$NVDA vs US CPI Inflation: Who Wins?

With US inflation data to be revealed in barely 1 hours’ time, what is the final prediction by Wall Street ?

Bets Placed:

$Bank of America(BAC)$ , Economists - Stephen Juneau & Michael Gapen:

• CPI (MoM) - March (0.3%) vs February (0.4%).

• CPI (YoY) - March (3.4%) vs February (3.2%).

• Core CPI (YoY) - March (3.7%) vs February (3.8%).

Catalyst for headline inflation 3.4% is largely due to “higher” energy costs, fueled by a jump in gas prices, driving up the index.

Based off January and February momentu, BAC’s economists are fairly certain that March Core inflation will march to the same tune.

Core inflation has remained stubbornly elevated due to “higher” costs of: (see above)

• Shelter.

• Core services eg. Insurance and Medical care.

If March inflation data is inline with the economists’ forecasts, it should instill some confidence in the Fed, that it is time to cut interest rate.

In order to stimulate demand in the Housing, that is almost at a standstill due to prolong elevated interest rates.

Nvidia in the coming days.

$NVIDIA Corp(NVDA)$ has been pulling back from its peak of $950 per share, attained on 25 Mar 2024. (see below)

Declines were influenced by various factors: (see below)

(1) Market Cap and Growth Concerns:

• Nvidia’s stock had experienced a meteoric rise, increasing more than 7x over the last 18 months1.

• The company’s market cap surged to over $2.2 trillion.

• Simple math suggests that sustaining this pace would lead to an astronomical market cap, surpassing the GDP of most countries.

• Investors have grown cautious about the sustainability of such rapid growth.

(2) Potential Economic Slowdown:

• Concerns arose that if the economy were to enter a slowdown, it could affect Nvidia.

• For instance, if major customers like $Microsoft(MSFT)$ reduced GPU spending, it might impact Nvidia’s growth.

(3) High Expectations and Realities:

• Investors had already priced in high expectations for Nvidia’s AI-related demand.

• As the stock reached new highs, there was a need to balance these expectations with market realities.

My viewpoints: (mine & mine only)

Taking all above into considerations:

• Nvidia might continue to consolidate regardless of the US inflation outcome.

• It is “too big” to be directly impacted by US inflation.

• Consolidation will be tested at the $830.39 next support level.

• In the long term, Nvidia will continue to grow and might be looking eastwards towards South-East Asia. (see below)

The leading semiconductor company remains a force to be reckoned with. Agree?

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