NVIDIA Corporation (NVDA)

 A great, innovative company. They built the best mousetrap, but MSFT, Amazon, Meta and Google make up 40% of their revenues. So, those 4 companies must grow at the same pace, which he doesn't think they can. Ask: How much can their customers keep increasing spending? Also, those companies are developing their own chips, while AMD is nipping at their heels. Also, a problem with the new Blackwell chip is that not all data centres can't use them, because the chips may need liquid cooling, and not air cooling; not all data centres use liquid cooling. The valuation remains high. Revenues can be flat and its multiple may fall from 30x to 15x.

High beta, not for everybody. 52-week high followed by a 6% decline yesterday. But makes sense as part of a portfolio for a growth investor.

Denominator (PE multiple) keeps moving higher faster than the numerator (price). So it's actually fairly cheap. Looking at lots of free cashflow for 2025. Leader in AI and gaming technologies. Data centres, deep learning, breakthroughs in image and speech recognition. 

90% market share in the AI GPU segment. Earnings growth rate a staggering 50%, giving it a 0.7x PEG ratio, probably the cheapest mega-cap tech name out there. Yield is 0.03%.

Loves the company and CEO, but the valuation is not cheap (he's a value investor). Yes, NVDA is setting the industry standard in chips. Remember that hardware is, unlike software, a huge gross margin business. As in the past, no one company can maintain a hold on an industry, so eventually margins will come down. You must have a strong believe that Jensen Huang can maintain this lead and that data centres' build-out ca last long term.

2025 will be the year of Blackwell. The hyperscalers will continue to spend on this stock.

Never buy a stock when it spikes, even NVDA which he likes. But today when NVDA opened deep into the red, that was the sign to buy. The stocked rallied hard today.

They were blowing away expectations is recent quarters, but this raised the bar so high that disappointment is inevitable. Shares have returned to levels of last July, but so has the Magnificent 7. The Mag 7 has run up so much, that they need a rest. Also, competition will inevitably limit margins and revenues.

Semiconductors have pulled back since 1H. This name's done OK, but not the huge outperformance it had before. Technicals still show an upward trend, which is positive. Unless it breaks the trend, it's positive; look for that before you take action. Watch $130 level, as that's where the trend would be broken.

If the market rallies, NVDA will participate as well. So he's positive in the short term.

Great run, but he's taken money out. Trepidation about maintaining margins and the growth of Blackwell and data centres. So far, other competitors have not caught up. Concerned about semis in general; SMH ETF has not recovered from July peak the way the rest of tech has. NVDA is 25% of the SMH.

The great thing about talking to him is that he's very detached from the fundamentals. Making higher highs and higher lows. It based and that was healthy, as it went parabolic for much of 2023 and 2024. Looking at the angle of ascent from late 2023 onward, it was crazy. Now breaking out. Can't see a problem owning at this point, a good story.

Today's the big day. Short-dated options from market makers show NVDA trading about 8-8.5% on either side of the close at end of day. A lot of the market makers will have to cover on their options, probably more so to the downside. 

Last time it reported in August, it was a great report with OK guidance, but over the next couple of days it traded from $125 all the way down to $95. You're going to have some opportunities to get in. For him, you have to own it, must be one of your top picks.

Right now, the largest market-cap company in the world, about $3.6T. If you extrapolate on its growth rate which is conservatively in the low 20%s, then market cap by 2029 could be anywhere between $5.6-6.3T. And that will be reflected in the stock. We can say this because it's really cornered the market on data centre accelerator chips; no one is even close. 

Now at $146, so runway is a bit short. However, it owns 88% of the accelerator chips in data centres, which are the big buyers out there. Some hyperscalers are starting to build in-house chips which will eat into its business, but at the same time governments are ramping up. Plus, there's still the gaming side, which contributes about $10B a year. Automotive chips too -- right now $3B, but estimated to be in excess of $20B by 2029. Lots of horses in the race.

They have the most advanced chip on the market that nobody can replace.

It boasts five straight quarters of triple-digit earnings growth. The stock continues to strengthen. They last guided $32 billion on data centre revenue vs. the street's $31.7 billon. If they come in above their guidance, this stock should be okay. But remember that NVDA has a history of sharp drawdowns even when they report a beat. Last August, it fell on a very short bear market. Be aware of that. You must accept that volatility.

It reports next week. It remains her largest position, despite regular trimming. NVDA will continue to increase until they eat into the backlog sometime in the future.

Huge momentum stock because of demand for chips to build large language models. Close to 40x PE, but growth has been pretty substantial. Concerns about how much capital the cloud companies are spending on chips, scaling might be hitting a wall. Should be more clarity on that in next 6-12 months. Don't chase.