Nvidia - "Revenue +100% YoY"; Market - "SELL EVERYTHING"
We check in on what just happened and what may happen next.
If It Was Easy, Anyone Could Do It
Wednesday after the close, one of the most important companies on the planet printed an earnings beat so savage that you now have folks bandying around price targets north of $1500 for a stock that civilians declared insanely overpriced at $450. Nvidia said in May that it would bring in a vertigo-inducing $11bn of revenue in its July quarter, but in practice delivered a direct-to-Moon-orbit ascent of $13.5bn. That's a 100% growth rate from the same quarter last year. They also said that next quarter they will deliver $16bn revenue, which would be 170% growth on the same quarter a year ago. As we noted in our Nvidia Earnings Review note yesterday, this kind of spending by enterprise customers is a clear signal of a tech capex cycle spinning up, which is likely to benefit the whole tech sector, and with it the tech-heavy Nasdaq and S&P500 stock indices.
So what happened Thursday?
Tech earnings moonage? Well, the Nasdaq dumped, of course! The S&P followed suit and the Russell 2000 and Dow both joined in later in the day for a collective miseryfest. If ever there was a lesson to watch price first and fundamentals second, yesterday was that lesson.
All is not lost however. If you look at the index behavior yesterday, they just retraced prior moves up. Nothing about yesterday is yet a tell of a market selloff, just a retracement of the move up from Friday's spike lows. For our Premium and Pro members here at Cestrian Market Insight, let’s take a look at where markets stand.