#5things: Before The Bell

Nvidia reports, Target plunges, bitcoin new record

I’m in the Big Apple for 48 hours. Without the kids. I am torn between wanting to lay down for those 48 hours but also enjoy a more than 20-minute meal, a casual walk with no purpose, window shopping, actual shopping, a museum without fear of destroying something priceless…the possibilities are endless! Send me your recommendations.  

Back to business: Futures are higher this morning as Nvidia gets set to report quarterly results today. Stocks shook off the nuclear war saber-rattling to finish mostly higher yesterday. This morning Bloomberg News is reporting Vladimir Putin is interested in discussing Trump’s Ukraine peace proposal. We may also be inching closer to a decision on Treasury Secretary. Cantor Fitzgerald’s Howard Lutnick was appointed Commerce Secretary so that takes a more wildcard candidate out of the mix. Former Fed Governor Kevin Warsh and Scott Bessent are the main contenders right now. Would you believe me if I told you that with oil prices around $70/bl, the TSX Energy sector just hit a 10-year high? Believe it. While oil producers have struggled, pipeline and uranium stocks have carried the day.

Missing the mark: Target is plunging 18% right now and is poised to open at a one-year low. Sales growth missed and profit fell more than feared. The retailer is also cutting its sales and profit forecast for the fourth quarter. The new profit forecast is well below analyst expectations. These results stand in stark contrast to Walmart yesterday which beat expectations, boosted its forecast and shares hit an all-time high. Target is clearly losing market share while also facing margin pressure. “The conclusion investors seem to be drawing is that there aren't a ton of margin levers left to pull if top-line remains on the weaker side throughout 2025,” wrote RBC analyst Steven Shemesh. However, depending on your time horizon, Shemesh says the stock could be worth a look. “The -18% share reaction probably fades throughout the day, but with limited visibility into a top-line recovery, we wouldn't advise shorter-term investors to chase here,” he wrote. “For investors with a longer-time horizon….EPS seems achievable in 2026, which we believe would make this an attractive entry point.”

Watch party: Since I am in New York, maybe I will try to find one of those Nvidia watch parties when earnings come out this afternoon. The most important company on the planet is set to report results today after the bell. It is trading near a record high and rallied more than 4% yesterday. It is expected to show an 83% increase in sales and nearly 100% increase in profit from last year on the back of insatiable demand for AI chips. “We believe the path to a $4 trillion market cap and beyond for 2025 starts today,” wrote Dan Ives of Wedbush in classic Dan Ives fashion. Key things to watch will be the outlook and whether it is higher than expected, commentary on the Blackwell chip and overheating concerns, and production ability when it comes to meeting demand. Last time Nvidia reported it beat expectations, but the stock sold off around 6%. That proved to be a good buying opportunity with the stock up 20% since. One of my favourite strategists, Jim Reid at Deutsche Bank, wrote about the “astonishing” earnings trajectory over a short period of time. In 2023, Nvidia’s net income was $6.4 billion. Over the last 12 months Nvidia is projected to have earned $53 billion. By 2027 that number is expected to be $124 billion. “There has never been a large cap company like it in the history of financial markets,” he wrote.

In your cart: I’ll watch shares of Metro at the open. The grocery store posted better profit and sales than expected. This was mostly due to higher pharmacy sales (+5.7% vs 5.5% expected), while food sales were a slight miss (+2.2% vs consensus +2.5%). It is also renewing its buyback for up to 4.5% of the shares outstanding. The company says it is going to get back to profit growth “gradually” in 2025 (consensus has them booked for 10% profit growth.) The stock has had a nice run this year, up 25% and trading near all-time highs. Worth noting food inflation is trending back up and that tends to be positive for the grocers.

Wen 100,000: Bitcoin has touched a record $94,000. Yesterday was the first day you could trade options on Blackrock’s Bitcoin ETF. The wagers were directionally bullish with 9 out of 10 trades betting on gains according to Bloomberg. Another boon to the space is speculation about who will be the next chair of the SEC. It is no secret that Gary Gensler has not been a friend to the space. CoinDesk reported that Trump is reportedly considering crypto-friendly lawyer Teresa Goody Guillen to be SEC Chair. She is currently favoured in the betting markets but the second contender would be lawyer Robert Stebbins who is seen as less crypto friendly.