Market Recap: Broadcom's $100B Bet, Walmart Stumbles, NVIDIA's Big Test Looms

Hey everyone, it is Julie here with tip ranks and once again I have the pleasure of being joined by Chris Versace from the street pro where we are diving into some hot topics from the week. Uh the pro portfolio buying the dip on a couple of very different stocks. We have Walmart stumbling while Ross stores jumped and then next week we have Nvidia and Marll that could set the tone for the rest of the year. Chris, thank you so much for joining me today. >> Well, happy Friday Julie. What a week to close out, huh? >> I know. Hey, it's been uh a lot going on, a lot of earnings here wrapping up. So, I want to start off though with the Pro portfolio's most recent purchases, scooping up some shares of Broadcom and Costco. Can you walk us through the thinking behind those two? >> Yeah. So, let's deal with Broadcom first. And you know, the play here with Broadcom is a combination of the ramping custom silicon business. We've heard about that from Marll and others. Um, and you know what I've noticed is that there almost seems to be this mentality across most of Wall Street that only one can win. So if one of the companies makes a very nice announcement that bodess well for their business, ah the it can't be good elsewhere and that's simply not the case. And and I I what we've done a couple different times now is use some of these illtimed reactions, let's call them, to our advantage. and and as it relates to Broadcom, they are going to continue to benefit not only from uh rising networking demand as will Marll, but folks seem to have forgotten, Julie, that you know earlier this year the Broadcom CEO said he sees the 2027 custom silicon business over a hundred billion dollars and that compares to the 10 billion they shipped just in the most recent quarter. So a huge ramp. They've also int a 30 billion multi-year deal with Apple. So, the outlook is very robust there in my opinion. So, we we use the culmination of several days of uh falling Broadcom stock to say, you know what, the riskreward here is favorable. We're going to pick up some more shares. >> Well, and as you mentioned, it has been a wild few days for them. Uh they had a big debt raise. We had the Apple deal and then the sell-off on the Marvel Google News. What headline caught your eye the most this week with Broadcom? you know, probably it was um you know, I and some people are probably going to say, "Oh, that big deal, right?" And I would say not really because if you think of the ramp that's happening and the customer base that they have, they they really do need to bring on incremental capacity. So, I'm not as plused by that. I I I think it was more the sharp reaction to the positive news of Marbell, which we also own in the pro portfolio, where Marll issued a warrant to Google uh in exchange for um you know, a really nice competitive stance inside Google's custom AI silicon business. And the the way it works here, Julie, is that tranches of that warrant will vest in Marbell stair shares benefiting Google. But for that to happen, certain revenue thresholds have to be triggered. So when you think about it, some folks are saying, "Wow, if this really works, Marll has the potential, keyword potential, for 120 billion in incremental revenue." That's a big number, but we need to see Google ship those chips or consume them internally. So nice positive for Marll. Don't don't take me uh don't don't get me wrong here, but you know there is some things we need to see happen. So I I think against that backdrop and the prospect that maybe Marll did not replace Broadcom inside of Google the way some folks are thinking you know that overreaction I think is another factor that led us to you know swoop in with Broadcom shares. >> And then we have Costco. Uh their comps are outpacing Walmarts and BJs. So, what's Costco doing right now that others aren't? What are we seeing there? >> Well, I I think it kind of speaks to the nature of Costco where you go, you buy in bulk, and you you stretch your spending dollars. And they deliver time and time again great value for their members, whether it's on on the grocery front, the clothing front, sundurries, you know, what have you, pharmacy, too. And and yes, they are starting to wade into Medicare healthcare plans, which should be an interesting development for them. We'll have to see how it goes when it moves past uh the pilot stage in three states, I believe. But but you're right to focus on the numbers, Julie, because the numbers don't lie. If if people are thinking Walmart's going to benefit from uh cashstrapped consumers, you know, trading down and stretching their dollars, and their US comp sales are like 2.6% 6% and you got Costco doing somewhere between 6 and 8% based on their uh adjusted monthly numbers which exclude gas and FX. We know where people are going to shop. It is at Costco. We can make the same argument against some other retailers that have reported and I I think you called out BJ's which is a wholesale competitor. 3.1% something like that. No question where they're going. That is what prompted us to pick up some more shares for Costco. And and let let me just add too real quick. To the extent that oil prices continue to move higher, gas prices above $4, remember it was Walmart who called out on their earnings call that gas above $4 tends to trigger more cautious behavior with uh consumers. Again, another positive for Costco. >> And when we talk about consumer spending, we also had Walmart and Ross. So we had Walmart missing but Ross having a big beat all in the same week here. What does that split tell us about the US consumers? >> Well, I I think it tells us a couple things and ju just you know the point on Rosars I think really builds on uh what I just said about Costco really. So ju just to frame it Ross Stores when they reported their quarter their comp sales were 10%. That is huge and they guided the current quarter for six to seven. So again, when you take a look at some of the other retailers that are reporting these low singledigit numbers, something like that, like, you know, just like Walmart did, you have to sit back and say consumers are feeling pressured. Where are they going? Follow, you know, I I hate to make this as simple as it can be, Julie, follow the money. Follow the money. Where are they opening up their wallets? Where are they spending? Ros Stores, Costco, e even at TJX, their overall comp sales were around 4%. Um there's some issues in the the core Marmax business, but it looks like that's been rectified. If you look at HomeGoods, other businesses up six, 7%. So clearly consumers are looking to stretch their disposable spending dollars that they do have. As investors, we want to be right there with them. So that explains why, you know, we added to Costco. That explains why even earlier this week, we picked up a couple more shares of TJX for the portfolio. And of course, we're long Amazon. So, I we we like that positioning going into the holiday shopping season. >> Absolutely. And it feels like we've gotten through the bulk of earnings for the big tech names, but next week we actually have two big hitters to keep an eye on. Of course, Nvidia and then Marvel as well reporting backtoback next week. What are you watching for the most in those two prints? >> Well, you know, first off, you're right. You know, I I think people tend to forget that Nvidia is the largest position in the S&P 500. And I I'll I'll make it clear the market cap weighted garden variety S&P 500. So, whatever Nvidia does, good, bad, or indifferent, it it's going to have an impact on the market. So, that that's the first thing. But what do I think? Look, we've seen hyperscaler u you know, capital spending go higher. Neocloud spending go higher. SpaceX is saying they will buy everything that you know can possibly be shipped by uh Nvidia. So I I think the expectations for the quarter are good. The the guidance for the back half of the year should also be very good. The one concern I have, and this is, you know, um, pretty much every time Nvidia reports, the expectations for what they could say get so elevated and to the extent that the stock runs into the earnings report, that's going to make those expectations even higher. You know, the odds that Nvidia can deliver to that extent, that's that's the concern that I have. um you know we we will be long-term holders uh with Nvidia. So to the extent that we see you know a pullback afterwards we might assess picking up some more shares. It really depends. Uh but you know we like the long-term positioning with Nvidia and uh you know we we will see what they say. >> So it seems like there could be a bit of risk where it's the earnings could be great but not great enough with all the anticipation. >> You know I like the way you summarized all that jibberjabber I just had into a very succinct point. Thank you, Julie. >> Of course, that's what I'm here for. Uh, in the broader market as well, we just had PMI coming in strong and inflation cooling. Of course, there's always the geopolitical wild card with Iran in the next week or so, whatever ends up happening there. But bottom line, are you more constructive or cautious heading into September? So, I was a little concerned given the runup in oil prices, gas prices, diesel prices that I was kind of bracing for some uh reinflation commentary out of that uh flash August PMI report. So, I was pleasantly surprised by what we saw. Not not just on the inflation front though, employment accelerated, order books accelerated. I mean, this is really like a very positive report all the way around. Now, two things. is one it's a flash report so it's you know the the survey period is shorter so we're going to have to see what the final data says we'll also want to see what ISM has to say um for a few reasons one you know that is the report that most in the market tend to watch two its findings are baked into uh some of the GDP calculations so it carries a lot more weight with the market therefore we will wait it a lot more as well but if we see similar findings that would be a very nice thing uh as we move into September and I think that can help the market kind of overcome some of the rough spots that it's had. But the second thing, Julie, and you mentioned this, we will need to see what happens on the geopolitical front. Monday could be potentially a big day. Um you know, US Treasury Secretary Scott Besson said we'll get a lot more details about this economic sanctions, not only on Iran, but on its allies. The question becomes, what is it? Does it work? Uh, and what is Iran's response? And how does some of its allies respond as well? Remember, [snorts] China's, uh, President Xi is supposed to come here in September. Could be contentious. >> It's a lot to keep an eye on, and as always, I appreciate your insights. I look forward to chatting within a couple weeks. We'll see how things play out next week with those earnings and the geopolitical wild card. Uh, so Chris, thank you so much for your time today. >> Happy to do it, Juliet. Have a great weekend. Same to you. And for all of our viewers, if you want to learn more and read Chris's articles on the factors that are moving the markets, you can head on over to the Street Pro. We have links in the description down below. And let us know what you're watching most in the market in the comments. Always appreciate hearing from you guys. Thanks for watching.