By Silvano Grimaldi, CEO of the independent asset management firm Grimaldi & Partners AG.
Monthly Review
International equity markets ended February 2024 with gains.
Driving Factors
- Positive data on the US economy strengthened hopes that companies and consumers could continue to manage high interest rates and that a recession was not imminent.
- Strong earnings from large-cap companies and favourable US economic data continued to support investor optimism.
- Technology companies benefited from the growing enthusiasm surrounding artificial intelligence.
Stock in Focus
NVIDIA’s Business Continues to Benefit from the AI Boom
The boom in artificial intelligence continued to generate strong growth for chip manufacturer NVIDIA.
During the latest quarter, revenue reached USD 22.1 billion, more than three times the level recorded one year earlier.
Analysts had expected average revenue of USD 20.4 billion.
Following the announcement, NVIDIA shares temporarily gained more than 8% in after-hours US trading.
Revenue from data-centre technology reached USD 18.4 billion, five times the figure recorded during the corresponding quarter of the previous year.
NVIDIA’s technologies were originally developed for graphics cards but have long proved highly effective for the computing processes required to train artificial-intelligence applications.
This development has driven rapid growth in both NVIDIA’s business and its market value.
Quarterly profit increased from USD 1.4 billion to nearly USD 12.3 billion within one year.
CEO Jensen Huang stated that the adoption of artificial intelligence had reached a tipping point and that demand was increasing worldwide.
The company’s outlook for the current quarter also exceeded expectations.
NVIDIA forecast revenue of approximately USD 24 billion, compared with the market consensus of around USD 22 billion.
Microsoft Becomes the World’s Most Valuable Company
Microsoft recorded a substantial increase in market value of approximately USD 159.36 billion, primarily supported by growing demand for its Azure cloud platform.
The technology group reported quarterly revenue and profit above expectations.
However, investors remained cautious because costs were expected to increase significantly on a sequential basis.
On 31 January 2024, Microsoft’s market capitalisation reached approximately USD 2.95 trillion, exceeding Apple’s market value of USD 2.85 trillion.
Meta Platforms’ Market Value Rises Sharply
Meta’s market value exceeded the USD 1 trillion threshold for the first time since September 2021.
Following the close of trading, Meta Platforms shares gained more than 14% to a record high of USD 451.
This increased the company’s market capitalisation by approximately USD 148 billion to USD 1.16 trillion.
The increase followed Meta’s announcement that revenue for the December quarter had risen by 25% to USD 40.1 billion.
The company also announced its first-ever dividend.
Outlook – March 2024
Key Market Factors
The current artificial-intelligence boom continued to support rising US equity prices.
NVIDIA’s exceptional quarterly results and highly positive outlook surprised pessimistic investors and reinforced expectations that the equity-market rally could continue.
Nevertheless, equity markets cannot rise indefinitely.
Following the exceptionally strong start to the year, particularly in the United States and Europe, a temporary pause within the continuing upward trend would not be surprising.
Performance Expectations
For March 2024, we expect a moderate period of consolidation, with equity markets likely to move at a slower pace.
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.
