Eyes On Nvidia, Microsoft, Wayfair, IBM, And Meme Madness

Summary:

Get ahead of the market by subscribing to Seeking Alpha’s Stocks to Watch, a preview of key events scheduled for the coming week. The newsletter keeps you informed of the biggest stories set to make headlines, including upcoming IPOs, investor days, earnings reports and conference presentations.

The latest musings of the Federal Reserve will be analyzed next week, with Chairman Jerome Powell talking publicly on Sunday, FOMC members out on the speech circuit, and the minutes from the last Fed meeting being released. Across the Atlantic, European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey are also scheduled for key talks next week. At the time of publication, futures trading implies a 66% probability of an interest rate cut before the November meeting of the policymaking committee.

In corporate earnings, Nvidia’s (NVDIA) report will be the key update of the week. On Seeking Alpha, analyst Michael Del Monte thinks the chip giant faces macro headwinds and micro tailwinds in the months ahead, while Justin Ward said the technical setup for Nvidia looks strong. Chinese electric vehicle makers XPeng (XPEV) and Li Auto (LI) are also lined up to report earnings, while home improvement retailer Lowe’s (LOW) will try to top some beaten-down expectations. The event calendar includes Microsoft’s (NASDAQ:MSFT) major build event for developers and IBM’s (NYSE:IBM) Think event. It is difficult to say if the meme phenomenon will revive itself again or die off, which means stocks like GameStop (GME), AMC Entertainment (AMC), and Faraday Future Intelligent (FFIE) could see wild swings again. Seeking Alpha Investing Group Leader Samule Smith said the meme stock craze could be an indication that interest rates will have to stay higher for longer if investors continue to bid up highly-speculative names. He suggested that investors should consider high-yielding stocks that are likely to continue delivering solid fundamental performance regardless of the direction of interest rates, such as Enterprise Products Partners (EPD), Mid-America Apartments (MAA), and Blackstone Secured Lending (BXSL).

Earnings spotlight: Monday, May 20 – Palo Alto Networks (PANW), Li Auto (LI), and Zoom Video (ZM). See the full earnings calendar.

Earnings spotlight: Tuesday, May 21 – Lowe’s Companies (LOW), Autozone (AZO), Toll Brothers (TOL), XPeng (XPEV), Macy’s (M), and Amer Sports (AS) See the full earnings calendar.

Earnings spotlight: Wednesday, May 22 – Nvidia (NVDA), TJX Companies (TJX), Analog Devices (ADI), Target (TGT), Snowflake (SNOW), Petco Health and Wellness (WOOF), and e.l.f. Beauty (ELF). See the full earnings calendar.

Earnings spotlight: Thursday, May 23 – Intuit (INTU), Medtronic (MDT), Toronto-Dominion Bank (TD), Ralph Lauren (RL), and Workday (WDAY). See the full earnings calendar.

Earnings spotlight: Friday, May 24 – Booz Allen Hamilton (BAH) and Buckle (BKE). See the full earnings calendar.

Volatility watch: Options trading volume is elevated on Faraday Future Intelligent (FFIE) and AMC Entertainment (AMC). The most overbought stocks per their 14-day relative strength index include Humacyte (HUMA), Zeta (ZETA), and Ardmore Shipping (ASC). The most oversold stocks per their 14-day Relative Strength Index include Augmedix (AUGX), Cerence (CRNC), and Ryerson Holding (RYI). The stocks in the S&P 500 Index with the highest percentage of short interest are Etsy (ETSY), Paramount Global (PARA), CarMax (KMX), Charter Communications (CHTR), and Albemarle (ALB).

IPO watch: Specialty property and casualty insurance provider Bowhead Specialty (BOW) is expected to start trading next week after the company prices its IPO. The analyst quiet periods end for Rubrik (RBRK), Loar Holdings (LOAR), Marex Group (MRX), Neo-Concept International Group (NCI) to free up analysts to post ratings. Loar (LOAR) is the only one in the group that has rallied since going public. The IPO lockup period expires for a block of shares of Elevai Labs (ELAB).

Dividend watch: Companies that have an ex-dividend date arriving next week include Johnson & Johnson (JNJ), Pitney Bowes (PBI), and Yum! Brands (YUM). The list of companies forecast to boost their quarterly dividend payouts include Unum (UNM) to $0.42 from $0.365, Guess (GES) to $0.325 from $0.300, and Donaldson (DCI) to $0.27 from $0.25. See Seeking Alpha’s list of Quick Dividend Stock Picks.

Investor events: Microsoft (MSFT) will hold its annual Microsoft Build event for developers in Seattle. Microsoft is expected to show off its next major Windows 11 update, which will ship first on new Qualcomm (QCOM) Snapdragon X-based PCs in June. Generative AI will be a major focus at the Build event, with AI Explorer anticipated to include a set of features that utilize next-gen NPU hardware to allow Windows to run AI in the background. Microsoft has already said it will equip Windows PCs with AI features, including a dedicated Copilot key. Intel (INTC) and ASUS (OTCPK:ASUUY) also have plans to introduce PCs with AI accelerators. Other notable events in the week ahead include Norwegian Cruise Line’s (NYSE:NCLH) 2024 Investor Day, the four-day Dell Technologies (DELL) World event, the four-day Advanced Clean Transportation Expo with a rare conference appearance by Tesla (TSLA), the two-day J.P. Morgan Global TMT Conference, and the American Thoracic Conference, which include presentations by Polydex Pharmaceuticals (POLX), Amgen (AMGN), aTyr Pharma (LIFE), Krystal Biotech (KRYS), and Gossamer Bio (GOSS), to name a few.

Nvidia earnings preview: Nvidia (NVDA) is due to report earnings on May 22 amid sky-high expectations. The Santa Clara-based chip giant is expected to disclose revenue of $24.6 billion and EPS of $5.53 for the quarter. Data center revenue is forecast to have more than tripled from a year ago to $20.97B, while gaming segment revenue is seen rising 16.7% to $2.61B. Nvidia is seen reporting an adjusted gross margin rate of 77.0%, adjusted operating income of $16.3B, and free cash flow of $11.78B. Investors will be looking past the quarterly numbers when determining if Nvidia deserves its $2.3 trillion AI-boosted premium valuation. Analysts largely anticipate that Nvidia will raise the bar with guidance. Oppenheimer said its conversations with memory vendors have suggested robust demand for both HBM, as well as high capacity SSDs associated largely with enterprise AI implementations and cloud SSD demand. Meanwhile, Morgan Stanley pointed out that hyperscale datacenter operators all noted that either capex budgets are being lifted in the current quarter or are being increased meaningfully for the fiscal year. On the conference call, questions could delve into Chinese demand for Nvidia’s H20 specialty chip and supply constraints for H100 GPUs. Jefferies said even a beat-and-raise quarter from Nvidia (NVDA) could take a backseat to the cadence on the ramp of the Grace Blackwell exascale computer. “We believe the ramp of the GB200 NVL products is a large driver for the story as NVDA will once again extend their control to a greater portion of the AI system design,” highlighted the firm. Options trading implies a 9% share price move for the stock after the report. Shares rallied 16% the day after the last earnings report. The stocks with the highest trading correlation to Nvidia (NVDA) on earnings day include Taiwan Semiconductor Manufacturing (TSM), Micron (MU), and ASE Technology (ASX).

Wayfair wildcard: Online retail player Wayfair (NYSE:W) will open its first ever brick-and-mortar store in Wilmette, Illinois, on May 23. The store was described as a one-stop shop for home decorating or home improvement needs. The 150,000-square-foot, two-floor store features more than 80,000 pieces of inventory, ranging from couches to refrigerators. The location will also have a restaurant called The Porch. “Customers, they still love stores. You still want to come in, you want to sit on it, you want to shake it, you want to feel it you want to squeeze it whatever it, whatever it is,” noted Liza Lefkowski, Wayfair Vice President of Merchandising, Brand and Stores. Wayfair’s (W) store concept could compete for incremental traffic with IKEA, Williams-Sonoma (WSM), Crate & Barrel, RH (RH), Ethan Allen (ETD), and others if it were to be expanded. It would also set it apart from some e-commerce rivals. “If you think about the categories we’re in, they’re typically very visual categories, or very tactile, or, you know, considered purchases, because it’s reasonably expensive and you’re going to put a lot of care into picking the right item,” stated Wayfair CEO and co-founder Niraj Shah. The Seeking Alpha Quant Rating on Wayfair (W) is flashing Strong Buy due to high marks for momentum and earnings revisions.