Nvidia Just Did Something No Company Has Ever Done

Nvidia just announced the [music] biggest stock buyback in history and Louis still says the stock is headed to $300 by the end [music] of the year. But treasury yields keep climbing and some of the hottest AI stocks are suddenly moving in opposite directions. So can Nvidia keep running and which stocks [music] still look strong? Let's get into it. Welcome back to Navellier Market Buzz. >> [music] >> Dad, let's start with Nvidia because this number is enormous. They just authorized another $150 billion for stock buybacks. So are we potentially talking about a $235 billion in Nvidia buybacks? >> Absolutely. So what what it was is, you know, companies authorize their buyback amounts, but Nvidia hadn't used up 85 billion of their previous buyback. So now with the 150 billion, that means they can buy back $235 billion of their stock. Of course, the $150 billion stock buyback announcement was the largest ever. The biggest was Apple for $110 back in 2024. So this is very very exciting. You know, big stocks seem to sometimes have a physics problem. They get so big that they can't go up as much as a smaller cap stock, but the truth of the matter is Nvidia has spectacular sales and earnings growth and this is really going to help the stock get to $300 by the end of the year, which is my year-end price target. I have a $500 price target by the end of the decade, but I think I'm going to be revising it higher. Let's get to $300 first, but this is obviously putting in a very good foundation for Nvidia and this is just incredibly exciting. >> So even after Nvidia's run, you're saying that the valuation is still attractive compared with a company say Apple? >> Yeah, because it doesn't go up as much as earnings. It's as simple as that. Uh P ratios are being compressed. If you remember last quarter, the earnings on the S&P 500 were up over 50%. Our stocks announced earnings were up over 100% and P ratios are collapsing, okay? Because their their stocks aren't going up as much as their earnings. So, yeah, Nvidia, last I looked, only trades at barely, let's see here, 24.6 times forecasted earnings. That's a very low multiple for a monopolistic company that dominates its business. Apple, by comparison, trades at 38.5 times forecasted earnings. And so, I stand by my $300 per share target by the end of the year for Nvidia. >> Okay, but here's the pushback. Treasury yields keep climbing, so if money keeps getting more expensive, so then at what point does that become a problem for Nvidia and the rest of the growth trade? >> It doesn't. I know I've said this multiple times, and I'm going to keep saying it. Rising bond yields, and they are rising, hurts dividend stocks, the dividend stocks that don't have dividend growth, okay? So, when we do buy dividend stocks, we like stocks that double their dividends every 6 7 years. So, those dividend stocks are okay, dividend growth, but just a high dividend stock that's unlikely to increase its dividend will suffer as bond yields go higher. So will a lot of value stocks. So, yeah, rising rates can curtail the stock market, okay? But the truth of the matter, it doesn't constrain the growth stocks that we recommend. You know, our average stock has over 100% earnings growth. So, we're going to be just fine here. Now, I do want to remind everybody this global bond yield increase is all over the concern that the world now has, I think the last I looked, 340 trillion dollars in government debt, okay? And they're worried that a lot of governments can't pay it. Countries like Japan that are shrinking in population. Countries like Britain that, you know, they've had a lot of immigration in Britain, but a lot of the rich have moved out, okay? And there's fewer people paying the system. They haven't fully assimilated all their new immigrants. Countries like France is definitely shrinking, okay? So, what's happening is there is a global concern that these shrinking societies will not be able to pay their their interest, okay? That does not apply to America because although we have a lot of debt, okay? We have a lot of growth. We're over 5% GDP growth right now. Furthermore, we have a lot of collateral, okay? And you know, I'm in Florida now, but when I'm in Nevada, 90% of Nevada is owned by the federal government, okay? They own, you know, Vandenberg Air Force Base. They own El Toro Marine Base. They own the Presidio in San Francisco. They own a lot of very valuable real estate. Also, you know, if you look at the Rocky Mountains, there's a lot of oil under the Rocky Mountains on federal land. So, I'm not encouraging them to strip mine the Rocky Mountains at this moment, but I'm just telling you there's a lot of collateral there. So, that's why the government gives out leases for oil exploration cuz they own the land. So, I think things are going to be fine and the dollar has been very, very strong here. So, we're looking awfully good. The other reason the dollar is so strong is this energy price increase doesn't hurt America like it hurts the other countries. It's just you know, we are food and energy independent. Yeah, higher diesel prices will cause prices to go up cuz it hurts the supply chain, but it's much more acute in other countries. >> Would you recommend for people to start buying Treasury bonds since they have risen so much? >> Well, only if I knew when the peak in rates would be. If we look at TLT, it's showing charts of TLT uh year-to-date and the past 5 years and you can just see horrific losses. And TLT is the iShares 20+ year Treasury ETF. So, the way bonds work is when yields go up, your principal erodes. When rates go down, your principal appreciates. And it's a game of chicken when to buy bonds, but if and when bond yields start to go down, I think you'll see them go down dramatically cuz they were going to pile in to to make some money on the trade. But, unfortunately, they are losing money in bonds and this is a global phenomenon. Okay? So, in a place like Japan where bond yields have spiked much more dramatically percentage-wise than they have in America, uh it's just devastating to be a bond investor. And so, that's it. And when you do buy any fixed income security, I recommend you buy and hold it to maturity. So, yeah, if you want to go out two, three, four years, uh that's fine, but I don't recommend you go out, you know, 20 years or more. >> So, higher rates don't necessarily mean investors should run from growth? >> No. No. Higher rates do not derail growth stocks. They only derail value stocks and high-yielding stocks that don't have dividend growth. >> That brings me to a really good viewer question. Microsoft and Palantir are obviously two major growth names and both have had very big moves. But, viewers have noticed that both show a low grade in stock grade. So, how can a stock be performing well while its quantitative looks weak? >> All right, let me start with Microsoft. Microsoft definitely is getting its mojo back and moving up in rank. And that is because they monetized chat GPT last quarter. Before that, they hadn't. And the reason they were able to monetize chat GPT, they got it more computing power. So, that's good. And that's the whole fight out there. Everybody wants power, you know? The tech industry is like Captain Kirk on Star Trek demanding that Scotty gives them more power. >> Something I haven't got the power. >> Try me. Try me. Power or power? >> Damn it, power or power. >> So, everybody needs more power to make their AI models work. Because Microsoft got more power for chat GPT, they were able to monetize it. So, they're getting their mojo back. The stock's improving. It's not strong enough for me at this time, but it's is up and coming. Palantir is a totally different situation. as Paul Hickey explained on the last Market Buzz. They've had nine perfect quarters in a row and their fundamentals are awesome. It gets a fundamental A in my system. Quantitatively, yes, it got It's not as strong because they had all those nasty short sellers spraying a rumor that software stocks would not exist as AI got better and and that is a false narrative, okay? Palantir is one of the best AI appliers out there. But, you know, when people buy like a software ETF and they hear that false narrative, they will be selling Palantir, okay? And they they essentially the babies get thrown out with the bathwater. I love Palantir. They've got incredible fundamentals. Also, if you look at how we test our stock selection models, as long as a stock remains in the top 60% of my fundamentals, I'm going to hold it even if it's a B or C in Stock Raider. >> So, when someone sees that it is a C grade, what should they actually take away from it? >> A C grade with a with a high fundamental grade of B or A is fine. >> Let's stay with AI for a second. One viewer asked about two companies that most investors outside of the semiconductor world probably wouldn't know as well. That's Cadence and Synopsys. These companies provide some of the critical tools used in designing advanced chips. So, how important are these companies compared to a company like Nvidia? >> Well, these obviously help the chip industry design their new chips and their business is okay. So, let me just give you the details of Cadence Design, for example. Their sales are supposed to be up 20.4%. That's their third-quarter sales according to analyst estimates. Their earnings are supposed to be up 6%. When your earnings don't grow as fast as sales, it means your margins are under compression. However, the analyst community is revising their earnings estimates higher for Cadence. As an example, in the last 60 days, they've gone from $1.95 to $2.05. So, that's a you know, that's good. That's a positive sign. Now, Cadence does have a good surprise history the last four quarters, but they're not a they don't have big surprises. Last quarter was only 2.7. So, Cadence is up and coming, but when I put in my eight-factor fundamental model, its surprises are good, just not as good as some of my other stocks. The operating margins are under compression, so it's going to get a poor rating there, okay? Its earnings momentum and it doesn't look good, either, so it'll get a poor rating there. So, Cadence is a good stock, it's just not checking all my boxes. So, that's why it's not recommended in my newsletters, but you know, Stock Traders tracking it, and if it improves, I'll be all over it. Now, Synopsys is a similar story. Their sales are supposed to forecast to be up about 13.5% in third quarter. Their earnings are supposed to be up 42.3%. So, that's a lot better. When your earnings are growing faster than sales, that means your operating margins are expanding. We do have pretty good analyst revisions on uh Synopsys in the last month. The analysts have revised their estimates from $3.99 a share to $4.13 a share. So, that's a good sign. Now, uh the stock has beaten four quarters in a row, but again, not spectacular surprises, but decent. They beat by 6.4 last quarter. So, Synopsys will show a little a little better on my radar cuz it has the margin expansion, but it's just not as strong as some of my other stocks. So, that's why I'm not recommending it now, but it is up and coming, and if it starts to have blowout surprises and big upward analyst revisions, bigger than they have been, yeah, I may recommend this stock. >> So, we've got Nvidia buying back stock, growth holding up, but Treasury yields are climbing. So, let's zoom out a bit. We're heading toward the midterm elections, and I know you've looked at how the S&P 500 historically performs. What does this history tell us? >> Yeah. You have an exhibit there showing that the next 10 months should be phenomenal. The fourth quarter is the strongest quarter of the year. Uh I think a lot of it is the holidays. People just get happy during the holidays. What's going to happen after the midterm elections? Well, everybody's going to stop arguing with each other because, you know, when you go into an election, the political consultants want you to vote emotionally. They don't want you to think and be rational. They just want to get you all riled up, okay? And so the political parties will, you know, stop their nasty rhetoric. It'll wind down dramatically after the midterms. But, what's also going to happen is everybody focuses on the holidays, and the holidays are happy time of year. So, when we're happy, investors are happy. There's also a lot of year-end pension funding. November is a season of the the second strongest month of for the stock market. So, I'm expecting a early January effect. We also have the annual Russell realignment. Well, actually the annual Russell realignment is was in June, and we have another one in November. It's two this year. So, that's going to help a lot of the smaller cap stocks. So, yeah, I'm expecting a great year-end rally, and then the third year of a presidential election term is usually the strongest for the market. And so, yeah, if history repeats, the next 10 months are going to be great. >> One thing that could help both inflation story and the rate story is cheaper energy. You know, crude has already started coming down, so do you see more relief ahead? >> Yes, I do. Now, we I know we got some grief. Some people said, "Oh, you said oil was going to fall." Well, it is falling. It's been falling since September 16th. It's just meandering slightly lower because what happens in the fall is uh demand drops. It's a weather thing. I'm in Florida now. We have a cold front, okay? That's a good sign, okay? So, as as everything cools off, demand drops, okay? And then demand will surge again in the spring, okay? And the reason this happens is there's more people in the northern hemisphere than southern hemisphere. So, we are getting our seasonal low, okay? Now, sometimes prices like uh can remain high because the refineries do their maintenance, or as we know now, there's a diesel shortage. So, our refiners will still continue to make record profits. We recommend four refiners. It's just a normal seasonal phenomena and I think we should stop worrying about energy prices. The political pundits are just getting all riled about this because there's a midterm election coming up, but I haven't seen a solution from the other side. And if anything, what's caused a lot of the problems out there is war between Ukraine and Russia because Ukraine keeps blowing up Russian refineries. And Trump told them to knock it off. Now, Russia is a huge supplier of diesel around the world. And now they're a net importer. So, between the Russian refineries getting taken out by Ukraine, again, an offset war started with another administration, and Saudi Arabia as pipeline was shut briefly and that hurt the output of five refineries. The pipeline's been restarted and those refineries are are producing you know, refined product now. You know, things are going to settle down, but we do have an acute diesel shortage and I would literally largely blame the fighting between Ukraine and Russia for that. >> Well, speaking of refiners, are there any specific names that you would still like? >> Yeah, the the four we like that you're showing here are PBF. It's based in New Jersey, but it's it's in one of the new refiners we've added. We, of course, have HF Sinclair, DINO, that's the the one that has the dinosaur, the green brontosaurus dinosaur as their symbol. We do love Marathon Petroleum, MPC, and Phillips 66, PSX. There are other refiners out there like Valero, VLO, that still rank well. I I It's not in portfolios or my newsletters yet, but it's it's acting well. You may know that Valero and Phillips 66, PSX, did close the refineries in California over the all the restrictions. >> Let's finish with the AI infrastructure trade because this is where we've got a ton of viewer questions. So, let's run through a few of them. Let's start out with Bloom Energy. Bloom joined the S&P 500, but the stock has been falling a bit. So, So, company tied so closely to the AI power and data center story, what's going on? >> Okay. Well, Bloom is still up if we look at it in the past month, and let me just get the latest data for you here. By the way, as I'm talking to you now, Bloom is up 14.52%. So, it was down the day before, and people were getting upset. But, obviously, all those losses from the day before have been erased today. So, just so you know, in the past month, Bloom Energy is up 42. 81%, okay? And we're recording this on Tuesday. Year-to-date, the stock is up 246.42. So, but so some folks were upset by what it was doing yesterday, okay? So, I think everybody needs to take a chill pill and realize when stocks run, they do back and fill. Now, why Bloom Energy has been so spectacular in the past month and year-to-date is Nancy Pelosi and her husband, Paul Pelosi, who took a big position at the right time, right around when the situational awareness hedge fund was being liquidated. And I am dead serious when I say that the Pelosis are the world's greatest investors. And to turn their portfolio from 3 million to 300 million, okay, since Nancy's been in Congress, is an incredibly impressive feat, okay? And again, if I ever run into them, I'm going to try to get them to do an investment newsletter, cuz we all want to know what they're doing. Now, on top of that, Nancy did and Paul did buy the stock before it was added to the S&P 500. I think that's just a coincidence, but when a stock gets added to the S&P 500, it is a good thing, because the stock gets more institutional flows, the stock's volatility would tend to drop. So, yeah, enjoy the ride with the Bloom Energy. >> And then we have the stock MTZ. Everyone wants to know why this one is plunging when so many other companies tied to AI infrastructure have been surging. So, what's different here? >> Yeah, this is one of the stocks I recommend. It's called MasTec, and I just want to be really honest with you. That is a big utility engineering firm just south of me in Miami, and they missed by a penny last quarter, okay? And that's why the stock got hit, but it's rebounding as I talked to you today, it's up 3.6%, so that's pretty impressive. And here's what's uh their their forecast of sales are supposed to be up 24.5%. Their earnings are supposed to be up 19.5%, and we have very minor analyst trims on the stock from 309 60 days ago to 296 today. That's minor. MasTec has had a very good earnings surprise history. Last quarter again, it missed by a penny. They earned a $2.22 a share operating. Analysts were expecting 223. So, this is an example of a stock I laid an egg in. I apologize, but I'm going to hold the stock through this earnings announcement season cuz I expect this stock to get its mojo back. The other thing is it's imperative that MasTec continues to help Puerto Rico rebuild their grid. If we ever can help Cuba, MasTec would probably be one of the companies that would go in there and help rebuild the Cuban power grid. Probably just be redone from scratch. And as all the data centers come in, we have to expand power grids and and all that and make them more efficient, MasTec profits from that. So, yeah, this stock is one I recommended in my newsletters, and I do apologize that it missed by a penny. >> Now, let's flip it around because one name has been working, and that's Argan, ticker AGX. What do you see when you look at Argan right now? >> Okay. That's funny that somebody thinks it's working cuz it's a very volatile stock, okay? I want to give everybody the example of the ride it's been on. Year-to-date, the stock is up 21.74%. A past month, it is down 8.7%. As I speak to you today, it's up uh 7.4, that's good. Argan builds the data centers, okay? And there's all these nasty short sellers out there that say they aren't going to be able to meet their demand. They're not big enough. Anyway, no, that's not true. Okay? Their sales are forecast to be up 41.1%. Their earnings are forecast to be up 45.1. The analysts are revising their estimates higher. In fact, in the last uh 7 days, the analysts went from $2.97 to $3.15 a share. And last quarter, they had a 40.2% surprise. This stock has had huge surprises the last three quarters. The smallest surprise last three quarters was 38.9. So, yeah, Argan's going to be fine building out solar data centers. But, you know, you know, successful stocks get attacked by nasty short sellers, okay? And short sellers are just horrible human beings that are trying to ruin the party for everybody. >> And finally, we have Advanced Energy Industries. The ticker is AEIS. Where does Advanced Energy fit into this whole AI infrastructure and power story? And what is your current view on the stock? >> Advanced Energy Industries is behind the scenes on semiconductors. They basically have this plasma power product to help better design semiconductor and the wafers that they put the semiconductors on. So, it's behind the scenes building out all the equipment, okay? And their sales are supposed to be up 39.2% and their earnings are supposed to be up 74.4% in the third quarter. And we have big upward analyst earnings revisions from $2.44 just a month ago to $3.04 today. That's a big, big upward revision. This stock had a 23.8% earnings surprise last quarter. It has surprised past four quarters, but the surprises are getting bigger. So, we got positive analyst revisions, big surprises, good forecasts of sales and earnings, margin expansion. This is why I recommend this stock because it's checking all the boxes in my eight-factor fundamental. >> So, Dad, let's just break it down. If we had to put this all together, Nvidia's making history, Treasury yields are climbing, growth stocks are still holding up, and underneath the surface we're seeing some huge differences between individual AI and infrastructure stocks. But, what is one thing that you want investors watching this week? >> Well, I want them to enjoy quarter and window dressing. You know, obviously Wednesday's the last day of the quarter, and the quarter and window dressing will continue. I just want to explain to you what that is. That's where the the big professional managers want to make their portfolios pretty before they see their clients, okay? So, they want to brag to the clients, "Look at all the great stocks we have, and look at all the great sales and earnings." That's what we recommend, okay? So, we naturally benefit from quarter and window dressing. Then, we'll start the third quarter in October. Sometimes there's a lull, okay? But, then earnings will come out in the second week, led by financials. We expect the financials to have good earnings, but I'm not recommending any financial stocks at this time. Then, in the third week, our stocks will start to announce. And FactSet just increased their earnings estimate for the third quarter to 29.1%. So, we are going to have this is some incredible party called earnings announcement season with wave after wave of great results. We have 5% GDP growth, and as far as interest rates are concerned, that doesn't derail growth stocks. You know, Paul Hickey pointed out very eloquently that a lot of the reason there might be upper pressure on interest rates, other than governments are running deficits and things, is that businesses are borrowing, okay? Because business is good, and they're growing. So, that's not a bad reason for rates to go up. But, the bottom line is it's time to be happy, it's time to celebrate, and all that negative news you hear out there will be gone after the midterm elections because all the political opponents are trying to do is get you to be all emotional, okay? The bottom line is we need the data centers. America needs to win the AI race and we are winning and we are going to continue to win. That is where you want to invest. AI infrastructure, energy, of course energy is refining, shipping, uh integrated energy. You want to invest in the best pharma. I like Eli Lilly. It's big weight in our portfolios and then in my newsletter portfolios and then finally some of the aerospace stocks that are going to be profitable from just the commercial aviation business as well as all the rocket launches going on. >> All right, now we want to hear from you. Louis says that Nvidia can hit $300 by the end of the year. Do you agree? Drop your Nvidia predictions in the comments. And if there's a stock you want Louis to break down in the next market buzz, leave the ticker below. We'll be pulling more of your questions directly into the show. We are still doing our 30,000 [music] subscriber giveaway. That link on how to enter will be in the description below. Thank you all so much for watching. Please give this and subscribe to our channel for more videos from us. We really [music] appreciate all your support and joining us every week. We'll see you at this Sunday for a new video. >> [music]