NVIDIA Corporation (NVDA)

Quite incredible. Shows that when stocks are attracting capital, they continue to do so for quite a period of time. The trend is still your friend. Still ranked #1.

The largest holding in his fund at 8.7%. He's no longer even writing calls on this one, which means he's no longer hedging this particular position. Analysts' target is not too far away, but every time stock reaches the price target, analysts just nudge it up. Set up rolling stops.

He stress tests his positions every morning. The #1 risk used to be the supply side. Now it's demand, but their order book goes well into 2026, so it shouldn't be an issue.

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.

Has such momentum, it could probably still outperform.

Its forward PE always looks expensive, then when you look back it so far it trumps those estimates, so it looks cheap compared to that PE. It's been this way since 2012. Incredible.

Cyclical company that will fall eventually. Would recommend a small position at current price levels. Company is underpinned by solid earnings. Trading at ~42x earnings, which is high, but expecting stock price to continue to rise. 

NVDA's cycle forecast stretching back to Nov. 2023 is negative. NVDA will top out on June 17, then decline for as long as July 30 before rising again in August. He himself (Cramer) recently took profits, because NVDA has had such a monster run. That said, he himself remains a true believer in NVDA and still holds some shares. (He feels the same with Apple, which has had ups and downs this year.)

Usually a stock pulls back right after splitting, but this didn't happen on Monday. Instead, owners held on while those who couldn't afford NVDA shares before entered. Demand has actually risen. Fitzgerald targets $200. He agrees there's more room to run.

She feels that tech is trading at unsustainable multiples and can be volatile when reporting earnings. Nvidia has consistently had good earnings.

First-mover advantage. Gross margins are out of sight at 75%. No one's caught up to it yet. At some point, companies will make their own chips and rely less on NVDA, but not right now. Big tech is spending $200B this year on capex to meet AI demand, and a lot of that is going to NVDA.

Arguably inexpensive. At some point growth will tail off, but he's not smart enough to know when that will happen, so it's in the "too hard" pile.

Great company, a bellwether. Fantastic management. Growth rate for next year or two is great. 

Real risks that customers will make chips in-house or that demand falls. We won't know the answer for awhile, look at earnings size to figure out. His sense is that the wave is just starting, and NVDA will go really hard for 3-4 years. The other chip makers aren't taking market share yet, but just trying to catch up. 

Today it surpassed $3-billion in market cap--and Apple. It comes down to their visionary CEO Jensen Huang.

Already a big fan of this stock, he agrees with an analyst's report today: they have a roadmap to continue dominating the chips industry. They will have a huge free cash flow over the next 3 years, amazing gross margins and no real competition right now. Another analyst also said that if you believe that AI is about to peak in development, then Nvidia is over-valued by a mile, but if you feel that AI is still in its infancy, then investing in anything but AI will mean underperformance. He also agrees with this. One analyst targets $2,000, meaning it will double by the end of this year. But he (Cramer) has some caveats. To reach $2,000, then where will the money come from? Not unless Nvidia's rise crushes the market. Hm. Also, inflation will erode the value of NVDA's future cash flow. Also, NVDA isn't immune to the flows of the overall stock market. He doesn't agree with the most bullish projections. That said, own and don't trade NVDA.