Sell shovels

A preview of NVDA’s massive Q2 earnings report

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AUGUST 28, 2024       Editor’s Note: I’m so excited that ProsperityPub is welcoming David Trainer, SumZero’s number one ranked stock picker in North America, to the team. If you haven’t seen his latest stock picks, you need to catch them here! Hey y’all, Can you ever remember an earnings report that felt like it had more weight around it than Nvidia’s report after the markets close this afternoon?  Seriously, it feels like their report today could not only send shockwaves through their share price… the AI boom… the entire tech sector… It could even have a ripple effect for the whole U.S. Economy and the upcoming election!  This tweet from yesterday pretty much sums it up…   Now, we can debate about whether that’s a good thing or a bad thing, but we’ve already done that a bit in the last few days. What I think is important to remember is how strong NVDA is as a company. Because it would be easy to think that NVDA is just some fad company, a glorified meme stock, one that really isn’t worthy of all this attention. But that’s actually incredibly misguided. The fact is that NVDA is not only one of the most popular stocks on earth right now, but it’s also one of the best companies. And I think we can see that through three simple images:    This is at the heart of what makes NVDA so successful.  You don’t know the name of anyone who went to California in the mid-19th century to hunt for gold. But you do know the name of Levi Strauss, the entrepreneur who set up a wholesale dry goods business, invented a better kind of denim pant and overall, and built a company that still trades on Wall Street today (LEVI). NVDA gets labeled an AI company. But they’re really not. They’re a “shovel” company. More specifically, they make the critical tools (microchips) necessary for the companies that want to revolutionize AI (Google, Microsoft, META, etc.) to do their work. And what’s great about that is, that means NVDA makes a killing whether or not the AI revolution takes over, or even if it takes over eventually, but takes a lot longer than we think. And that’s what has led to incredible revenue growth like this for NVDA…   NVDA’s revenue has surged exponentially in recent years, and Wall Street is currently projecting $28 billion in revenue in Q2 alone. Most analysts are projecting NVDA to beat that astronomical number, too. The real question seems to be: by how much?  NVDA’s fundamental growth as a healthy company that generates cash flow means that it is a healthier company every month, every quarter. It’s also what makes this chart, one of the craziest charts I’ve ever seen, possible:    That graph represents NVDA’s price-to-earnings (PE) ratio measured against its exponential growth in stock value.  PE is a measure of how overvalued a company is. Essentially, if a company’s stock price overheats to a point its fundamentals cannot sustain, the PE ratio will skyrocket, which is a warning sign to investors. Think back to the COVID bubble, when companies like Zoom and DOCU had astronomical PE ratios in the triple-digits. Bad news. You would think that even though NVDA is a healthy company, the explosive stock growth it's seen over the last 18 months would dictate that its PE ratio has inflated somewhat, right?  Wrong. NVDA’s PE ratio is falling almost as fast as the stock price is rising. And that means that from a fundamental perspective, NVDA is actually a better investment now than it would have been at the start of this stock surge. So, while it might seem crazy for one company to have this kind of outsized influence over the stock market, if any company makes sense for that designation, it’s NVDA. We’re in the midst of a pretty historic stock run. And tonight’s earnings call is just the latest chapter in that story. For those that are interested, Lance, Graham, and Nate will be trading the close together LIVE at 3pm and it’s FREE to join. I’ll be there watching for sure. If you wanna sign up, just go here:  https://LanceIppolito.com/tradetheclose To your prosperity, Stephen

AUGUST 28, 2024 Editor’s Note: I’m so excited that ProsperityPub is welcoming David Trainer, SumZero’s number one ranked stock picker in North America, to the team. If you haven’t seen his latest stock picks, you need to catch them here!   Hey y’all,   Can you ever remember an earnings report that felt like it had more weight around it than Nvidia’s report after the markets close this afternoon?    Seriously, it feels like their report today could not only send shockwaves through their share price… the AI boom… the entire tech sector…   It could even have a ripple effect for the whole U.S. Economy and the upcoming election!    This tweet from yesterday pretty much sums it up…   Now, we can debate about whether that’s a good thing or a bad thing, but we’ve already done that a bit in the last few days.   What I think is important to remember is how strong NVDA is as a company.   Because it would be easy to think that NVDA is just some fad company, a glorified meme stock, one that really isn’t worthy of all this attention.   But that’s actually incredibly misguided. The fact is that NVDA is not only one of the most popular stocks on earth right now, but it’s also one of the best companies. And I think we can see that through three simple images:    This is at the heart of what makes NVDA so successful.    You don’t know the name of anyone who went to California in the mid-19th century to hunt for gold. But you do know the name of Levi Strauss, the entrepreneur who set up a wholesale dry goods business, invented a better kind of denim pant and overall, and built a company that still trades on Wall Street today (LEVI).   NVDA gets labeled an AI company. But they’re really not. They’re a “shovel” company. More specifically, they make the critical tools (microchips) necessary for the companies that want to revolutionize AI (Google, Microsoft, META, etc.) to do their work.   And what’s great about that is, that means NVDA makes a killing whether or not the AI revolution takes over, or even if it takes over eventually, but takes a lot longer than we think.   And that’s what has led to incredible revenue growth like this for NVDA…   NVDA’s revenue has surged exponentially in recent years, and Wall Street is currently projecting $28 billion in revenue in Q2 alone.   Most analysts are projecting NVDA to beat that astronomical number, too. The real question seems to be: by how much?    NVDA’s fundamental growth as a healthy company that generates cash flow means that it is a healthier company every month, every quarter.   It’s also what makes this chart, one of the craziest charts I’ve ever seen, possible:    That graph represents NVDA’s price-to-earnings (PE) ratio measured against its exponential growth in stock value.    PE is a measure of how overvalued a company is. Essentially, if a company’s stock price overheats to a point its fundamentals cannot sustain, the PE ratio will skyrocket, which is a warning sign to investors.   Think back to the COVID bubble, when companies like Zoom and DOCU had astronomical PE ratios in the triple-digits. Bad news.   You would think that even though NVDA is a healthy company, the explosive stock growth it's seen over the last 18 months would dictate that its PE ratio has inflated somewhat, right?    Wrong.   NVDA’s PE ratio is falling almost as fast as the stock price is rising.   And that means that from a fundamental perspective, NVDA is actually a better investment now than it would have been at the start of this stock surge.   So, while it might seem crazy for one company to have this kind of outsized influence over the stock market, if any company makes sense for that designation, it’s NVDA.   We’re in the midst of a pretty historic stock run.   And tonight’s earnings call is just the latest chapter in that story.   For those that are interested, Lance, Graham, and Nate will be trading the close together LIVE at 3pm and it’s FREE to join. I’ll be there watching for sure. If you wanna sign up, just go here:    https://LanceIppolito.com/tradetheclose   To your prosperity,   Stephen

ABOUT US:  We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. Prosperity Pub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from Prosperity Pub are for your informational purposes only. Neither Prosperity Pub nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. Prosperity Pub is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions.  Please visit https://prosperitypub.com/terms-conditions/ for our full Terms and Conditions. Unsubscribe This email was sent to edwardlorilla1986.paxforex@blogger.com by Prosperity Pub 101 Marketside Ave, Suite 404 PMB 318, Ponte Vedra, Florida 32081, United States Prosperity Pub

ABOUT US:  We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. Prosperity Pub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from Prosperity Pub are for your informational purposes only. Neither Prosperity Pub nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. Prosperity Pub is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions.  Please visit https://prosperitypub.com/terms-conditions/ for our full Terms and Conditions.   Unsubscribe This email was sent to edwardlorilla1986.paxforex@blogger.com by Prosperity Pub 101 Marketside Ave, Suite 404 PMB 318, Ponte Vedra, Florida 32081, United States Prosperity Pub