Consensus-smashing January results paired with guidance above market forecasts is lifting Nvidia (NVDA) shares in pre-market trading and that is fueling the US equity futures. Soon after the market open, S&P Global will publish its Flash February Manufacturing and Services PMIs. That first hard look at February will be picked over as investors seek to gauge not only the speed of the economy but job creation during the month and whether February inflation could repeat its January upside surprise. Ahead of this report, the Atlanta Fed’s GDPNow Model is at 2.9% for the current quarter. However, with investors walking a tightrope between the economic benefits of a stronger-than-expected economy and expected timing for rate cuts, the Flash February PMI report may not provide the answers about a May rate cut some are looking for. But with five Fed speakers making the rounds today, the topic is likely to get some play today.
Nvidia (NVDA) reported consensus-smashing January quarter results with EPS of $5.16 compared to the $4.59 market forecast. Revenue for the quarter soared 265.3% YoY to $22.1 billion, easily outpacing the $20.4 billion consensus forecast. Data Center revenue rose 409% YoY (27% QoQ) to a record $18.4 billion. Gaming revenue was $2.9 billion, flat from the previous quarter and up 56% YoY. For the current April quarter, Nvidia sees its top line between $23.52-$24.48 billion versus the $22.21 billion consensus. Inside that forecast, the company expects sequential growth in Data Center and its ProViz business partially offset by a seasonal decline in Gaming.
Social media platform Reddit has struck a deal with Alphabet’s (GOOGL, GOOG) Google to make its content available for training the search engine giant's artificial intelligence models. Read more here
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Model Musings
Artificial Intelligence, Digital Infrastructure & Connectivity
“The outlook extends a streak of Nvidia shattering expectations, thanks to insatiable demand for its artificial intelligence accelerators — highly prized chips that crunch data for AI models. The technology has helped power a proliferation of chatbots and other generative AI services, which can create text and graphics based on simple prompts. “Accelerated computing and generative AI have hit the tipping point,” Chief Executive Officer Jensen Huang said in the statement. “Demand is surging worldwide across companies, industries and nations… Nvidia’s data center division, now by far its largest source of sales, generated $18.4 billion of revenue, up 409% from the same period a year earlier. Gaming chips provided $2.87 billion of sales.” Read more here
Data Privacy & Digital Identity
“CES 2024 was packed with innovative tech as automakers showed off the latest in-car platforms and advancements. At the centre of new experiences is a deeper understanding of the customer and their digital lives. These advancements are happening as the digital identity management landscape is undergoing a major shift. In this case, digital identity management refers to the process of representing a consumer’s identity to a subscription-based service for verification and access purposes. With the average consumer juggling as many as 100 passwords, efforts are being taken to move away from passwords to easier, more secure authentication measures. Today, big tech companies like Google and Facebook offer some respite by allowing their credentials to be used for access to digital services. Now, automakers also stand to become key digital identity players…” Read more here
“While an individual’s digital identity is comprised of several data points or signals, the phone number has globally cemented itself as the key personal identifier, especially with number portability enabling people to keep their phone number for life. One report shows that this year mobile phone numbers will become the primary source of identity for more than 3 billion people. "When it comes to verifying a digital identity, the phone number is the single most important piece of data that businesses use to verify a person or company.."“ Read more here
“When it comes to ransomware attacks, median initial ransom demands for 2023 spiked 20% year-over-year to reach $600,000, with some sectors hit much worse than that: The legal, government, retail, and energy industries are now routinely seeing median demands of $1 million or more.” Read more here
“With the upcoming release of iOS 17.4, iPadOS 17.4, macOS 14.4, and watchOS 10.4, the company is bringing a new cryptographic protocol called PQ3 to iMessage that it purports to offer even more robust encryption and defenses against sophisticated quantum computing attacks. Such attacks aren’t yet a broad threat today, but Apple is preparing for a future where bad actors try to unwind current encryption standards and iMessage’s security layers with the help of massively powerful computers.” 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.