🎙️ Dancing in the Street

Wow, just wow. Bitcoin appears on the cusp of another historic milestone: $100,000.

The asset has surged over 120% year-to-date after a 155% rally in 2023. Almost exactly two years ago, the asset had crashed to under $16,000. It’s been a 500%-plus run since.

Also, we’d love to hear from you below in our poll of the day: As Thanksgiving approaches, what are you most grateful for as an investor? Reply to us directly and/or share your thoughts at the bottom of this email.

— Matthew & Shawn

Here’s today’s rundown:

Today, we'll discuss the biggest stories in markets:

• Breaking down Nvidia’s latest earnings

• Why the stars have aligned for U.S. financial stocks

This, and more, in just 5 minutes to read.

Chart of the Day

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In The News

⚡ Breaking Down Nvidia’s Latest Earnings Beat and What It Means

In some of the most unsurprising financial news all week, Nvidia reported more dominant results that underscore its continued growth — and the boom of both the semiconductor and artificial intelligence spaces. 

Nvidia deliver high-level results, again:

• Sales surged to $35.1 billion, a 94% year-over-year increase
  

• Profits more than doubled to $19.3 billion
  

• Market capitalization has grown by $2.36 trillion in 2024, exceeding Alphabet's entire current value

A story of execution For years, Nvidia’s bread and butter has been its advanced AI chips, critical pieces for tech giants such as Microsoft, Google, Meta, and emerging AI companies. Its stock rally has set sky-high expectations for investors. 

• “Critical questions around Blackwell’s production ramp and customer concentration remain key concerns,” an analyst noted. “There’s little room for execution missteps in 2025.”

Full production: This week, CEO Jensen Huang highlighted "incredible" demand for both current and next-generation Blackwell chips, with anticipated shipments in the current quarter and expected supply constraints continuing into the next fiscal year.

• Huang said Blackwell is now in “full production,” and there’s still an appetite for Hopper, the previous design. “Blackwell is now in the hands of all of our major partners,” he said during the conference call.

Why it matters:

All eyes have been on Nvidia since it began this explosive growth period in late 2022. Two years ago, it reflected only 1% of the S&P 500. Now, it’s up to 7%.

Nvidia's journey from a graphics chip manufacturer to an AI technology leader has been nothing short of remarkable. Founded in 1993, the company's chips—originally designed for computer graphics—proved exceptionally well-suited for AI computational tasks. That positioning enabled tech companies to invest billions in advanced AI infrastructure.

A look ahead: There are still challenges ahead, including more competition from AMD and other AI chip startups. Amazon and Google might develop in-house chips. Plus, U.S. export restrictions could limit chip sales to China.

• Geopolitical shifts could further impact the world’s most valuable company, which now has a ~$3.5 trillion market cap. A Trump administration could mean sweeping tariffs and a confrontational stance toward China, all of which could impact Nvidia’s sales.
  

• Nvidia projects about $37.5 billion in revenue for the current quarter, signaling continued strong demand for its AI technologies and maintaining its position at the forefront of the AI revolution.

Final quotes: “The guidance seems to show lower growth, but this may be Nvidia being conservative,” said one analyst. “Short term, there is no worry about AI demand. Nvidia is doing everything they should be doing.”

Added Huang: “The age of AI is upon us and it’s large and diverse.”

Read more

More Headlines

📈 Snowflake rockets 32%, its best day ever, after earnings beat

💰 Americans say you need a $270,000 salary to be “successful”

🤔 Euphoria is in the air — what’s the bear case for stocks? Eric Soda explains

🚨 U.S. probes JPMorgan's links with Iranian oil trader's hedge fund

📉 Alphabet shares slide following DOJ push for Google to divest Chrome

🏦 Why the Stars Have Aligned for U.S. Financial Stocks

For all of the talk about tech, AI, and the Magnificent 7, did you know that the U.S. Financial sector has outperformed Technology this year?

What a difference a year makes. After a series of banking failures in early 2023 — and a rough year in 2022 — bank stocks are in vogue again. 

Confluence of factors: Banks were already doing quite well this year, but investors bet further on the sector after Donald Trump was elected back to the White House. They’re betting his return will mean higher tariffs, lower tax rates, and lighter regulation.

• Specifically, they’re counting on hopes of a stronger economy, which could mean more customers get loans and pay them back with interest. A Republican White House could also spur more mergers and buyouts, where investment banks earn (handsome) fees.
  

• Among the S&P 500’s 11 sectors, Financial stocks are No. 1 in 2024. 
  

• “A lot of bankers, they’re, like, dancing in the street,” JPMorgan CEO Jamie Dimon told CEOs at a global summit on Nov. 14. "They've had successive years and years of regulations, a lot of which stymied credit."

Across the board: Shares of the biggest U.S. lenders, JPMorgan, Bank of America, Wells Fargo, and Citigroup, have all leaped on the prospects for lighter-touch regulation and higher interest income under Trump. Goldman Sachs and Morgan Stanley have also enjoyed gains, as have regional lenders PNC and Capital One. Even in Europe, banks with big Wall Street operations, such as Deutsche Bank, Barclays, and UBS, have risen. 

• An unwinding of the antitrust crackdown under President Joe Biden could improve profits for U.S. banks and stock brokers.
  

• Treasury yields have soared after the election as investors anticipate economic growth, tax cuts and more fiscal spending. Banks like higher bond yields because they’re often vested in bond purchases and holdings.

Why it matters:

The Financial sector’s rise further proves the U.S. stock market’s broadening out from beyond mega-cap tech. Although many headlines have portrayed this market as “all about tech,” market breadth has improved this year as the S&P 500 keeps climbing higher.

Further, bank profitability could increase as government bond yields rise, particularly with longer-term debt rates outpacing short-term yields. 

Regulatory landscape changes are emerging. The Federal Reserve has softened capital requirement proposals for major banks, and Citigroup analysts predict more modifications under a Republican administration.

Bottom line: Bankers are optimistic that the new administration will deliver on its biggest corporate promises. “I’m not a dancing-in-the-streets guy. I keep my hands in my pockets,” a former JPMorgan executive told Bloomberg. “I’m certainly smiling.”

Read more

Quick Poll

Yesterday, we asked: How often do you pay with a paper check?

— Two-thirds of investors say they rarely or never use paper checks anymore. “I'm not sure if paper checks even exist here in Germany anymore,” one wrote. “Never considered they are safe and, furthermore, electronic payments are faster and cheaper,” wrote another. One reader simply called them “ancient technology.”

— People who still use physical checks said it’s often not their choice, as their HOA or contractors require payment that way.

— Another is making a gradual transition: “Monthly ,I do by business bills with a printer setup just because it's a habit, but I’m slowly rolling them over to e-checks.”

See you next time!

That's it for today on We Study Markets!

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