By Louis Navellier
The big investment news last week was Nvidia’s developer conference, which is already helping to boost storage companies like Micron Technology (MU) and Seagate Technology (STX), as well as companies speeding up optical connections, like Ciena Corporation (CIEN) and Ubiquiti (UI).
Nvidia Founder and CEO Jensen Huang said he expects at least $1 trillion in demand for its Blackwell and Rubin AI systems through 2027, up from about $500 billion in projected demand through 2026. In other words, Nvidia will be averaging over 100% annual sales growth. For this quarter, the analyst community is forecasting $78.7 billion in sales (+79%) and 119% annual earnings growth of $1.77 per share. In the past month, 31 analysts have revised their earnings estimates higher for Nvidia, and I am expecting more upward revisions after Huang’s strong 2027 guidance. Nvidia looks very strong now.
Last Wednesday, Micron Technology announced a revenue surge of +196.3% to $23.86 billion in its latest quarter. Even more impressive, the company’s earnings soared by 682% to $12.20 per share, compared with $1.56 per share a year ago. Micron Technology posted a whopping 21.7% revenue surprise and a 38.6% earnings surprise. Clearly, the data center demand for fast memory chips remains robust.
Also last week, Super Micro Computer (SMCI) issued a statement suspending three people charged with selling Nvidia GPUs to China via Taiwan. One of those charged was its co-founder, Yin-Shyan Liaw, so the stock was hit. Since the company is cooperating with the Department of Justice, I do not expect Super Micro Computer to be charged. Fundamentally, the stock is ripe for a rebound, since Super Micro Computer posted 123% sales growth, and its sales are forecasted to rise by 171%.
Here are the most important developments recently and what they mean:
– The Iran war and the TSA distraction are impeding U.S. GDP growth. Fourth-quarter GDP growth has been slashed to a 0.7% annual pace, and the Atlanta Fed has cut its first-quarter GDP estimate to a 2.3% annual pace. So, you might be wondering what happened to my prediction of 5% annual GDP growth this year? Well, it is clearly being postponed until the Strait of Hormuz is reopened and Congress stops impeding U.S. commerce by not paying TSA agents.
– Despite the food and energy inflation caused by the Strait of Hormuz closure, I am expecting central banks to cut key interest rates in the upcoming months to stimulate their respective economies. The Fed should join the global rate cut parade in May when Kevin Warsh takes over as the new Fed Chairman.
– The Fed likes to ignore food and energy inflation, which was substantial in the February inflation reports and is expected to soar in the March inflation reports, like the Consumer Price Index (CPI) and Producer Price Index (PPI). Warsh is expected to argue that the productivity gains from AI are not inflationary and will boost U.S. GDP growth. It is imperative that Kevin Warsh take over and lead the FOMC, since too many Fed members are “deer in headlights” with no confidence in the econometric models.
– As the Fed cuts and uncertainty dissipates, the 5% annual GDP growth that I have predicted should materialize as soon as possibly the second quarter. Improving weather should help to boost consumer confidence, especially after severe winter weather impeded first-quarter GDP growth. U.S. GDP growth is being boosted by massive productivity gains, strong export growth from gold, LNG, refined products and crude oil, plus steady consumer spending. Housing remains a weak link that is impeding GDP growth, so it is imperative that the Fed cuts key interest rates.
In conclusion, the U.S. is the economic growth engine of the world, and international investors are expected to continue to gravitate to the U.S. due to stronger GDP growth as well as an improving U.S. dollar. In the meantime, the best defense remains a strong offense of fundamentally superior stocks that are reporting stunning sales, earnings, surprises and positive guidance. Stocks like Micron Technology and Nvidia remain the market leaders. Even the weakest stock in our portfolio, namely Super Micro Computer, has 171% forecasted sales growth and now trades at less than 10 times this year’s forecasted earnings, so I think it may be acquired in the upcoming months. This is a good time to remind all investors that good stocks bounce.
