For Immediate Release

Chicago, IL – July 23, 2024 – Zacks Equity Research shares NVIDIA (NVDA Quick QuoteNVDA - Free Report) as the Bull of the Day and CrowdStrike (CRWD Quick QuoteCRWD - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Amplify Energy Corp. (AMPY Quick QuoteAMPY - Free Report) , Great Lakes Dredge & Dock Corp. (GLDD Quick QuoteGLDD - Free Report) and LendingTree, Inc. (TREE Quick QuoteTREE - Free Report) .

Here is a synopsis of all five stocks:

Bull of the Day:

I last looked at NVIDIA as the Bull of the Day after another stunning beat-and-raise quarter, reported on May 22, launched the stock from $95 ($950 pre-split) to my price target of $140 ($1,400 pre-split).

We knew the new Grace-Blackwell "super-GPU" was coming, but apparently investors and analysts needed to hear it from Jensen himself that the demand and deliveries were going to be off the charts by Q4.

Tectonic Shift to AI Economy

The other huge dynamic we learned on the conference call with Jensen on May 22 essentially put to rest the idea that "cannibalization" was about to occur as datacenter and LLM-builders would stop buying older systems like the GH200 because they wanted to wait for the GB200.

Here's what I wrote to my investor group on May 23 as we sat back and enjoyed the rocket launch...

TAZR Traders

You know the good news on NVDA: Wall Street continues to capitulate to the "tectonic shift" that has occurred with AI/ML/DL as more price targets play catch-up to our $1200...

Even as I raise mine to $1400 for the next 18 months.

And even as everyone and their Grandpa wring their hands about the NVDA market cap being worth more than half the world.

If you follow me on Twitter @KevinBCook you got to see the stunning "chapter and verse" from Jensen on the conference call yesterday... with all the analysts trying to find a fly in the ointment.

I used Otter.AI to transcribe the whole thing and will share more over the coming days... what a sermon Master Huang delivered!

It made me coin a new phrase about how he abolished the fear of "cannibalization" during this Global 2,000 -- plus nation-states -- deployment transition from GH200 to GB200 systems...

"Multiplicative Integration."

Jensen didn't say this, but this is what I felt he was talking about. I actually posted his final 5-paragraph "mic drop" because it captured the essence of the technological transformation we are in for science, industry, medicine, education, and society.

Jensen & Co. systems have "the transition" covered with TCO (total cost of operations) fully seamless -- and bootstrapped -- on the upgrades to the Blackwell platform.

Corporations won't have to worry about how the current GH200 systems integrate with the new Blackwell systems because Jensen and his top-tier CUDA engineers have already built that seamless transition into everything.

(end of TAZR commentary excerpt from May 23)

Huang's Law > Moore's Law

Then in the first week of June came the annual Computex conference in Taiwan. And Jensen made it clear that the Acceleration of GPU computing was driving down nearly all Costs, including Energy usage, and providing powerful platforms for Science, Smart cities, and Simulation.

The oddly capitalized words in my previous sentence make up a new handy acronym I devised for technology investors to memorize when trying to understand the revolution that NVIDIA has birthed: ACESx3 is for Acceleration-Cost-Energy-Science-Smart-Simulation.

This is how I remember the power of NVIDIA, and the exponential reasons for staying invested in NVDA shares. And all of these letters stand for one of the most powerful ACESx3 innovations for human kind: advances in medicine and cures for our worst diseases.

After Computex, and the NVDA 10-for-1 stock split which took effect on June 10, I raised my price target to $200. I had already told investors (and savvy traders) in May that the gap up from $95 ($950 pre-split) was likely never going to be filled (barring WWIII).

Here was my commentary for Zacks TAZR members...

NVDA to $200
Posted on 6/10/24

TAZR Traders

This morning we taped the Zacks Ultimate Strategy Session (ZUSS).

My Top Stock Pick was, of course, NVIDIA.

And I tried to cram a lot (too much) into my 10-minute segment, but of course got lost along the way.

I neglected to reiterate the emerging potential of Jensen's roadmap to $1 trillion in annual revenues by 2030 (a slide I showed you from last November).

And then I forgot to speak this key statement from my weekend notes that sums up my "No Cannibalization, Just Multiplicative Bootstrapping Integration" (that I introduced last week during Computex)...

"ALL OLD and NEW DGX-GPU systems BENEFIT FROM CUDA SOFTWARE UPGRADES, SUCH THAT ALL PREVIOUS GENERATION CHIP-SETS ACTUALLY GET FASTER!"

This is way beyond the "backward compatibility" thesis, so it gets lost on most analysts.

This is built-in "acceleration multiplicity."

To say that the NVIDIA stack of enlightened software that extracts the most from the accelerated hardware is "an exponential event-horizon for enterprise and science" is the understatement of the decade.

We may not like what Meta, Google, and Amazon do with this massive data-power over society, but the genie is long out of the bottle.

Now, we're aboard the ETI (Exponential Technology Innovation) Rocket that I previewed in 2017 in my Technology Super Cycle thesis.

And as NVIDIA CUDA-DGX-GPU acceleration has surprised almost everyone to rival Apple and Microsoft valuations, it's also deliciously ironic that the "Agree to Disagree" topic for this month's ZUSS was...

"Ben Rains and Kevin Cook will Agree To Disagree on whether the U.S. National Debt matters to the U.S. economy and the market."

When I last addressed this debate with some degree of interest, it was 3 years ago here...

Why the National Debt is Irrelevant

In any case, let's buy all the NVDA shares we can below $120 because my new price target for 2026 is...

$200!

No one had a $2,000 price target pre-split so just ignore the Wall Street noise and stick with Cooker on the ETI that has yet to be seen!

Cooker

What About Gloomy Goldman on the AI Bubble?

You've probably heard the hub-bub by now that Goldman research says the "ROI on AI" is non-existent. And that means of course that AI is a massive bubble ready to pop.

That's some cute "could happen" analysis. But it ignores what the Fortune 1000, the Global 2000, and the 20 largest nation-states are really up to: investing deeply for the future they see 5 years from now where if you don't have your own deep learning, automation and LLM expertise, you will be mere gold dust against your competitors.

And as I've been predicting since February, the sales estimates for NVIDIA were going to cross $150 billion and head to $200 billion very soon.

Well it finally happened this month with an unnamed analyst posting a high-Street peg of $180 billion for next year.

I think it might be Tim Arcuri from UBS because on July 8 he talked about his bull case seeing $204 billion for next year. Here's what I posted on Twitter/X that day...

UBS analyst Tim Arcuri leads the bulls with the call today for $204 billion next year, despite Goldman handwringing about "no ROI from all those GPUs yet." Still building the field of dreams AI factories for science and innovation!

Bottom line: As I've been saying for 2 years, the analysts are still way behind the curve of what is emerging for NVDA sales over the next 3-5 years. Join me in buying every dip below $120 and if $100 scares you, buy more.

Bear of the Day:

CrowdStrike is a premier cybersecurity firm focused on end-point threat detection and response.

And before they became headline news this weekend, the Zacks Rank detected significant downward EPS estimates on June 8. On June 11, our Short List algorithm added CRWD shares and is currently posting a 30% gain (as of 7/22) after shorting at $380.

Why is CrowdStrike Such a Big Deal?

CrowdStrike's co-founders George Kurtz and Dmitri Alperovitch were inspired by shortcomings in previous-generation security software technologies. In 2011, they focused on leveraging the network effects of crowdsourced data from their customer base applied to modern technologies, including AI, cloud computing, and responsive databases to adaptively detect threats and stop breaches.

The company's Falcon platform has expanded its market opportunity beyond core endpoint protection through offering advanced innovations using machine learning and deep learning for real-time surveillance and mitigation.

CrowdStrike became a household name after being called on to remediate the Democratic National Committee breach in 2016. This week, it's a household name for a completely different (and not great) reason as one of their "software upgrades" brought airline travel to its knees over the weekend.

Fragile IT Systems?

This what Nassim Taleb might call an "anti-fragile" wake up call for modern IT systems with built-in dependencies and extra complexity. In response to many posts on Twitter/X about the massive shutdown for Delta Air Lines, with people sleeping on the terminal floor in Atlanta for four days, I wrote this...

My report last year "State of Threat: Cyber Crime 3.0" highlighted the state-sponsored sophistication of cyber crime and terrorism... and how hard the cybersecurity firms would have to work to keep up. Now they are so busy trying to stay ahead of the bad guys that systemic fragility gets built in.

I have been a CRWD bull since $50 in 2019, and even as the valuation pushed some limits recently. Now I'll be looking for a spot to buy it again soon, maybe at 10X sales. After the 30% drop, it's now trading about 12.8X next year's projected $5 billion topline.

But those numbers could be in jeopardy if customers reposition to other vendors. The good news is that most big enterprises won't just switch from a key embedded protection player like CrowdStrike. The bad news is that this will definitely hit earnings as the company makes remediations and invests more heavily to regain trust.

State of Threat

If you want a copy of my report from last October, where I explain the impact of "Cyber Crime 3.0", just reach out to Ultimate@Zacks.com and tell 'em Cooker sent you.

Here's how I praised the company then as one of my top cyber picks when it was still trading under $200...

CrowdStrike: This $44 billion leader in "edge" security for mobile, IoT, and government / military applications has been surging to new highs since their August 31 earnings report. As many employees and senior management continue to work from home and remotely, the threat vulnerabilities are multiplied outside of enterprise firewalls. CrowdStrike's Zero Trust solution is intended to prevent breaches in real time on any identity, endpoint, or remote workload.

This Zacks #2 Rank is more expensive given the recent stock move, but with 35% topline growth this year -- and next year projected to tag $4 billion with another 28% advance -- it's going to remain on the top list for growth investors. It doesn't hurt that profits are following with an 83% jump to EPS of $2.82. And these are the guys, led by founder George Kurtz, who have deep experience in Europe and Asia and are watching every move that Russia and China make.

(end of October report excerpt)

Bottom line: I just shared this so you can see how I approached the growth and valuation back then. It looks like we'll be getting another chance at the stock at better bargain levels. So let's wait for the EPS estimates (and price targets) to come down and look for a buying opportunity before or after their Q2 report in late Aug/early Sep.

Additional content:

Rotation Trade May Prompt Stock Gains for AMPY, GLDD, TREE

At the moment, renewed interest in smaller domestic firms has led to a rotation out of mega-cap technology companies that had dominated gains in Wall Street. Interest rate cut prospects sparked off by falling inflation ignited a long-awaited rally among small-cap stocks that not only raised interest among individual investors but also billionaires like Stanley Druckenmiller.

This calls for investors to place their bets on growth-oriented small-cap stocks such as Amplify Energy Corp., Great Lakes Dredge & Dock Corp. and LendingTree, Inc. for stellar returns.

Big Tech Lose Their Appeal

Market participants have recently begun to move out of the favored tech behemoths, or the so-called Magnificent Seven stocks, which have mostly fueled the market rally over the past year. The group, which consists of mega-caps such as NVIDIA, Alphabet, Microsoft, Meta Platforms, Apple, Amazon and Tesla has contributed to more than half of the broader S&P 500's return in the past year.

However, these stocks have started to wobble as investors remain jittery about their stretched valuations and are drawing comparisons to the dot-com bubble. They believe that AI-driven revolutionary technology has primarily inflated the price of these mega-cap tech stocks, making them a risky bet for now.

Small Caps Are Now Wall Street Darlings

In a dramatic market shift, investors favored small-cap companies and other earlier detested sectors, including energy, real estate and finance. Small-cap stocks, in particular, have gained prominence as interest rate cut expectations increased.

With consumer price pressures ebbing amid a contraction in both manufacturing and service sector activity in June, the odds of a Fed rate cut as early as fall rise. The CME FedWatch Tool presently shows that 91.7% of market participants expect the Fed to trim interest rates by a quarter-point in the September policy meeting, up from a probability of 52% a month ago (read more: Rise in Rate-Cut Bets May Prompt Stock Gains for GOLD, KGC, FNV).

Interest rate cuts, nonetheless, are a blessing in disguise for small caps. This is because any interest rate hike impacts small caps more than large caps due to a weaker balance sheet and higher debt levels. Notably, small caps have suffered for quite some time as the Fed kept its interest rates elevated to tame relentless inflationary pressure.

Meanwhile, Donald Trump's improving prospects in the presidential race bolstered a small-cap rally since some of his policies, such as increasing tariffs and reducing taxes, bode well for smaller companies. Likewise, the Russell 2000 Index, which predominantly comprises small-cap stocks, has gained more than 6% month to date. However, the small-cap index continues to remain below its 2021 peak, a tell-tale sign that it has more room to scale upward.

Druckenmiller Making a Bet on Small Caps

Billionaire investor Druckenmiller was successful in predicting the unprecedented NVIDIA stock rally. He bought several shares of NVIDIA at the end of 2022 and sold many of them at the beginning of 2024 not before he made mammoth gains.

Similarly, Druckenmiller has now raised his bets on small caps, with the May filings showing that his Duquesne Family Office has acquired stakes in the Russell ETF, an indication that not only retail investors but also billionaires are hopeful about a small-cap rally soon. IWM has gained a solid 8% so far this year.

3 Small Cap Stocks Set to Rally Hard: AMPY, GLDD, TREE

Given the positives, it's judicious for astute investors to place bets on small-cap growth stocks like Amplify Energy, Great Lakes Dredge & Dock and LendingTree. These stocks have a Zacks Rank #1 (Strong Buy) and a Growth Score of A or B, a combination that offers the best opportunities in the growth investing space. You can see the complete list of today's Zacks Rank #1 stocks here.

Amplify Energy

Amplify Energy is an oil and natural gas company. Amplify Energy has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings increased 17.4% over the last 60 days. The company's expected earnings growth rate for the current and next quarters are 41.7% and 214.7%, respectively.

Great Lakes Dredge & Dock

Great Lakes Dredge & Dock is the largest provider of dredging services in the United States. Great Lakes Dredge & Dock has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings increased 24.1% over the last 90 days. The company's expected earnings growth rate for the current year is 414.3%.

LendingTree

LendingTree operates an online consumer platform in the United States. LendingTree has a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings increased 0.8% over the last 60 days. The company's expected earnings growth rate for the current year is 18%.

Shares of Amplify Energy, Great Lakes Dredge & Dock, and LendingTree have gained 23.4%, 21.6%, and 73.2%, respectively, year to date.

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