The Nasdaq jumped 1.06% now this Wednesday to 17,035 pts, the highest in its history with Nvidia, which continues its rally and is now approaching $3,000 billion in capitalization, on the verge of overtaking Apple as second global capitalization! The S&P 500 rose 0.41% to 5,313 pts. The Dow Jones, on the other hand, consolidated by 0.27% to 38,607 pts. The American rating was uncertain at the start of the week, nevertheless saved by Nvidia following the opening of the Computex 2024 conference in Taiwan and a keynote by its charismatic boss Jensen Huang. The AI chip giant supports from the Nasdaq. The indices also benefit from weak employment figures, while the Fed had been hoping for months for a tangible relaxation from this point of view.
On the Nymex, a barrel of WTI crude gained 0.5% to $73.6. An ounce of gold advances 0.9% to $2,369. The dollar index agrees 0.2% against a basket of currencies.
Job openings in the United States for the month of April 2024, announced yesterday, stood at 8.059 million units, significantly less than expected since the consensus was at 8.4 million. The revised reading for March came in at 8.355 million, compared to 8.488 million previously announced… This is rather good news, as the Fed is waiting for weakness in the labor market before change its monetary policy… Job openings in the USA have thus fallen to their lowest level since February 2021.
According to the ADP report this Wednesday, private job creations in the United States for the month of May stood at 152,000, while the market consensus measured by FactSet stood at 175,000. A month before, the creations numbered 188,000. “Job creation and wage growth are slowing as we enter the second half of the year. The labor market is strong, but we are monitoring notable pockets of weakness related to both producers and consumers,” adds Nela Richardson, chief economist of ADP. In detail, companies with more than 500 employees created 98,000 jobs in May, compared to 30,000 for companies with 250 to 499 employees and 49,000 for companies with 50 to 249 employees.
The final S&P Global PMI US composite index for May came in at 54.5, compared to a consensus of 54.4 and a level of 51.3 a month before. The preliminary indicator for May stood at 54.4. The final services indicator came in at 54.8, as expected, compared to 51.3 a month earlier and 54.8 for the preliminary reading.
The ISM American services index for May 2024 stood at 53.8, compared to the FactSet consensus of 50.8 and 49.4 a month earlier. This indicator signals a clear recovery in activity and a return to an expansionary situation.
On Thursday, the Challenger, Gray & Christmas report on layoff announcements, weekly unemployment claims, the balance of international trade in goods and services, as well as productivity figures for the first quarter, will be on the program.
Finally, on Friday, the monthly government report on the employment situation in the United States for the month of May will be followed (FactSet consensus 180,000 job creations for 3.9% unemployment rate).
PVH, Guidewire, Hewlett Packard Enterprise and CrowdStrike published their latest quarterly results last night. HPE stood out with strong AI server sales. Lululemon Athletica, Dollar Tree, Brown Forman and Campbell Soup revealed their results today. Autodesk, Samsara, JM Smucker, Nio Inc, DocuSign, Toro and Ciena, release tomorrow.
Values
CrowdStrike (+7%), a leader in cloud endpoint, workload, identity and data protection, reported revenue of $921 million for its first fiscal quarter, an increase of 33% year-over-year , compared to a consensus of 905 million. Adjusted earnings per share were 93 cents, compared to 57 cents a year earlier and 89 cents consensus. The group has exceeded $3.6 billion in annual recurring revenue. CrowdStrike also shows solid prospects. Revenues are expected between $958.3 million and $961.2 million for the fiscal second quarter ending at the end of July, compared to $954 million consensus. Adjusted earnings per share are expected to be between 98 and 99 cents, compared to a consensus of 91 cents. Finally, the group is raising its annual forecasts and envisages revenues for fiscal 2025 in a range of $3.98 to $4.01 billion, for adjusted EPS ranging from $3.93 to $4.03.
Hewlett Packard Enterprise soars by nearly 13% on Wall Street. HPE revealed strong revenues with demand for AI servers. For its second fiscal quarter, the group posted revenues up 3.3% to $7.2 billion, while analysts predicted a decline in activity! Quarterly adjusted earnings per share were 42 cents for the quarter ended at the end of April, compared to a consensus of 39 cents. The good surprise mainly comes from server activities, with revenues of $3.87 billion, more than 10% higher than the consensus. Sales of AI-oriented systems even doubled compared to the previous quarter to reach more than $900 million. Antonio Neri, CEO of the group, cited by Bloomberg, cited increased demand and better availability of Nvidia chips, explaining the jump in sales of AI systems. Neri judges that with this performance, “the market will begin to realize”. The AI systems backlog is now $3.1 billion.
For the quarter ending in July, revenues are expected between $7.4 billion and $7.8 billion, compared to consensus of $7.45 billion. Adjusted EPS is expected between 43 and 48 cents, in line with analyst estimates. For the financial year, HPE raises its forecasts and anticipates revenue growth of 1 to 3%, for adjusted EPS of $1.90 in the middle of the range.
PVH, formerly Phillips-Van Heusen, an American fashion group with the Calvin Klein, Van Heusen and Tommy Hilfiger brands, gained 2% on Wall Street, following its quarterly publication and the announcement of the departure of the CEO of Tommy Hilfiger Global and PVH Europe, Martijn Hagman. Lea Rytz Goldman, global president of Tommy Hilfiger, will lead the global brand and report directly to PVH CEO Stefan Larsson. David Savman, PVH Supply Chain Director, will serve as interim CEO of PVH Europe. The company has launched the search for a new European leader. For its first fiscal quarter, the group posted revenues down sharply by 10% to $1.95 billion, for adjusted EPS of $2.45 clearly exceeding guidance. For the financial year, the group expects a decline of 6 to 7% in revenues and a stable operating margin compared to 10.1% in 2023. Adjusted annual earnings per share are expected between $11 and $11.25, or an increase in guidance.
Tesla (stable) / Nvidia (+3%!). Elon Musk confirmed yesterday on X, ex-Twitter, that he had redirected artificial intelligence chips from Tesla to his companies X and xAI. The billionaire indicated that Tesla had no place to put the Nvidia chips: “So they would have been content to stay in a warehouse. The southern extension of Giga Texas is almost complete. It will house 50,000 H100 chips for FSD training” , Musk detailed, as CNBC previously reported that the multi-hatted businessman had redirected 12,000 Nvidia H100 graphics processing units originally planned for Tesla to X, citing an Nvidia memo from December. In another email that CNBC viewed, Nvidia staff reportedly noted that Musk made statements during the automaker’s first-quarter earnings presentation and on X that conflicted with the company’s reservations with from the chip manufacturer.
Musk said at the April 23 earnings call that about 35,000 of the company’s H100 chips were active and that he expected the company to employ about 85,000 by the end of the year. . On April 28, he wrote on year. The company is indeed working on its own supercomputer as part of broader efforts to develop autonomous driving technology. Tesla also provides sensors for all of its cars, whether or not consumers pay extra for its more advanced driver assistance system, Bloomberg notes. Finally, Musk indicated on X that his current best estimate for Tesla’s annual purchases of Nvidia products is between $3 billion and $4 billion.
Intel (+2%) will sell a 49% stake in a company that controls a factory in Ireland to Apollo Global Management for $11 billion. Under the terms of the agreement, Apollo will take a 49% stake in a joint venture operating Intel’s Fab 34. This is the second investment program of this type announced by Intel, which thus optimizes project financing while investing massively to revitalize its product range. Construction of the factory, at a company site in Leixlip, near Dublin, is almost complete. The transaction allows the processor giant to invest elsewhere. It is expected to be completed in the second quarter of 2024. Intel will purchase a minimum quantity of production from the factory to sell itself or on behalf of customers.
Dollar Tree (-6%) is studying a sale of Family Dollar. Furthermore, the group posted diluted earnings per share of $1.38 and adjusted earnings per share of $1.43 in the first fiscal quarter. Revenue guidance for fiscal 2024 ranges from $31 billion to $32 billion, for adjusted earnings per share ranging from $6.50 to $7. The review of strategic alternatives will therefore include a possible sale of the Family Dollar segment…
Brown-Forman (-4%) achieved revenues of $1 billion for the fourth fiscal quarter of 2024, down 8%, with an organic decline of 5%. For the period, operating profit stood at $375 million, up 26% (-16% organically). Diluted earnings per share rose 31% to 56 cents. Over the financial year, sales fell 1% to $4.2 billion. Diluted EPS rose 32% to $2.14.
Campbell Soup (-2%), the American food group, exceeded market expectations for the quarter ended and raised its annual sales forecasts, with the recovery in demand. The group is now forecasting sales growth of 3 to 4% for the financial year. For the closed quarter, the group posted adjusted EPS of 75 cents compared to a consensus of 70 cents. Sales increased 6% to $2.37 billion.
