Good morning! Today’s edition unpacks why Nvidia stock tumbled despite another dominant earnings report.

Plus, Anthony Pompliano and I have a new podcast to share about MicroStrategy and bitcoin’s record-breaking run.

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Great expectations, met

Nvidia’s monster third quarter, bullish guidance, and multi-trillion dollar potential was not enough to satisfy Wall Street. 

Similar to what happened last quarter, the world’s largest stock fell more than 2.5% in overnight trading following the blowout earnings report: 

• Earnings per share: $0.81, beating estimates for $0.74, up 103% from a year ago

• Revenue: $35.1 billion, beating estimates for $33.2 billion, up 94% from a year ago

• Nvidia’s Q4 revenue forecast: $37.5 billion (±2%), beating estimates for $37 billion

Chief executive Jensen Huang said demand for Nvidia’s new Blackwell products remains enormous.

He likened the artificial intelligence boom to a revamped industrial revolution.

“The age of AI is in full steam, propelling a global shift to Nvidia computing,” Huang said.

Indeed, Wedbush managing director Dan Ives called the earnings a “jaw-dropper.”

“This AI revolution is just in the early days of playing out,” Ives said in an interview with CNN, adding that he expects Nvidia to reach a $4 trillion market capitalization in 2025.

“I believe this is a stock that’s up tomorrow.”

That said, the initial muted market reaction suggests the stellar third quarter did not compensate for a strong-but-not-strong-enough projection for the fourth quarter. 

Kunjan Sobhani, lead semiconductor analyst for Bloomberg Intelligence, said ongoing shipping constraints are likely hampering the outlook. 

“Despite this, demand from cloud providers remains robust,” Sobhani wrote in a note late Wednesday. “Blackwell delay concerns should ease as the CEO affirmed several billion dollars in 4Q sales as shipments surpass prior expectations.”

Now, as Opening Bell Daily readers know, Huang has been building this company for three decades, but ChatGPT’s debut in November 2022 catalyzed an exponential boom in business as well as stock price appreciation. 

The following chart is worth revisiting every earnings report, as it becomes more extreme with each update.

Shares of Nvidia had climbed 192% year-to-date up to Wednesday’s closing price. 

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Elsewhere:

🚀AI spending is surging. A new report from Menlo Ventures showed business spending on generative AI is up 500% this year, jumping from $2.3 to $13.8 billion compared to 2023. OpenAI ceded market share in enterprise AI, dropping from 50% to 34%, while Anthropic doubled its market share to 24%. (CNBC)

📈 Investors are piling into bitcoin ETF options. The debut of options trading this week for bitcoin funds has attracted huge inflows, pushing bitcoin to another record late Wednesday above $96,000. Traders say bitcoin ETF options could attract greater institutional interest by allowing new hedging strategies. (WSJ)

🇪🇺 A debt warning from Europe. The European Central Bank cautioned Wednesday that the Eurozone risks another debt crisis if the bloc fails to boost growth and lower public debt: “Headwinds to economic growth from factors such as weak productivity make elevated debt levels and budget deficits more likely to reignite debt sustainability concerns.” (FT)

Traders see inflation climbing again in November, according to Kalshi, the biggest US prediction market:

Rapid-fire:

• Former billionaire Bill Hwang was sentenced to 18 years in prison for the implosion of Archegos Capital Management, which cost Wall Street banks over $10 billion (Reuters)

• Target missed earnings estimates and its stock plunged 21% on Wednesday (WSJ)

• Comcast is spinning off most of its cable TV networks and prioritizing streaming (CNN Business)

• Investing veteran Rob Arnott predicts growth stocks could lose momentum as a bear market sets in for large-cap stocks (Business Insider)

• Apartment builders are pulling back while single-family homebuilders are holding steady compared to a year ago (ResiClub)

• A classic Thanksgiving meal will cost about 5% less in 2024 compared to a year ago (CNBC)

• The price gap between owning and renting a home has rarely been this wide (Yahoo Finance)

Interview:

Investor Anthony Pompliano and I sat down to discuss MicroStrategy’s enormous stock rally, businesses putting bitcoin on their balance sheets, the outlook for cryptocurrency in 2025, and more:

Last thing:

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