If you asked me what is the most important date NVIDIA Corporation (NVDA) in June would be, my answer would be Monday June 10th. That was the day NVIDIA stock began trading at its new split-adjusted price following the 10-for-1 stock split on June 7.
However, mine New the answer is Tuesday, June 18, the day NVIDIA’s market cap hit $3.35 trillion — past Microsoft company‘s (MSFT) market capitalization of $3.317 trillion and briefly makes NVIDIA the largest publicly traded company in the world.
But we haven’t seen anything yet.
I expect NVIDIA to break $4 trillion in market cap this year and then grow to $5 trillion in 2025.
So in today’s Market 360, I’ll explain why. I will also give you a “crash course” in algorithmic trading. And then I will share a prediction—one that, if fulfilled, will change our lives forever.
Let’s get started.
NVIDIA’s next generation AI chips
The big jump from $4 trillion to $5 trillion should follow the announcement of the successor to NVIDIA’s Blackwell chips.
The fact is that NVIDIA will spend more than $2 billion developing its next-generation AI chips – and competing with NVIDIA is increasingly futile. In fact, all other AI chips in development are increasingly low-tech chip solutions, not the generative deep learning AI chips that NVIDIA is developing.
Blackwell chips enable generative artificial intelligence, which NVIDIA calls “the defining technology of our time.” So the company expects its Blackwell chips to “power this new industrial revolution” as it provides AI for all industries.
Interestingly, however, NVIDIA refuses to rest on its laurels. The company aims to launch a new generation AI chip every year until the end of the current decade. As a result, NVIDIA leads the entire market. In fact, Bloomberg TV recently reported that the Magnificent Seven has now become the “Magnificent One and 499 other stocks” in the S&P 500.
So I don’t even think the Justice Department and the Federal Trade Commission will be able to derail NVIDIA. The two entities recently reached an agreement on how to proceed with antitrust investigations of NVIDIA, Microsoft, and Open AI. ButThe Wall Street Journal he even said that these investigations “may come to nothing in the end”.
I should also add that the company still has impressive projected earnings and revenue growth. For the current quarter, earnings are expected to more than double year-over-year to $0.59 per share, compared to $0.25 per share in the same quarter a year ago. Revenue is expected to be $26.43 billion.
NVIDIA has also posted positive earnings surprises in each of the last four quarters and has also raised its outlook as a result of those earnings. So all the stock has to do is watch earnings grow and continue to head higher, and NVDA should soon break the $4 trillion market cap and push for $5 trillion.
Algorithms set to tear stock
As for those other 499 stocks in the S&P 500… I expect them to be increasingly affected by the mean reversion trading algorithms that Citadel implements after each earnings reporting period ends.
These algorithms like to hit stocks that are overbought and are usually based on a non-linear neural algorithm that loosens up as volatility increases. Former algorithmic traders I interviewed reluctantly indicated that these mean reversion algorithms typically last 10 to 12 trading days, but it all depends on how quickly volatility increases.
Neural algorithm people like to brag that they are not burdened by any fixed time cycle and that their neural algorithm “adapts naturally”. I don’t want to burden you with math geek jargon (which is basically how they boost their fragile egos), but the bottom line is that these mean-reversal neural algorithms are just hitting overbought stocks and covering them as they backfill and spend their recent gains.
Conversely, these mean reversion neural algorithms can be used to artificially “inflate” oversold stocks. However, as trading volume dries up, these mean reversion neural algorithms usually hide. The reality is that algorithms cannot function effectively without trading volume.
Personally, I am a math “liner” because my quantitative and fundamental analysis is done at the end of 52 weeks. Although we also do quantitative evaluations on a 270-day, 120-day, 90-day, 60-day and 30-day basis.
I will talk in more detail about how this system works next Tuesday June 25th at 8pm during my special event, Forecast for 2024. I will also share what kind of “financial mania” could lead to the emergence of a “New America” that almost no one of our generation knows.
Sign up for my Forecast for 2024 event now. And in preparation for that event, I’ll be back tomorrow with a special video to discuss what might happen to the market when Wall Street’s jerk reacts.
Best regards,
Louis Navellier
Editor, Market 360
The editor hereby declares that as of the date of this e-mail, the editor directly or indirectly owns the following securities that are the subject of comments, analysis, opinions, advice or recommendations in, or are otherwise mentioned in, the essay below:
Microsoft (MSFT) and NVIDIA Corporation (NVDA)