Nvidia guidance will be crucial for tech bulls. (0:25) Fed's favorite inflation gauge looks more benign than CPI. (2:18) Warren Buffett assures investors on cash pile. (3:07)Show NotesGoldman Sachs' Rising Stars ListEarnings CalendarDividend RoundupEpisode transcripts: seekingalpha.com/wsb Sign up for our daily newsletter here and for full access to analyst ratings, stock quant scores, dividend grades, subscribe to Seeking Alpha Premium at seekingalpha.com/subscriptions.
Chapter 1: What market events are expected to impact this week's stock performance?
Welcome to Seeking Alpha's Wall Street Brunch, our Sunday look-ahead to this week's market-moving events, along with the weekend's top news and analysis. Hello, today is Sunday, February 23rd, and I'm your host, Kim Kahn. This is a test. For the next few sessions, the stock market will be conducting a test of the AI rally. This is only a test.
Chapter 2: Will NVIDIA's earnings report boost tech stocks?
Will NVIDIA give the bulls a much-needed jolt of belief as macro worries gain a stronger grip on action? We'll find out when the chipmaker reports earnings on Wednesday. Analysts expect NVIDIA to report EPS of $0.85 on revenue of $38.15 billion. There have been six upward analyst revisions to the bottom line going into the report, with two down.
The top line has seen seven upward revisions and two to the downside. Viktor Derganov, who runs the financial profit investing group on Seeking Alpha, says the top line number will be especially important here as the market will look for signs of continued growth, specifically in the lucrative enterprise AI GPU segment.
While NVIDIA guided to only $37.5 billion in sales for Q4, NVIDIA often sandbags its forecasts, making it easier to provide better-than-anticipated results. So $38-39 billion in sales with a small beat on profit wouldn't be a surprise, he said.
Chapter 3: How might NVIDIA's guidance influence the AI industry?
Guidance will be crucial in the wake of DeepSeek, but despite high expectations, NVIDIA can deliver another constructive earnings report, which should support its stock price trajectory and the trajectory of other high-quality AI picks, he concluded. Key bank capital markets are expecting a strong report that will solidly beat forecasts and provide higher, albeit conservative, guidance.
DeepSeek's recent announcement concerning its latest AI product has led to a spike in demand for NVIDIA's H20 GPUs in China, analysts added. Shares of Nvidia are barely higher year-to-date, but are up 15% from their low at the beginning of the month. Also on the earnings calendar, Public Storage, Trip.com, Zoom Communications, and SBA Communications report on Monday.
Chapter 4: Which companies are reporting earnings this week?
Home Depot, Intuit, Workday, and Keurig Dr. Pepper weigh in on Tuesday. Joining NVIDIA on Wednesday are Salesforce, Lowe's, TJX, and Stellantis. Thursday brings HP, Rocket, Warner Bros. Discovery, and NetApp. EOG Resources chart industries and AES issue numbers on Friday.
On the economic front, the highlight of the week will be the Fed's favorite inflation gauge, which is expected to show a more benign picture of price pressure than the January CPI. The January core PCE price index hits Friday, and economists expect a 0.3% rise on the month, cutting the annual rate to 2.6%.
Chapter 5: What economic indicators should investors watch this week?
Wells Fargo economists say inflation progress is slower going, but it hasn't necessarily gone into reverse. David Rogel, lead portfolio manager of the BlackRock Total Return Fund, says, We think the recent FOMC rate cuts were part of a recalibration cycle to adjust policy rates down with inflation so as not to cause a passive tightening in monetary policy.
Chapter 6: How are recent FOMC actions affecting inflation expectations?
While the Fed's easing bias remains, we think the central bank has transitioned to more of an extended hold at a minimum through June and potentially longer, absent any unforeseen shocks. In the news this weekend, Berkshire Hathaway reported a surge in Q4 operating earnings, delivering a full-year 27% jump to $47.44 billion.
The company said Q4 operating earnings increased 71.3% year-on-year to $14.53 billion. Berkshire's cash pile swelled to a record $334.2 billion as of the end of last year, up from $325.21 billion as of September 30, 2024. The cash has long been a focus for investors impatient for it to be put to work.
In his annual letter, Warren Buffett assured investors that Berkshire Hathaway's equity holdings would always exceed its cash. Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned.
He also explained the company's policy of not paying dividends to shareholders, preferring to reinvest the money into the company. Berkshire only paid a dividend once in 60 years of Buffett's control. On January 3, 1967, the company paid out $0.10 per A share.
For 60 years, Berkshire shareholders endorsed continuous reinvestment, and that enabled the company to build its taxable income, Buffett said. And speaking of dividends, Phillips 66 goes ex-dividend on Monday, paying out on March 5th. S&P Global goes ex-dividend Wednesday and pays out on March 12th. Delta Airlines goes ex-dividend on Thursday, paying out on February 27th.
And Goldman Sachs goes ex-dividend on Friday, with a March 28th payout date. And in the Wall Street Research Corner, and speaking of Goldman, they are out with their rising stars list. Those are the stocks with the largest increase in the number of hedge fund owners from the third quarter to the fourth quarter of 2024.
Senior strategist Ben Snyder says stocks with the largest increase in number of hedge fund investors have historically outperformed their sector peers during the quarters that followed their rise in popularity. At the top of the rising stars list are Disney and Salesforce, both with 24 more hedge funds buying. Robinhood follows at 23 and Boeing at 20.
Arthur J. Gallagher, Coupang, and App Loving are tied at 19. Looking at falling stars, Micron saw 24 fewer hedge funds owning its stock. SS&C Tech followed, down 23. Premier and Elf Beauty followed at 19. See all 40 rising and falling stars in our story on Seeking Alpha. Wishing all our listeners a successful trading week and a special shout out to new podcast fans, Phoebe, Chris, and Jen.
That's all for today's Wall Street Brunch. Look for links to stories in the show notes section. Don't forget, these episodes will be up with transcriptions at seekingalpha.com slash WSB. And join the elite community of real investors to unearth great investing ideas. Just head to seekingalpha.com slash subscriptions.
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