Taking profits at all-time highs

The S&P 500 hit new all-time highs this week and we elected to trim three of our biggest winners, including Advanced Micro Devices (AMD), Meta Platforms (META), and ServiceNow (NOW) after a meaningful move higher.  

The trades reflect us playing “offense” as we lock in gains following strong returns. These trades give us the opportunity to add back to these positions at lower levels should we see an expected pullback given their increasingly rich valuations today.

Let’s dive in.

Advanced Micro Devices (AMD) represents the picks and shovels of artificial intelligence and has been one of the primary beneficiaries of the recent super cycle. The stock is up ~20% year-to-date and has more than doubled since we initiated the position in late 2022. Although we continue to believe that AMD is at the forefront of innovation, the company has moved a long way quickly and trimming allows us to de-risk an organically large position ahead of earnings. 

Meta Platforms (META) is up ~20% since we added to the stock in November. This can be attributed to strong quarter-to-date advertising checks and management’s expense guidance coming in better than anticipated. While our long-term confidence in META’s potential remains, we elected to capitalize on current valuation levels by booking in some profits. We intend to increase our position, as we’ve done in the past, upon any favorable risk-reward asymmetry. 

ServiceNow (NOW) has been another beneficiary of the artificial intelligence rally and has high expectations heading into its earnings print. We believe a lot of positive news is baked into the current price and we trimmed the stock in an effort to lock in gains and control risk.

The results of the trades decrease our net exposure for the time being. We feel comfortable with our incrementally higher weight towards strategic cash given stretched valuations and the velocity of the run higher. 

As always, let us know if you have any questions about the recent trades; we’re happy to assist.

– Your Titan Team

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