A market preview before Nvidia's earnings release on Wednesday, August 28th.

Market Over-View

8/27/202411:15 AM

During my career, I have seen many different market conditions. There are various over-bought, over-sold, bullish, bearish, inflationary, recessionary, trader markets, etc. However, the current conditions are unique.

As we have entered the last month of the third quarter, there is tremendous focus on one company, Nvidia. First, for due diligence, our firm does not own a position in Nvidia or have an investment relationship with the company. However, the clients we advise have positions in Nvidia.

After the market closes on Wednesday, August 28th, Nvidia will announce its earnings. In the last seven quarters, Nvidia has crushed earnings and raised further expectations for the next quarter.

When Nvidia started in January 2021, its market capitalization was about $400 billion. Today, it is just under $3.2 trillion. In perspective, Nvidia has a larger market cap than Meta(Facebook), Tesla, Netflix, AMD, Intel, and IBM combined or a greater valuation than the German, French, and U.K. stock markets.

Artificial intelligence has changed the world. Some have said it is more important than the development of the internet. I heard that during the dot.com area, but at least that period was spread among many different companies.

When Nvidia announces tomorrow, it will be one of the most scrutinized conference calls for the earnings season. In my early opinion, Nvidia must crush earnings and announce a higher ceiling on its future earnings potential.

If Nvidia does announce both, the stock should have a tremendous upside for the day and the remainder of 2024. Should the first two occur, the technologies names, the Nasdaq, and any mutual fund and ETF with technology in its top ten holdings will rally as well.

If Nvidia disappoints, I expect the market to sink. Nvidia will be hammered downward, and we will hear all the doomsayers on every cable business channel saying they were warnings about this quarter.

We will hear from the broken clock experts who have been calling for this event for over a year. For those newer readers, a broken clock is always right twice a day, but the clock is still broken.

Remember, the first rule of investing is that the stock market predicts a company's valuation in the future. You are not investing in a company for what it did in the past but for what it is predicted to do in the future.

I don't like this current situation because of the emphasis on a single company or sector. I like the future ahead of Nvidia and the companies investing in artificial intelligence and other new technologies.

Still, I don't take away from other companies working to improve their companies and grow their earnings. If you are investing for the future, a downward pullback could be an excellent opportunity to add quality names.

It could be a time to take some profits and re-balance your portfolio, or it could mean nothing. Don't be afraid of the future and don't be afraid of long-term investing.

Focus on "your personal goals and time horizon, and most importantly, be comfortable with your investments. If you don't sleep well at night or are wringing your hands about the next 30 hours, you may want to change how you invest.

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