Nvidia Lets the AI Trade Roll, CIA in Moscow, Warsh’s Backyard BBQ

Let the good times roll
Let them knock you around
Let the good times roll
Let them make you a clown
Let them leave you up in the air
Let them brush your rock and roll hair
Let the good times roll
Let the good times roll-oll
Let the (good times roll)

– Ric Ocasek (The Cars) “Good Times Roll”, 1978

Let It Be Written…

The AI trade is far from being over. Very, very far, indeed.

High-tech and AI bellwether/chip designer Nvidia (NVDA) released its fiscal second-quarter financial results on Wednesday evening. To say that those results were less than amazing would be disingenuous. To say that the guidance provided was less than incredible would be downright dishonest.

Supported by Data Center driven sales that reflected annual growth of “merely” 117%, Nvidia posted adjusted EPS that beat Wall Street expectations by $0.13 per share, a GAAP EPS print that beat the Street by “just” $0.40 per share and a top-line number that crushed the consensus view by more than $4 billion.

Let’s talk about the guidance. Nvidia is projecting sales growth for next year of 70% on a year-over-year basis. Wall Street was looking for growth of 44%. That’s not simply beating the Street. That’s beating the Street to a pulp.

It wasn’t just Nvidia, though Nvidia is to this market what Apple (AAPL) once was. Cloud-native cybersecurity platform provider CrowdStrike Holdings (CRWD) also reported as did cloud-based customer relationship management software provider Salesforce (CRM). Both of those firms beat the Street. Both of those firms provided forward-looking guidance that was better than expected.

There was a “tech stock party” overnight. Will these gains hold? We’ll let the momentum-chasing algorithms that control price discovery in 2026 and intentionally force overshoot decide that.
That said, these stocks are all up very nicely since the closing bell on Wednesday did its job. Nasdaq futures, at zero-dark thirty Thursday morning, are implying a gain of more than 350 points or better than 1%.

Let the good times roll. For now.

On That Note…

The Wall Street Journal is reporting that CIA Director John Ratcliffe traveled to Moscow this week to warn Russia not to attack NATO countries. The scuttlebutt is that U.S. officials have become concerned that Russia, after talks with Ukraine have broken down and domestic pressure to end a war that has been costly in terms of lives and treasure, could launch some kind of limited attack against a Baltic nation as distraction.

Possibly emboldened by reports of dwindling U.S. munitions in the wake of the six-month U.S. war in Iran, thoughts are that Russia could launch anything from a cyberattack to an actual smallish invasion. The Baltic nations are Estonia, Latvia and Lithuania. All three nations are former Soviet states. All three nations are currently members of NATO.

This kind of trip is rare. With the Russia-Ukraine war now in its fifth year, the last visit, or at least known visit by a CIA director to Moscow was back in November 2021. Ratcliffe’s visit comes after several visits by U.S. envoy Steve Witkoff, so clearly there is some kind of heightened U.S. awareness.

Kremlin spokesperson Dmitry Peskov told the media on Wednesday that Ratcliffe had held talks with Russian intelligence officials during his time in Moscow, but he did not meet with Russian President Vladimir Putin. It is understood that Putin was briefed on those meetings after the fact.

I don’t know about any of you, but I am staying long the shares of Lockheed Martin (LMT) and RTX (RTX). The U.S. needs to reload. NATO needs the U.S. to reload. The Russian threat on a regional and global level is going nowhere.

Don’t Forget

Cue the plate-spinners. Send in the jugglers. Enter the clowns. We indeed have a few of those.

The Kansas City Fed’s annual summer backyard barbecue (I mean economic symposium) kicks off today from Jackson Hole, Wyoming. Financial markets have been somewhat politely signaling to still “sort of” new Federal Reserve Chair Kevin Warsh that they want more specific guidance concerning the central bank’s plan to restore price stability.

Warsh, up until this point, has done an excellent job of remaining as vague as possible, which I believe (opinion) is the right approach. Since moving into his new position, U.S. economic data has appeared to be both hot and cold. In addition, based on headline risk associated with the war in Iran and the potential reopening of the Strait of Hormuz, consumer-level inflation in the U.S. has run both warm and cool.

Warsh is no dummy. Not by a long shot, which in some way (I know that this is mean, I feel shame) differentiates him from many of his peers. He knows that inflation driven by a shock to supply cannot be addressed through the adjustment of short-term interest rates. If only some of the loud mouths at the Fed understood the nuance required to apply policy to the real world the way they understand the politics of the spoken word. In that light, Warsh’s silence has been golden.

That said, the new Fed Chair will have to address the world from this economic clambake on Friday morning. If Warsh does not supply what sound like answers in that address, his credibility with financial op-ed writers could start to wane.

So far, this Fed Chair has been correct (again, in my opinion) in his assumption that reduced Fed communication improves the market’s and the Fed’s ability to interpret economic data and anecdotal information more clearly. However, if those on Wall Street and on Main Street don’t start seeing or hearing something they can get on board with, they are likely to start poking with a stick.

Kevin Warsh will probably have to signal something Friday morning. The FOMC’s next policy statement will be published on September 16. That’s three weeks from yesterday.

Economics (All Times Eastern)

08:30 – Initial Jobless Claims (Weekly): Expecting 209K, Last 206K.

08:30 – Continuing Claims (Weekly): Last 1.799M.

08:30 – Wholesale Inventories (July-adv): Expecting 0.2% m/m, Last 0.2% m/m.

10:30 – Natural Gas Inventories (Weekly): Last +16B cf.

11:00 – Kansas City Fed Manufacturing Index (Weekly): Expecting 14, Last 17.

The Fed (All Times Eastern)

All Day – Jackson Hole Symposium

Today’s Earnings Highlights (Consensus EPS Expectations)

Before the Open: BBY (1.37), BURL (2.19), DG (2.01), DLTR (1.13)

After the Close: MRVL (0.93), S (0.07), ULTA (6.19)

At the time of publication, Guilfoyle was long NVDA, CRWD, LMT, RTX equity.