Senior Managing Editor of The Freeport Society
A happy Sunday to you and yours.
It’s been a shortened week for many, with Wednesday’s Federal holiday Juneteenth, so today I’m bringing you some Sunday reading suggestions slightly different to what I’ve shared with you in previous essays.
Today, I’m going to share just two items…
The first, an essay from Freeport Society friend Louis Navellier about why Nvidia (NVDA) could be a $5 trillion company.
The second, an interview that TradeSmith Daily editor Michael Salvatore conducted with our very own Chief Investment Strategist Charles Sizemore about trading in this Age of Chaos.
Let’s get to it…
Why I Expect NVIDIA to Be a $5 Trillion Company
By Louis Navellier, Editor, Market 360
If you had asked me what the most important date for Nvidia (NVDA) in June would be, my answer would have been Monday, June 10. This was the day NVDA stock started trading at its new split-adjusted price following its 10-for-1 stock split on June 7.
However, my new answer is Tuesday, June 18, the day Nvidia’s market cap hit $3.35 trillion – sailing past Microsoft’s (MSFT) $3.317 trillion market cap to briefly make it the largest publicly traded company in the world.
But that’s just the beginning.
I expect Nvidia to blow through $4 trillion in market cap this year and then rise to a $5 trillion market cap in 2025.
But why?
I’ll explain… and while I’m at it, I’ll also give you a “crash course” in algorithmic trading. Then, I’ll share a prediction – one that, if it comes true, will change our lives forever.
Let’s get started.
NVIDIA’s Next-Gen AI Chips
The big jump from $4 trillion to $5 trillion should follow the announcement of the successor to Nvidia’s Blackwell chips.
The fact is, the company spends more than $2 billion to develop its next-generation AI chips – and competing with it has become increasingly futile. In fact, all the other AI chips in development are increasingly low-tech chip solutions, not the deep learning, generative AI chips that Nvidia develops.
The Blackwell chips enable generative AI, which Nvidia calls the “defining technology of our time.” So, the company expects its Blackwell chips will “power this new information revolution,” as it provides AI for all industries.
Interestingly, though, Nvidia refuses to sit on its laurels. The company aims to launch a new generation AI chip every year until the end of the current decade. As a result, this one company is leading the entire market.
In fact, Bloomberg TV recently stated that the Magnificent Seven has now become the “Magnificent One and 499 other stocks” in the S&P 500.
So, I don’t even think the Justice Department and the Federal Trade Commission will be able to derail Nvidia. These two entities recently struck a deal on how to proceed with antitrust investigations into this AI Chip leader, Microsoft, and Open AI. But The Wall Street Journal even said these investigations “may ultimately come to nothing.”
I should also add that the company still has stunning forecasted earnings and revenue growth. For the current quarter, earnings are forecast to more than double year-over-year to $0.59 per share, compared to $0.25 per share in the same quarter a year ago. Revenue is expected to come in at $26.43 billion.
Nvidia has also posted positive earnings surprises in each of the past four quarters, as well as increased its outlook in the wake of these earnings beats.
All the stock needs to do is follow earnings growth and continue to guide higher, and it should soon surpass the $4 trillion market cap before too long, on its journey to $5 trillion.
Algorithms Set to Jerk Stocks Around
As for those other 499 stocks in the S&P 500…
I expect them to be increasingly impacted by mean reversion trading algorithms that Citadel implements after each earnings announcement season winds down.
These algorithms like to hit stocks that are overbought and are typically based on a non-linear neural algorithm that becomes unwound as volatility increases.
Former algorithmic traders that I have questioned have reluctantly hinted that these mean reversion algorithms typically last 10 to 12 trading days, but it all depends on how fast volatility increases.
The neural algorithm folks like to brag that they’re not burdened by any fixed-time cycle and that their neural algorithm “naturally adapts.”
I don’t want to burden you with the math geek jargon (which is essentially how they reinforce their fragile egos), but in the end, these mean reversion neural algorithms just hit overbought stocks and covers them as they back and fill and digest their recent gains.
Conversely, these mean reversion neural algorithms can be used to artificially “pump up” oversold stocks. However, as trading volume dries up, these mean reversion neural algorithms typically run for cover. The reality is that algorithms cannot effectively work without trading volume.
Personally, I am a “liner” math guy, since my quantitative and fundamental analysis is done on a trailing 52-week basis. Although we also run quantitative rankings on a 270-day, 120-day, 90-day, 60-day and 30-day basis.
I’ll talk in more detail about how that system works next Tuesday, June 25, at 8 p.m. during my special event, Prediction 2024. I’ll also share what “financial mania” could lead to the rise of a “New America” that’ll be almost unrecognizable to anyone from our generation.
So, be sure to register for my Prediction 2024 event now so you don’t miss out on anything I have to say next Tuesday.
Sincerely,
Louis Navellier
Editor, Market 360
The Only Stable Factor in the Age of Chaos
By Michael Salvatore, Editor, TradeSmith Daily
We’re living in a critical time in financial history… when an errant social media post can create and erase billions in wealth in a matter of seconds… when deep and worsening budget deficits threaten to unravel the world’s reserve currency… when an accelerating trend towards deglobalization could upend the global world order.
It’s increasingly unpredictable to live and invest in times like this.
That’s why Charles Sizemore, Chief Investment Analyst at The Freeport Society, set out to find the one stable factor that you can depend on.
Using a proprietary MoneyFlow Indicator, he’s able to find no-BS trading opportunities that emerge from within the Age of Chaos.
And over a span of mere days, one such signal led his readers to a 40%-plus gain in a solar energy stock that Wall Street had left for dead.
I sat down with Charles to talk about this MoneyFlow Indicator, and I learned the sectors where he’s seeing the biggest institutional order flows right now.
Click here or the image below to listen to our conversation. Be sure to watch to the end to learn which sectors need to be at the top of your watchlist right now.
Charles uses the money flow indicator we talk about in the interview to uncover huge stock trading opportunities beneath the chaos of the markets. He then shares these discoveries in his Freeport Alpha advisory.
But what I love even more than the recommendations is Charles’ high-quality market commentary and storytelling prowess. He goes beyond what you’d expect from a traditional newsletter analyst. He shares poignant thoughts on our financial and political environment that are lacking the bias you’d see in the mainstream media.
Learn more about Freeport Alpha right here.
Regards,
Michael Salvatore
Editor, TradeSmith Daily
Well, folks… that’s all I’ve got for you today.
May the rest of your Sunday be restful.
To life, liberty, and the pursuit of wealth.