The Wednesday Letter 183 - 30 August 2023

THIS WEEK: NVIDIA Results; Republican Debate; Argentina's Anarcho-Capitalist; S&P Sectors Update; Tweets and Charts.

NVIDIA RESULTS

NVIDIA reported strong Q2 results last Wednesday. Revenues and net income were higher than expected despite the large increase in guidance in May. The company also raised guidance for the current quarter and the stock jumped 8% after hours to over $500. It closed yesterday at $487.84 with a year-to-date gain of 234%.

There are two questions: Is NVIDIA's earnings surge temporary or sustainable? and, is its stock mispriced?

First, NVIDIA's surge is driven by the Artificial Intelligence (AI) frenzy that kicked up in January. Companies are racing to invest in the hardware that is necessary to roll out an AI-based offering. As many have noted, this buying panic is reminiscent of that seen during the 1999-2000 dotcom bubble when no price was too high for corporations to gain a place on the internet or for mobile operators to obtain 3G lice…