Please see today’s Daily Investment Bulletin from Brooks Macdonald received this morning, 22/02/2024.
What has happened
Nvidia’s announcement of strong guidance has positively impacted the markets, with the company’s shares experiencing a gain of 9% in after-hours trading. This surge has contributed to a broader market uplift, a 0.74% rise in S&P 500 futures. Elsewhere, Japan’s Nikkei index has achieved a historic milestone by surpassing its previous all-time intraday high from 1989, marking a continuation of its impressive performance with a 16.5% gain throughout 2024.
Nvidia’s impressive earnings
Nvidia has surpassed expectations for both revenue and earnings in the fourth quarter, with Data Centre revenue notably exceeding projections. The company announced $22.1 billion in Q4 revenue, a substantial 265% increase from the previous year, which was well above the $20.4 billion anticipated by analysts. The company’s guidance for the current quarter’s revenue and gross margin has also surpassed expectations. Nvidia’s management has expressed a confident outlook on Generative AI, highlighting the strong and growing demand that is outpacing supply. The anticipation surrounding Nvidia’s financial results has been evident in the options market, which indicated a significant move in the stock price following the earnings announcement.
What does Brooks Macdonald think
The 2024 earnings revisions are outperforming historical trends, with the market still anticipating low double-digit percentage growth in S&P 500 earnings. However, this growth is primarily driven by the top seven companies, the ‘Magnificent 7,’ while the remaining 493 companies in the index have experienced downward revisions in earnings and margins. This situation certainly exacerbates concerns regarding market concentration.
Bloomberg as at 22/02/2024. TR denotes Net Total Return
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Charlotte Clarke
22/02/2024