TOP STORY
🚀 Nvidia Jumps 7% After Earnings, CEO Calls it the “Next Industrial Revolution”

😰 Investors held their breath yesterday as Nvidia reported earnings…

The recent AI boom has been a massive driver for the entire market, and Nvidia, who provides the GPUs, aka the ‘shovels to the gold rush’ for every big tech player, is a strong signal of whether the good times will continue or if trouble is ahead…

📈 Well, with the stock price up 7% this morning, you can probably guess it was good news!

Whether you hold Nvidia or not, their success/failure is basically driving all of tech right now, so let’s unpack the earnings and what it means for the broader market…

🏭 Nvidia CEO Calls it “The Next Industrial Revolution”

Nvidia’s CEO Jensen Huang hit us with some BOLD claims yesterday, signaling no signs of Nvidia slowing down anytime soon:

• 🏭 “The next industrial revolution has begun”

• 🌎 “Companies and Countries are partnering with NVIDIA to produce a new commodity, artificial intelligence”

• 🚀 “We are poised for our next wave of growth”

But did he have the numbers to back it up?

📊 Nvidia Revenue Up 262% Year over Year

Analysts were already quite optimistic about Nvidia, but it’s earnings surpassed even their expectations:

✅ Revenue: $26 Billion

• Up 18% from last quarter

• Up 262% from last year

• 5.6% higher than analyst expectations

• 87% of revenue is now coming from AI-driven ‘Data Center’ revenue (only 60% of revenue a year ago)

✅ Earnings per share: $6.12

• Up 19% from last quarter

• Up 461% from last year

• 9.5% higher than analyst expectations

As we know, earnings are only one piece of the puzzle, and a company’s future outlook is a HUGE driver of investor reactions.

On that front, Nvidia projected Q2 revenue of $28.0 billion, plus or minus 2%. While this ~8% projected growth is a slowdown from the 18% growth this quarter, it demonstrates that Nvidia believes the massive jump in the last few quarters is here to stay.

🚀 Is There Still Room to Grow?

With Nvidia stock up 2,212% in the past 5 years, a big question for Nvidia is if there is still room to grow.

Nvidia seems to think so and focused on two key growth drivers in the earning announcement:

🤖 AI Expanding to More Industries

• While cloud service providers like Amazon, Microsoft, and Google continue to drive strong growth (making up 40% of Data Center revenue), Huang pointed out that generative AI has expanded to consumer, enterprise, sovereign AI, automotive, and healthcare customers, creating multiple multibillion-dollar vertical markets.

👷‍♀️ New Product Development and R&D

• Nvidia’s new Blackwell Platform, announced in March 2024, is set to replace the highly successful ‘Hopper.’ Nvidia claims Blackwell can build and run trillion-parameter large language models at up to 25x less cost and energy consumption than Hopper.

🫧 Bubble or Not a Bubble, That is The Question…

🤑 So, with all these impressive growth numbers, should we all just dump every dollar we own into Nvidia and watch it take us to the moon?

Well, no - let’s quickly talk about the risks. Analysts and pundits have been calling Nvidia (and AI in general) a ‘bubble’ for over a year now, drawing parallels to Cisco during the dot-com bubble.

And just because Nvidia has continued to surge doesn’t mean they’re wrong. For 5 years during the dot-com bubble, Cisco surged 6000% from ~$2 per share to ~$80 per share before plummeting down all the way back to $9.5. Since then, Cisco has never surpassed its all-time highs in the past 24 years.

But there’s a key number in that dot-com analogy: 6 years

Even if you believed the dot-com was a bubble during the run-up, it’s very difficult to know when (or if) that bubble will pop, and at the end of the day, the dot-com companies like Alphabet, Meta, Microsoft, and Amazon did go on to generate massive returns over the past 25 years and ultimately re-shape the world.

👀 Stock price has gone up, but Nvidia has actually gotten ‘cheaper’

The most notable difference between Nvidia and Cisco is at its peak, Cisco traded at 200x price to earnings, and Nvidia is currently trading at 50-60x (based on a trailing 12 months to include this quarter).

Nvidia’s price-earnings ratio did hit over 200x from May to August 2023, but with the massive earnings growth in the previous few quarters, it’s fallen significantly, meaning the stock is technically ‘cheaper’ than it was a year ago based on this metric (despite the stock price rising 200%).

All and all, a LOT to unpack, but whether you think Nvidia is a buy/sell will ultimately depend on if (or how long) the AI hype will continue.

🌼 Can’t wait to read your thoughts on Blossom!!

PRESENTED BY PURPOSE INVESTMENTS
💵 Looking to invest in Nvidia while earning monthly distributions?

🤖 Driven by the essential role they play in AI advancements, the tech market is pivoting towards semiconductors – a reversal of previous trends that’s now shining a spotlight on hardware. And Nvidia is at the forefront. Case in point: CEO Jensen Huan's recent keynote at GTC 2024 about semiconductors drew a crowd comparable to a T-Swift concert.

💵 As Nvidia continues its meteoric rise, there is a new and exciting way for investors to gain exposure while receiving monthly yield: Nvidia (NVDA) Yield Shares Purpose ETF ($YNVD). $YNVD offers exposure to the underlying stock with a covered call strategy and moderate leverage to earn monthly yield, providing investors with a unique blend of growth and income.

💡 Nvidia Yield Shares are designed to provide investors with:

• 💸 Monthly yield

• 📈 Exposure to Nvidia’s long-term growth potential

• 🇨🇦 An investment in a US company hedged back to the Canadian dollar

Yield Shares by Purpose are more than just investment products; they’re a distinct asset class of investments, uniquely positioned to help you achieve your personal financial goals.

Interested in a monthly tech sector update? Sign up for the Yield Shares newsletter here.

_{*See Purpose Investments Disclaimer at the end of the newsletter.}

ANNOUNCEMENT
🌼 Blossom Investor Socials! Coming to a city near you 😎

🥳 BIG NEWS! Blossom is going back on tour!!

🔥 Last year, we hosted in-person Investor Socials, and they were a MASSIVE hit! Over 1,000 of you came out for an evening of hanging with other passionate investors, eating yummy food and drinks, and learning from a panel of the largest investing content creators in North America!

🚀 This year, we’re doing them even bigger and better, and you won’t want to miss out. Grab your ticket in your city below before we sell out!

• 🍁 Toronto - June 26

• 🗽 New York - June 30

• 🎨 Montreal - July 2

• 🤠 Calgary - July 15

• 🏔️ Vancouver - July 18

We can’t wait to see you there!! 😊

FROM THE COMMUNITY
🎙️ Top Discussions on Blossom

👇 Click to see the full post!