order, but I’m still not touching the stock

Boeing received an order from Dubai’s flagship carrier, Emirates Group, which has signed on the dotted line for an additional 55 Boeing 777-9s and 35 777-8s. If I’ve done my math correctly, that brings Emirates’ total orders to 205 777X jets. (Read)

Boeing stock, of course, is up on the news, but I’m still not going to touch it with a ten-foot pole. That’s because aircraft production is a long-cycle investment at a time when the world is driven by short-term headlines.

Keith’s Investing Tip: Matching expectations with market behaviour is critical in today’s complicated financial environment. In other words, you want to make an investment that is in line with profit expectations because that helps provide more consistent returns, a smoother ride, and a more predictable outcome over time. For example, AI generates profits that are exploding very quickly, which means that revenue and earnings will too, but an aircraft can take years to produce, and the international travel market is notoriously fickle, so there is a mismatch.

The most important meeting on the planet

Presidents Biden and Xi will meet this week, and the West will undoubtedly position this as all about tech and intellectual property, Taiwan, and trade. (Read)

The problem is that China is playing a far more sophisticated game at a time when they perceive President Biden to be weak and ineffective.

The stakes could not be higher. Upgrade to Paid

Buy the needle or the haystack?

It’s one of the oldest investing principles in the book. Sometimes you need to look for the needle, but at other times it’s better to buy the haystack.

Nvidia just unveiled its newest high-end chip, the H200. (Read)

What makes the H200 unique is that each chip contains 141GB of next-gen HBM3 memory that will help it generate predictions, text, and images—all of which are AI driven.

You know what to do 😊

Bottom Line

Many people think they can’t make it in the markets because they’re run by exceptional people. Not true.

The markets are run by people who see profits exceptionally.

My job is to help you do that.

And, by the way, YOU are doing that very well!

As always, let’s MAKE it a great day.

Keith 😊