Nvidia’s First-Quarter Triumph, Target’s First-Quarter Miss, and More!
Editor’s Note: It’s Friday at last!
But before we enjoy the long weekend, let’s get to the news.
Nvidia Does It Again
Nvidia’s (NSDQ: NVDA) latest earnings report showed that demand for the company’s chips is still going strong. Yesterday, Nvidia’s fiscal first-quarter results included a 427% increase in its data center business as companies continue to buy its artificial intelligence (AI) hardware.
The world’s biggest tech companies — including Microsoft (NSDQ: MSFT) and Amazon (NSDQ: AMZN) — have been scrambling for data center graphics processing units (GPUs) to add in-demand AI services to their product portfolios. These firms have indicated that they anticipate spending big money throughout the rest of the year.
That trend helped Nvidia report first-quarter revenue of $26 billion, versus Wall Street estimates of $24.7 billion. That’s a 262% increase on a year-over-year basis.
For the current quarter, Nvidia expects to report revenue of roughly $28 billion. The analyst consensus has estimated revenue of $26.8 billion.
Breaking down data center revenue, it rose 427% in the first quarter to $22.6 billion.
According to Nvidia’s chief financial officer, Colette Kress, this was thanks largely to demand for the company’s Hopper line of GPUs. Nvidia expects to see a revenue boost from its new Blackwell line of hardware by the end of the year.
Kress also indicated on a conference call that Nvidia’s current customers are already seeing an “immediate and strong return” on their investments. She estimated that for every $1 a cloud-computing company spends on Nvidia hardware, it will profit $4 during the next four years.
Kress noted that newer Nvidia products, such as the Blackwell chip, would grant customers an even greater return on investment. She cited Nvidia’s HDX H200 server product, which is used for Meta Platforms’ (NSDQ: META) Llama AI model, as an example.
“For every $1 spent on Nvidia HDX H200 servers at current prices, an API [application programming interface] provider serving Llama 3 tokens can generate $7 in revenue over four years,” she said.
Meanwhile, Nvidia CEO Jensen Huang said on the call that as many as 20,000 startups in the generative AI field are clamoring for GPUs.
“All of the work that’s being done at all the [cloud service providers] are consuming every GPU that’s out there,” he said. “Customers are putting a lot of pressure on us to deliver the systems and stand it up as quickly as possible.”
According to Huang, Meta alone plans to spend billions of dollars on 350,000 Nvidia chips.
After the company reported yet another quarter of Wall Street-beating results, Nvidia shares surged past $1,000 for the first time.
Nvidia also announced a 10-for-1 stock split and hiked its dividend by 150%.
Target Earnings Miss the Mark
Yesterday, Target (NYSE: TGT) posted a year-over-year drop in sales and missed Wall Street’s estimates for its fiscal first-quarter earnings.
The retailer has been struggling as price-wary consumers purchase fewer non-essential items…
But now Target reports that shoppers are buying fewer groceries as well.
In the first quarter, Target’s net income totaled $942 million, or $2.03 per share. That’s ever so slightly down from the $950 million, or $2.05 per share, reported for the year-ago quarter. According to LSEG, analysts had expected the big-box retailer to report earnings per share of $2.06.
At the same time, revenue dropped by roughly 3% on a year-over-year basis, from $25.32 billion in the year-ago quarter to $24.53 billion. LSEG data shows that analysts had expected revenue of $24.52 billion.
First-quarter customer traffic, which includes both brick-and-mortar stores and the company’s online shopping platform, fell by nearly 2%. And the average amount that customers spent on each Target visit dropped by nearly 2% as well.
Target noted that digital sales rose for the first time in over a year, by 1.4%. However, same-store sales dropped by 3.7% year over year — in line with expectations.
The retailer is sticking to its full-year forecast. Target expects comparable sales growth to range from flat to 2%, while adjusted earnings per share should be in a range of between $8.60 and $9.60.
According to Chief Growth Officer Christina Hennington, sales in food and beverage and household essentials categories dropped by the low-single digits in the quarter.
Unlike rival Walmart (NYSE: WMT), which derives roughly 60% of its U.S. sales from groceries and is currently the largest grocer in the country, Target has focused more on nonessential goods such as trendy clothes and home decor over the decades. Currently, groceries account for just 20% of Target’s annual sales.
However, as stubborn inflation makes consumers increasingly budget-conscious — and as prices on even fast-food menus rise to shocking highs — retailers offering low-priced groceries have benefitted. That’s certainly helped Walmart, as well as discount grocery chains such as Aldi and Lidl.
On Monday, Target announced that it would be slashing prices on some 5,000 frequently bought consumer staples in an effort to keep up with these low-priced grocers.
Fed Survey Shows U.S. Adults Felt Financially Worse Off in 2023
Yesterday, the Federal Reserve released its Economic Well-Being of U.S. Households report for 2023. The report showed that nearly two-thirds of adults in the U.S. felt financially worse off last year due to inflation.
The report found that 72% of respondents said they were at least “doing OK” financially, well below the high of 78% reported for 2021.
However, 65% of respondents said that inflation has made their financial situations “worse.” Of that percent, 19% said that their lives were “much worse” thanks to high prices.
The Fed’s report differs from some of the other reports we’ve seen that have illustrated economic strength here in America. Despite job growth and even reported wage increases, everyday U.S consumers are feeling drained.
Indeed, the Fed found that more than 60% of American households are currently living paycheck to paycheck, with no money left over to save or spend after paying essential expenses. And nearly 20% have left bills unpaid.
The report also showed that low-income adults have been hit the hardest. This group reported skipping meals and even foregoing medical care due to insufficient income.
In a press release, Fed Governor Michelle Bowman noted that the report “provides valuable insight into the financial conditions of American households.
“This perspective continues to help the Federal Reserve better understand how families are coping with the ongoing economic challenges they face.”
The report also indicated that people are feeling sightly more positive about their local economy. According to the survey, 42% reported it was “good” or even “excellent.” In the previous year, that percentage was 38%.
However, before the pandemic hit, 63% of respondents felt their local economy was in either good or excellent condition.
As for the national economy, 22% of respondents felt positive, versus 18% the previous year. However, in 2019, about 50% of adults felt the U.S. economy was in either good or excellent condition.
Who’s the Most Worried About Their Financial Future?
A lot of Americans are concerned about their financial future. But it could be worse.
A recent survey from Statista Consumer Insights showed that 36% of American respondents worry about their financial future.
However, that pales in comparison to Greece — where 60% of households are concerned about the ability to make ends meet.
Also high in the “worry rankings” are Portugal (at 49%), Argentina (at 48%), and Brazil (at 46%).
Take a look:
You will find more infographics at Statista
P.S. Crypto is making ordinary investors rich… and it serves as an inflation hedge, to boot.
But you need to make your move now because the fuse is lit on this market. And every day you wait is literally costing you thousands in profits.
If you’re worried you can’t figure out crypto…don’t be.
Our in-house crypto expert, Alex Benfield, will make it easy for you. You won’t have to figure anything out on your own. He’ll walk you through everything, step by step.
Alex made a personal fortune on crypto. Now, his mission in life is to spread the word about crypto and make other people wealthy, too.
Get in on the crypto action…now. To learn more about Alex’s new trading service, Crypto Trend Investor, click here.