IonQ (IONQ 0.65%). The name sounds like a cleaning product, doesn’t it? Anyway, it was briefly all the rage, shares shooting up like a caffeinated squirrel. But now? Well, now it’s down nearly 60% from its peak. Which is… concerning. Is this a ‘falling knife’ situation? Or are clever people quietly scooping up the bargains? I honestly haven’t decided. Probably best to just lie low and avoid looking at the charts. That usually helps.
Dozens of these ventures find themselves humbled, their valuations diminished. Yet, not all are equally deserving of our attention – or, indeed, our coin. Let us, therefore, examine two players in this drama, one offering a glimmer of reason, the other a testament to the enduring power of self-deception.
The fourth quarter revealed a substantial increase in operating income – a figure of one hundred and fifty-four percent year over year. A tidy sum, certainly. But one must remember that such gains are often ephemeral, like the scent of lilacs in spring. The company’s earnings, as a whole, have seen a corresponding lift, but the underlying question remains: can this momentum be sustained?
This surge, it seems, is fueled by a shortage – a modern plague, if you will – of memory chips. A shortage born of this… artificial intelligence. A most peculiar creation, this intelligence. It demands these chips – these high-bandwidth memory, or HBM, as the technicians call them – as a glutton demands pastries. The demand, of course, has driven revenue and profits skyward, like a poorly constructed balloon released into a tempest. Analysts now whisper of revenues doubling to $75.4 billion by 2026, and earnings quadrupling to $33.38 per share. A forward P/E of a mere 12? A pittance! A trifle! Though one suspects such figures are merely phantoms, conjured by the optimistic imagination of accountants.
Now, Nvidia’s Jensen Huang – a man who looks like he knows a thing or two about silicon and shenanigans – is stepping up to the mic. He’s suggesting this sell-off is… well, let’s just say it’s lacking a certain…logic. The man’s practically shouting from the rooftops, “These investors are acting like lemmings!” (Though, admittedly, a very profitable group of lemmings.)
Let’s not pretend it’s all smooth sailing. Johnson & Johnson, like any enterprise of its size, has its share of barnacles. Government price negotiations, a polite term for legalized extortion, are nibbling at profits. It’s a game of chicken, really – the company versus the bureaucrats, and the patient, as always, pays the piper. Then there’s the looming specter of patent cliffs. Losing exclusivity on a blockbuster like Stelara is akin to a magician losing his rabbit – the trick loses its appeal. And Imbruvica, once a shining star, is now facing a rather crowded constellation of competitors.
Now, don’t go gettin’ your hopes up, though. Just ’cause PIPPIN’s struttin’ doesn’t mean it’s the belle of the ball. Them derivatives and liquidity folks are whisperin’ sweet nothings about a bull trap-a fancy way of sayin’ this rally might be as reliable as a three-legged stool.
But one needn’t always chase after the latest buzzing thingamajig to achieve a decent return, you see. I’ve been casting a discerning eye over the market, and have alighted upon a rather unpretentious little company called Pool Corporation (POOL +1.80%), distributors of all things piscine. Up over fourteen percent year-to-date, it is, and I suspect there’s a good deal more where that came from. Rather like a well-maintained swimming pool, it just keeps on giving.
The company had, on the surface, delivered a quarterly report that would have pleased the bookkeepers. Fourth-quarter earnings and sales exceeded the anticipations of those who chart these things. Yet, a curious dissonance arose. The numbers, bright as they were, failed to stir the deeper currents of investor sentiment. It was as if a perfectly crafted melody fell upon ears preoccupied with a distant, gathering storm.
The trouble, it seems, is people. Not the freelancers, mind you – they’re busy clicking away. No, it’s the customers. Or rather, the lack of them. Six percent fewer active clients, they say. That’s a lot of empty chairs at the digital water cooler. Investors, being the jumpy creatures they are, got the jitters. They don’t like empty chairs. It suggests… well, it suggests nobody’s buying the sweets.