March 19: Parsing Nvidia’s Announcements, Waiting for the Fed
March 19: Parsing Nvidia’s Announcements, Waiting for the Fed
Oil and gas prices continue to chug higher
The market is digesting the wave of announcements served up by Nvidia (NVDA) CEO Jensen Huang during his GTC keynote late yesterday - see below for more. Based on the pre-market dip in NVDA shares, it appears some were expecting something more. As investors chew through those announcements and contemplate potential implications, the light calendar for today and tomorrow morning means the bulk of investors will be treading water until the Fed makes its latest policy announcement, shares its updated set of economic projections, and Fed Chair Powell fields press conference questions tomorrow afternoon.
Nvidia (NVDA) introduced its new Blackwell GPU platform with 2.5 times the 8-bit floating point power of its Hopper predecessor. CEO Jensen Huang announced several new partners, including Ansys (ANSS), Cadence Design Systems(CDNS), and Synopsys (SNPS). Huan also shared Nvidia said Amazon (AMZN) Web Services, Google (GOOG)(GOOGL) Cloud, Microsoft (MSFT) Azure, and Oracle (ORCL) Cloud Infrastructure will be among the first cloud service providers to offer Blackwell-powered instances, as will NVIDIA Cloud Partner program companies Applied Digital (APLD), CoreWeave, Crusoe, IBM (IBM) Cloud, and Lambda.
Research firm Canalsys forecasts that close to 18% of total personal computer shipments globally, roughly 48 million units, will be AI-capable PCs, and that number is expected to exceed 100 million units, 40% of all PC shipments, by 2025. In 2028, the firm expects vendors to ship 205 million AI-capable PCs, representing a compound annual growth rate of 44% between 2024-2028. Readers will want to note this for Microsoft (MSFT), Intel (INT), AMD (AMD), and other companies surrounding the PC ecosystem.
Congressional leaders struck a deal Monday evening on funding the Department of Homeland Security paving the way for lawmakers to begin processing the remaining spending bills and avert a government shutdown next weekend.
Crude oil futures settled yesterday at their highest since late October, as Ukrainian drone attacks on Russian refineries are believed to have idled a significant chunk of Russia's refining capacity, and Chinese industrial production for January-February exceeded expectations. Current gas prices, according to AAA data, are up more than 6% to $3.489 for a gallon of regular gas, putting slightly ahead of year-ago levels. Entering 2024, the national average for a gallon of gas was $3.09.
For more, be sure to read our Daily Markets column published each day by Nasdaq.
Model Musings
Artificial Intelligence
“Nvidia Corp. Chief Executive Officer Jensen Huang showed off new chips aimed at extending his company’s dominance of artificial intelligence computing, a position that’s already made it the world’s third-most-valuable business. A new processor design called Blackwell is multiple times faster at handling the models that underpin AI, the company said at its GTC conference in San Jose, California. That includes the process of developing the technology — a stage known as training – and the running of it, which is called inference.” Read more here
Digital Infrastructure
“Speaking over the week at the South by Southwest conference (SXSW 2024) and reported by AI Business, CEO Michael Dell said: “There definitely needs to be a big build-out of data center capacity for sure.” He added: “We could need 100 times more of this in 10 years than we have today.” Dell attributed the increase in data center demand to the rising interest in AI services, and explained that people will learn that they can get better results from generative AI models. He said we are only in the first or second year of “the big AI revolution” and predicted that the growth of AI will be 10x faster than the growth rate of the Internet.” Read more here
EPS Diplomats
“US. stocks have been unaffected by higher interest rates from the world’s most powerful central bank over the past few years, as incremental earnings growth gives investors ample reasons to pour money into equities even amid an increasingly gloomy policy-rate outlook, according to DataTrek Research... a Fed hawkish pivot would be a sign that the economy remains reasonably strong, a good backdrop for improving corporate earnings in 2024 and 2025…” Read more here
Guilty Pleasures
“Bitcoin isn't the only asset that's been breaking records with triple-digit gains over recent months — cocoa's 186% gain over the last 12 months has eclipsed bitcoin's roughly 150% climb in the same stretch. At the end of last week, cocoa futures touched a record $8,018 per metric ton. The commodity has pared gains since, but it remains near all-time highs due to weaker crop yields in West Africa, political instability in some of the top-producing countries, lack of investment in new cocoa plants, and imbalanced supply and demand.” Read more here
The Strategies Behind Our Thematic Models
Aging of the Population - Capturing the demographic wave of the aging population and the changing demands it brings with it.
Artificial Intelligence – Software, chips, and related companies that facilitate the collection and analysis of large data sets and autonomous generation of solutions given non-machine language prompts.
CHIPs Act – Capturing the reshoring of the US semiconductor industry and the $52.7 billion poised to be spent on semiconductor manufacturing.
Cloud Computing – Companies that provide hardware and services that enhance the cloud computing experience for users, such as co-location, security, and edge computing.
Consumer Inflation Fighters - Companies poised to benefit as consumers stretch the disposable spending dollars they do have.
Core Holdings – Companies that reflect economic activity and are large enough to not get pushed around by day-to-day market trends. Low-beta, large-cap names able to better withstand economic turmoil.
Digital Infrastructure & Connectivity -The buildout and upgrading of our Networks, Data Storage Facilities, and Equipment.
Data Privacy & Digital Identity - Companies providing the tools and services that verify authorized users and safeguard personal data privacy.
EPS Diplomats - Profitable large capitalization companies proven to produce above-average EPS growth and provide investors with the benefit of multiple expansion.
EV Transition - Capturing the transition to EVs and related infrastructure from combustion engine vehicles.
Guilty Pleasure – Companies that produce/provide food and drink products that consumers tend to enjoy regardless of the economic environment and potential long-term health hazards associated with excessive consumption.
Homebuilding & Materials – Ranging from homebuilders to key building product companies that serve the housing market, this model looks to capture the rising demand for housing, one that should benefit as the Fed returns monetary policy to more normalized levels.
Market Hedge Model – This basket of daily reset swap-based broad market inverse ETFs protects in the face of market pullbacks, overbought market technicals, and other drivers of market volatility.
Luxury Buying Boom - Tapping into aspirational buying and affluent buyers amid rising global wealth.
Market Hedge Model – This basket of daily reset swap-based broad market inverse ETFs protects in the face of market pullbacks, overbought market technicals, and other drivers of market volatility.
Nuclear Energy & Uranium – Companies that either build and maintain nuclear power plants or are involved in the production of uranium.
Precision Ag & Agri Science – Companies that look to address shrinking arable land by helping maximize crop yields utilizing technology, science, or both.
Rebuilding America - Turning the focused spending on rebuilding US infrastructure into revenue and profits.
Safety & Security – Targeted exposure to companies that provide goods and services primarily to the Defense and security sectors of the economy.
Space Economy – Companies that focus on the launch and operation of satellite networks.
The strategies behind our Dividend Income Models:
Monthly Dividend Model – Pretty much what the name says – this model invests in companies that pay monthly dividends to shareholders.
ETF Dividend Model – High-yielding ETFs that provide a range of exposures from domestic equities, international equities, emerging market equities, MLPS, and REITs.
ETF Enhanced Dividend Model – A group of high-yielding ETFs that utilize options to enhance yield through collecting option income.
Don’t be a stranger
Thanks for reading and if you have a suggestion for an article or book we should read, or a stream we should catch, email us at info@tematicaresearch.com. The same email works if you want to know more about our thematic and targeted exposure models listed below.