Consider a rotation into beaten-down software stocks, with Salesforce (CRM) looking attractive as it holds strong technical support near the $230 level ahead of earnings. For those with a higher risk tolerance, Adobe (ADBE) is a potential value play, but be aware of downside risk to the $285-$290 range if competitive concerns are not addressed. If you have large gains in semiconductor stocks like Broadcom (AVGO), consider reducing your position or hedging before its earnings report due to its stretched valuation. The investment case for Gold remains strong as a portfolio diversifier, with the price consolidating near all-time highs. Finally, watch Bitcoin (BTC) closely, as its recent weakness is a potential warning sign for a "risk-off" event in the broader market, especially if it breaks below the $107,000 support level.

NVIDIA (NVDA)

• The discussion centered on NVIDIA's recent earnings report.
• While the numbers were described as "historically large," a bearish case was made that the magnitude of the "beats and raises" is getting smaller.
  • Growth is still strong (50% year-over-year), but the period-over-period beats have slowed from double-digits to high single-digits.
• The valuation is considered a problem, with one speaker noting it's "actually getting expensive again" for a $4.4 trillion market cap company.
• The argument is that the massive growth is already "more than priced in" to the stock.
• There was a "very mild miss" in the all-important Data Center segment.

Takeaways

• Caution is warranted for investors due to the stock's high valuation and the slowing momentum of its earnings beats.
• The massive growth story is well-known, and the key focus is now on whether the company can continue to exceed already high expectations by a large enough margin to justify its price.

Software Sector

• The podcast highlighted a potential rotation into software stocks, particularly infrastructure software names that have been underperforming.
• Several software stocks were noted as "screaming" higher on the day of the recording:
  • Snowflake (SNOW): Up 21%
  • Datadog (DDOG): Up 7%
  • ServiceNow (NOW): Up 5%
  • The Trade Desk (TTD): Up 5%
• The speakers noted that many of these stocks had been "left for dead" as investment dollars flowed into semiconductor names.

Takeaways

• Investors may want to look for opportunities in beaten-down software stocks, as there could be a broader rotation out of high-flying semiconductor names and into this sector.
• Upcoming earnings reports from Salesforce (CRM) and Adobe (ADBE) will be critical tests for this theme.

Salesforce (CRM)

• Salesforce has upcoming earnings and has been an underperforming stock, down about 20% on the year.
• A key technical level was identified: a "nice little double bottom" around the $230 level, which has acted as support in both April and August.
• The valuation is considered attractive, trading at 22.5 times this year's expected earnings and 20 times next year's. This is described as "one of the cheapest valuations that Salesforce has traded in an awful long time."
• The expectation is that the stock could "bounce into earnings" due to low expectations and the strong technical support.

Takeaways

• The $230 level is a key technical support to watch.
• With a relatively cheap valuation and low expectations, there may be an opportunity for a short-term trade on the long side heading into its earnings report.

Adobe (ADBE)

• Adobe is viewed as a company being disrupted by competitors like Figma.
• The stock has performed poorly, down 50% from its all-time highs in late 2021.
• Its valuation is considered "historically cheap," trading at 17 times this year's earnings and 15 times next year's.
• The speakers had conflicting views on the stock's prospects:
  • Bullish case: One speaker was "far more inclined to take a shot on this one" due to its cheap valuation and the fact that it has been "cut in half."
  • Bearish case: The other speaker had an "odd feeling" about the stock, suggesting "the bloom is clearly off the rose" and that it could fall back to levels from late 2022, around $285 or $290.

Takeaways

• Adobe presents a classic "value trap vs. value opportunity" debate.
• Investors bullish on a turnaround could see the current price and cheap valuation as an attractive entry point.
• However, there is significant risk mentioned, with a potential downside target of $285-$290 if the company cannot overcome concerns about competitive disruption in its upcoming earnings report.

Figma (FIGMA)

• Figma is a recent, high-profile IPO in the collaborative design space.
• The stock has been extremely volatile, trading as high as $140 and was trading around $71 at the time of the podcast.
• One speaker suggested that investors could "play this one from the long side," but acknowledged the high risk.
• The options market is implying a 10.5% move in either direction on its upcoming earnings report, highlighting the expected volatility.

Takeaways

• Figma is a high-risk, high-reward play for aggressive investors.
• Given the high implied volatility, using the underlying stock rather than options might be a way to participate while managing the risk of options premium decay.

Broadcom (AVGO)

• Broadcom was highlighted as a key semiconductor stock with an upcoming earnings report.
• The stock has had a massive run, rallying 125% from its April lows to near all-time highs.
• The valuation is now considered "stretched."
• Expectations for its earnings report are very high.

Takeaways

• An investor who is long Broadcom should consider taking risk-reduction measures ahead of the earnings report.
• Specific suggestions included:
  • Selling a portion of the position (quarter, third, or half).
  • Selling covered calls to generate income.
  • Using proceeds from selling calls to buy put options for protection.
• A significant pullback is not out of the question, with a potential "back and fill" to the prior all-time high around $245.

Gold

• The investment case for gold is considered "alive and well."
• The metal is trading in a range and approaching its prior all-time highs.
• It was noted that central banks now own more gold than they own U.S. treasuries, signaling strong institutional demand.
• The speakers questioned why gold wasn't already higher given a lower U.S. dollar, lower yields, and rising uncertainty about the Federal Reserve's independence.

Takeaways

• Gold remains a solid holding for diversification and as a hedge against uncertainty.
• The technical setup is constructive, with the price consolidating near all-time highs, which technicians refer to with the phrase "the longer the base, the higher in space."

Bitcoin (BTC)

• Bitcoin was referred to as "nerd gold."
• It recently broke a key uptrend that had been in place since mid-April.
• It found support and bounced at the $110,000 level, but the overall price action is described as "heavy."
• A key observation is that Bitcoin is diverging from other risk assets. While the NASDAQ is strong, Bitcoin is not making new highs.

Takeaways

• Bitcoin's recent weakness is a potential warning sign for the broader market, particularly for tech stocks and the NASDAQ.
• It is acting as if a "risk-off event" is coming.
• Investors should watch the $108,000 and $107,000 levels closely. A move below these levels with "no bounce" would be a significant negative signal ("no bueno") for risk assets.