“We stand on the threshold of a brave new world.”
Stephen Hawking made this comment in 2017 at the Web Summit, one of the biggest tech events in the world. He had been invited to speak by Feedzai, an artificial intelligence (AI) company that specializes in fraud prevention.
He continued in his opening keynote address:
We need to take learning beyond a theoretical discussion of how AI should be, and take action to make sure we plan for how it can be. You all have the potential to push the boundaries of what is accepted, or expected, and to think big… It is an exciting, if precarious, place to be and you are the pioneers.
In the six years since Hawking marveled – and warned – about the future of AI, many pioneers have indeed begun pushing boundaries. OpenAI’s ChatGPT passed the bar and medical school exams; Tesla, Inc.’s (TSLA) Autopilot AI team is working toward fully self-driving cars; Amazon.com, Inc.’s (AMZN) Alexa can turn a light on from across the room.
AI has become integrated into, and even integral to, our daily lives. So as these pioneering companies continue to create AI advancements, I’ve been closely watching which companies lead the charge.
That’s why, in today’s Market 360, I want to focus on NVIDIA Corporation (NVDA).
NVIDIA has long been a favorite stock of mine, and it’s a strong AI bet right now. So, it’s no surprise that all eyes were on the chip leader as it released its fourth-quarter earnings for fiscal year 2023 on Wednesday afternoon.
Remember that NVIDIA makes high-end graphics processing units (GPUs), used in products like gaming consoles and personal computers, and that chipmakers are vital to AI inventions. So, NVIDIA is a major player in the artificial intelligence arena.
The company is currently partnered with Microsoft Corporation (MSFT) in a shared quest to create “one of the most powerful AI computers in the world.” And this week, they teamed up once again.
On Tuesday, the companies announced a 10-year agreement to bring Xbox PC games – created and owned by Microsoft – to NVIDIA’s cloud gaming service, GeForce NOW.
Microsoft Gaming CEO Phil Spencer said, “This partnership will help grow NVIDIA’s catalog of titles to include games like Call of Duty, while giving developers more ways to offer streaming games.” With the agreement, gamers will be able to stream Xbox PC titles from GeForce NOW to PCs, smartphones, smart TVs, and other devices.
NVIDIA is also helping Mercedes to emerge as the autonomous driving leader due to its Level 3 system via NVIDIA chips. The Mercedes system also uses LIDAR (Light Detection and Ranging), so companies that make LIDAR sensors have also firmed up. Mercedes and NVIDIA are leading the race to develop the safest autonomous driving system. I should add that other auto manufacturers are also using NVIDIA’s AI chip and systems, so its automotive business remains very promising.
My point is that NVIDIA’s GPUs are in high demand and becoming increasingly more so as the AI competition continues on. In a call to investors, NVIDIA CEO Jensen Huang said that AI is at an “inflection point,” as competitors race to develop AI and machine learning software. And NVIDIA is the graphic chips leader.
He continued, “There’s no question that whatever our views are of this year as we enter the year has been fairly dramatically changed as a result of the last 60-90 days.”
So with that, let’s see how the company fared in its fourth quarter…
NVIDIA reported earnings of $0.88 per share on $6.05 billion in revenue, which compared to earnings of $1.32 per share and revenue of $7.64 billion in the fourth quarter of 2022. However, the analyst community only expected fourth-quarter earnings of $0.81 per share and revenue of $6.01 billion.
For its fiscal year 2023, earnings came in at $3.34 per share and revenue was $26.97 billion. These results also bested estimates for full-year earnings of $3.27 per share and revenue of $26.92 billion. The company noted that it also returned $10.44 billion to shareholders in its fiscal year 2023.
Before Wednesday’s earnings report, the stock was up about 45% for 2023. Following the earnings, NVDA surged more than 14% on Thursday and is now up about 60% for the year.
I should add that NVIDIA’s fundamentals have also advanced this year.
NVIDIA had been stuck at a D-rating, or “Sell,” in my Portfolio Grader in November and December. Then, the company was upgraded to a C-rating, or “Hold,” in January. This is because NVDA’s Quantitative Grade rose.
The Quantitative Grade, which accounts for about 70% of a stock’s Total Grade, measures a company’s institutional buying pressure. You can think of this as “following the money.” The more money that floods into a stock, the more momentum a stock has to rise. The opposite is also true; the more money that flees a stock, the more momentum a stock has to fall. Given the revised C-rating for NVDA’s Quantitative Grade, it’s clear that institutional investor interest in the stock has been growing.
The fact is that companies that provide positive earnings, sales and future guidance are set to prosper. These are the companies I consider fundamentally superior. To help find these stocks, I created a new income research project designed to pinpoint investment opportunities that could generate incredible amounts of income, over and over again. I shared all the details about this exciting new project during my $50k Cash Comeback event last Thursday. If you missed it, you can click here to watch the replay now.
Sincerely,
Louis Navellier
P.S. My income research project flagged an exciting new tanker stock that boasts strong fundamentals. It is one of the largest tanker companies in the world, and it is expected to report triple-digit earnings and sales growth in its fourth-quarter earnings report next Tuesday. I expect a strong earnings report to dropkick and drive the stock higher, so now is the time to jump on this stock before it starts firing on all cylinders.
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
NVIDIA Corporation (NVDA) Amazon.com, Inc. (AMZN), and Microsoft Corporation (MSFT)
