Despite the S&P 500 and the NASDAQ hitting all-time highs in recent weeks, many investors who are heavily invested in smaller growth stocks may be feeling the pinch due to volatility. We take a look at two large-cap companies that can provide more stability to your portfolio.
Nvidia: Bull vs Bear arguments:
Nvidia (NASDAQ: NVDA) is a technology company headquartered in California. It is predominantly known for its graphic processing units (GPUs) and operates in other areas such as data centers, gaming, and more. It is the largest semiconductor company by market capitalization and remains founder-led, by visionary CEO Jenson Huang.
Despite its size, with a market cap of $816 billion, it continues to produce stellar results with record revenue in Q3 of fiscal 2022, reaching $7.1 billion, increasing by 50% year-over-year (YoY). On top of this, its gross margin expanded to 65% and Nvidia turned a profit of $2.46 billion.
Nvidia recently announced the general availability of its Omniverse Enterprise, which is “a platform for simulating physically accurate 3D world and digital twins” which could also be viewed as the metaverse. Its platform is already used by companies such as BMW and, along with its GPU technology, represents a massive opportunity for the company.
Although it appears that there is a long runway ahead for the company, it is trading at a rich valuation with a P/E ratio of roughly 100. This valuation will require flawless execution, and in addition, Nvidia’s proposed acquisition of Arm is facing fresh regulatory scrutiny.
Apple: Bull vs Bear arguments:
Apple (NYSE: AAPL) is a company that needs little introduction as the maker of the iPhone, MacBook, and wearables. It is currently the largest company globally with a market capitalization of roughly $2.66 trillion and is the largest holding of legendary investor Warren Buffet’s Berkshire Hathaway.
As of writing, Apple is the most valuable brand in the world and has evangelical customers. It continues to release new products and beyond its flagship iPhone, it has proven its ability to innovate successfully with its wearables such as Airpods and the Apple Watch that have crushed the competition.
Despite being known for its hardware, the company has continued to grow its services revenue which includes fees from the App Store, iTunes, iCloud, and more. With growth in its core business and services, revenue came in at $83.4 billion, representing a growth of 29% YoY in Q4 of fiscal 2021. The company is also highly profitable, reporting a net income of $20.5 billion in the quarter.
Apple has a net cash pile of $66 billion as of Q4, which can be used to fuel growth. One such area that could help it hit new heights is releasing a fully electric and autonomous car, with Apple reportedly targeting 2025 for its release.
Like many other companies, Apple has faced supply chain issues, which led to management reducing guidance by $6 billion. The company has also faced antitrust scrutiny and was
was forced to update some of its policies on the App Store after its lawsuit with Epic Games.
Contributing Writer at MyWallSt
Colm's favorite stock is Virgin Galactic as it is representative of his visions for our world in the future.