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Navellier Outlook:
Taking Over the World,
AI Anxiety, Spring is Here

In his podcast addressing the current markets on February 22, Louis Navellier, Chief Investment Officer, Navellier & Associates, offers the following Market Commentary: Jensen Huang and Nvidia are taking over the world, AI Anxiety – AI is being increasingly blamed for job layoffs, Spring is Here – natural gas prices nearing a three-decade low.

Nvidia’s better-than-expected sales and earnings announcement on Wednesday, plus its strong guidance that the company was at a “tipping point” clearly signaled its AI dominance. The analyst community revised their consensus sales and earnings estimates higher before Nvidia’s announcement, which was a good sign that another sales and earnings was forthcoming. Here’s what I said on CNBC Asia on Tuesday evening before Nvidia’s announcement.

Founder and CEO, Jensen Huang and Nvidia are taking over the world. He said, “Accelerated computing and generative AI have hit the tipping point.” Huang added that “Demand is surging worldwide across companies, industries and nations.” In the fourth quarter, Nvidia’s sales surged 265.3% to $22.1 billion compared to $6.05 billion in the same quarter a year ago. During the same period, the company’s earnings soared 771.6% to $12.29 billion compared to $1.41 billion. Excluding extraordinary items, Nvidia’s operating earnings were $4.93 per share.

The analyst community was expecting sales of $20.4 billion and operating earnings of $4.20 per share, so Nvidia posted an 8.3% sales surprise and a 17.4% earnings surprise. Nvidia raised its first-quarter sales guidance to $24 billion, which was substantially higher than the analyst consensus estimate of $20.4 billion.

Interestingly, Google laid off 12,000 workers despite a record $20.4 billion in fourth-quarter earnings and AI is being increasingly blamed for these layoffs. These layoffs have sparked widespread concern among Google employees, not just about job security but also about the ethical implications of their work, especially as Google continues to invest heavily in advancing AI technology.

There is a growing apprehension that the push towards automation and AI could eventually lead to further job replacements, adding further to the anxiety of potentially more layoffs. Ironically, what is happening at Google is called “productivity,” since Google is learning to boost its earnings with fewer employees.

Spring has finally arrived in the Northern Hemisphere, so the demand for crude oil and refined products is expected to expand. As a result, crude oil demand is steadily rising. Brent crude oil prices are now over $80 per barrel and WTI crude oil prices are also on the verge of crossing over $80 per barrel. According to the Energy Information Administration (EIA), U.S. refineries are only operating at an 80.6% capacity as many refineries shut down for seasonal maintenance, as well as a reformulation shift to summer fuels. As a result, the prices at the pump are expected to remain high.

I should add that natural gas prices are now nearing a three-decade low since this Winter has been warmer than normal, so LNG exports are necessary to boost natural gas demand. The fact that the Biden Administration prohibited new LNG expansion still has the energy sector very upset. However, a new Trump Administration would almost certainly reverse Biden’s LNG expansion ban to further boost U.S. energy exports.

Interestingly, Shell is forecasting that LNG demand will surge 50% by 2040 as the world transitions to cleaner fossil fuels. Specifically, Shell said, “The global LNG market will continue growing into the 2040s, mostly driven by China’s industrial decarbonization and strengthening demand in other Asian countries.” I still find it very odd that the Biden Administration is trying to impede a booming U.S. industry that is helping to lower worldwide carbon dioxide emissions. The U.S. war against natural gas appliances is also very perplexing and would likely be stopped by a new Trump Administration.

I should add that Guyana President, Irfanne Ali, called for the “immediate” development of the country’s natural gas resources. Specifically, Ali said “The time to develop our gas is now” and added “There’s an immediate window of opportunity between now and the end of the decade to monetize and maximize” Guyana’s natural gas resources. Currently, Exxon-Mobil is injecting most of Guyana’s natural gas back into crude oil reservoirs as a waste product, which is cleaner than flaring the natural gas. Low natural gas prices in the U.S. are likely hindering expanding natural gas production in Guyana, but if the U.S. ban on LNG expansion is not lifted, Guyana would be the first place U.S. energy companies could look at to expand LNG exports.

Editor’s Note: Navellier & Associates is a money management firm that finds and exploits inefficiency in the market, uncovers what we believe to be the market’s best growth stocks and utilizes a disciplined quantitative and fundamental analysis system to deliver customized portfolio strategies for individual investors. For more information on Navellier & Associates and/or a portfolio evaluation, Click Here.

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