Written by Ryan HassonAfter trailing the broader market this quarter, the semiconductor sector could be on the cusp of a resurgence. The VanEck Semiconductor ETF (NASDAQ: SMH) has only gained 8.36% quarter-to-date, underperforming the Invesco QQQ ETF (NASDAQ: QQQ), which climbed nearly 14%. However, the tide may be turning following stellar earnings and outlook from Broadcom Inc. (NASDAQ: AVGO), one of the sector’s giants and the newest member of the trillion-dollar club. With the SMH ETF reclaiming key technical levels and approaching significant resistance, investors are left asking: Is now the time to re-enter semiconductors?
Broadcom’s Impressive Outlook Signals Sector Strength
Broadcom, the third-largest semiconductor company by market capitalization and a key 7.7% holding in the SMH ETF, delivered a breakout performance in its recent Q4 results. The chipmaker’s revenue surged 51.2% year-over-year to $14.05 billion, while earnings per share (EPS) of $1.42 topped analyst estimates of $1.39. This marked Broadcom’s first foray into the trillion-dollar club, with its market cap now exceeding $1.1 trillion.
Broadcom’s bullish outlook for AI-related revenue was a major catalyst for its performance. CEO Hock Tan revealed that Broadcom’s AI chip and connectivity business is projected to generate between $60 billion and $90 billion annually by fiscal 2027, a sharp increase from the $12.2 billion recorded in fiscal 2024. This growth opportunity, driven by partnerships with hyperscaler customers like Google (NASDAQ: GOOGL), Meta Platforms (NASDAQ: META), and ByteDance, positions Broadcom to capture significant market share in the AI infrastructure space.
Tan’s comments instilled renewed optimism, as AI remains a cornerstone for semiconductor growth, giving investors a reason to believe the sector’s outlook is turning bullish after a period of uncertainty.
From Bearish Sentiment to a Bullish Setup
The semiconductor sector has faced challenges since the November 5 election. Industry leader NVIDIA (NASDAQ: NVDA), the SMH ETF’s top holding, has been down slightly since early November and declined nearly 5% this week alone. Heightened geopolitical risks, valuation concerns, and macroeconomic headwinds, including slowing demand in consumer electronics, contributed to the sector’s underperformance.
However, the narrative may be shifting. With Broadcom’s stellar earnings and the Magnificent Seven stocks trading at elevated RSI levels, investors could see opportunities emerging within semiconductors. The SMH ETF reflects this potential shift, having reclaimed its 20-day, 50-day, and 200-day moving averages. As of Monday’s close, the ETF hovered near downtrend resistance, signaling that a breakout above the $235 level could confirm a higher-timeframe trend reversal.
Positive inflows further bolster the sector’s case. SMH saw a 2.15% increase in inflows over the last three months, indicating renewed interest. If capital begins to rotate out of extended tech leaders and market breadth improves, semiconductors could benefit from a notable resurgence.
Watching for Rotation and Breakout Confirmation
The key going forward will be monitoring whether capital begins to flow back into semiconductors if momentum stalls in the Magnificent Seven stocks. If semis can break above current resistance levels while prominent tech leaders consolidate, it could mark the beginning of a sector rotation, solidifying a broader recovery. Broadcom’s strong AI-driven outlook and SMH’s improving technical position suggest the semiconductor sector may be positioned for upside, especially if rotation back into the sector is confirmed as market breadth improves.
Shares of Salesforce Inc (NYSE: CRM) have been a standout performer this year, as they continue to add gains to the 180% rally that kicked off in late 2022. Two years in, this tech giant is looking stronger than ever. Up 70% since May alone and already setting record highs this month, Salesforce has cemented itself as one of the market’s top growth names.
Salesforce’s bread and butter lies in enterprise customer relationship management (CRM) software. It has been a red-hot stock for a while now, with investors and analysts alike seeing it as a major player in the future of AI-driven business tools.
However, even with so many gains under its belt, there are several reasons investors should still be getting excited about Salesforce’s potential in the months ahead. Let’s jump in and take a closer look.
Salesforce’s Strong Fundamental Performance Drives Growth
To start with, there’s the company’s strong fundamental performance. A small miss on earnings at the start of December might stand out as a blemish, but it’s minor when you consider the bigger picture. For the most part, Salesforce smashed expectations with its earnings reports earlier in the year, consistently beating forecasts quarter after quarter.
Even this month’s report saw revenue hit a record high, and on the whole, EPS growth remains impressive. Other bright spots existed in the form of operating cash flow jumping 30% year-over-year, while the company returned $1.2 billion to shareholders through a combination of share repurchases and dividend payments.
Given how well its fundamental performance is trending in the right direction, it’s no surprise that Salesforce shares have been moving higher.
Why Analysts Are Bullish on Salesforce Stock
It’s also worth noting that multiple bullish analyst updates suggest there is still plenty of room for Salesforce to climb. Just this week, the team over at KeyCorp came out swinging with a bullish upgrade, boosting their rating to Overweight from Sector Weight. The reason? They see Salesforce’s artificial intelligence offering, Agentforce, setting the new standard in enterprise management software.
The energy around Agentforce has been resonating strongly with customers, partners, and investors. The KeyCorp team described it as the next evolution of AI and a leap forward from the copilot AI models seen in recent years. While it remains in the early stages, KeyCorp sees this “agentic wave” creating a buzz that could drive share price momentum wellbefore meaningful revenue is realized in 2025.
This bullish call aligns with earlier upgrades from Jefferies, JPMorgan Chase, and RBC, all of whom highlighted Salesforce’s growth runway and AI opportunities. KeyCorp’s price target of $440 will be particularly attractive, given it points to an upside of almost 25% from where the stock closed on Monday.
Balancing Caution With Bullish Market Signals
Of course, not everyone is fully on board with the bullish outlook. Macquarie initiated coverage last week with a neutral rating, joining Loop Capital and Citi’s stances earlier this month and taking a more cautious stance. After two years of near-continuous rallying, they’re waiting to see whether Salesforce’s potential can materialize more fully before they jump on board. These concerns highlight the need for Salesforce to deliver consistently right from the start of 2025.
As we head into the last couple of weeks of the year, however, there are way more reasons to be bullish than bearish. Salesforce’s technical setup, for example, is another reason for investors to be optimistic. One of the most telling indicators here is the Relative Strength Index (RSI), a momentum gauge that measures whether a stock is overbought or oversold. At its current reading of 62, Salesforce’s RSI signals bullish momentum without yet being in overbought territory. In other words, there’s still a ton of room to run.
Combine that technical setup with the company’s strong fundamentals, bullish analyst upgrades, and broader market tailwinds, such as the S&P 500 hitting fresh highs and the Fed cutting rates, and Salesforce is offering exactly the kind of outsized reward potential that investors crave.
The plight of medical providers collecting timely reimbursements from health insurers is a struggle that has been getting tougher by the year. Health insurance claim denials have come under scrutiny in light of recent events. Sentiment has turned sour on the medical sector stocks of insurance carriers and healthcare facilities and operators. Adding to the selling pressure are concerns the Trump administration will let the premium tax credit (PTC) for health exchange subsidies that expire under the Affordable Care Act (ACA) expire at the end of 2025.
HCA Healthcare Inc. (NYSE: HCA) is the nation’s largest for-profit hospital operator that has recently seen its stock price drop nearly 25% within the last 60 days from a peak of $417.14 on October 17, 2024, to $313.93 on Dec.6, 2024. HCA shares have been cascading lower since its Q3 2024 release, which missed consensus analyst EPS estimates by 8 cents and revenue estimates by $39.34 million. The selling may be overdone, and here are four reasons to consider buying the dip.
1) Outlier Hurricanes Negatively Impacted HCA in Q3 Through Q4 2024
Nashville, Tennessee-based HCA was negatively impacted by the outlier hurricane season in its third quarter of 2024. Hurricanes Helene and Milton caused catastrophic damage to the southeast states of Florida, Georgia, North and South Carolina, Virginia, and Tennessee. HCA incurred additional expenses associated with Hurricane Helene’s impact on its facilities in Florida, Georgia, and North Carolina, amounting to around 15 cents per share. Backing that out would have resulted in a 7-cent EPS beat in Q3.
HCA pointed out that the ongoing additional expenses and loss of revenues from Helene and Milton would impact October or Q4 revenues by nearly $200 million to $300 million or 60 cents to 90 cents per share.
HCA expects full-year 2024 EPS and revenue estimates to come in at the lower range of previous estimates.
While some of the ongoing impacts of the hurricanes will continue into 2025 in its North Carolina facilities, HCA believes they will be manageable. It expects the full-year 2025 EPS and adjusted EBITDA to grow near or slightly above its upper end of long-term growth ranges.
HCA CEO Sam Hazen stated, “HCA Healthcare has numerous examples from past hurricanes where our hospitals have recovered from major storms and become more productive than pre-storm performance. I believe we can produce similar results with these two hospitals in time as we move beyond the aftereffects of these most recent storms.”
2) Public Scrutiny of Health Insurers May Pressure Them to Ease Claim Denials
The major spotlight on the health insurance companies’ tactics to deny or delay reimbursements to providers may put pressure on them to ease up on the denials. This would be a boon to providers and healthcare facility operators like HCA to obtain quicker reimbursements with a little less hassle.
The public outcry could result in closer regulation of the health insurance industry and a higher payout to the providers who are actually providing the medical treatments. The recent decision by Elevance Health Inc. (NYSE: ELV) Anthem Blue Cross Blue Shield to nix its policy change limiting anesthesia reimbursements beyond certain time limits was arguably due to the public backlash.
3) Ambulatory Care Facilities Are a Cost-Effective Positive Trend
Ambulatory surgical centers (ASCs) are medical facilities that are more cost-effective, flexible, efficient, and patient-friendly. These freestanding facilities specialize in specific types of surgeries. Procedures can cost nearly 50% less at an ACS than at a hospital, with much less red tape and higher profit margins. Patients love them because they are more affordable and less expensive than hospitals, resulting in lower insurance co-payments. Most procedures are outpatient same-day discharge treatments.
HCA operates 187 full-scale hospitals and over 2,400 ambulatory care sites, including ASCs, urgent care, physician clinics, and emergency rooms. HCA plans to continue building out its ASCs. By the end of 2024, HCA will have added 600 new beds and 100 new outpatient facilities for a total of more than 2,600 facilities.
4) HCA Stock Is at a Critical Double Bottom Support Level
A double bottom occurs when a stock rebounds off a floor and retests the level successfully as the stock rises to new swing highs. A triple bottom will be formed if the stock retests at the same level and bounces.
HCA formed bottom at $312.54 on May 23, 2024, before rebounding to $344.20 and pulling back down to retest the $312.54 on July 1, 2024. HCA rebounded to stage a rally to its all-time high of $417.14 by October 18, 2024. HCA shares fell 25% from the peak to again retest the $312.54 support level, which is also an inverse cup lip line support. The daily RSI is attempting to curl back up at the 25-band. Fibonacci (Fib) pullback support levels are at $312.54, $298.81, $279.14, and $261.31.
Actionable Options Strategies: Bullish investors can consider using cash-secured puts to buy HCA at the Fib pullback support levels for entry and write covered calls to execute a wheel strategy for income in addition to 0.84% dividend yield.
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