As it turns out, monks don’t always levitate, and Nvidia (NVDA) shares don’t always go straight up. With that in mind, the company posted impressive numbers, strong guidance, and announced a $50.0 billion share buyback.

Still A Juggernaut

Despite the initial negative reaction, NVDA's performance is still commendable. The company has exceeded expectations regarding revenue and profit and announced a significant share buyback. 

NVDA's revenue has grown impressively by 122% from a year ago, reaching $30.0 billion. This remarkable growth is a testament to the company's strong financial performance.

Tough Crowd

The reaction probably won't surprise you initially —that stock got slammed. Down more than 8%, the only thing that might explain some of the selling is that the size of the beats is getting smaller. Coming into the report, the size of beats (surprises) declined sequentially in each of the last three quarters.

The April quarter beat was 9.8%, and last night's beat was only 3.1% above the consensus. Admittedly, this is one of my pet peeves, and it is something we consider in stock acquisition and management in the model portfolio.

In the case of NVDA, I've overlooked it because of the sheer magnitude of the company. 

The stock is very influential, so it will weigh on trading. By the same token, it’s the best name to hopefully turn it around and lead the parade once all the weaker hands have bailed.

Furthermore, there is a growing desire to mitigate exposure to “Mag Seven” and other mega-cap growers, which was part of the reason for yesterday’s selling.

Be cool and perhaps take the rest of the week off. 

We got your back.

Today’s Session

With all the attention on NVDA, many other earnings results and reactions exist.  Most are not household names.

But there were doozies including Dollar General (DG).

I think this is a two-part story.

Middle and lower-income families are hurting to a degree that economists don’t see or care to acknowledge.

The company’s mismanagement is also clear. Thinking the stimulus wave of cash would go on forever, it began selling higher-priced non-staples.

But make no mistake, it’s a proxy for the economy.

The stock will open down more than 20%.

Comments

I really do not like the business model of DG. Every store in this area is dirty including the parking lots, not well stocked, unorganized, and has poor customer service. But I don't blame the employees. The are all run with limited staff who are expected to simultaneously stock shelves and ring up customers. Their business model is this - we don't care how bad our stores are as long as people come in and pay a reasonable price for what we do actually have in stock. Ken Terry on 8/29/2024 11:12:49 AM

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