Industry Overview - Despite declining cigarette usage, the tobacco industry remains strong in 2025, with consumers shifting to emerging products like oral nicotine pouches and electronic devices [1] Company Performance - British American Tobacco (BAT) has shown resilience by focusing on innovation and high-growth categories, with the stock returning 31% over the past year [2] - BAT operates in over 150 countries and is known for iconic cigarette brands like Dunhill, Lucky Strike, Newport, and Camel [3] - The company is progressing toward becoming a predominantly smokeless business by 2035, with 18% of revenue from new categories in H1 2024, up from 6% in 2017 [4] - BAT's Vuse brand is the global market leader in rechargeable vaporizers, while glo holds the No 2 position in heated products [4] - Velo nicotine pouches are a major growth driver and market leader outside the US [4] - In H1 2024, BAT achieved 7 4% organic constant currency revenue growth from new categories, offsetting a 2 6% decline in traditional cigarettes [5] - Adjusted EPS increased 1 3% YoY, with climbing operating margins [5] - BAT expects low-single-digit organic revenue and adjusted profit growth in constant currency terms for full-year 2024 [5] - Management anticipates progressive improvement into 2025 and mid-single-digit profitable growth by 2026 and beyond [6] Valuation - BAT shares trade at a forward P/E ratio of 7x 2025 consensus EPS, significantly below peers Altria (10x) and Philip Morris International (17x) [7] - The discounted valuation may be due to BAT's global profile and reliance on emerging markets, contrasting with Altria's US focus and Philip Morris' success with Zyn in the US [8] - BAT's diversified global footprint is a strategic advantage, providing flexibility to adapt to evolving regulations and consumer preferences [9] Dividend - BAT offers an industry-leading 8 2% dividend yield, supported by significant free-cash-flow generation [10] - The company has a 25-year track record of consecutive dividend increases, with management committed to continued dividend growth [10] Outlook - 2025 is expected to be a significant year for BAT as it builds momentum with its smokeless product lineup [11] - The company is well-positioned to deliver positive returns over the next several years and is a good option for diversified portfolios [11]

Cathie Wood's Trading Activity - Cathie Wood, CEO of Ark Invest, has been selling shares of Palantir Technologies since September 2024, although it still constitutes over 5% of her ETF and is her fifth-largest position [1] Palantir's AI Leadership - Palantir established itself as an AI leader in 2024, leveraging its data gathering and analytics expertise to become a key software vendor for the U S government, particularly for mission-critical tasks like monitoring terrorists and tracking COVID-19 cases [2] Insider Selling Trends - Palantir executives and insiders, including CEO Alex Karp and Chairman Peter Thiel, have been aggressively selling shares since September 2024, with Karp selling $1 86 billion worth of shares and Thiel selling over $1 billion [3] Commercial Success and Revenue Growth - Palantir's AI platform (AIP) has driven significant commercial success, with U S commercial revenue increasing by 54% year-over-year and U S customer count growing by 77% last quarter [4] - The company has seen early success with commercial customers through proof-of-concept work and is now focusing on moving these customers from prototype to production [11] Stock Performance and Valuation - Palantir's stock had a strong performance in 2024, being added to the S&P 500 and Nasdaq-100 indexes, but its valuation has become stratospheric, trading at a forward price-to-sales (P/S) ratio of 36 5 times based on 2025 analyst estimates [5][6] - The stock's valuation is considered frothy, with a 300% gain over the past year, prompting investors to consider taking profits [7] Future Growth Prospects - For Palantir's stock to continue performing well, the company will need to accelerate revenue growth, particularly by transitioning commercial customers from proof-of-concept to production and improving international revenue [8] - The company has already seen revenue growth accelerate with its largest customer, the U S government, which grew by 40% last quarter [11] AI Application and Workflow Focus - Palantir's early AI success stems from its focus on real-life use cases and the application layer of AI, particularly in ontology, where it pairs digital assets with real-world counterparts to create operational AI systems [10]

Hedge Fund Insights and Retail Investors - Retail investors can use quarterly filings of hedge funds and asset managers accessible through the SEC to gain new investment ideas and validate their investment thesis [1] - Following billionaire investors can be beneficial as they manage large funds with significant capital and have extensive experience and professional training [14] Citigroup's Recent Developments - Citigroup has struggled since the Great Recession but has started to improve under CEO Jane Fraser's leadership [3][4] - The bank is selling or exiting 14 international consumer franchises that consumed too much capital and lacked competitive scale [7] - Citigroup announced plans to divest its highly profitable Mexico franchise, though the process has taken longer than expected [7][11] Investment Activity in Citigroup - Warren Buffett's Berkshire Hathaway took a $4 billion stake in Citigroup in early 2022, making it the 14th largest position in Berkshire's $297 billion portfolio [10] - Stanley Druckenmiller's Duquesne Family Office purchased over 327,000 shares of Citigroup in the third quarter of 2023 [10] Citigroup's Valuation and Strategic Focus - Citigroup trades at roughly 82% of its tangible book value (TBV), reflecting a discount due to its historical underperformance [6] - The bank is focusing on higher-returning businesses such as credit card lending, investment banking, and international cash management [12] - Citigroup has a 3% dividend yield, providing income for investors while they wait for potential stock price appreciation [13] Market and Regulatory Environment - The banking environment has improved with a steepening yield curve, potential deregulation, and lighter capital requirements under the incoming administration [13] - Investment banking activity is expected to improve, further benefiting Citigroup's earnings potential [13]

Intel's AI Accelerator Challenges - Intel's Gaudi 3 chip offers solid performance but struggles with an immature software ecosystem, limiting its success despite aggressive pricing [1] - The company's software immaturity has been a recurring issue, as seen with the Arc Alchemist gaming graphics cards, which initially failed due to faulty drivers and bugs [2] - Intel's AI accelerator roadmap is complicated, with the Max family of GPUs and Gaudi family of AI accelerators not being extended, and the next-generation Falcon Shores expected to launch by the end of 2025 [3][4][5] Intel's AI Market Position - Intel has fallen behind in the AI accelerator market, with Nvidia dominating and AMD being competitive, while Intel missed its 2024 goal of selling $500 million worth of AI accelerators [7] - The company's past decision to cancel the Larabee GPU project in 2008 has hindered its ability to compete in the AI revolution and meet the demand for GPU accelerators [8] - Intel's current AI accelerator lineup comes from Habana Labs, acquired in 2019, with the Gaudi family of AI chips being similar to but not traditional GPUs [13] Intel's Foundry Business and Future Opportunities - Intel is leveraging its manufacturing expertise and investments to build a foundry business, with the Intel 18A process scheduled for volume production next year [10] - The company has secured high-profile customers like Microsoft and Amazon for its Intel 18A process, which could lead to more AI-related chip production in the future [11] - While Intel's AI accelerator revenue may not be impressive in 2025 due to software issues, the foundry business could become a larger opportunity for capturing AI spending in the long term [12] Intel's Recent Successes - Intel secured a deal with IBM to integrate Gaudi 3 chips into IBM's cloud data centers and watsonx AI platform, which is expected to boost Gaudi sales this year [6] - The company has improved its software over time, leading to better performance for its second-generation graphics cards [2]

Tesla's Historical Performance - Tesla, founded in 2003, launched its first freestanding charging stations in 2012 and reported its first profitable quarter in 2013 [2] - In 2015, Tesla introduced solar energy products, marking a significant expansion of its business model [2] - A $1,000 investment in Tesla at the beginning of 2015 would have grown to $27,615 by 2025, representing an average annual gain of around 39%, significantly outperforming the S&P 500's average annual gain of 12% [3] Tesla's Market Position and Valuation - Tesla is currently valued at $1.3 trillion and is part of the "Magnificent Seven" stocks, alongside Apple, Amazon, Alphabet, Meta Platforms, Microsoft, and Nvidia [4] - Tesla's forward-looking price-to-earnings (P/E) ratio is 110, well above its five-year average of 77, indicating a rich valuation [6] - The company's growth has been slowing, which could impact its future performance [6] Tesla's Stock Volatility and Future Outlook - Tesla shares have shown significant volatility, with a 50% increase over the past year but only a 2.49% average growth over the past three years [5] - Over the past five years, Tesla's stock has averaged a 67.6% growth, highlighting its strong performance in recent years [5] - The future performance of Tesla stock in 2025 and beyond remains uncertain, requiring careful consideration for potential investors [5]

Company Overview - The account is managed by Noah's Arc Capital Management, which aims to provide Wall Street-level insights to main street investors [1] - The research focus is primarily on 20th-century stocks (old economy) undergoing a 21st-century transformation, with occasional coverage of companies that facilitate such transformations [1] - The firm seeks innovations in business models that can lead to significant stock price changes [1] Analyst Information - The main account author, Noah Cox, is the managing partner of Noah's Arc Capital Management [3] - The views expressed in the article are not necessarily reflective of the firm's views [3] Disclosure and Disclaimer - The analyst has no stock, option, or derivative positions in any of the mentioned companies and no plans to initiate such positions within the next 72 hours [2] - The article expresses the analyst's own opinions and is not intended as investment advice [3] - Seeking Alpha's disclosure states that past performance is no guarantee of future results and no investment recommendations are being made [4]

Nvidia's Market Position and Growth - Nvidia briefly became the world's largest company by market capitalization in 2024, surpassing Apple and Microsoft, highlighting its rapid rise from not being in the top 20 in 2021 [2] - The company's dominance in the AI market is expected to continue, with potential to reclaim the top spot in market capitalization by 2025 [8] - Nvidia's market capitalization reflects its dominance in the AI sector, driven by strong demand for its products [9] Blackwell Chip Demand and Production - Current AI models require up to 100,000 Hopper chips, but new models start at 100,000 Blackwell chips, driving "insane" demand [1] - Nvidia is sold out of Blackwell chips for at least 12 months, despite efforts to ramp up production, including a partnership with Foxconn to build the world's largest Blackwell production facility in Mexico [1] - Blackwell chips are more than twice as powerful as their predecessors, yet customers are demanding even greater quantities for their data centers [9] Revenue Growth and Market Expansion - Nvidia's successful launch of its most important product is expected to drive sales, with Morgan Stanley analysts predicting a 44% gain in top-line revenue over the next year [3] - The AI market is expanding rapidly, with PwC estimating it could add $15.7 trillion to the global economy by 2030, benefiting Nvidia [7] - Microsoft's announcement of an $80 billion AI infrastructure spend in fiscal year 2025, a 60% increase from 2024, signals strong demand for Nvidia's chips [4][5] Industry Trends and Spending - Microsoft's AI infrastructure spending has grown significantly over the past five years, with the majority allocated to building AI data centers and purchasing Nvidia chips [5] - The trend of increasing AI spending is accelerating, with Microsoft's plans likely to be followed by other Silicon Valley companies, further boosting demand for Nvidia's products [6] - Nvidia's client base is not tightening spending but expanding, as evidenced by Microsoft's massive AI data center investments, which are positive for Nvidia's financial performance [7]

Company Performance - ASML's stock has increased by more than 5% since October last year, outperforming the S&P 500's gain of over 2% [3] Analyst Background - The author, Yiannis Zourmpanos, is the founder of Yiazou IQ, an AI-driven stock research platform [3] - The author has a background in external/internal auditing and consulting, having worked at Deloitte and KPMG [3] - The author holds a Chartered Certified Accountant qualification and is a Fellow Member of ACCA Global, with BSc and MSc degrees from U.K. business schools [3] Investment Strategy - The investment approach focuses on GARP/Value stocks, targeting high-quality, reasonably priced businesses with strong moats and significant growth potential [3] - The strategy prioritizes fundamentals and seeks stocks trading at a discount to intrinsic value, with a clear margin of safety [3] - The long-term investment horizon is 5-7 years, aiming for wealth accumulation through compounding while emphasizing downside protection [3] - The strategy sometimes takes contrarian views during market uncertainties [3]

Tesla - Tesla CEO Elon Musk believes autonomy is the future of the automotive industry, with the company unveiling its Cybercab robotaxi in October, which lacks pedals and a steering wheel as FSD handles the entire driving process [1] - The company plans to build a ride-hailing network where the Cybercab can autonomously haul passengers and earn revenue around the clock, with high profit margins due to the absence of human drivers [1] - Consumers can purchase the Cybercab for personal use or operate a ride-hailing service using Tesla's network, unlocking several new revenue streams, with analyst Dan Ives from Wedbush Securities believing it could be a $1 trillion opportunity [7] - Tesla's full self-driving (FSD) software, already in beta mode for passenger EVs, is a major source of optimism, though it lacks regulatory approval for unsupervised use in the U.S. [13][16] - Tesla delivered 1.79 million passenger EVs in 2024, a 1.1% drop compared to 2023, with EV sales accounting for almost 80% of total revenue, posing a short-term challenge [18] - The Cybercab is not scheduled for mass production until 2026, requiring Tesla's passenger EV sales to impress investors for at least another year [18] - Ark Investment Management predicts Tesla stock could soar 530% to $2,600 by 2029 if the Cybercab and FSD are successful, offering substantial payoff for high-risk-tolerant investors [14] Meta Platforms - Over 98% of Meta's revenue comes from selling advertising slots on its social networks, with user engagement directly driving ad revenue [2] - Meta launched an AI chatbot called Meta AI in 2023, which has already amassed 500 million monthly active users and is embedded in all of the company's apps, allowing users to ask questions or generate images [3] - Meta AI is powered by the Llama family of large language models (LLMs), which is open source and has over 600 million downloads, making it the most popular open-source model family globally [4] - Meta spent $40 billion in 2024 building data center infrastructure to further its AI ambitions, with plans to launch Llama 4, potentially the most advanced LLM in the world, paving the way for new AI features and revenue opportunities [10] - AI-powered recommendations drove an 8% increase in time spent on Facebook and a 6% increase on Instagram in Q3 2024, enhancing user engagement and ad revenue potential [8] - Meta AI is free to use, but businesses may eventually pay to embed product links in its responses, unlocking a new revenue stream [9] - Wall Street consensus estimates suggest Meta could deliver a record $186 billion in revenue and $25.38 in earnings per share in 2025, making its stock attractive [5] Industry and Valuation - Tesla and Meta both bet heavily on AI, with Tesla focusing on autonomous driving and Meta on AI-driven social media and advertising [17] - Tesla stock trades at a high P/E ratio of 108, three times more expensive than the Nasdaq-100's 32.1 P/E ratio, while Meta stock trades at a more enticing P/E ratio of 29.1 [11] - Both Tesla and Meta stocks soared by over 60% in 2024, ending the year near record highs, but Meta is seen as a safer buy for 2025 due to its attractive valuation and immediate AI-driven revenue potential [12][15]

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