Welcome to the first top stock market highlights of the month from The Smart Investor.
May was a busy month with the release of the latest quarterly results and business updates from numerous companies in Singapore and the US.
We have taken the liberty of selecting the most relevant news and summarizing it here in case you missed it.
This month we feature several popular US growth stocks.
These stocks are moving the US market and driving the NASDAQ Composite Index to a new record high.
Meanwhile, the US Federal Reserve also gave its latest indications as to whether it plans to cut interest rates or keep them “higher for the longer term”.
Nvidia (NASDAQ: NVDA)
Nvidia has once again released outstanding results for the first quarter of fiscal year 2025 (1Q FY2025), which ends April 28, 2024.
Sales reached $26 billion, a record high, more than tripling from the previous year.
Operating profit was $16.9 billion, up 690% from $2.1 billion a year ago.
Net profit amounted to 14.8 billion US dollars, more than seven times the previous year.
Free cash flow increased more than fivefold year over year, from $2.7 billion to $15 billion.
CEO Jensen Huang explained that companies and countries are working with Nvidia to move to accelerated computing and that they are building a new type of data centers called AI factories to produce a new commodity called AI.
He also believes Nvidia is ready for the next wave of growth with its Blackwell platform in full production, which will ultimately form the foundation for advanced generative AI.
In line with the blockbuster results, the company announced a 1:10 stock split effective June 7, 2024.
Nvidia also increased its quarterly dividend 150% year-over-year to $0.01 after the split.
The company’s accelerated computing ecosystem has attracted a significant number of developers and AI startups to support more AI applications, thereby contributing to more innovation in the industry.
There were 2.5 million developers in 2021, but that number more than doubled to 5.1 million in Q1 2024.
While there were 7,000 AI startups in 2021, this number has almost tripled in just three years – to 19,000.
For the second quarter of fiscal 2025, Nvidia expects revenue of $28 billion, plus or minus 2%.
If the forecast comes true, it would be more than double the $13.5 billion in revenue generated in the second quarter of fiscal 2024.
Following the results release, Nvidia shares closed at a new all-time high of $1,038, representing an increase of over 115% since the beginning of the year.
Alphabet (NASDAQ:GOOGL)
There were many exciting announcements at I/O, Google’s annual developer conference in Mountain View, USA.
The highlight of the session was the words “artificial intelligence” or AI, which Alphabet CEO Sundar Pichai uttered 121 times.
The core of the event was to embed AI into every Google app and service used by nearly two billion people around the world.
First, the company announced a brand new AI model called Gemini 1.5 Flash, which is optimized for speed and efficiency.
Flash was developed because developers wanted a lighter and less expensive model to build AI-powered apps compared to Gemini Pro.
There is more.
This year, Google plans to double Gemini’s context window from the current one million tokens to two million. This will allow the software to process two hours of video and 22 hours of audio while writing more than 60,000 lines of code.
The company also introduced its latest universal assistant called “Project Astra”.
In a posted video, which Google says was shot in a single shot, the assistant has a natural conversation with the user about various aspects of real life and even reminds the user where they left their glasses.
The glasses themselves are equipped with an integrated camera system that is synchronized with Project Astra, allowing the user to connect seamlessly with the AI even without a phone.
Additionally, further upgrades to Google Photos were introduced that allow for more complex queries and generate more specific search results with the ability to caption those photos before publishing on social media.
Google Search itself is undergoing a major overhaul to enable complex questions and display AI-generated answers in addition to standard search results.
Microsoft (NASDAQ:MSFT)
Still on the topic of AI investments: Microsoft has also thrown its hat into the AI ring.
The software giant plans to invest $2.2 billion in building digital infrastructure in Malaysia.
This money will also be spent over a period of four years and will be used to build the infrastructure for cloud computing and AI services.
The news was confirmed last week by Microsoft CEO Satya Nadella during a visit to Kuala Lumpur.
As part of its investment, the software company will also train 200,000 people in Malaysia in AI while working with the government to strengthen the country’s cybersecurity capabilities.
This $2.2 billion investment is the largest in Microsoft’s 32-year presence in Malaysia and illustrates the company’s efforts to compete with other cloud giants for dominance.
Nadella has touted artificial intelligence as a growth engine and promised to invest at least $7 billion to expand the company’s services from Japan to India.
And to top it all off, Microsoft will also train a total of 2.5 million people in Southeast Asia in AI skills by 2025.
During his trip to Southeast Asia, Nadella also announced a $1.7 billion investment in Indonesia. In addition, he will invest in Thailand to help build AI cloud and digital infrastructure.
With these investments from Amazon and Microsoft, the future looks bright for many countries in Southeast Asia, as this money will not only stimulate new industries in the region but will also create numerous jobs and thus help boost the economy.
US interest rates
The interest rate debate has become even more confusing following the recent speech by Jerome Powell, Chairman of the US Federal Reserve.
On the one hand, he stated that the country probably does not need another interest rate hike to curb inflation.
However, he avoided giving a timetable for possible future interest rate cuts.
Central bank policymakers again left key interest rates unchanged in the range of 5.25 to 5.5 percent and would need very convincing evidence that inflation is not falling to persuade them to raise rates.
This announcement left investors virtually uncertain as to when and to what extent rate cuts would occur for the remainder of 2024.
To be fair, the Federal Reserve has stated that it will continually review all economic data before making a decision.
Given the data collected so far, policymakers are not yet confident enough to begin cutting interest rates, as inflation has not yet fallen significantly to the two percent target.
Private consumption expenditure rose 2.7 percent in March compared with the same period last year, an acceleration from the 2.5 percent increase in January.
This so-called “lack of further progress” in reducing inflation may reflect the difficulty of designing policies to achieve specific economic objectives.
Of course, these policymakers are also keeping an eye on the health of the economy.
If there is an unexpected slowdown in the labor market, Powell is prepared to lower borrowing costs to stimulate the economy.
But at present, bets on a rate cut later this year are invalid.
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Disclosure: Royston Yang owns shares of Alphabet.
The post “Top Stock Market Highlights in May 2024: Nvidia, Google, Microsoft and US Interest Rates” first appeared on The Smart Investor.
