NVDA lifts US market Up, Up & Away ?
US stocks finished mostly “higher” on Wednesday, with the S&P 500 and Nasdaq snapping their 4-day losing streaks as investors digested heightened uncertainty around President Trump's tariff plans and awaited $NVIDIA(NVDA)$ quarterly earnings after market closing.
When market closed on Wednesday, (see above)
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DJIA: -0.43% (-188.04 to 43,433.12). First decline for The Dow in 3 days.
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S&P 500 : +0.01% (+0.81 to 5,956.06).
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Nasdaq: +0.26% (+48.88 to 19,075.26).
Actually US market was recovering nicely in the morning until midday when it turned tail.
Wonder if it has anything to do with the announcement from Trump. (see below)
On Wed, 26 Feb 2025, Trump said his administration will soon announce a 25% tariff on imports from the European Union.
For sure, automobiles will be affected.
At the same time, he has paused the steep new tariffs on imports from Mexico and Canada by saying they would take effect on 02 Apr 2025, about a month later than a deadline next week.
Market Survey.
When asked whether a stock market correction of at least 10% is likely in the coming 3 months:
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13 of 19 poll participants said it was likely or highly likely.
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6 of 19, said it was unlikely.
At the same time, strategists said they expect solid corporate earnings growth to :
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Continue to support gains in equities.
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Boost (possible) to the economy IF Trump, goes ahead with his pro-growth agenda of tax cuts and deregulation.
Nvidia To The Rescue.
The much anticipated earnings report was finally released.
Quarterly:
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Earnings per share: $0.89 (adjusted) vs $0.84 estimated
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Revenue: $39.33 billion or +78% YoY gain vs $38.05 billion estimated
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Net income: rose to $22.09 billion vs $12.29 billion, in the year-ago period.
Fiscal 2025 (Full Year):
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GAAP Earnings per share (diluted) : $2.94, up +147% YoY.
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Revenue : was $130.5 billion, up +114% YoY.
More important, it provided strong guidance for current quarter (compared with LSEG estimates):
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Revenue : forecast to be about $43 billion (plus or minus 2%) vs $41.78 billion expected.
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The latest guidance implies a +65% YoY growth from a year earlier and its a “slowdown” from the un-relastic +262% annual growth in the same period last, last year.
Nvidia’s Industry Presence.
The one misconception that Nvidia is a predominant leader in Artificial Intelligence (only) needs to be corrected.
Like other tech giants eg. $Alphabet(GOOG)$, $Amazon.com(AMZN)$ and $Microsoft(MSFT)$ - all of them are heavily vested in other IT frontier technology persue.
For Nvidia, its chips are used in diverse industries or businesses:
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Data Centre.
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Gaming and Artificial Intelligence PCs.
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Professional Visualization.
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Automotive and Robotics.
Work-in-Progress.
In Nvidia’s research & development phase is Quantum Processing Units (QPUs) implement a new model of computing with potential impact across industries.
Turning QPUs into useful quantum computers means integrating them with state-of-the-art AI supercomputers.
NVIDIA is working with QPU developers to build such useful, accelerated quantum supercomputers.
Yet Despite.
Despite hitting both top and bottom lines and outlook for current quarter, Nvidia share has been trading down after market closed and is poised to open lower on Thu, 27 Feb 2025. (see below)
Below are some reasons for this counterintuitive market reaction:
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Profit-taking: Investors may be selling to lock in gains after its $126.63 low.
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Concerns over future growth: Despite strong current performance, there are worries about sustaining such high growth rates in the long term.
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Further China restrictions: Reports of Trump administration seeking to further tighten restrictions on US semiconductor chip sales to China could impact Nvidia's future sales growth.
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Valuation: Nvidia's high valuation may lead some investors to believe it's overpriced, given its diminishing returns, that are still beating forecasts.
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Broader market trends: With “concern” sentiments permeating US market, it is difficult to buck the trend when there are more sellers than buyers.
According to equity strategists in a Reuters poll, volatility will likely increase as a barrage of tariff announcements, job cuts and policy changes from President Donald Trump fuels uncertainty.
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Do you think Nvidia will be able to pull US market up this Thursday despite pre-market price ?
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Do you think Trump’s tariffs on EU, Mexico, Canada and the rest of the World, will ignite a global war with the #1 democracy country ?
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