The most important stock
If history is any guide, there will be some big moves after the bell today. Nvidia (NVDA) is scheduled to report Q2 results, with options markets already showing outsized activity before the numbers reveal the latest inning of the AI revolution. The stock has moved an average of about 8% after earnings over the past 12 quarters, and should that happen again this afternoon, it would result in a market cap move of around $250B, which is bigger than many U.S. companies.
Off the charts: Q2 EPS and revenues are expected to come in at $0.64 (+138%) and $28.7B (+113%), respectively, doubling from the levels seen only a year ago. It’s even more impressive with margins in the mid-70% range despite pressure from recent capacity expansions. Most importantly, investors are going to want to hear more impressive guidance, along with the product roadmap that it will take to achieve those figures. Keep an eye on commentary surrounding the next-generation Blackwell chip (refuting reported delays?), as well as current Hopper sales, especially the newer H200 GPU.
Demand is likely intact through 2025, with many companies warning of greater risks of underinvestment in AI (rather than overspending), but there could also be pressure given sky-high expectations. Nvidia shares are up a whopping 159% in 2024, accounting for around a quarter of the S&P 500’s YTD return of 18%. This means a lot is riding on the results of this one company, which is the symbol of the AI story, the Mag7 story, the overall market story, and even the U.S. growth story.
SA commentary: “So far, so good with the signals we see from TSMC and SMCI’s most recent earnings reports. Foxconn commentary helps as well,” writes Investing Group Leader Beth Kindig. “Blackwell is on its way, the GB200s are going to crush expectations in FY2026, we are getting the green light from suppliers the delay is immaterial at this time, demand/big tech capex remains high, and let’s be real, nothing can stop what’s coming.”
Taking jobs?
Swedish firm Klarna (KLAR) is expecting a further reduction in its workforce after its employee numbers shrunk from 5,000 to 3,800 over the past year. “Not only can we do more with less, but we can do much more with less,” CEO Sebastian Siemiatkowski told the FT. “Internally, we speak directionally about 2,000.” The popular “buy now, pay later” has already imposed a hiring freeze and expects natural attrition, along with AI taking over in areas like customer service and marketing. Klarna is also considering removing a key ally as the company eyes going public in the U.S.
$1T club
Warren Buffett’s Berkshire Hathaway is inching towards joining the coveted trillion-dollar club, with its market capitalization reaching close to $993B on Tuesday. Berkshire (BRK.B) shares have gained 29.2% this year and are up 7.5% since its last earnings report. If its market value hits $1T, that would make it the eighth U.S. company to ever reach the milestone and the ninth globally. Investing Group Leader Daniel Jones believes Berkshire’s stock is worth the premium, while REITer’s Digest said its recent rebound leaves limited upside.
Pre-approved
In a move that would finally bring Wall Street to the richest U.S. sports league, the NFL is now allowing private equity players to pick up minority stakes of up to 10% in teams. The approved PE firms include the likes of Ares Management (ARES), Arctos Partners, and Sixth Street, and are expected to bring in huge investments. Recall that the Washington Commanders was sold to Apollo (APO) co-founder Josh Harris for a record $6.05B in 2023. Other leagues already allow their teams to sell up to 30% of equity to a PE fund, like the MLB, NBA and NHL. (1 comment)
