1) I feel like a broken record commenting on Nvidia's (NVDA) latest earnings...
After the market close yesterday, the chipmaker reported another stunning quarter.
Revenue soared 22% from the previous quarter and 62% year over year ("YOY"). Adjusted earnings per share jumped 24% from the previous quarter and 60% YOY. They came in at $1.30, modestly surpassing estimates of $1.26.
The company also gave strong guidance. Revenue is expected to grow around 14% next quarter and 65% YOY to around $65 billion, above Wall Street estimates of $62 billion.
Needless to say, these are staggering numbers. And the stock jumped as much as 5% this morning in response. (But since then, it has pulled back along with the rest of the market.)
Coming into earnings, analysts expected Nvidia to earn around $4.57 per share for its current fiscal year ending in January and $6.83 next year. With yesterday's strong earnings and guidance, these estimates are likely to raise to around $4.65 and $7, respectively.
So with the stock opening this morning around $196, that meant it was trading at about 42 times current-year earnings and 28 times next year's.
Those are rich multiples. But they're not at all crazy for a company this dominant, profitable, and fast-growing. In fact, if Nvidia keeps growing anywhere near the rate it has been the past few years, its stock could be considered downright cheap now.
But that's a big "if"... There are plenty of competitors emerging. And even if Nvidia maintains its market share and margins, it's hard to see how artificial-intelligence ("AI") spending can be maintained at current levels, much less increased.
To understand the recent turmoil in the sector, take a look at these two articles about the struggles of major AI companies Oracle (ORCL) and CoreWeave (CRWV), both of which are "swimming in debt":
- Wall Street Journal: Oracle Was an AI Darling on Wall Street. Then Reality Set In.
- Bloomberg: CoreWeave's Worst-Ever Week Shows AI Traders Are Getting Picky
In summary, I'll repeat what I wrote after Nvidia's earnings report in February...
Nvidia is the kind of stock I like to pound the table on when it's down at least 50% (if not 75%). So I wouldn't go out and buy it today.
But in that same e-mail, I also noted that if I owned Nvidia, I wouldn't sell. (On September 5, 2024, I detailed how to handle this sort of "high-class problem" with a stock like Nvidia.)
As I've said many times before, you must let your winners run!
2) One of the biggest buyers of Nvidia's chips is Alphabet (GOOGL). Its Google division is using them to develop more and more advanced AI models, such as the new Gemini 3.
Google CEO Sundar Pichai posted about Gemini 3 on social platform X, including a 52-second video:
This post on Google's blog includes more details and two additional videos. Excerpt:
Nearly two years ago we kicked off the Gemini era, one of our biggest scientific and product endeavors ever undertaken as a company. Since then, it's been incredible to see how much people love it. AI Overviews now have 2 billion users every month. The Gemini app surpasses 650 million users per month, more than 70% of our Cloud customers use our AI, 13 million developers have built with our generative models, and that is just a snippet of the impact we're seeing...
Every generation of Gemini has built on the last, enabling you to do more. Gemini 1's breakthroughs in native multimodality and long context window expanded the kinds of information that could be processed – and how much of it. Gemini 2 laid the foundation for agentic capabilities and pushed the frontiers on reasoning and thinking, helping with more complex tasks and ideas, leading to Gemini 2.5 Pro topping LMArena for over six months.
And now we're introducing Gemini 3, our most intelligent model, that combines all of Gemini's capabilities together so you can bring any idea to life.
For readers who really want to get into the weeds, tech investor Gavin Baker posted an in-depth analysis on X covering Gemini 3 and AI's current trajectory.
He covers in detail how models and costs have improved, that Nvidia's Blackwell chips are surpassing China's, the return on investment for AI, and more. And he concludes:
All of this suggests that we are still very early in AI...
[The release of Gemini 3] will be just one datapoint in what I think will be a decade of steady AI progress. Exciting times!
Honestly, a lot of the tech jargon in his post goes right over my head. But the reviews of Gemini 3 are excellent.
And as I discussed on November 7, I continue to use Google exclusively for searches (rather than ChatGPT, despite paying $20 per month for it) because the Gemini results at the top of the page almost always give me the information I need.
GOOGL is up 55% this year, far exceeding the other Magnificent Seven stocks. Despite this big run-up, I continue to view the stock favorably.
3) I've been pounding the table on the "miraculous weight-loss drugs" for years. They offer hope (and health) to the 74% of Americans who are overweight, especially the 43% who are obese.
I personally know more than a dozen people on these drugs, and the results have been nothing short of miraculous for almost all of them. One friend, who weighed 280 pounds, has lost more than 100 pounds. He says it has transformed his life.
Almost all overweight/obese people would benefit from these drugs, but their high cost and lack of insurance coverage have been huge barriers. So I was delighted to see this news on CNBC two weeks ago:
President Donald Trump on Thursday announced deals with Eli Lilly (LLY) and Novo Nordisk (NVO) to slash the prices of some of their obesity drugs, including upcoming pills, in a landmark effort to expand access to the costly blockbuster treatments.
The agreements will cut prices of so-called GLP-1 drugs for Medicare and Medicaid beneficiaries in 2026 and offer the treatments directly to consumers at a discount on a website the Trump administration is launching in January called TrumpRx.gov.
That means Medicare will start covering obesity drugs for some patients for the first time starting mid-2026, a long-awaited move that could broaden the market for the medicines and spur more private insurers to cover them. Certain Medicare patients will pay a copay of $50 per month for all approved uses of injectable and oral GLP-1 drugs, including diabetes and obesity treatment.
Starting doses of upcoming obesity pills from Eli Lilly and Novo Nordisk, pending approvals, will be $149 per month for everyone getting them through Medicare, Medicaid or TrumpRx...
As a result, these weight-loss drugs are about to go mass-market, as this WSJ article details:
[Eli Lilly and Novo Nordisk] could roughly double their pool of covered patients, moving beyond Americans who currently buy the drugs out of pocket or through generous private insurance. In other words, the obesity market is shifting from the Upper East Side, where the drugs are wildly popular, to Main Street America. Bernstein estimates that the Medicare deal opens up a market of about 30 million people, which represents an opportunity of about $27 billion in annual sales.
I've written 20 times about Eli Lilly, starting more than three years ago. It has the best drug in the class, tirzepatide, which is sold under the brand names Mounjaro (approved for Type 2 diabetes) and Zepbound (approved for weight loss).
I (mistakenly) thought the stock was too expensive during most of this period. But when it pulled back sharply from its March 2025 highs, my colleague Dave Lashmet and I handed it to my readers on a silver platter on September 25. And at the same time, Dave warned that Pfizer (PFE) was "desperate" and wildly overpaid for its acquisition of Metsera.
It was a great call. In less than two months, LLY has soared by 47% while PFE has remained flat:
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.