Nvidia Shares Jump 6% on Deal with SoftBank to Buy UK Chipmaker Arm; Target Price $600

Nvidia Corp, an American multinational technology company, announced to acquire UK-based chip designer Arm Limited from SoftBank in a transaction valued at $40 billion, sending its shares up about 6% in pre-market trading on Monday.

Under the terms of the transaction, NVIDIA will pay to SoftBank a total of $21.5 billion in NVIDIA common stock and $12 billion in cash, which includes $2 billion payable at signing. The number of NVIDIA shares to be issued at closing is 44.3 million, determined using the average closing price of NVIDIA common stock for the last 30 trading days, the company said.

Additionally, SoftBank may receive up to $5 billion in cash or common stock under an earn-out construct, subject to satisfaction of specific financial performance targets by Arm. NVIDIA will also issue $1.5 billion in equity to Arm employees.

SoftBank will remain committed to Arm’s long-term success through its ownership stake in NVIDIA, expected to be under 10%.

Nvidia’s shares rose about 6% to $514 in pre-market trading on Monday; the stock is up over 100% so far this year. Also, the SoftBank ended 8.96% higher at JPY 6,385 in Tokyo.

Executive comments

“AI is the most powerful technology force of our time and has launched a new wave of computing,” said Jensen Huang, founder and CEO of NVIDIA.

“In the years ahead, trillions of computers running AI will create a new internet-of-things that is thousands of times larger than today’s internet-of-people. Our combination will create a company fabulously positioned for the age of AI.”

Nvidia stock forecast

Twenty-nine analysts forecast the average price in 12 months at $546.00 with a high forecast of $650.00 and a low forecast of $260.00. The average price target represents a 12.21% increase from the last price of $486.58. From those 29 equity analysts, 24 rated “Buy”, four rated “Hold” and one rated “Sell”, according to Tipranks.

Nvidia had its price target raised by investment analysts at Royal Bank of Canada to $610 from $528. The brokerage currently has an “outperform” rating on the computer hardware maker’s stock. Jefferies raised their target price to $680 from $570.

Other equity analysts also recently updated their stock outlook. At last, Rosenblatt Securities increased their price target to $600 from $500 and gave the stock a “buy” rating. BofA Global Research upped their price objective to $650 from $600, UBS raised target price to $625 from $528, Benchmark increased their target price to $600 from $540, Goldman Sachs raised their target price to $585 from $528 and Mizuho upped their target price to $575 from $520.

We think it is good to buy at the current level and target $600 as 100-day Moving Average and 100-200-day MACD Oscillator signal a strong buying opportunity.

Analyst views

“We view the deal as transformative, positioning Nvidia (NVDA) not just to capture 80% of the ecosystem value in the data center, but also unify the compute ecosystem between the edge and data center. We think the merged company has a 5-year EPS power of $50, and increase our price target to $680, and bull-case to $1,000,” said Mark Lipacis, equity analyst at Jefferies.

“We model Nvidia Data Center processor revenues of $34 billion in 2025, and Data Center Ecosystem (software) of an additional $34 billion,” Lipacis added.

Upside and Downside risks

Upside: 1) Nvidia (NVDA) successfully acquires and integrates ARM expanding its data center TAM and controlling 80% of the DC ecosystem and unifying compute ecosystem from the edge to data centers. 2) Accelerated growth in Deep Learning applications across multiple end markets. 3) Conversational AI demand increases at a faster than expected rate, driving demand for NVDA solutions in the data center. 4) Accelerated growth from Automotive with proliferation of autonomous cars GPU upgrades and incremental demand driven by virtual reality applications. 5) Five-year Non-GAAP EPS: $50; P/E: 20x; Price target: $1000, highlighted by Jefferies.

Downside: 1) NVDA ARM deal is blocked by regulatory authorities. 2) COVID-19 outbreak extends beyond 2020 causing greater than expected demand destruction and supply chain constraints. 3) Slowing Datacenter capex spending. 4) Slower than expected sales of Automotive products. 5) Adoption challenges with GPU Accelerators in the Data Center. 6) Emerging competitive threats from INTC, AMD and other startups. 7) C2021E Non-GAAP EPS: $9; P/E: 44x; Price target: $400.

Check out FX Empire’s earnings calendar

FANG Index Nearing Critical Support – Could Breakout At Any Moment

RESEARCH HIGHLIGHTS:

  • The washout-low price move in FANG stocks may present a needed rotation in price before another upside move sets up.
  • Tweezer Bottoms pattern and RSI pennant formation suggest very clear support levels.
  • Watch how Volume and the VIX pick up over the next few days, and how price reacts to this bounce at 945.

Our Custom FANG Index (consisting of Facebook, Microsoft, Twitter, Amazon, Google, and Nvidia) shows the FANG Index, and technology sector, are trading just above critical support near 945.  The congestion area on this chart between July and August just below this 945 level highlights the key resistance/support level that we are currently watching as price support.

TWEEZER BOTTOMS MAY SUGGEST MORE UPSIDE POTENTIAL

This Custom FANG Index Weekly chart clearly slows the Tweezer Bottoms pattern that formed in the markets after the close on Tuesday, September 8, 2020.  This pattern suggests a very clear support level is found near the recent lows – near 945.  If this support level holds, then the FANG Index price should begin to bounce and move higher.  If this support level is broken, prices may continue to push lower while attempting to find historical support levels.

The Fibonacci Price Amplitude Arcs suggest a broader price frequency inflection point is also setting up near the recent peak.  This Fibonacci Price Amplitude Arc suggests a major inflection point is taking place in the Custom FANG index right now.  We believe the 945 level resulting from the Tweezer Bottoms pattern is a critical price level to support a future price rally in this sector.

Lastly, we want to point out the Pennant/Flag formation in the RSI indicator over the past 8+ months (highlighted in RED).  The combination of these technical patterns, as well as the new Tweezer Bottoms pattern, suggests the current breakdown to the 945 level may present a “washout-low” type rotation after the RSI Pennant Apex.  Overall, this downside move in the FANG index represents a moderately strong APEX rotation.  If this is a “washout” rotation, then we may be setting up for another big upside price move soon.

Right now, we are cautiously watching the 945 level and expecting the Custom FANG Index to recover from these Tweezer Bottoms lows.  We believe there is a very solid chance that the washout-low price move may present a needed rotation in price before another upside move sets up.

Watch for the markets and technology sector to attempt a recovery as long as the 945 level on this Custom FANG Index chart holds. Isn’t it time you learned how I can help you better understand technical analysis as well as find and execute better trades?  If you look back at past research, you will see that my incredible team and our proprietary technical analysis tools have accurately shown you what to expect from the markets in the future.  Do you want to now learn how to profit from these expected moves?  If so, sign up for my Active ETF Swing Trade Signals today!

If you have a buy-and-hold or retirement account and are looking for long-term technical bull/bear signals for when to buy and sell equities, bonds, precious metals, or sit in cash then be sure to subscribe to my Passive Long-Term ETF Investing Signals to stay ahead of the market and protect your wealth!

For a look at all of today’s economic events, check out our economic calendar.

Chris Vermeulen
Chief Market Strategist
Technical Traders Ltd.

 

Blame it on The Nasdaq

US data announced this week showed a significant recovery in building permits and housing, building permits (MoM) for July surged to 18.8% compared to the previous 3.5%, Housing Starts data revealed 22.6% which is 5.1% higher than the previous month, existing-home sales data were as well positive reported beyond expectations.

Despite the negative Jobless claims and Philadelphia Fed Manufacturing PMI reported on August 20, Manufacturing PMI and Services PMI demonstrated a significant improvement, which led major US Indices to surge whereas S&P500 and Nasdaq100 reached the all-time high.

US stocks continue hitting records, Tesla surged by 24.19% breaking the significant $2000 per share value, and is now worth more than $382 billion surpassing Walmart by nearly $10B. Nasdaq’s top company by market cap – Apple gained 8.23% hitting the $2127B in capitalization. Tesla and Apple remain the top popular shares last week based on Robinhood data.

S&P500 closed above the all-time high, some might think that there is a possible double top pattern, economic recovery of the US indicates that the index may continue the run towards $3500.

Nasdaq owes its gains not only to Tesla and Apple, but there are also other tech companies that surged last week and during the pandemic, such as NVIDIA, AMD, Qualcomm, Microchip Tech, Texas Instruments.

An hourly chart demonstrates that the correction is most likely will happen as the price touched the dynamic resistance and the fifth wave of an ending diagonal is about to complete at 11600. Ending diagonal is a trend reversal pattern, which usually demonstrates exhaustion of bulls, note the evening star doji, though the closing is above the previous close, it still shows uncertainty and exhaustion.

NDX chart by TradingView

How is it related to cryptocurrencies and Bitcoin?

Bitcoin and Ethereum price actions are considered as cryptocurrency market movers. Since Bitcoin is nowadays considered as the digital Gold and Ethereum as a digital Silver, their price action now is correlated to US data which effect Gold. Gold was ever since used as a safe-haven to hedge funds during the uncertain times and inflation, so is Bitcoin now.

An hourly chart of Bitcoin indicates that the price could decline further to towards $11200 – $11160 to complete the Head and Shoulders pattern, another pattern to watch is an ending diagonal which is yet to be completed as well. Bitcoin remains below the major resistance level of $11700 an in order to show another bull run it must break the dynamic resistance (ending diagonals upper edge) and close above the 11700, however testing 11200 might bring another stimulus for bulls.

BTCUSD price on Overbit

Ethereum plummeted to $380 after reaching the year’s maximum at $446.67, loosing 9.7% this week only. Digital Silver price is following a similar ending diagonal pattern, and if the upper dynamic resistance and a static resistance of 397 is not overpassed, ETH might continue the drop towards a major support at $380, and if that support is broken, towards $370 – 369.

ETHUSD price on Overbit

Unlike Bitcoin, Gold lost only 0.20% in price for the week. A significant drop was on Wednesday August 19 ahead of US data announcements, where the precious metal lost 3.67% after gaining 2.97% on Monday and Tuesday.

Head and shoulders pattern is identified on an hourly chart of Gold and the price might continue the drop down to $1881.60 – 1880, where if the support laid on those level withheld the price might retrace towards 2014 and if above towards 2046, where the bearish pattern will be completed.

Gold price on Overbit

Since Gold and Silver prices demonstrate similarities in their price action, the same Head and Shoulders is visible on an hourly chart of XAGUSD. The price is below the dynamic support of August 12 which might signal to a further decline down to $25.30.

Silver price on Overbit

The price continues the short-term downtrend move inside a descending channel, which in other had forms another controversial to the H&S pattern of Bullish Flag.

Silver price on Overbit

If bulls are able to push the price above the dynamic support and if the dynamic resistance is overtaken at $27, the bullish run might proceed towards $28 – 28.50.

Key takeaways for the upcoming week would be announcements from Eurozone, Great Britain, China and the US.

Important announcements to watch:

Tuesday, August 25, 2020

German GDP (YoY) as per Second quarter data is expected to be -11.7%, 9.8% lower than the previous -1.9%

German GDP (QoQ) as per Second quarter data is expected to be -10.1%, 7.9% lower than the previous -2.2

US CB Consumer Confidence (August) is expected to be 93, 0.4 points higher than the previous 92.6

US New Home Sales (July) is expected to be 786K, 10K higher than the previous 776K

Wednesday, August 26, 2020

US Core Durable Orders is expected to be 2.1%, 1.5% lower than the previous 3.6%

Thursday, August 27, 2020

US GDP (QoQ) as per 2nd Quarter is expected to be -32.6%, 0.3% higher than the previous -32.9%

US Initial Jobless Claims is expected to be 1,000K, 106K lower than the previous 1,106K

US Pending Home Sales (MoM) as per July is expected to be 4.5%, 12.1% points higher than the previous 16.6%

Asides from the data to be announced, there are other important events to trace.

Republican National Convention, which will be held on Monday, in which delegates will determine the nominees for the upcoming presidential elections. Markets will be watching this event closely as during the current campaign Democrats are having an edge over republicans.

Source: Yahoo Finance

Another major event would be an annual Jackson Hole conference this Thursday, August 27, where FED Chairman Jerome Powell will speak about current economic situation, inflation targets and possibly share preliminary focus on interest rate change.

The economic state and inflation in the US once again are an important constituent of the Global economy and global markets, all these events will be decisive for the mid-term price movements for the US Indices, commodities and cryptocurrencies.

NVIDIA Bulls In Charge Ahead Of Wednesday Report

NVIDIA Corp. (NVDA) reports Q2 2020 earnings after the close of Wednesday’s U.S. session, with Wall Street analysts expecting a profit of $1.68 per-share on $3.66 billion in revenue. The graphics card manufacturer beat top and bottom line Q1 estimates in May and raised Q2 revenue guidance, with personal computer, video game, and mobile device sales surging as a result of COVID-19 pandemic shutdowns and self-quarantines.

NVIDIA In Talks To Buy UK Chip Designer

The company is engaged in talks with SoftBank to acquire U.K. chip designer Arm for £40 billion. The local press is calling on the British government to intervene, worried about potential job losses. Arm, which supplies technology to Apple Inc. (AAPL), was put up for sale in April, with Goldman Sachs Inc. (GS) contracted to ‘sound out buyers’. NVIDIA has emerged as the sole suitor, with a potential deal expected to close by year’s end.

Raymond James analyst Chris Caso added to bullish sentiment last week, stating, “we reiterate our Outperform rating on NVIDIA and raise our price target to $500 ahead of Q2 results. While the stock has had a good run, we consider NVDA to have among the strongest product cycles in semiconductors, given the continued ramp of Ampere for datacenter, and the upcoming ramp of the new gaming chip, for which it appears the launch will occur on August 31.

Wall Street And Technical Outlook

Wall Street consensus on NVIDIA is highly bullish, with a ‘Strong Buy’ rating based upon 25 ‘Buy’, 3 ‘Hold’, and just 1 ‘Sell’ recommendation. Price targets currently range from a low of $260 to a street-high $540 while the stock is trading more than $50 above the median $433 target. Q2 profit and revenue numbers on Wednesday will need to fire on all cylinders to justify this lofty placement, especially with the expensive 91.0 price-to-earnings ratio (P/E).

The stock completed a 19-month cup and handle breakout above 290 in May and has added more than 190 points since that time. It’s also more than doubled in price since the last trading day of 2019, with both metrics setting off extremely overbought technical readings. However, channeled price action since May lowers the risk of new long positions, with nearby channel support allowing traders and investors to place relatively tight stop losses.

NVIDIA Firing On All Cylinders After Pandemic Shutdowns

NVIDIA Corp. (NVDA) beat top and bottom-line estimates in May, reporting a profit of $1.80 earnings-per-share (EPS) while Q1 2020 revenue rose an impressive 38.7% year-over-year to $3.08 billion.  First-quarter shutdowns generated an unexpected windfall for the graphics chip giant, with lockdowns spiking demand for video gaming hardware and data center products that stream video. The company expects continued to benefit from these segments in the second quarter, leading them to raise Q2 2020 revenue guidance from $3.37 billion to $3.65 billion.

Many gains from the expanded digitization of business and home entertainment due to the pandemic could be long-lasting or permanent, with thousands of corporations likely to grow their virtual meeting spaces at the expense of business travel, which may not return to 2019 levels for years.  A handful of chip manufacturers that include NVIDIA stand to benefit from this paradigm shift, which has now lifted the stock to another all-time high.

Wall Street Outlook

Not everyone is bullish on NVIDIA’s outlook. Morgan Stanley downgraded the stock on June 16, with analyst Joseph Moore noting that “even with the best 5-year growth prospects in semis, the current P/E of 59x simply leaves very little room for error. 80% organic growth in HPC/cloud last quarter is probably the high watermark, and we see business plateauing beyond July.” He also takes a skeptical view about the gaming space, declaring “we remain tactically uncertain about when those products will be released.”

However, Wall Street consensus remains decidedly bullish, with 27 ‘Buy’ and just 4 ‘Hold’ recommendations. Not one analyst currently recommends that shareholders sell their positions at this time. Price targets currently range from $260 to a street high $420 while the stock is now trading less than 50 points below the high target. This is an advantageous position because modest gains from here are likely to trigger further upgrades and higher targets.

NVIDIA Technical Price Action

NVIDIA price action has been outstanding since a furious 57% correction ended in December 2018. The recovery wave through 2019 finally completed a round trip into the prior high in February 2020, just in time for the first-quarter decline. However, the second quarter bounce carved the handle of an 18-month cup and handle pattern, yielding a June breakout that now establishes a measured move target above 450.

Stocks Are Falling on April 20 As Oil Prices Plunge

The next significant level of support for oil comes around $10.50, a price not seen in decades. The oil market is telling us that not all is well in the economy and that demand is weak. I talked about this disconnect in the week ahead commentary for subscribers yesterday.

Simple, put, the signals from the commodity, bond, and forex market are not reflecting the same bullish optimism of the equity market.

USOIL Daily Chart

S&P 500 (SPY)

The S&P 500 ETF is merely only giving back part of what they gained on that big closing cross, end of the day buy program into options expiration on Friday.  The first level of support comes at  $273.60, and then $263.40.

Bank of America (BAC)

Bank of America is falling some today, and I still happen to think that the stock is going to refill that gap around $20.

Daily BAC Chart

Tesla (TSLA)

Tesla had a big run last week. But shares are falling a bit today, and they could drop to support and the uptrend around $680.

Daily TSLA Chart

Disney (DIS)

Disney was downgraded today to neutral from buy at UBS. Additionally, the stock price target was cut to $114 from $162. The stock has failed multiple times at resistance around $109, and I think the stock is going to head back to the lows around $78.60.

Daily DIS Chart

Nike (NKE)

Nike has a rising wedge pattern in the chart, and that could result in a gap fill around $78.

Daily NKE Chart

Nvidia (NVDA)

Nvidia is falling today, and I still happen to think this one is heading lower. The stock is sitting on support and an uptrend near $284. A break of that trend could get the shares moving back to $218. Call me crazy.

Daily NVDA Chart

This article was written by Michael Kramer the financial market strategist and the portfolio manager of the Mott Capital Thematic Growth Portfolio.


Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.

Global Crisis: Time to Enter the Market

If fundamentals stay as they are, we are likely to see the market gradually recover its losses, half of which are already reconquered. That makes this moment attractive to buy stocks. If we witness this moment, it will be the perfect timing to buy stocks. All you need is to choose a suitable trading platform. FBS Trader offers low spreads and fast deposits and withdrawals. So, why not? You can consider the following notable performers.

Disney

Strategically, Disney’s stock was rising in value before the virus came. The company also launched its Disney+ streaming service at the end of 2019, which made the price surge even higher – to the all-time high of $150. Therefore, it has all the fundamentals to rise when the virus outbreak is finally over. Paying $100 now for something that used to cost $150 is a rare discount. You can take this chance and buy or sell Disney’s stock in new and innovative app from FBS. In the short term, look at $120 per share as the resistance to be tested and probably broken.

Walmart

Walmart is on the list because of its strong fundamentals and a huge discount. Walmart is here for the same reason. At the same time, there’s more to this stock: although at a discounted price, it didn’t fall as much as most of its peers did. In fact, it’s one of the few shares that proves to be quite resilient to the virus-led plunge. Therefore, it makes sense to look at the current price and think of buying one of the strongest market performers that was traded at $125 a couple of months ago. With the pending order feature in the FBS Trader app, you can profitably buy stocks and select at which price level a position should be opened.

NVIDIA

NVIDIA is interesting because it represents the foremost frontier of the progress: virtual reality, video games, cloud technologies, etc. After the company sorted out its problems in 2018, it went into steady growth. There are reasons to expect that it will keep the line after the virus is gone. Now at $244, it is down 24% from its recent record – a significant discount for this share. The logic to take it is “buy the future”. And it is possible with FBS Trader app, which offers essential features for trading, such as instant deposits and withdrawals within over 100 payment systems.

Coca-Cola

Don’t be surprised to see Coca-Cola here. Actually, never be surprised to see it under any circumstances – it is one of the few century-old stocks that survived wars and pandemics and will survive us. If you like the logic “if Warren Buffett has it, I will have it”, you should like this stock. The price of $41 is offered for a $60-worth stock in March. Fortunately, FBS Trader provides you with online access to trading worldwide – anywhere and anytime. You can use the chance to buy Coca-Cola stocks at the time that suits you best.

Mastercard

Payment processing will recover before other industries wake up. This stock looks especially good as Chinese authorities allowed Mastercard to establish clearing services in China, and China is already on the way out of the virus-oppressed state. Mastercard looked strong before, it looks strong now, and trades at $256 after $347 – an offer one cannot lose, especially when you have the app for traders that opens up new opportunities.

 

UK Down On Brexit Woe, Pound Sinks, Asian Up On Brexit Hope, US Dollar Moves Higher

Asian Markets Move Broadly Higher On Brexit Hopes

Asia, led by China, moved broadly higher in Thursday trading, extending a bounce that began earlier in the wee. The Hong Kong-based Heng Seng led advancing indices with a gain of 1.75% followed by a 1.36% gain for the Shang Hai Composite. The Korean Kospi advanced nearly 1.0% on word a draft-Brexit had been written while the Australian ASX and Japanese Nikkei closed closer to break-even. The Japanese Nikkei was Thursday’s laggard posting a loss near -0.20%.

China’s equity markets were also supported by word the Chinese government had sent a written response to Washington’s demands. The details of the letter are not yet known but the sentiment is positive in light of the recently reduced tension between the US and China. Chinese President Xi Jinping and US President Donald Trump are slated to meet at the G-20 Summit in order to discuss improving trade relations.

EU, UK Down On Brexit Resignations

The UK and EU markets were initially higher on easing fear a hard-Brexit was inevitable. Those fears came back to the forefront soon after the open and reduced gains to near 0.25% for the FTSE 100 and Xetra DAX by midmorning. The CAC was the laggard posting mid-morning a loss of -0.20%.

In the UK, tensions over the draft-Brexit have split Theresa May’s parliament resulting in the resignations of several key members including the Brexit Secretary Dominic Raab. Raab says he can not support the current Brexit plan in light of promises made to the British people by ruling party members before the referendum was taken. The Brexit news had a negative impact on the pound. The GBP/USD and EUR/GBP both shed nearly -1.50% on the news.

US Markets Brace For Data, Dollar Moves Higher

The US futures market was indicating a positive open for equity indices in the early hours of the morning. Traders wary of geopolitical events were focused on a raft of economic data that produced a mixed bag of results. After the 8:30 AM data deluge futures pared their gains to indicate an open near break-even.

Retail sales figures came in hotter than expected at 0.80%. This is 0.3% hotter than expected and points to continued strength in the consumer. On the manufacturing front, the Philly Fed’s MBOS fell nearly 10 points to 12.9, far below expectations, on weakness in New Orders. The Empire State Manufacturing Survey counterbalanced MBOS by advancing 2.0 points to 23.3 in evidence of expanding activity in the New York Federal Reserve District.

Earnings reported released before the open on Thursday were good but did not spark a rally in equities. Both WalMart and Cisco reported top and bottom line results that beat the analyst’s consensus and provided a positive outlook. Walmart rallied a little more than 1.0% on the news while Cisco advanced a more robust 4.0%. NVIDIA tops the list of companies reporting earnings after the bell on Thursday. The company is expected to post YOY gains but the result may be negatively impacted by weak sales of cryptocurrency mining chips.

With GPU Sales Cooling After Crypto Craze, Investors Ask What’s to Happen With the Mining Infrastructure

For investors who have been watching the cryptocurrency movement over the past year, it’s apparent that the so-called “crypto mania” has come to an end, or at least on hold for a while. After cryptocurrency prices skyrocketed towards the close of 2017, all of the top 10 high market cap coins have now settled into more muted prices down, in some cases, nearly 80% from their all-time highs. Looking at the charts for bitcoin (BTC) and ether (ETH), it’s clear that the impressive bull run has tapered off to arguably more sustainable levels.

Bitcoin (BTC)

Bitcoin Daily Chart
Bitcoin Daily Chart

Ether (ETH)

ETH/USD Daily Chart
ETH/USD Daily Chart

As with nearly everything in the economy though, industries are connected together one way or another. One of the questions many in the cryptocurrency world hadn’t considered after the decline of crypto prices is how that fall will impact other facets of the economy. That fall in cryptocurrency prices, along with an increased focus on newer consensus mechanisms that aren’t processing-intensive (like different variants of proof-of-stake over the current proof-of-work model), has led to a decline in sales of graphics processing units (GPUs) for producers like AMD and Nvidia. While mining on the Bitcoin network is dominated by ASIC miners, other cryptocurrencies are still largely mined viaGPU mining operations, though that could soon be changing.

Crypto GPU Sales Down

Nvidia, the popular GPU manufacturer known for making a variety of cards for the gaming industry and, more recently, the crypto mining industry, recently announced a “substantial decline” in revenue from cryptocurrency miners. According to the company’s CFO Commentary on Second Quarter Fiscal 2019 Results, the company was anticipating a drop in GPU sales, though the reality was more significant than they accounted for.

According to the report, “Our revenue outlook had anticipated cryptocurrency-specific products declining to approximately $100 million, while actual crypto-specific revenue was $18 million. Whereas we had previously anticipated cryptocurrency to be meaningful for the year, we are now projecting no contributions going forward.”

Competitor AMD is in a similar situation as well. After releasing second quarter earnings earlier in the summer, the chip producer noted that their quarter-over-quarter decline in revenue in the computing and graphics segment was “primarily related to lower revenue from GPU products in the blockchain market.”

Cryptocurrency prices aren’t the only factor to blame for the decline in GPU sales either. One of the topics at the center of the cryptosphere right now is about alternatives to the standard consensus mechanism known as proof-of-work (PoW). As newer methods are proposed, developed, and eventually implemented, GPU sales are likely to continue declining in the crypto-related industry.

Heavy Infrastructure Investment

Besides trading and investments made directly in the cryptocurrency world, there has been a significant amount of investment funneled into business related to the crypto industry as well. Unlike the early days of bitcoin, cryptocurrency miners are no longer individual enthusiasts running gaming PCs in their bedroom.

Nowadays, there are entire cryptocurrency mining operations being funded and built across the globe. In Montana, US, Power Block Coin LLC is investing $251 million into a new cryptocurrency mining farm where the facility will be stocked full of mining equipment, and they’re not alone.

In upstate New York, US, there’s an even larger cryptocurrency mine under construction. The new facility in Massena, NY is being built by Coinmint and is estimating up to $700 million in investment going to the mining operation. But with all this funding being put into mining farms and large-scale operations, investors in these ventures are beginning to wonder what’s to come of them in the event that they become obsolete in the crypto world or if interest in mining dies off more. Here are some of the alternatives.

Crypto Mining Alternatives

While the cryptocurrency markets are cooling down on GPU mining, there are still viable alternatives for all the hardware and infrastructure created in the industry. Looking back to the comments from Nvidia’s CFO, there’s another area that led strong growth throughout the year that aided in offsetting a decline in crypto-related GPU sales. According to the CFO commentary:

“GPU business revenue was $2.66 billion, up 40 percent from a year earlier and down 4 percent sequentially, led by record performance in Gaming, Professional Visualization, and Datacenter, offsetting a substantial decline in cryptocurrency GPUs.”  

Professional visualization, video rendering, and developing AI are all areas of the tech economy that cryptocurrency farms can look to in the future. If investors are looking for a return on their investment, farm operators still have options. In fact, there are companies in the space already angling themselves for a significant shift in the coming years.

Marco Iodice is the co-founder of Leonardo Render, a blockchain-based startup working on incorporating much of the infrastructure already in place for mining to profit from large-scale, enterprise-level graphical rendering needs in the growing CGI industry. All of those mining farms can put their GPUs to work for them not mining, but as a means for graphical rendering. He sees the same thing that Nvidia saw in revenue as well and believes there are other solutions for miners, saying that:

“In 2017 we witnessed the ‘gold rush’ of GPUs with people gathering as much hardware as possible to grab some crypto, which caused the price of hardware to skyrocket along with the price of cryptocurrencies. Now that the market is down and there’s less interest in mining, many have hardware that is only worth half of the purchase value. So the best solution, in my opinion, is to keep the equipment so carefully collected and assembled and wait for a new way of using it, ideally more profitable and less volatile than crypto mining.”

Similarly, Tatau is another blockchain-based startup that’s focusing on using the infrastructure to fill other demands. Like Leonardo Render, Tatau is connecting those with computational power across the industry to put their machines to work not for mining, but for outsourcing jobs that require large amounts of computing power. In the case of Tatau, that’s being done for developing AI and the compute-intensive processes associated with it.

Regardless of what the future holds for the cryptocurrency markets, the current state is no longer supporting GPU mining at the scale that it once was. Because of that, investors need to start looking at alternate ways for these mining operations to be put to use. Significant investments were made to create the farms, now it’s up to business owners and investors to ensure the infrastructure is adaptable for the future of the crypto world.

Three Stocks To Buy On Fortnite Video-Game Craze

Very few people could have imagined how popular Fortnite, a third-person shooter video game would become on the release of free-to-play battle royale. As of the start of the month, over 45 million people had already played the game, and the trend appears to be gaining momentum by the day.

NVIDIA Corporation (NASDAQ:NVDA), Tencent Holdings Ltd (OTCMKTS:TCTZF), and Activision Blizzard, Inc. (NASDAQ:ATVI) have emerged as a must own stocks, as the Fortnite craze continues to hit higher highs.

So what makes the three stocks exciting picks on Fortnite’s fortunes?

Tencent

Tencent stands to be one of the biggest beneficiaries of more people playing the video game in part because of its 40% stake in Epic Games, the creator of the games. Even though the game is free to play, the creator is already reaping big from the sale of virtual items such as character costumes and emoticons used by gamers to express a thought or a feeling.

In addition to other merchandise sales tied to the game, there is growing belief that Fortnite craze could generate as much as $2 billion in revenue. Tencent being one of the majority shareholders in Epic Games thus remains to be the biggest beneficiary of soaring revenues.

Tencent has also developed and debuted two games in China that are somehow similar to Fortnite based on licensed IP from which it expects to generate significant returns. The company is also in the process of seeking regulatory approval to offer Fortnite in China.

Activision Blizzard

Concerned by the hype around Fortnite video game, publisher Activision Blizzard is reportedly planning to add a battle royale mode dubbed ‘Blackout’ to its billion-dollar franchise Call of Duty. The new model will allow Call of Duty enthusiast to compete against each other featuring iconic characters and locations to form all its four Black Ops Game

A battle royale mode where gamers are allowed to compete against 99 others with the winner being the last one left standing appears to be the new thing, in the gaming world. While it is not clear whether Activision Blizzard own mode in Call of Duty will be a success as Fortnite, its still presents an exciting opportunity given its success with previous releases that have ended up being blockbusters.

NVIDIA

Nvidia is one of the few companies that is not a video game developer but still poised to be one of biggest beneficiaries of the Fortnite phenomenon. The giant chip maker is better known for its industry-leading graphics processing unit, without which gamers will not be able to play their beloved games.

Growing demand and new players joining the ranks to play Fortnite or new games leveraging the ‘battle royale mode’ is thus expected to trigger an increase in demand for GPU’s to power hardware for playing such games.

NVIDIA’s gaming segment grew by 66% year-over-year in the recent quarter thanks to strong demand for graphics processing unit. Chief Executive Officer, Jen Hsun Huang has already acknowledged that increased adoption of the battle royale genre will continue driving sales in the company’s gaming segment.

GPU and ASIC – A Correlation and Barometer for Cryptocurrency Traders

GPU, which are Graphics Processing Units, and act as a primary computing device for cryptocurrency mining because of the power they deliver technologically to the masses, may serve as a compelling correlation for cryptocurrency traders who are willing to examine corporate reporting among chip makers and the value of their own digital asset holdings.

While companies like Intel, Nvidia, and ADM control a predominant amount of the GPU marketplace and derive a solid percentage of their core business from selling the GPU products to cryptocurrency miners, revenues are predicted to fall.

These companies via their quarterly earnings forecast that the purchasing of GPU technology will begin to decrease in the coming quarters and year.

The eroding profit equation may be a perception among their analysts who suspect a decline in ‘mining’ is coming because of the rising costs associated with mining enterprises, but it is also certainly related to the changing technological composition of engineered – open source decentralized architecture.

Miners within the digital asset world continue to seek methods which allow for stronger and faster computational applications to be used as bigger mathematical calculations are needed because of the increasing amount of hash functions needed to create a single coin because more ‘nodes’ are needed among the likes of Bitcoin, Litecoin, and Zcash.

The biggest competitor emerging against GPU in the computational field is ASIC (Application Specific Integrated Circuits), and potentially creeping onto the horizon is technology via Google – which is reportedly close to launching – its TPU2 technology, which is an improvement on its Tensor Processing Unit and could prove a wildcard should Google decide to share this power – but this remains to be seen.

Many cryptocurrencies which use mining to create coins are trying to fight back against stronger applications such as ASIC because these stronger applications eliminate the ability of ‘the common man’ to be part of the mining landscape – and put these capabilities largely in the hands of only the well-funded.

Decentralized cryptocurrencies were supposed – in theory – to battle against the powerful. The control of cryptocurrency mining is predominantly in the hands of the elite when it was actually meant to give a voice to those who felt concentrated authority was an ‘evil’ – like central banks and fiat currencies which were argued to be false gods by some of the creators behind blockchains and their respective cryptocurrencies.

For instance, Vertcoin is said to be actively fighting against the use of ASIC’s – but problems persist in actually proving the systems – like Vertcoin’s which have built to keep out the big players – actually work. Vertcoin has reportedly said, it will initiate a ‘hardfork’ if it feels it is vulnerable to ASIC miners.

The question for traders, speculators, and investors in cryptocurrencies is if the correlation of sales of GPU and ASIC’s can be formulated into a working index to judge values in the digital value realm. We are not looking to solve the question here, but to point out the possibility that the technology behind ‘mining’ cryptocurrencies can be monitored and used as a potential sentiment gauge.

Cryptocurrency traders have an interesting correlation which may give rise to a method in order to judge market psychology for values of digital assets via the world of GPU and ASIC as a ‘viewable commodity index’. Thus, a barometer for relative strength and outlook of the broad cryptocurrency marketplace to decipher where the next price trends will develop is feasible.

ASIC is dominated by Bitmain of China. And cryptocurrencies such as Monero are aware of the grip on cryptocurrency mining Bitmain controls and are talking about making changes to its Proof of Work algorithm in an effort to confront Bitmain with modifications which they would have to recalibrate. And it should be pointed out that players like Samsung, Fujitsu, IBM and a host of other companies are developers of ASIC systems.


Suggested Articles


While the sales of GPU are important via figures for the cryptocurrency community, the actual chief market for GPU are gamers which need the chips for the graphics interface. The high costs of GPUs because of price gauging caused by demand via the mining community has actually hurt the GPU market because gamers were not willing to pay the escalating prices in the resale market.

It is thought that a decrease of prices in the resale market for GPU devices will actually help companies like Nvidia, ADM and Intel perhaps – because they will once again start to pick up market share from game developers.

The climbing costs of ‘mining’ to create nodes becomes more expensive as more power and greater computational power is needed to create a coin.

Large companies have emerged within the ASIC landscape who can afford to mine cryptocurrency, and they are always looking for technical advantages to develop stronger capabilities of ASIC as an ingredient mechanically to effectively generate profitability.

Traders should not necessarily believe a decline in GPU means the value of cryptocurrencies will drop, but instead should look at the total computational application environment to make a judgment regarding sentiment and the trends in value it may create. Proving – as always – there are no simple formulas to determine worth.

Yaron Mazor is a senior analyst at SuperTraderTV.

SuperTraderTV Academy is a leader in investing and stock trading education. Sign up for a class today to learn proven strategies on how to trade smarter.

Crypto Update: Cryptocurrencies Fall From Highs, Roubini Rejects Cryptocurrencies

Roubini Dissents in Brooklyn and Crowd Reacts

Though he likely didn’t affect the value of cryptocurrencies, Nouriel Roubini, the American economist, highlighted his skepticism of cryptocurrencies again late last week during a panel discussion in which he was invited to participate at the Fluidity Summit in Brooklyn. Speaking in New York as the person who would deliver a contrarian viewpoint to a large group of cryptocurrency enthusiasts, Roubini didn’t disappoint his fans when it came to bringing forth an opinion of digital assets which clearly wouldn’t make friends.

Roubini maintains that the future of payments and cryptocurrencies – should they survive – will be via a centralized system of transactions and not a decentralized system. Roubini did express his belief that the FinTech industry will produce revolutionary changes in the marketplace but went onto say businesses such as PayPal, Square, and Alipay among others were on the correct path. He also described Initial Coin Offerings as Initial Coin Scams – thus calling them ICS’s instead of ICO’s.

The organizers of the event invited Roubini with the purpose of acting as the antidote for those who may be ‘drinking too much Kool-Aid’. However, also participating in the event was Joseph Lubin who is a founder of Ethereum and an officer of ConsenSys.

Nvidia Concerns about Cryptocurrency Mining

In corporate news, the semiconductor company Nvidia has said that it believes its profits will decline as cryptocurrency mining decreases. The company lost share value before going into the weekend after it issued its outlook regarding a drop in sales.

Nvidia is the market leader providing chips for miners – the news not only sparked concerns among its investors but raised the eyebrows for some in the cryptocurrency community.


Suggested Articles


Casting Blame on Bitcoin’s Decline Not as Easy as Said

Although many believe Bitcoin’s precipitous fall on Friday was an effect of the raid by South Korean officials on the UpBit offices, the drop in the value of Bitcoin because of this raid by regulators cannot be actually measured, and it can actually be debated.

Prior to the decline in value on Friday for Bitcoin, the cryptocurrency had been hit since the middle of last week with a downturn. The value of the digital asset reached 9800.00 U.S Dollars plus last Sunday on the 6th of May but has found a rather slippery path since. Four days of selling for Bitcoin precipitated Friday’s sharp falls on the 11th. And while the price action of Bitcoin on Friday was the headline maker, the previous four days of declines likely had an effect on broad sentiment which likely did not help speculative fervor, nor its trend.

Bitcoin Daily Chart
Bitcoin Daily Chart

Bitcoin is now within the 8600.00 per coin vicinity and trading in the coming days may see a retest of April values in which the psychological support level of 8000.00 U.S Dollars could become an important factor. For traders who believe a reversal will come in the short term a solid resistance to aim for maybe the 9300.00 juncture.

Yaron Mazor is a senior analyst at SuperTraderTV.

SuperTraderTV Academy is a leader in investing and stock trading education. Sign up for a class today to learn proven strategies on how to trade smarter.

NVIDIA Corporation (NASDAQ:NVDA) Fails To Maintain Stock Rally After Surpassing Estimates

NVIDIA Corporation (NASDAQ:NVDA) recently released its financial results for Q1 of 2018 revealing a stellar performance that managed to surpass the estimates. Unfortunately, it has failed to keep up the strong rally in the price of the stock dropping following the announcement that it expects lower revenue in the second quarter.

According to Nvidia, the impressive performance was partly due to the impact of the cryptocurrency mining community. The company sold graphics cards worth $289 million to cryptocurrency miners within the first quarter of 2018. However, it recently announced that revenue in the second quarter will most likely be slashed by two-thirds. This has a lot to do with the volatile nature of the market and the increased competition from ASICs which are marketed as more efficient and faster. Nvidia stocks dropped significantly after the Q2 estimates were revealed.

The announcement the first time that Nvidia had quoted sales specifically from the cryptocurrency mining market. Despite the fluctuating sales expected from the crypto mining community, the GPU maker revealed that sales in its main target market which is the gaming community would still remain strong even in the second quarter of 2018.

Nvidia revealed that it expects a revenue figure of $3.1 billion in the second quarter which is higher than the analysts’ consensus estimate of $2.95 billion as revealed by Bloomberg. Part of Nvidia has been getting involved in emerging trends that are changing the direction of the computing industry. These technologies include language processing, machine learning, artificial intelligence, and data center operations among others. There is also a lot of demand for its graphics cards from the gaming community and all these factors are expected to contribute to an impressive revenue figure for Q2.

The GPU maker’s CEO, Jensen Huang pointed out that the few months have been tough on the gaming community due to inaccessibility of graphics cards due to high prices. This was as a result of the heavy demand for graphics cards from cryptocurrency miners thus pushing up the prices.

The gaming industry is still Nvidia’s biggest market at more than 60 percent and thus the need for the company to double down on making sure this particular market is well served. It is also worth noting that the company had previously stated that it does not consider the cryptocurrency market to be one of its main businesses which is a good thing considering that it is a highly volatile market. However, the company cannot simply ignore the fact that it is a high-revenue market and thus the need to be prepared and one of the best ways to do this is to ramp up production.

Heavy growth in the gaming industry is expected as a result of the increasing demand for the ultimate experience, especially in AAA games. The company also revealed noteworthy growth especially in the data center business whose revenue grew to $701 million, thus surging by 71 percent. Despite the lower revenue expectation especially from sales to the cryptocurrency mining community, Nvidia is still banking on heavy growth from other key areas.

Advanced Micro Devices, Inc. (NASDAQ:AMD) Takes Fight To Intel Corporation (NASDAQ:INTC) and NVIDIA Corporation (NASDAQ:NVDA) After Stellar Q1 Results

Advanced Micro Devices, Inc. (NASDAQ:AMD) stock rallied after the company provided a second-quarter forecast that topped estimates. Investors also pushed the stock higher on the chipmaker posting first-quarter financial results that beat Wall Street expectations.

AMD Q1 Financial Results

The company reported earnings of 11 cents a share, beating analysts’ estimates of 9 cents a share. Last year, the company reported a net loss of (-$0.04) a share. Revenue in the first quarter was up 40%, to $1.65 billion and in the process beat Wall Street estimates of $1.57 billion.

Revenue growth was attributed to growth in the Graphics business Segment that posted revenues of $1.12 billion representing a 95% increase. Revenue could have been much higher had the Enterprise and Semi-Custom segment not posted a 12% drop in revenue that came in at $532 million. AMD attributes the decline to a drop in semi-custom revenue.

AMD also reported solid margins for the first quarter that came in at $36%, compared to 4% as of the end of the first quarter of last year. Lead operating income stood at $120 million compared to just $11 million. After struggling for almost a decade to post profits, AMD reported $114 million increase in net income that came in at $81 million.

For the current quarter, the company said it is expecting $1.72 billion in revenue compared to estimates of $1.58 billion. Blockchain accounted for 10% of the company’s revenue. However, the chip giant has warned of a potential decline in graphics revenue in connection to the blockchain.

Revenue Growth Drivers

Stellar first-quarter earnings and a positive second-quarter outlook underscores the success that AMD is getting with its Ryzen and Vega-based GPUs. AMD is increasingly becoming Ryzen driven company given that 60% of its revenue came from the sales of Ryzen products. The company is also benefiting from an increase in the prices of average desktop chip

The chip giant is already taking the fight to the likes of Intel Corporation (NASDAQ: INTC) with its Epyc server chips as it looks to gain market share in the lucrative marketplace. According to the Chief Executive Officer, Lisa Su, the company is poised to control mid-single-digit server unit share before the end of the year.

“I will say, for the first-generation Epyc, we’re seeing really nice customer interest, and it’s quite broad. And so it is across enterprise as well as the hyper-scale customers. And we view this as a multigenerational play, so we’re very excited about what Epyc can do over the next couple of quarters,” Su saidda.

AMD is slowly gaining a competitive edge against its fierce rivals after stealing market share from NVIDIA Corporation (NASDAQ: NVDA) in the graphics card market The Company also stole some market share from Intel in the Desktop chip market.

Focus going forward is on the launch of the second and third generation of the Epyc chips with production set for early next year. In addition to the Epyc Chip AMD continues to attract interest from companies with large data centers testing out its AMD Radeon graphics cards designed to handle artificial intelligence workloads.