The Insider Report: Bears Spooked to Start October

Market Overview

Stocks soared to new all-time highs across the board last week. Once again, the Nasdaq led the charge, with the tech-heavy index finishing up 1.32%. The Dow Jones Industrial Average followed, closing up 1.10% on the week after a strong Friday. The S&P 500 finished 1.09% higher on the week. The story under the surface was healthcare coming back to life. That said, it has a lot of catching up to do still. Cryptos also look ready for the next leg higher.

Stocks I Like

Bitdeer Technologies (Ticker: BTDR) – 39% Return Potential

What's Happening

• Bitdeer Technologies Group (Ticker: BTDR) is a leading blockchain and high-performance computing company specializing in cryptocurrency mining and AI cloud services, offering investors exposure to the rapidly growing digital asset and computing infrastructure sector with a focus on innovative mining solutions and scalable technology. 
• The company's recent quarterly report showed revenue at $155.58 million, but a loss of $24.39 million.
• This valuation on BTDR is high. Price-to-Sales is at 9.30 and Book Value is just 3.30.
• At a technical level, BTDR is consolidating its gains after breaking out from a rounding bottom formation. It's gathering momentum before its next leg higher.

Why It's Happening

• Bitdeer Technologies Group is riding the wave of renewed Bitcoin enthusiasm, with Q2 2025 revenue soaring 56.79% as its mining operations scale rapidly. The company's aggressive push to expand its self-mining hashrate to 40 EH/s by October positions it as a leader in capturing value from the growing crypto market, fueled by increasing institutional adoption and Bitcoin's rising price trajectory.
• Strategic pivot into AI and HPC markets diversifies Bitdeer's growth story. Winning the 2025 AI Breakthrough Award for its AI Cloud service, the company is leveraging its massive 1.6 GW power capacity to tap into the booming AI infrastructure sector, creating a compelling narrative of transitioning from crypto pure-play to a diversified tech powerhouse.
• Global operational footprint supports Bitdeer's resilience and scalability. With mining and data center operations spanning multiple regions, the company is well-positioned to navigate regulatory shifts and capitalize on global demand for both crypto mining and AI compute power, creating a robust foundation for long-term growth.
• Inclusion in major indexes like the Russell 2000/3000 enhances Bitdeer's visibility and credibility. This milestone attracts institutional investors and boosts liquidity, reinforcing the narrative of Bitdeer as an emerging leader in the intersection of blockchain and next-gen computing.
• Analyst Ratings:
  • Roth Capital: Buy
  • Rosenblatt: Buy
  • Needham: Buy

My Action Plan (39% Return Potential)

• I am bullish on BTDR above $14.25-$14.00. My upside target is $27.00-$28.00.

Kingsoft Cloud Holdings (Ticker: KC) – 38% Return Potential

What's Happening

• Kingsoft Cloud Holdings Limited (Ticker: KC) is a leading cloud service provider in China, offering scalable infrastructure and platform solutions for AI, e-commerce, and enterprise digital transformation, providing investors exposure to the rapidly growing cloud computing and AI technology sector with a focus on innovative, high-performance services.
• The most recent quarterly report had revenue at $2.35 billion but a loss of $300.48 million.
• Valuation is elevated in this stock. Price-to-Sales is at 3.24 and Book Value is just 3.45.
• From a technical perspective, KC is building out a base within a saucer formation. If it can clear resistance, look for a powerful surge higher back to the highs earlier this year.

Why It's Happening

• Kingsoft Cloud Holdings is transforming into a high-growth AI powerhouse, with its AI Cloud business surging 228% year-over-year in Q1 2025 gross billings to RMB525 million, now comprising 39% of public cloud services. This explosive demand from AI workloads positions the company to capture a larger slice of China’s burgeoning artificial intelligence infrastructure market, fueling a compelling narrative of innovation-driven expansion beyond traditional cloud services.
• Strategic ecosystem partnerships with Xiaomi and Kingsoft are unlocking new AI opportunities and revenue synergies. By deepening ties within these vast networks, Kingsoft Cloud is embedding its services into mobile, software, and enterprise ecosystems, creating a flywheel effect that drives customer adoption and cross-selling potential in the world’s largest consumer tech market.
• Robust revenue trajectory and profitability turnaround underscore Kingsoft Cloud’s operational resilience. Q2 2025 revenue grew 20.3% year-over-year, marking the first profitable quarter, while Q1 total revenues rose 10.9% to RMB1,970 million—reflecting disciplined cost controls and a shift toward higher-margin AI offerings that pave the way for sustained cash generation and financial strength.
• Aggressive capital raise for AI infrastructure signals bold ambitions for scale. The HK$2.8 billion share placement in September 2025, with 80% earmarked for AI business expansion and cloud enhancements, equips the company to meet surging compute demands, reinforcing its story as a forward-thinking leader ready to dominate the next wave of digital transformation in China.
• Dominant position in China’s cloud market provides a fortified foundation for long-term dominance. As a top-tier provider serving key verticals like e-commerce, healthcare, and intelligent mobility, Kingsoft Cloud benefits from the country’s accelerating digital economy and policy support for cloud adoption, positioning it as an indispensable enabler of enterprise innovation amid global tech shifts.
• Analyst Ratings:
  • Deutsche Bank: Buy
  • UBS: Buy
  • Nomura: Buy

My Action Plan (38% Return Potential)

• I am bullish on KC above $12.75-$13.00. My upside target is $21.00-$22.00.

Wayfair (Ticker: W) – 57% Return Potential

What's Happening

• Wayfair Inc. (Ticker: W) is a leading e-commerce company specializing in home furnishings and décor, offering a vast online selection of furniture, lighting, and accessories, providing investors exposure to the rapidly growing online retail and home goods sector with a focus on innovative technology and customer experience. 
• The company's previous quarterly report showed revenue at $3.72 billion and earnings at $134 million.
• Valuation in W is mixed. Price-to-Sales is solid at 0.93, but EV to EBITDA is high at 112.42. 
• From a charting perspective, W is trending higher in a strong way within its ascending price channel.

Why It's Happening

• Wayfair Inc. is capitalizing on a robust recovery in the home goods market, delivering a stellar Q2 2025 with $3.3 billion in net revenue, a 5% year-over-year increase, and its strongest profitability since 2021. This performance, coupled with a 6.3% adjusted EBITDA margin and $230 million in free cash flow, underscores a compelling turnaround story for the online furniture retailer, driven by renewed consumer spending and operational efficiency.
• Strategic expansion into physical retail enhances Wayfair's growth narrative. The successful launch of Perigold's first luxury showroom in Houston and a new retail location in Denver signal a bold move to blend online dominance with offline presence, appealing to customers seeking tactile shopping experiences and strengthening brand loyalty in a competitive market.
• Resilience amid market challenges bolsters Wayfair's investment case. Despite tariff concerns and a 4.5% drop in active customers to 21 million, the company's focus on higher average order values and cost discipline has sustained revenue growth, painting a picture of a company navigating macroeconomic headwinds while capitalizing on the enduring demand for home furnishings.
• AI-driven customer engagement sets Wayfair apart in the e-commerce landscape. Innovations like Decorify and Muse, which allow users to visualize home designs, have boosted customer retention, with 80.6% of Q2 2025 orders from repeat buyers. These tools address key e-commerce pain points, creating a sticky platform that drives recurring revenue and positions Wayfair as a tech-forward leader.
• Strong market momentum reflects growing investor enthusiasm. With an 80% share price surge over the past quarter and a 119% gain in six months, as seen in the finance card above, Wayfair's stock is riding a wave of optimism, fueled by its ability to outperform the Retail-Wholesale sector and deliver consistent earnings beats, making it a standout growth story in 2025.
• Analyst Ratings:
  • Truist Securities: Buy
  • Jeffries: Buy
  • Evercore ISI Group: Outperform

My Action Plan (57% Return Potential)

• I am bullish on W above $72.00-$74.00. My upside target is $140.00-$145.00.

Market-Moving Catalysts for the Week Ahead

The Labor Market Dread

The government shut down last week and stocks soared to new all-time highs. It really is poetic if you think about it. The press and politicians are out here trying to convince everyone that things are going to collapse if the government stays shut, but historically stocks fare well during shutdowns.

The last time we had a long shutdown was in 2018, and it actually coincided with a sharp selloff at first. Stocks bottomed on Christmas Eve but then proceeded to rip back to new all-time highs shortly afterwards.

Last week, we also had some really poor ADP employment numbers. But since the government was closed, we didn't get the regular payroll numbers on Friday. I don't think this is going to deter the Fed at all from cutting rates again on October 29.

Sector & Industry Strength

A bit of turbulence crept into the tape last week, but as I like to remind readers periodically, "When in doubt, zoom out." The bigger picture hasn't really changed much, and if anything, we continue to see positive developments.

Since the April 7 low, we're still seeing technology (XLK) outperform the rest of the market by a long-shot. This is the sector that drives index returns the most. There is no debate to be had in that department. 

One of the notable developments last week was the surge in healthcare (XLV), but it still remains contained. The rebound in utilities (XLU) is notable too, but it could be capitalizing on the tech (XLK) strength from artificial intelligence too.

Editor's Note: Healthcare is reborn. Healthy rotation or defensive flow for the second largest market sector?

A Healthcare Renaissance? (Sector ETF: XLV/SPY)

There have been plenty of headlines and developments in the healthcare space as of late. But it's also been one of the worst-performing sectors in the market going back to the lows of April 7. It may be on the verge of changing, however.

It's no surprise to see this ratio trending lower in favor of SPY. In fact, aside from last week, the healthcare sector (XLV) has done virtually nothing since the lows of the year. It was dead money.

But we did form a secondary, slightly higher-low in recent weeks, which gives bulls an opportunity to turn this around. Keep in mind that healthcare is the second-largest sector in the S&P 500 – it could provide some much-needed help to the tech sector.

The Bigger Story (Sector ETF: IBB/XLV)

We're in a falling rate environment now. Healthcare is starting to come back to life, but not necessarily for that reason. But within the broader healthcare umbrella, there is a subsector that is absolutely coming to life from rate cuts, and that sector is biotech (IBB).

This chart looks at the ratio between biotech (IBB) and the healthcare sector (XLV). It trended lower for years, but just recently, it broke out from a rounding bottom formation, which puts the sector back on the map.

Plus, we're starting to see a series of higher-highs and higher-lows, which effectively establishes an uptrend. If biotech isn't on your radar right now, it needs to be. We're talking about some of the strongest momentum opportunities that exist coming out of this sector.

Cryptocurrency 

It was a step in the right direction again last week for cryptos. By Friday, Bitcoin was encroaching its all-time high, and other cryptocurrencies confirmed higher-lows, reinforcing the existing uptrends.

We're back to looking at Solana this week, which is still building a tremendous technical base. The saucer formation is shaping up nicely, and if this coin clears 250.00, look out above. This could easily turn into a 500.00 coin.

With the recent higher-low, we have another excellent level of support to consider now. As long as Solana remains above 190.00-200.00, the path of least resistance remains higher. We know from history this thing can really get moving once it does. Keep a close eye on it now.

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