Weekly Roundup 2022-05-27

Weekly Roundup 2022-05-27

Lunar Capital Weekly Roundup

Index / Fund / Rate Start of Year Last week This Week % change YTD
JSE ALSI 73 723 67 575 70 485 -4.39%
NASDAQ Composite 15 833 11 354 12 131 -23.38%
S&P 500 4 797 3 901 4 158 -13.31%
Prime Lending Rate 7.25% 8.25% 8.25% 13.79%
Lunar BCI WW Flexible Fund 165.68 138.77 139.50 -15.80%
USD/ZAR 15.96 15.85 15.60 -2.26%
EUR/ZAR 17.95 16.73 16.75 -6.69%

Source: iress

Company and Market News

Nvidia Focus

Nvidia’s Q1 2023 results were released last week, beating analyst expectations. However, Nvidia decreased guidance expectations for Q2. The primary reasons are that China is still under strict lockdown which affects their sell-through rate. Nvidia has also stopped selling products in Russia which has an important gaming market.

Nvidia, a pioneer of the GPU-accelerated computing, develops graphical processing unit (GPU) based computer chips and solutions for the gaming, professional visualization, data centre, and the automotive industries. Nvidia is attempting to redefine computer graphics, high-performance computing, and Artificial Intelligence.

For FY 2022, Nvidia’s revenue was $26.9 bl. Gaming accounted for 46.3 percent of revenue and data centres accounted for 39.4 percent. Professional visualization, automotive, OEM and other accounted for the remaining 14.2 percent. They are seeing a slowdown of growth in the gaming sector; but the demand for their data centres is continuing to grow rapidly. According to IOT analytics, a conservative estimate for total addressable public cloud market is expected to plateau at $600 bl. The current addressable market is $157bl.

Nvidia faces multiple challenges though. They operate in a highly competitive environment with significant regulatory hurdles. Last year, Nvidia attempted and failed to acquire ARM from Softbank, which resulted in a $1.36bl expense. The supply chain crisis has also prevented Nvidia from operating at its historic capacity.

Below is a table comparing certain key metrics for Nvidia:

Rolling 12-months ended EPS PE day after release of results ROE Net Margin
01-May-22 3.73 43 36.17% 32%
02-May-21 2.12 74 28.37% 28%

Disclosure: Nvidia is held in the Lunar BCI Worldwide Flexible Fund.

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The Lunar BCI Worldwide Flexible Fund Fact Sheet together with our Disclaimers can be read here.

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