Give Credit Where It’s Due: Moody’s

In 1900, John Moody decided it was a good idea to start a company that compiled statistics on stocks, bonds, and bond ratings. Standard & Poor’s (NYSE: SPGI) had been around since 1860, but having a monopoly on such important information can be risky. Many of the people running big companies then aren’t interested in taking on more risk than they need to, and it’s the same today too.

 

Source: Wikipedia

 

This was an opportunity for young Moody to build his business in a space that was growing as fast as the country was then. By 1903, Moody’s Manual was a national publication. The crash of 1907 inspired the Federal Reserve system, and that meant even more interest in keeping current on credit and business statistics, but Moody had to sell his business after the crash.

In 1909, he returned with a product specifically focused on railroad bonds. Railroads were booming, and they took a lot of investment, not only for tracks, but all the land the tracks ran on. Teddy Roosevelt was president and the Panama Canal was underway. United States Steel Corporation founded Gary, Indiana to produce steel for a fast-growing nation.

Granted, WWI was on the horizon, but the US was already in the midst of its own expansion, physically as well as economically. That meant there were a lot of opportunities that companies were interested in exploiting. It also meant that more and more businesses and financial institutions were looking to separate the real opportunities from the shady ones. It was a great time to be in the ratings and business statistics business.

 

From Then to Now

Over the decades, Moody’s (NYSE: MCO) grew, and by the 1960s, it was sold to Dun & Bradstreet (NYSE:DNB). By 1999, DNB spun MCO off as a separate publicly traded company.

Today, MCO, Standard & Poor’s, and Fitch are considered the Big Three ratings agencies. Their business as ratings services is now global. Each has their own rating system, but generally speaking, they all have relatively uniform standards when it comes to building their ratings.

Also, since deriving those ratings take enormous amounts of research, they all provide research and consulting services for the buy side and sell side companies.

 

Source: Andalou Agency

 

Given all the recent global challenges – from the pandemic to the economic sanctions put on Russia, to the destruction of the Ukraine nation, to the supply chain crisis that has continued across the world – it’s never been more important for companies to understand what’s happening. Moody’s is a key source of that information, especially for institutional investors.

 

Source: Seeking Alpha

 

A New Twist: ESG

Moody’s has continued to find new opportunities as well.

The expanding ESG investing sector, which focuses on how to value companies and their efforts to be more environmentally, socially responsible, as well as be more diverse in leadership and board positions, is a growing interest to many institutional investors.

 

Source: Ceres

 

Moody’s recently bought a company that specializes in developing ESG statistics and research. That means Moody’s is well positioned for growth now, as well as long into the future.

MCO stock has had a bit of setback year-to-date, down 27%, but take a look at this 12-year chart.

 

 

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The Birth of a GPU Titan

Nvidia (NASDAQ: NVDA) was founded in 1993 by three seasoned computer and electrical engineers.  They were Jenson Huang, a former microprocessor designer from Advanced Micro Devices (NASDAQ: AMD), Chris Malachowsky, a former electrical engineer from Sun Microsystems, and Curtis Penn, also a former microprocessor engineer from Sun Microsystems. Back in a time when personal computers had coarse resolution and spreadsheet programs, like Lotus 123 and word processor programs like Word Perfect were considered to have state-of-the-art graphics, these three collectively had the vision that one day personal computers would become media centers. That is, personal computers would become a place where your family would watch the news, watch music videos, and play lifelike video games.

 

Nvidia headquarters in Santa Clara, California. (Source: nvidia.com)

 

Boy, were they correct! Their approach was to build special purpose graphics cards for computers. Where previous computers processed graphics with their main central processors, Nvidia focused on adding high performance processers onto dedicated graphics cards.

In most cases, the number of bits doing the processing on these graphics cards outnumbered those on the motherboard’s main processor – more bits, faster processing, which equals faster graphics. Today, for example, many of Intel’s high-end processors run on 64-bit chips. In some cases, Nvidia’s graphics cards run on multiple linked processors with ten times this many bits.

Nvidia has an incredible history of firsts and milestone product placement. In 1997, they designed and produced the world’s first 128-bit graphics card. PGGP pick Microsoft (NASDAQ: MSFT) chose Nvidia to supply the processor for its Xbox video game console in 2000.

NASA and Nvidia worked together in 2004 to produce a 3D virtual model of the surface of Mars. This was accomplished using the first-ever graphics card with multiple linked graphics processors. Sony (NYSE: SNE) chose Nvidia graphics cards for their famous PlayStation video game console in 2005.

In 2006, Nvidia jumped feet first into making graphics processors for smartphones and tablets. The world’s first 3D ultrasound machine was made by Siemens in 2009 using Nvidia graphics processors.

Starting in 2010, the world’s fastest supercomputer, Tianhe-1A, was spec’d with Nvidia processors. Also that same year, Nvidia processors enabled the production of James Cameron’s highly vivid and graphically intricate movie, Avatar. The world’s first dual core processor for smartphones was produced by Nvidia the following year. Two years after that, Nvidia made the world’s first quad-core processor for smartphones.

 

NVDA’s Most Recent Technical Progress

Producing dedicated graphics processors with 7 nanometer (nm) wire technology is Nvidia’s latest and greatest effort to make even faster processors. The smaller the wires on the processor, the smaller the transistors used to process information, algorithms, operation sets, etc.

The smaller the transistors, the more that can fit on a single chip. The result is ever faster computer processors that can handle more complex computations in less time. In the fourth quarter of 2020, Nvidia released their GeForce 30 Series graphics cards, which were the first ever to use 7 nm wire technology.

Nvidia personnel refer to this as their Ampere Architecture. The previous generation of chips used the Turing Architecture. They relied on 14 nm wire technology and were far slower than the GeForce 30 Series products.

 

An Ampere based graphics card being held by company CEO, Jensen Huang. (Source: pcmag.com)

 

The advancement of technology never seems to falter at Nvidia. In March 2022, the chipmaker announced that it had developed processors based on 5 nm wire technology. The new architecture is named Hopper and will soon appear in the next generation of graphics cards. Specific products and release timing have yet to be announced.

What’s also interesting is that Nvidia plans to release general computer processors (not just graphics cards processors, a.k.a GPUs) using the Hopper architecture. These processors will be used in next generation supercomputers and are said to be specially designed to accelerate the speed and effectiveness of artificial intelligence algorithms. In the meantime, Nvidia plans to keep selling faster graphics cards using the Ampere architecture.

 

Nvidia will be introducing 5 nm wire technology in their new Hopper architecture for graphics processors (Source: wccftech.com)

 

Nvidia’s trajectory certainly is interesting. It started by developing dedicated hot-rod GPUs for the gamer crowd. However, uses for Nvidia graphics cards didn’t stop with graphics cards. It turns out that its ultra-highspeed processors are also ideal for cryptocurrency miners. For those guys, speed translated directly into more crypto money in their virtual pockets.

Indeed, sales of NVDA GPUs to crypto miners generated billions of dollars in revenue for Nvidia. This cash influx, as well as its ever-advancing knowledge of ultra-highspeed computing power, has encouraged Nvidia to branch out into platforms that support scientific computing, artificial intelligence, new data platforms, robotics, and many other computationally intensive fields.

In April 2022, Nvidia announced plans to open a new R&D center in Armenia. This center will further support Nvidia’s diversification in many additional computing fields.

 

Financials

Following its IPO in January 1999, NVDA stock has performed impressively, as can be seen in the stock chart below. The IPO price was $19.69 per share, and today the stock price is near $200 per share. Nvidia’s stock has split two-for-one three times to increase the number of shares at a constant market capitalization. The most recent split was in 2007 where two shares were traded for three.

 

 

For the fiscal year ending January 31, 2022, Nvidia made profits of nearly $9.8 billion on revenues of $26.9 billion. This was up for the previous fiscal year, even during the supply chain crisis. With performance like this in the wild economy we’re riding through right now, it’s impressive that Nvidia’s stock has performed admirably over the past year, as can be seen in the stock chart above.

 

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Next-Gen Chips Demand a Next-Gen-Focused Company

Up to now, we have hardware – semiconductors and other electronics that power our electronic devices. Everything these days seems to have some kind of “intelligence” in it, from our cars, toaster ovens, and thermostats to phones, computers, and e-readers. Today, most of the builds are serial, meaning the hardware is built and then the software is built after it understands the architecture of the chip.

Synopsis (NASDAQ: SNPS) saw this as a challenge. What if you could build both the hardware and software sides of the chipsets simultaneously? You could save tons of time and also troubleshoot issues before you ended with a chip that didn’t really fit the software architecture.

 

Source: LinkedIn

 

Since 1986, SNPS has been working on moving hardware and software together to not only get new generations of chips faster to market, but also ideally suited for complex purposes as both hardware and software. You see, this kind of technology is crucial to next-generation sectors, like artificial intelligence (AI), self-driving cars, system-on-a-chip (SoC), Internet of Things (IoT), Software as a Service (SaaS), and software testing. This also means things like rapid prototyping, decentralized finance (DeFi), and cybersecurity can also be built with much more rigor and reliability.

 

Source: Tech Design Forum

 

Above is the basic challenge. While I’m not an expert enough on the systems side to explain what’s happening here, the fact is that if you’re building out “brains” for solutions like SoC and AI, you have to have increasingly complex chips that will act like a biological brain. That takes massive amounts of software to help it work.

This is why the kind of work that SNPS does is so crucial to the way chips are developed moving forward.

 

Already An Industry Influencer

In a recent article in the Wall Street Journal, SNPS CEO, Aart de Geus, is mentioned as one of the people the lead Apple (NASDAQ:AAPL) chip designer talked to about building out a proprietary in-house chip for AAPL’s computers moving forward. The point here is that SNPS isn’t just an up-and-comer, it’s an established, well-respected company by some of the most prestigious tech firms in the world.

 

Source: Synopsys

 

This has been something we have heard about in the news from the likes of Intel and other major chipmakers in recent years. Where a chip they made and sold has a security flaw that left tens of millions of users exposed and then armies of software engineers had to be deployed to come up with stop-gap fix. Also, bear in mind that this type of dynamic and unified prototyping also helps when it comes to making sure that the hardware and software running on that chip are as secure as possible from the outset.

It also means that this type of unified prototyping helps build quality and security into chips destined for financial use as well as government, military, and intelligence use.

 

SNPS Stock Continues Its Rise

Even as the chip slowdown due to supply chain issues and Covid lockdowns in China continue, demand for SNPS continues unabated.

 

 

The stock has been hit year to date, but for the past 12 months it’s still in positive territory.

This current price drop is a great opportunity to buy into this unique and exciting stock now. Its $44 billion market cap makes it a big fish to swallow for some of its competitors, but it wouldn’t be surprising for a major tech firm like AAPL or Alphabet (NASDAQ: GOOGL) to snap it up to further their own goals in building cutting edge consumer and industrial tech solutions.

 

The MegaTrend Stocks Await in Proffe’s Trend Portfolio

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The History of Visa, Inc.

The story of Visa, Inc. (NYSE: V) starts in the late 1950s in central California.  At the time, people had many credit accounts at many locations. At the local grocery store, for example, you had a credit account, and when you bought groceries, your purchase was added to your account.  At the end of the month, the grocery store sent you a bill.  In the US, this bill would typically be paid with a check, or what was really a note to your bank to pay the grocery store a certain amount from your account.

People had a similar arrangement with their local hardware store, their gas station, their farm supply store, their department store, and their auto repair shop, etc. Credit was often only extended on the basis of personal relationships and community reputation. You wouldn’t have received credit without these.

The Bank of America, who at the time had its headquarters in San Francisco, recognized how cumbersome this system was as Americans began moving around the country. Their new product development think tank came up with the idea of creating a credit account card called the BankAmeriCard. Customers could present any one of the businesses with which they frequently or infrequently do business with and have Bank of America provide the credit rather than the individual businesses.

At the end of the month, you got a summary of all your expenses in one card statement and made one payment to the bank, rather than to umpteen different businesses. Moreover, if you didn’t have a relationship with a particular company, you could purchase on credit with a promise from the Bank of America that they would be paid.

Wow!  What an improvement!  Think of the time savings and ease that this innovation delivered and continues to deliver today.

The first pilot program for the BankAmeriCard was in Fresno, California, and although the program wasn’t a complete success (there were higher than expect default rates), Bank of America began licensing the program to various other banks around California.

Later, the BankAmeriCard program was licensed outside California and then even outside the United States. By the 1970s, the program had become so large that the licensee banks formed a consortium called National BankAmeriCard Inc., or NBI, led by a man named Dee Hock.

Eventually, NBI became so large that it was spun-out of the Bank of America and renamed “Visa.”  Mr. Hock chose this name because the word “Visa” had a similar pronunciation and meaning in nearly every language.

Today, Visa is ubiquitous. Most Americans who have credit or debit cards have some form of Visa card, and the majority of businesses in every part of the country accept a Visa card as payment. This is especially true for online purchases.

 

Vintage Visa sign placed in merchant’s window. (Source: Wikipedia.org)

 

Surprisingly, Visa didn’t go public until many years after its inception.  In 2008, Visa was offered to the public for the first time. It was offered at $42 per share and was the largest initial public offering in history at the time, raising a whopping $17.9 billion.  Since then, the stock price split 4 for 1 (in 2015), and its market capitalization has roughly doubled.

Today, Visa has its headquarters in Foster City, California. However, in late 2019, it announced that it was in the process of building a new 13-story building in San Francisco, which will become the new home of its corporate headquarters. Planning is underway to move there in 2024 when the building is complete.

 

Architect’s drawing of Visa’s new corporate headquarters building at Mission Point in San Francisco, scheduled to open in 2024. (Source: sfyimby.com)

 

Recent Partnerships and Acquisitions

Visa is a strong supporter of innovation in fintech and has made several key announcements since our last report on the company involving partnerships and acquisitions in this space.

In February 2021, Visa announced that it entered into a partnership with First Boulevard. This fintech start-up is a fully online bank, also known as a neobank. It plans on issuing virtual credit cards using Visa’s payment products. This also helps First Boulevard utilize Visa’s well developed cybersecurity infrastructure.

Approximately a month after Visa announced the partnership with First Boulevard, the company announced that it would begin accepting payment in Stablecoin, a cryptocurrency that’s pegged to the US dollar. Although it uses blockchain technology to record transactions and accounts, it doesn’t exhibit the inherent volatility of other cryptocurrencies.

In March 2022, Visa announced that it had acquired Stockholm, Sweden based start-up, Tink. This company is considered by many to be Europe’s most robust open banking platform. Open banking allows third party fintechs to access data from your bank. It’s used to confirm bank account ownership, have visibility into bank accounts, and coordinate banking transactions. This is the technology that allows money transfer apps like Venmo, Wise, or Remitly to function.

Tink is the leader in Europe and will pave the way for future banking innovation. By joining with Visa, Tink gains access to a fortress of cybersecurity measures developed by Visa. In return, Visa takes a giant step ahead in open banking technology and money transfer apps. Tink already has relationships with over 3,400 banks in Europe.

 

Financial and Stock Performance

In 2021, Visa made a $12.3 billion profit on revenues of $24.1 billion. More recently, its stock performance has taken a small break from its typical growth, as can be seen in the figure below. This is in-line with recent happenings in the broader market due to the outbreak of war in Ukraine.

 

 

However, Visa is a true MegaTrend stock that is not going away anytime soon and will continue to increase again in the not-so-distant future. It is indeed the kind of long-term stock that we appreciate most.

Note that if you had invested in Visa in 2012, that money you invested would have increased by over eight times with or without investing the dividends.

 

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Netflix: The King of Content

It may not be a surprise to anyone now that Netflix (NASDAQ:NFLX) has become the king of content and one of the top MegaTrend stocks in my portfolio.

NFLX stock checks all the boxes. It’s a proven leader in content creation and delivery. It’s well run and continues to grow its global platform while strategically avoiding certain countries that can create more challenges than profits.

It continues to focus like a laser beam on its mission. It doesn’t have several operations doing various things within its operation. It seeks to provide the best in class streaming content platform that’s available.

 

Source: CNET

 

Most of its rivals in this space deliver a streaming content platform, but they don’t rely on that as their sole existence. That means there is a competition of resources for that division, and it doesn’t always win.

If you’re Disney (NYSE:DIS), for example, you have merchandise, theme parks, movies, shows, etc. Much of the content is driven by legacy content that it has monetized, and even if that division does well, it doesn’t necessarily translate that the entire company succeeds. Each division is a hedge on a bet on another division.

 

222 Million Strong

More to the point, many analysts are constantly talking about how DIS is going to steal market share from NFLX. Yet, when you ask analysts about how Tesla (NASDAQ:TSLA) has such a massive market cap relative to its car production and the growing number of competitors…well, then it’s a different story. The point is, NFLX has more than double the number of subscribers to its platform than DIS does, and DIS has a specific demographic that it caters to, so controversial subjects and content are kept to a minimum because it rarely goes off-brand.

NFLX isn’t constrained by those kinds of issues. It simply provides the quality content it can, and every year it spends billions on it. Last year, it spent $17.7 billion on content. It hasn’t disclosed what it will do this year.

NFLX has built a global network for content that continues to outpace its competitors, and it continues to find new ways to break into new markets. For example, in India, most consumers can’t afford what NFLX charges in the US, so it set up a new payment structure. In Kenya, it offers a free service.

 

Source: About Netflix

 

NFLX has this success without even entering the Chinese market. When it was choosing a new, big Asian market, it chose India instead. The pricing model was more challenging, but it knew there would be political distraction about the content it distributed in India. Plus, India has a huge amount of quality content, and many shows are already in English.

 

MegaTrend Stocks Have Troubles Too…But Not For Long

Currently, NFLX stock has lost 42% year-to-date. There are a variety of reasons for this – a subscriber boom during the pandemic, competition, investing cycle shift, etc. – but that is all in the past. Remember, MegaTrends aren’t about events. They’re about long-term, ineluctable trends.

 

 

If you simply look at that chart, you see which way this trend is heading.

NFLX has targeted Q1 subscriber growth at 2.5 million. Its subscriber growth in recent years averages around 8.4 million. It’s likely that it picked a lower number that it knew it could reach, rather than reach for a number it could miss and then be punished even more by the market.

Also, all the big tech leaders have been hit in this sector rotation out of tech, but now the leaders, like NFLX stock, are bouncing back. Q2 may well be the quarter where NFLX stock gets back on track. That means now is a great time to buy this massively discounted over-achiever. Don’t let this opportunity pass you by!

 

The MegaTrend Stocks Await in Proffe’s Trend Portfolio

PTP is the flagship, premier stock AND option portfolio, meaning you get an inside look at how Proffe Invest Inc. founder, Michael Proffe, is investing in options using his unique and one-of-a-kind options strategy, alongside his MegaTrend stock portfolio.

This is the portfolio that turned $30,000 into $1 million dollars in just 10.5 years. Most recently, as seen in the graph below, PTP is at $1,022,993.45. That’s a 3,309.98% gain for subscribers!

 

 

PTP is sent straight to your email inbox every week. In each issue, Michael always addresses his subscribers and the current state of the market, as well as highlights one of his MegaTrend stocks. Of course, you see the stock and option portfolios, and you will receive any Trade Alerts when the it’s time to buy and sell, so you can invest alongside Michael Proffe.

PTP is $999 for an annual subscription, BUT right now, you can get a FREE, risk-free 30-day trial to learn about the best growth stocks in the world and the right options to accompany them. We won’t ask for your credit card until your free trial is up because we’re confident you’ll want to continue, like our many subscribers! SUBSCRIBE —–> HERE!

 

Founding of Facebook

The story of the founding of Facebook is well known.  It was dramatized in the 2010 film, “The Social Network,” directed by David Fincher with Jesse Eisenberg playing the role of Mark Zuckerberg. In short, Mark Zuckerberg started Facebook (originally called “The Facebook”) from his Harvard University dorm room, along with his friends Dustin Moskovitz, Andrew McCullum, Chris Huges, and Edward Saverin.

At the time, the university promoted networking of their freshmen classes by publishing a small book listing all the freshmen students complete with a photograph of their face and short biography. Harvard students colloquially referred to the book as the “Face Book.”

Whether Mr. Zuckerberg himself came up with the idea to make a digital version, or he got the idea from some upperclassman is controversial, but he and a few friends coded up the website and deployed it to the Harvard community. It was an immediate hit, and membership in the Face Book spread like wildfire from university to university

At the urging of Napster founder, Sean Parker, – the world’s first internet-based music file sharing program (think forefather of Spotify) – Zuckerberg moved the development team to Silicon Valley and then followed in the footsteps of Microsoft founder Bill Gates by dropping out of Harvard to pursue his dreams.  After receiving capital from various Silicon Valley venture capitalists, including PayPal (NASDAQ:PYPL) co-founder Peter Theil, Facebook gained popularity and expanded.

 

Mark Zuckerberg as a freshman at Harvard University in 2005. (Source: thecrimson.com)

 

Since moving his company to Silicon Valley, Facebook has become a pillar of social media and has billions of subscribers. The company at this point would be impossible to replace, and that’s reflected in its hefty market capitalization of nearly two-thirds of a trillion dollars.

 

Plotting a Course for the Company’s Future

The company’s dedication to developing the metaverse is a lot more than just a name change. Meta has been assembling the critical pieces for its metaverse since at least as early as 2014. In that year, Facebook purchased a start-up called Oculus that had made a few prototypes of VR headsets. Facebook paid a staggering $2 billion for the company and received a fair amount of criticism for its decision.

Today, Oculus, now Meta Reality Labs, is making some of the most advanced VR headsets there are. Whereas their headsets originally required a PC to operate, now they’re a self-contained device with high powered system-on-a-chip (SoC) processing power and millions of pixels of resolution per eye. The most recent version is named the Oculus Quest 2.

 

Oculus Quest 2 virtual reality headset from Meta Reality Labs. (Source: theverge.com)

 

Another technology key to the metaverse is eye tracking technology. This technology enables the headset to track where the user wishes to go once inside the metaverse. In 2018, Facebook purchased Danish eye-tracking technology leader The Eye Tribe for an undisclosed amount. Previously, The Eye Tribe had been a start-up of 16 freshly graduated Danish college students with the goal of developing affordable software for eye tracking for a variety of applications. One such application is reading virtual sheet music where the pages automatically advance themselves.

It’s not far-fetched to imagine that Facebook’s interest in eye tracking may be much simpler. Namely, since Facebook’s core business is placing highly targeted advertising in front of its users, eye tracking software could be used to further this business model. If the direction in which a metaverse headset user is looking is known, then targeted advertising can be placed within their field of view.

Another advantage for Meta Platforms (NASDAQ: FB) developing its own metaverse is that just like mobile phones have operating systems (OSs), so the metaverse will have its own, possibly competing, OSs. Today, Meta must develop its apps, like Facebook, to operate on both Apple and Android Oss, and when an app or other product is sold, Meta must pay Apple or Google some of the money it earns. However, if Meta can develop its own OS for the metaverse, it may be able to finally relieve itself of this burden.

 

Meetings in the Metaverse will be better than Zoom because you will meet with colleagues or friends in a virtual meeting room. (Source: nytimes.com)

 

A Long-Term Strategy

As final proof of Meta’s conviction over developing the metaverse, it has hired over 10,000 new personnel solely focused on this task.

Then there is the money. In 2021, Meta took $10 billion dollars out of its bottom line to pay for its metaverse. That’s a lot of money, and Wall Street was surprised. Its stock price suffered mightily, but as company founder Mark Zuckerberg said at a recent company-wide meeting, it’s all for the long-term good of the company. The investment will come back in multiples over the coming years if the metaverse takes off the way he believes it will.

A long-term strategy is one we can get behind!

To see what happened to Meta’s stock, have a look at the chart below. The stock price has sunk in recent times, but overall it has been tremendously profitable.

 

 

That dip is one that’s worth buying. FB’s commitment to the metaverse may not pay off short term, which is what most analysts care about, but long term, there are big names already diving into this new concept. The companies that are involved don’t waste their money on fads. This is a great time to buy a MegaTrend metaverse winner.

 

Now Might Be the BEST Time to Subscribe to Proffe’s Global Growth Portfolio!

March has come and gone, and it was quite an eventful month for the Global Growth Portfolio. If you’re a subscriber to this portfolio, then you would have seen quite a bit of Trade Alerts (to make additional purchases) come through your inbox. This doesn’t happen often, and it’s indicative of the markets correcting sharply. In our case, for those following the MegaTrends, this is a positive opportunity to purchase the right stocks at bargain prices.

That’s what the Global Growth Portfolio and Trade Alerts are all about. They empower you to become a better global investor by simply following along with the Trendsetter Strategy and paying attention to what’s going on with the Trade Alerts. The whole goal is for subscribers to be able to put their money to work for them and attain “more time to live.”

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Fairchild, the Mother of the Digital Era

If you’re not a techie, then the name Fairchild likely doesn’t stir any sentimental connection, but it should.

You see, in 1957, Fairchild Camera and Instrument, owned by Sherman Fairchild, launched a division that would change the world. It pioneered transistors, integrated circuits, and hired some of the legends of the computer sector.

 

Source: Smithsonian Magazine

 

One of the keys to Fairchild’s success was its long history with the military. In those days during and after WWII, huge amounts of money were being given to R&D work to keep the US military on the cutting edge of technology. The cameras and other equipment Fairchild provided built a significant reputation among the armed services. As the company began to develop transistors and integrated circuits, it was with the help of military contracts.

Some of the pioneering group doing the work saw more potential for these chips. Gordon Moore and Robert Noyce left Fairchild and started Intel (NASDAQ:INTC) in 1968. Jerry Sanders was an electrical engineer and the director of marketing at Fairchild. He left with seven of the others that were part of the brain trust and started Advanced Micro Devices (NASDAQ:AMD) in 1969.

AMD’s first client was, of course, the military. During the Cold War, technological superiority was a very big deal, particularly during the Age of the A Bomb and the first Space Race. Computers were gaining significant acceptance for anyone working in the aerospace and defense sector, and most of that work was being done in California.

 

AMD Grows Up

Since then, AMD has gone through a number of changes, including being bought and sold a few times over the years. Its most recent major redefinition was in 2009 when it spun off its foundries into the company GlobalFoundries (NASDAQ:GFS). GFS went public last winter.

That was a prescient move at the time because a number of new up-and-coming chipmakers were “fabless”. Fabless chipmakers don’t fabricate the chips, they simply design them. Then they hand those designs to a chip foundry that specializes in building chips for different chipmakers.

 

Source: The Verge

 

For a while, giving up the means of production was a great way to run lean and fast, since new foundries are wildly expensive. That’s why most of them are in Asia, especially China and Taiwan.

Today, AMD is one of the largest chipmakers in the world specializing in microprocessors, motherboard processors, embedded processors, and graphics processors for laptops, servers, and desktops.

 

Means of Production

The downside of going fabless has become clear during the pandemic, and especially China’s zero-tolerance policy that has locked down key parts of the country, even after the broader pandemic waned.

Remember, China has six cities with more than 10 million people, three times the number that the US has. China also has 160 cities with more than 1 million people. The US has 10. Lockdowns are significant in China and have massive repercussions globally because China controls the means of production for much of the tech manufacturing in the world.

 

Source: Malay Mail

 

Given that reality, it’s also crucial that China gets back up and running, and that’s happening as I write. It also means demand for chips is massive, and it’s going to take a long time to fulfill the demand, which is great news for AMD.

Also, AMD has made great strides during its fabless period and gained significant ground on the competition since it could pump a lot of its money previously used for chip foundries into R&D. It’s now a major brand that represents the top of the heap in chipmakers.

 

The Stock Continues to Soar

Below is a graph that shows the kinds of strides AMD has made in the past five years. When you’re averaging more than 154% annually for five years and you’re a stock with a market of nearly $200 billion, you’re hitting on all cylinders.

 

 

In the past 12 months, AMD stock is up 62% and 8% in the past month. What’s more, there’s little short interest (investors shorting the stock, betting it’s heading down), which signals that most investors know AMD has been caught in the supply chain crisis, and once it’s freed, it’s ready to take off.

 

Let AMD Be the Start of Your Portfolio of MegaTrend Stocks!

AMD is a MegaTrend stock we hold in one of our Premium Portfolios entitled Proffe’s Global Growth Portfolio (PGGP). It’s extremely cost-friendly at just $49.95 for an annual subscription, and it’s designed to give you global stock diversification without leaving the US market . Twice a month, you receive PGGP straight to your email inbox, so you can follow along and incorporate its top MegaTrend stocks, like AMD, into your portfolio. With the global markets correcting and due to current events (that are short-term and don’t affect our long-term trends), NOW is a particularly advantageous time to join in on our strategy and purchase the rights stocks at a bargain price!

Become a better global investor! To learn more, CLICK HERE! To subscribe to PGGP, CLICK HERE!

 

Adobe (NASDAQ: ADBE) is truly an extraordinary company. With headquarters in the Silicon Valley suburb of San Jose, it has over 24,000 employees, and as of 2020, it made revenues approaching $13B.

All around your daily lives there are Adobe products. If your son doesn’t like the way he looks in a given photo, he can no doubt fix it with Adobe Photoshop. If your accountant needs some of your financial information, you can download PDFs (Portable Document Format) of your bank statements and email them to her.

If you’re a graduate student, no doubt you read a lot of journal articles. These too are now all available as PDFs. If your daughter needs to draw some pictures for her science fair project, she can draw them in Illustrator. This list of perfectly useful software packages from Adobe goes on.

 

Adobe’s founders (Warnock far right, Geschke in the middle) with Steve Jobs (far left). (Source: adobe.fandom.com)

 

Similarly to the Windows-based graphical computer interface and the mouse used on the first Apple (NASDAQ: AAPL) Macintoshes, the key technology that started Adobe begins in the late 1970s at Xerox’s PARC (aka, Palo Alto Research Center), which was Xerox’s West Coast think tank up until it was spun-off into a separate company in 2002.

Prior to 1982, Adobe’s founders, John Warnock and Charles Geschke, both worked at PARC. They largely invented InterPress, which was a computer language for controlling computer printing. Even though Warnock urged Xerox management to commercialize InterPress, they didn’t see the value in it and refused.

 

The Printer Language that Started It All

Warnock and Geschke saw huge potential in the concept, however, and left Xerox and formed Adobe in Warnock’s garage at his house in Los Altos, California. They completely rewrote and improved InterPress. They named the much-improved printer language “PostScript,” and it became the standard language for running laser printers.

Apparently, Apple’s Steve Jobs saw the value in PostScript and offered $5 million to buy the company less than a year after its founding. Warnock and Geschke turned Jobs down, but were convinced by Adobe’s investors to sell Jobs a large stake in the company (19%) and pay for a 5-year license to use PostScript on Apple products. Adobe became the first tech start-up in Silicon Valley to be profitable within its first year.

Adobe went on to become the supplier of software that promoted desktop publishing on several fronts. They improved digital typefaces by making them much cleaner and crisper around the edges. They developed new digital fonts and sold the best versions to computer and software developers. Not surprisingly, this was especially attractive to Jobs given his well-known passion for fonts.

 

More Groundbreaking Adobe Products

In 1989, Adobe released Photoshop. With this software, users could make modifications to digital photographs (or scanned versions of film photos) in ways that were impossible in traditional darkrooms, such as adding blur and color to discrete pieces of photos. Modified photos could then easily be added documents in desktop publishing software, such as FrameMaker. FrameMaker, which is also one of Adobe’s products, was always a better alternative to Word for making complicated documents with graphics and complex text block shapes. It still is.

Adobe Illustrator came out in the late 1980s. It allowed convenient creation of illustrations and drawings for pretty much anything: scientific papers, children’s books, furniture assembly directions, science fairs, etc. Illustrator could also easily be added to documents in desktop publishing software.  Although these products, Photoshop, Illustrator, FrameMaker, etc., are groundbreaking products, they have many strong competitors today, as well as back in the 1990s.

 

The Game Changer

There’s one Adobe product that has exclusivity. This product is the Portable Document Format, more commonly known as PDF. The original goal for PDF was to capture documents from any application, send them to another computer anywhere via email, thumb drive, cloud storage, etc., and view or print them on any machine.

Adobe succeeded in spades on these goals, and now PDF has its own international standard, ISO 3200-1: 2008. This gives PDF longevity and steadfastness. Today, as already mentioned, PDF documents are everywhere, almost as ubiquitous as carbon atoms.

More recently, Adobe has partnerships with a variety of other high-end companies. It has cooperation with NVIDIA (NASDAQ:NVDA), where NVIDIA adds software and hardware features to their graphics cards that specifically accelerate loading of large images created (or modified) in Adobe software.

 

Nvidia and Adobe are cooperating so that graphics can keep up with Adobe’s software. (Source: blogs.nvidia.com)

 

Adobe also has an ongoing partnership with famed German automaker BMW. In early March 2022, BMW announced their aim to sell one quarter of their cars and trucks online, sort of like Tesla (NASDAQ: TSLA), within the next three years. It hopes to provide possibilities for higher degrees of customer-directed customization and promote a high-quality, at-your-door delivery program. Adobe has the core competencies to propel BMW to achieving this goal in what BMW calls the digital transformation of its marketing and sales operations.

 

ADBE Goes Meta

Adobe currently is dedicating substantial resources to developing the metaverse. It will publish new products that contribute to the richness of the future metaverse with ever more realistic 3D graphics and lifelike movements. Like many other companies working on the metaverse, Adobe envisions a highly immersive experience where the graphics and capabilities are so lifelike that the things you do in the physical world will blur with those in the virtual world.

 

Some of Adobe’s version of what the metaverse could look like. (Source: hersmore.com)

 

Some expected experiences in the metaverse include visiting virtual museums. Starting a new job?  In the metaverse you’ll be able to receive training without leaving home. Of course, there will be shopping!

More and more people prefer to shop online rather than going to physical stores, and the online experience for most stores is getting better and better. In the metaverse, virtual shopping will be taken to a new level. You will be able to walk into virtual stores, pick up products with your virtual hands, inspect them from all angles, and look at them in different colors, or even try out how they function. In the case of cars, you’ll probably be able to take them on virtual test drives on your favorite roads, like Pacific Coast Highway in Southern California! The possibilities are endless.

For all this richness and convenience that Adobe has added to desktop publishing and document circulation and for their fantastic developments in the metaverse, you can be sure it’s a true MegaTrend stock. Its value will continue to grow for many decades. Consequently, we see Adobe as a buy and hold stock and one with which we are comfortable investing in long-term options.

 

 

ADBE stock has remained above water over the past 12 months, and it’s starting to gain ground again as the market rebounds, in true MegaTrend fashion. My MegaTrend stocks are the first stocks that investors pile into after a selloff because they have the management and the dominance to set them apart from the competitors. ADBE is still on sale, if you’re looking for a great company with a historic past and an even brighter future.

 

Try Our Premium Portfolios for More MegaTrend Stocks Like ADBE!

Proffe’s Global Growth Portfolio is a valuable and cost-friendly next step to following the Trendsetter Strategy and incorporating the MegaTrend stocks (the top trending stocks) into your stock portfolio. It is a bi-monthly, stocks-only publication designed to give you global diversification without ever leaving the US market. It’s only $49.95 for an annual subscription! That’s 24 issues at $2.08 per issue of an all-stock portfolio that you can easily and profitably follow. Click here to get started and subscribe today!

 

The latest gain from PGGP

Microchip Technology (NASDAQ: MCHP) is about as nondescript a name as you can get in this furiously competitive and high-flying sector. It’s not a massive player, or a maker of superfast CPUs or GPUs, and its chips aren’t the go-to choice for server farms or mining Bitcoin. Still, MCHP has a $38 billion market cap and has been around since 1987. That’s around the beginning of the second wave of computer technology. Personal computers were just getting started.

The Macintosh had been released a few years earlier. Sold as a portable computer, it was like carrying a heavy box around, but hey, it was one piece and technically portable. PCs had been around for most of the decade, but had more value in workplaces than homes.

 

Source: Apple Insider

 

By this time, many people were realizing that computers were significant productivity boosters in the workplace, and there was a lot more potential than just crunching numbers and doing research. The digital ecosystem was growing, and MCHP began to see opportunities.

 

Made In America

One of the unique qualities that MCHP has maintained is that it makes most of its own chips and microprocessors. It has fabrication facilities (a.k.a. fabs) near its headquarters in Arizona, Oregon, and Colorado, as well as US-friendly Thailand and the Philippines.

This has served MCHP well, since it has developed into a niche chipmaker that specializes in embedded computing products. Embedded computing is basically where a computer or chip is embedded into another larger product with a range of purposes. For example, a camera uses computer chips for many different functions today, but its ultimate value is capturing images, not computing. The same goes with cars, military equipment, and frankly, almost everything these days.

That’s the point. MCHP continues to develop and sell technologies that are continually in demand as the digital and mobile ages move forward.

 

Source: ARC Advisory Group

 

Bear in mind that having that “Made In America” label is becoming a big deal again. With supply chains under strain and global geopolitics heating up, controlling the means of production is a massive asset. It’s also why Tim Cook of Apple (NASDAQ: AAPL) paid China $275 billion to keep APPL safe from politics and China shutting down local distribution or exports to the US.

Safety isn’t the only facet, however. With the massive infrastructure stimulus bill starting to get deployed, US companies will be top priority beneficiaries of the money for new systems, many of which will include embedded systems – heavy machinery to HVAC systems to smart roads.

 

The Party Is Just Getting Started

What’s more, the world is becoming more digitized, not less. That means demand continues to expand. One of MCHP’s newest products is TanvasTouch, a touchscreen solution that you can run your fingers across and feel realistic textures. You can also feel the resistance of switches and buttons.

 

Source: Microchip Technology

 

This is a dream for gamers, but it will also have significant implications for new phones and the expanding meta universe that is already under construction.

 

Source: commons.wikimedia.org

 

MCHP stock has sold off with all the other tech high-flyers, but that’s to be expected since a sector selloff first means the big stocks in the sector are all sold together, then big investors move back into individual shares that have the most promise in the new environment.

 

 

You can be sure that MCHP will be back quicker than its smaller brethren and some fabless chipmakers that will offer more risk because they’re now at the mercy of changing times; when means of production becomes a significant asset again.

 

Don’t miss your chance to benefit from this economic shift and market recovery with the right stocks!

The right stocks are the MegaTrend stocks and you can benefit from them by subscribing too…

Proffe’s Global Growth Portfolio is a bi-monthly stock portfolio helping individuals become better global investors. For just $49.95 a year, you receive a bi-monthly portfolio update with pertinent MegaTrend information and stats. That’s 24 issues at $2.08 per issue of an all-stock portfolio that you can easily and profitably follow. CLICK HERE to find global diversification without ever leaving the US market by subscribing to Proffe’s Global Growth Portfolio NOW!

 

 

Proffe’s Trend Portfolio is the profitable, premier stocks AND options portfolio from Proffe Invest Inc. It surpassed the one-million dollar mark during the summer of 2021. Right now, you can get a FREE, no obligation 30-day trial to learn about the best growth stocks in the world and the right options to accompany them. We won’t ask for your credit card until your free trial is up because we’re confident you’ll want to continue, like our many subscribers! CLICK HERE to start your free trial of Proffe’s Trend Portfolio NOW!

 

There is no better time to start than now!

What will the trend world look like in the next year to two years?

Well, one thing is certain. The world has changed and will continue to change on a grand scale. The world economy is one of those facets that is and will change without question. Many doors that have been closed will ensure that new doors will be opened. The world is rearranging itself, and the big winners will be fast, agile, and flexible because no matter how bad the events are, the major trends on our planet cannot be stopped.

The capital market will be busy for a long time. Many businesses will be severely disrupted, but there will also be many opportunities. The capital market always finds ways to profit from any situation very quickly. Morality is not required in this sphere. The world will continue to turn, and the profits and sales of the strong trend companies will continue to flow. You can follow these trends weekly by subscribing to our free newsletter: Proffe’s MegaTrends

What does this mean for the stock price developments of trend companies?

The stock prices of the big trend companies have dipped across the board since the beginning of the year. A strong war bounty is now also priced in. The bad news is well known, but in the next few weeks and months, after bottoming out, the major trend stocks should rally to recover – provided there is no world war. The big trend stocks, like Apple, Amazon, Microsoft, Alphabet, Netflix, Meta, etc. will not let the events in the world sway their strategic developments. A lot of money will flow into these strong companies in the coming recovery phase.

 

 

Stock prices in Proffe’s Trend Portfolio (PTP) and Proffe’s Global Growth Portfolio (PGGP) have the potential to increase by 50% over the next 12 months. For many trend stocks, the potential for price increases is over 100% in the next 24 months. In addition, there are the share price stimulations for Alphabet and Amazon with their share splits.

 

We’re looking ahead to the potential of great gain for PTP

The stock portfolio in the Trend Portfolio has the potential to double in the next 24 months. The option portfolio in the Trend Portfolio has the potential to more than quadruple over the next 24 months! All trend stocks are now a clear buy. The 2nd quarter is the ideal time for a new start of PTP.

 

We’re setting our sights on new heights for PGGP

Price recovery targets in the Global Growth Portfolio will be over 50% over the next 12 months and around 100% over the next 24 months. This is far above the expected performance development of 30% P/A. The driving factor is, of course, the stock market correction that has been going on since the beginning of the year. The forthcoming recovery will be accompanied by very high dynamics in the trend stocks of the Global Growth Portfolio.

For new customers, the next few weeks are the best possible time to get started. The focus should be on the next 2 years with a chance of a price doubling.

 

 

Don’t miss your chance to benefit from this economic shift and market recovery with the right stocks!

The right stocks are the MegaTrend stocks and you can benefit from them by subscribing too…

Proffe’s Global Growth Portfolio is a bi-monthly stock portfolio helping individuals become better global investors. For just $49.95 a year, you receive a bi-monthly portfolio update with pertinent MegaTrend information and stats. That’s 24 issues at $2.08 per issue of an all-stock portfolio that you can easily and profitably follow. CLICK HERE to find global diversification without ever leaving the US market by subscribing to Proffe’s Global Growth Portfolio NOW!

 

 

Proffe’s Trend Portfolio is the profitable, premier stocks AND options portfolio from Proffe Invest Inc. It surpassed the one-million dollar mark during the summer of 2021. Right now, you can get a FREE, no obligation 30-day trial to learn about the best growth stocks in the world and the right options to accompany them. We won’t ask for your credit card until your free trial is up because we’re confident you’ll want to continue, like our many subscribers! CLICK HERE to start your free trial of Proffe’s Trend Portfolio NOW!

 

There is no better time to start than now!