Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Nvidia Corp.’s (NVDA-Q) profit report exceeded expectations enough for Citi analyst Atif Malik to put a 90-day upside catalyst watch,
“NVDA reported ‘beat and raise’ results with Oct-Q sales of $35B above expectations of $34B and Jan-Q guide of $37.5B in-line with expectations. Management hit on three key investor topics going into the call a) Blackwell [new updated GPU product] ramp is in full steam and sales are tracking higher than prior several billion sales in the Jan-Q; b) GM% [gross margin] will trough in the Apr-Q and get back to mid-70’s in F2H; c) AI scaling pre-training, post training and inference time scaling will continue to drive higher compute demand. Networking demand was down qq we believe due to optics supply but will grow in Jan-Q. Net-net, we lift our FY25/26/27 EPS 5%/4%/6%, increase TP to $175 on consistent 35x P/E, and open a positive catalyst watch into CES [consumer electronics show] Jan where we expect Blackwell sales expectations to move higher and management to talk about the inference led enterprise and robotics industrial demand inflection. Maintain Buy”
I argued that Nvidia’s earnings report was the last big obvious market risk before year end on Monday.
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BMO senior economist Sal Guatieri announces “Trump Trade Triumphant”,
“Two weeks after the U.S. elections, and the so-called ‘Trump trade’ is still a theme, even after large pre-election gains, despite some recent pullback in enthusiasm. The inflationary thrust from tax cuts, tariff hikes, and deportations has 10-year Treasury yields up 13 bps since November 5, while the tariff threat and fading Fed rate cuts are driving the U.S. dollar higher, up 1% against the Canadian dollar, 2% versus the Chinese yuan, about 3% against the yen and sterling, and nearly 4% against the euro (though surprisingly making little headway against the Mexican peso). Equity investors continue to price in more good than bad prospects from Trump’s agenda, with the S&P 500 up almost 2%. WTI oil prices are down 5% on possible increased domestic production. Curiously, despite the tariff threat to its economy, Canada’s 10-year bond yields are up as much as those in the U.S., though partly due to Tuesday’s CPI setback. The limping loonie isn’t helping”
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Citi analyst Vikram Bagri is looking for more hints on renewable power support, but he believes the new U.S. government might support nuclear power,
“A Republican trifecta has raised the stakes for renewables. However, pockets of support for cleantech among lawmakers should result in pushback to changes in IRA incentives. Thin margins in the House could further impede rollback. As we detail in this note, nuclear and solar have received positive support from Republicans, in addition to a broad preference for lowest cost energy including oil & gas. Nuclear support appears to have strengthened with Oklo board member Chris Wright nominated to be the Energy Secretary. We are watching for a reconciliation bill within the first 100 days of Trump’s second term for color on any proposed changes to the IRA and for size of fiscal deficit which has a second order impact via higher rates”
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Diversion: “Another Forbes 30 Under 30 CEO Is Indicted for Fraud” – Gizmodo
Newsletter: “Why I’m starting to care about top hedge fund holdings. Plus, three TSX stocks that could benefit from U.S. tariffs” - Report on Business