Nvidia earnings lift sentiment amid lingering macro risks

00:00:00: NVIDIA did it again!

00:00:01: Despite sky-high expectations, the company delivered stronger than expected second quarter results and a bullish guidance while signalling that their revenue could be growing even faster without supply constraints.

00:00:15: But the risks remain.

00:00:16: of course we've got rising memory costs The big technology is growing leverage And higher global yields.

00:00:22: These factors can still limit upside potential.

00:00:25: So speaking off these yields sticky inflation around the globe is keeping central bank tightening expectations firm.

00:00:32: today.

00:00:32: as attention now turns to Kevin Warsh due maybe clarify the Federal Reserve's position regarding U.S.

00:00:42: Treasury's latest action.

00:00:44: So, welcome to Swissco's daily market talk everyone!

00:00:48: It is Thursday, the twenty-seventh of August.

00:00:51: I'm Yipega Skardesh Krayer and will be discussing about things that are critical to market pricing.

00:00:57: but before i do as always please keep in mind opinions on my own.

00:01:01: this isn't financial advice.

00:01:11: So again, we woke up to one of these days where NVIDIA's earnings couldn't be ignored.

00:01:16: Because no matter how high the expectations were into these earnings No matter how higher the whisper numbers stood, NVIDia managed all of these expectations.

00:01:28: The company printed a revenue of ninety six billion US dollars in the second quarter this year beating high score of Wall Street Expectations, profit more than double to fifty four billion US Dollars and we just said that it expects to earn one hundred eight billion US plus or minus two percent in the current quarter.

00:01:49: that came around four billion US dollars higher than what analysts expected on Wall Street and would also be.

00:01:55: The first time, the company breaches a hundred billion USD psychological mark.

00:02:01: Funny enough though these numbers alone couldn't give Envy the shares it boosts.

00:02:06: after hours trading they were trading quite flat as reaction to this earnings.

00:02:10: but what made difference was the companies CFO telling investors call that the company's revenue would grow seventy percent in the fiscal year of two thousand twenty-eight and wait.

00:02:23: The letter would be a hundred percent if they weren't facing supply constraints!

00:02:32: The concern is that the AI build-out could eventually slow, whether it's because big technology companies are over investing today to avoid falling behind their peers in this AI race.

00:02:46: Whether financing of additional spending will become costlier to finance due to fact they have already spent everything they had on their hands and shoulders for three years in AI infrastructure or whether they successfully built and replaced NVIDIAs.

00:03:05: AI build-out will continue at full speed and NVIDIA will continue to put a notable part of the spending in this pocket still.

00:03:12: Because reportedly half, yes!

00:03:14: Half of AI data center's spending ends up in GPU purchases And Nvidia has market share of around eight to ninety percent off that market.

00:03:24: So when you think that big technology is expected to spend around a trillion US dollars this year, and that NVIDIA has a gross margin of about seventy-five percent.

00:03:33: Now the back off the envelope maths points to more than three hundred billion U.S.

00:03:37: dollars in potential graphs profit for Nvidia even after operating expenses on taxes.

00:03:43: That kind of earnings power makes nvidia's valuation look surprisingly reasonable given its growth rate.

00:03:49: he's assuming nvidia maintains an margin of around sixty per cent put the stock at roughly nineteen to twenty times its future earnings at a current price.

00:03:59: And that makes an immediate stock price look quite cheap!

00:04:02: And that doesn't even take into account the three trillion US dollar off balance sheet commitments from big technology companies, according to a recent research from Morgan Stanley analysts who actually died in these company's books and came up with incredible numbers including data center leases for one point.

00:04:20: One trillion US dollars of balance sheet on purchase agreements for chips memory and networking year for an estimated one point.

00:04:26: seven trillion us dollars as well off balance sheet.

00:04:29: So adding it all up Nvidia probably has a great future and is not too expensive, but not expensive also comes with a few concerns because we have rising membership prices today.

00:04:39: that have started to become a concern for NVIDIA too as its most advanced chips are very you memory intensive.

00:04:46: though For now the company looks capable of passing the cost on We don't know how long it could manage to do so.

00:04:51: then The big technology leverage worries will continue to loom potentially rise with rising global yields Today the market today and the fact that MVD has put its weight behind many companies out there through investment, strategic partnerships or financing guarantees so these companies could continue building data centers.

00:05:14: All of those worries will not disappear overnight and the latter could cap any fresh rally that we might see in NVIDIA's stock price toward uncharted territories.

00:05:24: But at the end of today, We can only estimate that with these numbers that the company prints it is impossible for investors to turn their back on this company.

00:05:34: It is growing fast!

00:05:35: It is incredibly profitable And no not expensive.

00:05:38: So this isn't pricing in a dream like SpaceX does For example.

00:05:42: This Is Reality.

00:05:44: And elsewhere, Salesforce and CrowdStrike also reported stronger than expected earnings yesterday after the bell.

00:05:50: Salesforce jumped thirteen percent while CrowdStrike added around ten percent in day-after hours trading.

00:05:56: so now that futures lead gains this morning as Korean Cosby Index is up but it's up by less then one per cent at a time.

00:06:03: I'm talking here this morning suggesting that first half before year surrounding the memory chip makers Samsung and SK Heining mainly fully coming back, as perhaps the macro-calming leg of this story is dragging its feet.

00:06:20: So let's talk about less fun stuff.

00:06:22: Yesterday a set of US data reflecting price pressures has come stronger than expected.

00:06:26: The core PC figure for July came in steady at three point three percent on yearly basis and in line with expectations.

00:06:33: But the July headline figure and instead of second quarter figures in the U.S printed stronger then expected numbers.

00:06:40: So in summary, the US inflationary pressures didn't ease in July if anything.

00:06:44: And yesterday's numbers warned that price pressure is required for policy action!

00:06:50: The

00:06:50: U.S.'s

00:06:50: not an isolated case of course because some European central bank officials remain very much concerned and lead by heated prices in the euro area also encouraged by surprisingly robust euro area growth.

00:07:06: faced with the geopolitical uncertainties and energy crisis.

00:07:11: And elsewhere, CPI numbers from Australia came in stronger than expected earlier this week boosting rate hike expectations for the Reserve Bank of Australia at this year.

00:07:21: And pricing in swaps suggests that New Zealand could go on high interest rates as early next month.

00:07:27: while Japan is running out options today to act the latest joint intervention with the US remains short lived on yields and Japanese yen sending a very clear message to the Japanese officials.

00:07:42: The race in Japan must readjusted countries.

00:07:45: new inflationary reality Pansorizing globally, yours could cap the positive action in equity indices despite NVIDIA-backed technology enthusiasm.

00:07:57: as attention will gently turn to Kevin Warsh's Jackson Hall speech due Friday.

00:08:02: The US dollar gained field against most majors on the back of stronger than expected PC series yesterday.

00:08:08: that boosted the hawkish Federal Reserve expectations and somehow narrowed the federal reserve and other central bank policy divergence.

00:08:17: every bound on creator prices on the other hand gave a further support to the US dollar.

00:08:23: Yet for the dollar to protect its recent gains, Kevin Warsh's response to the latest intervention from the U.S.

00:08:30: Treasury Department to tame long-term yield curve should be clear and firm.

00:08:36: He must convince investors that the Fed will remain independent with aim of bringing US inflation back.

00:08:48: Manages to restore the Fed's credibility at his Jackson Hall speech, which I hope he will.

00:08:53: We could see further gains in the US dollar in this short one.

00:08:57: The longer term outlook remains negative But if not the U.S.

00:09:00: dollar bill come under fresh selling pressure even in the shorts one probably giving precious metals and other hot commodities a further boost as well.

00:09:08: So this is all for today.

00:09:10: I'm Ipeco Skardishkaya and thank you for joining me, And Thank You For All Your Beautiful And Supportive Comments!

00:09:32: Telegram and Blue Sky for regular market updates.

00:09:35: Subscribe to our YouTube channel for daily market comments, And please don't forget hit the like button on these videos To let us know that you enjoy them.

00:09:46: So I will meet again tomorrow.

00:09:48: Until then, good day trading.

00:09:58: SwissQuote assumes no responsibility for accuracy or losses from its use.

00:10:01: Products and services are offered only where legally

00:10:04: permitted.".