The Long Term Investor

HO-HUM.....I am going out for an ice cream cone. I will check the NVDA earnings later.

 

I have not had a chance to digest the NVDA earnings since we just got back from DQ. Love the small chocolate dipped cone that has been on sale for .99 cents for the past couple of weeks.

I am forcing myself to wait to see more on NVDA.

As to posts above....yes...TireSmoke. When I sell I sell. When I buy I buy. No market timing and no exit or entry points. This sale of NKE....the funds were only out of the market for about two minutes....before they went back into COST and HD. That is how I like to do it. I dont like market money siting around.

I have done a few momentum trades on stock splits and other single events.....as noted in this thread. BUT....that is definately not the norm for me....it takes a special situation.

AND.....I will mention.....I broke my promise about posting all trades in real time. I scraped together some money from various sources yesterday and added 150 shares of NVDA to my primary account. This brought this holding up to 20% of my account total.

I decided it was time to put my money where my opinion was. As I have said a few times....I have NEVER since MSFT 1990...seen a stock where the company controls a MASSIVELY profitable market. I see that now with NVDA so....like I did buying 1000 shares of MSFT back than.....have made a commitment to NVDA.

I did not want to post this yesterday because I did not want to influence anyone else to follow along. Now that earnings are in....which I have still not looked at.....I am posting this to catch up.

 

Yeah Smokie....I was doing my final research and typing a post when Emmett and TireSmoke posted. I could see NKE if their problems were pandemic related.....but....from what I saw the issues thay are having seem to have started in 2017/2018....well before the pandemic.

I hate to be not making money.....those funds will be much more profitable in COST and HD. In fact COST is usually among my top two holdings.

Time to go see what is being said about NVDA.

 

Looks like a HUGE BEAT.

Nvidia tops estimates and says sales will jump 170% this quarter, driven by demand for AI chips

https://www.cnbc.com/2023/08/23/nvidia-nvda-earnings-report-q2-2024.html

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

"Key Points

• Nvidia’s performance was driven by its data center business, which includes the A100 and H100 AI chips that are needed to build and run artificial intelligence applications like ChatGPT.
• Nvidia reported $10.32 billion in data center revenue, which was up 171% on an annual basis.

Nvidia shares climbed 8% in extended trading on Wednesday after the chipmaker beat estimates for the second quarter and issued optimistic guidance for the current period.

• Earnings: $2.70 per share, adjusted, versus $2.09 per share expected by Refinitiv.
• Revenue: $13.51 billion versus $11.22 billion expected by Refinitiv.

Nvidia said it expects third-quarter revenue of about $16 billion, higher than $12.61 billion forecast by Refinitiv. Nvidia’s guidance suggests sales will grow 170% on an annual basis in the current quarter.

Net income jumped to $6.19 billion, or $2.48 a share, from $656 million, or 26 cents, a year earlier.

Nvidia’s strong sales and forecast underscore how central the company’s technology has become to the generative AI boom. Nvidia’s A100 and H100 AI chips are needed to build and run AI applications like OpenAI’s ChatGPT and other services that take simple text queries and respond with conversational answers or images.

Revenue in the second quarter doubled from $6.7 billion a year earlier and increased 88% from the prior period.

“A new computing era has begun,” Nvidia CEO Jensen Huang said in the press release. “Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI.”

The stock moved higher on Wednesday after finance chief Colette Kress said that the company would not be immediately affected by proposed Biden administration export restrictions on chips.

“Given the strength of demand for our products worldwide, we do not anticipate that additional export restrictions on our data center GPUs if adopted would have an immediate material impact to our financial results,” Kress said on a call with analysts.

Even before Wednesday’s report, Nvidia’s stock price had more than tripled for the year, making it the top performer in the S&P 500. It jumped past $507 after hours, a level that would mark a record if it closes there on Thursday. Its prior closing high was $474.94 on July 18.

Nvidia’s performance was driven by its data center business, which includes AI chips, as cloud service providers and large consumer internet companies like Alphabet, Amazon and Meta snapped up next-generation processors. The company reported $10.32 billion in revenue for the group, up 171% on an annual basis and above the $8.03 billion estimate, according to StreetAccount.

Nvidia added that it saw its adjusted gross margin increase 25.3 percentage points to 71.2%, because of growth in data center sales, which are more profitable.

Nvidia’s gaming division, which used to be its core business, saw revenue increase 22% from a year earlier to $2.49 billion, topping the $2.38 billion average estimate.

Nvidia also makes chips for high-end graphics applications. That business shrank 24% year-over-year to $379 million. It reported $253 million in automotive revenue, which grew 15% on an annual basis.

Nvidia said its board of directors authorized $25 billion in share buybacks. It said it had purchased $3.28 billion in shares during the quarter.

Executives will discuss the results on a call with analysts at 5 p.m. ET."

MY COMMENT

The only thing left for the company is to do a stock split. Shareholders deserve it. BANNER earnings.....with INSANE numbers for only one quarter. The call with analysts that is happening right now will hopefully be the icing on the top of the cake.

 

Here is more detail.....from the company itself.

NVIDIA Announces Financial Results for Second Quarter Fiscal 2024

https://nvidianews.nvidia.com/news/nvidia-announces-financial-results-for-second-quarter-fiscal-2024

A huge amount of info in this release including ALL the actual financials.

 

As to buying 150 shares of NVDA yesterday. I started out thinking perhaps I should buy 150 shares and do a short term trade on what I considered a PROBABILITY....for great earnings....and take my profit before the close on Friday.

BUT as I thought about it more....I realized WTF am I doing. I need to keep these shares long term. So I ditched the plan to do the purchase on margin and scraped together the funds from other sources to do it as a long term hold.

I have to say.....what this company is doing is a once in 50 year market opportunity. How they are positioned and considering their near term future......is basically unheard of. I see very little risk to them over the next 2-5 years. I have to ride this train. I can honestly say there has only been TWO of these situations over my entire 50+ years of investing....MSFT and NVDA. For the average investor I literally see this as a once in a lifetime event.

I will say there is some black swan risk if for example China invaded Taiwan.

BUT PLEASE........I am not telling anyone else to buy this stock. There is always risk....especially...short term risk. I am NOT gambling with leverage or borrowed money....so please.....be rational, realistic, and careful.

 

Here is more NVDA coverage including a report on their next processor which is to release in 2024.

Nvidia just made $6 billion in pure profit over the AI boom
On a staggering $13.5 billion in revenue.

https://www.theverge.com/2023/8/23/22608145/nvidia-q2-2024-profit-revenue-ai-chips

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

"Roughly three months after joining Apple, Amazon, Google, and Microsoft among the world’s trillion-dollar companies — on the back of the AI boom — Nvidia is now making far more money than it’s ever made before.

The company raked in $13.5 billion in revenue since May, it revealed in its Q2 2024 earnings, with the unprecedented demand for its generative AI chips blowing past any difficulty it might have had selling desktop and laptop GPUs into a shrinking PC industry. Data center accounted for a record $10.32 billion of that revenue, more than doubling in just one quarter, and Nvidia made $6.188 billion in profit as a result — up 843 percent year over year. And while gaming is more than a billion dollars short of pandemic highs, it was actually up 22 percent year over year to $2.48 billion in revenue, too.

Nvidia says it believes gaming is back to growth, with an unspecified upgrade opportunity coming up for gamers — and says 20 percent of its install base now has an RTX 3060 or better.




Nvidia is forecasting revenue of $16 billion next quarter, yet another leap due to AI. “We expect sequential growth to be driven largely by data center,” says Nvidia CFO Colette Kress on the earnings call. The company’s stock price jumped 8.5 percent in after-hours trading.

The company’s next AI chip, the GH200, is coming in mid-2024 for an undisclosed price, so next quarter’s demand will still be for existing AI chips. “Our supply over the next several quarters will continue to ramp as we lower cycle time and work with our supply partners to add capacity,” says Kress, adding that Nvidia’s L40 GPU “will help address the growing demand for many types of workloads.”

Nvidia’s chief rivals Intel and AMD do not yet have convincing answers to Nvidia’s generative AI silicon. AMD’s MI300 may begin to arrive as soon as the fourth quarter, deploying in early 2024. Both AMD and Intel are also at least temporarily trying to downplay the importance of putting those AI chips into servers in the cloud, with both their chief executives promising to put AI features in client chips as well. Or, as Intel CEO Pat Gelsinger put it: “build AI into every platform we build.”

“If you look out five years, you will see AI in every single product at AMD, and it will be the largest growth driver,” AMD CEO Lisa Su told Forbes back in May.

We’ll let you know if we hear anything else of interest on the earnings call."

MY COMMENT

If NVDA can stay one chip ahead of the competition they can stretch out this BONANZA for many years. It looks like this is what they will be doing with the next chip to release about mid 2024.

This company has a very good shot at becoming the highest market cap company in history....soon.

 

Since I bailed out of NKE today before the close.....ALL eight of my stocks were UP for the day. I also beat the SP500 today by 0.69%. BOTH of my additions to COST and HD today were positive for their first day.....better than NKE for the day.

It will be FUN to watch the markets and commentary over the rest of the week. A GREAT HUMP DAY today.

 

OK.....NVDA day is done for now. So moving on.

Into Perspective: Soft August Flash PMIs

https://www.fisherinvestments.com/e...ntary/into-perspective-soft-august-flash-pmis

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

"Even if the latest surveys are right, a shaky economy has little surprise power.

Is the soft landing about to get bumpy? For the past several weeks, economic expectations have inched higher—most notably in the US—as people started fathoming that inflation has eased without central banks inducing recessions. Economists started erasing recession forecasts instead of delaying them. But it seems all it took to reverse the cheer was a bad August for stocks, coupled with some not-so-great Purchasing Managers’ Indexes (PMIs). With these surveys putting Europe in contraction, the US close to flat and only Japan in firm expansion, people once again are arguing recession is a foregone conclusion. We think that is a bit hasty, but sentiment still seems dreary enough toward the weakest spots (Europe and the UK) that an actual downturn should have limited surprise power.

August’s flash (preliminary) PMIs weren’t great by any stretch. Yet this isn’t unprecedented. As Exhibit 1 shows, composite readings (which combine services and manufacturing output) spent much of 2022’s second half (and in some cases beyond) under 50, suggesting more firms contracted than grew. Outside Germany, however, this didn’t translate to a recession. GDP wobbled a tad in Japan, the eurozone and some member states, but it kept growing in the US and to a lesser extent the UK. Therefore, we think it is premature to declare recession is a sure thing now. It may be. It may not be.

Exhibit 1: A Composite PMI Double Dip


Source: FactSet and S&P Global, as of 8/23/2023.

The points in favor of a recession are probably obvious: Those sub-50 readings mean a majority of businesses are reporting a contraction. But there are also counterpoints. For one, PMIs measure growth’s breadth but not its magnitude. So if the minority of firms that reported growth notched a big enough expansion to outweigh the contracting majority, then output could still grow. As noted earlier this week, this is the current trend in US manufacturing, and a similar trend is underway in the UK. In both places, manufacturing output has defied contracting manufacturing PMIs for months. Eurozone output is choppier, but it hasn’t been uniformly in the red since PMIs first notched contraction last summer.

Two, the composite readings could be overweighting manufacturing. Exhibits 2 and 3 break manufacturing and services out separately. As Exhibit 2 shows, with a couple of exceptions, manufacturing has been in the red for a year. This isn’t good, but manufacturing is a small piece of developed-world economies. Even in Germany, widely considered an industrial powerhouse, manufacturing is just 18% of GDP. Services generates the lion’s share of output, and it isn’t contracting across the board. The US and Japan’s services sectors remain above 50—signaling expansion—while Germany, the UK and the eurozone only just slipped below. Only French services have contracted for more than a month.

Exhibit 2: Manufacturing PMIs


Source: FactSet and S&P Global, as of 8/23/2023.

Exhibit 3: Services PMIs


Source: FactSet and S&P Global, as of 8/23/2023.

If services’ multi-month contraction last year didn’t correspond with recessions outside Germany, we think it seems quite bizarre to equate August’s falling PMIs with broad economic trouble now. Blips have happened before, and this could be another. And if not? We daresay economic fears have lingered long enough to keep surprise power at a minimum. Yes, we had an awful lot of soft landing chatter in the US, but nascent cheer here was an outlier. In the UK, economists remained preoccupied with rising living costs, BoE rate hikes and a perceived lack of meaningful domestic growth drivers. Eurozone concerns are similar, with an added dose of renewed energy jitters. No one did a victory lap when Germany’s contraction paused and eurozone growth resumed in Q2. The reaction there was classic early bull market: Just wait, the real trouble lies ahead. To us, it suggests a continued downturn would mostly just meet dreary expectations, while eking out growth would probably be a positive surprise.

None of this precludes further stock market volatility, which we know is an unpleasant prospect with global stocks down about -5% from their year-to-date high before Wednesday’s rally. Pullbacks and even full-fledged corrections (sharp, sentiment-fueled drops of about -10% to -20%) have happened in bull markets’ first years before. Sometimes weak economic data spur that reaction. Sometimes not. Regardless of the cause, enduring short-term wobbles is part of the price we all pay to achieve stocks’ long-term returns. These wobbles also begin and end when people least expect it, making gritting your teeth and toughing it out the only realistic option, in our view."

MY COMMENT

I see the markets and the media as downplaying the NVDA earnings.....and.....earnings in general. I believe it is clear that many are still pushing negative sentiment and downplaying anything positive.

The current earnings are now mostly HINDSIGHT.....so we move on to third quarter earnings which will be the PRIMARY MARKET EVENT of the rest of the year for investors.

This is CLASSIC early bull market behavior. It takes a long time for people to admit they were wrong.

 

The ten year yield is now down a little bit today as we.....GASP.....await the FED meeting (vacation with the elites) in Jackson Hole. A totally non-event....that is being hyped as usual.

10-year Treasury yield inches up as investors await Jackson Hole meeting

https://www.cnbc.com/2023/08/24/tre...-as-investors-await-jackson-hole-meeting.html

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

"U.S. Treasury yields were mixed on Thursday as investors await signals on monetary policy from central bankers at the upcoming Jackson Hole meeting.

The yield on the benchmark 10-year Treasury note was up around 2 basis points at 4.215%, after hitting a 16-year high on Monday. The yield on the 30-year Treasury bond climbed less than 1 basis point to 4.288%. At the shorter end of the curve, yields were slightly higher

Yields move inversely to prices.

The recent surge in 10-year yields to their highest level since November 2007 came as investors grappled with a surprisingly resilient U.S. economy and the possibility that inflation sticks around, forcing the central bank to keep interest rates higher for longer.

Thursday’s market moves come ahead of the Federal Reserve’s annual symposium in Jackson Hole, Wyoming, on Friday, which Wall Street hopes will offer some insight into the likely path of interest rates.

Richmond Fed president Thomas Barkin struck a hawkish tone on Tuesday, reiterating that the Fed needs to defend the 2% inflation target to preserve its credibility with the public.

“We have one big weapon and that is credibility,” Barkin said to the Danville Pittsylvania County Chamber of Commerce. “There is nothing magic about 2 except that when you set that as a target you probably want to achieve it.”

The U.S. Treasury on Thursday will auction $80 billion in 4-week bills, $70 billion in 8-week bills and $8 billion in 29-year and six-month Treasury Inflation-Protected Securities."

MY COMMENT

WELL even with a booming economy since 2009 we weree seeing DEFLATION. I dont have any concerns at all about rates on Treasuries. I STILL see the world wide default as being DEFLATION. Over time that will take care of the yield issues and concerns that we are seeing right now.

I also like where we are right now on yields since I prefer to live in a NORMAL world........and....the yields that we are seeing right now are perfectly normal.

 

As I was saying.

Nvidia Cheer Fades As Stock Market Reverses Lower; Retailer's Sell-Off Adds To Sector's Woes

https://www.investors.com/market-tr...ers-sell-off-adds-to-sectors-woes/?src=A00220

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

"Another impressive earnings report from Nvidia (NVDA) helped send the stock market higher Thursday, but indexes quickly eased from opening gains.


The Nasdaq composite, where Nvidia accounts for 4.4% of the index, fell 0.4% after opening 0.8% higher. The index climbed to its 50-day moving average before getting turned back, a sign of resistance.

The S&P 500 was down 0.1% at 10:28 a.m. ET. The Russell 2000 fell 0.2%. Volume rose on the Nasdaq and fell on the NYSE compared with the same time on Wednesday.

The Dow Jones Industrial Average climbed 0.1%. Dow component Boeing (BA) tripped up 3.7%, falling below its 50-day moving average and below the 223.91 buy point of a July 26 breakout.

The company's 737 Max planes were found to have faulty drill holes in fuselage components made by Spirit AeroSystems (SPR). The Federal Aviation Administration says there's no immediate safety risk, and it's unclear how the issue will impact 737 deliveries. Spirit shares fell nearly 11% in heavy trading.

Innovator IBD 50 ETF (FFTY) eased 0.1%. Frontline (FRO) and Futu Holdings (FUTU) led with gains for more than 2% after both reported second-quarter results.

Nvidia Earnings Impress Stock Market

Nvidia late Wednesday breezed past analysts' expectations for July-quarter sales and earnings. The company also raised its guidance for the current quarter. The stock jumped to a record high but trimmed its gain to 3.5% at 10:08 a.m. ET.

Just like it did three months ago, Nvidia cited abundant demand for chips used in generative AI for its success. CEO Jensen Huang hailed the dawn of a "new computing era" based on AI and accelerated computing.

Global X Robotics & AI ETF (BOTZ), whose largest holding is Nvidia, pared gains to 0.1%. Technology Select Sector SPDR (XLK) had a lackluster response, up 0.2%.

Splunk (SPLK) broke out of flat base in heavy trading after the data analytics company beat expectations for its July-ended quarter. Earnings growth soared 689% from the year-ago period, and management raised its outlook. Shares rallied nearly 14% in big volume.

The retail sector's woes continued. Dollar Tree (DLTR) plunged more than 10%, to the lowest in 14 months. The discount chain beat sales and profit estimates. But gross margin fell and the company suffered more inventory losses from shoplifting and other factors. Dollar Tree is today's worst performer in the S&P 500."

Jobless Claims, Durable Goods

In economic news, claims for first-time unemployment benefits fell by 10,000 to 230,000. Last week's claims came in below forecasts for 241,000, according to Econoday.

Durable goods orders fell 5.2% in July, more than economist estimates for a 4% drop. But excluding transportation, orders rose 0.5%, above forecasts.

MY COMMENT

OK.....time to move on from Nvidia. The company will do their thing.......no need for daily cheer-leading.

The economic data above is generally being ignored today but I believe it is the primary cause of the market action today along with the Treasury yields and the FED. These are CLASSIC short term market events.......trader events. As has been the case for some time now the economic data is schizophrenic.

BUT.....for the typical retail investor....the silent majority....NONE of these day to day market drivers will matter at all.

 

SO.....I see that the markets have now turned negative for the day. Seems about right.....a single stock can not pull up the entire market. Sentiment among the professionals......even if they wont say it........is still being pushed as negative.

I see this as actually a good indicator for the rest of the year. The market is taking a breather and stocks are consolidating the gains of the past 8 months. The BULL MARKET is now 14 months young and still being disrespected and questioned.

One issue that I am hearing a lot about on the day to day.....normal people level.....is inflation. it may be slowing but prices are not going down. Gas, food, all the day to day necessities are still causing concern for regular people. I noticed a few days ago that a single can of Chili in the store was $5. We eat out every day and restaurant prices are outrageously higher. What I am seeing on a local level from repair people........auto shops, HVAC people, etc, etc, etc.....are EXTREME prices for service and parts. I believe HIGH PRICES are the greatest concern of the man on the street.