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Nvidia impact on markets, Grayscale CEO resigns: Asking for a Trend

On today's episode of Asking For A Trend, host Julie Hyman covers a diverse range of topics spanning market dynamics to succession plans.

As anticipation builds around Nvidia's (NVDA) highly anticipated earnings release, stocks (^DJI, ^IXIC, ^GSPC ) are in the spotlight, with investors eagerly awaiting the potential market-moving implications. Joining the show is Ivana Deleveska, Founder and CIO of Spear Invest, who provides her insights into Nvidia's earnings outlook and the potential ripple effects on the broader markets.

Additionally, Sarge986 LLC President Stephen "Sarge" Guilfoyle, brings his expertise to the table, unveiling two dominant macro trends that he believes will influence stock movements moving forward.

As the episode draws to a close, Asking For A Trend shifts its focus to corporate leadership, delving into the succession plans of Grayscale's CEO, Michael Sonnenshein, who recently announced his intention to step down.

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This post was written by Angel Smith

Video transcript

Hello and welcome to Young Finance, his brand new show.

Asking for a trend.

I'm Julie Hyman filling in for Josh Lift in for the next half hour.

We're breaking down the trends of today that will move stocks tomorrow here, some of the topics will be diving into the S and P 500 hit another record close after a winning week but a slowdown could be on the horizon.

We'll take a closer look at the driving the market plus spot ETF and flows are helping push Bitcoin prices to record highs in 2024 but not all funds are created equal will have more on which name is falling behind and in video eyes another Blockbuster quarter.

We're watching to see if the chip giants expected earnings beat is enough to fuel more A I.

We're just days away from nvidia's make or break.

Earnings report.

Estimates are sky high for the chip maker implying a year over year quintupling of earnings per share and analysts are expecting it will handily beat those forecasts as it has in the past five quarters.

Our next guest expects a solid beat for the company on Wednesday.

We're joined by spear invest founder and chief investment officer Ivana Deska.

It's great to see you again.

Ivana, thanks for being here.

Thanks for hearing me too.

So, um, you were looking for the company to beat again, but there, I guess there is a difference between beat and a difference between beat and raise and the shares going up considering that they've already what almost doubled this year thus far.

So, what are you expecting on that front?

That's right, Julie.

So we're pretty confident that the company will beat expectations.

However, what we've been seeing this quarter specifically is that companies beat and raise, but the market, no matter what the report finds it pretty disappointing.

So it wouldn't be surprising to see that to be the scenario.

However, I would say that the upside for NVIDIA is really gonna come in the next two years.

So if you look at estimates 1 to 2 year route, they're pretty conservative and we think they're gonna have to meaningfully come up.

The data center cycle is just in the early innings and that's what's driving this, uh upside in in earnings estimates and we expect that they're gonna deliver closer to 40% Kegger rather than the currently 20% Ker that it's in the analyst consent for the folks who don't know Kegger compound annual growth.

So in terms of the themes, we're looking for the earnings, there's definitely the data center that is a huge part of it I think that comprises something like 80% of their revenue at this point, they still have a gaming business that we should be watching for as well.

And then it seems like the other thing that folks are gonna be watching for is Capex, which has been a big theme among big tech companies, but we've perhaps has been a little bit less of a topic for NVIDIA.

Do you think that's gonna be more important this quarter?

Well, Julie, there is a pretty big difference in the business model of the hyper scaler versus NVIDIA, right?

The hyper scaler being the cloud service providers like Amazon and A with Aws and Microsoft with Azure.

Exactly.

So these companies really rely on Capex to drive their business.

So what they're doing is they buy in video chips and they basically sell them as a service.

So they're gonna have to really run their Capex if they wanna be growing their revenues for NVIDIA, it's a little bit of a different story.

They don't need to be investing in capital expenditure as much.

So they're gonna be investing more in R and D and keeping up with the, with the cycle, but Capex is not as big of a driver for them just because of that dynamic.

And we're not showing Capex that we showed operating expenses which are ticking up on a year over year basis.

That's right.

And that would be including R and D, right.

So R and D would be, uh would be increasing.

Um I wanna ask you about training versus inference, which is something I hear a lot of talk about here.

So we're in the stage of A I right now where everyone's building their models and the A I um large language models are learning, which is the training phase, then we'll get to the inference phase where those A is start making predictions, start making leaps of their own if you will.

And I think one of the questions has been, I mean, un un IND disputably, NVIDIA has dominated the training phase.

What happens as we get further into the inference phase?

You seem pretty confident that NVIDIA is still gonna be pretty dominant here.

Well, their chips are positioned very well, both for training and inference.

So we don't really see them being disadvantaged on the inference side for inference, you can use a wider variety of products.

So that is maybe where the, where some of the confusion comes from where people are thinking.

OK. Well, you do, you really need to be using the highest end Blackwell chip, right?

Couldn't you be using a competitor's chip?

And that is true.

So you can use a wider variety of chips when doing in France.

However, that market is actually growing pretty significantly.

And NVIDIA disclosed that it represented 40% of their um of their data center revenues today is being used for for in France and this was two quarters ago.

So that number may have gone higher over the past uh the past quarter.

So they're well positioned in Infer, I don't think it's necessarily the case that uh competitors are more likely to uh to disrupt that market.

And A MD did highlight on their um call or one of the conferences that they attended that they are actually trying to position their next generation chip to be better at model training.

So I think over time, we're gonna see similar uh similar performance in both from, from both competitors.

Um And then in the 30 seconds or so, we have left beyond NVIDIA.

I know you're looking at sort of two main themes that will fuel outside of NVIDIA where A I is going.

So that's right.

So we are seeing actually uh within the data center there is inside the rack.

So this would be the chips that we've been talking about.

But there is also opportunities outside of the rack, which is companies that are providing thermal management, whether it's liquid cooling companies that are providing power generation power components.

So these are really big massive areas of investment that are gonna benefit equally from the data center investment cycle.

And then there's also B to B that you're looking at right, business to business kind of which that's a little overlap there.

But that's right.

So our ETF more broadly invest in B two B technology.

So within B to B technology.

There's several areas.

Hardware is one area, cyber security is another area.

Data infrastructure is a third area.

So what we focused on here is the data center hardware cycle, right?

But there are many more opportunities beyond that.

All right, thanks so much.

Excited for Wednesday.

Thank you, Ivan.

I appreciate it.

Well, the NASDAQ rising to a new record today, boosted by in video as investors await the chip makers latest earnings report.

Y finances, Alexander can now join us now with some of the top takeaways from today's trading day.

Hey, hey Julie.

Well, the bull is on Wall Street continue today.

That is my first take away and we saw long time Bear Mike Wilson from Morgan Stanley.

He up his 12 month price target for the S and P 500.

So he's right here 5400.

Now this is not a year and this is what he expects in May of 2025.

But there are clearly others on the street that think we're going to get to that number or possibly above by the end of the year BMO capital markets, Brian that he sees 5600 by year end.

And of course, this comes as we've seen records across the board, you just mentioned the NADA hit another record today as the 500 almost got that record all at the end of the train day today as well.

And then of course, do 40 1000 which we hit on Friday.

Yeah, so everybody's getting more optimistic here.

Um And then what and then what?

Well, Julie also metals we talk about me.

We have an equities rally.

We also have a medals rally as well.

You see gold trading at record highs about 2450 bucks an ounce.

Now, this is spurred by the fact that investors largely expect a fed rate cut at some point.

We did hear from officials that there's this higher for long mantra as inflation still remains sticky.

But we did get that cooler than expected.

CP I print for April.

So that is fueling hopes that we could potentially see a cut as soon as September.

And then, and then there's geopolitics as well because if gold is seen as a haven, right is a good store of value.

When things get rough, you had the death of the Iranian president over the weekend, which raised some concerns of what already obviously is tension in the region that that could somehow play into what's going on there.

So that seemed to feel a little bit of the buying a lot of Asian buyers, a lot of Asian interest as well there for gold.

And then we also see silver at 12 year high is around 32 bucks an ounce.

Now, what's interesting with silver is that it's very much tied to industrial demand.

We saw a lot of that in 2023.

So we've seen some pretty big swings across the board.

But largely strategist think that long term we can continue to see this up.

Copper is a similar story where you could see some up and down.

But strategists told Yahoo finances and s for a, that the long term fundal fundamentals remain strong and they're also at records about five bucks and seven cents.

Yeah, we also talked to, uh, one, analyst say you talked about the short squeeze that we're seeing in copper.

So you do have the fundamentals there.

But then in some of these markets, sometimes you also get the sort of speculative or technical effects that then can shoot, you know, push things higher or lower, right.

So, so metals I thought was an interesting story.

And then finally, as we've been talking about, all eyes are on Nvidia's earnings and this is really the one year anniversary from that blowout earnings report that really started this rally.

We see the stock up about 200% since that time of about 100% year to date.

And the expectations are really just as high heading into this print.

Of course, there is that possibility if we see any sign of weakness, not only could it affect NVIDIA stocks, but really all the adjacent A I stocks that have really benefited from this boom.

But I mean, you're looking at your screen now, expectations of over 400% returns on earnings, 242% on revenue.

So we'll see on Wednesday where this, yeah, we will see on Wednesday, I mean, remember NVIDIA is also now the third largest company in the S and P 500 by, in by weight.

So there's that sort of effect it has, it's accounted for a lot of their earnings growth in the S and P 500.

And then there's the ripple effect you discuss among other chips.

I will note it.

We are not gonna continue to see these types of numbers likely as we get further out from that blowout quarter that you mentioned because the cops were gonna get tougher and the growth rate will go likely to go down.

But you know, we've been surprised so far, so we'll see surprise so far and it's certainly the biggest news that we'll be getting this week cutting into that long weekend.

No contest.

Thank you so much.

Appreciate it.

Well, coming up, looking beyond A I, one of the biggest them driving the market we'll discuss with a veteran trader next, the S and P 500 NASDAQ both closing a new records to start the week and momentum feels pretty bullish, maybe ahead of invidious quarterly results.

But beyond A I, our next guest sees two trends at play when looking at the wider market steadily rising prices and a broad weakening of the US economy sounds ominous.

Sure, but no need to panic.

Here's how to play it I'm here with veteran trader Steven Sarge, Gilfoyle.

Sarge.

It's good to see you.

So, as we look at uh this inflation issue, how should investors be thinking about it?

All right.

So I I see the economy is evolving from reflation which we've been into, into a period of stagflation which is inflationary without that much economic growth.

All right.

So what, what I'm seeing here is you need to price in inflation into your book.

Now, now this is, this is more of a trend trade than it is in an investment.

So what I'm doing here rather than put my standard target price panic point.

That whole all la I usually explain when I, when I explain what I do, this is more where I'm trading the trend as the trend moves on.

So it's not really a target price, panic point type of thing.

It's more of a of a fluctuating ongoing thing.

Well, the main, the main theme here I would say in order to combat inflation is the commodities trade that you've seen.

Uh gold, silver, copper, uranium, I'm in, I'm in the ETF S that represent all of these places as well as the physical and silver and gold as well as electricity.

I think you have to be in utilities because as A I goes on, as Bitcoin goes on, as electric vehicles go on, the demand for electricity isn't going to be what it's been, it's been demand for electricity nationwide.

Has gone up maybe like less than five per 0.5% a year for a number of years from here on out.

I think they're expecting 2 to 3% growth per year.

So this is going to be an ongoing thing.

You're not going to pay a low price for electricity, I don't think probably for a long time.

So, in other words, you're saying pinpoint some of the areas that are going to have consistent inflation actually and sort of lean into that and figure out the best ways to play that.

Oh, yeah.

Yeah.

And I think what I'm doing right now is I'm, I'm maintaining a core position in all these ETF and a few other names like, like Freeport, Mac Moran, uh Southern you to utility those kind of things.

So I keep a small core position but as on days where they're up a lot, I sell some on days where it doesn't work.

I try to buy it back.

So it's, it's really a rolling ball of wax that has been working for a couple of months now quite well.

Um And you're also looking, you mentioned the medals.

So tell us what you're thinking there and kind of what the best way is to play those.

Oh, well, um when, when you talk about precious metals like gold now, gold versus Bitcoin, I know that Bitcoin is not a metal, but it's kind of a metal.

I mean, maybe to the people who are really involved in it.

It's not.

But to an old guy like me, Bitcoin is gold as far as I see it.

And probably they're almost the same kind of thing from my generation.

The alternative investment was gold is gold.

So I see gold as the way to play that because gold is less volatile.

So I don't have to face the same risk as a younger person.

But a younger person might be attracted to cryptocurrencies, especially Bitcoin because they, while they face higher volatility, they probably face greater returns over the long run.

So II, I do see them as almost identical parallel trades, but probably separated by how close you are to retirement is whether you should be in gold or Bitcoin.

And what about copper?

You know, we've been talking so much about copper being at highs.

Um We had an interesting debate on the show earlier today or I should say on market domination earlier today because we're now a different Joe um uh about, you know how much of what's happening with copper is being filled by the short squeeze versus the fundamentals.

Yeah.

Iii I watched that show actually and I and I, I heard your guest who, who sees a, I guess less potential for copper than I do going forward.

She sees this price, these prices are exuberant.

She's right about that.

But I see copper as part of my electricity trade and it's, it's part of uh not, not only infrastructure which we do believe that China which is starting to come out of, it has come out of recession.

Uh China probably will have some kind of infrastructure package because that's what they do when they've been in trouble.

They boost the economy through infrastructure here in the US.

We have almost no choice but to spend fiscally.

So II I do see copper probably, I don't know if this pace of growth we can see but it, it remains part of the inflation trade.

Um and you know, is silver just kind of going along with gold here.

Yeah, silver, silver is a sort of a precious metal, sort of an industrial metal.

Uh It's been red hot, thank goodness, I love it because I've been in it for too long to make it worthwhile.

It's finally becoming worthwhile and I do like silver.

It's still catching up, I think, and I think because it's useful both as a store of value and industrially, I think it, it probably captures some of the growth that you might not see with gold or you might not see with copper, but it kind of plays the middle.

So I, I do me at least I need to be in all three as well as uranium.

Lots of ideas here.

Sarge.

Thanks so much.

Appreciate it.

Thanks.

Coming up.

Bitcoin prices got a boost this year.

Thanks in part to spot ET EFS but not all funds are created equal.

That's next in our chart of the day, Grayscale, Ceo Michael Sonnenschein is stepping down after more than a decade at the firm, he'll be replaced in August by Peter Mintzberg, who currently serves as the global head of strategy for Goldman Sachs Asset and Wealth Management Division.

And there will be an interim actually, Michael Sonnenschein stepping down immediately, there'll be an interim person in that place until August.

Now for years, Gray scales, Bitcoin Trust was one of the few ways to play crypto without buying tokens directly.

And Gray was one of the first firms to launch a spot.

Bitcoin ETF once it secured SEC approval in January, but it has seen an investor exodus as of late.

Let's get to Jared B.

It's been a long day, Jared with more in today's chart of the day.

Thank you, Julie.

Um You know, I don't want to gloss over Michael Sonenshein leaving the firm because he presided over some really bell weather events.

His regulatory strategy was to sue the SEC after they denied the conversion of that G BT C into a spot.

Bitcoin ETF because it was a closed end fund and it, the price had become detached from Bitcoin fundamentals.

That is a Bitcoin prices.

So all in all we did see this rash, this rush of Bitcoin spot.

Bitcoin ETS come to market in the middle of January and these are the flows now we had about seven or eight, don't quote me on that.

And these are only the top ones, but what you're gonna notice is gray scale, they've lost $17.5 billion in flows there.

And that's, that directly eats into their fees.

But it's precisely because they have higher fees than the rest of the market that a lot of that exodus has occurred.

And the principal beneficiary has been Blackrock.

I ETF and that's IBIT, that's a ticker there.

And if you were to compare the total assets, um that would be 18.5 for Blackrock, that's 18.5 billion in their IBID fund versus 19.5 for gray scale.

So all in all, you got these two guys pretty much operating on par now and it's an incredible race.

There was this thought that uh Boomers were going to load up their 401k with Bitcoin ETF that has not materialized.

And so I think what we've seen now in the price of Bitcoin is the slow realization that the spot Bitcoin ETF.

And this is a year to day chart was a big moment for Bitcoin A TF, it wasn't enough to carry it through and continue that slate of that slate of record highs.

We did produce new nominal highs there.

But if you look at the five year chart, these were not that much higher than the highs we saw before.

So Bitcoin may be just putting in this pattern of slightly higher highs without that huge surge that people had hoped for.

Um, we'll continue to watch G BT C to see if there's any changes to their fees and therefore a reversal of some of those outflows, Jared.

Thank you, checking in on one ticket.

That's trending after our Peloton shares are sinking after the company said it will sell $275 million worth of convertible notes due 2029.

This comes as the fitness equipment maker looks to refinance its debt and return to growth.

Why are the shares falling?

Well, typically when you see a convertible offering, it is debt that is convertible into stock.

When you have more stock being issued, that dilutes the value for existing shareholders.

In other words, more supply of stock means lower value.

So that seems to be what happening.

What's happening in this case?

Of course, the longer term trend for Peloton has been downward.

The company has struggled post pandemic with declining demand for its namesake bikes.

And it's been trying to make up for that with subscription revenue for its fitness app which is met with sort of mixed success recently had a leadership change.

So it's been a rocky road for Peloton but raising more money here on its quest to turn itself around.

That's a wrap on today's asking for a trend.

Be sure to come back tomorrow at 4:30 p.m. Eastern for all the latest market.

Moving stories affecting your Wallet.

Have a great night.