How investors can trade AI after Nvidia's earnings report
Speakers
Josh Brown
— CEO, Ritholtz Wealth Management
Malcolm Ethridge
— CIC Wealth Executive Vice President
Summary
CNBC's Halftime Report Investment Committee discusses Nvidia's earnings and AI trading ideas. Josh Brown is bullish on Nvidia targeting $250. Malcolm Etheridge favors industrial automation stocks as AI infrastructure beneficiaries. The market reaction is subdued due to high pre-earnings expectations.
- Nvidia reported strong revenue growth and guidance.
- Stock was up pre-earnings and consolidating after results.
- Josh Brown expects Nvidia to reach $250.
- Malcolm Etheridge highlights industrial plays like Rockwell and Teradyne.
- Backlogs at industrial companies surged to 34% year-over-year.
- Marvell was mentioned as a smaller position by Josh Brown.
- China exposure remains uncertain for Nvidia.
- Derivative AI trades are in focus.
Trade Ideas
Nvidia still going to 250.
Nvidia (NVDA) is still going to 250. The stock trades at 18 times forward earnings with 83% expected growth. The guide beat by $4-5B, justifying the pre-earnings rally. The stock will digest for a day or two then take off again. I wouldn't sell.
Bought Marvell; expecting gains.
I bought Marvell (MRVL) and it is up. No further detailed thesis provided but the mention indicates a position.
Buy industrial AI beneficiaries.
I am inclined to buy more industrial plays exposed to AI infrastructure, specifically Rockwell Automation (ROK), Teradyne (TER), Quanta Services (PWR), Eaton (ETN), Caterpillar (CAT), and Vertiv (VRT). The thesis: Nvidia's data center revenue (up 115% hyperscale, 74% AI cloud/industrial), physical AI at $9B, supports robotics and industrial automation. Backlogs at these companies are up 34% Y/Y vs historical 3-5%, providing extreme visibility.
