Welcome to The Smart Investor’s first top stock market highlights for the month.
May has been a busy month with the release of the latest quarterly earnings and business updates from a host of Singapore and US companies.
We took the liberty of selecting the most relevant news bits and summarising them here in case you missed them.
For this month, we are featuring several popular US growth stocks.
These stocks are moving the US market and pushing the NASDAQ Composite Index to a new record high.
Meanwhile, the US Federal Reserve also provided its latest hints on whether it intends to cut interest rates or leave them “higher for longer”.
Nvidia (NASDAQ: NVDA)
Nvidia released another set of blowout earnings for its first quarter of fiscal 2025 (1Q FY2025) ending 28 April 2024.
Revenue hit US$26 billion, a record high and more than tripling year on year.
Operating profit came in at US$16.9 billion, up 690% year on year from US$2.1 billion a year ago.
Net profit stood at US$14.8 billion, up more than sevenfold year on year.
Free cash flow leapt more than fivefold year on year from US$2.7 billion to US$15 billion.
CEO Jensen Huang commented that companies and countries are partnering with Nvidia for the shift to accelerated computing and are building a new type of data centre called AI factories to produce a new commodity called AI.
He also believes that Nvidia is poised for the next wave of growth with its Blackwell platform in full production, which will eventually form the foundation for advanced generative AI.
In line with the blockbuster results, the company declared a 10-for-1 stock split effective 7 June 2024.
Nvidia also increased its quarterly dividend by 150% year on year to US$0.01 on a post-split basis.
The company’s accelerated computing ecosystem has attracted significant numbers of developers and AI startups who are supporting more AI applications, thereby pushing greater industry innovation.
Back in 2021, there were 2.5 million developers but this has more than doubled to 5.1 million in 1Q 2024.
For AI startups, there were 7,000 back in 2021 but this has nearly tripled in just three years to 19,000.
For 2Q FY2025, Nvidia expects revenue to come in at US$28 billion, plus or minus 2%.
If the forecast comes to pass, it would be more than double the US$13.5 billion of revenue generated back in 2Q FY2024.
Shares of Nvidia closed at a new all-time high of US$1,038 after its results were released, up more than 115% year to date.
Alphabet (NASDAQ: GOOGL)
There were many exciting announcements at I/O, Google’s annual developer conference held in Mountain View, USA.
The highlight of the session was the words “artificial intelligence” or AI which had been uttered 121 times by Alphabet CEO Sundar Pichai.
The essence of the event was to embed AI into every Google app and service used by nearly two billion people around the world.
First off, the company announced a brand-new AI model called Gemini 1.5 Flash which has been optimised for speed and efficiency.
Flash was created because developers wanted a light and less expensive model compared with Gemini Pro that they could use to build AI-powered apps.
There’s more.
Later this year, Google plans to double Gemini’s context window from the current one million tokens to two million, allowing the software to process two hours of video, and 22 hours of audio, and write more than 60,000 lines of code at the same time.
The company also showed off its newest universal assistant dubbed Project Astra.
In a video posted that Google claimed was taken in a single shot, the assistant has a natural conversation with the user on various aspects of real life and even reminds the user where she left her glasses.
The glasses themselves come equipped with an onboard camera system that is synched with Project Astra, allowing the user to seamlessly connect with the AI even without her phone.
There were also other upgrades presented for Google Photos which will allow for more complex queries that can generate more specific search results with the ability to caption before these photos are posted on social media.
Google Search itself will receive large changes to allow for complex questions and will also present AI-generated answers on top of the default search results.
Microsoft (NASDAQ: MSFT)
Still on the topic of AI investments, Microsoft has also thrown its hat into the AI ring.
The software giant plans to invest US$2.2 billion to build digital infrastructure in Malaysia.
This money will also be spent over four years and involves the construction of infrastructure for its cloud computing and AI services.
The news was confirmed by Microsoft CEO Satya Nadella during a visit to Kuala Lumpur last week.
In line with its investment, the software company will also provide AI training to 200,000 people in Malaysia while working with the government to boost the country’s cybersecurity capabilities.
This US$2.2 billion investment is the biggest in Microsoft’s 32-year presence in Malaysia and demonstrates the company’s efforts in competing with other cloud giants for dominance.
Nadella has touted AI as a growth engine and has pledged at least US$7 billion to build the company’s services from Japan to India.
As icing on the cake, Microsoft will also train a total of 2.5 million people in AI skills in Southeast Asia by 2025.
During his trip to Southeast Asia, Nadella also announced a US$1.7 billion investment in Indonesia and will also invest in Thailand to help build out AI cloud and digital infrastructure.
With these investments from Amazon and Microsoft, the future is looking bright for many countries in Southeast Asia as this money will not just kickstart new industries within the region but will also create numerous jobs, thus helping to boost the economy.
US interest rates
The interest rate debate just got more confusing after the latest speech by Jerome Powell, chairman of the US Federal Reserve.
On one hand, he stated that the country would likely not need another rate increase to temper inflation.
Yet, on the other hand, he avoided providing a timeline for potential rate cuts down the road.
Policymakers at the central bank kept interest rates unchanged in the range of 5.25% to 5.5% once again and would need very persuasive evidence that inflation is not coming down to push them to increase rates.
This announcement effectively left investors in limbo over the timing and extent of rate cuts for the remainder of 2024.
To be fair, the Federal Reserve did state that it would continually assess all economic data before making any decisions.
With the data collected thus far, the policymakers did not have the confidence to start cutting rates yet as inflation has not fallen decisively to the 2% target.
Personal consumption expenditures rose 2.7% in March from a year ago, accelerating from a 2.5% advance back in January.
This so-called “lack of further progress” in bringing inflation down could reflect the difficulty in tweaking policy to achieve specific economic goals.
Of course, these policymakers are also keeping their eye trained on the health of the economy.
If there is an unexpected weakening in the labour market, Powell is prepared to lower borrowing costs to stimulate the economy.
But for now, the bets for an interest rate cut later this year are off.
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Disclosure: Royston Yang owns shares of Alphabet.
The post Top Stock Market Highlights of May 2024: Nvidia, Google, Microsoft and US Interest Rates appeared first on The Smart Investor.