With Nvidia’s (NVDA) earnings failing to drive markets the way investors had hoped, Commerce Street Capital CEO Dory Wiley joins Market Domination to share his market outlook and discuss how investors should position themselves within the Big Tech sector.
Wiley highlights the importance of Nvidia’s earnings: “Nvidia drives Mag 7, Mag 7 drives the market.” He acknowledges that Nvidia “blew it out of the water” with its results. However, he notes that Big Tech has been “a weak spot in the market” despite Nvidia’s value proposition.
Despite the recent pressure on Big Tech and the “Magnificent 7,” Wiley remains optimistic about these stocks’ long-term prospects: “[They] have fundamental reasons to keep growing and to keep driving the markets … If you under-allocate, you’re in big trouble.”
For more expert insight and the latest market action, click here to watch this full episode of Market Domination.
This post was written by Angel Smith
Video Transcript
Nvidia earnings out that’s in the rearview mirror but couldn’t save the market from a down day overall.
We’ve had some surprisingly hot data over the last two days and that just leads to the conclusion that the fed may actually have to stay higher for longer.
Uh What’s your first flesh impression of the week?
Well, there’s a lot there but thanks for having me on.
Uh, first of all, yeah, NVIDIA drives Max seven Mac Seven drives the market.
So that earnings release was important and of course, they, they blew it through the water that stocks up well, over 200% for the year, 2500% for five years.
And if there’s been a weak spot in the market, it’s been big tech over the last 20 years.
Now, used to when I would look at it.
I’m a fundamental investor.
I’d see Amazon with a five or 6% margin.
Didn’t make money.
I couldn’t understand the valuation and arguably I missed the boat e early on.
But with NVIDIA, it’s easy to look at that from a value standpoint, the company got 50% margin.
They run a 90 plus percent return on equity.
They’re growing like crazy in the pursuit their position in the market is not only super uh uh a first mover advantage in the A I space and accelerated computing, but it’s already getting entrenched.
And so it’s a really amazing stock, but I would say the market’s got a little more depth to it than just the video mag seven.
Because if you look around, uh at, at all the companies reporting in the first quarter, these companies we had earning supplies here, right?
We did well up over over 5% 5.3% in earnings uh expectations when the market was expecting, you know, 3.9%.
And so that was a nice boost to help some of this downside protection.
Everybody’s worried about amidst some other concerns about rate hikes higher for longer inflation and stuff which we can talk about.
Uh dory.
I, I want to dig a little bit in on and the mag seven specifically here for just a second because I, I feel like the big question is after the numbers, do people, should people be thinking about adding to NVIDIA if they don’t have a position or if they don’t have a large position, should they just stay pat?
Um And does that extend to the rest of the mag seven as well?
Well, it, that’s probably the biggest question for not only individuals but institutional investors, right?
If you’re an index person or you’re a large cap manager.
Do you have the mag seven allocation to your portfolio?
Do you have the NVIDIA allocation?
So about a year ago, I started saying, you know, you under allocated your own risk because these stocks have fundamental reasons to keep growing and to keep driving the market and to keep what dominating the, the, the S and P. So if you under allocate, you’re in big trouble, I think that still holds, you know, NVIDIA still looks strong.
Mi Microsoft still looks strong.
And if you want to outperform the market, then you can tactically overweight some of these stocks that you like more and underweight the Teslas and whatnot.
But you under allocate mag seven at your own risk.
So you kinda have to be in and you have to bite the bullet.
And I would get the same question back in November and December when a stock is three or 400 bucks.
And I said, you still have to close your eyes, put a little in and then pray that there’s a dip of 10 or 20% to shake out some of the euphoria and you can get in then.
But I think you got to establish a position and then, and then pray for some dips.
The joke I had with my trader was I said, hey, you’re supposed to be buying this video on dips.
This was a few months ago and he goes, there haven’t been any dips.
And I said No, the dip is one that only goes up 1%.
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