Thursday Feb. 27, 2025 - Nvidia Analysis
40:06 Share

He's been seen on CNBC, the Fox News Channel, and the Fox Business Channel. His articles can be found on MarketWatch, Seeking Alpha, TheStreet.com, and many other places. He's the author of the weekly Best Stocks Now newsletter and the inventor of the Best Stocks Now app. He's president of Gundersen Capital Management. Here is professional money manager Bill Gundersen.

And welcome to the Thursday. It's Thursday already. Tomorrow will be the last day of February. Today is February the 27th, 2025. This is Bill Gunnarsson and it's the Best Stocks Now show. And we are live. We're joined by Barry Kite, our Chartered Financial Analyst. Man, I'll tell you what, the market just cannot make up its mind ever since NVIDIA launched.

reported last night it was flat at first and pretty much flat throughout the night then it was looking kind of buoyant this morning and then the whole ai sector went south when the market opened so go figure we'll see where we end the day we have had some bad economic reports right now the dow is up 118 points

That's a quarter of a percent. It's at 43,551, quite a bit below that 45,000 area, though, that it was not too long ago. We've got the NASDAQ is down 192 right now, down 1%. It opened to the upside, and I think maybe the...

Oh, the jobless claims, and there was one other thing. Jobless claims and one other one, which we'll get to, that are probably hurting the NASDAQ here today. Pending home sales came in right when we started the show, and they came in. Well, what's that have to do with NVIDIA? I don't know. Exactly. We'll see. Okay, the Russell 2000 down 20 basis points right now.

The 10-year was up 5 last time I looked. That could be a little bitty part of it. The 10-year up, yeah, 4 basis points to 4.29. Crude oil, $69.70. Gold, $2,884. It's come off a bit. And the Bitcoin remains under pressure. Bitcoin is down 23.72 points.

And it is all the way down to $85,076 today. That's where Bitcoin is. So welcome to today's Best Stocks Now show with professional money manager Bill Gunderson, president of Gunderson Capital Management. And to say that we're not getting a lot of whiplash here in the market today,

lately would be an understatement this is the pretty much the ninth day it began a week ago tuesday with the palantir government cutting spending news and yes government cutting spending does ripple through the economy and it's starting to show up in a few places which we'll talk about here in a minute uh yesterday we had the 10-year goal all the way down to 4.25 percent

They seem to be pretty optimistic and pretty bullish on cutting a lot of debt and a lot of fat and balancing the budget, Barry. I listened to the press conference, a lot of it yesterday, with his cabinet. And then I listened to the interview with Howard Lutnick. I mean, they're really going after it. But!

What comes with reduced government spending? Well, it's less stimulus, really. Less stimulus in the economy. There's a tradeoff there. And I am all for less government spending. And I am all for cutting the fat out of the government. But you've got to realize that there's going to be repercussions throughout the economy.

And you can make up for the other end via less regulation, for example. There's other non-monetary ways to kind of spur growth, right? And I think right now all we're hearing about is the cut side, right? You haven't heard – nobody's – of course, your normal news outlets aren't going to focus much on it, but –

No one's focusing on the growth side of it, right? Well, the idea is to shift that spending away from the government and over to the private sector, which, again, I'm all for. But along the way, there's going to be a little bit of pain. And you're seeing that show up here today a little bit in some of these economic reports.

Let's see if there's any important earnings. Last night it was all about NVIDIA. NVIDIA didn't report until about 4.30 or so. They did beat, but it wasn't like they smashed expectations. And I thought NVIDIA would either go way up or go way down, and it really didn't either. It was flat.

It was dead flat, which I suppose is a victory, actually. And now, right now, NVIDIA has gone south a little bit. NVIDIA right now is down 2.1%. They just can't quite decide what to make of NVIDIA's earnings, it would seem, from yesterday because the stock was actually looking pretty bullish this morning. I think it was up 1.5% or so.

And now it's back on the downside. Okay, here's a few things that have got the market chewing its fingernails here today. Bear sentiment jumps, which can also be a bullish indicator. Bearish sentiment among individual levels surged to the highest level in two and a half years this past week as the tech and momentum trade showed some vulnerability. And that's absolutely true.

They have shown some vulnerability, but I also pointed out in my newsletter last Friday that the money is not leaving the market. It's just rotating to other areas of the market after a red-hot run by that sector for a couple of years. But the American Association of Individual Investors, otherwise known as AAII, I've spoken to a few chapters over the years,

The bearish camp, those who think the market will be lower over the next six months, jumped to 60% from 40% the week before. Now that's kind of strange to see a big jump like that. But I guess that sell-off,

Spooked a lot of folks, and they're not quite ready to go back in to those growth stocks. Bulls fell to just 19.4% from 29%. That's a big move in sentiment on the market. Now, that's just one source. That comes from the Association of Individual Investors.

It's a big variation from the last time. That's a huge variation, yes. The USDA expands its program to fight avian flu with a goal to lower egg prices. So how do you lower egg prices? Obviously, you've got to get the avian flu, the bird flu, under control.

And that's the approach that they're taking. It doesn't do much good to ramp up chicken production if that bird flu is still floating around. So you've got to, obviously, that's the problem. That's the bottleneck right there. U.S. Secretary of Agriculture Brooke Rawlins announced on Thursday.

a $1 billion comprehensive strategy to curb highly pathogenic avian influenza. I also saw that they're reviewing, I mean, right in Biden's last few weeks in office, he awarded a giant contract to Moderna. I want to say 600 and I don't know. I've got it a little bit later in the show, but it was a big, big contract.

And they're going to review that contract because Moderna was going to go about it with the messenger RNA approach, which was used in the vaccines by Moderna. And I don't know if RFK stepped in and said, hey, wait a minute. Number one, they're analyzing how much money they gave to Moderna. Moderna's stock is down so far because Moderna might have to give the money back. They're reviewing the best way to attack this thing, and we don't know who will end up

I don't think it'll be Elon Musk, no matter what the case may be. I don't think he's got a bird flu franchise. He's got everything else going on, but not the bird flu. So anyways, how are you going to lower the price of eggs? It's getting bird flu under control. There's no question about it. That's what's got to happen. So anyways, I don't see lower egg prices anytime soon.

Egg prices are significant for restaurant operators such as Denny's, McDonald's, First Watch, Albertson's, Waffle House, Tractor Supply, Vital Farms. If you want to pick up a chick, this is the time of year over at Tractor Supply. They start rolling out the chicks to take them. They won't allow them in our neighborhood. I'd have a few. I'd have a few layers if I could.

But I think the HOA might have some indigestion over that. Microsoft asked Trump to simplify the AI chip export curbs. Well, yeah, I mean, Microsoft would love to be able to sell to the entire world, but they're afraid that this new rule that has been put out there by the Trump administration, and I'm sure this has something to do with the sell-off in NVIDIA,

He's curbing the sales of advanced U.S. AI chips to much of the world, not just China. Microsoft will urge Trump's team to ease the limits on chips that can be used in data centers for training AI models so they no longer apply to a group of U.S. allies, including India, Switzerland, and Israel.

So anyways, that's a little bugaboo there in the tech sector. We'll be right back.

And welcome back here to the second quarter of today's Best Docs Now show. Well, I'll tell you the other thing. It hit me during the break here. The other thing that's got the market nervous is the tariff talk. And Trump is absolutely ramping up big time the tariff talk, even though he gave them an extension, both Mexico and Canada, of 30 days to the tariff talk.

Now he's saying that it's up on April the 2nd. Okay, so we've got that hanging over the market. And that's 25% against Mexico and 25% against Canada. And apparently when he met with Trudeau, the first thing he said to Trudeau was, Justin, how much do we buy from you every year? How much do you buy from us every year?

And he says, why do we have such a big trade deficit? And I guess Trudeau had no answer for that, right? And, you know, he's got it in for Canada, Mexico, and obviously China. And Europe. Well, everybody outside of the U.S., I suppose. And the tariff talk upsets the markets.

So, you know, that and cutting the government spending, a couple things that upset the markets. But, you know, there's going to be a little bit of pain with trying to get things on a more even playing field, it would seem like. Number one, getting our massive debt under control and the spending under control. It just can't keep going on the way it's been going.

And the massive trade deficits that we've been running. Okay, GeoGroup. This is another sign of the times. GeoGroup is a publicly traded prison stock. And they get a contract from the U.S. government, U.S. Immigration and Customs Enforcement, ICE.

That's one of the problems they have is they don't have the infrastructure yet in place for massive deportations. They've got to have a place, in some cases, to put the folks in a holding pen, I guess. And they've awarded a contract to GeoGroup, a 15-year fixed-price contract. This will be in the Newark, New Jersey area to help with this whole process. Now...

The initial jobless claims, I forgot to write those numbers down. You got those numbers written down? Oh, yeah, I got them right here. Because they came in pretty high. That's the highest they've been in a long time. Yeah, I think it came in at 242, was expected to be 224. Of course, you know, the average.

average right is i think the prior four-week moving average is 215 000 so that shows you um 242 i did read in a little bit uh where it was a couple of states that had some big uh

You know, big weather issues. Probably Maryland. Or no. Massachusetts is one. And Washington, D.C. Yeah, that is a piece. But, yeah, part of it was also some of the weather. So it will be interesting to see, as we talked about, how these kind of things will shake out over time because –

You know, if you've got people leaving the government, say they get the eight-month, you know, payment, will they all hit in the eighth month, right, on the numbers? Yeah. Or will they hit prior to that? Yeah.

It'll just be interesting to see how some of this plays out. Well, we are highly focused on those numbers that come out every week, those initial jobless claims, because that's going to be one of the very... We're going to go into a recession at some point in time. I mean, the market and the economy is cyclical.

And there's really no way to avoid recessions. Now, it's been since 2008, 2009 when we had the last recession. It was the Great Recession caused by the financial crisis. So this has been a very, very long expansion, one of the longest in history ever.

I don't remember a longer expansion in earnings for the S&P 500, which have been going up since 2008, 2009. I'm not saying there's one coming, a recession, but there will be one in the future. And we look for signs. And as I've always said, the reason I don't buy into the asset allocation model is

Because if I'm 30 years old, I'm supposed to have 70% of my money in the stock market. But I think when a recession hits or is coming, I think you've got to lower your exposure to the stock market, especially if you're 70 years old or 65 years old. So we are always on recession watch. I've been on recession watch since the last recession.

So is the entire market, Barry. How many times have they predicted? You know, we had the, what's the big indicator that we, oh, the yield curve inversion. Right. I mean, you had the old joke about economists, right, is they're always pessimistic, so they've called 42 out of the last three recessions. Yep, exactly. So, I mean, there's always recession talk. Now, I will say this.

If there's ten dominoes that got to fall, you know, this would be one domino. But one week does not a trend make. We have had some rough weather, I mean, including snow here in Charleston, which is unheard of. And we also have what's going on in Washington, D.C. I don't know if that's showing up in the unemployment numbers yet.

But that is something to take note of, $242,000. Okay, new Trump order grants more power to Doge to review contract expenditures. So anyways, they can go in and review expenditures and contracts and whatnot.

try to make better deals, all kinds of different things. The order also puts a 30-day freeze on credit cards held by agency employees except for those engaged in disaster relief or natural disaster response. So I mean to tell you, I mean, they are really, really looking in all the nooks and crannies of

to find waste, which it shouldn't be too hard at first. It'll get harder and harder as they get the stuff that's right on the surface. But they seem to be finding plenty. And I think Elon Musk, he has not found a trillion dollars yet. I think it's up to about $100 million or something like that. But he thinks that eventually he'll find a trillion dollars in waste that can be cut.

from the budget so we'll see when they're using a broad brush I saw something with I think we're getting the aid agency or whatever I think it's pretty much getting 85% haircut USAID is basically out of business they took the sign off the building and everybody went home closed the curtains and got a vacancy sign on I don't know who would take that space but

And if they've got a credit card out there, it's going to be cut off too. Now, Verizon has a big contract with the FAA. We've heard a lot about this recently, the FAA and how far behind, not far behind, but they could definitely use a little bit more upgrade to their system. Well, it was awarded to Verizon. Now, this is going to be controversial.

It may go to SpaceX, to Starlink, owned by Elon Musk. And, of course, that doesn't look good on the surface. I say whoever the best and the cheapest is, is who should get the contract. We'll be right back. Well, the top brass don't like him talking so much.

This is Bill Gunderson. Thank you for tuning in to today's Best Stocks Now, Best Inverse Funds Now show. I put several hours of research in during the wee hours of the morning each day to bring you the very best cutting-edge stories that I can.

To get two free weeks of my newsletter, go to GundersenCapital.com. To talk to us about our fee-based only money management services, call us at 855-611-BEST. Now, back to the second half of the show. Call the Inspirator because there's something good.

We've got to get together sooner or later. And welcome back here to the second half of today's Best Stocks Now show. Well, I see the Dow is up 334 points right now, which is worth taking a look into. It's mostly 3M, Visa, Raytheon, Travelers, McDonald's, Boeing, and UnitedHealthcare. Nothing's really up big today.

But that's a pretty good move there on the Dow, which was looking pretty shaky yesterday. I looked at the Dow chart and it was kind of like teetering on its support level, but obviously bouncing off of that today. The NASDAQ, on the other hand, is down.

The NASDAQ is down 65 basis points or 125 points right now. Okay, the bird flu thing, here's the number. Moderna was awarded a $590 million contract. You know, Barry, that's not for bird flu shots. That's to do a study on the bird flu and come up with something.

And this other company, Vaxart, was awarded a, let's see, $453. So there's a billion dollars right there. And Vaxart received a stop work order for its research under a federal contract for an, oh, it was a COVID vaccine, actually, that Vaxart, they put an end to that.

and they're reevaluating the contract that Moderna got for bird flu. You know, the vaccine, the mRNA, obviously is a bit controversial. There was a lot of people that had heart issues, etc. Now, if you would have said that on Twitter, you'd have been banned from Twitter, right? I would have been de-plained, de-programmed, whatever. But there obviously was something there.

That was worrisome, bothersome. It's a controversial issue. Let's study it. Let's make sure. That's all is what they're doing. Okay, now let's switch to NVIDIA.

What do we make of that video? On the other piece, though, I will say in terms of if you make a bad contract, right, there's really no repercussions, right? So, like, you could be someone in the government, make a bad deal, and what happens, right? I mean, it's not like you're – it's technically not your money, right? I mean, it's – I don't know. There's just some weird – Yeah. A lot of those contractual things. I feel like there's a lot of –

People are just making deals, and they're not even spending. It's like a company's money that has a bottom line. There's not a lot of good follow-up. It's not run like a business. No, it's not. Here's $100 million. Go study this, and they never report it. It's just like, hey, it's got to tighten up big time. Okay, NVIDIA is down 3% right now.

It's never really got more than 2% or 3% to the upside. So they came in with $0.89. The street was expecting $0.85. They came in with $39.3 billion in revenue. That's unbelievable. And that beat by $1.2 billion. But, you know, I think when you've got a stock like NVIDIA...

Hey, we want you to absolutely blow the numbers away. Now, it is decelerating. I mean, if you go back a year ago, they were growing, their sales were growing by, they had a 262% quarter.

in growth in sales and 455% growth in earnings. Now they're only at 78% growth. Yeah, only at 78 year over year. In sales and 71% in earnings. And so it wasn't wow enough, and that's why you have. But now, okay, so let's just take a look at the valuation here on NVIDIA.

Let's see. I've got to get that in front of me here. Control-C. Okay. I still have some pretty good valuations, some pretty good numbers on NVIDIA. And I'm using a very conservative...

growth rate I think about 20 percent is what I'm using and I still get over a hundred percent upside potential over the next five years now that's hard to believe I know because Nvidia is now a 3.1 trillion dollar company if it doubled again it would be a 6.2 trillion dollar company and on the surface that seems like a wild a wild shot that that's not ever going to happen but

That's all I'm doing is taking their projected growth rate, and I'm extrapolating that out over five years, and I'm applying a fairly reasonable multiple to that.

And I come up with a pretty big number here, over 100% upside potential on the stock. And on the fundamental criteria, too, I mean, you can look there at the app in terms of the peg ratio at the moment. 1.2. Yeah. That's the market peg rate. The market's peg ratio is 2.

Yeah, and if you look at used forward earnings, it's actually below 1 because they've got a forward PE of 29 and an earnings growth figure of 48%. So I read through the transcript, and you can just Google it and read through the transcript, but there's some pretty compelling figures as you read through it, particularly on the

on the automated driving, autonomous driving front, where they've got some irons in the fire there that are pretty eye-opening and some certainly in the health care piece too. Jensen Wang said that when ChatGPT came out not quite a year ago, about a year ago, he says that AI since then needs to be 100 times faster than it was back then.

Now, over the last 10 years, NVIDIA, an investment in NVIDIA, 73% per year. Do those numbers on $10,000. Growing by 73% for 10 years. Last five years, 81%. Last three years, 77%. The last 12 months, 66.6%. So obviously, it's not going to keep up numbers like that.

But I have no issue whatsoever with this valuation on the stock. What it lacks is momentum. It lacks the momentum side of the equation. For whatever reason, I mean, it's been going sideways. It was $130 last August, and here it is several eight months later, and it's $130 or thereabouts.

But I'm not selling my NVIDIA. Would I buy more for new clients? I think I would. The valuation still looks pretty compelling to me. Now you've got some Morgan Stanley analysts checking in, and he says the guidance shows its remarkable growth phase isn't over yet. So I don't know what the market was expecting. The market can be strange from time to time.

But after nearly two years of explosive growth, their latest numbers reinforce the view that the artificial intelligence spending boom is not slowing any time soon, even if the investor sentiment doesn't always seem to agree. So that's what you've got right now. You've got a disconnect between investor sentiment and the actual growth that they have projected.

So I just think you hold tight in there, and I think, well, deep seeks hurt it a little bit. That took some momentum out of the stock. But I still see pretty robust. I can't think of a sector in the market.

that can even touch the kind of growth that we're seeing with NVIDIA and AI. And they're in everything. I mean, I'm looking here. This is his comments from yesterday that early and large robotics applications, autonomous vehicles,

And, you know, that vertical in the automotive side is supposed to grow to $5 billion this year. So, I mean, those pieces, they've got a lot of irons in the fire in terms of AI, not just on the data center side, but then, you know, beyond that and other applications. And health care, too. I mean, they're going to be at a health care conference, I think, next.

in early March and we've seen, you know, seen notes come by and you've highlighted on the show where they were, you know, doing some work on vaccine, you know, or, or with, uh, drug creation using AI and some, uh, you know, doing, doing that kind of trials, uh, without actually doing it on humans.

The biggest reversal now that I've seen today, and it's associated with NVIDIA, Vistra was up 8% when they reported their earnings, and now it's down 6%. That's a huge turnaround. Oclo is another one today. It was up, I think, hit 38, and the last time I looked it was in the low 34s. Well, there is some news out there that Microsoft is canceling

some orders for data centers.

Maybe that's it. I don't know. But I'm still a big believer in the nuclear renaissance myself. But that's quite a turnaround. Something obviously was said during the conference call, which, Barry, you look into that. Why the big turnaround in Vistra, VST out of Texas, which was up 8%. Now it's down almost 7%. That's crazy. We'll be right back.

And welcome back here to the final segment of today's Best Stocks Now show. We've got three or four stocks left to talk about here today. The next one we're going to talk about is Snowflake out of Bozeman, Montana.

How many publicly traded companies are headquartered in Bozeman, Montana? I used to go very close to Bozeman, Montana. Every summer, my uncle owned a big resort in Ennis, Montana. And Bozeman was not too far from there. In fact, his sons ended up, one of them ended up being a principal of a school up there in Bozeman, Montana. That's where Snowflake is.

which is a $59 billion company. I'll bet that brings in some revenue there to Bozeman. Nice tax dollars right there. Oh, boy. Snowflake provides cloud-based data warehousing that allows corporate users to store and analyze data. Okay? They had a very good quarter. They're not real profitable yet, but...

Their sales have been growing 33%, 29%, 28%, 27%. We own Snowflake in our ultra growth portfolio. It's one of the 20 stocks in that portfolio. Snowflake is having a good day. It's up 7.9% on six times normal volume.

And it has a very good chart today. Their full year guidance surpassed Wall Street's expectations. So you raise that guidance and up goes the stock. That's the way it works. You've got the CEO of Snowflake saying, Today, Snowflake is the most consequential data and AI company in the world. That comes from their CEO, Sridhar Ramaswamy.

Which doesn't sound like a Bozeman native, but it's funny that they're located there in Bozeman. I'm going to do a little research and find out how they ended up in Bozeman. Maybe friendly for business would be my guess, right? Yes. Okay. So anyways, they have more than 11,000 customers are already betting their business on our easy-to-use, efficient, and trusted platform.

We see tremendous opportunities ahead to support our customers throughout their end-to-end data lifecycle, and we are laser-focused on delivering on this vision. They also expanded their partnership with Microsoft to let customers directly access the latest OpenAI model. So the symbol is SNOW.

Which they have a lot of in Bozeman, Montana. I don't know if that's where they got it. Well, the name of the company is Snowflake. Maybe that's where they got the symbol and the name. Yeah, and now it's making sense. They haven't even put that together until now. But a major player in software is Snowflake. Okay, Salesforce, which is a member of the Dow. That's Mark Benioff's company. Not a very good report. Salesforce is an expensive product. I was having a little discussion last night.

with someone in the software industry here in Charleston, in fact. Works for the one that does the software for nonprofits. Oh, yeah, yeah, yeah. BlackBot. Yes, BlackBot. And I said, how much does it cost for an annual subscription to BlackBot? And he says, well, you know, like if you're a Harvard University, it's millions.

This description to Black, okay, all right, no wonder these software stocks. But Salesforce is not cheap, okay? It's not a cheap product. And you've seen, I mean, we use Morningstar for tracking, doing our billing and everything and everything.

And you've seen how much Morningstar and how much the competition charges for software subscriptions. It's a lot of money. It's crazy. And Salesforce down 3%. Okay, that doesn't really bode well. I mean, if companies are really growing, I mean, they're not going to be cutting back on Salesforce. They're going to be expanding or signing up for Salesforce. But they came in with just 8% growth in sales.

And 21% growth in earnings. Salesforce is down 2.9%. I unloaded Salesforce last week. I didn't like the way it was trading. It was breaking below its support level. I sold it at 310. It's 298 today.

It's just, you know, the momentum is just not there. Evaluation is one thing, but you've got to have momentum. The other one that I'm really happy with here today is a Brazilian company by the name of Embraer. Embraer ADR, that stock, look at the breakout on that thing today, up 6.8% as they issue guidance for 2025.

And, you know, aviation, there's no lack of demand for planes. But look at all of the issues that we've had, especially at Boeing recently. Now, Embraer makes more of the commuter-size jets. But Embraer is a very well-run company. Embraer delivered 75 jets recently.

In Q4-24, 31 were commercial jets and 44 were executive jets. Well, I'm still waiting for mine. They haven't told me when it will be here. Embraer reports Q4 results issues guidance for 2025.

Okay, last but not least, 24th of March through the 26th of March, I'll be in town in Sarasota and have opened two days, two days of appointments at the Westin Hotel, the big monster on the corner there.

It used to be like the monster. Now there's monsters all around it that are even bigger monsters. That's right. But I will be there. You've got two days, however many people we can fit into those two days to make an appointment, 855-611-BEST, 855-611-BEST, basically from 7 in the morning until 7 in the evening,

I will make myself available, whoever wants to come meet with Gunderson.

and talk to us about the services that we offer and what we might be able to do for you. Give us a call at 855-611-BEST, 855-611-BEST. And the four-week trial, as always, is still ongoing to get all of the alerts during the day, the big giant newsletter on the weekends, access to the Best Talks Now app,

The whole enchilada, even a tamale on the side. Go to GundersonCapital.com, GundersonCapital.com, or to set up an appointment via phone from anywhere in America. 855-611-BEST, 855-611-BEST. Have a great day, everybody.

This show is not a solicitation to buy or sell any securities. Bill Gunderson or clients of Gunderson Capital Management may have long or short positions in stocks mentioned during the show. Past performance is not indicative of future performance. Gunderson Capital Management is a fee-based registered investment advisory firm. All accounts are held at Charles Schwab. Schwab is a member of SIPC and FINRA.