A Deep Dive into Nvidia's Performance and the Latest FOMC Meeting

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For our street investors… face the wall with AI sentiment analysis and adjust your trading for Today (May 25, 2023):

1. Markets: The Nasdaq 100, S&P 500, and Dow Jones all experienced declines in their last session, with real estate and financial stocks seeing significant losses. Energy stocks, however, bucked this trend and saw increases. This indicates volatility in the stock market.

2. Pre-Market Losses: In the pre-market session, several companies including Digital Turbine, QuantaSing Group, American Eagle Outfitters, Tigo Energy, Snowflake, UiPath, Mirati Therapeutics, XPeng, Qudian, DISH Network Corporation recorded losses.

3. Tech Rally: A tech rally in the markets is expected, largely driven by Nvidia's strong quarterly performance. However, there is still a level of caution due to an ongoing debt deal issue between President Joe Biden and House Republicans. These two factors are expected to influence market sentiment heavily.

4. Economic Data: Several economic indicators are due to be released, including jobless claims, the first-quarter GDP, the Chicago Fed National Activity Index, and the pending home sales index. These releases could significantly impact market trends.

5. Debt Ceiling Impasse: The ongoing stand-off surrounding the debt ceiling is a cause for concern for investors. Jim Cramer warns that this political impasse might result in financial losses for investors, similar to the scenario in 2011.

6. Agriculture Forecast: In the agricultural sector, input and crop prices are expected to be lower than last year. Prices for fertilizers, natural gas, and fuel have decreased. However, the impact of a strong El Niño might pose a significant risk to this sector, affecting global sugar production and conditions for U.S. crops.

The Federal Open Market Committee (FOMC) meeting minutes highlight the discussions held around the current state of the U.S. economy, the monetary policy stance, and potential risks to the economic outlook.

Key takeaways from this meeting include:

1. Monetary Policy Decision: The Committee voted to raise the target range for the federal funds rate to 5 to 5¼ percent. This move is part of the effort to control inflation, which has remained elevated above the Committee's 2 percent objective.

2. Future Uncertainty: The FOMC expressed uncertainty about how much more policy tightening may be appropriate, emphasizing the importance of maintaining optionality. Factors, such as the cumulative tightening of monetary policy, lag with which monetary policy affects economic activity and inflation, and other economic and financial developments would inform these decisions.

3. Risks and Outlook: Participants noted increased downside risks to growth and upside risks to unemployment due to possible banking-sector developments leading to further tightening of credit conditions. Despite inflation remaining above the Committee's longer-run goal and a tight labor market, participants also saw some downside risks to inflation.

4. Banking Sector: Members concurred that the U.S. banking system was sound and resilient. However, they anticipated that tighter credit conditions would weigh on economic activity, hiring, and inflation, though the extent of these effects remained uncertain.

5. Communication Strategy: The FOMC discussed the importance of communicating their actions and strategy clearly. They emphasized the need to convey their data-dependent policy-making approach and commitment to returning inflation to the 2 percent objective over time.

6. Asset Reduction: The Committee also decided to continue reducing the Federal Reserve's holdings of Treasury securities and agency debt and agency mortgage-backed securities as per its previously announced plans.

7. Next Meeting: The next FOMC meeting will be held on June 13–14, 2023.

The Federal Reserve remains committed to its dual mandate of maximum employment and 2 percent inflation. While they have raised the target range for the federal funds rate this time, they are cautious about future tightening and will closely monitor incoming information to assess its implications for monetary policy.

Today’s company news. Anything to keep an eye out for? This is not financial advice, just a tracker for you to go into more details. Picks are selected using #AI models. Special issue in regards to $NVDA:

This is our AI analysis of NVIDIA's financials for the periods ended on April 30, 2023, January 29, 2023, and May 1, 2022. Here are the highlights from this statement:

1. Cash Flows: NVIDIA's net cash provided by operating activities increased to $2.911 billion by April 30, 2023, from $1.731 billion in the same period of 2022. Cash and cash equivalents at the end of the period increased to $5.079 billion from $3.887 billion.

2. Gross Profit & Margin: For the period ended April 30, 2023, GAAP gross profit was $4.648 billion with a gross margin of 64.6%, and Non-GAAP gross profit was $4.802 billion with a gross margin of 66.8%. Comparatively, for the same period in 2022, GAAP gross profit was $5.431 billion with a margin of 65.5%, while Non-GAAP gross profit was $5.563 billion with a margin of 67.1%.

3. Operating Expenses & Income: For the period ended April 30, 2023, GAAP operating expenses were $2.508 billion, and GAAP income from operations was $2.140 billion. The non-GAAP figures for the same period were $1.750 billion and $3.052 billion, respectively.

4. Net Income & Earnings Per Share (EPS): The GAAP net income for the period ended April 30, 2023, was $2.043 billion, while the Non-GAAP net income was $2.713 billion. This resulted in a GAAP diluted net income per share of $0.82 and a Non-GAAP diluted net income per share of $1.09.

5. Free Cash Flow: For the period ended April 30, 2023, free cash flow, calculated as GAAP net cash provided by operating activities minus purchases related to property, equipment, and intangible assets, and principal payments on property, equipment, and intangible assets, was $2.643 billion.

6. Outlook for Q2 FY2024: The company anticipates a GAAP gross margin of 68.6% and a non-GAAP gross margin of 70.0% for Q2 FY2024. GAAP operating expenses are expected to be around $2.710 billion, and non-GAAP operating expenses are expected to be around $1.900 billion.

Overall, the report indicates an increase in net cash provided by operating activities and cash and cash equivalents at the end of the period. However, there is a decrease in gross profit, operating income, and net income compared to the same period of the previous year.

It's definitely a stock to watch in the coming months.

Events

Earning reports: Autodesk Inc., Costco Wholesale Corp., Medtronic PLC, NetEase Inc., Royal Bank of Canada, The Toronto-Dominion Bank, VMware Inc., and Workday Inc.

Economic events:

1. Initial Claims for the week ending on May 20th

2. Continuing Claims for the week ending on May 13th

3. GDP - Second Estimate for Q1

4. GDP Deflator - Second Estimate for Q1

5. Pending Home Sales for April