๐๐ NVIDIA ($NVDA) Smashes Earnings!
Happy Wednesday all,
The market was anxious and pressure filled all of today waiting on Nvidiaโs earnings calls, and boy did they not disappoint. Read our story below to get the full scoop on the numbers โ but in short Nvidia is pumping because it is literally selling shovels in a gold rush that is AI these days. Their H100 chips cost $30-40k a piece, and tech companies like META and Google are gobbling them up by the thousands.
In more personal news, Iโll be posting some more YouTube videos in the next month or so than usual. For one month, I am going to post 2x videos per week and test if 1) that is sustainable, and 2) if it makes sense to do so from a growth and business perspective. I hope you enjoy the increased amount of videos youโll see from me. I plan to post on Mondays, and Thursdays starting next Monday, for a month. Iโll keep you posted on if we continue that in the future.
Enjoy this weekโs Hump Days!
- Humphrey, Rickie & Tim
๐ Eye-Catching Headlines
๐ Amazon to replace Walgreens in Dow Industrial Average next week (CNBC)
๐ Muskโs SpaceX Forges Tighter Links With U.S. Spy and Military Agencies (WSJ)
๐บ Walmart buys TV maker Vizio for $2.3 billion to grow ad business (CNBC)
๐ Data Show the Economy Is Booming. Wall Street Thinks Otherwise. (WSJ)
โ๏ธ American Airlines raises bag fees, wonโt allow some travel agency bookings to earn miles (CNBC)
๐ฐ A $6 Trillion Wall of Cash Is Holding Firm as Fed Delays Cuts (Bloomberg)
๐จโโ๏ธ FuboTV sues Disney, Fox, Warner Bros. over sports joint venture (CNBC)
โ ๏ธ Fed Minutes Show Most Officials Flagged Risks of Cutting Rates Too Quickly (Bloomberg)
The Weekly Brief
Nvidia reported earnings Wednesday afternoon, impressing the market with a significant surge in revenue and profitability driven by the demand for its AI accelerators, essential for powering AI models and generative AI services.
In the fiscal fourth quarter, which ended Jan 28, Nvidiaโs revenue more than tripled to $22.1 billion. Profit was $5.16 a share, minus certain items. Analysts had predicted sales of about $20.4 billion and earnings of $4.60 a share.
Companies such as Amazon, Meta, Microsoft and Alphabet are Nvidiaโs largest customers, accounting for nearly 40% of its revenue.
Nvidiaโs data center division, now by far its largest source of sales, generated $18.4 billion of revenue, up 409% from the same period a year earlier. Gaming chips provided $2.87 billion of sales.
Capital One Buys Discover in a $35 Billion Deal
Capital One Financial proposed to buy Discover Financial Services in a $35 billion deal that would create a major force in the US credit card market, surpassing rivals like JPMorgan Chase and Citigroup in credit-card loan volume.
This acquisition, motivated by Capital One's aim to enhance its competitive edge in payment networks and Discover's recent challenges, including a significant profit drop and management upheavals, is set to transform the credit card world.
While the merger is still subject to regulatory approval, the merger could lead to new product offerings and potentially reshape the industry's dynamics by providing a stronger alternative to payment giants Visa and Mastercard, benefiting consumers with more diverse financial products and services.
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Foreign Investment in China Falls to Lowest in ~30 Years
Foreign direct investment (FDI) into China in 2023 plummeted to its lowest level since the early 1990s, with new investments totaling only $33 billion, reflecting an 82% decrease from the previous year, as reported by the Chinese government.
The downturn is likely due to the continued impacts of COVID-19 lockdowns, geopolitical tensions, and higher interest rates in other economies, leading to a cautious approach from international investors.
Despite this overall decline, German companies increased their investments in China to a record high, showing a mixed international sentiment towards the Chinese market.
Market Begins to Reconsider Odds of Rate Cutsโฆ
Amid a resilient US economy, investors are starting to reassess the Federal Reserve's potential monetary policy shift from rate cuts to considering the possibility of rate hikes.
Unexpected data showing persistent inflation and robust job growth numbers have led to the market now expecting a chance of rate hikes. What could happen is a brief easing followed by rate hikes, similar to what happened in the late 1990s.
Lawrence Summers, a Harvard University professor, suggested a 15% chance that the next Fed move is an increase.