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Apple music, gaming to bring in over $8 billion in revenue by 2025, JPM says

by Reuters June 13, 2022

written by Reuters

(Reuters) – Apple Inc’s revenue from gaming and music offerings is expected to jump 36% to $8.2 billion by 2025, J.P.Morgan said on Monday, as the iPhone maker taps its huge user base to drive its subscription services.

The two services are likely to have a combined subscriber base of about 180 million by 2025 – 110 million for music and 70 million for gaming – boosted by the rapid spread of the internet and a booming gaming industry, according to JPM analysts, led by Samik Chatterjee.

Apple Music, which was launched in 2015 and is the second-biggest music-streaming service after Spotify Technology, is expected to account for a bigger chunk of that revenue, raking in about $7 billion by 2025, the brokerage said.

Apple Arcade, the gaming subscription service launched in 2019, is estimated to pull in $1.2 billion.

Apple did not immediately respond to a request for comment.

The company does not give a sales breakup for gaming and music services but the overall segment, which includes App Store, Apple TV+, Arcade and Apple Music, reported revenue of $19.82 billion for the March quarter. The business is seen as Apple’s engine for expansion.

Chatterjee, who is rated five stars for his estimate accuracy on Apple by Refinitiv Eikon, expects the gaming-market size to hit $360 billion by 2028 and music streaming to reach $55 billion by 2025.

(Reporting by Siddarth S and Pushkala Aripaka in Bengaluru; Editing by Anil D’Silva)

June 13, 2022 0 comments

Financial News

JPM says Meta will become Broadcom’s next billion-dollar customer

by Reuters May 31, 2022

written by Reuters

(Reuters) – Facebook parent Meta Platforms Inc will use Broadcom Inc’s custom chips to build its metaverse hardware, becoming the chipmaker’s next billion-dollar ASIC customer, analysts at J.P. Morgan said on Tuesday.

ASIC (application-specific integrated circuit) chips will drive $2 billion to $2.5 billion in revenue for Broadcom this year, helped by its deals with Meta and partnerships with Alphabet and Microsoft, the analysts said.

“We believe these wins are primarily at 5 nanometre and 3 nanometre and will be used to power Meta’s metaverse hardware architecture that it will deploy over the next few years,” analyst Harlan Sur said.

Meta is investing heavily in the metaverse – a virtual space where people interact, work and play – by adding new features to hardware devices that serve as access points to the virtual world.

Sur added that Meta will emerge as Broadcom’s next $1 billion-a-year ASIC customer over the next three to four years after Google.

ASICs are designed to perform hyper-specific tasks, including in AI and machine learning, efficiently.

Broadcom and Google have co-developed Google’s custom chip used for machine learnings tasks since 2016 and the brokerage estimates this to be worth over $1.3 billion in 2022.

Meta is developing a range of hardware products for the metaverse that include smart glasses and virtual reality headsets, and has even opened its first physical store where shoppers can try out these devices and other gadgets.

“Near-term ASIC program pipeline is strong as we believe Broadcom will be ramping Meta/Facebook and Microsoft ASICs this year,” Sur added.

Broadcom’s semiconductor solutions business, which makes custom chips, contributed more than 70% to the company’s nearly $27.5 billion revenue in 2021.

(Reporting by Aniruddha Ghosh in Bengaluru; Editing by Maju Samuel)

May 31, 2022 0 comments

Financial News

JPM says Japanese automakers to see record profits on price hikes, cost cuts

by Reuters May 31, 2022

written by Reuters

(Reuters) – Japanese auto companies are likely to post record profits this year as they raise vehicle prices and cut costs to mitigate the hit from soaring inflation, J.P. Morgan analysts said on Tuesday.

JPM expects price hikes and cut in some production-related expenses to mitigate 80% to 90% of the rise in Japanese original equipment manufacturers’ (OEMs) raw material costs per vehicle, which it estimates will rise by an average of 95,000 yen ($742.88) in fiscal 2022.

“We think product price hikes are likely to go through in North America in particular, backed not only by solid demand but also the Japanese OEMs’ brand positions,” JPM analysts said.

The brokerage also upgraded Japanese auto industry’s bellwether, Toyota Motor Corp, to “overweight” from “neutral”, citing its production recovery, price positioning, among other things, amid concerns that inflation could eat into the company’s earnings.

Japan’s largest automaker by sales on Friday cut its global production plan for June for the second time this month and signaled its full-year output estimate could be lowered, highlighting the pain from the supply chain crunch and China lockdown.

Besides high commodity prices, global auto production has also suffered from semiconductor shortages and China’s COVID-19 lockdowns, with car sales in China, Europe and the United States remaining depressed compared with a year earlier.

The brokerage forecast 2022 global automobile demand of 84.5 million units, with Japanese OEMs global production at 24.3 million.

($1 = 127.8800 yen)

(Reporting by Siddarth S in Bengaluru; Editing by Vinay Dwivedi)

May 31, 2022 0 comments

Financial News

JPM goes ‘underweight’ on alternative investments after they lose 10% this year

by Reuters May 25, 2022

written by Reuters

(Reuters) – Analysts at J.P. Morgan turned negative on alternative investments as they expect lower returns for the asset group compared to traditional assets.

The brokerage downgraded alternatives to “underweight” from “overweight” after estimating the asset group to return 10% over the next 12 months against 12% for traditional assets.

The outstanding value of alternative assets like hedge funds and private debt in total asset investments have fallen by 10% this year to $25 trillion, analyst Nikolaos Panigirtzoglou said.

However, the brokerage said market share of alternatives in total assets remain at a record level.

Record high inflation, along with market sell-offs, cloud the outlook for alternative assets, even though private equity and hedge funds have seen strong performance this year.

However, share of alternatives in total asset has reached a new high of 13.7% in 2022, compared to just 7.6% in the beginning of 2007, according to analysis by JPM.

“While public markets already price in significant recession risks, and digital assets have repriced significantly following the collapse of Terra USD, some alternative assets such as private equity, private debt and real estate appear to have lagged somewhat,” Panigirtzoglou said.

TerraUSD, one of the world’s largest stablecoins, lost a third of its value earlier this month, spooking cryptocurrency investors and partly contributing to bitcoin’s tumble below $30,000 for the first time in 10 months.

(Reporting by Aniruddha Ghosh in Bengaluru; Editing by Maju Samuel)

May 25, 2022 0 comments

Financial News

JPM downgrades Thailand on fading tourism recovery and worsening macro conditions

by Reuters May 2, 2022

written by Reuters

(Reuters) – Analysts at J.P. Morgan downgraded Thailand’s equities rating on Monday, citing the slow pace of recovery in the tourism industry due to rising inflation and a surge in COVID-19 cases in China.

JPM said the tourism industry in Southeast Asia’s second-largest economy faces several headwinds, including soaring inflation globally along with weakening consumer sentiment and foreign exchange fluctuations, as brokerage cuts its rating to “neutral” from “overweight”.

Thailand, one of the world’s popular tourism destinations before the pandemic, was among the first nations in Asia to reopen its borders to vaccinated visitors last year with limited quarantine norms, hailed at the time as a model for re-opening.

Travel and tourism in Southeast Asia – known for its white sand beaches, historical architecture and warm climate – contributed $380.6 billion to the region’s GDP in 2019, or 11.8% of the total, according to World Travel and Tourism Council.

Thailand’s tourism industry contributed to 12% of the country’s GDP before the pandemic.

More than a quarter of the 40 million tourists who had visited Thailand in 2019 were Chinese. This year, the country expects between 5 million and 10 million international arrivals from places such as Malaysia and other Southeast Asian neighbours.

“China’s firm zero-Covid policy and recent capital outflows will likely delay the return of Chinese outbound tourists,” JPM said.

Forward bookings for 2022 show Thailand is expected to reach 25% of pre-pandemic levels, behind levels of 72% and 65% for Singapore and the Philippines, respectively.

Thailand’s economic activity improved in April following easing of COVID restrictions, but remained under pressure from rising living costs after a slowdown the previous month, its central bank said on Friday. JPM also downgraded Thailand’s industrial sector to “neutral” from “overweight”.

(Reporting by Aniruddha Ghosh in Bengaluru)

May 2, 2022 0 comments

Financial News

JPM, Credit Suisse expect China COVID spike to have minimal impact on GDP

by Reuters March 18, 2022

written by Reuters

– The recent surge in COVID-19 cases across China is likely to have a minimal impact on the country’s GDP this year, two brokerages said in their reports, while adding it could hurt demand for some commodities.

China reported 2,388 new local cases with confirmed symptoms on March 17, almost double the count a day earlier, as it battles its worst coronavirus outbreak since the virus first emerged in Wuhan in 2020.

Credit Suisse said in a report late Thursday it expected a loss of 0.03 to 0.05 percentage point to GDP growth per week of the lockdown, on the current size of the lockdown.

Earlier this month, China forecast a slower economic growth of around 5.5% this year as domestic headwinds, including a downturn in the country’s vast real estate sector and lacklustre consumption, cast a pall on its outlook.

“We view China’s recent COVID cases and restrictions as a potential demand-side shock that could partly offset the Russia/Ukraine supply-side shock to some commodities,” Credit Suisse economists said.

Separately, J.P.Morgan said it expected 20% of China’s GDP to undergo a “more severe economic shock” associated with the “zero-COVID” policy, but expected it to recover in May and June.

The brokerage forecasts China’s full-year GDP growth to be 4.9%, down from its previous estimate of 5.1%.

(Reporting by Siddarth S in Bengaluru; Editing by Rashmi Aich)

March 18, 2022 0 comments