The tech-focused Nasdaq 100 turns 40 today. Its journey to the milestone illustrates the path many investors have taken, initially viewing tech stocks as risky gambles before developing what can best be described as an enduring love for an index that has arguably become the poster child for innovation and growth. Though initially empowered by an era of ultra-low interest rates, tech stocks have continued their gravity-defying ascent higher even as yields have jumped to near multi-decade highs recently. This week, a Chinese upstart, DeepSeek, has raised questions about the amount of money invested by U.S. semiconductor companies to build out data centres and other AI infrastructure. It is always necessary to test investors’ conviction when a market has a widely agreed upon narrative. Even still, this week the Nasdaq 100 is still hovering near its all-time highs. Here is updated look at mega-cap price charts. AAPL moved back above its 50-DMA today, which will be positive for technicals. Alphabet (GOOGL) made a new all-time closing high along with Meta (META). Microsoft (MSFT) and NVIDIA (NVDA) are the two that are struggling at the bottom end of their six-month trading ranges. This weekend will be full of Tariff conversations. Our portfolios are diversified across sectors and industries. There will be some hurt in some areas, and some upside surprises in others. The Canadian dollar is on life support. For now, investors should not overthink things.
Should you have any questions or concerns, please feel free to reach out.
Macro Minutes
RBC Capital Markets macro and market strategy series - explores the latest financial market and economic developments. Click the link below to hear the latest insights from RBC's desk strtegists and research analysts.
Episode Focus: The Art of the Deal
RBC Capital Markets | Macro Minute
Portfolio Notes
(+) indicates a positive development, (-) indicates negative, and (~) indicates neutral
(+) Apple (AAPL-US) The earnings report shows why Jim Cramer always says "own it, don't trade it." They reported a record revenue of $124.3 billion and an all-time high EPS of $2.40, indicating strong financial health and growth. Despite iPhone revenue remaining flat year-over-year, Apple achieved all-time revenue records in several markets and saw an all-time high in the iPhone active installed base. Mac and iPad segments experienced significant growth, with Mac revenue up 16% and iPad revenue up 15%, driven by the latest product releases and advancements in Apple Silicon. However, the wearables segment saw a slight decline of 2%. Services revenue reached a new all-time high of $26.3 billion, growing 14% from the previous year, underscoring the increasing importance of services to Apple's revenue mix. China is still a question mark for Apple, though. Revenues down 11% there in the quarter. Apple Intelligence still needs government approval to launch. Keep in mind that rivals like Huawei and Xiaomi can access the AI platform from DeepSeek. Owned in Core, Cash Flow, and US Portfolios.
(-) Canadian National Railway (CNR-T) Revenues were in-line, however earnings came in below expectations due to several one-time issues which negatively impacted margins. There was a port disruption this past quarter and the market was already bracing for a soft quarter. Looking ahead, management is guiding to volume growth of low-to-mid single digits and earnings to grow by 10-15%.
CNR trades at ~19x earnings, a discount to its 5-year average of ~21x and relative to CP. We would note that CNR also comes with lower exposure to the U.S. compared to CP and therefore, CNR is less exposed to the knock on effects if tariffs were to be applied. We wouldn’t mind nibbling here for long-term money. Owned in Core and ESG+ Portfolios.
(-) Caterpillar (CAT-US) The equipment manufacturer declined after posting fourth-quarter revenue of $16.22 billion, under the consensus estimate of $16.39 billion from analysts. On the other hand, Caterpillar earned $5.14 per share, excluding items, which exceeded the Wall Street’s forecast of $5.02 a share. Owned in US Portfolio.
(+) Celestica (CLS-T) shares surged on strong earnings. The company posted record adjusted earnings per share of $1.11, up from 77 cents a year ago. Revenue rose 19 per cent to $2.55 billion. For the current year, the company anticipates its revenue could be as high as $10.7 billion. That’s up from $10.4 billion previously forecast. Celestica provides supply chain solutions globally through two segments: Advanced Technology Solutions and Connectivity & Cloud Solutions. It offers a range of product manufacturing services, including design, engineering, electronics manufacturing, logistics, and after-market services. The company serves various industries such as aerospace, defense, industrial, and communication markets. Headquartered in Toronto, Canada, Celestica focuses on hardware platform solutions and program management services for original equipment manufacturers and service providers. Owned in Core and ESG+ Portfolios.
(-) Deckers Brands (DECK-US) raised its full-year outlook and reported third-quarter results that topped estimates, helped by demand for Ugg boots and Hoka running shoes. But investors, apparently, had reservations, sending shares lower in after-hours trade. Shares tumbled but the selloff follows a 73% gain for the stock over the past 12 months, which has of late had the stock hovering near record highs. The company said it expects sales for its full fiscal year to increase around 15% to $4.9 billion, a bit up from the $4.8 billion it forecast in October. Owned in US Portfolio.
(+) Meta Platforms (META-US) The company delivered better than expected revenue growth across all its geographical segments. We were encouraged by the Q4 quarter and continue to see meaningful growth potential going forward driven by leverage to GenAI to drive growth in the core advertising business near term in addition to the monetization of multiple attractive existing and emerging assets which we believe should support sustainable revenue growth longer-term. Owned in Core, ESG+, and Opportunity Portfolios.
(-) Microsoft (MSFT-US) reported a FQ2 beat on revenues and EPS. While the Azure business drove solid growth of 31%, it did fall at the low end of the company’s guidance range and Q3 guidance also fell slightly short of consensus. Despite some blemishes in the quarter and guidance, the company on the whole continues to execute well and we don’t see the quarter as any indication of weakening in its growth or execution. We remain bullish on the long-term growth prospects of the company and continue to view the company as being well positioned to benefit from the continued growth and adoption of GenAI. With the shares trading at a NTM P/E multiple of ~31x, a premium to its 10-year average of ~24x, we would continue to own the stock and would be buyers on weakness. Owned in Core, ESG+, Cash Flow and US Portfolios.
(-) NVIDIA (NVDA-US) On Monday, technically, shares broke a two-year uptrend on heavy volume with NVDA’s sudden decline of -16.86% on 300% higher volume. This is unusual given the lack of structural weakness beforehand. Its 17% decline erased over $589 billion from its market capitalization in Monday’s trading, proving to be the largest in stock market history. However, NVDA had shown some slowing momentum over the last nine months as it had largely been drifting sideways since last Summer. To its credit, NVDA was trading much closer to 52-week highs than many within the Semiconductor space, as SOX remained around 15% off its all-time highs from last July. Technically, the break of a lengthy trend on higher volume for NVDA Monday typically necessitates some stabilization before expecting an immediate rally back. However, the stock is attractive in the short run, in my view, and is thought to likely bottom this week near $114-$115 before a sharp bounce into February. If NVDA fails to regain $142 on any sharp rally in the Semiconductor sector over the next month and begins to turn back down, then one can make a case for a further decline to attempt to test last Summer’s lows. At this point, that’s technically not the preferred scenario, and it’s thought that NVDA should try to bottom out this week. It looks like Nvidia will end the week with an approximate -12% decline. Owned in Core, ESG+, Cash Flow, US and Opportunity Portfolios.
(+) Roper Technologies (ROP-T) Shares jumped after Roper reported a strong financial performance for 2024, with a 14% revenue growth and a 16% increase in free cash flow, reaching over $2 billion. The company enters 2025 with accelerating demand for its solutions, guiding a total revenue growth north of 10% and organic revenue growth in the 6% to 7% range. Significant strides in Gen AI-based solutions across its portfolio, including product assistance and real-time fraud detection, highlight the company's commitment to technology innovation. Roper also expects high single-digit revenue growth in the TEP segment for 2025, driven by strong performance in businesses like Verathon and Neptune. Additionally, the company now possesses over $5 billion in acquisition firepower, indicating a strong position for strategic M&A activities. RBC has a $666 price target or 16% higher. Owned in Core, ESG+, and US Portfolios.
(+) RTX Corporation (RTX-US) reported a solid earnings revenue and earnings beat in Q4, with revenue beats across all three of the company’s reporting segments. On an operating profit basis, Pratt and Whitney and Raytheon delivered strong beats, while Collins met consensus expectations. The company also provided F25 guidance that fell below consensus expectations on revenues which appears to be driven by a deceleration of growth in the Collins business, and we will look to the conference call for details regarding this dynamic. RTX remains a powerhouse in the aerospace & defense industry, where it enjoys stable growth and healthy margins leveraging its established expertise, mission-critical product portfolio, and deeply entrenched customer relationships. With the shares currently trading at a NTM P/E multiple of 20x, a slight premium to its 10-year average of 16x, we continue to see runway for the multiple to close the gap to its commercial aviation peers as RTX continues to drive improving execution. As such we continue to recommend the shares and would be buyers at current levels. Owned in Core, Cash Flow, US and Opportunity Portfolios.
(-) ServiceNow (NOW-US) reported in line FY4Q revenues and a modest EPS beat. Additionally, cRPO growth and subscription revenue growth were in line with consensus expectations. The company was bullish on AI trends, unveiling agentic solutions which management expects to accelerate consumption based monetization to drive faster initial uptake. A combination of consumption based monetization, FX headwinds, and DOGE uncertainty drove CY25 guidance modestly below expectations. We continue to be bullish on NOW's ability to take share from legacy IT vendors as their proprietary platform reduces costs and streamlines operations for customers from an IT perspective, bolstered by GenAI solutions. We continue to own the stock and be buyers at the current level for long-term growth-oriented investors. Owned in US and Opportunity Portfolios.
(+) Shopify (SHOP-T) closed significantly higher this week driven in part by (1) positive third party credit card data and (2) positive implications post DeekSeek. With respect to the former, stronger consumer spend should result in stronger gross merchandise volumes. This in turn would be a tailwind for SHOP, especially due to the weak seasonality that’s typically associated with the post holiday quarter. On the latter, assuming there AI compute costs have improved materially, then arguably software companies could be some of the largest biggest beneficiaries. For context, SHOP has been building out AI tools, notably Shopify Magic. Most of the use cases are essentially around improving the user experience, streamlining the buildout of the e-commerce page, and converting a greater percentage of traffic to sales. Overall, we believe profitability is poised to inflect higher on the back of improving operating leverage. Owned in Core and ESG+ Portfolios.
(+) Starbucks Corporation (SBUX-US) reported a revenue and EPS beat in FQ1. Same-store-sales of -4% exceeded consensus expectations of -5.5%, as both the North America and International operations delivered SSS of -4%, which beat consensus expectations of -4.8% and -6.6%, respectively. This was partly offset by weaker than expected margins of 11.9%, vs. consensus 12.1% as the company invested behind its operational turnaround. While management did not provide specific guidance, they did note that they expect Q2 to be the nadir for earnings, with earnings improving sequentially and YOY in H2. On the whole, we view the Q1 results as an incremental positive, as it appears that the new initiatives are having an incremental impact on top-line. However, it remains unclear whether such initiatives will be sufficient to drive a sustained rebound in traffic momentum. Owned in Core, ESG+ and US Portfolios.
(+) Tesla (TSLA-US) shares dipped, then ripped after reporting adjusted earnings and revenue that missed estimates. Total revenue rose just 2% YoY, but automotive revenues sank 8% YoY to $19.8 billion, with $692 million coming from regulatory credits. Lower average selling prices across its product lines drove the decline, with its operating margin shrinking from 8.2% last year to 6.2%. However, total deliveries also posted their first annual decline amid high financing costs and increased competition. Tesla did not provide specific guidance for 2025 but said it expects the vehicle business to return to growth. Still, the company continues to encourage investors to look beyond the autos and ahead to its future of autonomy and robotics. It will need to unlock an unsupervised FSD option and launch its driverless ride-hailing business sometime this year to assure investors that its vision is feasible. Owned in ESG+ Portfolio.
(+) Visa (V-US) reported beats on both revenues and EPS for Q1F25. Net revenue growth was driven by strong international transaction and value-added services revenues as international transactions benefited from higher cross border volumes and higher currency volatility. Additionally, consumer payments revenue growth was driven by payments, cross border, and processed transactions volumes which all accelerated on a y/y basis compared to the previous quarter. We continue to like card networks given they operate in an effectively duopolistic market (V and MA control ~90% of all credit card transaction volumes globally), possess robust balance sheets, strong FCF generation and benefit from the ongoing secular shift towards digital payments. Owned in Core, ESG+, Cash Flow and US Portfolios.
Company of the Week: Louis Vuitton
Weekend Reading
RBC MacroMemo - January 28 - February 10, 2025 Post-inauguration update / All about tariffs / U.S. expansionism / Economic data RBC GAM
Canada confronts U.S. protectionism U.S. trade policy is taking a more restrictive turn with potential implications for Canada’s economy and equity market. RBC INSIGHT
How Often Are We in a Recession or Bear Market? One of my favorite ongoing economic stats is the fact that the U.S. economy has been in a recession for just two months out of the past 15-and-a-half years. We’ve been in a recession just 1% of the time since the end of the Great Financial Crisis in the summer of 2009. BEN CARLSON
DeepSeek FAQ In short, Nvidia isn't going anywhere; the Nvidia stock, however, is suddenly facing a lot more uncertainty that hasn't been priced in. And that, by extension, is going to drag everyone down.
The Real Lessons from Kodak's Decline Kodak's story is a reminder of how difficult it is to completely change what a company does. When a team is geared to do one thing really well, diverting those systems and personnel to do something different is nearly impossible. MIT SLOAN 2016
Outlook for China Housing deflating, demographics deteriorating, and exports slowing. APOLLO
Floating Exchange Rates at Fifty From the Postwar World Economy to the Modern World Economy: The Critical Years 1969-1973 PETERSON INSTITUTE
iPad at 15: Hit or a Miss? Marking the 15th birthday of the iPad, perhaps one of the most misunderstood products in Apple’s lineup. OM MALIK
Diversions
"Zero Day" Former U.S. President is charged with finding the perpetrators of a devastating cyber attack that has caused chaos around the country and thousands of fatalities. NETFLIX YOUTUBE TRAILER
“Paradise” This Is Us” creator Dan Fogelman’s new show is a thriller, when a Secret Service agent and an elite enclave is shaken by a murder. DISNEY+
"Companion" A dark comedy. A billionaire's death sets off a chain of events during a weekend trip to his lakeside estate. IMBD

“The stock market is the story of cycles and of the human behavior that is responsible for overreactions in both directions.”
- Seth Klarman