NVIDIA and Marathon Digital have been highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – June 4, 2024 – Zacks Equity Research shares NVIDIA NVDA as the Bull of the Day and Marathon Digital Holdings MARA as the Bear of the Day. In addition, Zacks Equity Research provides analysis on NIO Inc. NIO, Li Auto LI and Tesla TSLA.

Here is a synopsis of all five stocks:

Bull of the Day:

I last wrote about NVIDIA as the Bull of the Day in early April to summarize what investors should expect from their Q1 earnings report that was delivered on May 22.

At the time, NVDA shares had made a double-top of new highs near $970 and were headed back below $900.

I had been telling investors since February they “won’t see $700 again,” and that prophecy became further solidified after the semiannual GPU Tech Conference (GTC) the week of March 18. Here’s what I wrote…

GTC 2024: March 18th Will Be Remembered For Years

Just as I tell investors to check in with the NVIDIA Newsroom every couple of weeks to see the latest in innovations on the accelerated computing/AI frontier, so too being aware of GTC events is critical.

Because there is always a flurry of new technologies and partnerships unveiled, to say nothing of the most recent scientific R&D that Jensen highlights as accomplished using their hardware and software stacks.

On March 18, GTC 2024 kicked off with these observations from Jensen & Co…

Generative AI promises to revolutionize every industry it touches — all that’s been needed is the technology to meet the challenge.

NVIDIA founder and CEO Jensen Huang on 3/18 introduced that technology — the company’s new Blackwell computing platform — as he outlined the major advances that increased computing power can deliver for everything from software to services, robotics to medical technology and more.

“Accelerated computing has reached the tipping point — general purpose computing has run out of steam,” Huang told more than 11,000 GTC attendees gathered in-person — and many tens of thousands more online — for his keynote address at Silicon Valley’s cavernous SAP Center arena.

“We need another way of doing computing — so that we can continue to scale so that we can continue to drive down the cost of computing, so that we can continue to consume more and more computing while being sustainable. Accelerated computing is a dramatic speedup over general-purpose computing, in every single industry.”

(end of excerpt from April 2 report)

That article also explains where the names Hopper and Blackwell come from.

Fast forward to Q1 earnings — and the beat-and-raise fireworks that launched the stock above $1,000 — and I have a new prophecy:

NVDA shares will not fill the gap back down to $950.

I had conviction like this before the report from Jensen & Co. and it was only strengthened by what we’ve learned since about the demand for NVIDIA GPU-driven DGX-CUDA “massively parallel architectures.”

My conviction prior was demonstrated by adding some unique leverage to our already full position in the TAZR Trader portfolio. When NVDA slid below $800 again, I bought the GraniteShares 2x Long NVDA Daily ETF (NVDL) on April 22 near $30.50.

So when NVDA rallied back to $950 and parked there before the May 22 report, we sat tight with a 40%+ gain in the levered ETF, on top of our 660% gain in the common shares since October of 2022.

And that conviction was rewarded when NVDA spent the next three days surging over 20% to $1150. Only then did we take some partial profits.

We only trimmed some of each position simply because both positions had each become 15% of the portfolio — which was like having 45% in one stock!

What’s Next for NVIDIA?

The main thing to keep in mind is that the growth story is still stronger than most investors and Wall Street analysts expect. That’s why my price target remains one of the highest on the Street as I moved from $1200 to $1400 last month.

What is it that analysts and investors are still underestimating? First, it is the size of the TAM (total addressable market) that NVIDIA owns. If you listen to the Fortune 1,000 companies buying NVIDIA architectures and systems, there is little competition right now.

Jensen’s favorite way of describing the opportunity is that there is a “$1 trillion installed base” of traditional CPU-compute in datacenters right now that needs to evolve to accelerated GPU-compute.

Even if NVIDIA only captures 20% of that, we’re talking $200 billion in peak revenues over the next 2-3 years during the revolutionary transition.

But he’s being far too modest (as he must, being the captain of a public ship). I’ve been calling for $200 billion inside of two years (by early CY 2026) and that’s not counting how far and fast the installed base keeps growing.

Tectonic Shift to AI Economy

The other huge dynamic we learned on the conference call with Jensen on May 22 essentially put to rest the idea that “cannibalization” was about to occur as datacenter and LLM-builders would stop buying older systems like the GH200 because they wanted to wait for the GB200.

Here’s what I wrote to my investor group on May 23 as we sat back and enjoyed the rocket launch…

TAZR Traders

You know the good news on NVDA: Wall Street continues to capitulate to the “tectonic shift” that has occurred with AI/ML/DL as more price targets play catch-up to our $1200…

Even as I raise mine to $1400 for the next 18 months.

And even as everyone and their Grandpa wring their hands about the NVDA market cap being worth more than half the world.

If you follow me on Twitter @KevinBCook you got to see the stunning “chapter and verse” from Jensen on the conference call yesterday… with all the analysts trying to find a fly in the ointment.

I used Otter.AI to transcribe the whole thing and will share more over the coming days… what a sermon Master Huang delivered!

It made me coin a new phrase about how he abolished the fear of “cannibalization” during this Global 2,000 — plus nation-states — deployment transition from GH200 to GB200 systems…

“Multiplicative Integration.”

Jensen didn’t say this, but this is what I felt he was talking about. I actually posted his final 5-paragraph “mic drop” because it captured the essence of the technological transformation we are in for science, industry, medicine, education, and society.

Jensen & Co. systems have “the transition” covered with TCO (total cost of operations) fully seamless — and bootstrapped — on the upgrades to the Blackwell platform.

Corporations won’t have to worry about how the current GH200 systems integrate with the new Blackwell systems because Jensen and his top-tier CUDA engineers have already built that seamless transition into everything.

Estimates Still Levitating

In my February report, I noted that sales estimates would continue to rise in March as analysts re-worked their models and caught up to the real, but still hard-to-believe, demand for solutions from the King of AI.

In my April report, I wrote “Next year’s topline has moved from $117 billion to $125 billion, with the high estimate at $142B. I expect the consensus for next year to soon be $150B.

“And with gross margins above 75%, NVIDIA continues to release the profit flow. This year’s EPS consensus has risen over 20% in the past two months to $23.84, representing 84% growth. Next year is projected to top EPS of $27.”

As of May 31, next year’s topline projection has climbed to a Zacks Revenue Consensus of only $142 billion. Geez, I thought we’d easily be at $150bn by now for next year. But at least one analyst holds the high ground with $161bn. That guy or gal knows what’s up.

On the profit front, the Zacks EPS Consensus for this year and next has jumped to $27 and $32.50, respectively, as NVIDIA turns the screws on margin leverage in the greatest demand revolution since the iPhone.

Bottom line: Will the gap at $1065 get filled and should you wait to buy there? Definitely not a bad strategy. But if you don’t own any NVDA shares, and want to, I would be very careful about simply hoping for that event. Many underexposed fund managers have a target on their foreheads for hoping similar hopes in the past year, and so the stock won’t stay in the $1,000-handle for long.

Breaking Update

As I write this on Sunday afternoon, we are about to enter an event this week that should also keep NVDA shares in high demand: the annual Computex summit in Taipei, Taiwan.

This morning (evening in Taiwan), Jensen delivered the opening keynote at Computex with a unique ROI angle for corporations to view their continuous capex upgrading of DGX-GPU systems.

Independent technology analyst and CEO of The Futurum Group, Daniel Newman, was there and provided some “TL/DR” Twitter notes on Master Huang’s main message…

“The more you buy, the more you save. It isn’t accurate, but it is correct. CEO math,” NVIDIA CEO Jensen Huang shares at his Computex Keynote.

The TLDR is that NVIDIA is providing its “ROÍ Calculator” of the value that adding GPUs to the datacenter or to a PC creates.

Deflationary in many ways, AI allows companies to produce more and spend less at scale.

But, in this particular case, NVIDIA’s calculations suggest 30-60x greater data center performance by speeding up the data center by more or less 100x.

Next, he talks about moving the speed up from 100x to 200, 300, 1000x…

Marginal cost of computing becomes so low that a new way of using compute emerges.

Made one algorithm “one million” times faster.

(end of Daniel Newman’s Twitter notes where he includes a snapshot of the NVIDIA ROI Calculator)

If this is Jensen’s message to corporations, it should be clear that analysts and investors are still missing the big picture when they hear Jensen say “accelerated” compute and don’t really grasp the depth of the transformation that is coming.

Be sure to follow @DanielNewmanUV and @KevinBCook on Twitter to stay up to date on everything NVIDIA and accelerated compute!

NVIDIA AI Summit

Finally, watch the NVIDIA Newsroom this week as the NVIDIA AI Summit on June 5 in Taipei will delve into the practical applications of AI in manufacturing, healthcare, research and more.

The summit will feature over 20 sessions from industry experts and innovators as well as training sessions for developers. Kimberly Powell, vice president of healthcare and life sciences at NVIDIA, will host a special address on how generative AI is advancing the healthcare technology industry.

As Jensen convinced me 8 years ago, giving developers across industry, enterprise, science, medicine, and research universities access to CUDA-DGX tools and platforms is not only the key to NVIDIA’s growth, it’s the fulcrum for improving the world and solving problems faster.

Bear of the Day:

Marathon Digital Holdings is a digital asset technology company that mines cryptocurrencies, with a focus on the blockchain ecosystem and the generation of digital assets.

I recently told my investor group to buy MARA under $20 before the infamous “Bitcoin Halving” on April 20 because I believed that all the pessimism had been discounted since the stock had just fallen nearly 50%.

Fast forward six weeks and it seems like the stock is still stuck in the same old place.

And their quarterly report in early May didn’t help assuage fears of the imminent “halving” of Bitcoin mining revenues.

Marathon came out with a quarterly loss of $0.06 per share versus the Zacks Consensus Estimate of $0.02. This compares to a loss of $0.03 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of -400%. A quarter ago, it was expected that MARA would post earnings of $0.05 per share when it actually produced a loss of $0.02, delivering a surprise of -140%.

Over the last four quarters, the company has not been able to surpass consensus EPS estimates.

Marathon Digital, which belongs to the Zacks Technology Services industry, posted revenues of $165.2 million for the quarter ended March 2024, missing the Zacks Consensus Estimate by 14.80%. This compares to year-ago revenues of $51.13 million. The company has topped consensus revenue estimates just once over the last four quarters.

Even with 99% topline and 59% EPS growth projected for this year, investors and analysts appear skeptical about how this premier Bitcoin miner will survive the current political and economic uncertainty as their “precious” pushes back toward new highs above $70,000.

Bottom line: For a company with strong projected growth, there appears to be a disconnect with the stock trajectory and the estimated revision momentum. Until the estimates stabilize, let’s stay on the sidelines with MARA until we see an all-clear sign. The Zacks Rank will let us know.

Additional content:

EV Roundup: NIO’s Deliveries Surge +234% in May

China-based electric vehicle (EV) players NIO Inc. and Li Auto recorded year-over-year growth in May 2024 deliveries, with NIO recording triple-digit percentage gains. Meanwhile, U.S. EV king Tesla also made it to the top stories with the recall of 125K vehicles.

While LI carries a Zacks Rank #5 (Sell), NIO and TSLA are #3 Ranked (Hold) currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Last Week’s Top Stories

Li Auto reported 35,020 vehicle deliveries in May 2024, up 23.8% year over year. The company’s cumulative deliveries were 774,571 vehicles as of May 31, 2024. More than 15,000 Li L6 vehicles have been delivered since its launch on Apr 24, setting a record pace for new models. The company is committed to maintaining supply chain security and ramping up Li L6 production to expedite customer deliveries.

Sales of the 2024 Li L7, Li L8, and Li L9 are also accelerating, driven by a new pricing strategy. Li Auto’s market share in the RMB200,000 and above NEV market grew to 13.5% from January to April, solidifying its leading position among Chinese auto brands. As of May 31, 2024, Li Auto operated 487 retail stores in 144 cities, 374 service centers and 426 supercharging stations with 1,888 charging stalls across China.

NIO delivered 20,544 vehicles last month, marking a whopping 233.8% year-over-year jump. The deliveries comprised 12,164 SUVs and 8,380 sedans. Year to date, deliveries rose 51% to 66,217 units. The company’s cumulative deliveries reached 515,811 vehicles as of May 31, 2024.NIO enhanced its battery-swapping strategy by partnering with GAC Group and FAW Group.

These new alliances add to NIO’s existing collaborations with Changan Automobile, Geely Group, JAC Group, Chery Automobile, and Lotus Technology. NIO is committed to developing a dynamic battery-swapping ecosystem to offer efficient and convenient recharging solutions for its users.

XPeng delivered 10,146 EVs in May 2024, marking a 35% year-over-year increase. XPENG X9 achieved 1,625 monthly deliveries, totaling 11,456 units since its launch, maintaining its leading position in China’s all-electric MPV and three-row model segments. Year to date, XPENG has delivered 41,360 Smart EVs, a 26% year-over-year increase.

The monthly active user penetration rate of XNGP in urban driving scenarios reached 84% in May. By May 2024, XPENG’s R&D team logged over 6.46 million kilometers in accredited XNGP on-road tests, aiming for full nationwide road coverage by the third quarter of 2024. During XPENG’s AI Day on May 20, 2024, the company launched XOS 5.1.0 (AI Tianji OS), its AI-powered in-car operating system, highlighting its leadership in AI applications in the China auto industry.

Tesla has issued a recall for over 125,000 vehicles due to a malfunction in the seat belt warning system. The seat belt warning system is supposed to provide visual and audible alerts when drivers are not buckled in.

However, in some vehicles, these alerts may not function correctly, as indicated by U.S. National Highway Traffic Safety Administration documents. Affected models include the 2012-2024 Model S, the 2015-2024 Model X, the 2017-2023 Model 3 and the 2020-2023 Model Y. Tesla plans to fix this issue with an over-the-air software update. It aims to complete the software update for all affected vehicles by the end of June this year.

What’s Next in the Space?

Stay tuned for announcements of upcoming EV models and any important updates from the industry.

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