NVIDIA Corporation (NVDA)

The real, bleeding-edge innovator in the ecosystem. 

It's interesting that TSM makes NVDA chips, and MU memory goes into NVDA chips. All part of the same value chain. NVDA is at bleeding edge of technology, no direct competitor in the conventional sense. If AI is real, NVDA is the winner. And if we're not at peak capex, NVDA is the winner.

He's adding in all these caveats because the valuation's OK, but you have to believe that revenue from here and 2.5 years from now is going to double. Is that likely? He thinks it's more of a 50/50 bet.

As an investor, you should look at whether you think MSFT Copilot is going to be successful, and will it have 10-30M subs willing to subscribe? If yes, then the killer app for AI is here, and NVDA will continue to rally.

He's more neutral on NVDA today, and still owns it today, but has been trimming as capex risks starting to build up. Cost of admission to NVDA is +/- 30% at the very least. He's not chasing the recent 15% dip. Worth owning over a 3-5 year horizon, but be mindful that you can't double or triple up the weight right now by adding on tertiary AI stocks that are associated with it.

Own it, but own it in a size that you'd be willing to tolerate big, significant drawdowns and moves higher. Believe in it, but don't be over-invested.

Great opportunity to pick up 4 pillars. MU on the manufacturing, TSM for the foundry, LRCX or KLAC or ASML as the equipment suppliers, NVDA is a gift down here as a designer. And (he can't believe he's going to say this) even INTC; come 2025, it will be competitive with NVDA.

The best is behind it, now fairly valued and potentially overvalued. You can't argue with the chart. Still lots of risk in this business. You never know if there are 2 guys in a garage who can come up with better software. So many companies like AMD and INTC are working to try to compete. At the same time, big techs are trying to reduce their reliance on it.

Better ideas in software or big tech.

Likely, their strength won't last that long, because competition will emerge. For now, NVDA is cooking, doing very well. You can hold this, but don't bet the farm on it. A very good company that's growing into its valuation. Be careful.

He was asked to compare Nvidia and Arista. He feels Nvidia has 3 to 5 years more growth and even though it is getting a little expensive he would hold. Arista is one of the networks to move all the AI information and is a consistent grower with a good future.

Question is investor timeline, and size of position. If bought stock recently - will have to hold for a long time. Recent weakness in share price to be expected (stocks go up and down). Traders (not long term investors) should put "stop loss" orders in. Long term investors should buy when share price falls. 

Interesting that stock price has moved up significantly but, because of earnings growth, the multiple hasn't gone crazy. Still 12 months of runway, as long as hit targets with strong forward guidance. High demand for new chips. Wait for a pullback later this summer. Core holding if you plan to hold for 2 years.

With a high stock price comes high expectations. Must continue to deliver on quarterly earnings. Will be a major commodity and move like one, so more fluctuations. 

It's pulled back but not overpriced even trading at 40x, which is expensive for a semi stock. But its growth rate justifies that. The PEG ratio is 1.0. But we have 2-3 quarters before their growth rate falls off, when the inevitable happens, when customers get their orders and inventories filled. Not now. Now is a healthy consolidation for the stock, then it resumes its next leg higher. He won't trim it here, but in 2-3 quarters.

hit, and that's when he'll buy back. Its PE is too high now. He foresees their key AI chip being commoditized by other companies. Their shareholder day didn't do much to the stock. He took profits again to be cautious.

NVDA is the creative genius leading the way in AI. Valuation is priced for perfection. Wouldn't buy it now. (Heed the warning from MU, where earnings took just a bit of a dip and the stock went down.)

It's selling off today because those who got in during momentum and can't resist momentum any longer are selling it today. Those who come in last are the first to get out. They have no loyalty. It happened with meta after a disappointing report and sell-off; that's when he bought that. NVDA will offer the same opportunity, but the caution is that these semi stocks could weaken.

Other tech stocks like Meta are up today, so it's only Nvidia correcting, and it needed to correct after shooting so far, so fast, way above its moving averages. This quarter, tech earnings are supposed to rise 16%, but remove NVDA and it's 6%. Considering tech in 2000 as an historical measure, there will be a time when NVDA will have an earnings pause. Warning.