Nvidia is Not Playing Games

 

Market Scorecard


Our local market had a good day out yesterday thanks to the momentum from international markets. China cutting their interest rate meant that Tencent was up 3%, which in turn meant nice gains for Prosus and Naspers. A stock that has had a rough time recently is Telkom, and things were made worse for them yesterday when MTN and Cell C announced a national roaming agreement. The agreement means that the chances of Telkom buying Cell C have been reduced. As an MTN shareholder, this roaming agreement is a positive move. MTN spends R10 billion a year upgrading and maintaining their network. It makes sense to increase traffic on their world class network; it will improve the return on their substantial network investment.

US markets opened in the red yesterday due to concerns over a trade deal between the US and China. It was on the news that China had cancelled a large soybean order from the US. One of the conditions of a trade deal is that China will buy more agricultural products from the US. As the trading day went on though, the US market picked itself up and finished the day at another record high.

Yesterday the JSE All-share closed up 0.74%, the S&P 500 closed up 0.05%, and the Nasdaq closed up 0.11%.

Company Corner


 

Michael’s Musings

Last week graphics card (GPU) maker, Nvidia released their Q3 results which beat market expectations. Over the previous 18 months the share price has been rather volatile. It reached a high of around $280, then a low of around $130 and is now trading at $205.

The reason for all the volatility is the hangover in the GPU market from the bitcoin bubble bursting. The impact on Nvidia was a drop in sales and inflated stock levels. Here are the numbers, Revenue was $3 billion for the quarter, down 5% year over year but up 17% from the previous quarter. The change in Net Income is even more significant, where for the quarter it was $899 million, down 27% year over year but up 63% quarter on quarter. The numbers show that the company is back on course, their sales are trending higher and stock levels have improved, going from $1.5 billion to $1 billion.

Below is a table of the size of each of their divisions:

(Found at The Motley Fool)

As you can see, gaming is still the biggest division. It is double the next biggest division. After suffering a massive blow when Bitcoin sank, the gaming division has had three straight quarters of growth. You don’t own Nvidia for gaming though. You own it for the exciting prospects for their other divisions. Automotive is self driving cars, an industry still in its infancy. Data centres focus on the processing of massive amounts of data. The industry is expected to grow at an exponential rate, thanks to the Internet of Things (IoT). Data is useless until you have analysed it, so these data centres will become more critical as more of our lives go online.

The company is the leader in the GPU market, and as such trades at a premium. We still like the company as the sectors they operate in are very exciting and have massive growth potential. For clients who can stomach a bumpy ride, we recommend getting a position.

Our 10c Worth


 

Byron’s Beats

Uber likes to connect people who need a service. It started as a ride hailing app but has moved into food delivery in a big way. The company has recently announced a new service called Uber Works, which aims at connecting casual workers such as cleaners and bar staff with jobs.

As mentioned above, Uber is great at connecting people. It has a large and established brand which is essential for gaining scale in this kind of environment. The service which uses algorithms to find jobs for people based on their info is being piloted in Chicago.

I am unsure whether this new venture will work. But it shows Uber’s willingness to use their great tech to connect people, businesses and services. They are one of the pioneers of the gig economy and they are playing to their strengths.


 

Bright’s Banter

The Way To Wealth is an essay written by Benjamin Franklin in 1758. It first appeared in his annual publication called “Poor Richard’s Almanack”; the founding father wrote and published for 25 years under the pseudonym of Richard Saunders. The way to wealth was eventually reprinted in more than 100 languages.

If you enjoy personal finance and self-development books, this essay is for you. This proverb-filled essay about wealth and success includes some timeless advice that has worked for centuries. Some of the wealthiest, most successful people of today still live their lives according to some of these adages:

– There are no gains, without pains.

– Early to bed, and early to rise, makes a man healthy, wealthy and wise

– One today is worth two tomorrows.

– Get what you can, and what you get hold.

– Have you somewhat to do tomorrow, do it today.

– The eye of a master will do more work than both his hands.

You can find the essay here.

Linkfest, Lap it up


Bill Gates takes us through why it is so difficult for us to come up with new medicines to treat Alzheimers. Amgen recently abandoned its Alzheimers research due to the difficulty in finding a cure – Here’s a way you can help fight Alzheimer’s

Need inspiration? How about some ‘da Vinci’ wine to get your creative juices flowing? There are only 330 bottles on sale though – Leonardo da Vinci’s personal vineyard has been re-created.

Signing off


South African earnings continue to roll in this morning with what on the surface looks like good numbers from both, property company Stor-age and food company Rhodes Food Group. There is not much by the way of economic data today. The JSE All-share is higher this morning.

Sent to you by Team Vestact.

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