Making sense of this crazy world
Nvidia is on the march again
After significant weakness recently, Nvidia shares jumped by 7% on Wednesday and 8.7% on Thursday after a brief dip. Their earnings surpassed market expectations with the company predicting 70% sales growth for 2028. The consensus from analysts was 45%.
The results have inspired more confidence across the sector but those who are fearful of how this will eventually unfold are warning about what happens when the costs of using AI slumps and companies are left high and dry with their excessive spend.
Don’t hold your breath, but this week, the oil price has fallen by circa 7% as progress is apparently being made regarding increasing oil supplies through the Strait of Hormuz.
Trade wars are making the headlines again as Canadian Prime Minister, Mark Carney, imposed retaliatory tariffs on a range of US exports. It’s reported that Trump has signed an executive order to rename Lake Ontario as “Lake America”!
If you’ve been keeping up with economic news this last couple of weeks, there has been increasing airtime given to concerns over high government bond yields and why we, as investors, should be worried. The amount of interest paid by governments on their debt is undoubtedly eye watering, but perhaps investors shouldn’t be overly concerned as we may just be operating in a totally new paradigm according to the Global Chief Investment Strategist at BlackRock.
Kevin Warsh, the Fed Chair, is to deliver his first major speech later today. Investors want to know the path for US interest rates as, until now, he’s been reluctant to give guidance to markets.
I’m testing your resolve today by diving a bit deeper into the equity/bond conundrum, so I will need your attention. It’ll be worth it because it will give much needed perspective to what’s going on.
This week’s content:
- Nvidia knocks it out of the park
- What happens when there is a collision?
- Canada retaliates
- Why do bond yields matter for markets?
- What’s causing the angst?
- Perhaps we are just in a new paradigm
- Outlook for investors
- Conclusion
Nvidia knocks it out of the park
Nvidia, the chipmaker central to the AI boom, delivered a very positive outlook. The company stated that it could grow even faster if it had access to more supply.
Below are some details courtesy of Bloomberg:
- Sales surged. It sees revenue in the current period at $108 billion. Compared with a year ago, that’s close to double.
- Hyperscalers spend big. The data centre division beat estimates, with firms like Alphabet and Amazon accounting for much of those sales.
- Margins will narrow. Nvidia warned that margins would shrink slightly in the coming months as it copes with a surge in memory costs.
Continues…
Want to get this in your inbox?
Our CEO, Gary Neild, writes engaging Market Commentaries every week. If you would like to receive the full version straight to your inbox every Friday, please join our communications list.
Risk warning
Please Note: This communication should not be read as giving specific advice regarding your personal circumstances. This would only be given following detailed assessment of your individual needs. The value of investments may fall as well as rise; you may get back less than invested. Past performance is not necessarily a guide to future returns.