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- ⚾ Why Nvidia's Blowout Earnings Set Up the Next AI Boom
⚾ Why Nvidia's Blowout Earnings Set Up the Next AI Boom
Plus, watch these big insider moves, and more
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Happy Thursday! Nvidia's blowout earnings and CEO Jensen Huang's remarks signal that the next wave of AI will demand exponentially greater computing power, fueling an industry-wide arms race. Here’s how Nvidia is setting the stage for a new AI boom — and what it means for investors. Also, corporate insiders are making waves in these diverse industries.
—Josh Enomoto
Plus, if you’re looking for an innovative opportunity in the pharmaceutical space, check out today’s sponsor!
MARKET RECAP
Yesterday: Stocks edged higher Wednesday, with the S&P 500 and Nasdaq posting modest gains as defensive sectors led the market. Bond yields ticked lower following mixed housing data, while investors weighed international inflation surprises and their potential impact on global markets. Attention now shifts to upcoming economic reports and Fed signals to gauge the policy outlook.
On Our Radar: After digesting this morning’s initial jobless claims and durable goods orders, analysts will next turn to pending home sales. On the earnings front, resort and entertainment players like Hilton Grand Vacations and PENN Entertainment will disclose their results.
TOP STORY
Nvidia’s record-breaking earnings highlight the surging demand for AI infrastructure, with next-gen models requiring unprecedented levels of computing power.
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FIVE ZINGERS
Auto Rally: Toyota released production figures that rose by about 6% in January, the first year-on-year increase in 12 months. Discover the details that showcase potential consumer preferences.
Day After: Paramount Global expects its namesake streaming service to slow in Q1 2025 as the Super Bowl euphoria fades. Still, learn why management is cautiously optimistic about the current fiscal year.
Battle Lines: Crypto exchange Gemini's co-founder Cameron Winklevoss stated that the SEC concluded its investigation into the platform. Read why this could be a "milestone" event.
Flying High: Insurance company Root posted its Q4 results, disclosing revenue of $326.7 million that far exceeded estimates. Here's how data science helped deliver an impressive performance.
Fire Wall: While several homes were devastated during LA's Pacific Palisades Fire, some abodes resisted the danger. Get the inside details on how to better protect yourself.
SPECIAL OFFER
Editor’s Note: Last week, Tim Melvin released Alpha Buying, a report detailing the insider buying that, unlike most, is actually worth paying attention to. Here’s a sneak peek at the report:
Taking a look at insider buying this week, we see that insiders are just as cautious and uncertain as the rest of us. The insider buy-sell ratio has moved to levels that are typically bearish, meaning that many more insiders are selling than buying.
Now, that is not necessarily a disaster. Insiders sell stock for all sorts of reasons—estate planning, buying a house, funding a dream wedding or an Ivy League education, or, in some cases, a dream divorce.
But there is only one reason an insider buys: they think their stock is going to move a lot higher.
Right now, the lack of insider buying suggests they are not feeling overly confident about the market's long-term upside. And let's be honest, the broader market indicators aren't giving us any warm fuzzies either. Market cap to GDP, the Buffett Indicator, is sitting at historic highs. The overall allocation to equities among pensions, individuals, and institutions is near peak levels, a setup that historically leads to anemic returns over the next decade.
The excess CAPE yield, which compares corporate cash flows to Treasury yields, is flashing warning signs with a spread that screams, “proceed with caution.”
A lost decade is not out of the question. That does not mean an outright crash, though. It could take many forms: a brutal meltdown and a slow recovery, a melt-up followed by a grinding pullback, or just a long, ugly period of sideways action. The market has been running hot since 2009, and it has weathered a few hiccups—2018 and COVID—but each time, the Fed stepped in and bailed everyone out. That kind of intervention cannot last forever.
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