The 2023 Unhedged stock draft

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Ethan Wu (0:36)

Thank Pushkin, they are sexy, they are salubrious, they are magnificent, they are the seven tech stocks propping up the S&P 500 But which are the sexiest, the most salubrious? Today on the show, we have two contestants, duke it out in a draft style game for the most magnificent tech stocks at the top of the market.

This is Unhedged, the markets and finance show from the Financial Times and Pushkin. I am reporter Ethan Wu, your host today for this tech stock rumble. In one corner, we have Rob, Value This, Armstrong.

Rob Armstrong (1:11)

I'm here to win, Ethan.

Ethan Wu (1:14)

When are you not? And in the other corner, we have Elaine, putting the flex back into Lex Moore.

Elaine Moore (1:21)

Hi, I've got a lot of other nicknames, sorry.

Ethan Wu (1:24)

You're also here to win.

Elaine Moore (1:25)

I'm here to beat Rob, that's the most important thing to me.

Ethan Wu (1:30)

That is the most important. Elaine is the deputy head of Lex and our resident tech stock expert. And today, Elaine and Rob, you're both going to pick three of your favorites out of the seven tech stocks in a draft style competition, and there will be one leftover. The criteria for your decision making is from today, July 13th, 2023 to the end of the year, December 31st, which stock will have the best price appreciation in the market? That's your metric. And since first pick is very important, we're gonna have a little trivia question, a little over under to decide who gets that first pick.

But first, what are our seven stocks, Rob?

Rob Armstrong (2:09)

Our seven stocks are Alphabet, Meta, Apple, Microsoft, Amazon, Nvidia, and Tesla.

Ethan Wu (2:16)

Of these, I think pretty much inarguably, the stock du jour is Nvidia. I mean, it's just had a preposterous run-up in both valuation and its stock price. So today for the privilege of getting first pick, in the second quarter of 2022, Nvidia earned 51 cents per share. What is the bottom-up analyst estimate for the second quarter of 2023? I'm giving you $2.

Elaine, do you take over or under on $2?

Elaine Moore (2:43)

100% over.

Ethan Wu (2:44)

Over?

Rob Armstrong (2:45)

Rob, are you okay with that?

Ethan Wu (2:47)

I can live with that. I'll take the under. Okay.

Nvidia's analyst estimate for the second quarter of 2023 is $2.06 a share, just over $2. It's pretty much quintupled in the space of a year. So I'm sorry, Rob, Elaine's gonna get the first pick today.

Elaine Moore (3:02)

Off to a flying start.

Ethan Wu (3:03)

Okay, Elaine, which of the Magnificent 7 are you starting with and why?

Elaine Moore (3:08)

I'm going for Nvidia. I'm starting strong.

Ethan Wu (3:10)

There you go.

Elaine Moore (3:11)

I know the haters will say that competition is coming.

Nvidia won't keep its advantage forever, but I can't think of a meeting I've been to this year that hasn't included AI in there somewhere. And Nvidia is completely out on its own in providing semiconductors in this market.

So Jensen Huang, noted style icon, cool leather jacket is leading the way. And there's no Intel, there's nobody else you can compare to Nvidia right now. So even if we've had the stock rocket up this year, he was handing out hints about what the second half of the year might be, but without giving any numbers. And I have a feeling that when we get the next set of earnings, we'll hear some numbers. And I think the stock is just gonna bounce up even further.

Rob Armstrong (3:53)

Elaine, it's very interesting that you pick Nvidia first because I have before me my secret draft order list and I put Nvidia last. Not only did I put it last, I put it last for the exact same reasons that you put it first. We are at peak AI hype. The stock trades at 60 times earnings. As of a few days ago anyway, it had over almost 200% price return for the year.

This is a great stock that is at the absolute top of investor excitement. So they only need to step on a very small banana peel to fall directly on their faces.