💪 Nvidia's Profits Up +628%

and is Abercrombie & Fitch back?

Good morning,

A quick breakdown — in case you just don’t have the time.

  1. Nvidia’s profits grew from $2B to $14.4B over the last year.

  2. Our financial playbook for recent graduates and their families.

  3. The highest-ever travel day (2.95M Americans) just took place.

  4. Abercrombie & Fitch is up over +500% in the last 12-months.

  5. T-Mobile is acquiring U.S. Cellular’s wireless business ($4.4B).

  6. Acorns will give you a $35 bonus when you sign up (see the bottom).

Market Overview

Chart of the Week

What we’ve seen from Nvidia (NVDA) over the last 18-months is astonishing.

If you were to remove Nvidia from the ‘Magnificent 7’ stocks (Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms & Tesla) — this group would actually be lagging the S&P 500 year-to-date year.

As you can see above, their massive stock price appreciation coincides with Nvidia’s Data Center revenue sky rocketing from $3.6B to $22.5B in only 18-months. According to Wall Street’s estimates, Nvidia currently controls over 75% of the AI chip market — while operating at 80% gross profit margins.

Despite the recent run up in stock price, Nvidia is still trading at a -13% discount to their 3-year median forward P/E ratio of ~45X.

Something to consider — data centers are very power intensive, which means the growth of US power consumption is expected to increase sharply over the coming years.

The average ChatGPT search uses 10X the amount of power as the average Google search.

Now ask yourself… who is set to benefit from this increase in power consumption? And how can we invest in their success? 🤔

In Case You Missed It…

In this week’s episode of the Rich Habits podcast (linked here) — we shared our financial playbook for all of the recent graduates and parents of graduates in the Rich Habits community:

  1. Your Defining Decade — Whether it’s a high school or college graduation, your 20s are a great time to build your base. We talked about starting small and the power of compound interest. Time is on your side when you start early!

  2. Hitting Stride — We talked about career considerations and how you should think about your ‘relationship’ with work. Specifically, being a team player no matter what your current situation looks like — but also remembering to always protect yourself.

  3. Execute Now, Be Thankful Later — A few important habits to learn are ‘honest budgeting’ and not letting ‘lifestyle creep’ eat away at your hard-earned money!

Be sure to listen to the episode if you haven’t!

And a quick shoutout to the recent graduates who entered our $500 giveaway! Keep the submissions coming — we’ll announce the winners on Monday.

Thanks to Elizaveta from Northeastern, Evan from Cincinnati, Max from Kent State, Megan from Texas A&M, Janet from Utah, Blake from Michigan State, and MANY more! Keep them coming in!

During our Q&A episode that was posted this morning, we answered questions from Angel, Lizzy, Casey, Bryndon, Anthony, Griffin, Christine, Alex, and Brandon.

We prioritize questions via Instagram DMs — if you’re not yet following us, be sure to follow here! 

Thanks so much for keeping the GREAT questions rolling in.

We’ve got another free webinar coming your way! This time it’s with the Head of Product at Public. We’ll be discussing options strategies — including long calls & puts, call & put debit spreads, and everything in between!

If that sounded like a foreign language to you — that means you need to join us.

Robert’s Callout

Goodness gracious — all of you have clearly been moving around quite a bit!

TSA reported that 2.95M travelers passed through airport security on the Friday of Memorial Day Weekend. That surpassed the previous record of 2.9M, which was set on the Sunday after Thanksgiving last year.

Airlines for America thinks it’s going to be the biggest summer for travel ever — forecasting that 271M passengers will travel on U.S. airlines from June through August. This would be a +6% increase from last summer.

Heads up — the National Weather Service is giving us an 85% chance of having an above-average hurricane season.

There’s nothing worse than losing thousands of dollars from failed travel plans turning sour. Prepare well for your trips and stay safe people!

Austin’s Callout

Everyone’s favorite 2000s clothing brand has officially made a comeback!

Abercrombie & Fitch reported their quarterly earnings yesterday … and Wall Street was blown away. The company’s Q1 revenue ($1.02B) came in higher than expectations ($965M) — highlighting the company’s multi-year efforts spanning marketing, product design, and in-store presentation.

The company’s inventory levels also remained flat year-over-year against their +22% sales growth — allowing them the flexibility to offer more favorable promotions to drive even more growth during the summer months.

Something people forget is that Abercrombie & Fitch also owns Hollister — a clothing brand that mainly targets teenagers. Their A&F line experienced +31% sales growth year-over-year, while their Hollister line only experienced +12% sales growth.

Wall Street is optimistic the company will be able to take what they learned from “reinvigorating” A&F and apply it to Hollister — leaving ample room for growth in 2025 and beyond.

“Additionally, we expect management to implement a similar marketing playbook at Hollister, leading to continued improvements in traffic trends across both stores and digital channels.”

Corey Tarlowe, Jefferies

The Rich Habits Radar

  • 👉 HubSpot’s market cap hit $33B as Google acquisition rumors rise.

  • 👉 Canva revealed it's new “Canva Create” suite during a conference.

  • 👉 T-Mobile is acquiring U.S. Cellular’s wireless operations for $4.4B.

  • 👉 Mastercard launched its “Crypto Credential” peer-to-peer pilot.

  • 👉 Celsius stock fell rapidly after growth worries were revealed.

  • 👉 PayPal is building an advertising sales business based on user data.

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  • Roi — Use code “Habits” and start tracking your net worth

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Disclaimer: This is not financial advice or a recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.