News and analysis

The AI (artificial intelligence) rally flagman flew into the next sky layer. Its share price quickly topped a $1000 per share barrier in the extended trading after Wall St closed on May 22 following its 5.6-fold growth in profit numbers YoY. The world's largest GPUs (graphic processor units) chipmaker released its EPS (earnings per share) at $6.12 in the quarter ended in April on sales of $26.04 billion, compared to $1.09 per share on sales of $7.19 billion in the same period of 2023. Both top and bottom lines clearly exceeded consensus estimates for EPS of $5.6 a share on revenue of $24.65 billion. The contrast between brave expectations and even more oversized reality indications was stark enough for the stock to soar by more than 6%, which seems to become the lowest possible reward for a very strong report.

The forward guidance provided by the company was also bright and even brighter. It projected the current quarter's revenue at $28 billion, plus or minus 2%, while the market analyst pool on Reuters expected $26.66 billion on average. NVIDIA's CEO Jensen Huang commented that its newest Blackwell AI chips line-up would allow additional production increase. Chief financial officer Colette Kress also added that demand for most effective Blackwell chips is going to "exceed supply well into next year". NVIDIA is now dominating 80% of the global segment for AI task relevant chips. Its sales for the data centres added 427% YoY to $22.6 billion, which reflects "higher shipments of the NVIDIA Hopper GPU computing platform" to train and inference with large language models and recommendation engines based on generative AI features, according to the company's statement.

One of its largest customers, Amazon, recently said it "has not halted" any NVIDIA chip orders. Another giant purchaser is Meta Platforms, which increased the midpoint of its 2024 capital expenditure forecast by nearly $4 billion. It is very difficult to try to replace NVIDIA's chips due to the high performance technology behind them. A 10-for-1 stock split will happen soon (starting on June 7) to attract even more investors with small and middle size of capital, thanks to lower cost of a share. NVIDIA showed its gross margin at 79% vs 77% on consensus forecast, while its closest peer AMD reported 52%. However, AMD share price added a couple percentage points as well.

The Wall St analysts' average 12-month price target immediately moved to $1040 overnight, and this is probably far from ultimate limits for this year. More upside moves in NVIDIA are highly likely. They may also support a bullish rally in other giant tech companies, including Microsoft, Google and Broadcom. Any leap in the market value of these flagship businesses may serve as an additional driver of stability for the overall bullish market mood.

Dash (DSH) added 6.5% to $30.80 this week, slightly retreating from a monthly high of $31.39. The token's rise is fueled by speculation around the approval of spot ETH-ETFs, following the SEC's request for crypto exchanges to update their spot ETH-ETF filings. Dash surged above the critical support level of $30.00 and the support of an ascending channel established on August 17, 2023. The project is showing signs of development, and if the overall crypto market sentiment remains bullish or neutral, Dash prices could potentially reach the next resistance level at $35.00.

For many months, I avoided buying Palo Alto shares. I am not purchasing it right now, yet I began to consider such an opportunity for the first time in my investing life, and here is my way of thinking. You probably know the stock benefited a lot from the overall AI rally at the second half of 2023, yet badly disappointed the crowd with its forward guidance for 2024 at the end of February to waste nearly 25% of its value as a result. A step-by-step price recovery by this cybersecurity solutions business began a month ago in hopes for better Q1 numbers. Palo Alto covered the way from $265 to $320, but then was battered again by rather weak than strong billings outlook for the future. Markets focused on this aspect despite last quarter earnings beating the feared and, therefore, too modest forecasts. Sales increased by 15% to $2.0 billion, which was not bad at all, taking into consideration the preliminary expert consensus of $1.97 billion and the previous year's result at $1.7 billion only. If we discuss the business profit, then its earnings per share (EPS) came out at $1.32, beyond cautious expectations of $1.20 on average. The so-called "performance obligations rose by 23% YoY to $11.3 billion, also slightly above $11.28 billion in projections. All in all, this sounds like great progress for me.

I think that's why the stock, which initially lost about 9% of its achievements in after-hours following the report, later was bought by some part of the crowd at least to lessen the negative gap to 4% in the first two hours of regular trading today. Well, I'm still an unbiased observer, yet looking ahead to the market dynamics in Palo Alto with growing interest. The company's CEO Nikesh Arora told the public about raising customer enthusiasm for Palo Alto's comfortable platformization strategy to integrate the AI features into security measures. The next quarter forecast mentioned a good EPS range of $1.40 to $1.42, with sales figures lying within the range between $2.15 billion and $2.17 billion, both strictly in line with the $1.41 consensus. Again, Palo Alto updated its annual guidance to project its own sales range with $8.00 billion only in the middle, which was up from the previous range of $7.95 billion to $8.00 billion, and also above the consensus estimate of $7.98 billion. A good basis for potential attractiveness in the eyes of crowds, isn't it? The only sign from the negative side is that the billings outlook would be ranging from $3.43 billion to $3.48 billion for the quarter and $10.13 billion to $10.18 billion for the fiscal year, which are slightly short of expectations. So, I am ready to monitor day-by-day developments in Palo Alto's market valuation and to let you know if I finally decide to come into this investment.

Applied Materials, a well-known manufacturer of semiconductor equipment, which serves as an essential part of the production process for factories of Taiwan Semiconductor, Intel, Global Foundries, Huawei and also contributed much to liquid crystal screens and solar cells, is slowly but surely expanding its mid-term rally. Lithography, being the basic technology for etching extremely small elements onto a silicon surface to grow nanotubes and transistor schemes, ion implantation and molecular layering are forming only a general summary of the odds the company offers to modern technologies.

Its share price initially fell by nearly 2.75% during May 17 trading session on Wall Street, even though the issuer surpassed expert consensus estimates in both top and bottom lines of its quarterly report. However, this effect was most likely technically natural with a massive take profit after a more than 15% rise on highly positive expectations in the previous three weeks, which followed large-scaled dip buying late April. Thus, the stock quickly recovered and even renewed the record peaks already on May 20, when Applied Materials climbed by 3.7% to touch the landmark of $220 per share for the first time in its history. This stage of integral ascending completed to be successfully continued, while next target areas around $250 per share for nearest months could probably be considered by large investment houses and the broader market community.

Applied Materials' adjusted EPS (earnings per share) of $2.09 for the last three months to end on April 28, were 4.5% up from $2.00 per share YoY, while its sales number slightly rose to $6.65 billion from $6.63 billion, mostly in line but little better with average forecasts for EPS of $1.99 on revenue of $6.54 billion. Gross margin increased from 46.8% to 47.5%, all thanks to stronger growth in China where sales doubled to $2.83 billion from $1.41 billion in the same period of 2023. Meanwhile, the company shifted its focus from the U.S. where sales dropped to $0.853 billion from $1.11 billion. The AI (artificial intelligence) wave is boosting chip demand again, and so AMAT CEOs projected the company's EPS for the Q2 2024 in the range between $1.83 and $2.19 per share, on sales of about $6.65 billion, plus or minus $400 million. Consensus forecast on Wall Street was lower, at $1.97 per share of EPS on $6.59 billion in sales. This may boost possible re-evaluation of the stock soon. To summarize, AMAT remains a very popular investment choice at the moment.