What Happened In The Stock Market This Week?
The much-anticipated earnings release for AI-chipmaker, NIVIDIA, were released this week, sending the company above $1,000 per share for the first time in the company’s history. The S&P 500 traded relatively flat this week. Pet supply and wellness company, Petco soared nearly 20% after the release of their earnings report. Meanwhile, AutoZone, Target, and Workday all fell after the release of their earnings report, with Target falling nearly 10% after lackluster revenue and earnings, missing expectations for the first time in almost two years after what they attributed to an increase in customer selectiveness due to inflation and high prices on discretionary goods. We’ll dive into all this in more detail below.
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NVIDIA Corporation ($NVDA):
Well, it happened…NVIDIA topped more than $1,000 in share prices after closing higher by 9.32% on Thursday, after the release of their latest earnings report during the post-market session on Wednesday. The company reported earnings of $6.12 per share, topping estimates of $5.59 per share. The chipmaker also reported revenue of $26.04B, which topped expectations of $24.65B. Net income surged year-over-year for the company to $14.88B, compared with $2.04B last year during the same period. The company also announced a 10-1 stock split as part of their earnings release. Sales for the company in the last year have been primarily driven by large companies such as Google, Microsoft, Meta, Amazon, and OpenAI purchasing billions of dollars of the company's much-sought-after graphics processing units, which are required to develop and launch artificial intelligence applications. NVIDIA said its data center category rose 427% year-over-year in the most recent quarter to $22.6B in revenue. Company CFO, Colette Kress said that this was due to shipments of the company's new Hopper graphics processors, which include the company's H100 GPU. She stated, "A high highlight this quarter was Meta's announcement of Lama 3, their latest large language model which used 24,000 H100 GPU's." Company CEO, Jensen Huang said the company is poised for even more growth due to its next-generation AI GPU, Blackwell. He stated, "We will see a lot of Blackwell revenue this year." The company has bought back $7.7B in common stock and paid $98 Million in dividends during the most recent quarter. The company also announced a dividend increase from $0.04 per share to $0.10 per share on a pre-split basis. After the split, the dividend will go to $0.01 per share. Company CEO, Jensen Huang, said in the latest earnings report, "The next industrial revolution has begun -- companies and countries are partnering with NVIDIA to shift the trillion-dollar traditional data centers to accelerated computing and build a new type of data center -- AI factories -- to produce a new commodity: artificial intelligence...Ai will bring significant productivity gains to nearly every industry and help companies be more cost and energy efficient, while expanding revenue opportunities." "Our data center growth was fueled by strong and accelerating demand for generative AI training and inference on the Hopper platform. Beyond cloud service providers, generative AI has expanded to consumer internet companies, and enterprise, sovereign AI, automotive and healthcare customers, creating multiple multibillion-dollar vertical markets." "We are poised for our next wave of growth. The Blackwell platform is in full production and forms the foundation for trillion-parameter-scale generative AI. Spectrum-X opens a brand-new market for us to bring large-scale AI to Ethernet-only data centers. And NVIDIA NIM is our new software offering that delivers enterprise-grade, optimized generative AI to run on CUDA everywhere -- from the cloud to on-prem data centers and RTX AI PC's -- through our expansive network of ecosystem partners." Each record holder of common stock as of the close of market on June 6th, will receive nine additional shares of common stock, to be distributed after the close on June 7th. Trading will commence on a split-adjusted basis at market open on June 10th.
Target Corporation ($TGT):
Shares of Target tumbled more than 8% during the market session on Wednesday after the grocery store supercenter chain posted a year-over-year sales decline and missed on earnings. The company attributed this to consumers being increasingly modest on high priced goods, and discretionary goods, as well as groceries. Target reported earnings of $2.03 per share, falling short of expectations of $2.06 per share. The company posted revenue of $24.53B, falling just in-line with expectations of $24.52B. This is the first time since November of 2022 that Target missed earnings expectations. The company announced on Monday that they would cut prices on everyday items such as milk, bread, paper towels, and diapers. The company maintained its full-year outlook, saying it expects comparable sales will range from flat to up 2%, and adjusted earnings per share will be $8.60 to $9.60. Target is trying to win over consumers who are not spending as freely on clothing, home goods and other discretionary items. Customer traffic dropped by nearly 2% during the latest quarter, with average ticket prices for customers also dropping by nearly 2%. Same-store sales fell 3.7% in the most recent quarter, but that was in-line with expectations. Company CEO, Brian Cornell, said in the latest earnings report, "Our topline performance improved for the third consecutive quarter, with growth in our digital business led by strength in our same-day fulfillment services. Consumers continue to respond to the newness and value that we offer across our shopping experience, and we're pleased with early results from the relaunch of Target Circle. Looking ahead, our team will deliver for our guests through lower prices, a seasonally relevant assortment, ease and convenience, as we keep investing in our strategy and efficiency initiatives to get back to growth and deliver on our longer-term financial goals."
Petco Health and Wellness Company Inc. ($WOOF):
Shares Petco went soaring during the market session on Wednesday and closed higher by 17.55% after the release of the company's latest earnings report. The company beat expectations on revenue and earnings posted revenue of $1.53B topping expectations of $1.51B and posting EPS of -$0.04 against expectations of -$0.06. Same-store sales were down 1.2% year-over-year and free cash flow also decreased by roughly $16 Million year-over-year, bringing their total free cash flow figure to -$41.06 million. Net revenue has decreased 1.7% year-over-year to $1.5B, and operating cash flow has decreased year-over-year from $37.7 Million, to -$8.4 million. Interim company CEO, Mike Mohan, said in the latest earnings report, "In Q1 we made meaningful progress against our strategy to reposition the business for sustainable and profitable growth...The underlying value proposition of this iconic and trusted brand remains strong, and I'm confident that a renewed focus on retail fundamentals and effective delivery of cost transformation will restore profitability and amplify the competitive advantages of our differentiated approach within the pet category."
Macy's Inc. ($M):
Shares of Macy's closed higher by 5.13% on Tuesday, after the release of the company's latest earnings report that morning. The fashion retailer/department store topped expectations on earnings, and nearly met expectations on revenue for the most recent quarter. Macy's reported earnings of $0.27 per share, nearly doubling what expectations were set at, which was $0.15 per share. The company reported quarterly revenue of $4.85B, barely falling short of estimates of $4.86B. Not all was good for Macy's, however, as their Q1 income fell 60% to just $62 Million, compared with $155 Million during the same quarter from the previous year. The company is currently undergoing a "turnaround" strategy for both its brick-and-mortar locations as well as its online segment. As part of this turnaround strategy, the company is attempting to get smaller as it tries to grow its sales again. The company is planning to close roughly 150 of its stores this year, including Bloomingdale's and Bluemercury locations. That would be more than 25% of its total operating locations. The company also plans to open smaller locations in suburban strip malls. The company is also attempting to attract more customers, namely younger ones, by launching new exclusive brands and overhauling existing ones. The company is currently valued at $5.53B, and has traded relatively flat for 2024, falling well short of the 11% gain of the S&P 500 during the same time frame. Company CEO, Tony Spring, said in the latest earnings report, "We are encouraged by our customers' response to our Bold New Chapter strategy resulting in sales near the high end of our outlook...Although early days, our investments in product, presentation, and experience are gaining traction and reinforce our belief that longer-term, Macy's, Inc. can return to sustainable, profitable growth."
Workday, Inc. ($WDAY):
Shares of Workday plummeted more than 15% during the market session on Friday. This comes after the release of the company's latest earnings report during the post-market session on Thursday. The company reported earnings that missed analyst expectations and narrowly beat revenue expectations. The company also gave weak guidance on subscription revenue for the next quarter and the full year. The company posted revenues of $1.99B, narrowly beating estimates, but marking an 18.1% year-over-year increase. Subscription revenue was also up more than 18% year-over-year. Operating income came in at $64 Million for the most recent quarter, compared to a loss of $20 Million during the same quarter from the previous year. Operating cash flow came in at $372 Million, compared to $277 Million during the same period from the previous year, and free cash flow came in at $291 Million, up from $218 Million during the same period from the year prior. The company also repurchased 500,000 shares of its common stock during the latest quarter, worth $134 Million. Cash and cash equivalents for the company were at $7.18B as of the last day of April. Workday is currently used by more than 60% of the Fortune 500, including HPE, KeyBank, Salesforce, and Unum. The company also announced that the Defense Intelligence Agency (DIA) has selected Workday Government Cloud to support its mission to rapidly accelerate recruitment and onboarding efforts. Company CEO, Carl Eschenbach, said in the latest earnings report, "With the emergence of Generative AI, the shifting talent landscape, and pressure to realize operational efficiencies., Workday has never been more relevant. Our strong value proposition, investments in key growth initiatives, and leadership in AI are paying off as more organizations turn to Workday to manage their two most important assets -- their people and money."
AutoZone, Inc. ($AZO):
Shares of AutoZone closed 3.53% lower on Tuesday, after the release of the company's latest earnings report that morning. The global auto-parts retailer reported earnings of $36.69 per share for the most recent quarter, which marks a 7.5% year-over-year increase. These earnings posting, topped expectations, which were set at $35.72 per share. Net sales also grew for the company by 3.5% year-over-year. During the most recent quarter, AutoZone opened 32 new stores in the United States, 12 new stores in Mexico, and 1 in Brazil. This makes 6,364 stores in the United States, 763 in Mexico, and 109 in Brazil, bringing the company's global store count to a whopping 7,236 locations. The company reported cash and cash equivalents of $275.4 Million, down from $277.1 Million from August of last year. Its total debt increased by nearly $1B, rising from $7.67B from August of last year, to its current amount of $8.5B. The company also announced plans to repurchase 242,000 shares of common stock for a total of $737.7 Million. Company President and CEO, Phil Daniele, said in the latest earnings report, "Domestically, our sales performance was negatively impacted at the start of the quarter due to timing of tax refunds while the cooler than usual weather across several areas of the country negatively impacted our results later in the quarter. Conversely, we were pleased with the strong same store sales results we achieved in our international business...As we continue to invest in our business, we remain committed to our disciplined approach of increasing operating earnings and cash flow and delivering strong shareholder value."
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Resources:
$NVDA:
https://www.cnbc.com/2024/05/22/nvidia-nvda-earnings-report-q1-2025-.html
https://nvidianews.nvidia.com/news/nvidia-announces-financial-results-for-first-quarter-fiscal-2025
$TGT:
https://www.cnbc.com/2024/05/22/target-tgt-q1-2024-earnings.html
https://corporate.target.com/press/release/2024/05/target-corporation-reports-first-quarter-earnings
$WOOF:
https://finance.yahoo.com/news/petco-nasdaq-woof-beats-q1-110937653.html
$M:
https://www.cnbc.com/2024/05/21/macys-m-q1-2024-earnings.html
https://www.macysinc.com/investors/financials/quarterly-results/default.aspx
$WDAY:
https://finance.yahoo.com/news/why-workday-wday-shares-falling-160312367.html
$AZO:
https://finance.yahoo.com/news/autozone-azo-pulls-off-surprise-152600137.html
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