Nvidia Earnings Preview: Stephanie Link on Market Trends and Stock Picks

Nvidia's Upcoming Earnings

• 💡 Nvidia is the most watched stock this week, representing 6% of the S&P 500.
• ⚠️ Stephanie Link anticipates a messy quarter for Nvidia due to China restrictions and H2O issues impacting guidance, potentially a 10% hit.
• 📉 Slower rack production and power consumption issues are also contributing factors, though the stock has recovered 36% from April lows.
• 📌 The core issue is identified as a supply problem, not a demand problem, with estimated earnings power of $5 this year.

Costco's Performance and Valuation

• 🛒 Although Stephanie Link doesn't own Costco, she notes it's a behemoth expected to report good earnings, with April same-store sales up 6.7% and worldwide traffic up 4.2%.
• 📈 Costco typically sells off on earnings news, and a significant dip would be an opportunity to buy the stock.
• 💰 The stock is trading at 50 times earnings, considered expensive, but justified by 80-85% recurring revenue from membership fees.

Gap's Turnaround Strategy

• 🎯 Stephanie Link owns Gap, which is up 22% year-to-date, largely due to CEO Richard Dixon's turnaround efforts.
• 🎨 The company is seeing improved creativity in products under creative director Zack Posen, leading to gained market share for seven consecutive quarters.
• 📈 Trading at 12 times forward earnings with a 2.3% yield, Link would consider adding to the position if the stock pulls back.

Macro Environment and Investment Strategy

• 📊 Stephanie Link has reduced her cash position from 9% to 2% over the last few months.
• 💰 Her strategy involves dollar-cost averaging on weekdays, indicating a bullish stance despite market fluctuations.