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Here's a big topic that currently only affects two major companies. Deferred demand for mergers and acquisitions. Now that the excessive antitrust regulation of the Biden era has been replaced by its almost complete absence in the Trump era. Most companies don't believe this moment will last long, so they use it to make deals.
I believe that after the summer is over we will see some high-profile deals, similar to the rumors of AstraZeneca bidding for Bristol Myers or Stripe bidding for PayPal. I know that the targets in such cases may not be interested in a merger, but the potential buyers—oh, they are ready for anything.
They seem very interested, and I think they are willing to pay well. How to play on this merger mania? Not by selecting potential targets. This is a game for losers. Instead, you should buy shares in companies that facilitate these deals—for example , why not Goldman Sachs or Morgan Stanley? Both have excellent mergers and acquisitions departments.
This merger and acquisition consulting business is a gold mine. We are talking about huge income per person, and therefore income per share. Ultimately, the technology sector has grown so much that portfolio managers are looking to enter other market sectors where innovation is still possible. Consider them " non-tech" technology stocks.
For our charitable trust club, we are focusing on Eli Lilly and Johnson&Johnson. We discussed them in detail today with Jeff Marks during our 10:20 call. Both companies had great quarters and are worth buying during any downturn. B D has a lot of medical technology. We will hear them later in our program.
Amgen just posted a great quarter, and it's time to give credit to Moderna, which has begun to realize its dream of specialized vaccines for specific diseases. Just this week, the company received FDA approval for its mRNA flu vaccine. Well, there's a reason why stocks are up 83% year-to-date. Of course, there are no guarantees with thematic investing.
You may come across an unsuccessful pharmaceutical promotion. Perhaps sales and trading at Goldman Sachs could cause problems. You buy shares of a cruise line thinking consumers are living lavishly, and someone in the group reports a weak quarter and drags everyone down. But the main takeaway: I think this quarter's information is fresh enough to pick stocks in a travel company , a semiconductor equipment manufacturer, a cybersecurity company, someone in M&A, or medtech.
And you will be Some numbers: 2.22 adjusted earnings per share, that was above the expected 2.09, right? Revenue—96.2 billion dollars. We talked about it. We expected an increase of approximately 97%. This growth was 106% year-on-year and 18% compared to the previous quarter . These are positive indicators.
Net income grew 126% year-over-year, to nearly $60 billion. Now about the forecast for the future. The revenue forecast— $108 billion plus or minus 2%—is what they provided to the market. Expectations were only about 104 billion. So, this is a $4 billion revenue overrun. Now regarding fiscal year 2028: Nvidia doesn't typically give year- ahead forecasts, so this is probably a range of forecasts.
But they announced a 70 percent growth rate in fiscal year 2028. This fiscal year will begin in February next year. This significantly exceeded expectations, which predicted only 45–50 % growth. So, these are positive points. Excellent report on key financial indicators. A wonderful prediction for the future.
What were the negatives that investors latched onto early on when the stock fell below $204 a share? These are gross profits. They were 75%, but for the current quarter (Q3) they are forecasting around 74%. They noted that this margin could drop to 71–72%, a forecast given by the company's CFO. And that scared investors a little.
But, Diana, we're talking about insignificant percentages, and they have one of the highest gross margins in this area, if not the highest. So, I think investors are finally ignoring this when looking at growth rates. They mentioned that memory chip prices were well above expectations, but CEO Jensen Huang said things were going well.
The financial side of their business is not a concern for the company because all other companies are increasing supplies and raising prices. So, there is demand in the future. So this was a great report from Nvidia and they are finally getting recognition on Wall Street. Yes, they are finally being rewarded; This is the fifth reporting period in which they have exceeded expectations, but this time they have been given a good rating .
Okay, let's move on to Salesforce. Their shares rose about 10 % in premarket trading after the results were released. The company came into this report with weak numbers , going through a difficult period, so what are your takeaways from their quarterly results? Yes, fears that software will not be able to monetize AI seem to be dispelling after this report.
Maybe Marc Benioff should be given a pom-pom, because he's the main proponent of promoting what they've put out here. But it was also a higher-than-expected profit for them. Adjusted earnings per share were $5.90. This significantly exceeded expectations, which were around $3.27. If you look at the remaining contract commitments, they increased by 14% year-on-year to $33.5 billion .
This reflects growing demand and strong subscription figures, with support revenue growing 12% year-over-year to approximately $10.8 billion . Agent Force, you know, they announced a partnership with Claude. So now it's effectively Claude Force, but Agent Force's annual revenue has exceeded $1.5 billion .
This is an increase of over 240% year-on- year. And corresponding orders, according to the company, continued to grow. Free cash flow. Nvidia just delivered a quarter that is forcing the market to raise the bar even higher. Revenue was $96.2 billion, beating the expected $92.3 billion . Data center revenue reached $89 billion , also above expectations.
Meanwhile, adjusted earnings per share came in at $2.22 versus the expected $2.09. And then Jensen Huang said a number that really caught my attention. Nvidia now expects revenue growth of approximately 17% in fiscal 2020. Think about that for a second. This is no longer a small company. But management is still projecting growth at a rate that most companies would call extraordinary.
So what is the driving force? Jensen's explanation is that AI is no longer just an experiment. AI models are now doing productive work. Companies pay for this performance. And the number of tokens generated continues to grow. More customers means more usage, and more complex models mean more computation.
And now computing power remains constant. Nvidia also says its business extends beyond large cloud providers. Half of the business is tied to cloud giants, while the other half increasingly encompasses enterprises purchasing AI infrastructure and new cloud providers. And at the heart of this expansion is our revenue and our next- generation platform, which management sees as the fastest period of product ramp-up .
But there was one figure that initially worried investors. Free cash flow fell sharply to $21.3 billion compared to $48.5 billion in the previous quarter. This sounds alarming until you look into it. Operating cash flow fell mainly due to working capital adjustments and income taxes. The accounts receivable alone created an estimated $22.35 billion burden on operating cash flow.
Simply put, Nvidia reorganized revenue that had not yet fully converted into cash received by the end of the quarter. So the decline in cash flow is mostly related to timing and working capital, not the collapse of the core business. There is also an issue that Nvidia has been championing for a week now, which is cyclical funding.
Nvidia has provided details on its future commitments, and the numbers tell an interesting story. The vast majority of commitments are related to suppliers and facilities that help Nvidia secure components and manufacturing resources to produce more products. Its investments and cloud service agreements are significantly smaller in comparison.
Therefore, the argument that Nvidia is simply financing its own demand is not entirely consistent with the allocation of liabilities. And Jensen explained the bigger picture even more clearly. Nvidia believes in the longevity of its infrastructure, as CUDA and its software stack continually enhance the usefulness of the hardware even after it is deployed.
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