[Altos Weekly Traders Edge] Nvidia and AI...Details Inside

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This area has been a major growth driver for Nvidia, fueled by strong demand for AI technologies. Investors will also be looking at Nvidia’s efforts to diversify its revenue through software and services, which could provide more stable, long-term income. - Gross Margin Trends: Another critical aspect is gross margin trends. With the rollout of the new Blackwell GPUs, priced higher than previous models, Nvidia’s ability to maintain its historically high margins will be crucial. Balancing pricing power with competitive pressures will directly impact profitability. - Forward Guidance and Order Backlog: Nvidia’s forward guidance and order backlog will offer insights into the sustainability of current AI-driven demand. As AI continues to be a significant growth driver, Nvidia’s projections for the upcoming quarters will help investors assess its future trajectory. - Expansion into New Markets: Beyond its core markets, Nvidia's progress in emerging areas like autonomous vehicles and edge computing will indicate its capacity to expand and reduce dependency on traditional revenue sources. Success in these initiatives will demonstrate Nvidia's ability to tap into new markets and broaden its influence. Challenges on the Horizon: - Valuation Concerns and Growth Sustainability: Nvidia's shares have been trading at high multiples, reflecting optimism about its future. However, maintaining these growth rates is uncertain, particularly as the initial AI infrastructure boom begins to slow. If AI demand tapers off, Nvidia could struggle to sustain its explosive growth. - Intensifying Competition: While Nvidia leads the AI market, competitors like AMD and custom AI chipmakers are closing in. AMD’s acquisition of ZT Systems enhances its AI capabilities, challenging Nvidia in the data center market. Emerging competitors could erode Nvidia’s market share, forcing it to innovate faster. - Geopolitical and Supply Chain Risks: Ongoing U.S.-China tensions pose significant risks. Potential export restrictions on advanced semiconductor technologies could limit Nvidia’s access to critical Chinese markets, a major revenue source. Supply chain disruptions could lead to delays and increased costs, impacting Nvidia’s operations. Strategic Responses: - Accelerated Innovation: To counter these challenges, Nvidia is accelerating its innovation cycle, aiming for faster product releases. - Market Expansion and Diversification: The company is also expanding into emerging markets like India and Vietnam and shifting towards a software-driven business model to create more stable cash flows. Additionally, Nvidia is diversifying its supply chain to ensure operational continuity amid geopolitical uncertainties. Nvidia's ability to navigate these challenges while continuing to innovate will be crucial for sustaining its leadership in the AI industry. The company’s future growth will depend on effectively addressing these obstacles and capitalizing on new opportunities. - The Team at Altos Trading In the next article, as the Federal Reserve hints at a potential rate cut following the Jackson Hole symposium, investors must closely monitor key economic indicators and market trends to navigate the potential impacts on equities and broader indices. Sponsor Jack just unlocked his “profit-sharing” portfolio Jack Carter just did the unthinkable. He revealed his entire “Profit Sharing” portfolio to traders globally! With skyrocketing costs, even hard workers are struggling. Jack’s revealing his picks to help you get ahead. [Free Access to Jack’s Portfolio!]( Join the free broadcast now and learn Jack’s 3 golden rules for picking dividend stocks. Don’t miss out! 3 Crucial Post-Jackson Hole Charts to Monitor as the Fed Prepares for a Potential Rate Cut Focus on Economic Data Amid Rate Cut Anticipation The recent Jackson Hole symposium signaled a potential rate cut by the Federal Reserve. As the market anticipates this change, several factors are under scrutiny. Upcoming US economic data, particularly ISM manufacturing and services PMIs, and labor market indicators will be key. These will reveal if the Fed's actions are timely or lagging, with implications for equities and the broader market. Employment and Growth Data in the Spotlight Jackson Hole highlighted growing downside risks to employment, even as inflation risks ease. This focuses attention on economic indicators like nonfarm payrolls, unemployment rates, and retail sales. Weakness in these areas could signal an economic downturn. If indicators worsen significantly, the Fed might need more aggressive rate cuts to counter a possible recession. Such a scenario could negatively impact major US stock indices, including the S&P 500 and Nasdaq 100. The possibility of synchronized global stock market losses, like those seen in late July and early August, cannot be ruled out. Closely monitoring these economic indicators is vital to understanding the Fed's future moves and their market impact. S&P 500's Historical Performance After Rate Cuts Historically, the S&P 500's performance after the Fed's first rate cut during a recession has been poor. Data since 1957 shows negative average returns over three, six, and twelve-month periods following the first cut. The worst performances occurred during the Fed pivots of October 1969, January 2001, and September 2007. This historical context serves as a cautionary tale for investors who might be overly optimistic about a rate cut's immediate positive effects. The data suggests a potential initial negative market reaction, particularly if economic conditions are already deteriorating. Value Stocks and Yield Curve Movements The current US Treasury yield curve dynamics are noteworthy. A potential bull steepening is observed, with the 2-year yield dropping faster than the 10-year yield. If this steepening continues, it could indicate that the market is pricing in a soft landing for the economy, assuming no significant negative surprises in upcoming data. This scenario could favor value-oriented stocks and lagging indices like the Dow Jones Industrial Average and Russell 2000. These sectors have underperformed compared to mega-cap technology stocks and the Nasdaq 100. A rotation into these laggards could extend the long-term bullish trend in place since March 2009. However, this shift depends on the Fed successfully transitioning to a more neutral monetary policy stance without triggering further economic distress. Investors should monitor yield curve movements and the performance of value stocks, as these will be key indicators of how the market interprets the Fed's actions. Sponsor [New Customers earn 5.25% APY* (variable)]( Store your money with Cash Reserve, a high-yield account built for peace of mind. New customers earn 5.25% variable APY*—that’s 13x higher than the national savings rate. ** Plus, your money’s FDIC-insured up to $2M†at our program banks and no limits on withdrawals and transfers. **The national average savings account interest rate is reported by the FDIC (as of 5/15/23) as the average annual percentage yield (APY) for savings accounts with deposits under $100,000. [Sign Up Now!]( Disclaimer: The Altos Trading Alert Newsletter is published as an information service for subscribers, and it includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of the Altos Trading Alert Newsletter are not brokers or investment advisers, and do not provide investment advice or recommendations directed to any particular subscriber or in view of the particular circumstances of any particular person. Altos Trading, including its owner, does not participate in any trades issued through the alert services. Subscribers to Altos Trading or any other persons who buy, sell or hold securities should do so with caution and consult with a broker or investment adviser before doing so. Trading securities and options involves risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade securities and options, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Performance figures are based on actual recommendations. Due to the time critical nature of trading, brokerage fees, and the activity of other subscribers, there is no guarantee that subscribers will mirror the performance of the service. Performance numbers shown are based on trades subscribers could enter based on the trade alerts. Altos Trading, LLC assumes no responsibility for any losses incurred by any individual or entity as a result of trade alerts or strategies taught through courses or coaching services. 7154 W State Street Suite 169 Boise Idaho 83714 USA Disclaimer: The Altos Trading Alert Newsletter is published as an information service for subscribers, and it includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of the Altos Trading Alert Newsletter are not brokers or investment advisers, and do not provide investment advice or recommendations directed to any particular subscriber or in view of the particular circumstances of any particular person. Altos Trading, including its owner, does not participate in any trades issued through the alert services. Subscribers to Altos Trading or any other persons who buy, sell or hold securities should do so with caution and consult with a broker or investment adviser before doing so. Trading securities and options involves risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade securities and options, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Performance figures are based on actual recommendations. Due to the time critical nature of trading, brokerage fees, and the activity of other subscribers, there is no guarantee that subscribers will mirror the performance of the service. Performance numbers shown are based on trades subscribers could enter based on the trade alerts. Altos Trading, LLC assumes no responsibility for any losses incurred by any individual or entity as a result of trade alerts or strategies taught through courses or coaching services. 7154 W State Street Suite 169 Boise Idaho 83714 USA [Unsubscribe]( | [Change Subscriber Options](