AMD

A New Computing Era Has Begun — Nvidia Delivers Yet Again

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By Brian Nelson, CFA When we first wrote that Nvidia (NVDA) would power this market higher back in May, the firm had just put up one of the most prolific earnings beats I had ever seen. I’d have to go back almost 20 years to the invention of Apple’s iPod click-wheel technology to remember something that came close. Well, on August 23, Nvidia just put up another monster quarter, this one the second of its fiscal year 2024, beating top-line and bottom-line consensus estimates by a huge margin for the period ending July 30. We’ve raised our fair value estimate of Nvidia considerably following the blockbuster second-quarter performance and third-quarter outlook, released today, and the race is on to adopt … Read more

Latest Report Updates Concentrated in Mining & Chemicals and Healthcare Industries

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———- In our 16-page equity research reports, we offer a fair value estimate for each company based on a rigorous and transparent discounted cash flow process, assess the attractiveness of a stock based on a firm-specific margin of safety, and provide a relative valuation comparison in the context of the company’s industry and peers. Each report includes detailed pro forma financial statements, explicit fundamental forecasts, and scenario analysis. A cross section of the ValueCreation and ValueRisk ratings provides a financial assessment of a company’s business quality (competitive position), while the ValueTrend and Economic Castle ratings offer insight into the trajectory of a firm’s economic profit creation (ROIC versus WACC). Included in each 16-page report is a company’s rating on the Valuentum Buying Index (VBI), a methodology that combines rigorous financial and valuation analysis … Read more

Nvidia Rockets Higher to Propel Large Cap Growth

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Image: Nvidia powers higher after releasing better-than-expected second-quarter fiscal 2024 guidance. The company continues to be a driver behind the outperformance of large cap growth as a stylistic area. By Brian Nelson, CFA We haven’t seen a quarterly guidance beat like this since Synaptics (SYNA) put up a monster quarter when Apple (AAPL) started using its innovative click-wheel technology in the first-generation iPod, almost 20 years ago. Nvidia Corp.’s (NVDA) outlook for the second quarter of its fiscal 2024 was phenomenal thanks to tremendous interest in its chips that power artificial intelligence [AI]. We expect a material increase in our fair value estimate of Nvidia, but shares remain quite pricey, in our view. Revenue during Nvidia’s fiscal second quarter is … Read more

Call Me Unconcerned

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Image: Large cap growth has dominated returns the past five years. The Best Ideas Newsletter portfolio continues to have significant exposure to this area. By Brian Nelson, CFA When it comes to the financial markets, the debt ceiling debate is nothing to worry about. Countries (sovereigns) cannot generally default on debt that is denominated in their own currency. The concern that there will be any sort of calamity if the U.S. government doesn’t raise the debt ceiling is far overblown, in our view. The political will of the U.S. to pay its debt will only resolve itself in time, and any risk premium built into Treasuries as a result of the debt ceiling showdown will be fleeting. Of course, nobody … Read more

Nice! — NASDAQ-100 Follows Through on Breakout

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Image: NASDAQ-100 breaks through August 2022 resistance. NOW READ: There Are No Free ‘Income’ Lunches ———- It’s Here!  The Second Edition of Value Trap! Order today!   —– Tickerized for holdings in the QQQ. Brian Nelson owns shares in SPY, SCHG, QQQ, DIA, VOT, BITO, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, and RSP. Some of the securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.         Valuentum members have access to our 16-page stock reports, Valuentum Buying Index ratings, Dividend Cushion ratios, fair value estimates and ranges, dividend reports and … Read more

Not Worried About Global PC Demand Weakness

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Image Source: IDC By Brian Nelson, CFA On April 9, International Data Corporation (IDC) issued preliminary findings for the first quarter of 2023 for global personal computer (PC) shipments in its Worldwide Quarterly Personal Computing Device Tracker. The results were a bit surprising, with the firm noting that “weak demand, excess inventory, and a worsening macroeconomic climate were all contributing factors for the precipitous drop in shipments of traditional PCs during the first quarter of 2023.” According to the IDC report, global PC shipments fell 29% to 56.9 million compared to the first quarter of 2022. Apple (AAPL) experienced the biggest year-over-year percentage decline, where shipments fell more than 40%. Dell Technologies (DELL), Lenovo (LNVGY) (LNVGF) and ASUS experienced declines … Read more

U.S. Economy Likely Weakened During Regional Bank Crisis; Artificial Intelligence the Next Great Platform

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  Image Source: Trong Khiem Nguyen By Brian Nelson, CFA Broader markets in the U.S. continue to be concerned about the impact of the Fed’s rapidly-rising contractionary monetary policy on the banking sector. A number of regional banks have already failed, with SVB Financial’s (SIVB) demise bringing into light concerns over the solvency of many other regional banks in the U.S., if their books of business are marked-to-market for both available-for-sale (AFS) and held-to-maturity (HTM) securities. The Fed raised rates so quickly that many regional banks may have been caught taking on too much interest rate risk. Liquidity across the regional banking sector, however, seems to have improved thanks to Fed actions, and deposit flight from regional banks seems to … Read more

Follow Up on Intel’s Dividend Cut: We Will Strive to Do a Better Job Communicating

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The Dividend Cushion ratio is one of the most powerful financial tools an income or dividend growth investor can use in conjunction with qualitative dividend analysis. The ratio is one-of-a-kind in that it is both free-cash-flow based and forward looking. Since its creation in 2012, the Dividend Cushion ratio has forewarned readers of approximately 50 dividend cuts. We estimate its efficacy at ~90%. By Brian Nelson, CFA As noted in our brief note on Intel this morning, “Intel Cuts Dividend, As Expected,” we have now refreshed the company’s reports on the website, with updated Dividend Safety and Dividend Growth Potential ratings, both as VERY POOR. After factoring in Intel’s updated outlook to our valuation model from its fourth-quarter release, our … Read more

Intel Cuts Dividend, As Expected

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  Image Source: Aaron Fulkerson By Brian Nelson, CFA The Dividend Cushion ratio caught another dividend cut. This time it was Intel’s (INTC). With a Dividend Cushion ratio of 0.4, Intel announced February 22 that it has slashed its dividend by nearly two thirds, to $0.125 on a quarterly basis, down from its prior quarterly dividend of $0.365. The company’s estimated forward yield now stands at ~1.9%, and we can’t say that the dividend cut was unexpected given its massive net debt position and significantly weakened free cash flow generation–the two most important components behind an assessment of its cash-based intrinsic value and dividend health. Intel’s fourth-quarter results and outlook for 2023, released January 26, were atrocious. Here’s what we … Read more

Meta’s Free Cash Flow Generation Has Returned, But TikTok Has Permanently Changed the Competitive Landscape

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Image: Meta Platforms’ free cash flow has bounced back a bit, but the firm’s top-line growth remains challenged as it transitions away from a secular growth powerhouse into a cyclical story with encroaching competition. Image Source: Meta Platforms By Brian Nelson, CFA As we outlined in our introductory note in the February edition of the Dividend Growth Newsletter (pdf), the Federal Reserve is slowing its pace of benchmark rate increases as signs of inflation start to slow. Though there may still be pockets of input cost pressures, particularly with respect to prices at the pump and food-at-home expenses, for the most part, the negative wealth effect from falling asset prices around the globe is successfully working itself through the system. … Read more