OrionCapital @OrionCapital: "Nvidia, Nasdaq and European stock..."

France

Nvidia, Nasdaq and European stock markets It’s hardly imaginable. Even for those of us who follow the markets on a daily basis. Nvidia’s clout is such that the publication of its quarterly results is as eagerly awaited as major economic indicators such as US employment figures. And they were published last night. $NVDA (NVIDIA Corporation) Almost everything has been said about this stock. Its phenomenal track record. The explosion of its valuation in record time. A capitalization in excess of $3,000 billion. An indicator of the excitement surrounding Artificial Intelligence. The symbol of American tech domination. So important that it seems as if the fate of the $NSDQ100 , and therefore the world’s stock markets, rests on a single share. AND YESTERDAY Like every quarter now, traders and investors, but also economists, were awaiting the publication of the company’s results. Hold on to your hats : sales more than doubled in one year. 30 billion for the quarter, up 122%. Sales ahead of analysts’ expectations. And its profit rose by…168% to $16.6 billion (calculate the margin…). But Nvidia’s valuation is so high that even when the stock doubles its sales, it’s not enough. And… the share price fell by nearly 8% after the publication of these excellent results. Remember that Nvidia is still up over 150% in 2024 alone. THE GAP Nvidia illustrates the overwhelming dominance of the American stock market and the gap between the American and European stock markets. A gap that is reaching record levels. The Price-Earnings Ratio of the European $IEUR Stoxx 600 index is 15. This compares with 26 for the $SPX500 On the basis of this simple measure, we can say that the discount between European equities and US equities is 40%. This is enormous. THE REASONS European stock markets are mainly centered on flagship sectors such as automobiles and luxury goods. The automotive sector is suffering. And luxury goods are suffering a little, due to Chinese consumer fatigue. The US stock market, on the other hand, is driven by Tech, a sector that is poorly represented in European indices. And Tech has driven the indices. With champions like Nvidia. SHOULD I PLAY EUROPE ? That’s the question on everyone’s lips. And one that investors have been asking for years. At such a discount, are European stocks a compelling buying opportunity ? The pros’ answer : no. The discount will persist because Europe needs to rethink its business model, and growth is sluggish and will remain so. Our only chance of catching up is for one of Tech’s titans, like Nvidia, to slip up.

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NVDA

NVIDIA Corporation

NSDQ100

IEUR

iShares Core MSCI Europe ETF

SPX500