Investment Review №327. The soft power of the Federal Reserve

Invesco Solar ETF

On August 15, U.S. solar energy companies experienced significant upward movement in stock performance. Notably, the Invesco Solar ETF (TAN), the largest fund in the sector by assets under management, recorded an 8.8% increase—its highest daily growth since the start of 2025. Solar companies with market capitalizations exceeding $1 billion averaged a 17.1% gain on that day. This surge followed recent guidance issued by the Treasury and IRS concerning the eligibility requirements for clean energy projects to obtain tax credits. The guidance discontinues the previous provision allowing developers of solar generation projects to qualify for incentives by investing only 5% of the total project cost without commencing actual construction. Now, substantial energy projects must demonstrate tangible construction progress to be eligible for these incentives. This regulatory shift is anticipated to bolster demand for U.S.-manufactured solar panels and associated equipment.

Stock Performance for Leading U.S. Solar Energy Companies as of August 15, 2025

Source: FactSet

Apple

As we approach Apple's (AAPL) traditional annual fall event slated for September 9, substantial information regarding the company's three-year iPhone product lineup has emerged. This year, Apple is set to unveil the ultra-thin iPhone 17 Air, notable for integrating the Apple C1 modem, marking a first for the company. Additionally, standard updates to other product lines are anticipated. In 2024, Apple plans to release its inaugural foldable iPhone, priced around $2,000, aligning with the flagship foldable Samsung Galaxy in cost. This model will feature Touch ID exclusively (no Face ID), four cameras, and lack a SIM card slot. Looking ahead to 2027, to commemorate the iPhone’s 20th anniversary, Apple intends to launch a smartphone with a fully touchscreen-covered design. Despite these ambitious plans, Apple faces challenges in integrating artificial intelligence, resulting in speculation that the company might acquire AI firms such as Perplexity AI and Mistral. Investor sentiment is cautious, with concerns that insufficient AI capabilities and a potentially flawed foldable smartphone execution could adversely affect Apple in 2026.

AAPL-US vs. S&P 500 performance, $

Source: FactSet, Freedom Broker analysis

Intel

On August 22, Intel Corp. (INTC) and the U.S. government entered into an agreement under which the government acquires approximately 9.9% of Intel’s shares, converting $8.9 billion in unpaid grants under the CHIPS Act and the Secure Enclave initiative into an equity stake in the company. A week earlier, Japanese conglomerate SoftBank announced a $2 billion investment in Intel, purchasing INTC shares at $23 each. As part of the agreement, the U.S. government will also receive a 5-year warrant allowing it to acquire an additional 5% equity stake at $20 per share, should Intel’s ownership in the foundry business fall below 51%. The arrangement allows the government to passively participate in the company’s equity, granting voting rights but no representation on the board. The company has cautioned that the government’s participation may adversely affect its international sales and investor sentiment and result in a dilution of the shares of current shareholders. Additionally, it might impose restrictions on corporate transactions. Intel’s long-term recovery continues to be uncertain.

INTC-US vs. S&P 500 performance, $

Sources: FactSet, Freedom Broker

Palo Alto Networks

Palo Alto Networks (PANW) reported a record quarterly revenue of over $2.5 billion for Q4 FY2025, surpassing the $10 billion annual run-rate for the first time. The key drivers of this growth were the accelerated development of the SASE segment, the scaling of XSIAM, and the active adoption of AI solutions (Prisma AIRS, AI Access). Additional momentum came from large ARR deals exceeding $10 million and a highly dynamic Fortune 500 customer base. We expect Palo Alto to sustain high growth rates in 2026, driven by further scaling of NGS ARR, growth in SaaS subscriptions, and the expansion of platform solutions. An additional growth catalyst is the integration of CyberArk, which will enable the company to enter the Identity Security segment and offer a unified AI-driven security stack. However, there remains a risk factor due to gross margin pressure from hyperscaler infrastructure in the coming quarters, along with a potential slowdown in the U.S.

Number of PANW platform customers

Source: Palo Alto Networks’ presentation

Novo Nordisk

Novo Nordisk’s (NVO) drug, Wegovy, has been approved for treating metabolic associated steatohepatitis (MASH) in adults with moderate to severe hepatic fibrosis. It is the first GLP-1 based therapy approved for MASH and the second therapy for MASH treatment after Madrigal Pharmaceuticals’ (MDGL) REZDIFFRA. According to the American Liver Foundation, this disease impacts approximately 5% of the U.S. adult population and represents a multi-billion-dollar market opportunity. REZDIFFRA received FDA approval in March 2024, heralding the start of a significant competitive race in the MASH market. Analysts predict that the drug could surpass $1 billion in revenue within just a year and a half post-launch, an impressive feat for such a nascent therapeutic area. For Wegovy, this approval presents a potential substantial sales growth driver.

What will patients choose: REZDIFFRA or Wegovy? It’s important to note that REZDIFFRA is an oral drug, while Wegovy requires subcutaneous injections. Wegovy, in its phase 3 clinical trials, demonstrated a more significant absolute impact on resolving MASH and improving fibrosis compared to REZDIFFRA. Despite this, REZDIFFRA’s oral tablet form and ease of daily use might make it more appealing to many patients. It should also be taken into consideration that Wegovy is part of the GLP-1 agonist class, which not only addresses MASH but also aids in weight loss and the management of type 2 diabetes—common comorbidities with the disease. That is why many analysts believe that healthcare professionals may lean towards prescribing Wegovy when presented with both treatment options. To fully grasp how this new indication could influence Wegovy sales, it’s helpful to compare its potential sales with the projected revenue from REZDIFFRA (refer to Chart below).

REZDIFFRA Current and Projected Revenues, $ million

Source: FactSet