Canada Stops a Train Wreck, Nvidia and More (original) (raw)

Let's look at the impact of the rail stoppage and Evercore ISI's views on Nvidia and this PC trend.

As we await Fed Chair Jerome Powell's Jackson Hole comments, we have want to discuss Canada's rail crisis, Nvidia (NVDA) and personal computer shipments.

Canada Stops the Pain

The Canadian government has moved to curtail what is being labeled as an unprecedented rail stoppage. While this is good news, comments from Canadian National (CNI) indicate it will take a week or more to catch up on shipments. This suggests we could see a softer second half of August when we compare S&P Global’s final August PMI data with yesterday’s flash findings. But it also means a potential risk to the economy and renewed inflation pressures have been averted.

Evercore's Bullish on Nvidia

Evercore ISI raised its Nvidia price target this morning to 150from150 from 150from145 citing big tech capital spending on data centers as a key indicator of demand. It's a good point, but not exactly a new one. Nvidia shares have had a remarkable run since bottoming out on Aug. 7 and that’s been a boon for the portfolio. Given capital spending comments from big tech so far this earnings season and signs of rising adoption of artificial intelligence from ServiceNow (NOW) and others, we expect Nvidia to once again deliver next week. If we see signs Nvidia’s second half of 2024 earnings per share is poised to grow faster than market consensus' implied 17% growth compared to the first half of 2024, it would be a factor prompting us to boost our NVDA price target that currently resides at $148.

Evercore Ups PC Outlook

Evercore yesterday also lifted its outlook for second-half of 2024 PC demand. But the strange part is this also feels out of date. Evercore cited the "AI on PC" tailwind that we’ve already been discussing for Qualcomm (QCOM) . Evercore sees that trend as a bigger tailwind in 2025. When we dig into quarterly results next week from HP (HPQ) and Dell (DELL) and the guidance for the second half of the year, we will examine the AI-on-PC expectations and see if they are a catalyst for QCOM as well as Microsoft (MSFT) shares.

At the time of publication, the Pro Portfolio was long NVDA, QCOM, and MSFT.