NVIDIA Corporation (NVDA)

He wouldn't bet against their earnings next week, but Nvidia is the biggest risk to the market now.

Goldman Sachs reiterated its buy rating today, a week before NVDA earnings. Shares rallied 4.35% today. He'd like to take profits, but will hold off. NVDA is an amazing operator.

Leader in the space, but expensive valuation. Must be willing to hold long term. Would recommend buying on pullbacks. 

Is up 35% since the dip two weeks ago. NVDA is its own casino. Look at weekly options volumes (billions). The best thing is not to get carried away when this stock lurches higher or lower.

He'd say take a small swing. It's been on a roll. All the big guys say they can't get enough chips, so demand will be there this quarter. This quarter will be good. When the AI bubble bursts, this will be first to go. 2-3 more years in this stock.

On the recent pullback, he bought half a position, because he sees downside to the risk. On the pullback, NVDA's PE fell close to the level he wanted. It is one of the highest-quality tech margins, generating enormous free cash flow, 78% gross margins, 65% operating margins, no debt and capex is only 1% of sales.

Based on three previous dips in Dec. 2018, Q1-2020 and 2022, a two-day trend is not a sell-off. In 2022, NVDA corrected 70%. There's a lot going on geopolitically, namely the US election, so wait and see. The problem with NVDA is it's heavily traded--everybody loves. AMD is safer with less volatility. For a trade, buy NVDA on a dip, but he's sitting on both names now, waiting.

Shares tanked today on a report that their next-gen AI chips will be delayed, but he has heard nothing to confirm this and believes that it's business as usual, that the chips will ship as scheduled. Even if the chip is delayed, NVDA is a buy at these levels because demand for the current ship is so strong.

Buy this at $105 and sell the October $120s at $8.

AI negative press is just noise. META, for example, said that it's already strategically using AI to benefit bottom line and free cashflow. Multi-decade disruption from AI, and NVDA is right at the centre. Paying ~40x for a name that's growing around 40%.

Don't buy right at the top, and don't put all your money in at once. But when there's a pullback, as there was 2 days ago, you can put some money to work. Still buyable at certain times.

Overbought. Now pulling back, and maybe that's over or maybe it's not. Can't argue with the trend, but a pullback is expected.

Since its Q1 earnings and stock split: it flirted with a $3 trillion market cap after getting too expensive, with a PE too high. June 20 was the start of a correction. Its PE has fallen to that of P&G, Coke and Colgate, when it should trade higher. Eventually, their chips will make businesses more profitable. Own, don't trade it.

He should own this. This pullback is temporary. It could go sideways for a bit, but you could see a spike as early as today if we get positive news out of the Fed.