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Wells Fargo Sees No Fizz in PepsiCo (PEP) Amid Profitability Concerns

On June 4, Wells Fargo analyst Christopher Carey maintained a Hold rating on PepsiCo Inc. (NASDAQ:PEP) with a price target of $140, citing ongoing challenges in the company’s North American food division related to costs and volume trends.

Carey notes that PepsiCo is struggling to adjust its cost structure to current market conditions, which could affect its near-term earnings. He argues that growth in the food sector is currently largely driven by shifts in consumer demand rather than companies gaining market share, a trend he thinks may continue.

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Despite PepsiCo’s efforts and past investments, the company has not been able to reinvigorate volume growth, raising concerns about its ability to sustain revenue momentum. In particular, the Frito-Lay and Quaker Foods unit has seen pressure from weaker volumes and rising costs, which have weighed on operating margins.

Carey believes that meaningful cost restructuring, including workforce reductions and other expense controls, may be necessary to improve profitability and support EPS growth. Without such steps, the stock could remain under pressure, warranting a neutral stance.

PepsiCo Inc. (NASDAQ:PEP) is a leading global food and beverage company. Its product offerings span beverages, snacks, and convenient foods, with notable brands such as Pepsi, Mountain Dew, Gatorade, Tropicana, Lay’s, Doritos, Cheetos, Quaker, and SodaStream.

While we acknowledge the potential of PEP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than PEP and that has 100x upside potential, check out our report about the cheapest AI stock.

READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.

Disclosure: None.

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When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

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  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

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