Each time Nvidia $NVDA reports earnings, it’s the most important earnings announcement ever. Results were fantastic, but already incorporated into market expectations leading to little stock reaction. Walmart $WMT and Target $TGT indicate the consumer is shifting to lower-priced retail. It’s yet another indication that consumers prefer a drive for lower prices over a focus on controversial social issues. DKI releases a new eBook on the macro environment which gets a lot of positive attention on Twitter/X. Want a copy for yourself – just click here. Texas Pacific Land Corporation $TPL gets added to the S&P 500 taking the stock up even further after its incredible run this year. Hat tip to DKI Board member, Chris Bell, who did multiple video webinars explaining this stock to DKI’s premium subscribers and helping us make almost 5x our money in under three years. If that seems interesting, you can subscribe here. Finally, we address a reader question about inflation hedges when they get expensive. In related news, Bitcoin has been on an incredible tear. Perhaps we’ll be celebrating the $100k mark next week.

This week, we’ll address the following topics:

• Nvidia $NVDA earnings are fantastic. Market says “meh”.
• Walmart $WMT great quarter. Target $TGT bad quarter. What’s going on with the consumer? We explain with help from Michael Gayed.
• DKI releases new eBook on the macro environment. There was much rejoicing.
• $TPL gets added to the S&P 500. Stock rises. DKI Board of Advisors delivers again.
• How do you hedge when hedging gets more expensive? We take on this important portfolio management issue.

Another great week by interns, Andrew and Alex. As usual, they wrote most of this week’s 5 Things and are collaborating with me on multiple eBooks. Keep an eye out for the next release.

Ready for a week of earnings reports and eBooks? Let’s dive in:

1) Nvidia Earnings:

NVIDIA’s $NVDA Q3 results continue to dazzle on paper, but the market’s reaction? Flat. Despite posting record quarterly revenue of $35.1 billion (up 17% QoQ and a staggering 94% YoY), and a record $30.8 billion from Data Centers (up 112% YoY), it seems investors weren’t impressed. Why? Revenue and earnings beats are slowing down. Revenue exceeded expectations by only 5%, a steep drop from last quarter’s 22% beat. In a world of sky-high expectations and a market cap above $3.5 trillion, “good” doesn’t cut it anymore. Investors wanted fireworks. GAAP earnings per share grew 111% YoY, yet the deceleration in surprise performance overshadowed the raw growth numbers. CEO Jensen Huang proudly announced that the “age of AI is in full steam,” fueled by demand for Hopper GPUs and anticipation for Blackwell chips. AI could be transformative, with breakthroughs in industrial robotics, telecommunications, and gaming. NVIDIA’s growth narrative is alive, but with its valuation already stratospheric, the bar for excitement is higher than ever.

The absolute numbers were amazing, but not above market expectations.

DKI Takeaway: Investors may now want more than just records—they want acceleration. In a market obsessed with momentum, even juggernauts like NVIDIA can’t afford to slow down. The potential upside in the stock remains tied to continued increases in AI-related data center purchases, something every hyperscaler is pursuing. The potential downside is the big tech firms are spending tens of billions of dollars pursuing a lead in AI without a current business model to earn a return on that investment. Further complicating things is these $NVDA GPUs use a huge amount of power. Single AI data centers could use as much electricity as an entire city. There’s a lot more power generation infrastructure that needs to be permitted and then built. That’s going to take some time.

2) Consumer Reality and Shifting Spending:

This past week was meaningful for retail giants Walmart $WMT and Target $TGT. In Tuesday’s earnings report, Walmart reported revenue of $169.6 billion, surpassing analyst estimates of $167.7 billion. The company raised its year-end sales guidance from a range of 3.75% – 4.75% up to 4.80% – 5.10%. Target presented a contrasting picture. The company missed revenue projections, reporting $25.7 billion compared to the expected $25.9 billion. Earnings per share (EPS) also fell short, posting $1.85 which was a disappointment from the expected $2.30. In contrast to Walmart, Target cut its guidance, revising previous EPS forecasts of $9.00 – $9.70 down to $8.30 – $8.90. The inverse relationship in their earnings highlights an increasingly price-sensitive consumer.

Excellent summary of $WMT and $TGT reports by Michael Gayed.

DKI Takeaway: There are two key points to consider here. First, DKI has consistently highlighted how dramatically inflation is understated by the BLS (Bureau of Labor Statistics), and today we see another example of a consumer response. Prices remain too high for most, leaving consumers with little choice but to turn to discount retailers, and that’s precisely what they’ve done. Target’s $TGT management blamed the decline in demand for non-essential goods for disappointing revenue, which is partially true. DKI believes high prices remain the primary issue causing this. Second, Walmart $WMT is leaning into its strengths while Target continues to flounder. Despite Target slashing prices on many items, the strategy isn’t working partly because the company is caught in an identity crisis. Balancing controversial social issues with effective merchandising and pricing is difficult, as reflected in their financials and guidance. In contrast, Walmart understands its audience, offers a wide range of products, and consistently delivers the lowest prices. Based on consumer choices, the winner here is clear.

3) Misunderstanding the Macro Environment? Check out our new eBook:

On Tuesday, we released our latest eBook on Twitter/X. As we’ve mentioned over the past few weeks, DKI and The Five Things have shifted away from a heavily macro-focused approach and are now concentrating more on individual stock-picking because we think we’ll make more money for our subscribers that way. While we aim to keep you well-informed about the economy, we believe an in-depth report provides more value than weekly macro updates.

If you’d like a free copy, just click this link and you’ll have the book in minutes.

DKI Takeaway: If you’re reading the Five Things you likely already have an idea of DKI’s thesis about the U.S. economy and its outlook. In the eBook we go deeper into why mortgage rates are rising despite (or because of) Federal Reserve rate cuts, the true cause of inflation, why we think the Federal Reserve cut too soon, the fake employment “data”, and the outlook on various policies from the election. Best of all, it’s written for people who haven’t spent decades working in finance. You access the eBook by following Gary Brode on X and comment “macro” on the pinned Tweet at the top of the page.

4) $TPL to Added to S&P 500:

Last week, we got the welcome announcement that the Texas Pacific Land Corporation $TPL is being added to the S&P 500. The stock was up 195% so far this year and is up an additional 14.2% today as I write this. The stock is up 378% since DKI’s original recommendation in February of 2022.

Up 378% since DKI recommended $TPL.

DKI Takeaway: One of DKI’s great strengths are my relationships with other stock-pickers and the advice I receive from our Board of Advisors. I’d like to credit Board Member, Chris Bell, for doing multiple video webinars with DKI premium subscribers to explain the investment opportunity in $TPL. Between Chris on Texas Pacific, multiple DKI Board Members on Bitcoin and $GBTC, and Dr. Paul Thompson on Shockwave ($SWAV before it was acquired at a large premium), it’s clear that DKI subscribers have made a lot of money because I’ve been well-advised by the people closest to the firm. I’d like to thank Chris and the rest of the Board for their support, ideas, and help. If this sounds attractive to you, we invite you to join us here.

5) Is it too Late to Invest in Inflation Hedges?

This week, we received another excellent question from a DKI subscriber, who asked whether investing in inflation hedges like gold and Bitcoin has become a gamble after their significant price increases this year. The reader also wanted to know the best approach for incorporating inflation hedges into their portfolio. First, we want to commend our readers for asking thoughtful questions and for proactively adding inflation hedges to their portfolio. Given the current fiscal state of our economy, it’s clear that we’ve already reached unsustainable levels of debt. Regardless of the effectiveness of Elon Musk and Vivek Ramaswamy’s DOGE, over $1 trillion in interest expense does not disappear overnight and inflation hedges will still be necessary. Especially, as the government will be required to print more dollars to pay for the exponential interest expense.  Gold and Bitcoin have risen, but the reasons for that increase aren’t subsiding. Insurance may be expensive, but inflation is as well.

Interest expense has gone parabolic and the dollar is in full Ponzi.

DKI Takeaway: One DKI mantra is that it’s never too late to buy Bitcoin, and another is to always hold your Bitcoin (not lambo – sorry). With cryptocurrency, it’s important to walk a fine line when evaluating the reliability of certain coins, which is why we only buy Bitcoin. While Ethereum has some excellent use cases, it’s not fully decentralized meaning it’s subject to control. That’s not the case with Bitcoin. When it comes to implementing inflation hedges, dollar-cost averaging over a 12-month period is a great way to invest in various assets. While it’s hard to time the market perfectly, if you’re in it for the long term, you’ll likely come out ahead. We also emphasize that our inflation hedges are part of a larger portfolio including high-growth stocks, energy, and market hedges. We think it’s an approach that tends to make money in up markets, and outperform in down ones. If you have any questions related to finance or the market, we encourage you to submit them to Ask Gary.

Here’s the video version: https://youtu.be/OavvVsQntn8

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