The Long Term Investor

Good job Lori. Now the goal moving forward should be to not let that debt sneak back on you.

I dont know if you had a gain or a loss on TSLA....but either way...I think that is probably a good choice to sell. I also like your thinking on NVDA.

There are times in life for ALL OF US when it is right to use some of the investment money. That is what it is for. Now...if you have extra money without the debt to be able to put into the markets every month....so much the better.

 

Here is the economic news of the day.

US economic growth for last quarter is revised up to a solid 3% annual rate

https://finance.yahoo.com/news/us-economic-growth-last-quarter-123624182.html

(BOLD is my opinion OR what I consider important content)

"WASHINGTON (AP) — The U.S. economy grew last quarter at a healthy 3% annual pace, fueled by strong consumer spending and business investment, the government said Thursday in an upgrade of its initial assessment.

The Commerce Department had previously estimated that the nation’s gross domestic product — the total output of goods and services — expanded at a 2.8% rate from April through June.

The second-quarter growth marked a sharp acceleration from a sluggish 1.4% growth rate in the first three months of 2024.

Consumer spending, which accounts for about 70% of U.S. economic activity, rose at a 2.9% annual rate last quarter. That was up from 2.3% in the government's initial estimate. Business investment expanded at a 7.5% rate, led by a 10.8% jump in investment in equipment.

Thursday's report reflected an economy that remains resilient despite the pressure of continued high interest rates. The state of the economy is weighing heavily on voters ahead of the November presidential election. Many Americans remain exasperated by high prices even though inflation has plummeted since peaking at a four-decade high in mid-2022.

But measures of consumers' spirits by the Conference Board and the University of Michigan have shown a recent uptick in confidence in the economy.

“The GDP revisions show the U.S. economy was in good shape in mid-2024,’’ said Bill Adams, chief economist at Comerica Bank. “Solid growth of consumer spending propelled the economy forward in the second quarter, and the increase of consumer confidence in July suggests it will propel growth in the second half of the year as well.’’

The latest GDP estimate for the April-June quarter included figures that showed that inflation continues to ease while remaining just above the Federal Reserve’s 2% target.

The central bank’s favored inflation gauge — the personal consumption expenditures index, or PCE — rose at a 2.5% annual rate last quarter, down from 3.4% in the first quarter of the year. And excluding volatile food and energy prices, so-called core PCE inflation grew at a 2.7% pace, down from 3.2% from January through March.

Both the PCE inflation numbers issued Thursday marked a slight improvement on the government's first estimate.

A GDP category that measures the economy’s underlying strength rose at a healthy 2.9% annual rate, up from 2.6% in the first quarter. This category includes consumer spending and private investment but excludes volatile items such as exports, inventories and government spending.

To fight spiking prices, the Fed raised its benchmark interest rate 11 times in 2022 and 2023, lifting it to a 23-year high and helping shrink annual inflation from a peak of 9.1% to 2.9% as of last month. The much higher borrowing costs for consumers and businesses that resulted had been widely expected to cause a recession. Yet the economy has kept growing and employers have kept hiring.

Now, with inflation hovering only slightly above the Fed’s 2% target level and likely slowing further, Chair Jerome Powell has essentially declared victory over inflation. As a result, the Fed is poised to start cutting its benchmark interest rate when it next meets in mid-September.

A sustained period of lower Fed rates would be intended to achieve a “soft landing,” whereby the central bank manages to curb inflation, maintain a healthy job market and avoid triggering a recession. Lower rates for auto loans, mortgages and other forms of consumer borrowing would likely follow.

The central bank has recently become more concerned about supporting the job market, which has been gradually weakening, than about continuing to fight inflation. The unemployment rate has risen for four straight months, to 4.3%, still low by historical standards. Job openings and the pace of hiring have also dropped, though they remain at relatively solid levels.

Thursday’s report was the Commerce Department’s second estimate of GDP growth in the April-June quarter. It will issue its final estimate late next month."

MY COMMENT

Good data.....if you can believe it is accurate. My view as an investor is that this government data is basically worthless. But that does not matter since I dont use it for any investing purpose at all.

 

Now the elephant in the room....NVDA.

A HUGE BEAT......of giant expectations. Does it matter.....NOPE. Basically historic earnings if you look back over the past 50 years....does it matter.....NOPE. MASSIVE earnings potential for this company over the next year and into the foreseeable future....does it matter....NOPE.

We have now reached a new level of RIDICULOUS market behavior. Do I care about NVDA being down today....NOPE. The stock and company will be just fine....it is obvious that they are simply going to MINT MONEY going forward.

What I do care about is the ever escalating markets ability to ignore financial and fundamental reality in companies. As a 55 plus year investor....I have a long time of watching the markets and their reaction to FUNDAMENTAL BUSINESS DATA. I have seen a continuous and ever escalating IGNORING of actual financial data in the markets for the past at least 20-30 years.

In this case we had SKY HIGH expectations and SKY HIGH analyst estimates.......and.....they still BLEW THEM AWAY with a huge beat. BUT....that does not matter. The "FUNDAMENTAL" future does not matter either. We are seeing a highly irrational and quickly escalating ability on the part of the markets.....to ignore the obvious and reality.

Over the past 10-15 years it has become the norm to punish companies that BEAT expectations based on some nit-picked earnings data point or especially based on guidance. With NVDA this quarter, this has now reached a new level of stupidity.

My long term fear is for the survival of the markets as a vehicle for the average person to provide for their future. When or if the markets become disconnected from financial and fundamental reality......they will simply be gambling or at best RANDOM.

I think we are a lot closer to that reality than people think. With the advent of AI SPEED TRADING of news headlines and commentary and the breathless and total fear mongering from even the financial media drama queens......plus social media and all that comes from a "phone-addicted culture"....a totally short term oriented culture.....a culture totally obsessed with the shallowness of "me, me, me".....I believe that over the next 15-30 years there is great risk that the markets will lose all connection to business reality.

If what we are seeing now in INVESTING culture, media coverage, norms, etc, etc, etc....continues to develop and progress to the more and more extreme from here....the future of the markets as a rational vehicle for the "little person" to provide for their future will simply fizzle away. It will not be some BIG collapse or some big dramatic event. it will simply be a slow death for the markets as people slowly lose confidence in the markets having any connection to rational reality.

Of course we are seeing this same process work its way through all aspects of our society right now. Call it dumbing down or whatever you want.....or simply choose to not see it....but it is happening all around us every day. Drip by drip....it is a slow erosion of society that is so slow and relentless that most do not even see it happening.

Here is the perfect definition:

"Dumbing down is the deliberate oversimplification of intellectual content in education, literature, cinema, news, video games, and culture."

https://en.wikipedia.org/wiki/Dumbing_down

I know I am simply talking to the wind.....the process that is now happening will be relentless and will continue. It is unstoppable.

The markets will become more and more random. It will move from the short term to the mid term and eventually start to INFECT the long term results. FOR ME......ok....I am probably old enough that it will not matter. But for those that are younger.........WELCOME TO YOUR FUTURE.

(sorry, I have ZERO solution to what is happening)

 

Now...back to the present:

Nvidia Pays Price of Lofty Expectations, Stoking Fear for Rivals

https://finance.yahoo.com/news/nvidia-pays-price-lofty-expectations-111326594.html

(BOLD is my opinion OR what I consider important content)

"(Bloomberg) -- Nvidia Corp.’s earnings report needed to be perfect for a stock that’s added nearly $2 trillion in market value in the past year. In the end, a broad beat still sparked a selloff.

At issue is Nvidia’s revenue forecast. While easily exceeding the average analyst estimate, the beat was far narrower than investors have grown to expect over the past five earnings reports. That, and an acknowledgment that the new Blackwell chip hit production snags, was enough to send Nvidia shares tumbling in postmarket trade Wednesday, with declines resuming Thursday. Shares of Nvidia were down as much as 4.7% in early trading.

The concern that Nvidia — the biggest beneficiary of AI spending and a stock central to the S&P 500’s gains this year — having trouble living up to lofty expectations would weigh on the broader market and other gear makers hasn’t panned out yet. The S&P 500 Index rose in early trading, and shares of Broadcom Inc., Advanced Micro Devices Inc. and Micron Technology Inc. were up after slipping in premarket trading.

“It’s not entirely surprising to see it trade down on these results because it is the smallest beat that we’ve seen in a while,” said Ivana Delevska, founder and chief investment officer of Spear Invest.

The reaction to the report signals that the AI giant’s valuation may have topped out for the time being, at least until more is known about the availability of the Blackwell chip. Chief Executive Officer Jensen Huang said supplies will be plentiful when manufacturing picks up, but his comments did little to quell concerns.

After rallying back from a steep selloff earlier this month amid macroeconomic worries and concerns about the longevity of big spending on AI, Nvidia shares closed on Wednesday priced at 37 times forward earnings. That’s down from a recent high of 44 times in June, according to data compiled by Bloomberg.

Nvidia’s forecast for third quarter revenue to be about $32.5 billion exceeded the average analyst estimate by $600 million. Still, that was the narrowest beat since February 2023, back when Nvidia’s market value was around $500 billion. It closed on Wednesday with a market value of about $3.1 trillion.

“AI is still there, but I think people got a little too excited, a little too over-hyped in terms of what we can expect in the near term,” said Michael Matousek, head trader at U.S. Global Investors Inc.

The report capped off a volatile earnings season and showed just how high expectations have become. In the weeks leading up to Nvidia’s results, the chipmaker helped drag the S&P 500 down more than 8% from a July peak before rallying back as concerns about AI spending subsided and readings on the health of the US economy quelled recession fears.

The results will also do little to reset the company’s valuation. In previous quarters, Nvidia’s large beats on guidance, signaling bigger revenue growth to come, compressed the multiple. After this report, it looks like the ratio relative to projected profits should stay about the same as shares fall and earnings estimates tick up only slightly. At Thursday’s open, Nvidia traded at about 36 times forward earnings.

That may calm some fears about a bubble, at least for now.

“People say these AI hardware stocks are in a radical bubble, but they’re trading under 40 times estimated earnings,” said Tony Kim, lead portfolio manager and head of the global technology team at BlackRock, noting that this contrasted with the more than 100 times forward earnings seen during the dot-com era.

Still, there was still plenty for Nvidia investors to like, with some analysts viewing the share slump as likely short-lived. On top of handily beating second quarter estimates for revenue and profits, the company authorized an additional $50 billion for share repurchases.

“Expectations become more challenging as the superlative becomes mundane,” Morgan Stanley analysts led by Joseph Moore noted. “This was still a very strong quarter given the transitional nature of the current environment.”"

MY COMMENT

I agree with some of the content above. Particularly what I have put in BOLD.

Now the gratuitous and I believe phony Blackwell comments above........no way. They do NOT reflect what I saw from the company release yesterday.

Here is what I am talking about quoted from above:

"......an acknowledgment that the new Blackwell chip hit production snags, was enough to send Nvidia shares tumbling in postmarket trade Wednesday, with declines resuming Thursday........"......

"The reaction to the report signals that the AI giant’s valuation may have topped out for the time being, at least until more is known about the availability of the Blackwell chip......"

I did not and do not see anything of the sort in what the company released yesterday. Blackwell is already shipping and will ship to the tune of BILLIONS of dollars over the next four months. The media fear-mongering on this issue was not and is not true.

There is......and will be......NO issue of availability of this chip....other than OBSESSIVE and EXTREME market demand for the product. The writer is simply trying to use the phrase........"at least until more is known about the availability of the Blackwell ship.....to subtly plant doubt and push the production issue BS.

The truth about Blackwell is that....yes....there will be availability issues..... but it will be due to the MASSIVE demand for the product. NOT production issues. There are...... two - five - ten - or more........ customers lined up for every chip than can be produced. The demand is so HUGE that it will simply be humanly impossible to produce enough of these chips for every potential customer that wants them immediately.

 

As to what Lori and TirsSmoke posted above. I am a huge advocate of being debt free. BUT....especially when people are younger and raising kids........this is usually not possible. BUT....as soon as you can.....paying off credit cards every month, buying a car for cash, not having a mortgage...can make a GIANT impact on your life and lifestyle and mental health.

At least if you do have to use credit....be a smart consumer.

I think it is interesting that the number of house buyers that are paying all cash is now pushing toward 50% of all buyers in many areas. AND....in some higher areas....it is well over 50%. That is an extreme change from earlier in my life when it was rare at any income level to see cash home buyers. That tells me that educated and financially smart buyers....are no longer willing to use leverage to buy a house. They are willing to put CASH into a house as an "investment" as well as a home.

 

I am generally HAPPY with the markets today. Most of my stocks are doing very well.....HD and NVDA being the only down stocks at this moment. Today is generally a RALLY with the SP500 and NASDAQ being nicely green......as well as the .....DOW.

NVDA will take care of itself after a few days of media driven BS. In general we are all set up for a....."probable"..... great final four months this year. BUT....as usual....there are no guarantees.

 

In life in general I am feeling GOOD.....I am STILL moving forward with my plan to try to purchase a major painting this fall at auction.

Of course the key phrase is......"at auction".....so the process is out of my control.

I have a big number that I feel comfortable with putting into this piece....but other bidders might simply just blow past my number. What I am willing to pay is right in the.....middle to high.....range for this particular artist....based on auction results for similar paintings over the past 18 months. BUT....at auction....you never know who will be bidding and if they are willing to pay way more than recent market value.

LOL......I very much understand. There have been a few times when we have set an auction world record for some item. It is never a good thing to win an item at auction.....and the audience breaks out into applause.

In the end....it is generally like investing....quality, quality, quality, is key and so is holding for the long term.....along with educating yourself.

 

Since nothing is really going on today....other than some lingering drama.....I will end with this little post. I like this little article....although it is very theoretical.....and there is no way I would use this sort of theoretical.....and speculative.... thinking in actual real investing.

Markets Adapt to Your Style

https://smeadcap.com/missives/marke...431&utm_content=321731386&utm_source=hs_email

(BOLD is what I find INTERESTING content)

"Dear fellow investors,

My colleague Will Keenan recommended an outstanding book, The Professor, the Banker, and the Suicide King, by Michael Craig. The book is a short and entertaining read of how Andy Beal played the best poker players in the world heads-up. He not only gambled toe-to-toe, but he also reminded them that they were doing what everyone should think poker is: gambling. Scared money is still scared money. The poker pros were playing on scared money compared to Andy Beal.

In the story, Andy spent countless hours playing with friends, colleagues and anyone who he could test poker theories with. Andy was seeking to change his style of play to where it would be tough for the professional players to adapt to him. Barring the issues he ran into like getting tired and sloppy later in the day, this is a wonderful way to think about stock picking. Poker is gambling. Phil Carret framed common stock investing on this gambling paradigm when he wrote his book titled The Art of Speculation. He was an incredible stock picker with a long career but viewed it as speculation.

In a plethora of his books, Michael Mauboussin has argued that the stock market is a complex, highly adaptive system. When one style does well, the market will adapt to that style and take the potential profit lower over time. This is the same thing a poker pro would do. Figure out your style and biases to take advantage of your way of allocating capital at the poker table.

No different than Andy Beal, Warren Buffett has had to adapt his style. Buffett was a disciple of Benjamin Graham. Graham would buy a plethora of securities at a discount to the tangible assets of the business (aka net-nets). He would do this across broad securities to allow the style to not be ruined by a single issuer event. The principal Buffett adapted to was to buy something cheaply relative to the value of the business. He stole other ideas like portfolio concentration from John Maynard Keynes at that time as well.

He continued investing like this into the 1960s when Munger’s influence began to weigh heavily on Buffett. It was no shock to Buffett that value alone wouldn’t be the only way to make money. The cult of value investing was slowly growing, and naturally, over time, this style would lose some of its profit from the market of players adapting.

Munger taught Buffett that the quality of the business mattered a great deal. See’s Candies has been the poster child for this principal. Buffett has said numerous times how stingy he was on the price, whereas over time it was of little importance. The high returns on capital and the longevity of what See’s Candies has done proved to Munger and Buffett that the quality of the business must be accounted for while looking at the valuation. They are weights that must be balanced against each other.

Buffett’s big test with that theory came at two points. First, Disney in 1965. Buffett bought 5% of Disney for $4 million. They had produced The Mary Poppins movie in 1964 and were spending a large amount of capex to build my favorite ride at Disneyland, Pirates of the Caribbean. Buffett commented he was paying five times ride at his 1996 UNC business school talk (link). One year later, Disney had gone up 50%. Buffett sold it. In 1996, his $4 million investment was worth $1 billion if he had held it. It’s even worse today. It showed Buffett that the quality of a business like Disney has historically produced was something to behold.

After that came Buffett’s purchase of Coca-Cola in 1988. He was criticized at the time for paying for what in the 1980s was a nosebleed high-teens P/E (price-to-earnings) multiple. The value crowd was following what he did, but as the flop came out on this hand, they didn’t know how to read his play. He was looking for other ways to make money. As Beal learned, king-deuce is a winning hand about 53% of the time. Maybe Buffett could find a hand that had good odds, but others didn’t play because they didn’t understand the odds.

Quality was the factor that Buffett was proving in Coca-Cola, as he had in See’s. Coke could pay off its debt with one year of free cash flow and ran an attractive return on equity of roughly 30-35%. Coca-Cola then began producing higher returns of 50% ROE (return-on-equity) and continuing to maintain a strong balance sheet. We believed the other players continued to misunderstand Buffett’s style. They weren’t taking into account that Coke was producing far higher returns on capital, a significant attribute in quality. It didn’t fit into their simple low P/E multiple view of the action at the table. Alas, the market was slow to adapt to this tell. He began buying more in 1991.

By the late 1990s, the market had caught on to the value of Coca-Cola’s business and Warren’s reason for playing the game that way. In effect, the players in the market adapted. The stock has since been a serial underperformer, compared to the S&P 500 Index, for the last 25 years.

Andy Beal considered winning hands like king-deuce a likely winner, but the best time to use that style was when no others would play a hand like it. He was playing heads-up, which makes it slightly different from playing a 10-handed table in poker or the entire stock market, but the principle holds true.

How does this direct us as stock pickers and “speculators” in the Phil Carret sense of the word? Value people liked playing tight. Buy low, sell high. They treated the market like a simple formula. They all adapted to that formula. The cult of quality has been built up. Strong balance sheets and high returns are factors that must be weighed. It doesn’t mean that pocket rockets (ace-ace) won’t win a high percentage of the time. but if the board flop comes out as two-two-king: pocket rockets may be worth nothing.

We believe the market has adapted to quality. Even the value players have adapted and most of them have attached quality to their marketing materials. The style has been adapted and we believe the next era won’t reward quality as it has over the recent past. In markets, we believe the winning hand moves around the table just as it does in poker. Luckily Buffett continues to adapt his play lately by selling Apple and buying OXY. The way we see it, the future winning hands look cheaper and more cyclical, but provide attractive returns on capital for the business in his view and in ours.

Fear stock market failure,"

MY COMMENT

Some food for thought here......on a very theoretical level.

I do like the Buffett content in this little article. I have always seen myself as a "NEW" value investor.....where value is captured in young BIG CAP GROWTH companies that become dominant....rather than......the cheap traditional value investing style.

Anyway just a fun article on investor "style"......and being in or out of "style" with current thinking and fads....etc, etc.

AND....speaking of QUALITY OF THE BUSINESS....does that bring any particular company to mind....on a day like today?

 

I will say regarding my post above about world record prices at auction....that does not necessarily mean BIG BUCKS. We paid one world record price for a particular porcelain sign that we wanted. I wanted to buy one initially at an auction but with short term cash needs our budget was $2500. But we got outbid. My wife wanted to keep bidding but $2500 was our limit. So....I told her....the next one we see, some time in the future, we will get it, I promise.

A year to two later we were at another auction and one came up....a really nice one. So I started bidding. There was an obvious new collector that was throwing money around and he kept bidding me up, up, up. I ended up paying a world record price for that sign around $6000. But with my wife siting next to me and my promise.....I just had to bite the bullet. Fortunately now those signs routinely sell for over what I paid.

Over the years we have had a few items like that.....some higher price some lower....but still world record prices. One of them was bought not too long ago and is probably still a world record price....I dont know, since they dont come up often, and none have sold since our purchase.

Fortunately.....we rarely lose money on art or collectables. We may not make as much as in the markets......but for something that is home decor and we get to enjoy....not losing money in the process and perhaps even making some good money on a few items is a good thing.

 

Still good strong markets today....other than......"he that can not be mentioned".......I like it.

At least if....."that"....stock can not go up today....it is a good thing to see it pull the entire stock market up today. The DOW is hitting record highs at times today.

I will take what the markets give me....I am a "hunter-gatherer" stock investor.....If I happen to find some mushrooms, I will take them....the next day I might come across some berries, great.....some time later a bee hive with honey. Once in a while I might have to go hungry. BUT.....that is life.

AND....that is also the POWER of a PORTFOLIO versus gambling on single stocks.

 

What in the world is going on with air travel and there TURBULENCE injuries that seem to be happening more and more lately.

United Airlines flight diverted to Memphis over ‘severe turbulence’ that left 7 injured
United Flight 1196 from Cancun to Chicago makes landing in Memphis, Tennessee

https://www.foxbusiness.com/lifesty...memphis-over-severe-turbulence-left-7-injured

I am speculating that this is a side affect of all the new high tech very light materials that are now being used in airplane construction. In the old days planes were much heavier....compared to their size and surface area..... and that made the impact of turbulence less.

But....I have no engineering education so I dont really know what I am talking about. Other speculation......flying lower routes? Less ability due to crowding to avoid storms? Less experienced pilots? Air companies mandating routes to max profits? Planes carrying less fuel so unable to divert to avoid weather?

Anyone know?

 

As to the "one stock" that I will not mention......it is nice to see the people that count putting their money and their customers money where their mouth is.

Analysts overhaul Nvidia stock price targets after Q2 earnings

https://finance.yahoo.com/news/analysts-overhaul-nvidia-stock-price-112103048.html

(BOLD is my opinion OR what I consider important content)

"Nvidia shares slipped in early Thursday trading, but pared the worst of their post-earnings declines, as a host of Wall Street analysts rushed to update ratings and price targets on the AI-chip maker following its highly anticipated July-quarter update.

Nvidia (NVDA) , which holds a commanding lead in the production of chips and processors that power AI systems worldwide, posted record revenue of $30.04 billion for its fiscal second quarter and saw profit more than double from the year-earlier period to 68 cents a share.

The group also suggested that current-quarter revenue would continue to improve, albeit at a slower pace, as it forecast a top-line tally of $32.5 billion despite some delays in the shipment of its new line of Blackwell processors owing to design changes and supply-chain snarls.

Nvidia said it executed a "change to the Blackwell [graphics-processing-unit] mask to improve production yield." The Santa Clara, Calif., group added that the ramp is "scheduled to begin in the fourth quarter and continue into fiscal 2026."

"We're sampling functional samples of Blackwell, Grace Blackwell, and a variety of system configurations as we speak," Nvidia CEO Jensen Huang told investors on a conference call late Wednesday. "There are something like 100 different types of Blackwell-based systems and we're enabling our ecosystem to start sampling those."
"The functionality of Blackwell is as it is, and we expect to start shipping out in Q4," he said, adding that demand for Nvidia's legacy Hopper chips is "really strong" and the appetite for Blackwell is "incredible."

Blackwell revenue boost

Finance chief Colette Kress said Blackwell should generate "several billion" in revenue for Nvidia's fiscal fourth quarter, which ends in January. She said that Hopper sales would accelerate over the second half of the year.

That has proved important for investors, who had worried that the Blackwell launch would trigger some cancellation or postponement of Hopper orders as customers waited for the new and more powerful processors and systems to hit the market.

The Blackwell ramp, however, will likely eat into Nvidia's profit margins, which narrowed modestly to 75.7% in the second quarter and will likely settle at the 75% level over the near term.

"Despite lower-than-expected gross margin guidance, Nvidia’s data center revenue opportunity across cloud, consumer internet, and enterprise customers remains strong," said Goldman Sachs analyst Toshiya Hari, who reiterated his conviction-buy rating and $135 price target on Nvidia stock following last night's earnings update.

"With a redesign of the Blackwell GPU, management expects several billion dollars in revenue in FY4Q, supported by growing Hopper revenue," he added.

Blackwell delay a 'nothing burger'

JP Morgan analyst Harlan Sur had a similar take, noting the the two-month delay in Blackwell GPU shipments shouldn't affect Nvidia's overall revenue profile given that it's "offset by Hopper's strong performance."

"We expect gross margins to improve throughout next year, with Nvidia maintaining a strong lead over competitors with its aggressive product launch cadence," said Hur, who added $40 to his Nvidia price target, taking it to $155 a share.

Cantor Fitzgerald analyst C.J. Muse, who reiterated his $175 price target and overweight rating on Nvidia stock, said worries about the Blackwell delay "appear to be a nothing burger ahead of one of the biggest and baddest product cycles in Nvidia’s history."

"We do not see any change to the AI story underpinning Nvidia, and think (today’s) potential pullback is simply another buying opportunity," he added.

That view was echoed by Piper Sandler analyst Harsh Kumar, who also held to his $140 price target and overweight rating following last night's earnings update.

"The company is well-positioned to capitalize on strong AI demand with Hopper and Blackwell," Kumar said. "Gross margins are expected to stabilize, supporting continued growth."

Nvidia expectations remain high

Bernstein SocGen Group analyst Stacy Rasgon, who raised his Nvidia price target by $25 to $150 a share, said the group "continues to deliver amidst high expectations with strong data center growth and several billion dollars of Blackwell revenue expected in Q4."

"Hopper demand remains strong, and we anticipate significant growth next year driven by diversified customers and expanding AI opportunities," he added."

AND

Nvidia’s business is growing faster than expected. Investors were still disappointed.

https://finance.yahoo.com/news/nvid...estors-were-still-disappointed-182820608.html

(BOLD is my opinion OR what I consider important content)

"Sometimes your best just isn’t good enough. That’s the lesson Nvidia (NVDA) learned Wednesday after the company’s stock price fell 3% despite posting better-than-expected second quarter earnings and guidance for the third quarter.

It’s not as though the company’s growth was unimpressive, either. Revenue jumped 122% year over year to $30 billion, up from $13.5 billion. Nvidia’s all-important data center revenue topped out at $26.3 billion, a 154% year-over-year increase.

But that wasn’t the kind of blowout that investors have quickly grown accustomed to over the last few quarters.

Beyond investor sentiment, Wall Street analysts have also seemingly caught on to Nvidia’s growth after several quarters of big surprises to the upside.

Nvidia’s revenue reported Wednesday beat Wall Street expectations by 4.1%, the slimmest margin since the fourth quarter of its 2023 fiscal year.

As Nvidia’s business has boomed over the last two years, the company’s revenue topped Wall Street forecasts by double-digit percentage points for three straight quarters, including a 22% difference in its fiscal second quarter of 2024.

And as Wall Street appears to have gotten a better feel for Nvidia’s growth at this point in the AI investment cycle, questions have also arisen about the status of Nvidia’s next-generation Blackwell chip.

Ahead of the company’s earnings announcement, the Information reported that the chip, the follow-up to Nvidia’s Hopper line, faced delays that could impact some of the company’s biggest customers including Microsoft and Google.

In her quarterly comments, Nvidia CFO Colette Kress explained that the company made changes to Blackwell to improve its production yield. CEO Jensen Huang, meanwhile, said that the chip is currently being sampled to customers, a major step toward shipping the processor at volume.

Huang said the company expects to ship several billion dollars of Blackwell revenue in the fourth quarter. But the CEO couldn’t pin down exactly how much revenue Blackwell would generate, despite analysts’ questions.

Huang, however, did provide a number of other strong points for Nvidia, including pointing out that demand for Blackwell platforms is well above supply. The CEO also said that Nvidia’s Hopper platform will continue to grow in the second half of the year, and explained that the company expects its data center business to grow “quite significantly next year.”

Huang also said that AI inferencing is driving the company’s data center revenue. Inferencing refers to computers running AI programs and providing users with answers to their queries.

That should put to rest fears of threats to Nvidia’s long-term growth as companies pivot from training AI models to using inference. Huang appears to believe that Nvidia will continue to plow forward as customers use its chips to both train and run their AI models.

Nvidia is still the world leader in AI chips, and it’ll be some time before rivals AMD (AMD) and Intel (INTC) catch up to its hardware and software lead. And while Nvidia may be facing a near-term decline in its stock price, Wall Street is still on board.

In an investor note released following Nvidia’s earnings, BofA’s Vivek Arya raised his price target on the chip designer to $165 from $150 per share, writing, “Despite the quarterly noise, we continue to believe in [Nvidia’s] unique growth opportunity, execution and dominant 80%+ share as generative AI deployments are still in their first 1-1.5 [years] of what is at least a 3 to 4-year upfront investment cycle.”

Raymond James’s Srini Pajjuri also raised the firm’s price target on Nvidia’s stock from $120 to $140, writing in an investor note that “Blackwell delays appear better than feared and management is forecasting a strong ramp in FQ4.”

Pajjuri also said demand for Nvidia’s current-generation Hopper chip continues to be healthy and pointed to anticipated sales growth in Q4, despite Blackwell production ramping up at the same time.

Morgan Stanley's Joseph Moore, who raised his price target for Nvidia from $144 to $150, called out Nvidia's sky-high expectations with regards to the company's stock moves after the earnings report.

"Expectations become more challenging as the superlative becomes mundane, but this was still a very strong quarter given the transitional nature of the current environment.""

MY COMMENT

I do like that one of the analysts above has the last name......Muse.

These people....making the calls above have some real skin in the game. When they make a call it is PUBLIC and their reputation, job, and income is on the line. As is their standing with peers

The exact opposite of some financial journalist putting out a story hoping to gather a few clicks. AND...no one will ever care if they are accurate or not in anything they say in the media environment that is the norm today. In fact most of them will be lucky to even have a job in a year or two......as they are replaced by AI....being run by....yes you guessed it.....NVDA chips. How IRONIC.

 

It is easier for me to list what was green for me today....PLTR, AAPL, AMZN, and MSFT. In addition I lost out today to the SP500 by 2.61%. Looks like the NASDAQ and SP500 WEENIED out today heading to the close.......a waste of a perfectly good day.

Dont care.....and....moving on.

 

An interesting little after-hours tech story.

Apple and Nvidia may invest in OpenAI
The two tech giants might join OpenAI’s potentially huge funding round.

https://www.theverge.com/2024/8/29/24231626/apple-nvidia-openai-invest-microsoft

 

Lets get this....story of the day.....out of the way.

The Fed’s favorite inflation indicator increased 0.2% in July, as expected

https://www.cnbc.com/2024/08/30/pce-inflation-july-2024.html

(BOLD is my opinion OR what I consider important content)

"Key Points

• Core personal consumption expenditures prices increased 0.2% in July and 2.6% from a year ago. The 12-month figure was slightly softer than the 2.7% estimate.
• All-item inflation came in respectively at 0.2% and 2.5%, in line with forecasts.
• Personal income increased 0.3%, slightly higher than the 0.2% estimate, while consumer spending rose 0.5%, in line with the forecast.

The Fed’s favorite inflation indicator increased 0.2% in July, as expected

Inflation edged higher in July, according to a measure favored by the Federal Reserve as the central bank prepares to enact its first interest rate reduction in more than four years.

The Commerce Department reported Friday that the personal consumption expenditures price index rose 0.2% on the month and was up 2.5% from the same period a year ago, exactly in line with the Dow Jones consensus estimates.

Excluding volatile food and energy prices, core PCE also increased 0.2% for the month but was up 2.6% from a year ago. The 12-month figure was slightly softer than the 2.7% estimate.

Fed officials tend to focus more on the core reading as a better gauge of long-run trends. Both core and headline inflation on a 12-month basis were the same as in June.

Core prices less housing increased just 0.1% on the month. As other inflation components ease, shelter has proven to be stubborn, again rising 0.4% in July, according to Friday’s report.

Elsewhere in the report, the department’s Bureau of Economic Analysis said personal income increased 0.3%, slightly higher than the 0.2% estimate, while consumer spending rose 0.5%, in line with the forecast. Spending continued at a solid clip even though the personal savings rate fell to 2.9%, the lowest since June 2022.

From a prices standpoint, inflation changed little over the past month. The BEA said that goods prices fell by less than 0.1% though services increased 0.2%.

On a 12-month basis, goods also were off by less than 0.1%, while services jumped 3.7%. Food prices were up 1.4% and energy accelerated 1.9%.

Markets reacted little to the news, with equity futures pointing to a slightly higher open on Wall Street and Treasury yields higher as well.

The report comes with the markets pricing in a 100% chance of a rate cut in September, with the only uncertainty being whether the Fed will take the incremental step of lowering benchmark rates by a quarter percentage point or being more aggressive and moving a half-point lower.

Following Friday’s release, market pricing tilted a bit more towards a quarter-point, or 25 basis point, reduction, lowering the probability for a 50 basis point move to 30.5%, according to the CME Group’s FedWatch gauge.

In recent days, policymakers such as Chair Jerome Powell have expressed confidence that inflation is progressing back to the Fed’s 2% goal.

The Fed is expected now to switch from a nearly complete focus on bringing down inflation to at least an equal concentration on supporting the labor market. Though the unemployment rate is still low at 4.3%, it has been trending higher over the past year, and surveys suggest a slowdown in hiring and a perception among workers that jobs are getting tougher to come by.'

MY COMMENT

A nice report.....in line with expectations. There should be NO change in any plan by the FED to start rate cuts in September. There should also be NO negative impact on the markets with this report. A good start to the day.