Daily Brief - From Underdog to AI Powerhouse

TLDR: On Tuesday, the star of the semiconductor world knocked Microsoft out of the top spot to become the world's most valuable company with a staggering market cap of $3.34 trillion. Let's talk about Nvidia!

This year alone, Nvidia added over $2 trillion in market value, a testament to its pivotal role in AI technology.

But Nvidia's journey wasn't smooth. It replaced Enron in the S&P 500 in less than three years post-IPO, but long-term investors had to endure significant volatility, including three annual drops of 50% or more.

The 2008 financial crisis and a soured agreement with Intel posed challenges, yet Nvidia's resilience shone through. By 2012, it ventured into data centers, and though the initial response was lukewarm, these chips laid the groundwork for future growth.

The real breakthrough came in 2015, with Nvidia's chips becoming central to advanced technologies like autonomous vehicles and AI.

The Covid-19 pandemic further boosted Nvidia's data-center sales as remote work surged, propelling its revenue to new heights. Despite a slump in 2022 due to rising interest rates, the release of ChatGPT reignited investor interest. Nvidia's Q1 2023 earnings shocked Wall Street, with sales projections soaring above expectations.

As Nvidia continues to dominate, its focus on data-center sales is set to exceed gaming revenue, with analysts predicting sales to top $100 billion this fiscal year.

With AI driving the future, Nvidia is not just in the game—it's rewriting the playbook.

Scenario Spotlight: Is NVIDIA overbought?

Yes. But even with an RSI above 75, Nvidia stock historically tends to see further upside in the following 6 months.

Market Movers: Who Thrives When Nvidia's RSI Breaks 75?

Interestingly, history shows that Broadcom tends to outperform against Nvidia in the 1-month following Nvidia's RSI crossing into overbought territory.

Earnings Spotlight: CarMax reports tomorrow

CarMax's fiscal first-quarter results, ending May 31, are expected to benefit from a surge in U.S. used vehicle sales. Retail used vehicle sales saw year-over-year growth of 11%, 5%, and 16% in March, April, and May, respectively.

A Zacks model projects sales volumes for used and wholesale vehicles at 228,073 and 161,977 units, up 4.7% and 0.6% year-over-year. Although declining average vehicle prices may impact revenue, a reduction in the cost of sales should improve gross margins for both segments.