39: Dollar Gets Jacked, House Prices Falling, NVIDIA

Welcome to Sunday Edition, where I cover the markets, economy, and uncover hidden gems across the internet.

What's New

Quote of the week

"Did you ever consider how ridiculous it would be to try to cram on a farm—to forget to plant in the spring, play all summer and then cram in the fall to bring in the harvest? The farm is a natural system. The price must be paid and the process followed. You always reap what you sow; there is no shortcut."

Stephen R. Covey, The 7 Habits of Highly Effective People

Markets

The S&P 500 is flat while the Nasdaq is up 1.4%. Oil, Gold, and Copper are all down this week. The Nasdaq still reigns supreme on a 5y basis at 158%.

The 500 is chilled this week at ATH.

Economy

The Dollar Grows Stronger

There's always so much talk about the destruction of the US dollar. I'm not buying it, and neither is the data. Below you'll see the Real Broad Dollar Index dating back to 2014.

Median House Price in US Stalls

Great news for first-time home buyers. With the big increase from 2020 to late 2022, the cooled housing market is a welcome sight. I hope we'll see home prices stay at this level or even fall a little bit in the future.

Economy Note

I often hear about how the world is going to hell in a handbasket. The thing is, the data seems to point to the fact that things are humming along. For this reason I'm not watching the news, or even spending a whole lot of time on social media. Negativity and fear get a lot of clicks and shares. This particular newsletter does not, because I'm choosing to share how reality works, and not focus on the shallowness of sensationalism. It's why the above data are shown in 10 year snapshots, so you and I get a good idea of how the world is evolving. If we focus on the day-to-day changes, we'll worry our heads off.

Sectors

Information tech got a bump this week, signaling investors' confidence in the market.

Company Updates

NVIDIA Kicks Ass

Financial Performance

  • Q1 2025 revenue reached $26 billion, up 18% sequentially and 262% year-on-year, exceeding the outlook of $24 billion. 
  • Data Center revenue hit a record $22.6 billion, up 23% sequentially and 427% year-on-year. 
  • GAAP gross margin for Q1 expanded to 78.4%, with non-GAAP gross margins at 78.9%. 
  • In Q1, $7.8 billion was returned to shareholders through share repurchases and cash dividends. 
  • A 10-for-1 share split was announced, effective June 10, along with a 150% increase in dividends. 

Data Center

  • Strong demand for NVIDIA Hopper GPU computing platform drove data center growth. 
  • Compute revenue grew over 5x and networking revenue more than 3x from last year. 
  • Large cloud providers represented mid-40s percentage of Data Center revenue. 
  • AI training and inferencing on NVIDIA CUDA accelerated cloud rental revenue growth. 
  • Enterprises and consumer Internet companies contributed to strong sequential growth. 
  • Over 100 customers are building AI factories with NVIDIA GPUs, ranging from hundreds to tens of thousands of GPUs. 
  • Sovereign AI revenue is expected to approach high single-digit billions this year. 

Product Updates

  • Hopper GPU architecture drove the majority of compute revenue. 
  • H200 system, doubling inference performance of H100, is in production. 
  • Grace Hopper Superchip is shipping in volume, powering new supercomputers globally. 
  • Strong networking growth driven by InfiniBand and new Spectrum-X Ethernet solution. 
  • Blackwell GPU architecture, launched in March, offers 4x faster training and 30x faster inference than H100. 

Gaming and AI PCs

  • Gaming revenue was $2.65 billion, down 8% sequentially but up 18% year-on-year. 
  • GeForce RTX GPUs are optimized for generative AI applications on PCs. 
  • NVIDIA and Microsoft announced AI performance optimizations for Windows. 

Professional Visualization (ProViz)

  • ProViz revenue reached $427 million, down 8% sequentially but up 45% year-on-year. 
  • Generative AI and Omniverse industrial digitalization expected to drive future growth. 
  • New Omniverse Cloud APIs announced for industrial digital twin and simulation technologies. 

Automotive

  • Automotive revenue was $329 million, up 17% sequentially and 11% year-on-year. 
  • Growth driven by AI cockpit solutions and self-driving platforms. 
  • New design wins for NVIDIA DRIVE Thor with leading EV makers. 

2025 Outlook

  • Q2 revenue expected to be $28 billion, plus or minus 2%. 
  • Sequential growth anticipated across all market platforms. 
  • GAAP and non-GAAP gross margins projected at 74.8% and 75.5%, respectively. 
  • Full-year GAAP and non-GAAP operating expenses expected to grow in the low 40% range. 

Management Commentary

  • The next industrial revolution is underway, shifting traditional data centers to AI factories. 
  • Generative AI is transforming computing from information retrieval to answers and skills generation. 
  • Blackwell platform and Spectrum-X are poised for the next wave of growth. 

Portfolio

Still chugging along. I feel pretty good about this portfolio, but I'm eyeballing another company to add. Stay tuned.

QTD % YTD % 1 Year % Since Inception Annualized
S&P 500* 1.2 11.9 29.8 25.0 11.9
Portfolio -0.2 7.3 30.5 48.8 23.2
Performance data is indicative and should not be considered as advice. *S&P500 includes dividends reinvested. Inception date: 2022-04-18.

Here is the current portfolio:

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