Nvidia Throws Hands Over ARM Holdings
Somebody once told me Nvidia’s (Nasdaq: NVDA) gonna roll me. He ain’t the sharpest tool in the shed.
They were looking kinda dumb, said the ARM deal wouldn’t come and that Nvidia soon would be dead.
Well, the hits start coming and they don’t stop coming. The Fed makes the rules, you gotta hit the ground running…
Wait … wait. Hold up. Smash Mouth? Seriously? Aww, man.
Forgive me, Great Ones. Sometimes, I have no control over the lyrics that come out of my mouth … er, um, fingers in this case?
Anyway, Nvidia. What’s the deal, man?
It would appear that Nvidia has seen the regulators’ writing on the wall and knows that the end is near for its $40 billion deal to acquire ARM Holdings.
According to the infamous “people familiar with the matter,” Nvidia has told company partners that it doesn’t expect the deal to close due to too many regulatory roadblocks. Similar “people” also indicated that SoftBank — ARM Holdings’ current owner — is preparing an alternative public offering for ARM.
These “people” are all off the record, meaning the deal is still officially on and that both ARM and Nvidia are still pleading their case.
In fact, in a statement to Barron’s, Nvidia said: “We continue to hold the views expressed in detail in our latest regulatory filings — that this transaction provides an opportunity to accelerate Arm and boost competition and innovation.”
That’s corporate speak for “I can neither confirm nor deny those rumors.”
Great Ones, the dream was nice while it lasted. But after a while, I think we all knew that the U.K., the U.S., China and the entirety of Europe weren’t going to let Nvidia buy ARM.
None but the FTC in the U.S. directly tried to block the acquisition … but silence is as good as a wink to a blind bat. Or something like that … wink, wink, nudge, nudge.
As a result of the ARM rumors, NVDA stock dropped more than 4% — bringing the stock’s decline to about 20% since we recommended NVDA in Great Stuff Picks back on January 4.
Now, some of you might be worried about NVDA’s recent decline. I understand that choppy, volatile stock market declines are nerve-wracking. But I’m not worried. No sir.
Why? Because Nvidia is one of the surest bets you can make right now. As I said back on January 4, Nvidia has all the tools it needs to dominate not only the current tech environment but also the metaverse!
I mean, name another company that does high-end, photorealistic 3D graphics, AI, massive data processing and crypto/blockchain. Can you? I’d love to hear about it: GreatStuffToday@BanyanHill.com.
Nvidia is literally the one-stop shop for everything that the current internet and the future metaverse need to grow and thrive.
Would the ARM acquisition be nice? You bet your arse it would. The mobility market is Nvidia’s one shortcoming … though it does have quite the presence in the mobile market even without ARM.
But Nvidia will be fine without ARM should the deal fall through. It will be more than fine, in fact. Just imagine what the company could do with the $40 billion it’s gonna save.
New chip plants. New R&D. Massive cash for further development of Nvidia’s Omniverse platform — which is currently the premier open platform, virtual collaboration software for metaverse development.
The possibilities remain endless for Nvidia, with or without ARM. For my full reasoning on why you should buy NVDA stock, check out the January 4 edition of Great Stuff — and stay tuned for today’s Quote of the Week.
And remember, Great Ones, you’re a rockstar … get your game on, go play.
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The Good: International Business Machines Of Mystery
You know, Great Ones, we get caught up in so much of the market’s Musk-esque antics and BS that at this point, boring earnings reports have become refreshing.
And yes, this is the most positive way we’ve ever kicked off an IBM (NYSE: IBM) discussion, but stranger things have happened…
IBM shocked analysts today with reports that, yes, it’s still alive out there — and thriving! The company dropped a double-beat report that sent shares soaring a whole 3%, with revenue rising 8.6% last quarter alone.
After IBM’s mic drop of a report hit the Street, CEO Arvind Krishna was … frankly, not all that enthused: “Our fourth quarter results give us confidence in our ability to deliver our objectives of sustained mid-single digit revenue growth and strong free cash flow in 2022.”
There you have it, Great Ones: the single dullest, most understated statement that’s ever been understated. (Don’t worry, we’ll get to the real quotable meat of the week in a sec.)
Does that sound like a company that just had its best sales growth in over a decade? A company that’s trimmed the fat off of its bloated IT business and honed itself into a hybrid cloud pro? No sir!
Granted, this is IBM we’re talking about here — the company has eked out its existence quarter by quarter since the late Cretaceous period, and it hasn’t subsisted so long by bragging up a high-growth storm.
Amid the tech slaughter’s sea of red, who’d have thought investors would see green with Big Blue? Unfortunately, the same can’t be said of certain other blue-chip dinosaurs…
The Bad: Not So General Electric Earnings
Geriatric General Electric (NYSE: GE) reported its quarterly results today and, to the surprise of literally no one except the most steadfast of GE bulls, said that supply chain hiccups halted the company’s sales growth over the past three months.
Just the three?
Including GE’s legacy insurance business, per-share earnings came in at $0.92 and topped the Street’s expectations of $0.85 per share. But revenue hit a roadblock, falling to $20.3 billion from $21 billion a year ago.
Supply chain issues aside, GE CEO Larry Culp said that inflationary pressures have also eaten into the company’s profits, as “managing inflation isn’t a skill many of us have had to exercise.”
Did he … did he really just say the quiet part out loud?
Oh, indeed. And while some people will surely appreciate Culp’s honest commentary, that’s the kind of frankness that Wall Street generally gives the stink eye. So, it’s no surprise that upon hearing some of its least-favorite buzzwords, the Street started selling GE stock and sent it crashing more than 8%.
Yet, had they looked a little closer, investors would’ve seen that GE issued generally good earnings guidance despite industry headwinds. In fact, rumors of GE’s demise are more than a little exaggerated.
For one, since taking over as CEO in 2018, Culp has already streamlined GE’s manufacturing materials, cut down on the company’s debt and prepped the powers that be for an eventual three-way breakup of GE’s major business segments. That’s no small feat, I can assure you.
Furthermore, GE’s aviation business is coming up aces, with revenue rising 4% and orders rising 22% in the latest quarter — despite all those supply chain clusters.
In other words, to quote Lenny Kravitz: “It ain’t over ‘til it’s over.”
The Ugly: Google’s Dark Materials
Swinging back to the tech sector — sorry, Joseph C., maybe we’ll talk about oil again someday, but not today — Alphabet’s (Nasdaq: GOOGL) Google has allegedly been lying to users about the extent of its location-tracking tech and our ability to turn off said tech in the first place.
You mean Google’s been tracking my every move and lying to me about it? I am shooketh.
Kinda sorta. I mean, Google’s generally shady. But the tech giant stepped it up a notch by tiptoeing around privacy concerns using a practice people in the industry call “dark patterns” — basically a dark and stormy way of saying “deceptive design choices.”
These deceptions include things like complicated menus, visual misdirection, confusing word choices and repetitive reminders (or nudges) all designed to scramble our senses and make it that much more difficult to go off the grid.
It’s a pretty damning claim, all things considered. And if three state attorneys general and Washington, D.C. have their way, Google will finally be brought to justice for all its dirty deeds surrounding consumer privacy. Well … maybe not “all,” but it’s a start.
Except, we’ve been here before with Google. And after this current lawsuit is laid to rest, we’ll be here again. At this point, there’s just no putting this privacy genie back in its proverbial bottle … and I think most of Google’s users already know that.
Basically, Google is gonna Google. And while I agree that these practices are completely unethical … I don’t see them having any lasting effect against GOOGL stock.
A quick look at Alphabet’s share price — down less than 2% today — already proves my point.
Like a kid on Christmas, the Meta Platforms (Nasdaq: FB) CEO is ready and rearing to show off the company’s new supercomputer, dubbed the “Research SuperCluster.”
Once Meta’s Research SuperCluster is fully armed and operational — Zuck jumped the gun by about six months, you see — the social media empire will have a massive battle station in its fight to cram the metaverse trend down your throat.
If this sounds familiar to you, congrats! You must be reading your Great Stuff on the regular — or at least our December 4 issue, “5 Stocks To Rule The Metaverse.”
But as much as the Zuck thinks he’s leading the metaverse-investing race … FB stock didn’t even crack the list of great picks for metaverse domination.
More meta than Meta? How?
As Zuckerberg went on to divulge, the AI supercomputer would be nothing if not for the massive amount of processing power inside … power that comes from none other than yours truly, Nvidia.
No matter if people actually use the virtual chit-chat rooms, VR games or whatever other meta monstrosities Meta makes … Nvidia is already cashing in big-time on tech giants upping their computing power.
Like Great Stuff said back in that December 4 metaverse rundown:
You can also ask just about any gamer how hard it is to find a graphics card right now…
In fact, Meta’s currently using 6,080 Nvidia graphics processing units (GPUs) to run its Research SuperCluster. And by the time Meta is done building out its supercomputer, the company plans to stick an insane 16,000 Nvidia GPUs in the sucker, making it the fastest supercomputer — period.
16,000 Nvidia GPUs?! So that’s where they all went. Curse you Suckerbeeeerg!
For you NVDA investors out there, this means a whole lot more GPU revenue comin’ down the pike.
Meta is staying tight-lipped on where exactly the Research SuperCluster facility is or how much it costs … which is surprisingly similar to my approach when buying new, super-expensive PC parts. Ignore the receipt, and the guilt goes away. Eventually.
All told, Meta’s new shiny supercomputing toy just confirms what all y’all Great Stuff Picks investors already knew: If you’re looking for a way in on the metaverse market that isn’t, well, the company formerly known as Facebook … it’s gotta be Nvidia.
As I said earlier today … on January 4 when recommending NVDA stock … and on December 4, when talking about recommending NVDA stock … Nvidia is the all-in-one metaverse monster. Even Meta knows that.
Are you sticking with NVDA through the sell-off? Got any other metaverse picks in the ol’ portfolio? Drop us a line at GreatStuffToday@BanyanHill.com with your thoughts. Your email might even be featured in this week’s edition of Reader Feedback!
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Until next time, stay Great!
Editor, Great Stuff