August 22, 2023

Kingsview CIO Scott Martin on Fox Business Cavuto Coast to Coast 8.22.23

Click here to listen to the full interview.

NEIL CAVUTO: All right. Taking a peek at Nvidia right now. That was a tear in one of the best-performing stocks of the year, I believe, up over 150% year to date. The big question is how it performs tomorrow when its earnings come out. Most are anticipating that if they come out even a little bit better than expectations, the stock could easily hit a new high and lead the Nasdaq higher. The Nasdaq is under some pressure today. Scott Martin at Kingsview Asset Management is joining us from Madison, Wisconsin. Madison, Wisconsin, is a little over an hour, I guess, from Milwaukee.

SCOTT MARTIN: About an hour from Milwaukee, Neal. A couple of hours from Chicago. And in one of the most beautiful places in the Midwest I’ve probably ever seen.

CAVUTO: It is a beautiful place. So let me ask you a little bit, Scott, about whether it will be a beautiful place for technology stocks led by Nvidia tomorrow. Many people are looking at that as a chance for tech to regroup, not that they need much regrouping this year to date, but what do you make of it?

MARTIN: They don’t need much regrouping. In fact, they need tech to keep leading. And I think that’s something, Neal, that you talked about in your lead regarding how the Nasdaq is feeling pressure. Because Nasdaq, my friends, is off considerably from the highs earlier today. And that’s really the concern here. Not only interest rates; it’s kind of the backdrop. We’re going to have the Fed talking from Jackson Hole on Friday. But also the fact, Neil, that we need companies like Nvidia, Google, Apple, Microsoft, and Amazon to keep doing what they’ve been doing: raising guidance, exceeding expectations, and talking about AI possibilities in the future.

CAVUTO: You know, it seems now that it’s an AI play for many. Of course, it’s been around long before the whole AI phenomenon in gaming, what have you. But some cynics who short the stock say it just lucked out. It just sort of rebranded itself as an AI play. But it genuinely is at least partially an AI play. So what do you think of Nvidia as a stock? The AI phenomenon in general? Did we go too far with it? What?

MARTIN: I think we have gone a little too far with it in terms of expectations. I mean, sometimes, Neal, I wake up in the morning and I feel like I’m AI myself, so maybe that could get me some higher prices in the future too. But there is a nice proposition with AI in the future. However, these stocks, like you said, have rallied considerably ahead of what they’ve really delivered. I mean, if Nvidia has these chips and some of the other businesses that they do besides AI that have been very good and part of their business for years and years, like you said. So the fact that a company comes out in an earnings report and mentions AI and talks about how great these capabilities are and the integrations into their systems and things with respect to what they’re going to output that has taken those stocks up, say, ten, 15, 20% in a day or two. So looking at how these expectations line up with Nvidia, we do own it. We’ve owned it in the past, we’ve sold it as it’s rallied high, and then bought it as it’s come back down low again. But I think Nvidia is one to watch here as a proponent of the market going forward and how we behave here at the end of the third quarter, going into the fourth quarter at the end of the year.

CAVUTO: Even with these lofty expectations for Nvidia, I mean, it still trades at, what, 50 times earnings? And I’m wondering whether the earnings either have to go way, way up or the stock has to come way, way down for them to meet in the middle. What do you think?

MARTIN: I think they will meet in the middle. I think that’s probably the sad story. There’s a lot of late money that’s gone into Nvidia that may be disappointed. Now, if you hold Nvidia for say, three years versus three months, I think your outcome is going to be good. But you’re right in terms of, say, even 1999, 2007, when many of these stocks on the Nasdaq especially traded very expensively, as you mentioned, 50, 75, 100 times earnings, those eventually came back down to more reasonable levels. Good, long-term money came into those names and eventually took them higher and higher. And that’s something I think we’re going to see with many of these stocks here in the fall.

CAVUTO: Got it. We’ll watch closely. Scott, it’s always good catching up with you, my friend. Scott is joining us from beautiful Madison, Wisconsin.

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