By Silvano Grimaldi, CEO of the independent asset management firm Grimaldi & Partners AG.
Monthly Review
International equity markets ended August 2024 with slight gains.
Driving Factors
- Signals from the US Federal Reserve: The Federal Reserve indicated that an interest-rate policy shift could take place in September in the world’s largest economy.
Factors Weighing on Markets
- Concerns about a possible hard landing: Investors remained worried that the US economy could enter a recession.
- Rising tensions in the Middle East: Increasing geopolitical tensions added to uncertainty across financial markets.
Stock in Focus
AI Boom Keeps NVIDIA on Record Course, While Blackwell Concerns Weigh on the Share Price
Chip manufacturer NVIDIA continues to benefit significantly from the artificial-intelligence boom.
During the latest quarter, revenue increased from USD 13.5 billion in the previous year to USD 30 billion, representing growth of 122%.
This followed the previous three-month period, during which revenue had risen by 262%.
NVIDIA’s technologies were originally developed for graphics cards. However, they also proved highly effective for the computing processes required to train artificial-intelligence applications.
As a result, NVIDIA’s chips have become a key technology for the future of artificial intelligence. The company also benefits from its related software and services businesses.
Growth was particularly strong in the data-centre division.
Revenue from data-centre technology reached USD 26.3 billion, representing an increase of 154% compared with the previous year, according to NVIDIA’s announcement following the close of US markets on Wednesday.
NVIDIA’s quarterly profit increased from just over USD 6.2 billion to nearly USD 16.6 billion year-on-year.
For the current quarter, the company forecast a further increase in revenue to USD 32.5 billion, while analysts had expected an average forecast of slightly below USD 32 billion.
However, investors remained concerned that NVIDIA’s next-generation chip system, known as Blackwell, still required additional modifications.
Outlook – September 2024
Opportunities
- Expected Federal Reserve interest-rate cut: The first US interest-rate cut in more than four years, expected in September, could support equity prices.
- NVIDIA’s strong profitability outlook: The technology group’s continued excellent earnings prospects could provide further support to the sector.
Risks
- Negative seasonality: September is statistically the weakest month of the year for equity markets.
- Deterioration in the US labour market: A greater-than-expected weakening of employment conditions could increase concerns about the US economy.
Performance Expectations
For September 2024, we expect a sideways trend in international equity markets.
Stock Recommendation: NVIDIA
This publication is provided for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any financial instrument. Past performance is not indicative of future results.
