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An Uber rideshare sign is posted nearby as taxis wait to pick up passengers at Los Angeles International Airport (LAX) on February 8, 2023 in Los Angeles, California.
Mario Tama | Getty Images

The new year has only just started, but macro uncertainty is already hanging over investors, with Federal Reserve officials raising concerns over inflation and its impact on the rate-cutting path.
In these shaky times, investors can enhance their portfolio returns by adding stocks backed by solid financials and long-term growth opportunities. The investment thesis of top Wall Street analysts can inform investors as they pick the right stocks, as pros base their analysis on a strong understanding of the macro environment and company-specific factors.

Here are three stocks favored by the Street’s top pros, according to TipRanks, a platform that ranks analysts based on their performance.

Uber Technologies

We start with ride-sharing and food delivery platform Uber Technologies (UBER). The company delivered better-than-expected revenue and earnings for the third quarter of 2024, though gross bookings fell short of expectations.
Recently, Mizuho analyst James Lee reiterated a buy rating on Uber Technologies stock with a price target of $90. The analyst sees 2025 as a year of investment for UBER. While these investments could impact the company’s earnings before interest, taxes, depreciation and amortization over the near term, they are expected to fuel long-term growth.
Based on his analysis, Lee expects Uber’s growth investments to drive a compound annual growth rate of 16% in core gross bookings from FY23 to FY26, in line with the company’s analyst-day target of mid- to high-teens growth. The analyst is confident that Uber’s EBITDA growth is on track with its analyst-day target of high-30s to 40% CAGR. “Despite leaning into growth investments, economies of scale and increased efficiency should offset margin risks,” said Lee.
Additionally, Lee thinks that worries over the growth of the company’s Mobility business seem overstated. The analyst expects FY25 gross bookings growth (forex neutral) in the high-teens, with the pace of deceleration moderating compared to the second half of 2024.

Further, the analyst projects the gross bookings for Uber’s Delivery business to remain in the mid-teens in FY25. This increase is expected to be supported by the growing adoption of new verticals while maintaining the food delivery market share. The analyst added that Mizuho’s checks revealed that order frequency has reached another all-time high. Checks also indicate solid grocery adoption in the U.S., Canada and Mexico along with robust user penetration.
Lee ranks No. 324 among more than 9,200 analysts tracked by TipRanks. His ratings have been profitable 60% of the time, delivering an average return of 12.9%. See Uber Technologies Stock Charts on TipRanks.

Datadog

We move to Datadog (DDOG), a company that offers cloud monitoring and security products. In November, the company announced better-than-anticipated results for the third quarter of 2024.
On Jan. 6, Monness analyst Brian White reiterated a buy rating on Datadog stock with a price target of $155. The analyst thinks that the company has a more balanced approach toward the generative artificial intelligence trend, “avoiding the absurd claims propagated by many across the software complex.” He noted that DDOG fared well compared to its peers in a challenging software backdrop in 2024, but added that it lagged behind other stocks in Monness’ coverage universe.
That said, White thinks that Datadog, and the broader industry, will start to see incremental activity over the next 12 to 18 months from the long-term boom in generative AI. Highlighting DDOG’s outperformance compared to peers and its transparency with regard to its generative AI progress, the analyst noted that AI-native customers accounted for more than 6% of the company’s annual recurring revenue (ARR) in Q3 2024, up from over 4% in Q2 2024 and 2.5% in Q3 2023.
White also highlighted some of the company’s AI offerings, including LLM Observability and its gen AI assistant, Bits AI. Overall, the analyst is bullish on Datadog and thinks that the stock deserves a premium valuation compared to traditional software vendors due to its cloud-native platform, rapid growth and robust secular tailwinds in the observability space, as well as its new generative AI-led growth opportunities.
White ranks No. 33 among more than 9,200 analysts tracked by TipRanks. His ratings have been profitable 69% of the time, delivering an average return of 20%. See Datadog Ownership Structure on TipRanks.

Nvidia

Semiconductor giant Nvidia (NVDA) is this week’s third stock pick. The company is considered one of the major beneficiaries of the generative AI wave and is experiencing stellar demand for its advanced GPUs (graphics processing units) that are required to build and run AI models.
Following a fireside chat with Nvidia’s CFO Colette Kress, JPMorgan analyst Harlan Sur reaffirmed a buy rating on the stock with a price target of $170. The analyst highlighted the CFO’s assurance that the ramp-up in the production of the company’s Blackwell platform is on track despite supply chain challenges, thanks to solid execution.
Moreover, the company expects spending in the data center space to remain strong in calendar year 2025, supported by the Blackwell ramp-up and broad-based strength in demand. Further, Sur noted that management sees massive revenue growth opportunities, as it grabs a larger chunk of the $1 trillion-worth datacenter infrastructure installed base.
Sur added that Nvidia expects to benefit from the shift to accelerated computing and growing demand for AI solutions. Management thinks that the company has a solid competitive advantage compared to ASIC (application-specific integrated circuit) solutions due to several strengths, including ease of adoption and its comprehensive system solutions.
Agreeing with this viewpoint, Sur said, “We believe that enterprise, vertical markets, and sovereign customers, will continue to prefer Nvidia-based solutions.”
Among the other key takeaways, Sur highlighted the rollout of next-generation gaming products and opportunities to expand beyond high-end gaming into markets like AI PCs. 
Sur ranks No. 35 among more than 9,200 analysts tracked by TipRanks. His ratings have been profitable 67% of the time, delivering an average return of 26.9%. See Nvidia Hedge Funds Activity on TipRanks. More

A flight engineer performs a test flight in a CAE Inc. 7000 Series Boeing Co. 737-800 flight simulator at a CAE facility in Montreal, Quebec, Canada, on Tuesday, Aug. 13, 2019.
Christinne Muschi | Bloomberg | Getty Images

Company: CAE Inc (CAE)

Business: CAE provides simulation training and critical operations support solutions in Canada, the United States, the United Kingdom, Europe, Asia, the Oceania, Africa and the rest of the Americas. It operates through two segments: Civil Aviation, and Defense and Security. The Civil Aviation segment offers training solutions for flight, cabin, maintenance and ground personnel in commercial, business and helicopter aviation. It also provides a range of flight simulation training devices and ab initio pilot training and crew sourcing services, as well as aircraft flight operations solutions. The Defense and Security segment operates as a training and simulation provider that delivers platform-independent solutions to enable and enhance force readiness and security for defense forces, original equipment manufacturers (OEMs), government agencies and public safety organizations.
Stock Market Value: $7.56B ($23.73 per share)

Stock chart icon

CAE shares over the past 12 months

Activist: Browning West LP

Ownership: 4.3%
Average Cost: n/a
Activist Commentary: Browning West is an independent investment partnership based in Los Angeles, California and founded in 2019. The partnership employs a concentrated (five to 10 investments), long-term and fundamental approach to investing. It focuses primarily on investments in North America and Western Europe. The firm does not use activism in all of its portfolio positions, but when it does, it’s almost always focused on leadership at the board and CEO level. Browning West wants to make sure that it has confidence in the people who are making the decisions with its capital and assure that management’s interests are aligned with shareholders.

What’s happening

On Dec. 20, 2024, Browning West sent a letter calling on CAE’s board to collaborate with the firm in the recruitment process for a new CEO.

Behind the scenes

CAE Inc. is a Canadian multinational company specializing in flight training and simulation technologies. The company operates through two segments: Civil Aviation and Defense and Security. Civil Aviation provides comprehensive training solutions for personnel in commercial, business and helicopter aviation, as well as manufacturing flight simulation training devices. Defense and Security provides similar solutions, but to defense forces, government agencies and other related end markets. CAE is the market leader in both manufacturing highly valuable flight simulators and operating training facilities for flight safety. The company also sells its valuable technology to customers who conduct their own independent training of flight personnel.

CAE maintains an enviable position within an attractive and growing industry. It is the largest player in its market and at least double the size of its next largest competitor, aptly named FlightSafety International, a business which is owned by Berkshire Hathaway. Any business with Warren Buffett’s stamp of approval is certainly an indication of a favorable mix of growth and value. It is hard to think of another industry where the growth rate is so certain. Annual global flight miles typically grow in the mid-single digits and there is a tremendous long-term opportunity for growth. As flight volumes continue to grow, that means more aircraft, more pilots, more personnel, and, of course, more simulators and more training.
Still, CAE has underperformed in the past five years, delivering a return of -8.75% versus a nearly 101.78% return for the five years prior. When the company reported its FY24 results in March 2024, it missed analysts’ full-year expectations for revenue by about 5% and EPS by 4%. In addition, the company reported an operating loss of $185 million in Canadian dollars after putting up C$466 million the year prior. A hefty portion of the loss came from a C$568 million non-cash impairment of Defense and Security goodwill and C$90.3 million in unfavorable contract profit adjustments due to accelerated risk recognition on certain legacy contracts. On Nov. 12, 2024, CAE announced that its longtime president and CEO Marc Parent would resign from his post at the company’s next annual meeting in August 2025 as a part of CAE’s ongoing succession plan.
This is where things get very interesting for an activist investor: a market leader in a secularly growing industry where the activist could potentially be in the room to name the next CEO. And this is the type of shareholder activism that Browning West focuses on: leadership changes. Accordingly, Browning West LP sent an open letter to the board of CAE. In a succinct letter, the firm speaks highly of CAE’s strong market position, points out the company’s recent prolonged period of underperformance, but affirmed its conviction in CAE’s ability to grow earnings per share and free cash flow per share well exceeding current market expectations. However, Browning West has requested that the board engage with it regarding the recruitment of CAE’s next CEO, believing that the board must avoid a hasty CEO search process and instead work to recruit a proven CEO with a verifiable track record of value creation. Browning West and its principals have an admirable history of assisting in CEO succession at its portfolio companies. In May 2024, Browning West reconstituted the entire board of Gildan Activewear over the board’s decision to remove that company’s long-time CEO and co-founder Glenn Chamandy. Since the reinstatement of Chamandy as CEO about eight months ago, Gildan’s shares have appreciated nearly 30%. In addition, Browning West co-founder and CIO Usman Nabi, gained extensive experience from his time at H Partners conducting CEO searches. Between H Partners and Browning West, he has served on and/or led nomination and CEO search committees at both Tempur Sealy and Six Flags. H Partners generated a return of 242% over the course of its 13D at Tempur Sealy versus 99% for the Russell 2000 and a return of 399% over the course of its live 13D at Six Flags versus 285.71% for the Russell 2000.
Given that Browning West even had to issue this public letter, we can infer that perhaps CAE’s board has not been overly receptive or made itself profoundly available for inbound communication requests from Browning West to participate in the search process. Browning West does not frequently get confrontational, but when it does, it’s very good at doing so. The firm picks battles that it can win. In early 2024, Browning West requisitioned a special meeting at Gildan Activewear which resulted in the resignation of that company’s entire board and the appointment of their eight-member slate (which included Browning West co-founder Peter Lee). Previously, at H Partners, Usman Nabi was able to reconstitute the board at Tempur Sealy and replace the CEO with nothing more than a withhold vote campaign, an unprecedented move in activism at the time. Browning West has also engaged with companies where the firm was invited on to the board such as Six Flags and Domino’s. We would advise CAE’s board to look at this as an opportunity as opposed to an attack. If the board decides to fight, it could ignore Browning West while commencing and consummating its CEO succession plan without any input from the activist investor before the company’s director nomination window opens next summer. But CAE’s board would be doing that at its own peril. Browning West is a long-term investor that does not opportunistically look for activism but finds a handful of companies it wants to own for the long term, and the firm will do whatever is necessary to ensure that its capital is in the hands of the right stewards. CAE has a choice: It can embrace Browning West and the firm’s experience in CEO succession like other companies successfully have. Alternatively, the company can fight the investor, as other companies have done so unsuccessfully, and potentially face Gildan part deux. 
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. More

The 2025 tax filing season will begin on Jan. 27, which marks the first day the IRS will accept and process individual tax returns for 2024. 
Most taxpayers must file federal returns and pay taxes owed by April 15 this year to avoid penalties and interest. 
Taxpayers have several free filing options, including Direct File and IRS Free File, among others.  

Pra-chid | Istock | Getty Images

Expanded free filing options for 2025

For the 2025 season, Direct File, the IRS’ free tax filing program, will be open to eligible taxpayers in 25 states. That’s up from 12 states for the 2024 season.
This year, participating states include Alaska, Arizona, California, Connecticut, Florida, Idaho, Illinois, Kansas, Maine, Maryland, Massachusetts, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Washington state, Wisconsin and Wyoming.
Meanwhile, IRS Free File, which offers free guided tax prep through software partners, opened on Jan. 10. Eligible taxpayers can electronically file returns prepared via Free File partners starting on Jan. 27.
Many are eligible for free tax preparation via programs like Volunteer Income Tax Assistance and Tax Counseling for the Elderly. Another free option for military members and certain veterans is MilTax. More

There are many undisputed health benefits associated with Dry January. There’s also an economic boost.
One expert estimates the savings for the monthlong endeavor could be between $300 and $1,000, depending on consumption.
For a growing number of adults, that’s a top motivator.

Ryanjlane | E+ | Getty Images

The start of a new year is the most popular time to make a resolution or two. For many, those include giving up alcohol for the first 31 days.
This year, 22% of adults are participating in Dry January, five percentage points higher than in previous years, according to a new report by Morning Consult.

“I don’t even want to call it a trend anymore because it has staying power,” said Lindsey Roeschke, author of the report.
Of those taking a break from beer, wine and mixed drinks, most were driven by the health benefits, the research found. Some adults may be particularly motivated by the U.S. Surgeon General’s recent warning that even small amounts of alcohol can cause cancer, Roeschke said. 
Forgoing alcohol entirely for a month has become a popular way to kick-start better habits. It’s credited for improved sleep, weight loss and overall wellbeing.
But the financial savings are also significant. 

How much money you can save

“Your exact savings during Dry January will hinge on your typical drinking patterns and related expenses,” said Douglas Boneparth, a certified financial planner and president and founder of Bone Fide Wealth, a wealth management firm based in New York.

“For some, skipping that occasional glass of wine might free up $50, while for those who regularly go out, the total could climb to $300 or more,” he said.
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Fred Harrington, the CEO of Coupon Mister, a site with money-saving tips, estimates that going entirely alcohol free for the month could save between $300 and $1,000, depending on consumption.
“The savings associated with cutting out alcohol for Dry January can be substantial,” Harrington said. “Even if you’re an occasional drinker, you’ll see a noticeable difference in your spending by giving up alcohol for a month.”
In fact, saving money was the third most popular reason for cutting out alcohol for the month, according to Morning Consult. Money as a top motivator “ticked up in 2022 when inflation reached its peak,” Roeschke said.

Tracking your baseline spending on alcohol is the best way to figure out how much you’ll save by going dry, advised Boneparth, who is also a member of CNBC’s Financial Advisor Council. The U.S. Department of Health and Human Services’ alcohol spending calculator can also show how much you are spending on alcohol every week, month or year.
A lot also depends on what you drink and where you live, Boneparth said. For example, a six-pack of beer from a grocery store might run $10 to $15, whereas a single cocktail at a bar could cost $12 to $18.
“Big-city bar prices are often higher than those in small towns and social habits — weekly happy hour, weekend outings — also play a huge role,” Boneparth said.

There could be an additional trickle-down effect from fewer rideshares or food orders and even less of a chance of drunk online shopping.
“It’s not just the money spent on the alcohol itself, it’s all of the ancillary things that come along with that,” said Morning Consult’s Roeschke.

How to put that savings to work

“You can put the money you save by doing Dry January to great use by, say, spending it on a health club membership, a new bike for exercise, savings or a holiday,” Harrington said.
Alternatively, that money could be well spent paying down post-holiday debt.
Most experts also recommend putting any extra cash in an emergency savings fund. Even a few hundred dollars can go a long way to providing a financial cushion when unexpected expenses arise. 
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The price growth for top drugs covered by Medicare Part D has exceeded inflation, according to a new AARP report.
The 25 drugs studied have increased by an average of 98%, or nearly doubled, since they entered the market.
The findings highlight the importance of allowing Medicare to negotiate drug prices, according to AARP.

Morsa Images | Digitalvision | Getty Images

List prices for the top 25 prescription drugs covered by Medicare Part D have nearly doubled, on average, since they were first brought to market, according to a new AARP report.
Moreover, that price growth has often exceeded the rate of inflation, according to the interest group, which represents Americans ages 50 and over.

The analysis comes as Medicare now has the ability to negotiate prescription drug costs after the Inflation Reduction Act was signed into law by President Joe Biden in 2022.
Notably, only certain drugs are eligible for those price negotiations.
The Biden administration in August released a list of the first 10 drugs to be included, which may prompt an estimated $6 billion in net savings for Medicare in 2026.
The Centers for Medicare & Medicaid Services is scheduled to announce by Feb. 1 the list of 15 Part D drugs selected for negotiation for 2027.

AARP studied the top 25 Part D drugs as of 2022 that are not currently subject to Medicare price negotiation. However, there is a “pretty strong likelihood” at least some of the drugs on that list may be selected in the second line of negotiation, according to Leigh Purvis, prescription drug policy principal at AARP.

Those 25 drugs have increased by an average of 98%, or nearly doubled, since they entered the market, the research found, with lifetime price increases ranging from 0% to 293%.
Price increases that took place after the drugs began selling on the market were responsible for a “substantial portion” of the current list prices, AARP found.
The top 25 treatments have been on the market for an average of 11 years, with timelines ranging from five to 28 years.
The findings highlight the importance of allowing Medicare to negotiate drug prices, as well as having a mechanism to discourage annual price increases, Purvis said. Under the Inflation Reduction Act, drug companies will also be penalized for price increases that exceed inflation.
Notably, a new $2,000 annual cap on out-of-pocket Part D prescription drug costs goes into effect this year. Beneficiaries will also have the option of spreading out those costs over the course of the year, rather than paying all at once. Insulin has also been capped at $35 per month for Medicare beneficiaries.
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Those caps help people who were previously spending upwards of $10,000 per year on their cost-sharing of Part D prescription drugs, according to Purvis.
“The fact that there’s now a limit is incredibly important for them, but then also really important for everyone,” Purvis said. “Because everyone is just one very expensive prescription away from needing that out-of-pocket cap.”
The new law also expands an extra help program for Part D beneficiaries with low incomes.
“We do hear about people having to choose between splitting their pills to make them last longer, or between groceries and filling a prescription,” said Natalie Kean, director of federal health advocacy at Justice in Aging.
“The pressure of costs and prescription drugs is real, and especially for people with low incomes, who are trying to just meet their day-to-day needs,” Kean said.
As the new changes go into effect, retirees should notice tangible differences when they’re filling their prescriptions, she said. More

For those who wish to help victims of the devastating Los Angeles wildfires, here is a list of highly rated nonprofits engaged in relief and recovery efforts on the ground.
These groups have been vetted by nonprofit evaluator Charity Navigator.
Fundraising scams are already trying to capitalize on the crisis.

Firefighters work as a brush fire burns in Pacific Palisades, California on Jan. 7, 2025.
David Swanson | AFP | Getty Images

Massive wildfires are devastating the Los Angeles area of Southern California. As of Thursday morning, at least five people were killed, more than 100,000 residents have been ordered to evacuate, and nearly 2,000 homes and businesses were destroyed.
Many people around the country, and world, want to help, by donating money or emergency supplies. However, there are already fundraising scams trying to capitalize on the crisis.

To make sure your funds get into the right hands, third-party evaluator Charity Navigator compiled a list of highly rated nonprofits currently engaged in relief and recovery efforts in the Pacific Palisades and the surrounding areas — including support for first responders. 
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“We’ve vetted the organizations that are there,” said Michael Thatcher, CEO of Charity Navigator. “These are all outstanding.”
Here are some of the groups that earned high marks from the organization for providing immediate support to the victims of the wildfires and wildfire-affected communities.

During disasters like these “it’s best to donate to a highly efficient and experienced charity versus to an individual crowdfunding campaign,” said Laurie Styron, the CEO and executive director of CharityWatch. “Charities are better equipped to distribute aid equitably to everyone who needs help.”

Further, even some well-established groups may not have sufficient experience in aiding wildfire victims. The charity may lack infrastructure in the region or an explicit plan for how it will help.
If you aren’t sure how best to provide support, “don’t donate impulsively,” Styron said. “Take your time to confirm that a charity is not only legitimate and efficient but is actively providing aid on the ground.”

How to avoid wildfire-related scams

Unfortunately, as with any high-pressure donation, there will be an increase in fraudulent behavior, said Thatcher, “and what we encourage people to do is be proactive rather than reactive to a solicitation.”
As a general rule, rather than follow a link in a text, email or on social media, go directly to a charity’s website or find a relief effort through a site such as Charity Navigator, BBB Wise Giving Alliance or CharityWatch, Thatcher said.
“There’s a safety element and a legitimacy element,” he said. “At the end of the day we want to make a difference to the people affected by this fire.”

The BBB Wise Giving Alliance also offers tips for donating to the California wildfire relief efforts.
It recommends donors check whether a charity is accredited and take extra precautions on crowdfunding sites, including reviewing how postings are screened as well what transaction fees may apply.
In addition, be wary of relief appeals that have vague descriptions or do not explain what programs your support will assist.
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The fourth-quarter estimated tax deadline for 2024 is Jan. 15, and you could trigger “unexpected penalties and fees” by skipping a payment, according to the IRS.
You typically owe estimated taxes with income from self-employment, small businesses, investments, gig economy work and more.
Tax filers may avoid late payment penalties by sending 90% of 2024 taxes or 100% of 2023 levies if adjusted gross income is less than $150,000.

Israel Sebastian | Moment | Getty Images

The fourth-quarter estimated tax deadline for 2024 is Jan. 15, and missing a payment could trigger “unexpected penalties and fees” when filing your return, according to the IRS.
Typically, estimated taxes apply to income without withholdings, such as earnings from freelance work, a small business or investments. But you could still owe taxes for full-time or retirement income if you didn’t withhold enough.

You could also owe fourth-quarter taxes for year-end bonuses, stock dividends, capital gains from mutual fund payouts or profits from crypto sales and more, the IRS said.    
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Federal income taxes are “pay as you go,” meaning the IRS expects payments throughout the year as you make income, said certified public accountant Brian Long, senior tax advisor at Wealth Enhancement in Minneapolis. 
If you miss the Jan. 15 deadline, you may incur an interest-based penalty based on the current interest rate and how much you should have paid. That penalty compounds daily.
Tax withholdings, estimated payments or a combination of the two, can “help avoid a surprise tax bill at tax time,” according to the IRS.

What to know about the ‘safe harbor’ rules

One way to avoid penalties is by following the “safe harbor” rule, which means “you’re meeting that [IRS] pay-as-you-go requirement,” according to Long. 
To satisfy the rule, you must pay at least 90% of your 2024 tax liability or 100% of your 2023 taxes, whichever is smaller.
The threshold increases to 110% if your 2023 adjusted gross income was $150,000 or higher, which you can find on line 11 of Form 1040 from your 2023 tax return.

However, you could still owe taxes for 2024 if you make more than expected and don’t adjust your tax payments.
“The good thing about this last quarterly payment is that most individuals should have their year-end numbers finalized,” said Sheneya Wilson, a CPA and founder of Fola Financial in New York.

How to make quarterly estimated tax payments

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Smoke billows as fire burns while powerful winds fueling devastating wildfires in the Los Angeles area force people to evacuate, at the Eaton Fire in Altadena, California, U.S. January 8, 2025. 
David Swanson | Reuters

Fear and uncertainty surrounding the wildfires in California appear to be weighing on shares of Edison International, whose Southern California Edison is the power utility for the areas directly surrounding the city of Los Angeles.
The stock fell 10.2% on Wednesday and was down more than 13% at session lows.

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Utility stock Edison International fell sharply Wednesday.

The drop comes as multiple large fires are burning around Los Angeles, with strong winds making them difficult to contain. Tens of thousands of people have been ordered to evacuate, and at least two people have died, according to the Associated Press.
More than 3 million Edison customers were dealing with outages Wednesday, according to the utility’s website.
Public utilities have been grappling with issues around wildfire prevention and readiness for years. Previous wildfires in California have been linked to issues with power equipment, but so far there is no public information tying Edison to the fires.
“At this time, there is no indication that SCE equipment is believed to have started the fire, as SCE has not filed an electric service incident report (ESIR). … There are multiple media reports indicating SCE equipment has been at least impacted by the fires and we would expect some incremental expenses related to the fire, regardless of ignition source,” Bank of America analyst Ross Fowler said in a note to clients Wednesday.

Smoke engulfs buildings off Sunset Boulevard during a wildfire in the Pacific Palisades neighborhood of west Los Angeles, California, January 7, 2025. 
Mike Blake | Reuters

Previous wildfires have had massive financial impacts on utilities and their investors. Northern California utility Pacific Gas and Electric Company filed for bankruptcy in 2019, in large part due to its liability from wildfires. The utility exited bankruptcy in 2020.

However, a 2020 state law known as AB 1054 limited the liability for utility companies going forward.
“Investors remain nervous from our conversations given the lack of containment with a ‘sell first, ask questions later’ mindset. We remain comfortable due to the AB 1054 liability protections that limits the tail risks for the utilities,” Jefferies analyst Julien Dumoulin-Smith said in a note to clients Wednesday.
Other California utility stocks were also down Wednesday. Shares of the reconstituted PG&E fell 3.7%. Sempra, whose footprint includes power and gas in the San Diego area, was down 1.7%. Sempra’s SDG&E said on its website that it has shut off power to about 9,000 customers due to fire risks.
— CNBC’s Michael Bloom contributed reporting. More