NVIDIA confirms AI boom, but Iran fears are clouding market

I think NVIDIA (NVDA) is a good buy today. The company posted solid beats on the top and bottom line and maintained strong profit margins. Their forecast for growth exceeded estimates. They raised their dividend and announced an $80 billion share buyback program. As we’ve seen in the past, the shares are initially trading down after a run-up into earnings. Typically, a week later, they’ve historically been higher than before the earnings announcement. But we aren’t in typical times.The Iran situation weighs on marketsWhile the demand for AI has been confirmed, concerns about no near-term resolution with Iran are weighing on markets once again. Crude oil prices are back on the rise, and interest rates are following, after Iran stated that they were not going to agree to send their enriched uranium out of the country. This is a deal point for Trump. They also appear to expect to be the gatekeepers of traffic through the Strait of Hormuz, which is technically international waters, planning to charge fees in the millions of dollars per ship, to finance the reconstruction of damage the war has brought to their country. It’s unlikely that Trump will agree to this either. While Trump says a resolution is close, the posturing of Iran appears otherwise. Still, the market continues to reflect the belief that the situation will not evolve into an extended conflict as we’ve seen in Ukraine.Related: SpaceX’s long-anticipated IPO filing is out now — here are the highlightsPerhaps taking some oxygen from NVIDIA and other AI names is the upcoming SpaceX initial public offering (IPO), expected in early June, which is looking to be the largest IPO of all time, north of $1.5 trillion. In addition, there was an announcement that the Trump administration is investing $2 billion in quantum computing, including $1 billion in IBM (IBM). The companies involved have seen a rise in their share prices.Walmart (WMT) also reported earnings and delivered a beat on the top and a meet on the bottom, saw strong e-commerce growth but cited headwinds from higher fuel costs. With a P/E of 48X, the shares were priced for perfectionand have traded down on disappointing earnings growth (+9.2% year-to-date, +26.1% last-twelve-months). Economy is still in fine shapeWe’re seeing a stable labor market, some surprising strength in housing starts, strength in manufacturing, and an improved U.S. GDP running forecast from the Atlanta Fed, raising the second-quarter estimate from 4.0% recently to 4.3%.The trend remains positive, but now that NVIDIA is behind us, the focus shifts back to Iran, a situation where no news is bad news as energy reserves continue to be drained, but the prospects of an agreement being reached almost guarantee a relief rally. Related: Nvidia gets unexpected China opening as chip fight intensifies