A lot was riding on Nvidia’s (NVDA:NASDAQ) latest quarterly update with the strong run for the shares leaving little margin for error. However, it delivered and the S&P 500 and Dow Jones Industrial Average reached new record highs.
The big loser this week was Palo Alto Networks (PANW:NASDAQ) which endured a major slump in its share price after revealing softer client spending and steep promotions would have a big impact on its annual billings forecast.
Also under pressure was e-commerce platform Etsy (ETSY:NASDAQ) which unveiled mixed fourth quarter results which showed better than expected revenue but earnings some way short of expectations. Earnings per share of $0.62 compared with a consensus forecast of $0.78. Gross merchandise sales – the total amount of sales going through the platform – were also lower.
Outdoor recreation, fitness and navigation device maker Garmin (GRMN:NYSE) impressed as fourth quarter earnings beat expectations and it announced an increase to the dividend.
NVIDIA
Chip maker Nvidia (NVDA:NASDAQ) declared the AI ‘tipping point’ as revenues surged by 265% last year, smashing forecasts into the bargain and sending the shares on another upward surge, topping $800 for the first time. The company posted $22.1 billion in revenue in the fourth quarter versus the $20.55 billion forecast, with earnings similarly scorching, at $4.93 per share against $4.64 estimates. Data Centre sales, which now make up the bulk of the business, were up 409% to $18.4 billion, which over half going to hyper-scale cloud providers, such as Amazon (AMZN:NASDAQ), Microsoft (MSFT:NASDAQ) and Alphabet (GOOG:NASDAQ).But the demand dynamics are wider than just the hyper-scalers, coming from consumer internet companies like Meta Platforms (META:NASDAQ), software companies like Adobe (ADBE:NASDAQ), and sectors such as automotive and governments.Nvidia has provided guidance for the first quarter that exceeded consensus expectations by 9%, indicating a robust outlook of 233% revenue growth year-on-year. The company’s strong market positioning, combined with a rapidly emerging demand market, suggests that Nvidia is set to continue its growth trajectory well beyond 2024, although demand/supply dynamics, especially in the Asian supply chain, will be crucial to watch, as they will play a significant role in shaping Nvidia’s future growth.
MODERNA
Biotechnology firm Moderna (MRNA:NASDAQ) known for its mRNA Covid vaccine surprised investors (22 February) after generating a fourth quarter profit against Street expectations for a loss.
Adjusted EPS (earnings per share) came in at $0.55 equating to a 170% positive surprise compared with analysts’ consensus estimate for a $0.78 loss per share.That makes four quarters in a row the company has surpassed market expectations.
The earnings beat was driven in part by $600 million of deferred revenue but more importantly better productivity. The company has scaled back manufacturing to resize its footprint in response to falling demand for Covid shots which is now seasonal.
Moderna increased its share of Covid vaccine sales in the fall of 2023 to 43% from the 37% it captured in 2022. Looking ahead the company reiterated 2024 guidance for Covid vaccine sales of around $4 billion compared with $6.7 billion in 2023.
The company anticipates receiving regulatory approval for its RSV (respiratory syncytial virus) vaccine in May 2024.
WALMART
Walmart (WMT:NYSE), the world’s biggest retailer, jumped to an all-time high of $180.25 after the Bentonville-based behemoth’s fourth quarter sales and earnings topped estimates and the company upped its annual dividend by 9%.
Quarterly adjusted EPS (earnings per share) rose 5% to $1.80 compared with the $1.65 called for by consensus, driven by a 23% jump in ecommerce sales.
Guided by CEO Doug McMillon, Walmart’s revenue increased 5.7% to $173.4 billion, ahead of the $170.71 billion analysts were looking for. ‘Our team delivered a great quarter, finishing off a strong year,’ commented McMillon. ‘We crossed $100 billion in e-commerce sales and drove share gains as our customer experience metrics improved, even during our highest volume days leading up to the holidays.’
The retail powerhouse, which operates over 10,500 stores in 19 countries, also sprang a positive surprise with the $2.3 billion acquisition of smart TV maker Vizio (VZIO:NYSE), a deal designed to shore up its advertising business. Walmart currently sells advertisements at physical stores and via its website but by acquiring Vizio, it can now sell ads through streaming services on television.
