Even good earnings news and guidance from Taiwan Semiconductor Manufacturing (TSM) couldn’t reverse the drop in tech stocks that accelerated yesterday, July 17, when the NASDAQ Composite recorded its worst day since 2022 with a 2.7% decline.
I think there are reasons to worry about Nvidia’s valuation and its ability to continue to generate revenue and earnings growth at a pace that would support a forward price to earnings ratio above 40, but I think those re worries for 2025. In 2024, I don’t see anything that disrupts the AI boom story. Over the next six months or so I’d like to be buyer, especially id I can get the shares on a temporary drop. So yesterday’s drop to $118 was a promising development. There was technical support at the 50-day moving average near $100 so there was a chance the stock would move lower. Today, Tuesday, June 25, though, shares of Nvidia rallied, closing ups 6.76% at $126.09. This doesn’t mean the drop is over or the opportunity is lost,
I’d buy Broadcom even at this price as one of my three core AI stocks from the current generation of leaders. I’m adding it today to my long-term 50 Stocks Portfolio.
This Special Report; Trade War! Trade War! gives you my recommendations for what to sell, where to take profits, and where to trim as seen through the lens of a likely global trade war. Here are my choices with my first 3 sells
Yesterday, May 22, after the market close, Nvidia (NVDA) crushed Wall Street projections for revenue and earnings for the company’s fiscal first quarter of 2025. Nvidia reported that revenue soared 262% year-over-year to a record $26 billion, marking an 18% quarter-over-quarter increase. Adjusted earnings per share climbed 461% to $6.12. The Wall Street consensus had called for revenue of $24.65 billion and earnings per share of $5.59. And it even beat the Wall Street “whisper number,” which in a bullish momentum situation like this runs considerably above the official consensus. Data center revenue hit a record $22.6 billion, up 427% year over year. Data center revenue represents 87% of Nvidia’s total sales. For the current fiscal second quarter of 2025 Nvidia told investors to expect sales of $28 billion, up 107% year over year.
Today’s Quick Pick is Cloud Service Infrastructure Stocks. Normally I’ll choose a specific individual stock for Quick Picks but in this case, I thought I should highlight the entire sector. It’s impossible to overstate the importance of AI technology’s effect on the economy as a whole but it’s also important to look at the individual companies and sectors that benefit from the demand this technology brings to the market. AI has created a revival of growth in the cloud service infrastructure sector, as demand for more processing on databases to run AI programming continues to increase. The sector has seen a revenue growth of about 21% year over year in the first quarter of 2024. The sector is dominated by three companies with Amazon (AMZN) holding the largest share at 31%, and Microsoft (MSFT) with 24% and Alphabet (Google) (GOOG) with 11.5%. This is a $300 billion market, and those three companies have about 66% of it. Smaller players like Alibaba (BABA) and Oracle (ORCL) have A LOT smaller shares at 4% and 3%. However, even that 3% of the market puts Oracle’s cloud revenue at $5.1 billion in the most recent quarter. Revenue in this sector is likely to continue to grow and it looks like good news for all of these companies that set the tone for the market. This is yet another way to get in on the AI boom.
After the close today, Alphabet (GOOG) reported revenue of $80.5 billion, easily beating the consensus projection of $78.7 billion. Earning per share came in at $1.89 versus expectations for $1.50 a share. And none of the worries before the news turned out to be problems. Advertising revenue rose 13% to $61.7 billion. Ad revenue for YouTube–an area of worry rose 21% to $8.09 billion. Subscriptions, platforms and devices revenue jumped 18%.
Tuesday, April 23, after the market close Visa (V) reported adjusted net income of $2.51 a share. That ws 7 cent a share more than the consensus of estimates from Wall Street analysts. Earnings rose 7% year-over-year in the quarter. Revenue climbed 10% from a year prior to $8.8 billion, also exceeding Wall Street estimates
Today’s Hot Button Moves NOW video is Buy ASML Holding (ASML). ASML is the only global manufacturer of the most cutting-edge chip-making equipment, a technology called Extreme Ultra Violet Lithography (EUV). The equipment allows for a smaller chip, more transistors on the chip, and more power for less silicon. ASML’s earnings report on April 16 was disappointing, with fewer than expected orders, a situation that will likely continue into the next couple of quarters. This resulted in a big drop in earnings and the stock taking a big hit. But, this is the only game in town for this equipment, and anything chip that uses the new 2-nanometer, 3-nanometer, and 5-nanometer technologies will be made on ASML equipment. So orders will not stay down for long. I would use this weakness to buy ASML Holding. It’s not cheap, but it’s not likely not get much cheaper than this, and as geopolitical chip wars settle, orders for ASML will jump rebound. ASML Holding is a member of my long-term 50 Stocks Portolio.
Apple has lost its spot as the world’s biggest mobile phone seller, IDC reported today, April 15. A steep drop in sales in China for Apple let South Korean rival Samsung retake the lead in global market share. Samsung had been the biggest seller of mobile phones for 12 years until the end of 2023, when sales of Apple’s iPhone models overtook it. Global smartphone shipments increased by 8% to 289.4m units during January-March, according to IDC. Samsung has a 20.8% market share. That beat Apple’s 17.3% share
Bookkeeping. I added Visa as Pick #5 for my New World of Dividend Investors Special Report (You can find it in the Special Report section of this site along with all the content on this market and its trends for Dividend Income investors. But I’m reposting it as a stand alone pick so no one misses it.
Apple is likely to take its shareholders on an even wilder ride in the next six months than they’ve been on since the December all-time high at $199.62. The end result, I think is likely to be a renewed rally beginning in the fall–if you can either hold on through the volatility until then or see your way clear to timing when to buy and sell.
