Opinions
Chris Blumas
NVIDIA Corporation
NVDA-Q
COMMENT
Jun 18, 2024
Stock price when the opinion was issued
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Used to make 75% gross margins, but those have jumped to 90%. If it goes back to historic gross margins, even if sales continue, you'll see a huge degradation in profit. Sweet spot in terms of demand. Market thinks it can do no wrong. Worries that demand will abate or just normalize. Good news is baked in. Watch your position size.
Premium contentPremium contentProbably a good place to write some calls against it, especially as average analyst price target is ~$175. Over next few days, analysts will probably up price targets due to H20 chips being allowed to China. It'll be king of the hill for at least 18 more months. Should definitely be in your top 5.
(Analysts’ price target is $175.00)Clear winner, because its chips make AI possible. There is some competition out there, but AVGO isn't one of them. Look for a good buying opportunity.
He sees a parallel with INTC, which was a darling for many years. Not now. NVDA still has the market share; there are companies trying to catch up, but NVDA is still further ahead.
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A phenomenal business. Its rise is justified by its fundamentals. Trades at 40x forward PE, but it's insane how fast this business is growing. They've cornered the market in AI chips. His own concern is that NVDA's clients will eventually design their own chips for their specific purposes. Medium term, NVDA will face more competition. A risk is that it wouldn't take much for shares to slide; all it takes a quarter where growth is no longer 55% and re-rates to 40%. So shares slide by a third. It's tough--don't chase a stock, but NVDA is a phenomenal company. He's wary.