Shesa's Stock Market Weekend Updates - 5|25|26

Welcome to my weekend's updates

Last week stock market had a modest run with multiple consecutive weekly gains, driven by resilient earnings and AI enthusiasm. Nvidia (NVDA) had another good quarter and solid guidance but stock retreated down. Oil prices and bond yields went up significantly and later in the week it came down slightly giving some respites for the investors. It can be noted that the 30-year Treasury yield briefly topped 5.19% on last Tuesday for its highest level in nearly 19 years. Let's see the indexes now. 

S&P 500: Closed at 7,473.47, up 0.88% marking its eighth consecutive weekly gain, the longest streak since late 2023. Dow Jones closed around 50,580, up 0.58%. Nasdaq had modest gain rising 0.45% finishing at 26,343.97 for the week.

Key News

Per President Trump, a peace deal between the US and Iran has been “largely negotiated,” and 90-95% complete per report for the opening of Strait of Hormuz. If it happens, it would bring the oil prices down and that's a great news from inflation point of view and so also for investors. For nuclear deal may be extended to 60 days timeline. 

Key Economic Report last week

Friday, 5/22: Consumer sentiment hits fresh record low in May as Iran war fuels inflation worries

Update on Quantum Computing stocks

There was a question in my group about Quantum Computing stocks. Here is my thought - all Quantum Computing stocks were on fire as “US government $2B funding push on quantum computing companies". Government wants to stake in companies like IBM, QBTS, RGTI and IONQ has multiple contracts earlier with U.S government. Most of the QC stocks had a huge week. Is it still a good time to get in? Honestly, it’s difficult to say because these stocks are very volatile and had a huge run last week. Thus, the Risks has also increased. But we know what happened to Intel (INTC) after government took a stake. The stock went from about $20 to $132. Hence, it's individual discretion what to do. I do not provide any buy/sell suggestions. If I have add in QC stock now, then I may add slowly especially when there is a pullback. These stocks are not trading based on their fundamentals rather trading based on the future prospects. That brings higher risk. I would not like to chase any stock on hype without doing my due diligence. I buy only if I am comfortable. Every investor should do their due diligence and determine what’s best for them.

SpaceX IPO: I discussed at length during our last investment meet on SpaceX, Anthropic and OpenAI IPO. There are lots of hype as well as negativism built around SpaceX IPO. I will share my view on my next blog, possibly next weekend about my thoughts on the pros and cons of SpaceX IPO.

NVDA Q1 FY2027: Released on Wed, 5/20:

• EPS: $1.87 vs $1.76, up 214% YoY.
• Revenue: $81.62 billion vs $78.86B estimated, up 85% YoY.
  
• Data Center: $75.2B.
• Q2 Guidance: $91B vs. $87B estimated.
• Increased Dividend from 0.01 to 0.25.
• Share buy back increased additional $80B.

My view: it was another very god quarter and company provided higher guidance than Wall Street expectations. AI is still rocking. But the stock has the tendency to go down after earnings. This was 4th consecutive earnings where stock came down after good/great earnings. Fundamentally and growth wise, it's still a very good stock to won. Many of its competitors like AMD, INTC etc. are going more with momentum, but NVDA still has much better fundamentals and dominance. 

Earnings this week

Marvel (MRVL), DELL, Salesforce, Costco. 

I will watch Marvel’s and Dell earnings for AI momentum. BTW: I don’t have Dell.

Stocks to watch 

MU, MRVL, NVDA, TSLA, SOXL, AVGO, APLD, NBIS, INTC, AMD, IONQ, GOOG, DELL

Economic Report this week

Tuesday, May 26: Consumer Confidence (May).

Thursday, 5/28: PCE report (April) - Expected 3.8% (up from 3.5% in March). 

What to expect?

This will be a short trading week. The vibe may be a cautious or consolidative tone as Stocks have/had a strong run and markets are at all-time highs. So, some profit-taking or a “breather” into summer is possible after the recent momentum. 

However there are two key things may continue the bullish momentum in the market:

As Trump said, the deal is imminent with Iran - if it happens that would be big. As I write this update, Nasdaq futures were up 1% and Oil was down about 6%, $90.9 a barrel. This may be a market booster. 

Secondly, good Earnings from Dell and Marvel could continue the AI momentum. Having said that, I keep taking some chips out of the table as and when I get the opportunity. That's just my perspective and not a recommendation. 

Have a good evening!