The Portfolio Digest

The Portfolio Digest (July 7-13)

Introduction

Markets delivered mixed signals last week as earnings season kicked off with modest surprises while major corporate developments dominated headlines. 

Here's What We're Covering:

• Nvidia CEO's $36 million stock sale as the company maintains AI leadership and $4 trillion market cap

• Wall Street analysts raise S&P 500 targets for 2025

• Industrial software consolidation with Autodesk's potential $23B PTC acquisition

• Early Q2 earnings are showing mixed results, with revenue outperforming expectations

• Market volatility from Trump's escalating tariff announcements and Intel's strategic challenges

Nvidia CEO Huang Sells $36 Million in Stock as Wealth Rivals Buffett

Nvidia CEO Jensen Huang sold approximately $36.4 million worth of company stock, unloading 225,000 shares as part of a prearranged trading plan, according to SEC filings. The sale continues Huang's systematic divestment under a plan adopted in March to sell up to six million shares through year-end.

The 62-year-old executive's net worth has surged to $143 billion, putting him neck-and-neck with Warren Buffett's $144 billion fortune, according to Bloomberg's Billionaires Index. Huang's wealth has grown by $29 billion since the start of 2025 alone as investors bet on Nvidia's AI dominance.

Nvidia briefly topped a $4 trillion market cap on Wednesday, becoming the world's most valuable company and surpassing Microsoft and Apple. The chipmaker has positioned itself as the decisive leader in graphics processing units powering large language models, with shares climbing more than fifteenfold over five years.

Despite geopolitical tensions and Chinese export restrictions that cost the company $8 billion in potential sales, Nvidia stock rose 1% Friday and remains up 22% year-to-date, reflecting continued investor confidence in the AI hardware boom.

Wall Street Raises S&P 500 Targets 

Bank of America raised its year-end S&P 500 target to 6,300 from 5,600, implying a 1% gain through year-end. The firm had initially entered 2025 with a bullish 6,666 target before cutting estimates after President Trump's "Liberation Day" tariff announcement roiled markets in April.

Goldman Sachs similarly lifted its target to 6,600 from 6,100, citing expectations for Federal Reserve rate cuts to boost stocks in the second half. The bank's economists anticipate three sequential 25 basis point cuts starting in September.

Both firms pointed to corporate resilience despite macro uncertainty. BofA's Savita Subramanian noted the index's shift toward "higher-quality, more asset-light" tech companies with strong balance sheets justifies lower risk premiums. Goldman's David Kostin highlighted that recent data shows "less tariff pass-through so far than expected."

The S&P 500 has rallied 25% since its April 8 low, marking one of the biggest three-month gains in 50 years. However, analysts warn the narrow rally driven by tech giants like Nvidia and Meta could face challenges as earnings growth decelerates.

Autodesk Weighs $23B Acquisition of Engineering Software Rival PTC

Autodesk is considering acquiring rival engineering-software provider PTC Inc. in a potential cash-and-stock deal, according to people familiar with the matter. The Boston-based company, valued at approximately $23 billion, is also attracting interest from other industry players.

The potential acquisition comes amid steady consolidation in the industrial software space, where artificial intelligence adoption is driving growth expectations. Recent major deals include Siemens' $10 billion purchase of Altair Engineering and Synopsys' pending $34 billion acquisition of Ansys.

Bloomberg Intelligence analysts noted the deal would give Autodesk a 17% share of the $19 billion manufacturing-software market, driven by "a need for scale" to compete with leaders like Dassault Systèmes and Siemens-Altair.

PTC shares initially surged 19% on the news Wednesday before falling 7.4% Thursday, while Autodesk dropped 6.9% to a $61 billion market value. The deal faces potential scrutiny from activist investor Starboard Value, which built a stake in Autodesk earlier this year and has pushed for board changes over performance concerns.

S&P 500 Q2 Revenue Beats Expectations

The second quarter earnings season is showing early signs of weakness, with S&P 500 companies delivering smaller positive surprises than usual. Only 71% of the 4% of companies that have reported beat earnings estimates, falling short of the five-year average of 78%.

Companies are reporting earnings 4.6% above estimates, significantly below the 5-year average of 9.1%. The blended earnings growth rate has declined to 4.8% from 5.0% last week, marking what could be the slowest growth since Q4 2023's 4.0% rate if the trend continues.

Despite the underwhelming earnings performance, revenue results tell a different story. Some 81% of companies exceeded revenue expectations, surpassing both 5-year and 10-year averages. Revenue growth remains steady at 4.2%, potentially extending the index's streak to 19 consecutive quarters of revenue growth.

Six sectors are projected to post year-over-year earnings growth, led by Communication Services and Information Technology, while earnings for the Energy sector is forecast to decline the most. The forward 12-month P/E ratio stands at 22.3, above historical averages, as 42 companies prepare to report next week.

Markets Retreat as Trump Escalates Tariff Threats on Key Trading Partners

US stocks closed lower Friday as investors digested President Trump's announcement of a 35% tariff on Canada and broader threats of escalating trade measures. The Dow Jones Industrial Average dropped 0.63%, while the S&P 500 fell 0.33% and the Nasdaq declined 0.22%.

The selloff marked a sharp reversal from Thursday's session, when the S&P 500 notched a fresh record high as investors initially shrugged off Trump's trade rhetoric. 

However, Friday's Canadian tariff announcement, citing fentanyl concerns, appeared to spook markets as traders awaited potential updates on European Union tariffs that never materialized during trading hours.

Trump's latest move follows a week of aggressive trade positioning, including 30% tariffs announced Saturday on goods from the EU and Mexico, effective August 1. The president has now sent similar tariff letters to 23 trading partners, with rates ranging from 20% to 50%, as part of his broader effort to establish "reciprocal" global trade relationships.

Friday's losses pushed all major averages into negative territory for the week, with the Dow declining 1% while the S&P and Nasdaq posted respective losses of 0.3% and 0.1%. Investors now face the second-quarter earnings season and key inflation data ahead.

Intel CEO Admits Company Has Lost Its Edge in Semiconductors

Intel CEO Lip-Bu Tan delivered a stark reality check to employees, acknowledging the chipmaker has fallen out of the top 10 semiconductor companies and conceding it's "too late" to catch Nvidia in AI training.

"Twenty, 30 years ago, we are really the leader. Now I think the world has changed. We are not in the top 10 semiconductor companies," Tan told staff during a company-wide broadcast leaked to The Oregonian. The candid assessment marks a dramatic fall for the once-dominant chip giant.

Intel's market value has plummeted to just over $100 billion, less than half its value in late 2023, while Nvidia has soared past $4 trillion. Tan explicitly acknowledged Nvidia's insurmountable AI advantage, stating, "On training, I think it is too late for us. Nvidia's position in that market is simply too strong."

Intel faces mounting challenges beyond AI, including struggles with its 18A manufacturing node that has attracted only Amazon, Microsoft, and the Defense Department as committed customers. Tan has initiated comprehensive restructuring since taking over in March, including roughly 20% workforce reductions, following an $18.8 billion net loss in 2024.