by Louis Navellier
February 27, 2024
In the fourth quarter, NVidia’s sales surged by 265.3% to $22.1 billion, compared to $6.05 billion in the same quarter a year ago. The company’s earnings soared by 771.6% to $12.29 billion compared with just $1.41 billion in the fourth quarter of 2022. Excluding extraordinary items, NVidia’s operating earnings reached $4.93 per share. The analyst community was expecting sales of $20.4 billion and operating earnings of $4.20 per share, so the company posted an 8.3% sales surprise and a 17.4% earnings surprise.
NVidia also raised its first-quarter sales guidance to $24 billion, substantially higher than the analysts’ consensus estimate of $20.4 billion. Founder and CEO Jensen Huang said, “Accelerated computing and generative AI has hit the tipping point.” Huang added that, “Demand is surging worldwide across companies, industries and nations.” In other words, Huang and NVidia are taking over the world!
Google laid off 12,000 workers, despite a record $20.4 billion in fourth-quarter earnings, and AI is being blamed for these layoffs. There is a growing apprehension that the push towards automation and AI could eventually lead to further job replacements, adding to worker anxiety. Ironically, what is happening at Google is called “productivity growth,” since Google is boosting its earnings with fewer employees.
Speaking of productivity, Wal-Mart reported same-store quarterly sales growth of 4%, significantly higher than analysts’ consensus expectation of 3.1%. The retailer also beat earnings estimates and raised its guidance for fiscal 2025. For all of fiscal 2025, Wal-Mart is expecting 3% to 4% sales growth, so the good news is that the U.S. consumer is not dead, despite a dismal -0.8% decline in January retail sales.
Business Insider featured an article about Jeremy Grantham, a perpetual market bear, listing 14 of his quotes on why both real estate and the stock market are overvalued. Grantham’s latest quotes belittle Artificial Intelligence, AI chips and ChatGPT, despite their explosive sales growth. Frankly, being perpetually depressed is not healthy, so I hope Jeremy Grantham gets some professional help, since he has been a permanent buzzkill in every interview that I have seen. Maybe Business Insider can interview Nouriel Roubini next, to find a bearish analyst that at least does not belittle technological advancement.
Updates from War Fronts in the Middle East and Ukraine
Turning to the war fronts, two major natural gas pipelines in Iran were attacked in multiple locations and those attacks knocked out about 15% of that country’s natural gas production. These attacks disrupted heating in many Iranian provinces. If these attacks persist, crude oil and natural gas prices will likely rise.
It looks like President Biden and Israeli Prime Minister Benjamin Netanyahu’s are not communicating, since Netanyahu is ignoring Biden’s call for a prisoner exchange and cease-fire. Israel is now in the process of clearing out Hamas in the Egyptian border town of Rafah. Although U.S. military aid to Israel continues, most other aid to Israel has been postponed, since Congress is on recess for a couple of weeks.
Meanwhile, the U.S. circulated a draft of a resolution at the United Nations Security Council calling for a temporary cease-fire in Gaza “as soon as possible.” Previously, the Biden Administration had rejected any resolution that called for any cease-fire. Complicating matters further, the U.S. vetoed a United Nations Security Council resolution that was drafted by Algeria calling for an immediate cease-fire in Gaza. The U.S. said it vetoed the U.N. resolution, since it would disrupt ongoing hostage negotiations.
The G-20 finance ministers met last Wednesday in Rio de Janeiro. Unfortunately, prior to this meeting, Brazilian President Luis Inacio Lula da Silva compared Israel’s war with Hamas with Hitler’s extermination of Jews during the Holocaust. Brazil and several other Latin American countries have pulled their ambassadors from Israel. Clearly, the Middle East conflict will not be solved by the G-20 finance ministers, but these deep divisions will persist and likely threaten unity at the November G-20 meeting.
The Ukrainian war just entered its third year, as U.S. aid remains a contentious subject due to the 177 Ukrainian generals living in Spain in luxury villas, amid evidence of graft. The fact that aid to Ukraine lacks any accounting credibility remains a sore subject with many in Congress. Furthermore, the 14+ million people that have fled Ukraine are not expected to return, so the future of Ukraine is uncertain.
The recent fall of the town of Avdiivka to Russian troops also indicates that Ukraine’s defense efforts are breaking down. Obviously, this war is a human tragedy, with an estimated 650,000 troops and civilians killed, so both Russia and Ukraine are big losers. President Biden is now blaming Congress for this latest Ukrainian defeat due to a lack of military aid, despite refusing for so long to meet with House leadership.
In an abrupt about face, President Biden last week said he is now willing to meet with House Speaker Mike Johnson to discuss an emergency funding package for Israel and Ukraine. While on vacation in Rehoboth Beach, President Biden said, “I’d be happy to meet with him… if he has anything to say.”
The softening support for Ukraine in the U.S. Congress and in many European countries has President Volodymyr Zelensky alarmed, so he is doing a full court press for more aid. Senate Majority Leader Chuck Schumer is next to meet with President Zelensky in Ukraine and is striving to satisfy his Congressional colleagues that the graft and other problems with Ukrainian aid can be resolved.
Another big casualty of the war between Russia and Ukraine is agriculture. Not only has the Ukrainian wheat harvest been decimated, but there is now an acute shortage of Russian fertilizer, so crop yields around the world are in decline. Only in Canada and the U.S., where fertilizer is plentiful, are crop yields largely unaffected. A drought in Italy and other European countries also threatens crop yields. As a result, food prices may remain elevated until Ukraine can return to being a breadbasket for much of the world.
Houthi rebels in Yemen are now experimenting with drones in the Red Sea. If Iran supplies the Houthi rebels with sea drones, the U.S. Navy and many merchant ships could be at severe risk. In fact, a dry bulk cargo ship, the Rubymar, which was transporting cargo from the UAE to Bulgaria, was recently sunk after two Houthi missile attacks, so the fighting in the Middle East persists and is entering a dangerous stage.
An Early Spring (and Supply Concerns) Boost Energy Prices
An early spring seems to have arrived in parts of the Northern Hemisphere, so the demand for crude oil and refined products may soon expand. As a result, crude oil demand is steadily rising. Brent crude oil prices are now over $80 per barrel and WTI crude oil prices are also on the verge of reaching $80 per barrel. According to the U.S. Energy Information Administration (EIA), U.S. refineries are only operating at an 80.6% capacity, as many refineries were shut down for seasonal maintenance, as well as a reformulation shift to summer fuels. As a result, prices at the pump are expected to remain high.
I should add that natural gas prices are now nearing a three-decade low, since this winter has been warmer than normal, so LNG exports are necessary to boost natural gas demand. Since the Biden Administration prohibited new LNG expansion, the energy sector is very upset. However, a new Trump Administration would almost certainly reverse Biden’s LNG expansion ban and further boost U.S. energy exports.
Shell is forecasting that LNG demand will surge 50% by 2040 as the world transitions to cleaner fossil fuels. Specifically, Shell said, “The global LNG market will continue growing into the 2040s, mostly driven by China’s industrial decarbonization and strengthening demand in other Asian countries.”
I still find it very odd that the Biden Administration is trying to impede a booming U.S. industry that is helping to lower worldwide carbon dioxide emissions. The U.S. war against natural gas appliances is also very perplexing and would likely be stopped if America votes in a new Trump Administration.
If the U.S. ban on LNG expansion is not lifted, Guyana might be where U.S. energy companies look next to expand LNG exploration. Guyana President, Irfanne Ali, called for the “immediate” development of the country’s natural gas resources. Specifically, Ali said, “The time to develop our gas is now” and added, “There’s an immediate window of opportunity between now and the end of the decade to monetize and maximize” Guyana’s natural gas resources. Currently, Exxon-Mobil is injecting most of Guyana’s natural gas back into crude oil reservoirs as a waste product, which is cleaner than flaring the natural gas.
Bloomberg posted an excellent article on Wednesday, titled, “Biden’s EV Dreams Are a Nightmare for Tesla and the U.S. Car Industry.” In this article, there is a chart illustrating “Tesla’s Buying Spree” of battery imports from China. Not only is Tesla utilizing CATL’s LFG batteries, but it is also using BYD’s blade battery technology in the Model Y it makes in Berlin. So, it looks like the goal of on-shoring battery manufacturing in the U.S. was a Biden pipe dream, since the Big 3 all cancelled their new battery plants with partners from China and South Korea, due to a lack of demand as well as a battery glut in China.
The Biden Administration’s efforts to onshore chip manufacturing is proceeding better than its EV battery push, as the big Taiwan Semiconductor plant in Arizona is scheduled to open in 2025. One major glitch is that the neon used in lasers to make semiconductors has mostly come from Ukraine and Russia. Since Ukrainian production is offline and Russia is subject to sanctions, new neon supplies must be developed.
Navellier & Associates owns NVidia Corp (NVDA), Exxon Mobil Corp. (XOM), Walmart Inc (WMT), Alphabet Inc. Class A (GOOGL), and Shell Plc Sponsored ADR (SHEL) in managed accounts, and a few clients hold Tesla (TSLA), and Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM), per client request in managed accounts. Louis Navellier and his family own NVidia Corp (NVDA), Exxon Mobil Corp. (XOM), and Shell Plc Sponsored ADR (SHEL) via a Navellier managed account, and NVidia Corp (NVDA), in a personal account. He does not own Walmart Inc (WMT), Alphabet Inc. Class A (GOOGL), Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM), or Tesla (TSLA) personally.
All content above represents the opinion of Louis Navellier of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
Inside NVidia’s Stunning Report, and its Impact
Income Mail by Bryan Perry
What Could Stop this Market’s Mojo?
Growth Mail by Gary Alexander
Are We in Market Bubble Territory Yet?
Global Mail by Ivan Martchev
The Broad Market is Not Extended at All
Sector Spotlight by Jason Bodner
Is the Market a Short-Term Casino, or a Long-Term Sure Thing?
View Full Archive
Read Past Issues Here
Louis Navellier
CHIEF INVESTMENT OFFICER
Louis Navellier is Founder, Chairman of the Board, Chief Investment Officer and Chief Compliance Officer of Navellier & Associates, Inc., located in Reno, Nevada. With decades of experience translating what had been purely academic techniques into real market applications, he believes that disciplined, quantitative analysis can select stocks that will significantly outperform the overall market. All content in this “A Look Ahead” section of Market Mail represents the opinion of Louis Navellier of Navellier & Associates, Inc.
Important Disclosures:
Although information in these reports has been obtained from and is based upon sources that Navellier believes to be reliable, Navellier does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute Navellier’s judgment as of the date the report was created and are subject to change without notice. These reports are for informational purposes only and are not a solicitation for the purchase or sale of a security. Any decision to purchase securities mentioned in these reports must take into account existing public information on such securities or any registered prospectus.To the extent permitted by law, neither Navellier & Associates, Inc., nor any of its affiliates, agents, or service providers assumes any liability or responsibility nor owes any duty of care for any consequences of any person acting or refraining to act in reliance on the information contained in this communication or for any decision based on it.
Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any securities recommendations made by Navellier. in the future will be profitable or equal the performance of securities made in this report. Dividend payments are not guaranteed. The amount of a dividend payment, if any, can vary over time and issuers may reduce dividends paid on securities in the event of a recession or adverse event affecting a specific industry or issuer.
None of the stock information, data, and company information presented herein constitutes a recommendation by Navellier or a solicitation to buy or sell any securities. Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The holdings identified do not represent all of the securities purchased, sold, or recommended for advisory clients and the reader should not assume that investments in the securities identified and discussed were or will be profitable.
Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. Individual stocks presented may not be suitable for every investor. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. Investment in fixed income securities has the potential for the investment return and principal value of an investment to fluctuate so that an investor’s holdings, when redeemed, may be worth less than their original cost.
One cannot invest directly in an index. Index is unmanaged and index performance does not reflect deduction of fees, expenses, or taxes. Presentation of Index data does not reflect a belief by Navellier that any stock index constitutes an investment alternative to any Navellier equity strategy or is necessarily comparable to such strategies. Among the most important differences between the Indices and Navellier strategies are that the Navellier equity strategies may (1) incur material management fees, (2) concentrate its investments in relatively few stocks, industries, or sectors, (3) have significantly greater trading activity and related costs, and (4) be significantly more or less volatile than the Indices.
ETF Risk: We may invest in exchange traded funds (“ETFs”) and some of our investment strategies are generally fully invested in ETFs. Like traditional mutual funds, ETFs charge asset-based fees, but they generally do not charge initial sales charges or redemption fees and investors typically pay only customary brokerage fees to buy and sell ETF shares. The fees and costs charged by ETFs held in client accounts will not be deducted from the compensation the client pays Navellier. ETF prices can fluctuate up or down, and a client account could lose money investing in an ETF if the prices of the securities owned by the ETF go down. ETFs are subject to additional risks:
- ETF shares may trade above or below their net asset value;
- An active trading market for an ETF’s shares may not develop or be maintained;
- The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track;
- The cost of owning shares of the ETF may exceed those a client would incur by directly investing in the underlying securities; and
- Trading of an ETF’s shares may be halted if the listing exchange’s officials deem it appropriate, the shares are delisted from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally.
Grader Disclosures: Investment in equity strategies involves substantial risk and has the potential for partial or complete loss of funds invested. The sample portfolio and any accompanying charts are for informational purposes only and are not to be construed as a solicitation to buy or sell any financial instrument and should not be relied upon as the sole factor in an investment making decision. As a matter of normal and important disclosures to you, as a potential investor, please consider the following: The performance presented is not based on any actual securities trading, portfolio, or accounts, and the reported performance of the A, B, C, D, and F portfolios (collectively the “model portfolios”) should be considered mere “paper” or pro forma performance results based on Navellier’s research.
Investors evaluating any of Navellier & Associates, Inc.’s, (or its affiliates’) Investment Products must not use any information presented here, including the performance figures of the model portfolios, in their evaluation of any Navellier Investment Products. Navellier Investment Products include the firm’s mutual funds and managed accounts. The model portfolios, charts, and other information presented do not represent actual funded trades and are not actual funded portfolios. There are material differences between Navellier Investment Products’ portfolios and the model portfolios, research, and performance figures presented here. The model portfolios and the research results (1) may contain stocks or ETFs that are illiquid and difficult to trade; (2) may contain stock or ETF holdings materially different from actual funded Navellier Investment Product portfolios; (3) include the reinvestment of all dividends and other earnings, estimated trading costs, commissions, or management fees; and, (4) may not reflect prices obtained in an actual funded Navellier Investment Product portfolio. For these and other reasons, the reported performances of model portfolios do not reflect the performance results of Navellier’s actually funded and traded Investment Products. In most cases, Navellier’s Investment Products have materially lower performance results than the performances of the model portfolios presented.
This report contains statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are “forward-looking statements” within the meaning of The U.S. Private Securities Litigation Reform Act of 1995. These statements may be identified by such forward-looking terminology as “expect,” “estimate,” “plan,” “intend,” “believe,” “anticipate,” “may,” “will,” “should,” “could,” “continue,” “project,” or similar statements or variations of such terms. Our forward-looking statements are based on a series of expectations, assumptions, and projections, are not guarantees of future results or performance, and involve substantial risks and uncertainty as described in Form ADV Part 2A of our filing with the Securities and Exchange Commission (SEC), which is available at www.adviserinfo.sec.gov or by requesting a copy by emailing info@navellier.com. All of our forward-looking statements are as of the date of this report only. We can give no assurance that such expectations or forward-looking statements will prove to be correct. Actual results may differ materially. You are urged to carefully consider all such factors.
FEDERAL TAX ADVICE DISCLAIMER: As required by U.S. Treasury Regulations, you are informed that, to the extent this presentation includes any federal tax advice, the presentation is not written by Navellier to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Navellier does not advise on any income tax requirements or issues. Use of any information presented by Navellier is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.
IMPORTANT NEWSLETTER DISCLOSURE:The hypothetical performance results for investment newsletters that are authored or edited by Louis Navellier, including Louis Navellier’s Growth Investor, Louis Navellier’s Breakthrough Stocks, Louis Navellier’s Accelerated Profits, and Louis Navellier’s Platinum Club, are not based on any actual securities trading, portfolio, or accounts, and the newsletters’ reported hypothetical performances should be considered mere “paper” or proforma hypothetical performance results and are not actual performance of real world trades. Navellier & Associates, Inc. does not have any relation to or affiliation with the owner of these newsletters. There are material differences between Navellier Investment Products’ portfolios and the InvestorPlace Media, LLC newsletter portfolios authored by Louis Navellier. The InvestorPlace Media, LLC newsletters contain hypothetical performance that do not include transaction costs, advisory fees, or other fees a client might incur if actual investments and trades were being made by an investor. As a result, newsletter performance should not be used to evaluate Navellier Investment services which are separate and different from the newsletters. The owner of the newsletters is InvestorPlace Media, LLC and any questions concerning the newsletters, including any newsletter advertising or hypothetical Newsletter performance claims, (which are calculated solely by Investor Place Media and not Navellier) should be referred to InvestorPlace Media, LLC at (800) 718-8289.
Please note that Navellier & Associates and the Navellier Private Client Group are managed completely independent of the newsletters owned and published by InvestorPlace Media, LLC and written and edited by Louis Navellier, and investment performance of the newsletters should in no way be considered indicative of potential future investment performance for any Navellier & Associates separately managed account portfolio. Potential investors should consult with their financial advisor before investing in any Navellier Investment Product.
Navellier claims compliance with Global Investment Performance Standards (GIPS). To receive a complete list and descriptions of Navellier’s composites and/or a presentation that adheres to the GIPS standards, please contact Navellier or click here. It should not be assumed that any securities recommendations made by Navellier & Associates, Inc. in the future will be profitable or equal the performance of securities made in this report.
FactSet Disclosure: Navellier does not independently calculate the statistical information included in the attached report. The calculation and the information are provided by FactSet, a company not related to Navellier. Although information contained in the report has been obtained from FactSet and is based on sources Navellier believes to be reliable, Navellier does not guarantee its accuracy, and it may be incomplete or condensed. The report and the related FactSet sourced information are provided on an “as is” basis. The user assumes the entire risk of any use made of this information. Investors should consider the report as only a single factor in making their investment decision. The report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. FactSet sourced information is the exclusive property of FactSet. Without prior written permission of FactSet, this information may not be reproduced, disseminated or used to create any financial products. All indices are unmanaged and performance of the indices include reinvestment of dividends and interest income, unless otherwise noted, are not illustrative of any particular investment and an investment cannot be made in any index. Past performance is no guarantee of future results.