Morning Toast 29th Aug
Highlights
Jerome Powell's cautionary remarks at the Jackson Hole didn't perturb investors, as they propelled the S&P 500 and Nasdaq to their initial weekly increase in three weeks. However, the prevalent discussions about heightened interest rates have compelled US bond yields to reach levels not seen in over a decade, a trend that historically has weighed down on stock performance.
Stock Spotlight
Three engineers from Silicon Valley's mid-ranking echelons, who co-founded Nvidia with a mere $40,000 three decades ago, were driven by the conviction that 3D graphics would revolutionize the rapidly expanding video game sector.
In contemporary times, the equivalent sum can acquire only a single Nvidia microprocessor, a product that is now perpetually in short supply due to overwhelming demand.
The surge in artificial intelligence (AI) has propelled Nvidia to the status of arguably the most pivotal tech company globally, granting it a valuation exceeding $1.2 trillion.
A recent highlight occurred on Wednesday night (Thursday AEST) as the corporation unveiled an astounding 843% year-on-year surge in quarterly profits, surging from $656 million to $6.2 billion.
Within a span of just three months, sales in its data centre division, indicative of the desire for its premier AI chips, ascended by an impressive 141%, surpassing even the ambitious predictions of Wall Street.
The most encouraging revelation for investors was Nvidia's projection of sustained momentum, predicting another substantial increase in sales during the third quarter of this year.
Phillip Capital analysts promptly elevated their rating on Nvidia (NASDAQ:NVDA) shares, transitioning from "Accumulate" to "Buy," while setting a price target of $645 per share, marking a remarkable $205 enhancement compared to the previous target.
This adjustment stemmed from the company's recent "blowout results and guidance." Analysts perceive Nvidia's back-to-back remarkable earnings reports as indicative of a "market monopoly" phase.
The analysts underscored that Nvidia's Graphics Processing Units (GPUs) play an integral role in nearly 70% of the world's top 500 supercomputers.
Elaborating on Nvidia's prospects in the CPU market, the analysts asserted that the entry of Nvidia, especially with their product "Grace," could potentially erode the market share of the two primary CPU manufacturers. This is attributed to Grace's capacity to optimize the performance of Nvidia GPUs compared to those of its competitors.
Stock Spotlight
Walt Disney's (DIS) theme parks have sprung back to life after a prolonged slump during the pandemic. Nevertheless, the company is pinning its hopes on a renewed return of its previous management team to rekindle growth in the wake of Covid-19.
Although the company narrowly fell short of Wall Street's expectations for earnings and Disney+ subscribers during the fiscal second quarter, it's striving to regain stability after a period of underperformance triggered by the pandemic. The former CEO's departure and the company's involvement in contentious political matters in Florida, where its largest theme park complex resides, further complicated matters.
Since the beginning of 2020, Wall Street has been on a roller-coaster ride, with the stock market plummeting into a bear market due to the impact of the coronavirus crash. Disney's stock took a hit as it shuttered its theme parks and suspended Disney Cruise Line operations. Throughout this year, Disney shares have only managed a modest 5% increase, trailing behind the performance of the Dow Jones Industrial Average.
While the theme parks and cruise divisions endured setbacks, the entertainment behemoth found a silver lining with its Disney+ streaming service. Additionally, the gradual reopening of movie theatres has injected optimism into the potential for box office revenue. Yet, the company faces the challenge of striking a harmonious balance between streaming income and in-person earnings.
Disney's achievements in content creation have encountered stagnation as well. In the previous year, Disney films secured 22 Oscar nominations, including titles like "The Banshees of Inisherin," "Black Panther: Wakanda Forever," and "Avatar: The Way of Water." However, theatrical releases continue to grapple with challenges.
Sustainable News
In the fiscal year 2023, IFC achieved a landmark in Africa by delivering unprecedented financing. This contribution played a pivotal role in expediting the continent's transition towards sustainable energy, fostering eco-friendly manufacturing, bolstering intra-Africa trade, empowering smaller enterprises, and amplifying local food production, even in the more challenging and vulnerable regions affected by conflicts.
Within the timeframe of July 1, 2022, to June 30, 2023, IFC made significant investments totaling $11.5 billion across 40 countries. This marked the largest annual commitment ever witnessed on the continent. The scope of assistance encompassed several areas, including $1.12 billion dedicated to trade financing, $876 million directed towards advancing Africa's green energy transformation, and $1.98 billion allocated to facilitate the growth of smaller businesses, ultimately fostering job creation. Furthermore, IFC contributed $1.76 billion to enhance digital connectivity, channelled into investments in telecom infrastructure, broadband expansion, and the proliferation of mobile internet accessibility.
Out of the total investment of $11.5 billion, $3.5 billion was in the form of short-term financing, and an additional $3.1 billion was mobilized. Notably, 40% of IFC's self-financing was dedicated to addressing the pressing issue of climate change, while 48% was directed towards supporting economically disadvantaged, fragile, and conflict-affected states.
Sérgio Pimenta, the IFC Vice President for Africa, emphasized the organization's commitment to supporting a resilient, inclusive, and environmentally conscious private sector. This sector not only contributes to vital infrastructure and digital solutions but also takes on challenges related to food security and climate change.
These efforts have been at the forefront of IFC's initiatives throughout the past year and will remain central as the organization collaborates with partners to generate employment opportunities and empower individuals.
Quote Of The Day
“I hope to use my celebrity to motivate people and contribute to moving our global society back from the brink. I am surprised environment is not at the top of the agenda. What is more important than good and clean air?”
– Don Cheadle, Actor & UN Environment Goodwill Ambassador