- 3 Big Scoops
- Posts
- đź—ž Nvidia Surges Over 4%
Bulls, Bitcoin, & Beyond
Market Moves Yesterday
S&P 500 @ 5,344.39 ( ⬆️ 0.0043%)
Nasdaq Composite @ 16,780.61 ( ⬆️ 0.21%)
Bitcoin @ $59,206.11 ( ⬆️ 0.22%)
Hey Scoopers,
Happy Tuesday! Here’s what we’re covering today:
👉 Nvidia leads gains
👉 The U.S. budget deficit widens
👉 Oil prices tick higher
So, let’s go 🚀
Market Wrap 📉
The S&P 500 index ended the last trading session marginally higher but maintained the momentum from late last week as investors brace for key inflation data.
The upcoming batch of inflation data will be essential for markets that remain jittery due to higher volatility. The consumer price index report for July will be published tomorrow, providing clues to the health of the U.S. economy.
The inflation data would also determine whether Wall Street remains uneasy, as the weak nonfarm payrolls report contributed to the recent sell-off.
Alternatively, Wells Faro explained that the pullback in tech stocks could create strong opportunities in the communication services sector in the second half of 2024.
The communication services sector has gained close to 20% year-to-date, outpacing the S&P 500 index gains of 12%.
Trending Stocks 🔥
JetBlue - Shares sank over 20% after the airline disclosed plans to sell $400 million of five-year convertible notes.
Hawaiian Electric Industries - Shares tanked more than 14% after the utility said it does not have a financing plan for a settlement totaling $1.7 billion. It also reported a net loss of $1.3 billion or $11.74 per share in Q2.
KeyCorp - The regional bank surged 9% after the Bank of Nova Scotia agreed to take a minority position. Scotiabank will invest $2.8 billion in KeyCorp for a 14.9% stake in the lender.
Will Nvidia Continue to Shine?
While the S&P 500 index posted marginal gains on Monday, the semiconductor giant surged over 4%.
The AI megatrend, which began at the start of 2023, has driven shares of Nvidia higher by 650% in this period. Valued at $2.68 trillion by market cap, Nvidia stock also trades 22% below all-time highs despite its market-thumping gains.
While investors might think that Nvidia is overvalued, the chipmaker remains among the hottest stocks in the world and trades at a reasonable multiple.
Moreover, the company’s data center graphics processing units (GPUs) are driving the proliferation of AI. For example, OpenAI uses Nvidia’s GPUs to train ChatGPT, following which several tech giants are lining up to buy these high-end GPUs to train and deploy AI models.
With an 80% market share in the AI chip market, Nvidia’s sales have increased from $10.9 billion in fiscal 2020 (ended in January) to almost $80 billion in the last 12 months.
KeyBank expects Nvidia’s data center sales to surpass $200 billion next year once it launches the much-awaited Blackwell AI chips. In fiscal 2024, Nvidia’s data center sales stood at $47.5 billion. On average, Nivida’s data center sales are forecast to almost triple to $140 billion next year.
Nvidia emphasized that it will release a new AI GPU every year. This segment is forecast to be worth $1.16 trillion in 2034, providing Nvidia with enough room to increase its top line going forward.
The U.S. Budget Deficit Is Growing
The federal government’s red ink eclipsed $1.5 trillion in July due to a jump in Medicare expenses and elevated interest rates.
With a shortfall of $243.7 billion, the total budget deficit for the year rose to $1.52 trillion, increasing the federal debt to $35.1 trillion.
A budget deficit is an indicator of a country’s financial health and occurs when government expenses exceed revenue.
Medicare costs for July rose to $92 billion, over 4x compared to June. Net interest payments totaled $81 billion and stand at $763 billion for the year.
U.S. Crude Oil Rallies
U.S. crude oil rallied yesterday, topping $80 per barrel as the Pentagon dispatched additional forces to the Middle East, anticipating an Iranian attack on Israel. Crude oil prices in the country are up 11.7% in 2024.
Israel has been bracing for strikes by Iran following the assassination of a Hamas leader in Tehran.
Increased allocations to oil and gold may be wise to protect against a further escalation in geopolitical tensions.
U.S. crude oil is trading higher even as OPEC lowered global demand forecast by 135,000 barrels per day due to a slowing Chinese economy.
Headlines You Can't Miss!
Unwinding of the yen carry trade may be healthy for Japan
Elon Musk, Donald Trump event on X crashes site
Japan’s Nikkei 225 rises 3% as it continues to recover
Macy’s closure could spark changes at shopping malls
Uniswap’s front-end sales surpass $50 million
Chart of The Day
Invest in companies that enjoy a competitive moat. For example:
👉 Tech giants such as Microsoft, Alphabet, Meta, Amazon, and Netflix benefit from network effects.
👉 Apple, Nike, and Starbucks can leverage their brand power
👉 Walmart, Costco, and Alibaba offer a cost advantage to consumers
👉 Intel and Pfizer benefit from intellectual property and trade secrets.
Meme of the Day
DISCLAIMER: None of this is financial advice. The newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions. Please be careful and do your own research.