Three stocks that rise when Nvidia dominates earnings
16th May 2024
Welcome to AI Collision 💥,
In today’s collision between AI and our world:
Nvidia’s earnings 😢 😡 🤩 ?
Sky or ScarJo, you decide!
Oh, Kermit, what have you done?
If that’s enough to get the stocks popping, read on…
AI Collision 💥
Here’s the roll call of the last few releases of Nvidia’s earnings…
Beating earnings-per-share expectations by double-digits for the entirety of the last year is quite the accomplishment.
So the question rises, will it do it again?
The market is clearly pricing in a big set of numbers. But what will really happen to Nvidia’s stock price?
Here’s the thing…
The market expects great results now. So if Nvidia beats expectations, because it’s has done it repeatedly, the market expects that it’ll do it again.
That means if Nvidia beats expectations, but in single-digit figures, there’s a good chance that will see the stock price head lower.
It’ll beat, but it won’t be a big number, so the market will be sad 😢.
There’s the off chance it’ll miss earnings-per-share expectations… The market won’t like that at all. That would send the stock price lower and the market will be enraged 😡.
Then there’s the possibility it’ll beat expectations, by a long way again, but upwards of 15%. That would be good news and the market would be ecstatic 🤩.
Nvidia’s stock price off the back of this will go down, do nothing or go up. That’s real investment analysis there…
Point being I’ve seen the market react in ways that does not seem rational or logical, even when things are good.
Remember, the market can stay irrational longer than you can stay solvent.
That’s why Nvidia’s earnings, which by the time you read this will have already dropped, but at the time I’m writing this, haven’t.
Therefore, as of me writing this today, I have no idea what Nvidia’s earnings will be. I’ll give more detailed thoughts on it next week.
But I do predict it’ll beat expectations, and I think it’ll beat them in excess of 15%. And that the market will be star-struck once again 🤩.
That aside, what I do know is that in the earnings Nvidia’s previously released, there are other stocks that have ridden the Nvidia wave higher.
These are stocks related to the rise of Nvidia. In a sense, Nvidia is carrying them higher on its shoulders.
So, if Nvidia’s earnings are going to smash it out of the park again, should these three stocks be ones to give deeper consideration to?
If we wind back the clock to Nvidia’s last two earnings, they were released on 21 November 2023 and 21 February 2024.
Let’s take a look at a stock we’ve written about before (and have a soft spot for here at AI Collision) Vertiv Holdings (NYSE:VRT) on those dates.
Vertiv provides infrastructure and hardware for data centres things like communications and cooling infrastructure. All necessary for the rollout of Nvidia AI in data centre technology. Or as I like to call it, Datacentre-as-a-Chip technology.
On 21 November 2023, Vertiv’s stock price closed at $42.59.
And on 21 February 2024, the stock price had risen to an intraday high of $61.59. Today it trades at over $100.
Another is the developer of an AI voice platform for natural language recognition, analysis and interaction. Its name is SoundHound (NASDAQ:SOUN). Its aim is to introduce lifelike AI voice assistance to customer service, retail, automotive, and hospitality and leisure industries.
On 21 November 2023, SoundHound’s stock price closed at $2.12.
And on 21 February 2024, the stock price had risen to an intraday high of $4. It would go on to top $10 in March and even today it trades at over $5.10.
Part of its rise is that as Nvidia’s cash coffers have risen, in part thanks to the company continuing to smash its earnings, it’s also disclosed investments it’s made in other companies… One of those was SoundHound. Nvidia quite literally has been the catalyst for SoundHound’s rise.
The third is a company that very much does what it says on the tin…
Southern Copper Corporation (NYSE:SCCO).
On 21 November 2023, Southern Copper’s stock price closed at $75.31.
And on 21 February 2024, the stock price had risen to an intraday high of $83.54. It now trades at over $120.
Now you might not initially think that a copper company would be riding the back of Nvidia’s earnings. But as we’ve also covered recently, the copper market is absolutely flying because of the increasing demand that AI and data centre technologies has for copper.
And when Nvidia noted of its pivot from fibre optic to copper for short-term data transmission in March, that lit a fire under the seat of copper stocks.
Nvidia’s earnings will start to shape a picture of the demand for its technologies that are coming and hence the demand for key metals like copper.
If the earnings are great, and demand continues to ramp, then it might just be another leg up for companies like Southern Copper.
Whatever Nvidia’s stock price does it’s not the only way to play the rise of AI. When you expand the horizon and look beyond the big names, then you start to see plenty of other opportunities to ride Nvidia’s wake and make some potential profits along the way.
AI gone wild 🤪
On Tuesday I sent a brief link to you about the whole Scarlett Johansson thing with OpenAI.
I noted,
Last week I wrote to you about the OpenAI updates it had released. The translation part sent Duolingo’s stock into a tailspin. One of the other things OpenAI showed us was the uncannily similar voice its new AI had to Scarlett Johansson. It was great. But now looks like it’s getting replaced 😔
Well after I sent out Tuesday’s AI Collision, things got even wilder!
Not only were OpenAI having to roll back the “Sky” voice, but Scarlett Johansson then released a statement about the whole situation.
She noted that she had actually been asked to voice the OpenAI upgrades. And that she eventually declined!
But then OpenAI and Sam Altman went along and did a thing anyway that let’s be honest was very similar to ScarJo.
So, she is or is considering suing them.
Cue the insanity.
The memes were great though.
This in particular made me chuckle.
In the internet we trust, and not long after a video was available that read out the official statement from ScarJo but in the Sky OpenAI voice.
The irony being that it sounds exactly like Scarlett is reading the statement herself.
Check it out below.
So, this is the world we live in now. From Tom Hanks dental advert deepfakes through to (alleged) Scarlett Johansson voice cloning by the world’s leading AI company.
What a place!
Boomers & Busters 💰
AI and AI-related stocks moving and shaking up the markets this week. (All performance data below over the rolling week).
Boom 📈
Cyngn Inc (NASDAQ:CYN) up 40%
Kainos Group (LSE:KNOS) up 21%
Vicarious Surgical (NYSE:RBOT) up 19%
Bust 📉
BigBear.ai (NYSE:BBAI) down 10%
Oddity Tech (NASDAQ:ODD) down 12%
Duos Technology Group (NASDAQ:DUOT) down 20%
From the hive mind 🧠
And like that, the hype of an AI device will be confined to the history books as tech that had a red hot go, but ultimately failed. Shame, but frankly, it' sucked from the outset. But kudos for trying Humane.
I could think of nothing better than my computer taking continuous screenshots of my desktop to help me manage my life. Uhhh…no thanks. Just kidding folks. The BBC actually nailed it for once. This is a privacy NIGHTMARE.
This feels significant. Tesla will either be with Elon and much more than just a car company, or without him and just a car company. Battle lines drawn!
Artificial Polltelligence 🗳️
I’ve been looking pretty closely at resource stocks of late. Keeping a close eye on the copper, uranium, gold, silver, aluminium, indium, tin, zinc, gallium and germanium (amongst others).
I have some ideas as to what comes next, and it’s defenitely going to be a focus at my AI-enhance stock advisory service, Predictive Edge.
But I’m also interested in your thoughts too. Now what I’m going to ask is like picking favourite children. It’s impossible (or is it…).
Jokes aside, if you had to pick one of the following to outperform the others over the next year, what would it be?
Note: I’m restricted to five options here, so if you think something else, make sure to leave a comment by hitting the button here.
Weirdest AI image of the day
Kermit cheated on Miss Piggy again – r/Weirddallee
ChatGPT’s random quote of the day
"Success in the tech industry isn't about having the best ideas; it's about executing them relentlessly." - Atlassian co-founder, Mike Cannon-Brookes
Thanks for reading, and don’t forget to leave comments and questions below,
Sam Volkering
Editor-in-Chief
AI Collision
I'll probably buy NVDA when it splits 10 for one June 10. $95/share. Just sold VRT at $4600 profit.