AI Giants Surge, Market Value Exceeds $1 Trillion!
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The upcoming week is poised to be a significant one for the A-share market in China, as a total of 47 publicly traded companies will be liberated from restrictions on their shares that were previously heldThis unlocking of shares, which will take place between December 16 and 20, has substantial implications not only for these companies but also for their investors and the market as a whole.
Taking a look at the U.Smarkets from overnight, all three major indexes - the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 - started on a high note, only to dip later in the sessionBy the end of the trading day, the Dow saw a decline of 0.2%, marking its seventh consecutive trading day of lossesIn contrast, the NASDAQ managed to rise by 0.12%, while the S&P 500 held steady with no change, showcasing the volatile nature of the market.
Interestingly, Tesla's stock price experienced a robust increase of 4.34%, reaching an impressive $436.23 per share, which is a record high for the automaker
Since November 5, Tesla's shares have surged close to 80%, highlighting the growing investor confidence in its growth potentialElon Musk had hinted in a conference call back in October about his ambition to utilize his influence to set up a 'federal approval process for autonomous vehicles', signaling further innovation and regulatory dialogue in this crucial sector.
In addition, prominent financial institutions like Goldman Sachs, Morgan Stanley, and Bank of America have rallied behind Tesla by releasing optimistic reports about the companyGoldman Sachs noted that investors are adopting a more forward-looking perspective regarding Tesla, particularly in terms of potential opportunities in artificial intelligence (AI), an area where the company is looking to expand its footprint.
Moreover, Broadcom has seen a significant spike in its stock price, jumping by 24.43% and crossing a market valuation of $1 trillion
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The surge can be attributed to its better-than-expected fourth-quarter earnings report, which revealed that the company's AI revenue exploded by 220% year-over-year, amounting to $12.2 billionAnalysts expect the AI product revenue to further increase by 65% year-over-year in the first quarter of fiscal year 2025. This growth is primarily driven by the surging demand for AI solutions, a testament to the technology's current industry relevance.
Broadcom anticipates that by 2027, the market for customized AI chips could scale anywhere between $60 billion to $90 billionMark Lipacis, an analyst at Evercore ISI, expressed enthusiasm over this forecast, suggesting that investors might be underestimating the opportunities provided by Broadcom's custom AI chip offeringsMorgan Stanley analyst Joseph Moore has similarly reiterated an "overweight" rating for Broadcom and raised the target share price from $180 to $233, reflecting growing confidence in the company's trajectory.
Focusing back on the A-share market, the total market value of the 47 companies facing share restrictions lifted next week exceeds an impressive 48 billion CNY
According to data compiled by Securities Times and Data Treasure, the leading company in terms of the total value of unblocked shares is Northern Copper, with a market value of approximately 9.16 billion CNYFollowing that are Guoxuan High-tech, Hemai Shares, and Mingyue Lens with market values of 8.53 billion CNY, 7.35 billion CNY, and 5.21 billion CNY respectivelyAmong these, Northern Copper and Guoxuan High-tech are releasing shares from targeted placements, while Hemai Shares and Mingyue Lens are lifting restrictions on shares held by original shareholders at the time of their initial public offerings (IPOs).
Recent news has also indicated that Northern Copper’s subsidiary has completed the acceptance of its high-performance copper strip foil project, which has crucial applications in computers, 5G communications, automotive electronics, aerospace, and new energy sectorsThis is part of Northern Copper’s strategy to expand towards high-value-added products
Once fully operational, the project is expected to generate an astounding annual revenue of 3.22 billion CNY and a net profit of 371 million CNY.
When considering the impact of share unlocks, the percentage of shares released against the total share capital often provides a clearer picture of potential price fluctuationsAmong the 47 stocks, 14 stocks have unlock ratios exceeding 10%. Notably, Huilong Piston, Mingyue Lens, Northern Copper, Wuchan Environmental Energy, and Lingge Technology top the charts with unlock ratios of 70.78%, 59.28%, 59.01%, 57.4%, and 54.95% respectivelyExcept for Northern Copper, all others are releasing shares originally held by shareholders at the IPO.
In addition, other companies like Hemai Shares, Anpeilong, Huayan Precision Machine, and Suobote Protein also have unlock ratios above 30%. Huilong Piston, listed on the Beijing Stock Exchange, specializes in producing diesel engines for internal combustion locomotives and ships
In the first three quarters of the year, the company reported a revenue of 102 million CNY, reflecting a year-on-year growth of 7.08%, with a commendable net profit of 29.08 million CNY, a 42.74% increase from the previous year.
Mingyue Lens, another significant player, has emerged as a leading brand in China's lens industry, actively venturing into the smart eyewear marketWith the rapid rise of AI-enabled smart glasses, institutions believe Mingyue Lens stands to benefit from being an early mover in this space.
Overall, among the 47 companies with lifted restrictions, 17 are subject to share unlocks related to employee stock incentives or general restricted shares, accounting for about 36.17% of the totalIn terms of scale, Aier Eye Hospital and iFlytek have market values surpassing 100 million CNY, at 28.8 million CNY and 26.3 million CNY respectively.
Lastly, for those stocks whose locked shares are part of strategic placements, the institutions that invested in Northern Copper, Guoxuan High-tech, Changjiang Communication, Chuangjiang New Materials, and Shihua Technology will experience positive returns from the unlock
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