Nov 19, 2024
This quarter’s “earnings season” unofficially comes to an end this week now that Walmart (WMT) has reported its numbers and NVIDIA (NVDA) is on tap to report tomorrow after the close. After NVDA, the number of earnings reports per day will slow to a trickle for the next six weeks before the next earnings season begins in early January.
As the largest company in the world, NVIDIA’s quarterly earnings release is now inspiring watch parties at bars in New York City! Needless to say, investors are on edge from both a micro and macro perspective about NVDA’s report tomorrow. NVDA is THE company driving the AI Boom, so any hints of caution or a slowdown will likely not be taken kindly by the market.
As shown in the chart from our website below, NVDA is heading into its report tomorrow down only slightly from all-time highs that were hit last week.
Our Earnings Explorer tool on our website lets users see historical sales trends for individual stocks like NVDA along with how sales came in compared to estimates each quarter. The chart for quarterly NVDA sales is one of the more remarkable ones you’ll ever see. Check out the absolute explosion in sales for NVDA beginning in 2023 (top chart) along with the massive beats versus expectations (lower chart). (You can find these charts for the stocks you follow most closely with a Bespoke Institutional membership.)
NVIDIA (NVDA) shares are up nearly 1,000% since the end of October 2022 just before ChatGPT was released.
Revenue growth has been astronomical for NVDA over the last couple of years, but with a market cap of more than $3.5 trillion and expected full-year sales of $127 billion in 2025, the company trades with an estimated 2025 price-to-sales ratio of 27.9x. That is not cheap!
And while revenue growth is expected to jump more than 100% YoY in 2025, estimates drop to 49% in 2026, 19.5% in 2027, ~18% in 2029 and 2029, and then 10% in 2030 and 2031.
Based on NVIDIA’s current market cap, below is a look at its forward price-to-sales multiple going out to 2031 based on estimates. At NVDA’s current valuation, it’s trading at 18.8x 2026 sales, 15.7x 2027 sales, and even 9.2x 2031 sales.
It’s undeniable: NVDA has a lot to live up to in the coming years.
Getting back to the here and now, investors and traders are focused on how NVDA will react in the immediate aftermath of its earnings report tomorrow night.
Bespoke Institutional subscribers have access to a treasure trove of historical earnings data that shows how stocks have typically traded in reaction to past reports. Below is a snapshot of NVDA’s historical earnings data pulled directly from our website. What you’ll notice with NVDA is just how often it reports an earnings triple play by beating EPS estimates, beating sales estimates, and raising guidance. Typically, an earnings triple play results in an upside share-price reaction, but as we saw last quarter with NVDA when a triple play becomes the norm, sometimes it’s not enough. Back in August following NVDA’s seventh earnings triple play in a row, the stock ended up falling more than 6% on the day.
Looking ahead to tomorrow, it’s hard to envision NVDA shares performing well if it doesn’t manage to report yet another triple play.
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Nov 15, 2024
To read our weekly Bespoke Report newsletter and access everything else Bespoke’s research platform offers, start a two-week trial to Bespoke Premium. In this week’s report, we focus on the rotation in stocks under the hood of this week’s post-election equity market rally. We also review earnings season results, economic activity in China, US economic data, market sentiment indicators, and much more in this week’s report.
Nov 8, 2024
The S&P 500 came into this week having its best Election Year through October since 1936, and the gains have only continued with SPY currently up another 4.7% week-to-date. Below is a helpful look at the performance of various asset classes this week using our “Key ETF Matrix,” which also includes year-to-date and bull market total returns.
The Nasdaq 100 (QQQ) slightly outperformed SPY this week, but it’s the small-cap Russell 2,000 (IWM) that’s done the best of the major index ETFs with a gain of 8.22%. Small-caps outperformed mid-caps this week, which themselves outperformed large-caps. Generally speaking, growth outperformed value, although small-cap value (IJS) is doing much better than large-cap growth.
Looking at sectors, Financials, Energy, and Industrials were the best-performing sectors on the day after the election, but Consumer Discretionary (XLY) is now the best-performing sector of the week with a gain of 7.44%. Consumer Discretionary has Tesla (TSLA) to thank for its big gain since the stock was up 30% this week and has re-joined the “Trillion Dollar Market Cap” club. On the flip side, the two most defensive sectors — Consumer Staples (XLP) and Utilities (XLU) — have seen the smallest bounce of the major sectors with gains of roughly 1%.
International stock market ETFs traded on US exchanges did not participate in the post-election rally. The MSCI All-World ex-US ETF (CWI) was only up 16 basis points on the week as of Friday afternoon, and European country ETFs like France (EWQ), Germany (EWG), Italy (EWI), and Spain (EWP) were all down more than 1%. Commodity ETFs didn’t do much either, with the broad commodity ETF (DBC) up just 0.6% and both gold (GLD) and silver (SLV) solidly red.
The outperformance of US equities relative to the rest of the world has pushed Bloomberg’s index showing US market cap as a share of world market cap to its highest level this century at 49.5%. You can see this week’s bounce in US market share in the chart below:
With markets up so much this week, things have quickly gotten extended. As shown below in the snapshot of key index ETFs from our Trend Analyzer tool, all of them are currently trading more than two standard deviations above their 50-day moving averages, which we call “extreme overbought” territory.
As of mid-day Friday, the average Russell 3,000 stock was up 6.7% on the week. Roughly 30% of stocks in the index were up more than 10% on the week, 177 stocks were up more than 20%, and 15 stocks surged more than 50%. Below is a look at the 15 stocks up 50%+ on the week.
Most of the stocks up 50%+ shown above are small-caps, so below is a look at the 25 best-performing stocks this week with market caps of more than $10 billion:
Given Elon Musk’s very vocal campaign to help President Trump win re-election, it should come as no surprise that Tesla (TSLA) reacted positively to Trump’s victory. Back in late April, TSLA was down more than 40% year-to-date, but it has now rallied more than 120% off its lows and is up 28% YTD. As shown below, TSLA shares are up 30% since Tuesday’s close before that night’s election results.
Tesla’s move this week allows it to re-join the “Trillion Dollar Market Cap” club along with Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Meta (META), Microsoft (MSFT), and NVIDIA (NVDA). Berkshire Hathaway (BRK/B) also joined that club Friday with a market cap right at the trillion-dollar mark. As shown below, early 2022 was the last time TSLA had a $1+ trillion market cap.
Another insane move this week has been in a little-known closed-end fund called the Destiny Tech 100 (DXYZ). DXYZ has surged 170% since Tuesday’s close, which puts it 465% above its net asset value (NAV)! Why, you may ask? Well, DXYZ owns stakes in private companies, the biggest of those being SpaceX. On Destiny’s website, it shows SpaceX making up just over 37% of the fund. We recommend reading this Morningstar article to learn more about DXYZ. This is NOT something to mess around with unless you have extensive knowledge about closed-end funds and how they work. We are simply highlighting its move as an example of some of the craziness that has gone on in markets since Election Day.
In addition to Tesla (TSLA) and DXYZ, the two main private prison stocks — Geo Group (GEO) and Corecivic (CXW) — have also seen huge buying since Tuesday, with GEO up 67% and CXW up 64%. These two companies make their money housing prisoners and illegal aliens for local, state, and federal agencies. With crime, immigration, and the border on top of President-elect Trump’s to-do list, investors are betting that GEO and CXW stand to benefit.
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