Opinions
Larry Berman CFA, CMT, CTA
NVIDIA Corporation
NVDA-Q
COMMENT
Mar 17, 2025
Stock price when the opinion was issued
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A tough question. Chips are highly cyclical. He was cautious on this when it was soaring given its high valuation then and the future was cloudy--what is the evolution of AI? We're starting to see questions on that. Is investment in data centres an overreach? He's on the sidelines.
What we heard from CEO Jensen Huang at the current tech conference is what we've heard in the several past quarters: there's insatiable demand for AI, and NVDA is the middle of this and it's good for the company. We heard nothing new. He's surprised shares are not even higher today (they are bouncing). The modest share increase isn't tied to NVDA, but tied to the fact that the market has been oversold. That said, will this bounce continued into the close and beyond? The market is in no man's land.
Jensen Huang made a positive announcement at the tech conference and shares are bouncing today, but he's surprised the response is not bigger. It's muted, but is an omen for the next few weeks until the April 2 tariffs that Trump plans. Tech is up today, but down for the past several weeks. Wait and see.
It's a $3T company now, so you're not going to get the same returns as the last few years. Fundamentals are sound. Sold out for this year. There is a threat with A6 custom chips, which will have to be looked at for 2026 and beyond.
It's fine, but there are other ways to play the AI trend. You should diversify and have a basket of names. Early winners are typically infrastructure names like NVDA, but as the sector makes progress, other names will build on what the early movers provided.
Forefront of AI revolution, which is in early innings but a long game with fits and starts. Technological superiority. DeepSeek started the uncertainty, bringing into question the capital spend by hyperscalers.
Big run, but earnings have moved along in step, so PEG is actually less expensive than before. PE has contracted to high 20s, earnings expected to grow at a similar cadence for the next 3 years. Pullback is buyable.
What's important today is that they have a big conference this week. On a 1-year chart, you can see for the last 3-4 months that it's been chopping around, not doing much of anything. While that's not bearish, it's certainly not bullish.
To get to the next leg up, it'll take even better news than the market's expecting. DeepSeek indicated that maybe we don't need as many of these chips as we think we do. INTC is a turnaround story. Lots of uncertainty, and it'll take a lot to lift this stock and others.