VIDEO: These Portfolio Stocks Helped Power the Nasdaq to All-Time Highs

In today's Daily Rundown video, Chris Versace explains which three Portfolio stocks helped power the Nasdaq to a new all-time high yesterday.

He also touches on three recent price target increases for portfolio holdings, and shares what in Macy's M earnings caught his eye.

Transcript

CHRIS VERSACE: Hey, folks. Chris Versace here. It is Tuesday, May 21. And as I'm coming to you taping today's video, the stock market's off its lows with about three of the four major market indicators in the green. What does this mean? Well, it means that the NASDAQ, in particular, is looking to push past the record high that it set yesterday.

And that was really driven by three of our portfolio holdings, Apple, Microsoft and Nvidia. So let's just quickly recap that news, or those developments, I should say, with Apple, it was the reports that it will be working with OpenAI to bring some of its technologies to iOS 18. That really underscores the expectation for Apple and AI at WWDC.

So a positive indication, but we are going to want to see more on that front. With Microsoft, the day ahead of the build conference, which is starting today, the company came out and showcased some new AI-focused laptops and tablets. We like that because, one, it is kind of speaking to something that we've been thinking about quite a bit, which is the expected AI-on-device upgrade cycle.

It also says that as that upgrade cycle happens, we should see another explosion in data creation, data consumption. And that is likely to pressure digital infrastructure, whether it's data center or other networks. That of course keeps us bullish on Nvidia, but also Marvell.

Now, alongside what Microsoft had to say, there were several other announcements about AI-powered PCs, whether it was Lenovo or Samsung, or the others. But here's the thing. Microsoft, as we expected, called out using Qualcomm's Snapdragon chips. And when we take a look at that, as well as similar announcements by some of those other vendors announcing AI-powered PCs, that led us to up our price target on Qualcomm today to 2:30 from 2:10.

One, There's going to be a nice ramp in those products, but two, it also reduces Qualcomm's reliance on the smartphone market. So we do like that increasing revenue diversification. You know, we also have Microsoft's, like I said, Build Conference today. So we're going to get through that conference.

But odds are, we will be revisiting our Microsoft price target, one that's over. Part of that, of course, is going to reflect what we might learn today about some of the incremental AI efforts, but also too, that upgrade cycle for PCs bodes very well for its Windows business. So we want to reflect that in our thinking.

Rather than make a price increase today, another one tomorrow, we figured, let's just wait, take a beat, and come together with one cumulative price target increase for Microsoft shares. So we expect to do that in the next couple of days. But let's remember, too, that in addition to the Qualcomm price increase, we also lifted our price targets yesterday for both Bank of America and for Morgan Stanley.

And those decisions really reflected two things. One, prospects for better net interest income. That really comes off of something that JP Morgan had to say yesterday. But also too, the improving outlook for investment banking, whether it's M&A activity or IPO offerings. And we are seeing even more companies start to file to go public.

So the backlog is building and so far the aftermarket performance is solid. I do think that we will see an acceleration in the IPO activity in the coming weeks and months. That bodes very well for the investment banking business at both Bank of America and Morgan Stanley.

Here's the thing. Should that activity be even greater than we expect, that would give us a reason to once again revisit the price targets for both Bank of America and Morgan Stanley. So that was Apple. That was Microsoft. Got a little sidetracked there. Sorry.

But the third company that really powered the NASDAQ to a new high yesterday was Nvidia. Of course, that's one of our larger holdings. We built it up over the course of 2024, and the company has earnings after tomorrow night's market close.

And look, expectations are high. And I shared some thoughts in our opening comments today about what the options tell us, and how we could see a wide swing in Nvidia shares depending on how the market interprets the quarterly results, and more importantly, the outlook.

We shared our thoughts with you on this last week, but just to be clear, expectations are running very high. And you know, NVIDIA is going to really have to deliver upside probably on the quarter, but also in the guidance. And if it doesn't do that to the extent that the hopium thinks that it will, we could see NVIDIA shares trade off.

And you know, our plan as we discussed last week, was that if we see them pull back in a meaningful way, we might be able to get one more little nibble on NVIDIA shares. And of course, we want to do this, because we are only in the early innings of AI adoption, which as I talked about a few minutes ago, is going to lead to a dramatic explosion in data content creation, consumption, pressuring networks, pressuring data centers to add more capacity.

So that's our game plan for that. But I also just wanted to talk about two other things today. First and foremost, we do have another gaggle of Fed heads, I think at least six speaking today. And our thinking coming into this morning was that the Fed heads who are talking today would largely reiterate what we've heard the last couple of days, need to see more good data, build our confidence for rate cuts.

And sure enough, the first speaker, Fed Governor Barr came out and said he will need to see several months of good data in order to get more comfortable about rate cut timing. We're not surprised. We're going to continue to watch this. My thinking is that the market really wants to think that there will be rate cuts come September, but as we know, it's really going to be dependent on the data.

I do think that reflecting on last week's core CPI number at 3.6%, you know, we'll need to see further stepdowns in the next several months of data to suggest that maybe a September rate cut is potentially on the table. But again, we're not going to presuppose that's the case. We're going to let the data do the talking to us so we don't get caught flat-footed or the victim of market hopium.

And then finally, I just want to talk a little bit about retail earnings. We are getting-- this week's wave has kind of started. Macy's in particular, I want to talk about that for a second, and here is why. You know, when we kicked off the week, we said we'd be paying attention to retail earnings, particularly what they say about inventories, because we've heard a lot of reports about consumers being selective, choosy, trading down, call it what you will.

And at the same time, retail sales data has really shown that department stores just continue to take it on the chin. Strength in other areas, of course, benefiting our holdings, Costco, Amazon, but department stores really taking it on the chin. So you know, despite the top and bottom-line results, I really wanted to look into what Macy's inventories showed for the quarter that they reported this morning.

And sure enough, they were up not only year over year, but they were up quarter over quarter. And I'm not going to read too much into one company, but as we get this next wave of retail companies, TJX, Kohl's, Target reporting, I'm going to continue to focus on their inventory levels, because if they're all moving higher, it could be that they are just a little bloated. And it means that we're going to see some extra promotional activity potentially hitting margins to clear out that inventory.

You know, if we do see that, it's certainly not going to be an area that we want to go to. We want to continue to stick with our consumer-facing plays that are Costco and Amazon. And that, folks, is today's video. Thank you so much for watching. Please be sure to check your emails, your alerts. We want you to be on top of our latest thoughts. And if we happen to make any moves with the portfolio, we want you right there with us. Thanks.

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At the time of publication, TheStreet Pro Portfolio was long AAPL, MSFT and NVDA.