Nvidia's Killer Earnings 💰

🤖 Nvidia has killed it and continues to kill it, but will they keep killing it? February 22, 2024 | Peel #652 Silver Banana goes to... [CapLinked. ](=) In this issue of the Peel: - 🤓 Any linguists interested in learning a new language called Fedspeak? - 💉 Teladoc's shareholders need doctors more than their patients... - 🤖 Nvidia has killed it and continues to kill it, but will they keep killing it? Market Snapshot 📸 = Banana Bits 🍌 - Nvidia shares are up over 9% after hours on [these wild stats](=) - Food is eating more of our income than it has for a [long time](=) - It could be government shutdown or bust for [House Speaker Johnson](=) - Architecture billings have been moving lower, a [bad sign for CRE]( Get Free VIP Tickets to Coachella Thanks to Caplinked. = Imagine this: it's weekend 2 of Coachella. You're rolling hard and crushing claws, dancing in the VIP area next to main stage. Beside you is the IG model you've been obsessed with for years. How did life get so good? You stop to think back to freezing cold February. You were sitting at your desk, miserable, when you saw the ad from Caplinked. But everything changed when you clicked [this link](=). Open an Enterprise VDR plan by February 29th, and Caplinked will send you to Coachella with a VIP ticket. It's a win-win! Get the industry-leading data room and the experience of a lifetime. Start planning your outfits now. We'll take care of everything else! [Request a Quote & Claim Your Tickets Now!](=) Macro Monkey Says 🐒 Wait A Minute The group chat’s been leaked. Calm down—I don’t mean you and your friends. The Federal Reserve, America’s Central Bank, has leaked the deets on their most personal thoughts, wishes, and dreams about a thing we all hold so dearly—the U.S. economy. The Fed Minutes, a document released weeks following each FOMC meeting detailing their insights on monetary policy, just dropped. Reading is boring, so we went ahead and poured through the entire document so you don’t have to. Now, let’s see what’s going on. Learning A New Language Federal Reserve officials took George Orwell’s idea of “doublespeak” and ran with it, creating their own language called “Fedspeak.” In case you’re unfamiliar, we got a free and in-depth lesson in the language this month. Rates and the balance sheet were hot topics of conversation. So, as a reminder, this is where we currently stand: The above chart depicts the fastest monetary policy tightening cycle of all time. We don’t need to dive into ancient history all the way back in 2022 and 2023, but everyone who can spell “Wall Street” is now just wondering when that chart will reverse. According to the minutes, rates won’t begin to head lower until FOMC members have “greater confidence” that inflation was systematically “retreating.” “Greater confidence” is a perfect example of this scarcely spoken language of Fedspeak. I’d love to translate, but I don’t even think JPow really knows what he means. [Source]( Now, the other key aspect of monetary policy is, of course, the Federal Reserve’s balance sheet. The Fed uses the balance sheet to regulate long-term interest rates and manage liquidity, for the most part. When the “size,” or amount of assets, on the balance sheet increases, liquidity rises, and longer-term rates move lower. As the above chart tells us, the FOMC has been reducing the balance sheet by $95bn/month since early 2022. A brief uptick in the wake of the SVB crises occurred, but for the most part, the Fed’s been shedding assets like my dog’s hair this winter. What’s New? Now that we’re all on the same page, two questions plague Fed Watchers more than any others, including: - When will the Fed begin loosening monetary policy through rate cuts, reductions in balance sheet runoff, or a combination of the two, and - What will it take for the Fed to begin making those moves? Neither one of those questions was answered in these Fed minutes, but using Fedspeak, they did pretend like they were shedding some light on this subject. Notably, FOMC participants agreed that “recent indicators suggested that economic activity had been expanding at a solid pace.” While ideal, this does not bode well for those waiting on a rate cut for their portfolio to get back in the green. Still, the greatest challenge is assessing the degree to which the “risks of moving too quickly” are present. Like we always say, JPow considers himself a modern-day Paul Volcker and is, as such, terrified of easing conditions too quickly. We’ll keep using this chart until we’re as blue in the face as the lines on it are. So, we didn’t really learn a whole lot of new info from these minutes. That’s no surprise—generally, JPow likes to spit game on the juicy details during the post-game, I mean, post-FOMC press conference. The Takeaway? Even when the Fed says nothing, they’re saying something. By not making any changes, we can assume the FOMC still has just as little of any idea of what’s going on as they did last meeting. That means, if anything, there’s basically no chance of a rate cut in March. We could see a slowdown in the balance sheet runoff, and we’d be surprised if the Fed cuts rates before loosening the runoff. All eyes are now on the May and, more so, the June meeting for rate cuts to enter the conversation at the adult table. But the March meeting will also give us an update on the Fed’s Summary Economic Projections, a key indicator in assessing how the Fed feels about markets, financial conditions, and the macroeconomy going forward. March is also the month many say comes “in like a lion, out like a lamb.” We sure hope that holds true when it comes to the monetary policy picture. What's Ripe 🤩 Garmin (GRMN) 📈8.8% - Every dad-without-a-dad-bod’s favorite company is killing it after a solid earnings report. The wearables and outdoor activity maker is riding the high of this new “touching grass” trend. - EPS of $1.72/sh beat the $1.40/sh expected, and revenue guidance of $5.75bn for 2024 beat estimates. $400mn in quarterly free cash flow wasn’t bad either. - Of Garmin’s 5 business segments, 3 reported record sales numbers in 2023. There wasn’t much more investors could ask for. We’ll see if this momentum can continue. CRISPR Therapeutics (CRSP) 📈4.7% - If shocking Wall Street was an Olympic event, CRISPR just won the gold. Estimates were for a $0.40/sh loss, but the firm delivered a helluva beat. - The gene editing firm reported EPS of $1.10/sh, destroying estimates, while sales of $201mn beat by over 45%. But other reports were even more hype. - Casgevy, a potential “blockbuster” therapy,” hasn’t made any sales yet but is approved in over 5 global markets. The anticipation has never been higher. What's Rotten 🤮 Palo Alto Networks (PANW) 📉28.4% - The only thing worse than Palo Alto’s stock price is crime rates in the city and the rest of the Bay area. Only thing is—residents actually want the latter to fall. - But when your revenue warning is this bad, what else can we expect? Sales grew 19%, and EPS jumped 39% last quarter, but don’t think that’ll last. - CEO Nikesh Arora announced a strategy shift where Palo Alto will pursue land grab strategies of giving out free sh*t to get more clients in their ecosystem. - As a result, guidance was slashed, and EPS is expected to be flat in 2024. But Cramer said it was [time to buy](… so we all know what that means. Teladoc (TDOC) 📉23.7% - For the first time, shareholders need a doctor more than patients do at this company. Teladoc shares fell off a cliff, and we’re sure that the injuries are high. - This pandemic darling, down 95% from its all-time high, flatlined on a revenue miss and weak guidance. Losses came in slightly less than expected too. - Analysts wanted sales guidance in the ~$675mn range for Q1, but Teladoc is shooting for $630—$645mn. No one misses C-19 more than these guys. Thought Banana 🤔 Earnings Spotlight: The King (NVDA) One word—Wow. The bar was set higher than Snoop Dogg and Wiz Khalifa at Rolling Loud, but Nvidia showed with an army of Seth Rogens and managed to beat every expectation. The Numbers Yesterday afternoon, Nvidia reported their quarterly results for Q4 and the full year 2024 —because they’re always a year ahead. Immediately, the results blew Wall Street away to such a degree we thought there would be a gaping hole in Manhattan as a result. [Source]( Here are the highlights. Nvidia reported… - Record quarterly revenue of $22.1bn vs estimates for $20.3bn, up 265% YoY - Record data center revenue in Q4 of $18.4bn, up 27% QoQ and 409% YoY - Record annual revenue of $60.9bn, up 126% YoY - Quarterly GAAP EPS of $4.93/sh, up 33% QoQ and 765% YoY - Full-year GAAP EPS of $11.93, up 586% YoY Go ahead and change your pants now. If you’re like me, you already need a new one. [Source]( We thought the ~50% revenue growth in 2022 and 2023 would be enough, but little did we know Nvidia was just warming up. Absolutely ridiculous, but now that we know the numbers, let’s translate. What Does This Mean? Nvidia is now the 3rd largest company on planet Earth, behind only Microsoft and Apple and just ahead of Saudi Aramco. This egregious growth has largely carried them there, but now the age-old Wall Street questions come into play: - What’s priced in? - How far can this run? Both questions are related, and they’re equally impossible to answer. Operating cash flow ballooned as well, with quarterly OCF growing 411% vs 2023 and the annual line item bursting 397% as well. This has helped Nvidia grow its cash pile just under 2x from the same period last year. So, anyone expecting the firm to run out of steam is sorely mistaken because now Nvidia has the cash to invest—in itself or in the next itself—they’ve got plenty of chances to do so. Overall, the takeaway here is that Nvidia continues to live up to its sky-high expectations. Whether or not that means it’s time for you to buy the stock depends on your portfolio and life in general, so please stop asking me. Just cross your fingers and hope for the best like the rest of us. Other semi-stocks seemed to get a little bit of the reward as well, ticking slightly higher in the after-hours to ride the wave. We’ll say it again—Wow. Now, go get as high as Nvidia’s share price, especially if you’re a shareholder. 💭 The Big Question 💭: What’s next for Nvidia? Is this the last quarter of egregious growth? If not, what will drive the continuation going forward? Banana Brain Teaser 💡 Yesterday 🗓 On a certain transatlantic crossing, 20 percent of a ship’s passengers held round-trip tickets and also took their cars aboard the ship. If 60 percent of the passengers with round-trip tickets did not take their cars aboard the ship, what percent of the ship’s passengers held round-trip tickets? Answer: 50% Today 🕐 A certain university will select 1 of 7 candidates eligible to fill a position in the mathematics department and 2 of the 10 candidates eligible to fill 2 identical positions in the computer science department. If none of the candidates is eligible for a position in both departments, how many different sets of 3 candidates are there to fill the 3 positions? Send your guesses to vyomesh@wallstreetoasis.com Wise Investor Says 🤓 "Smart people focus on the right things" — Jensen Huang How Would You Rate 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") 20705 Saint Charles St Saratoga, California 95070 United States (617) 337-3353