If you had asked me what the most important date is for NVIDIA company (NVDA) would have been in June, my response would have been Monday, June 10th. This was the day NVIDIA stock would begin trading at the new split-adjusted price, following the 10-for-1 stock split on June 7.
However, my new the answer is Tuesday, June 18, the day NVIDIA’s market cap hit $3.35 trillion – sailing by Microsoft Corporation‘s (MSFT) Market cap of $3.317 trillion, making NVIDIA simply the largest publicly traded company in the world.
But we haven’t seen anything yet.
I expect NVIDIA to break through a $4 trillion market cap this year and then rise to a $5 trillion market cap by 2025.
So today Market 360, I’ll explain why. I will also give you a “crash course” in algorithmic trading. And then I will share a prediction – a prediction that, if it comes true, will change our lives forever.
Let’s start.
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 is spending more than $2 billion developing its next-generation AI chips – and competing with NVIDIA has become increasingly pointless. In fact, all other AI chips in development are increasingly low-tech chip solutions, and not the deep learning, generative AI chips that NVIDIA is developing.
The Blackwell chips enable generative AI, which NVIDIA calls the “defining technology of our time.” So the company expects its Blackwell chips to “power this new industrial revolution” as it offers AI for all industries.
Interestingly enough, however, NVIDIA refuses to sit on its laurels. The company aims to launch a new generation of AI chip every year until the end of the current decade. As a result, NVIDIA leads the entire market. In fact, Bloomberg TV recently stated 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 can derail NVIDIA. These two entities recently reached a deal on how to proceed with antitrust investigations into NVIDIA, Microsoft, and Open AI. ButThe Wall Street Journal even said that these investigations “ultimately come to naught.”
I should add that the company still has stunning earnings and revenue growth expectations. 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. Sales are expected to reach $26.43 billion.
NVIDIA has also delivered positive earnings surprises in each of the past four quarters, and has raised its outlook in the wake of these earnings results. So all the stocks have to do is follow earnings growth and continue to steer higher, and NVDA should soon surpass the $4 trillion market cap and continue on to $5 trillion.
Algorithms set to shuffle stocks around
As for those other 499 stocks in the S&P 500… I expect they will be increasingly influenced by the mean reversion trading algorithms that Citadel implements after each earnings announcement season ends.
These algorithms like to target stocks that are overbought and are typically based on a non-linear neural algorithm that unwinds as volatility increases. The former algorithmic traders I’ve interviewed have reluctantly hinted that these mean reversion algorithms typically last ten to twelve trading days, but it all depends on how quickly volatility increases.
The neural algorithm folks like to brag that they are not burdened by a fixed time cycle and that their neural algorithm “adapts naturally.” I don’t mean to burden you with the math jargon (which is essentially how they shore up their fragile egos), but at the end of the day, these nasty neural algorithms are just hitting the overbought stocks and covering them while they refill their recent stocks and digest. profits.
Conversely, these neural mean reversion algorithms can be used to artificially inflate oversold stocks. However, as trading volume decreases, these mean reversion neural algorithms typically run for cover. The reality is that algorithms cannot work effectively without trading volume.
Personally, I am a ‘liner’ mathematician as my quantitative and fundamental analysis is done on a 52 week basis. Although we also perform quantitative rankings based on 270 days, 120 days, 90 days, 60 days and 30 days.
I will explain in more detail how that system works next Tuesday June 25 at 8pm during my special event, Forecast 2024. I will also talk about what “financial mania” could lead to the rise of a “New America” that will be almost unrecognizable to everyone of our generation.
Sign up for my Forecast 2024 event now. And in preparation for that event, I’ll be back in touch tomorrow with a special video discussing what could happen to the market if Wall Street’s reflex reacts.
Honestly,
Louis Navellier
Editor, Market 360
The Editor hereby discloses that, as of the date of this email, the Editor directly or indirectly owns the following securities which are the subject of the commentary, analysis, opinions, advice or recommendations contained in, or which otherwise mentioned in, the essay set out below:
Microsoft Corporation (MSFT) and NVIDIA Corporation (NVDA)