VIDEO: We’re Contemplating a Potential Venezuela-Led Play

In today’s Portfolio video, Chris Versace shares what we’re contemplating and looking at coming off of the weekend’s developments in Venezuela.

We also review Foxconn’s December quarter revenue and near-term outlook, discussing implications for the Portfolio’s holdings. Chris uses that as a springboard to share our thoughts on Qualcomm (QCOM) and Apple (AAPL) shares as we get ready for CES 2026 to kick off later on Monday.

We also lay out the week’s economic data gauntlet and what we’ll be focused on as we dig through it. Chris also shares some positive Wall Street moves for our shares of Arista Networks (ANET) , Costco (COST) , Marvell (MRVL) , United Rentals (URI) and SuRo Capital (SSSS) .

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At the time of publication, TheStreet Pro Portfolio was long QCOM, AAPL, ANET, COST, MRVL, URI and SSSS.

Transcript

CHRIS VERSACE: Hey, everyone, Chris Versace. It is Monday, January 5. And as you've probably noticed, we are firmly in 2026. Some folks still shaking off the holiday cobwebs. But it is back to work.

Now, for us here at the portfolio and the rest of the market, that means we're going to be digesting a lot of new information coming at us this week. Yes, we have a lot of economic data that's going to really give us a very much updated view on what's going on when it comes to inflation, as well as the Fed's other key point of focus these days-- that's right, the jobs market. We don't have a lot of earnings. We will have some, and we will be picking through them.

But the other big thing this week is going to be the kickoff of CES 2026. That begins tonight, when AMD's Lisa Su and Jensen Wang over at NVIDIA deliver their keynote addresses. I suspect it's going to be rather positive on the AI comment front, with implications spilling over for a number of different areas, many of which we have covered in the portfolio. As you should remember, we continue to focus on AI adoption and usage, and we'll have some signals out towards the end of this week really speaking to that, kind of updating that expectation, which appears to be, as we suspected would be the case, accelerating.

Now, let's get to the business at hand for today. As you've probably seen, developments in Venezuela over the weekend raising a number of questions-- oil, oil prices. What's the implication for the potential supply of oil? What does that mean for oil prices, but also gas prices and jet fuel prices? We'll continue to see what happens there. But as you know, there are also geopolitical questions. We've heard some additional saber rattling, we'll call it, about the rest of Latin America out of President Trump, potentially more action in Venezuela. We'll have to see how that plays out.

But, also, this weekend action in Venezuela has kind of rekindled questions about what China may do regarding Taiwan. So a lot of geopolitical uncertainty there. Hence gold prices moving higher, which is benefiting several positions in the EPS diplomats. Remember, on Friday, we reconstituted and rebalanced the portfolios basket for that strategy, pulling in some new gold names. And obviously, those are trending higher today. Remember, too, with EPS diplomats, we're not in this for any particular day, any particular week. This is a strategy for the quarter. So let's remember to give it some time to breathe, as I like to say.

I will end the comments on Venezuela and oil saying that, yeah, right now, when you put together everything I just said, things do seem a little murky. But we do understand that landscapes change, and in this case, we're going to want to see what develops over the next few days. We don't want to make any rash decisions. Already, some US officials are already kind of balking or pushing back on the comments that the US will run Venezuela.

Let's take the time, do some work in the space, and that's going to include looking at oil service providers, as well as shares of IOH. That is the VanEck Oil Services ETF. My thinking is if we were to move into this space, we want to capture some well-rounded exposure, not bet on any one company, kind of using the same strategy that has benefited us extremely well with the cyber ETF.

Now, let's move on and talk about some other news that came out earlier today. Foxconn reported its December and fourth quarter revenue. Remember, we pay close attention to Foxconn because it's a key partner for NVIDIA as well as Apple. But it also gives us a barometer of demand for AI and data center servers. And boy, oh, boy, does that seem to be vibrant.

For the quarter, Foxconn reported a just over 22% year over year jump in revenue, which was stronger than expected. Now, we are in January, so let's take a look at what they said going forward. One, they do expect the normal seasonal slowdown to unfold. No surprise, considering they touch PCs and smartphones, and those tend to have a seasonal decline in the first quarter of the year compared to the fourth quarter of the year.

But what Foxconn said is that robust demand for AI server rack products, even against elevated fourth quarter levels, that end market is expected to bring strong wrong performance in the current quarter, really leading Foxconn to signal that its revenue growth should be at the upper end of what it's seen over the last few years.

So our takeaway is supportive for NVIDIA, most likely supportive for Marvell, as well as Broadcom. On the seasonality side, not as good for Qualcomm. Not unsurprising, but still just not very supportive. Remember, too, some comments that we shared with you earlier today, but also in Friday's December monthly roundup about Qualcomm and the concern of a looming headwind that we see as memory prices tick higher. That could restrain demand for PCs, AI PCs included, and smartphones.

So we're going to pay very close attention to what is announced at CES this week, see what Qualcomm has to say, if it updates its business models at all, any design wins it looks to speak to speak to, particularly on the IoT front, which is another part of its diversification strategy. But we do have to be mindful of those consensus EPS expectations we shared with you when we updated our table for the portfolio today. Qualcomm's expectations-- low single digits. There might be some upside to that. That's what we're really going to look for this week, again, in those CES announcements.

But let's remember that most of those products that are announced at CES tend to ship in the back half of the year. So the concern that we have with Qualcomm is that if we hit the typical seasonal slowdown and AI, PC, and smartphone shipments are a little weaker than expected, Qualcomm shares might be range bound. So we'll be revisiting that position throughout this week and as we move into the December quarter earnings season.

Quick question I'm sure we're going to get. Chris, you talk all about Qualcomm here. What about Apple? Remember, with Apple, the key catalyst is going to be the potentially spring shipment of the updated, refreshed, AI-enabled Siri and what that could do to jump start the replacement cycle for iPhone. So near-term, we could see Apple shares, again, trade sideways. But that is a bigger potential for Apple. Remember, iPhone, despite all the other things that we talk about, the iPhone remains Apple's biggest business.

We'll also be on the lookout for what they might do with the services business in the coming months and quarters. We really like that business. It's helped stabilize Apple's quarterly EPS, no longer as susceptible to fluctuations in iPhone demand. And we have to remember, too, that that services business carries some very, very nice margins relative to all the other businesses. So to the extent Apple signals some new things ahead for that, boy, that would be a positive.

m let's talk a little bit about some of the data that we got. I said earlier that we're going to have a wave of data coming at us. And we kicked that off today with the ISM manufacturing PMI for December. It's the first part of what will be a very, very much data-filled week. We're going to cap it at the end of the week with the December employment report. But in between, we'll be hearing from ADP and Challenger job cuts about the tone of the jobs market. We'll also get the December services PMI, which is going to be, in our view, a very important figure.

But remember that when we look at all of this data, we want to understand what is the aggregate picture for what's going on in the jobs market and inflation, given the Fed's focusing on that, but also the overall tone of the economy, and what does new order data have to say about what lies ahead?

Now, with that, what did the December ISM manufacturing PMI report revealed today? Well, manufacturing activity at the headline level softens slightly in December compared to November. Prices, on the other hand, unchanged, still at about that 58.5 reading, which says they are expanding, rising. Employment came in at 44.9. Yeah, better than the 44 figure in November, but still weaker than what we saw in September and October.

And finally, new orders for the manufacturing part of the economy. They ticked a little higher in December, but here, too, that figure was still much, much weaker than what we saw in August, September, and October. So all in all, no real dramatic changes when we compare the December manufacturing data with the November manufacturing data. But it does signal that the overall manufacturing activity remains soft.

Having said that, let's remember that manufacturing only accounts for about 10% to 15% of GDP, which also means we will be much more focused on what we find in the December PMI report out later this week. Should we see the jobs data weaken further compared to recent months, both in what ADP has to say, Challenger has to say, and the employment report on Friday, and the services PMI, that bad news could inch up rate expectations for this year.

Remember, we're in that environment-- bad news, potentially good news. Now, we're not going to predict what's going to happen on this. I do suspect we could see some weaker jobs data, but we will want to see that confirmed, which means we'll have a lot more coming your way on this data. We'll be breaking each data point down as we get it, and we'll give a summary report at the end of the week and what we think that means not only for the speed of the economy, but for potential rate cut expectations for 2026.

Now, let's cut an end today's video with some nice headlines for others in the portfolio. Let's talk about some upgrades. Arista Networks, ANET, upgraded to overweight from neutral at Piper Sandler with a target 159. Costco-- I know this has been a frustrating position for many. I talked about why we're frustrated with it in the December monthly roundup. Apparently, Mizzou is turning bullish. They upgraded the shares to an outperform from neutral with a price target of 1,000.

Marvell also upgraded to buy from hold at Melius Research-- price target 135. And United Rentals was also upgraded to a buy from neutral at UBS, with a price target of 1,205. We'll end this part of the video sharing that there is some new coverage out from SuRo Capital. They were initiated with a buy rating at Lucid Capital-- price target $12, same as ours. Remember, our thinking about SuRo is the IPO market will remain a key factor for this holding as it looks to continue to monetize its portfolio.

As they do that, we should see the dividend stream continue, potentially accelerate depending on the size of the gains that they book. A number of different potential monetizations inside that portfolio, including additional shares of CoreWeave. But the real thing we're watching now is going to be, what do they do with OpenAI should that go public later this year? But again, there are some other positions that could go public as well.

You know we're going to keep our eyes and ears on the IPO market if and only if because of our positions in Morgan Stanley and Bank of America. And as I mentioned, Bank of America, I'm sure you saw the alert by now, but we did do some prudent portfolio trimming. Some continued strength in the shares finally tipped them over 4.5% in terms of a position size for the portfolio. So we did do some prudent register ringing, very profitable register ringing, too, I might add, and that'll kind of flow back into our cash levels as we close out the day.

So as you can see, folks, it has been, so far, a busy day. It's going to be a busy week. Yes, we have hit the ground running for 2026. We've got a lot more coming your way, including our first set of office hours today after the market close between 4:00 and 5:00 PM in the forum. I'll be there taking as many questions as we can squeeze in in the 60 minutes that we've allotted.

And with that, my friends, please remember, check your emails, your alerts. We want to make sure you're getting our latest thoughts. And if we make any moves with the portfolio, like we did today with Bank of America shares, we want to make sure that you are right there with us. Thanks for watching.