VIDEO: Here's What Prompted Our Multiple Moves With Nvidia

In today’s Daily Rundown video, Chris Versace discusses this morning’s inflation data that took some wind out of the market’s early move. 

He also recaps today’s portfolio action with Nvidia NVDA, that April revenue report from Taiwan Semiconductor TSM, and the latest positive data point for two portfolio infrastructure plays. 

Transcript

CHRIS VERSACE: Hey folks, Chris Versace here and Happy Friday May 10th, end of the trading week. We started off the day, stocks were up pretty solidly following some good news, particularly out of Taiwan, Semiconductor and some others. But yes, the market did give back some of those gains following a hotter than expected print for May consumer inflation expectations. Came in at 3 1/2% year over year. For some context, that's the highest level in six months, and it is up from April's 3.2% figure.

You know, on the one hand, it is another data point that suggests inflation is being persistent. And of course that's going to add to, not only our view but the Fed's view that a rate cut simply isn't likely in the next few months. But two things to think about.

First, this type of data it's really based on survey. It's not hard data. It's what we call soft data. So we do have to be careful not to read too much into what it has to say. In my view, next week's April CPI PPI will be far more important. And as we've discussed several times over as many days, given what we saw in the April PMI reports from ISM, S&P Global, you know, I really don't think that we're going to see a demonstrative improvement in the April CPI PPI compared to what we saw in the last few months.

I do, as a result, still think that the market's going to have to kind of slowly come to the realization that a rate cut as soon as September isn't likely to happen. It's more likely to be later in the year. And I suspect that ahead of the April CPI PPI report, we're likely to hear just that from the latest array of Fed speakers that are making the rounds.

But the second point I want to make about the data that came out this morning is that it shows consumers expressing some worry about inflation and unemployment. And that can translate into softer consumer spending. And at a minimum, it really reinforces why we own and will continue to own the shares of Amazon and Costco. Now, let's turn to some other portfolio names.

We did upgrade the shares of Nvidia this morning to a one rating. We lifted our price target to 1100 from 950 and we also bought some additional shares for the portfolio. All of that stems off of what we saw early this morning from Taiwan Semiconductor. Yes, their April revenue jumped more than 59%, almost 60% on a year over year basis to largest end markets, high performance computing or AI data center, and smartphones. So we view this report not only really good for Nvidia, hence our actions. But also for Marvell, Apple, Qualcomm, and of course Universal Display.

We think that this is going to set the table for very solid, if not better than solid results, when both Nvidia and Marvell report their quarters in the second half of this month. I also want to talk quickly about two other things. First, Apple, there was a report and we discussed it in an alert to you, that they have inked a deal with Samsung Display for foldables. No real surprise. We've seen others kind of enter that space with the foldable form factor, kind of reminiscent of the old clamshell mobile phone form factor.

It gives you a much wider display, potentially driving productivity, streaming, and other uses. So are we surprised that Apple is kind of making its path towards this? We're not. In fact we talked about this several months ago. It was one of the reasons that we added Universal Display shares to originally the bullpen and then called them back up to the portfolio.

So from our perspective, Apple's move into this, good for improving its iPhone lineup at some point. Maybe there might be some something similar with some smaller iPads. But what we have to think about this is whether it's small form factor iPads or preferably the iPhone, it means that much larger display size is going to drive a lot more demand for universal's organic light emitting diode chemicals and its IP licensing business. That is just the latest positive data point for our shares of OLED this week.

Remember earlier, Apple said that it is bringing organic light emitting diode displays to its two new Pro iPad models. So a lot of positive things happening for Universal Display. Still other markets that can perk up as well, we gave an example in the automotive market, but we're also eventually waiting for the larger opportunity that is General Illumination.

And then lastly, early this morning construction partners ticker symbol ROAD reported a beat and raise quarter lifting their expectations because of what they're seeing for continued, not only demand but funding for public and private infrastructure. This of course, is going to reinforce our position for United Reynolds and Vulcan Materials. And that, folks, is today's video. As I get today's roundup ready, I will be popping in and out of the forum, so I hope to see you there.

But remember, we are going to have another round of office hours next week, Tuesday and Thursday. Please be sure to join us. Really enjoy it, a lot of engagement. And with that I would just say, please remember to check your alerts, your emails. We do want you to capture our latest thinking and any moves that we might make with the portfolio. Thanks for watching and have a great weekend.

At the time of publictaion, TheStreet Pro Portfolio was long NVDA.