Nvidia's Significant China Drop

And, Nordstrom’s softening consumer spend.

November 22, 2023

Today is Wednesday, November 22, 2023.

The Early Bird Index today is 59.82.

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Nvidia's Significant China Drop

Despite posting strong financial results, Nvidia (Nasdaq: NVDA) dropped by 1.74% in after-hours trading on Tuesday due to alarming commentary from the CFO.

Financials: Nvidia reported earnings of $4.02 per share in the past quarter and revenue of $18.12 billion; both were better than expected.

Details: Revenue is up 206% year-over-year thanks to the importance of technology in the AI age. Revenue for Nvidia’s data center business reached a record $14.51 billion. Gaming revenue increased 15% to $2.86 billion.

Outlook: Nvidia expects revenue in the current quarter to be around $20 million.

Yes, But: CFO Colette Kress said that sales to China “will decline significantly” in the fourth quarter. China usually contributes up to 25% of the data center revenue.

Background: The U.S. restricted the sales of certain semiconductors to China last month, which impacted the types of chips that Nvidia produces.

Stock Price: Nvidia is up 248% this year, including a 16% increase in the last 30 days.

Final Thoughts: Many investors see Nvidia as a “must-own” stock due to the current AI craze. However, expectations are super high for Nvidia, and the restrictions in China are bad. The company hopes that growth elsewhere can offset any declines in China.

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Notables

Notable Earnings Today: Deere (NYSE: DE), Tremor International American Depository (Nasdaq: TRMR), Baozun (Nasdaq: BZUN), GDS Holdings (Nasdaq: GDS).

Notable IPOs Today: N/A.

Notable Equity Crowdfunding Campaigns Ending Today: Atakama (Wefunder), Momento Labs (StartEngine).

Notable Economic Events Today: Jobless Claims (8:30 a.m. ET), Core Durable Goods Orders (8:30 a.m. ET), Michigan Consumer Expectations / Sentiment (10:00 a.m. ET), Crude Oil Inventories (10:30 a.m. ET), Atlanta Fed GDPNow (11:30 a.m. ET).

Nordstrom’s Softening Consumer Spend

Nordstrom (NYSE: JWN) ticked down 0.74% in after-hours trading on Tuesday after the retailer posted mixed financial results.

Financials: Nordstrom reported earnings of 25 cents per share in the past quarter, which was better than expected. But revenue only hit $3.3 billion, which was lower than anticipated.

Outlook: The company expects revenue to decline by 4% to 6% in the current quarter. 

Quote: “Given continued uncertainty and softening consumer spend, we're remaining agile and focused on serving our customers.” - CEO Erik Nordstrom.

Final Thoughts: Nordstrom is down 5% this year. It’s a rough time to invest in retailers. The company made some progress in the quarter, but not enough to feel confident.

Guess? Faces ‘Uncertain’ Environment

Retailer Guess? (NYSE: GES) plunged by 14.29% in after-hours trading on Tuesday after the company posted disappointing financial earnings results.

Powering the Story: CEO Carlos Alberini said that the company is facing “an uncertain shopping environment,” which is scary for investors.

Final Thoughts: The stock is up 11% in 2023, but that obviously won’t last for long if the environment is “uncertain.”

Trends to Watch

Going Back to 2010: Home Sales Fell to a New 13-Year Low in October (Wall Street Journal)

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