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☕ Jensational – the most important line in the entire earnings report

Nov 21, 2024

Good morning! 👋

Right on cue, Nvidia changed market sentiment.

It’s up, down, and all around… which means there is plenty of money on the move!

As always, that spells O-P-P-O-R-T-U-N-I-T-Y!

Here’s my playbook.

1 – Nvidia’s Jensational Earnings

I told you very specifically yesterday that I expected “a $1.9B - $2.5B+ beat” and we got it.

I also told you that traders would take prices lower before they reversed higher in the overnight markets and we got that, too.

Next up, a pipe cleaning to gut the FOMO crowd. In fact, I’m betting Nvidia will give up opening gains then waffle around, perhaps even by the time you read this.

Longer term, this kind of shenaniganry doesn’t faze me one bit and I encourage you not to worry about short-term price action either.

Nvidia’s earnings were “Jensational!” (Read)

Revenue of $35.1 billion vs expectations of $33.25 billion
Adjusted EPS of $0.81 vs expectations of $0.75
Revenue increased 94% YoY, with data center revenue increasing 112% YoY

What catches my attention and, again, exactly as we’ve been talking about for a while now, is that Jensen says customers want to buy more chips faster than the company can make ‘em. And, critically, that the company will sell more Blackwell chips than previously anticipated. (Read)

Demand, demand, demand – hooyah!

We are still very early stages with AI and it’s important that you recognize that.

Moreover, history suggests there are 10-15 “Nvidias” out there right now in various stages of maturity. So don’t worry about missing out but do get over the whole PE/valuation thing making the rounds this morning.

What investors fail to understand about how money really works is costing ‘em dearly with stocks like Nvidia and I’d hate to see that happen to you.

Btw, I am preparing a special look at that in the December issue of One Bar Ahead® which is just around the corner. Many investors tell me that what they’ve learned along the way has made a life-changing difference. If that sounds appealing, I’d love to earn your trust, goodwill, and business. (Learn more)

Which reminds me, I think it’s time to update my price target. 🎯

2 – Billionaire Adani charged in $250M bribery scheme

Billionaire Gautam Adani, chairman of India’s Adani Group, has been in indicted along with seven others for his involvement in a $250 million bribery and fraud scheme intended to secure lucrative renewable energy contracts in his home country. (Read)

This is fascinating to me, having spent much of my career in global markets.

Bribery and influence peddling are “normal” in many markets around the world despite being frowned upon or even explicitly prohibited by law. Particularly in the Far East.

In China, for instance, relationships are governed by what’s called “guanxi” – meaning connections that are often compared to interpersonal relationships or an “old boys network.” In Japan, it’s “kankei” which means relationship, albeit it one that does not carry the complexities of guanxi in China but which does include obligation and reciprocity. In India, the slang terms for influence peddling include “rishwat”, “baksheesh” or “chai-pani.”

The Adani Group has denied all allegations saying that US claims are “baseless” which is typical in a situation like this one. And my guess is that Adani and his crew truly believe that.

Ultimately the case will come down to whether or not Adami and other defendants mislead US and international investors as their fund raising relates to the Foreign Corrupt Practices Act (FCPA) but also SEC related charges that US investors were harmed.

Meanwhile, I imagine that this could result in a new round of banking challenges in international lending circles as investors chase down who paid what to whom and where all the money actually went.

Solar, oil and development contracts in a variety of industries may get rewired.

US companies take this stuff super seriously with good reason, but offshore is another matter but changing. Kenya has apparently already spiked a deal, for example. (Read)

Investors who own Chinese stocks, particularly those operating in Africa or the Middle East, would be wise to do some homework.

Not for nothing, but I imagine that Adani won’t set foot outside India for a while lest he earn a trip to the grey bar hotel.

3 – Crypto correction: Is somebody talking their book?

Michael Novogratz was formerly a partner at Fortress Investment Group, but currently the CEO of Galaxy Investment Partners, a firm that focuses on investments in cryptocurrency. He’s also the founder, CEO, and majority shareholder of Galaxy Digital Holdings, a publicly-traded crypto investment firm on the Toronto Stock Exchange.

CNBC is reporting his comments that, “there will be a bitcoin correction” because crypto is “levered to the gills.”

Uh, yeah. 🤦

If you are involved, you wanna pay attention.

Novogratz is a knowledgeable, powerful and super savvy industry player who may have a vested interest in self-fulfilling prophecies just like any big hedge fund or trader would. The fact that he’s said “will” and specifically noted leverage as a factor suggests that the game is afoot, especially with so many retail investors piling in like moths to a flame lately.

While we’re at it, don’t forget that George Soros’ investment fund was widely reported to be making crypto-related bets. Citadel is also in the game. (Read)

Stay frosty!

If you’re really gutsy and have money to burn, consider betting on a sharp quick downside move using bitcoin options which are available on a variety of traditional options exchanges and crypto-specific trading platforms.

Here’s a quick primer from Investopedia that may be helpful. (Read)

4 – Is Super Micro a buy?

The company has been beaten to smithereens lately after its auditor quit and concerns over its financial reporting hit the headlines. (Read)

Now it’s clawing higher.

It is a buy?

Maybe, and only if you fancy shooting craps.

I’d rather go to Vegas, but that’s just me.

Keith’s Investing Tip: Super Micro may well have its act together but the fact that a well-known auditor quit for reasons that are still not yet clear is problematic. My experience has been that investing is a series of choices… and there are plenty of ‘em out there at the moment with far higher, better investment potential and none of the accounting challenges.

5 – What in the world is up with Jag?

I’ve seen some crazy moves in my time, but Jaguar’s latest is a headscratcher. (Read)

Don’t get me wrong, I am all for new direction, new visions and new leadership… just not at the expense of unceremoniously kicking your corporate legacy and customer base to the curb.

The situation reminds me of Porsche when it released the 928 in 1977 with the intention of killing the 911, “new Coke” in 1985, Tropicana’s repackaging in 2009 and even Leeds United in 2018… all of which were intended to take things in a new direction and all of which were subsequently reversed after customers pitched a fit.

This decision, however, seems so ill-conceived and so misguided that I am hard pressed to imagine Jag has a way out. 🤔