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💸 Too late for $NVDA?
👜 $COIN is collateral damage as SEC sues Binance
🕶️🍏 Gotta get that $3,500 headset
Unfolding trends.
It’s time. Pocket Finsights is your go to source for public companies embracing AI. Let’s get that AI cheddar 💰.
👑 The King - First up, the King of AI - $NVDA (NVIDIA). NVIDIA reported earnings on May 24th . Although this was 2 weeks ago, earnings were such a shocker that we had to start here.
Product - NVIDIA makes GPU chips. GPU stands for graphics processing unit. It’s what you need to play video games on your computer or on your Nintendo Switch. 🎮
Playing to Their Strengths - GPUs also have a less obvious use case – they make it possible to power AI software and applications. This is because GPU chips can do many simple tasks at an average speed, but all at the same time. CPU (central processing unit) chips, on the other hand, can only do a few tasks at once, but they do them very fast. AI processes run exceptionally well on GPUs as AI requires thousands or even millions of simple calculations to be done quickly. Hence, NVIDIA’s GPU chips = the backbone of Generative AI. 💪
Advantage Runs Deep - Generative AI is another buzzy term, so let’s break it down. Imagine you have a friend who is really good at drawing. You show them a picture of a cat, and they quickly understand what a cat looks like. Now, even without looking at a picture, they can draw you a completely new cat that doesn't exist but still looks like a real cat. That's because they've learned the general characteristics of a cat - whiskers, tail, ears, and so on. Generative AI works in a similar way. It's a type of AI that can learn from a bunch of examples and then create new examples on its own. if you show it a thousand pictures of cats, it can generate a new picture of a cat that it has never seen before. This is pretty cool because it's not just copying or mixing the examples you gave it; it's actually creating something new.
The Numbers - In this past quarter, NVIDIA grew revenue by a staggering 19% sequentially (compared to last quarter) with exceptional gross margins at 65% and operating margins at 30%. EPS came in at $1.09 compared to Wall Street estimates of only $0.92.
🤯 But the most exceptional part of this earnings report was their Q2 revenue guidance of $11.0 billion, an insane 53% higher than Wall Street expectations of only $7.2 billion. To put this in context – NVIDIA’s revenues are expected to be 4x higher than just 4 years ago! So much for a lockdown beneficiary.
NVIDIA’s no newbie when it comes to tackling massive opportunities. And now with the swagger of reaching trillion dollar market cap status, it’s eying and hunting down its next $1 trillion opportunity – enterprise-grade AI solutions for almost every industry around the world. 😎
The Finsight 🐂 📈: the ChatGPT moment is upon us, and NVIDIA is king. NVIDIA remains the best way to play AI.
Big movers for the day.
Coinbase, the Victim
🏦 Unlicensed Exchange? What’s that? Coinbase, $COIN, is -9% today. Why? Because the SEC just sued Binance, the world’s biggest crypto exchange for running an unlicensed exchange. Imagine a local flea market where people buy and sell goods. Now imagine if that flea market had no rules, no management, and anyone could sell anything, even stolen or counterfeit items. That would be chaotic and potentially illegal, right? A securities exchange is kind of like a market, but for stocks and other financial products instead of physical goods. The "license" to run such an exchange is like the rules and management for the flea market. It ensures that everything is done fairly, legally, and transparently. So, running an unlicensed securities exchange is like running a wild, rule-free flea market for stocks. It's illegal because it can lead to all kinds of problems, like fraud, manipulation, or unfair trading practices. 💀🧪
Rumblings of FTX. Now, Binance isn’t quite FTX (at least not yet…), but crypto exchanges are notorious for their bad behavior. In descending order, we need to ask if 1) they are stealing customer money, 2) if they are laundering terrorist money, and 3) when the SEC will sue for being an unlicensed securities change.
The problem with $COIN? They are also running an unlicensed securities exchange by allowing customers to trade cryptocurrencies like Cardano and Solana. Oops!
The Finsight 🐻 📉: tread with caution. The SEC is on a rampage against crypto companies, and we fear that $COIN is next. Funds are not feeling SAFU.
Apple, the Visionary
Apple Branded Ski Googles / Apple ($AAPL) is the talk of the day. The company just announced a new product that will be for sale next year – the Apple Vision Pro. Apple expects the world to pay $3,499 for… ski googles?! While we get the hype, it is still really, really, (did we say really) early. This may be a case of “if we build it, they will come,” but for now, there are no practical use cases for the Vision Pro. The stock is saying by being largely unchanged on the day at -0.8%.
AirPods bigger than Goldman Sachs? While there will be no impact on revenue or earnings from this product, we can’t help but dream. Apple’s Wearables, Home, and Accessories segment (which is largely made up of AirPods and the Apple Watch) did a whopping $41 billion in sales last year! That’s almost as much revenue as all of Goldman Sachs!
The Finsight 🐂 📈: Apple is as steady as she goes.
Chatter on the Street.
Historically...we've always seen, when there's a recession, whether it was '99 or '00 or '09 -- '08, '09, '10, we would see -- some sales penetration shift from beef to poultry and pork. We have seen some of that now.
The Finsight 🐻 📉: $COST (Costco) signaling weak consumer spending. Tread carefully in consumer discretionary stocks.
The bear cave is a bear cave. They can stay in their bear cave. We're a profitable software company. Those are interesting critiques of us and we have the best products in the market and that's why they're profitable and we will win.
The Finsight 🐻 📉: When there’s smoke there’s usually fire. Be careful around $PLTR.
Mortgage rates hitting a 7-month high & limited listings are sidelining homebuyers, but many are ready to pounce when rates decline & more homes hit the market. The silver lining of low inventory is that it’s propping up prices for the sellers who do list their homes
The Finsight 🐂 📈: there’s even less housing inventory out there. Home builders like $DHI (DR Horton), $LEN (Lennar), and $PHM (Pulte) may be able to capitalize.
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Fin-specto Revelio!