The Next Nvidia(s)?

Let’s find the next Nvidia through wild speculation (not financial advice) June 12, 2024 | Peel #729 Silver Banana goes to... [SRS Acquiom. ]() In this issue: - 😱 Get ready for today’s JPow Eclipse of Inflation + Interest Rates - 🍎 Apple is back above Nvidia; investors side with Elliott over Southwest - 🤖Let’s find the next Nvidia through wild speculation (not financial advice) Market Snapshot 📸 Banana Bits 🍌 - Paramount’s saga with Skydance has officially [come to an end](=) - Ignore the earnings and make your [intelligence artificial with Oracle](=) - Affirm shares ripped as firm’s payment tech gets [added to Apple Pay]( - The “refi wall” is approaching for S&P companies, [per Morgan Stanley]( Call it a career booster. The SRS Acquiom 2024 M&A Deal Terms Study is here. As always, it’s got the exclusive deal data, analysis, and insights to help you do your best work even better. This isn’t a regurgitation of publicly available information or a lengthy list of things you and your boss(es) already know. No, every data point and insight comes from private-target deals that SRS Acquiom provided M&A services on—more than 2,100 private-target deals, valued at more than $475 billion, that closed between 2018 and 2023. Not the kind of intel you’ll find elsewhere. The latest trends in valuations? Deal structures? PPAs and RWI? Earnouts, escrows, and indemnifications? It’s all here, and only here. So if you’re looking for a ticket to smarter negotiations and deal terms, and better results all around—the kind of stuff that makes your clients and bosses take notice—this is the closest you’re going to get. [So get it while it’s hot]() >> Macro Monkey Says 🐒 The JPow Eclipse Like the sun and the moon during an eclipse, every so often, the latest releases of the two most important celestial bodies of macroeconomics align on the very same day. And that day is today. A meeting and press conference held by Fed Chair Jerome Powell, including a release of the Fed’s latest economic projections, will come just hours after May’s inflation report. Let’s all pray to our economic overlord, JPow, for good tidings, and let’s get into it. What’s Happening? The FOMC will conclude its latest two-day rate-setting meeting this afternoon around 3:30 pm EST. Just 7 hours before, we’ll get the latest Consumer Price Index (CPI) report. It’s important to understand the context going into both releases to grasp how our economic overlords (the FOMC) are thinking about inflation and policy going forward. This time, it’s not all about what happens today but what it means for later this year. [Source](=) Futures markets still don’t expect any rate cuts before the FOMC’s September meeting, assigning >99% odds for no cut today and >91% odds for no rate cut in July. However, as we can see above, consensus expectations call for at least one rate cut by the end of the September meeting. Spoiler alert, but the chances of that rate cut coming today are about as likely as GameStop remaining solvent for the next 5-years. However, today, we will be blessed by our overlords with a fresh Summary of Economic Projections (SEP), the Fed’s quarterly update of short-and-long-term macro expectations. The hottest part of the report is, as usual, the dot plot. This is where JPow and his fellow FOMC participants graph out their expectations for the future path of interest rates. Here’s where we stood as of the last SEP in March: [Source]( Each dot represents one member’s expectation for the prevailing level of the Fed Funds Rate at the end of the respective period. In March, everyone was expecting 2-3 rate cuts before year-end. Now, the market’s consensus is for only 1-2 cuts, so any diversion from this expectation is sure to juice markets more than the Liver King. Now, on the inflationary side, the FOMC estimates PCE inflation, not CPI. So, it’s a little different, but to get a general sense of their vibe in March, this is where expectations sat: [Source](=) PCE was (is?) expected to sit in the upper 2% range by year-end. In case you missed it, the latest PCE report printed an annualized rate of [2.7%](=). That was in line with the previous month but 0.2% higher than both January and February’s prints of 2.5%. We get the next PCE on the 28th, but today’s CPI print should provide a decent proxy. The Takeaway? Mr. Market hates surprises more than Keith Gill hates rational investment decisions. While waiting on the edge of his seat today, Mr. Market isn’t looking for a rate cut but is also keeping his fingers crossed for a more dovish outlook. That’s unlikely given recent PCE data, but based on comments by Fed officials, slowing GDP growth, and consumer spending, the Fed might be forced to cut in order to keep growth and record unemployment alive. I’m sure for most of you reading this, May’s CPI dropped several hours ago. After you brush your teeth and eat your 1 pm breakfast, check out the latest print [here](. If we see an annualized print of 2.6% or less, there’ll be a party at The Daily Peel Global Headquarters. Champagne and losses in your portfolio are on me. What's Ripe 🤩 GameStop (GME) 📈22.8% - Has this guy’s wife left him yet? The stock might be up today, but bro eviscerated nearly $350mn of their family’s wealth in literally 4 days. - GameStop is ripping higher once again as the roller coaster of degeneracy continues, seemingly driven by another series of [memes on X](=). - I sure hope it works out for Roaring Kitty, but I’d beg this guy to take $5-$10mn off the table so his family can eat. Best of luck, future bag holders. Apple (AAPL) 📈7.3% - When analysts take the time to actually read things, their opinions start to turn around. Apple was a big benefactor of that slow comprehension. - Shares ripped as analysts decided they like the firm’s AI updates, believing new features with Siri and writing will drive new device adoption. - Yesterday’s surge brought shares to an all-time high, bringing Apple’s value back above Nvidia’s and making it all right in the world again. What's Rotten 🤮 Southwest Airlines (LUV) 📉5.6% - Not everyone likes an activist… especially the CEO and Chair they’re trying to oust. Southwest said they’re “open” to meeting Elliott. - After Elliott unveiled their $1.9bn stake and looked to go full Robespierre on CEO Robert Jordan, Southwest sought to defend its strategy. - And the market hated it. The funny thing about investing is that people like to make money, and in this case, investors are siding with Elliott. Hertz (HTZ) 📉5.6% - After picking up my neon orange Kia Soul rental from Hertz last week, I can see why shares are falling. But weirdly, this one doesn’t have to do with me. - Shares fell as ~11% of the investor base in the rental car company are suing for $188mn on the basis of a “change in control event.” - Covenants in convertibles often include a payout for the above. $3.4bn in buybacks and $2.2bn in new debt meet that criteria, per these investors. Thought Banana 🤔 The Next Nvidia(s)? The name “Nvidia” partially derives from the Latin word “invidia,” which means “envy.” That makes too much sense considering the stock’s run-up, creating more envy than Pete Davidson’s relationship history. But, the (alleged) reason Jensen Huang named the firm “Nvidia” is because the “NV” stands for “next vision.” Now, hedge funds are ditching the first part, forgetting their envy and focusing on the “next vision” for the AI wave. Let’s speculate wildly as to what names could be next. What Happened? According to Goldman’s prime brokerage desk via Bloomberg last week, “fund managers net sold US technology stocks for the third straight week.” Most of the selling was in the “semiconductor and semiconductor equipment” sectors, indicating that funds are no longer betting on chip stocks to lead the AI trade. The biggest uptick within the tech sector was found in software. Surprisingly good earnings reports from software names like Crowdstrike, Guidewire, Smartsheet, and others in prior weeks could be driving the increased buying, too. What Now? Shooting for the next Nvidia in the AI market is about as speculative as markets get, besides plain idiocy like [Archegos](=). But let’s do it anyway. If the next leg in the AI trade is software-based, markets may be looking for something with: - A large, but not incredibly enormous, market cap, - Vast repositories of unique data from diverse sources and modalities, - The capability to deploy proprietary systems that improve current offerings and - Valuable intellectual property Think names like (potentially) Salesforce, Crowdstrike, Veeva, hell maybe even Disney. Based on what analysts are looking for in AI software firms, these babies could be top choices. Oh yeah—and so I don’t get fired/arrested—as always, none of what I say is in any way meant to be construed as advice. Do not take financial advice from me or anyone else on a website whose currencies are bananas and money sh*ts. The Big Question: What are the next companies left to ride the AI wave? Are private markets the best way to play it? Banana Brain Teaser💡 Previous 📅 For each student in a certain class, a teacher adjusted the student’s test score using the formula y = 0.8x + 20, where x is the student’s original test score and y is the student’s adjusted test score. If the standard deviation of the original test scores of the students in the class was 20, what was the standard deviation of the adjusted test scores of the students in the class? Answer: 16 Today 🕐 Last year 26 members of a certain club traveled to England, 26 members traveled to France, and 32 members traveled to Italy. Last year no members of the club traveled to both England and France, 6 members traveled to both England and Italy, and 11 members traveled to both France and Italy. How many members of the club traveled to at least one of these three countries last year? Send your guesses to vyomesh@wallstreetoasis.com Wise Investor Says🤓 “The sucker has always tried to get something for nothing, and the appeal in all booms is always frankly to the gambling instinct aroused by cupidity and spurred by a pervasive prosperity. People who look for easy money invariably pay for the privilege of proving conclusively that it cannot be found on this sordid earth.” — Jesse Livermore Today's Peel? 😁[All the bananas]() 😐[Meh]() 😩[Rotten AF]() Happy Investing, David, Vyom, Jasper & Patrick [ADVERTISE](=) // [WSO ALPHA](=) // [ACADEMY]( // [COURSES]() // [LEGAL]( [Unsubscribe]( IB Oasis Corp. (aka "Wall Street Oasis") 14435 Big Basin Way PBN 444 Saratoga, California 95070 United States