Quick Read
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Nvidia (NVDA) beat earnings expectations and provided strong guidance with shares rising nearly 5% after hours.
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Nvidia’s Blackwell chip demand remains off the charts as the company drives continued AI adoption.
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Loop Capital analyst maintains a $350 price target for Nvidia following the strong quarterly results.
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Just when many investors thought that the AI trade as we knew it would go up in a poof of smoke, Jensen Huang’s GPU empire, Nvidia (NASDAQ:NVDA), posted a quarterly earnings result that was a lot better than expected. Undoubtedly, the AI chip giant didn’t just serve up a good number; it offered some very strong guidance that was enough to move the needle higher on the stock during Wednesday’s after-hours session of trade (shares are up just shy of 5% after the big beat and raise). In a climate where not even incredible numbers will nudge shares of a widely-followed tech play higher, I think Nvidia’s quarter really was worth a round of applause.
Not only did Nvidia’s big third quarter help its own shareholders breathe a huge sigh of relief amid rising AI anxiety and a big short bet made by none other than the great Dr. Michael Burry, who made a fortune shorting the housing market ahead of the housing meltdown of 2008, but the numbers may very well have saved the AI trade from even more pain.
Nvidia hit a grand slam home run in Q3. Is that it for the AI pullback?
Undoubtedly, the Nasdaq 100 has now been hit with a nasty pullback that dragged the index more than 6% from its recent peak. And while it’s too soon to tell how Nvidia’s numbers will affect its AI-heavy Magnificent Seven peers, I do think that the AI trade will be back on the table after a very brief upset that I’m sure had some investors prematurely hitting the sell button on weakness. Did Nvidia single-handedly save the AI names, potentially setting up the stage for a strong year-end finish, with AI in the driver’s seat? It’s definitely possible.
Combined with a slew of interesting new AI startups popping up, like Project Prometheus headed by Jeff Bezos or even the new unnamed venture led by Abidur Chowdhury, the man behind the Apple (NASDAQ:AAPL) iPhone Air, who has since departed the Cupertino giant, and I think all the ingredients are there for a relief bounce in markets driven by the hardest of hit AI names. Undoubtedly, it was uneasy times for a while, but thanks to Nvidia, the AI trade seems to be alive and well.
And perhaps that confirmation will grant Nvidia’s Mag Seven rivals and the hard-hit semi plays permission to move higher from here. As to whether Dr. Burry will end up covering his put options on Nvidia remains the big question. If Nvidia’s solid results pave the way for even more strength in the coming weeks, perhaps Dr. Burry’s short bet would prove, once again, far too early.
Here comes that “golden wave” of AI adoption. Could Nvidia stock be gearing up for another leg higher?
In a prior piece, I highlighted the potential for Nvidia’s next-generation chips to spark a “golden wave” of AI adoption (a call made by the exceptional Loop Capital analyst Ananda Baruah) that would potentially push Nvidia stock to make a move towards $350 per share (a price target held by Baruah). Ultimately, such a move, I thought, made Burry’s bet a risky one that increased the odds of being forced to cover at a loss.
While I wouldn’t underestimate Burry’s ability to take pain amid what appears to be an Nvidia post-earnings reinvigoration of the AI trade, I do think that following the man into a bearish bet is still an incredibly risky proposition. Sure, you’ll side with a genius in Burry by mirroring such a bet, but, at the same time, you’d also be going against many other geniuses, including Nvidia’s Jensen Huang, who seems to have a better batting average since the AI boom first began close to three years ago.
In any case, I view Nvidia as a great bet after some strong quarterly numbers that may very well have single-handedly saved the AI and tech trade. And if you didn’t buy the recent dip, the bottom may very well have come and gone.
With soaring profits and Blackwell demand that’s still “off the charts,” perhaps standing by the name despite the intense pressure is the right call rather than trading in and out based on emotions. After such a robust result, I do think the path to $350 per share has been solidified.
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