☕ If you thought Nvidia at $1,000 share was high, you need to read this

Good morning! 👋 

I hope you had a wonderful Memorial Day weekend if you are here in the United States and great weekend if this morning’s email finds you elsewhere. 

The markets are split, which is not atypical for a holiday-shortened week as traders try to get their minds around summer conditions. 

Volumes tend to dry up and spreads – meaning the difference between what somebody is willing to pay to buy a stock and what someone wants to sell it for – widen.  

The result is often a little extra volatility because price efficiency drops so prepare mentally for that possibility. And don’t let it knock you off your game. 

Buy the best, ignore the rest! 

Here’s my playbook. 

1 – My new Nvidia & Microsoft targets 

Let’s tackle NVDA first. 

The more expensive this stock gets, the cheaper it is. 

As I noted to the venerable Stuart Varney this morning, I see shares cresting $2,000 to $2,300 a share ($200-$230 post-split) within the next 24-36 months. They’re up to $1,120 as I type, blowing through the $1,000 a share target I set last year before anybody else even remotely thought that was possible and Wall Street was telling you it was too expensive. (Watch) 

Getting there isn’t tough. 

I expect the company to turn in $35ish this year which is higher than current consensus EPS projections of ~$27 per share. Assuming it continues to trade at a forward PE multiple of 30-35X and EPS tops $50 - $60, that translates into north of $2,000 a share. 

Remember what we’re dealing with here. 

Every $1 spent on AI brings back $5+, a figure I think jumps to $7+ within the next few years as generative AI becomes inferential AI. Then, after that, intuitive AI. 

Microsoft is similar but, in this case, I see it taking out $500 a share within the year. 

People ask me constantly if I fear a correction in one or both of these stocks. 

No. 

AI is still very early days and, from an investing perspective, the fastest revenue uptick in human history for companies using it.  

Pullbacks spell O-P-P-O-R-T-U-N-I-T-Y. 

Besides and not for nothing, I wouldn’t be very good at my job if I feared that. 

2 – Right on cue: Fed’s Kashkari wants “months of data” before rate cuts 

I’ve often said that the Fed will never waste an opportunity to screw up markets, particularly if there’s a rally in play. 

Right on cue, the Fed’s Kashkari wants “months of data” before he starts thinking about rate cuts. (Read) 

Of course he does. 

The Fed doesn’t have a strategic bone in its body which is why it’ll constantly look in the rear-view mirror instead of down the road.  🤦‍♂️ 

MyPOV: The Fed continues to be as wrong about rates and labor, as it was about transitory. Big investors don’t spend hours debating what Team Powell may or may not do let alone why. They focus – like we do – on buying world class companies and moving forward. 

3 – T Mobile to buy most of US cellular  

T-Mobile has announced that it plans to buy most of US Cellular in a deal worth $4.4 billion. (Read) 

The company says it will use US Cellular’s wireless spectrum to improve coverage in rural areas… translation... where you can’t presently get service worth a dang. 

Reports suggest that US Cellular will retain some of its wireless spectrum and towers while also leasing space on at least 2,100 additional towers to T-Mobile. 

No word on where Verizon stands just yet but I suspect we’ll hear something about that in the next few weeks as the two companies – T-Mobile and Verizon – continue to carve up the US cell phone market. Something I alerted you to last February. 

Not to be a total wiseacre this morning, but where’s the FTC in all this? 

Answer... wasting time on big tech. 

Keith’s Investing Tip: The first law of the jungle is that bigger, stronger players survive and deals like this highlight the continual nature of that process. T-Mobile wouldn’t make the effort if it didn’t think it could 5X that payment over time.  

T-Mobile, btw, has positively crushed Verizon over the past 5 years, posting returns of 118.53% versus a –13.19% drop respectively. But the latter has a considerably higher dividend yield, so there is that to think about. 

4 – Meme investing is back (but never really left) 

GameStop shares were up as much as 26% in premarket this morning after the company announced Friday that it had made nearly $1 billion from its recent stock sale. (Read) 

Honestly, I can't believe people are still following the stock. 

And not because of the stock, either. 

Retail investors who are piling in are particularly prone to fin-fluencers creating content which means that herd behavior is a very real by-product of their actions. 

Not fundamentals. 

This kind of stuff never ends well. 

Steer clear (unless you are a speculator, have money to burn, and enjoy the game). 

Consider putskies – a bet that shares fall – when the shine wears off. 

5 – Dinosaur juice is still great for dividend investors 

The public’s fascination with all things EV seems to be wearing thin. 

Oil prices will catch up. 

OPEC expects oil demand to jump by 2.25 million barrels per day this year but drop to just 1.8m bpd (barrels per day) in 2025. (Read) 

I think that’s a mistake. 

The global oil market may grow 20-25% over the next 10 years, probably realistically 5-7 imho.  

Factor in global unrest and potential shortages and the game changes. 

EVs will come back and oil prices will jump. 

MyPOV: The mistake many investors make is that they tend to think of energy and EVs as a “one or the other” situation. Nothing could be farther from the truth, which is why I advocate owning both. Great companies only. Upgrade to paid. 

Bottom Line 

People are prone to believe that making money in the financial markets “isn’t for me” or is something “everybody else does.” 

Bull. 

I’ve spent 44+ years in global markets and what I’ve seen along the way convinces me more than ever that anybody can be wildly successful in the stock market with the right information, education, and tactics.  

Learn!  

Find a mentor.  

Learn some more!  

Every day is a new opportunity. 

You got this – I promise. 

As always, let’s MAKE it a fabulous day. 

Keith 😊