Offshore Portfolio Clients

Nvidia: Priced to Perfection

Over the past two years, Nvidia’s stock price has increased nearly 700%, bringing its market capitalization to $2.9 trillion as of Friday. This remarkable growth has made Nvidia one of the largest companies in the world, trailing only behind industry giants like Apple and Microsoft.

Nvidia’s success is largely driven by the sale of its high-performance graphics processing units (GPUs) and AI platforms, which are crucial for training data-intensive AI workloads. As companies and organizations increasingly focus on developing artificial intelligence models, they seek processing power and energy efficiency—areas where Nvidia’s GPUs are currently unmatched in the market.

Last week, Nvidia’s Q2 2025 results were among the most anticipated of this earnings season. The company reported an impressive $30 billion in revenue for the quarter, marking a 122% year-over-year increase. Operating income also saw significant growth, rising 174% year-over-year to $18.6 billion.

Nvidia’s gross margin came in at 75.1% for the quarter, down from 78.4% in the previous quarter but up from 70.1% in the same period last year. Despite this slight dip compared to the previous quarter, both gross and operating margins have been on a strong upward trajectory since early last year, driven by the immense demand for Nvidia’s AI platforms. The graph below shows the change in Nvidia’s margins since the beginning of last year.

The slight downturn in margins this quarter was primarily attributed to delays in the launch of their new AI platform, Blackwell, which is now expected to ship in Q4 this year. During the earnings call, CEO Jensen Huang reassured investors that Nvidia remains committed to releasing new platforms on a yearly rhythm, emphasizing the company’s focus on delivering faster and more energy-efficient chips.

Despite Nvidia’s impressive performance, several questions remain. How much additional efficiency is AI bringing to companies adopting the technology? Will the major tech players, who are heavily investing in Nvidia’s platforms, continue to spend at this rate? And could other companies be developing chips that might eventually surpass Nvidia’s offerings?

Click here to access your account to view statements, obtain tax certificates, add or make changes to your investments.

Our email address is: [email protected]

Disclosures
Lunar Capital (Pty) Ltd is a registered Financial Services Provider. FSP (46567)
Read our full Disclosure statement: https://lunarcapital.co.za/disclosures/
Our Privacy Notice: https://lunarcapital.co.za/privacy-policy/
The Lunar BCI Worldwide Flexible Fund Fact Sheet can be read here.
This stocktake is prepared for the clients of Lunar Capital (Pty) Ltd. This stocktake does not constitute financial advice and is generated for information purposes only.

Nvidia: Priced to Perfection Read More »

Snowflake Melting?

Weekly Stocktake / By VCS Agency

Snowflake is strategically positioned to leverage the growing importance of high-quality data in powering AI applications, including both machine learning and generative AI. The premise is simple: the better the input data, the more effective and accurate the AI output.

Snowflake enables organizations to manage and structure their data in the cloud, offering secure and efficient data querying and sharing capabilities. Snowflake has recently invested in integrating a generative AI layer into its platform. This innovation allows users to interact with their data without needing specialized coding knowledge.

In its Q2 2025 results, Snowflake reported a 28.9% year-over-year increase in revenue, reaching $869 million. However, despite this growth, the company’s gross margin declined slightly to 72%, down from 74% in the same period last year. Additionally, Snowflake recorded an operating loss of $355 million; 41% of the company’s revenue. This was marginally down from an operating loss margin of 42% last year.

One of the persistent challenges for Snowflake, as with many smaller tech companies, is the competition for top-tier talent. Unlike Big Tech with their vast financial resources, Snowflake must find alternative ways to attract and retain skilled professionals. Stock-based compensation has been a key strategy, offering equity in the company as a significant part of an employee’s compensation package. While this approach is effective in attracting talent, it comes with the risk of diluting the company’s share base, reducing each share’s claim on future earnings.

Snowflake faces the delicate balancing act of incentivizing its workforce with equity while managing the potential long-term impacts on shareholder value through dilution. Navigating this fine line is crucial for Snowflake as it continues to scale. Snowflake’s share price dropped by around 10% after the announcement of their results, reflecting shareholder’s desire to see a better balance between shareholder returns and stock-based-compensation.

Click here to access your account to view statements, obtain tax certificates, add or make changes to your investments.

Our email address is: [email protected]

Snowflake Melting? Read More »

Moving ON

Weekly Stocktake / By VCS Agency

On Holdings, owners of the On Cloud sports brand best known for its distinctive running shoes, recently released its Q2 2024 results. The company reported a revenue of CHF 567.7 million, marking a 28% increase year-over-year. Operating income rose by 20% to CHF 47.3 million. The brand has a strong presence in the U.S., where 65% of last quarter’s sales originated, showing a growth of over 24% compared to the same period last year. Although the Asia-Pacific region was the fastest-growing market with nearly 74% growth, it only accounted for 10% of the company’s net sales for the quarter.

The bulk of On Holdings’ revenue (95%) comes from its shoe sales, which grew by nearly 27% year-over-year. As a relatively small brand compared to giants like Nike and Adidas, On Holdings faces both opportunities and challenges. The company has significant potential for growth by expanding into new regions and diversifying its product range.

One of On Holdings’ recent innovations is a new shoe that is sprayed onto a person’s foot, weighing just 158g for the women’s version. Helen Obiri, a renowned Kenyan middle- and long-distance runner, trained in these shoes for the recent Olympics and was so impressed that she wore them during the Paris Olympics marathon, where she won a bronze medal. This reflects On Holdings’ strategy of collaborating with athletes to design products that cater specifically to their sports.

Source: https://www.on.com/en-us/lightspray

On Holdings does however operate in a highly competitive market, facing rivals ranging from smaller brands like Deckers, which owns the popular Hoka brand, to industry giants like Nike and Adidas. Fashion trends can shift rapidly, and consumer preferences are fickle, posing a constant challenge. For now, On Holdings is capitalizing on current trends, but the landscape could change quickly.

Click here to access your account to view statements, obtain tax certificates, add or make changes to your investments.

Our email address is: [email protected]

Moving ON Read More »

Weighing In

Weekly Stocktake / By VCS Agency

Eli Lilly and Novo Nordisk are leading pharmaceutical companies known for their innovative diabetes and obesity treatments. Both companies have developed drugs—Tirzepatide by Eli Lilly and Semaglutide by Novo Nordisk—that mimic the glucagon-like peptide-1 (GLP-1) hormone.

Originally designed for type-2 diabetes to control blood sugar by increasing insulin release, these GLP-1 drugs were later found to significantly aid in weight loss. In a recent study, Eli Lilly’s Zepbound has been shown to reduce patient weight by 21%. Associated with obesity, are a variety of other health issues – including cardiovascular diseases. Novo Nordisk’s Wegovy treatment decreased the risk of major adverse cardiovascular events by 20%.

Both Novo Nordisk and Eli Lilly are investing heavily in research and development, and in manufacturing capacity. For their recent quarter, Novo Nordisk increased their R&D spending by 127% to DKK 16.2 billion (1 USD = 6.95 DKK on 30 June 2024). This accounted for 24% of revenue, roughly in line with Eli Lilly’s R&D to revenue ratio. Both companies are pushing to gain an edge over each other and the other competitors in the industry.

The pharmaceutical industry requires extensive testing of drugs and treatments before they can be sold to patients. Some of these treatments, especially the ones related to cardiovascular diseases, can take multiple years for the treatments to be approved by the relevant authorities.

They also require large sample sizes to show the extensiveness of their research. As it stands, Novo Nordisk currently has 45000 participants in trials or about to be in trials for Semaglutide. Eli Lilly has slightly more participants in trial for Tirzepatide.

Even though other pharmaceutical companies may know how GLP-1 agonists work. They may not have the required resources in terms of capital and time to go after Novo Nordisk and Eli Lilly’s market share.

Last week, Novo Nordisk and Eli Lilly released their Q2 2024 results. Novo Nordisk’s revenue was up 25% year over year to DKK 68 billion, while net income was up only 3% to DKK 20.1 billion. This was mainly due to the increase in R&D spending. Eli Lilly on the other hand had revenues of $11.3 billion, up 36% year over year. Its net income increased 68% to $3 billion. this was primarily driven by increased manufacturing capacity and pricing power.

Click here to access your account to view statements, obtain tax certificates, add or make changes to your investments.

Our email address is: [email protected]

Weighing In Read More »

AI: The Energy Saga

Weekly Stocktake / By VCS Agency

Generative AI relies on supercomputers to perform complex calculations and answer increasingly intricate questions. It is thus highly dependent on advanced semiconductors (chips), large data sets and powerful algorithms (models). The energy requirements of these processors, which are typically housed in datacentres, are enormous and require stable and secure power sources.

According to the International Energy Agency (IEA), energy for data centres, cryptocurrency, and artificial intelligence accounted for roughly 2% of global energy demand in 2022. The IEA forecasts that the energy demand could almost double from 460 TWh in 2022 to about 800 TWh by 2026. However, these estimates may vary significantly depending on the actual demand for generative AI products and services over the next two years.

Cloud computing giants like Amazon, Microsoft, and Alphabet are heavily investing in their data centres to enhance their capabilities for running complex AI applications. This involves training and inferencing (producing outputs) with AI models. Consequently, their energy consumption and greenhouse gas emissions have risen. According to Alphabet’s 2024 Environmental Report, their greenhouse gas emissions have increased by 48% since 2019. The growing demand for AI, combined with Alphabet’s termination of some clean energy projects, has led to this overall increase in its emissions.

Why haven’t companies simply expanded their energy capacity? Data centres require a stable energy supply that can be adjusted instantly. Renewable energy is not always reliable due to its dependence on unpredictable elements. Nuclear power can provide the needed stability, but building nuclear plants takes more than five years. In contrast, gas-fired plants take about two years to build.

The cloud providers are exploring various ways to increase their access to stable energy sources. Earlier this year, Amazon bought a data centre from US power generator Talen Energy, located next to a nuclear power station. The data centre will be powered with energy from the station.

Microsoft on the other hand, signed a power purchase agreement with Brookfield Asset Management, to support the development of 10.5 gigawatts of renewable energy and to secure their energy requirements and offset their carbon footprint.

At the core of these new data centres are semiconductors responsible for all processing tasks. Nvidia claims that their flagship Blackwell Platform will enable organizations to “build and run real-time generative AI on trillion-parameter large language models at up to 25x less cost and energy consumption than its predecessor.” No wonder everyone is racing to get their hands on these chips.

Security Held In:

Security

Lunar Capital BCI Worldwide Flexible Fund

Lunar Capital Offshore Portfolio Clients

Security

Amazon

Lunar Capital BCI Worldwide Flexible Fund

Lunar Capital Offshore Portfolio Clients

Security

Microsoft

Lunar Capital BCI Worldwide Flexible Fund

Lunar Capital Offshore Portfolio Clients

Security

Alphabet

Lunar Capital BCI Worldwide Flexible Fund

Lunar Capital Offshore Portfolio Clients

Security

Nvidia

Lunar Capital BCI Worldwide Flexible Fund

Lunar Capital Offshore Portfolio Clients

Key Indicators

Index / Fund / Rate

Start of Year

Last Week

This Week

% Change YTD

Index / Fund / Rate

Lunar BCI WW Flexible Fund

Start of Year

188.33

Last Week

214.18

This Week

216.71

% Change YTD

15.07%

Index / Fund / Rate

JSE ALSI

Start of Year

76 893

Last Week

80 244

This Week

80 797

% Change YTD

5.08%

Index / Fund / Rate

NASDAQ Composite

Start of Year

15 011

Last Week

17 733

This Week

18 353

% Change YTD

22.26%

Index / Fund / Rate

S&P 500

Start of Year

4 770

Last Week

5 460

This Week

5 567

% Change YTD

16.72%

Index / Fund / Rate

Prime Lending Rate

Start of Year

11.75%

Last Week

11.75%

This Week

11.75%

% Change YTD

0.00%

Index / Fund / Rate

USD/ZAR

Start of Year

18.30

Last Week

18.17

This Week

18.18

% Change YTD

-0.66%

Index / Fund / Rate

EUR/ZAR

Start of Year

20.17

Last Week

19.47

This Week

19.72

% Change YTD

-2.23%

Index / Fund / Rate

Brent Crude ($'barrel)

Start of Year

76.97

Last Week

84.87

This Week

86.98

% Change YTD

13.01%

Source: Iress

Click here to access your account to view statements, obtain tax certificates, add or make changes to your investments.

Our email address is: [email protected]

AI: The Energy Saga Read More »

Nike Just Not Doing It

Weekly Stocktake / By VCS Agency

Last week Nike released their Q4 and FY2024 results. Revenue for the year was $51.4 billion, flat compared to 2023. Net Income for the year was $5.7 billion, up 12% compared to the same period last year. Below is a graph showing key metrics for Nike over the last four years. Since 2021, Nike’s revenue has increased just over 13 percent. While its net income has remained flat.

Before the Covid-19 pandemic, Nike had already started investing in its Nike Direct business, which includes company-operated stores and its e-commerce division. This focus on e-commerce proved beneficial both before and during the pandemic when consumers were unable to leave their homes. Nike Direct accounted for just under 44% of Nike Brand revenue in 2024, compared to 32% in 2019. The wholesale business, which sells to third-party stores on consignment, accounted for 56% of Nike Brand revenue in 2024.

Over the last few years, running has surged in popularity, likely due to pent-up demand from the Covid-19 pandemic. The London Marathon received a record 840,000 applications for the ballot for the 2025 race, surpassing the previous record of 578,000 in 2024. Despite its roots in running, Nike has struggled to capitalize on this trend, losing market share to competitors like On Holding, Hoka (owned by Deckers), and Brooks.

Fashion is fickle. Brands that are successful today may not be next year, and vice versa. Nike faces the challenge of growing revenue from an already high base. For example, Hoka’s 2024 revenue was $1.11 billion, roughly 2% of Nike’s 2024 revenue. Nike has better financial strength compared to many of its competitors to withstand setbacks. It could possibly even use this to pivot its company to get back in favour with consumers.

Nike’s share price is down from a peak of $179.10 (November 2021) to $74.85 per share at the time of writing.

Security Held In:

Security

Lunar Capital BCI Worldwide Flexible Fund

Lunar Capital Offshore Portfolio Clients

Security

Nike

Lunar Capital BCI Worldwide Flexible Fund

Lunar Capital Offshore Portfolio Clients

Security

ON Holdings

Lunar Capital BCI Worldwide Flexible Fund

Lunar Capital Offshore Portfolio Clients

Security

Deckers

Lunar Capital BCI Worldwide Flexible Fund

Lunar Capital Offshore Portfolio Clients

Key Indicators

Index / Fund / Rate

Start of Year

Last Week

This Week

% Change YTD

Index / Fund / Rate

Lunar BCI WW Flexible Fund

Start of Year

188.33

Last Week

212.51

This Week

214.18

% Change YTD

13.73%

Index / Fund / Rate

JSE ALSI

Start of Year

76 893

Last Week

79 768

This Week

80 244

% Change YTD

4.36%

Index / Fund / Rate

NASDAQ Composite

Start of Year

15 011

Last Week

17 689

This Week

17 733

% Change YTD

18.13%

Index / Fund / Rate

S&P 500

Start of Year

4 770

Last Week

5 465

This Week

5 460

% Change YTD

14.48%

Index / Fund / Rate

Prime Lending Rate

Start of Year

11.75%

Last Week

11.75%

This Week

11.75%

% Change YTD

0.00%

Index / Fund / Rate

USD/ZAR

Start of Year

18.30

Last Week

17.95

This Week

18.17

% Change YTD

-0.71%

Index / Fund / Rate

EUR/ZAR

Start of Year

20.17

Last Week

19.21

This Week

19.47

% Change YTD

-3.47%

Index / Fund / Rate

Brent Crude ($'barrel)

Start of Year

76.97

Last Week

85.07

This Week

84.87

% Change YTD

10.26%

Source: Iress

Click here to access your account to view statements, obtain tax certificates, add or make changes to your investments.

Our email address is: [email protected]

Nike Just Not Doing It Read More »

Adobe or Not Adobe

Weekly Stocktake / By VCS Agency

Adobe is a digital-media company that creates and sells products and tools that are primarily suited towards the creative economy. Their products include Photoshop and Lightroom, which are used to alter images, Premiere Pro, which is the standard video editing tool, and Adobe Document Reader, which allows people to view and export a standardized version of a digital document. There are free versions of their products, but Adobe makes its money from charging users a subscription fee to access all the products’ features.

Two weeks ago, Adobe released their Q2 2024 results. Revenue for the quarter was $5.31 billion, up 10% year on year. And operating income was $1.89 billion, up 16% year on year. The table below is a snapshot from Adobe’s earnings slide, which shows their core driver of revenue: Digital Media (DMe). The Creative segment within DMe accounted for just under 59% of their total revenue this quarter. Creative grew just under 10% year on year – in line with their revenue growth.

Despite many of Adobe’s products being industry standard tools, they are facing an increasing number of headwinds from both competitors and regulators.

In 2022, Adobe agreed to buy Figma (an interface design tool) for $20 billion. At the time, the deal placed an astronomical 50x revenue valuation on Figma. The deal faced regulatory scrutiny in the EU and was therefore cancelled before it could be completed. Adobe had to pay Figma a cancellation fee of $1 billion. Adobe is now being sued in the US, as the Federal Trade Commission (FTC) claims that Adobe makes it too difficult for users to unsubscribe from their products.

Despite Adobe adding generative AI layers to their products, they are facing intense competition from the likes of Microsoft-backed OpenAI. OpenAI has many tools that directly compete with Adobe’s tools, allowing people to generate and edit texts and images using generative AI.

Adobe, once a gold standard, could be one of the first victims in the new generative AI world.

Security Held In:

Security

Lunar Capital BCI Worldwide Flexible Fund

Lunar Capital Offshore Portfolio Clients

Security

Adobe

Lunar Capital BCI Worldwide Flexible Fund

Lunar Capital Offshore Portfolio Clients

Security

Microsoft

Lunar Capital BCI Worldwide Flexible Fund

Lunar Capital Offshore Portfolio Clients

Security

Inditex

Lunar Capital BCI Worldwide Flexible Fund

Lunar Capital Offshore Portfolio Clients

Key Indicators

Index / Fund / Rate

Start of Year

Last Week

This Week

% Change YTD

Index / Fund / Rate

Lunar BCI WW Flexible Fund

Start of Year

188.33

Last Week

212.26

This Week

212.51

% Change YTD

12.84%

Index / Fund / Rate

JSE ALSI

Start of Year

76 893

Last Week

77 054

This Week

79 768

% Change YTD

3.74%

Index / Fund / Rate

NASDAQ Composite

Start of Year

15 011

Last Week

17 689

This Week

17 689

% Change YTD

17.84%

Index / Fund / Rate

S&P 500

Start of Year

4 770

Last Week

5 432

This Week

5 465

% Change YTD

14.57%

Index / Fund / Rate

Prime Lending Rate

Start of Year

11.75%

Last Week

11.75%

This Week

11.75%

% Change YTD

0.00%

Index / Fund / Rate

USD/ZAR

Start of Year

18.30

Last Week

18.38

This Week

17.95

% Change YTD

-1.91%

Index / Fund / Rate

EUR/ZAR

Start of Year

20.17

Last Week

19.69

This Week

19.21

% Change YTD

-4.76%

Index / Fund / Rate

Brent Crude ($'barrel)

Start of Year

76.97

Last Week

82.56

This Week

85.07

% Change YTD

10.52%

Source: Iress

Click here to access your account to view statements, obtain tax certificates, add or make changes to your investments.

Our email address is: [email protected]

Adobe or Not Adobe Read More »

A Day out Shopping

Weekly Stocktake / By VCS Agency

Lululemon, the athleisure brand, and Inditex (owner of fashion brands such as ZARA, Oysho, and others) primarily share one similarity: they both make clothes. However, these brands are quite different in terms of their target audience, operational methods, and growth stages.

Lululemon, founded in Vancouver, initially made yoga clothing before expanding into other types of athleisure for various sports. Lululemon has just over 700 stores around the world. Lululemon targets the upper-income segment, focusing on creating high-quality products primarily for women. This approach contrasts with other major athleisure brands like Nike and Adidas. Lululemon also sponsors local trainers and influencers, believing they have a closer connection with their community compared to big stars. Lululemon generally sets trends for each season, attempting to design and produce enough to meet the needs of its client base.

Inditex, on the other hand, operates quite differently. Catering to middle and upper-middle income groups, they have just under 7,300 stores worldwide. Inditex’s biggest brand, ZARA, focuses on offering customers the latest trends. ZARA uses a Just-in-Time vertical integration method. Their scouts attend fashion shows to identify trends, which are then sent to designers. These designs are quickly produced in factories and appear on shelves within 2-3 weeks. Depending on demand, ZARA can easily ramp up or scale down production, producing closer to what is actually needed. This results in there being just enough items in their stores to meet demand.

Despite Inditex being just under 4 times bigger than Lululemon in terms of market cap, the graph below shows how similar their gross and operating margins are. The also both have a PE ratio of around 25.

Margin Levels for Lululemon and Inditex

Last week, Lululemon and Inditex released their respective Q1 2024 results. Lululemon’s revenue for the quarter was $2.2 billion, up 10% year-on-year, while operating income was $432.6 million, up 7.7% year-on-year. Lululemon attributed the weakness in their sales growth to a limited colour range in certain women’s products in the US, missing an opportunity to meet demand. Combined with slowing overall demand in the US and Europe, heightened competition in the athleisure space, and the missed opportunity, Lululemon’s stock price has decreased by over 35% year-to-date.

Inditex, on the other hand, had a revenue of €8.2 billion for the quarter, up 7.1% year-on-year. While their operating income was €1.6 billion for the quarter, up 10.3% year-on-year. Inditex expressed that they are planning to spend €1.8 billion, over the next two years, on their supply chain as they look to bolster up their e-commerce offering, while also maintaining their physical presence with their stores.

Security Held In:

Security

Lunar Capital BCI Worldwide Flexible Fund

Lunar Capital Offshore Portfolio Clients

Security

Lululemon

Lunar Capital BCI Worldwide Flexible Fund

Lunar Capital Offshore Portfolio Clients

Security

Inditex

Lunar Capital BCI Worldwide Flexible Fund

Lunar Capital Offshore Portfolio Clients

Security

Inditex

Lunar Capital BCI Worldwide Flexible Fund

Lunar Capital Offshore Portfolio Clients

Key Indicators

Index / Fund / Rate

Start of Year

Last Week

This Week

% Change YTD

Index / Fund / Rate

Lunar BCI WW Flexible Fund

Start of Year

188.33

Last Week

208.29

This Week

214.80

% Change YTD

14.06%

Index / Fund / Rate

JSE ALSI

Start of Year

76 893

Last Week

76 704

This Week

76 852

% Change YTD

-0.05%

Index / Fund / Rate

NASDAQ Composite

Start of Year

15 011

Last Week

16 735

This Week

17 133

% Change YTD

14.13%

Index / Fund / Rate

S&P 500

Start of Year

4 770

Last Week

5 278

This Week

5 347

% Change YTD

12.10%

Index / Fund / Rate

Prime Lending Rate

Start of Year

11.75%

Last Week

11.75%

This Week

11.75%

% Change YTD

0.00%

Index / Fund / Rate

USD/ZAR

Start of Year

18.30

Last Week

18.80

This Week

18.88

% Change YTD

3.17%

Index / Fund / Rate

EUR/ZAR

Start of Year

20.17

Last Week

20.40

This Week

20.42

% Change YTD

1.24%

Index / Fund / Rate

Brent Crude ($'barrel)

Start of Year

76.97

Last Week

81.31

This Week

79.51

% Change YTD

3.30%

Source: Iress

Click here to access your account to view statements, obtain tax certificates, add or make changes to your investments.

Our email address is: [email protected]

A Day out Shopping Read More »

Costco – One up on Inflation

Weekly Stocktake / By VCS Agency

The no-frills, ultra-low-cost warehouse retailer Costco, does everything it can to lower the prices of the products it sells. With the surge in inflation over the last two years, Costco is benefiting from the trend of people wanting to pay the lowest prices possible for goods. Here are some of the strategies Costco uses to keep their prices low.

Costco keeps a limited inventory of the products it sells. This enables them to sell inventory before they are required to pay for it.
They also don’t stock too much variety in terms of products, further allowing them to buy in bulk from their suppliers.
Costco keeps the design of its stores extremely simple, reducing the need to spend much on marketing.
Costco has an annual membership fee that incentivizes customers to shop more at their stores.
Costco has built a strong business culture, resulting in low employee turnover. Companies lose out when their trained employees leave. They also offer higher-than-average compensation, which incentivizes employees to stay.

Last week, Costco released their Q3 2024 results. Total revenue for the quarter was $58.5 billion, up 9.1% year-on-year. Costco’s gross margin was 12.5%, far lower than many retailers. Operating income increased by 30.8% to reach $2.2 billion for the quarter. This represented an operating margin of 3.8% for the quarter.

Costco has built a cult-like fanbase among its customers, gaining customers across different income levels. Not only do they sell hotdogs for $1.50 and rotisserie chickens for $5, they also sell gold bars as customers attempt to beat inflation on another front.

Costco is trading at a relatively high multiple. Their price to earnings (PE) ratio is currently hovering around the 50 mark, whereas Walmart is trading at a PE ratio of around 28. Costco operates in an extremely competitive industry with very low margins. Any missteps in their operating activities could cause their bottom line to suffer tremendously.

Walmart is held in the Lunar Capital BCI Worldwide Flexible Fund and by Lunar Capital’s Offshore Portfolio Clients

Key Indicators

Index / Fund / Rate

Start of Year

Last Week

This Week

% Change YTD

Index / Fund / Rate

Lunar BCI WW Flexible Fund

Start of Year

188.33

Last Week

207.00

This Week

208.29

% Change YTD

10.60%

Index / Fund / Rate

JSE ALSI

Start of Year

76 893

Last Week

79 112

This Week

76 704

% Change YTD

-0.25%

Index / Fund / Rate

NASDAQ Composite

Start of Year

15 011

Last Week

16 921

This Week

16 735

% Change YTD

11.48%

Index / Fund / Rate

S&P 500

Start of Year

4 770

Last Week

5 305

This Week

5 278

% Change YTD

10.64%

Index / Fund / Rate

Prime Lending Rate

Start of Year

11.75%

Last Week

11.75%

This Week

11.75%

% Change YTD

0.00%

Index / Fund / Rate

USD/ZAR

Start of Year

18.30

Last Week

18.41

This Week

18.80

% Change YTD

2.73%

Index / Fund / Rate

EUR/ZAR

Start of Year

20.17

Last Week

19.96

This Week

20.40

% Change YTD

1.14%

Index / Fund / Rate

Brent Crude ($'barrel)

Start of Year

76.97

Last Week

82.16

This Week

81.31

% Change YTD

5.64%

Source: Iress

Click here to access your account to view statements, obtain tax certificates, add or make changes to your investments.

Our email address is: [email protected]

Costco – One up on Inflation Read More »

Nvidia – Silicon Supreme

Weekly Stocktake / By VCS Agency

Nvidia, the graphics processing unit (GPU) designer, had another standout quarter. Since the beginning of the year, Nvidia’s share price has increased by over 120%. Big tech companies such as Amazon, Microsoft, Alphabet, and Meta are buying Nvidia’s chips for their data centers so that they can enhance their artificial intelligence capabilities. Companies and researchers are then able to train and run their large language models from these data centers. To get an idea on how these big some of these AI investments have been, Meta (owners of Facebook, Instagram and WhatsApp) top of acquired 24 thousand H100 GPU chips, which go for between $25000 and $40000 each, to power their Lambda AI service.

Nvidia released their Q1 2025 results last week. Revenue for the quarter was $26 billion, up 262% compared to the same quarter last year. Net income for Nvidia was $14.9 billion, up 628%. Data center revenue, which includes the revenue recognized from the sale of chips for artificial intelligence, was $22.6 billion, up 427% year on year. Nvidia’s gross margin was 78.4% and its net margin 57.1%.

The H100 platform is currently the top-of-the-line chip platform in the market. However, Nvidia has developed a new platform, Blackwell, expected to be released later this year. The Blackwell platform performs 4x faster in training LLM models and 30x faster in inferencing (where the trained LLMs draw conclusions from new inputs) compared to the H100 platform. Nvidia faces the risk of overdeveloping their chips, where customers may wait out certain generations of chips to get the next generation, which is significantly better. Nvidia, however, is confident that current demand far outstrips current supply for both the H100 and Blackwell chips.

Nvidia developed the CUDA software platform to expand the use of its chips in various applications, including AI. However, CUDA is exclusive to Nvidia’s chips. Due to the heavy reliance on Nvidia’s chips, their limited supply, and high costs, other developers have created an open software platform called Triton. This platform allows developers to run AI applications on an array of other chips.

Nvidia also faces significant competition in the chip design field. They are not only competing with established designers like AMD, but also with well-capitalized companies such as Amazon and Microsoft, who are developing their own chips to reduce their reliance on Nvidia. Nvidia has stated that their chip cycle is one year between each generation, so competing companies are aiming at a moving target going at breakneck speed.

Nvidia, Amazon, and Microsoft are held in the Lunar BCI Worldwide Flexible Fund and by Lunar Capital’s Offshore Portfolio Clients.

Key Indicators

Index / Fund / Rate

Start of Year

Last Week

This Week

% Change YTD

Index / Fund / Rate

Lunar BCI WW Flexible Fund

Start of Year

188.33

Last Week

204.58

This Week

207.00

% Change YTD

9.91%

Index / Fund / Rate

JSE ALSI

Start of Year

76 893

Last Week

79 531

This Week

79 112

% Change YTD

2.89%

Index / Fund / Rate

NASDAQ Composite

Start of Year

15 011

Last Week

16 686

This Week

16 921

% Change YTD

12.72%

Index / Fund / Rate

S&P 500

Start of Year

4 770

Last Week

5 303

This Week

5 305

% Change YTD

11.21%

Index / Fund / Rate

Prime Lending Rate

Start of Year

11.75%

Last Week

11.75%

This Week

11.75%

% Change YTD

0.00%

Index / Fund / Rate

USD/ZAR

Start of Year

18.30

Last Week

18.17

This Week

18.41

% Change YTD

0.60%

Index / Fund / Rate

EUR/ZAR

Start of Year

20.17

Last Week

19.78

This Week

19.96

% Change YTD

-1.04%

Index / Fund / Rate

Brent Crude ($'barrel)

Start of Year

76.97

Last Week

83.93

This Week

82.16

% Change YTD

6.74%

Source: Iress

Click here to access your account to view statements, obtain tax certificates, add or make changes to your investments.

Our email address is: [email protected]

Nvidia – Silicon Supreme Read More »