NVIDIA Corporation (NVDA)

She bought more Nvidia. She loves earning season. What she learned from conference calls from Microsoft, Meta et al is that they're building a ton in AI capex. She doesn't know which companies will monetize at this point, except Nvidia. All roads lead to Nvidia. She's confident that they will report a backlog next month and will raise guidance.

On fire. AI frenzy has pushed these stocks on price and valuation. Trades at 45x trailing price to sales, 23.6x forward price to sales. Growing quickly, future looks bright, but the valuation is unheard of. There's momentum, so you can hold, but keep an eye on it. He'd prefer names with similar growth rates, but much better valuation. See his Top Picks.

Whether to buy now is a tough question, but he's been adding recently. Great story. Dominant in GPU space, and you need GPUs for AI. Earnings quarter was one of the best he's ever seen, yet still earnings growth estimates got ratcheted up. Valuation is reasonable given EPS growth rate of over 40%.

The gains have been so incredible that she has taken some profits. It's a tremendous data play and just in AI.

He still strongly believes in these names, but Palo Alto is up 76% YTD while Nvdia is 189%. He just took profits to be prudent and manage risk. Still believes in AI and cybersecurity. Palo has achieved profitability with EPS growth above 85% and revenue growth is 25%. 

Two directors have sold a large $$ amount of stock (about $80M combined). Certainly after a 200% gain many will take some profits. While there is plenty of AI hype, we do think this year will be a very big 'spending' year on AI. It may be a year from now before companies decide if the spending was 'worth it'. We like positive momentum and earnings surprises, but no one can say NVDA is cheap. We still think it can be owned, but we would monitor position sizes, and 'traders' might get a chance to re-buy. It is not going to go up in a straight line, certainly. 
Unlock Premium - Try 5i Free

Too late to invest in company - stock price too high.
Wait for shares to fall before buying.
Strong business, but valuation too high.
20-30x revenue trading price too high.

It's the most obvious way to play generative AI, which is a decade-long story ahead. Investors will keep bidding this up, based on FOMO and greed, and that may not be good. Point is, this name has momentum.

Generative AI has been, of course, a tremendous catalyst by 160%. Be prudent in managing the stock going forward. AI is a long-term secular trend. He is looking out for pullbacks in these names.

He wouldn't be adding when a stock's performed the way this one has. Be happy with what you have, and stay with it if you like it. Wait for a pullback to add more. Probably a bit ahead of itself with AI euphoria. Wonderful company, and AI will be prevalent in years to come.

Most would say. Cathie Wood missed this trade because of the valuation. But last week's earnings told him there's something going on in the chip industry. The last time he saw a huge beat like Nvidia's last week was Blackberry in 2006. This signals a conversion in the chip market towards AI chips. Probably will see a delineation between winners and losers based on who makes AI chips, winners like AMD. Until more players appear, Nvidia is the only game in town and enjoys a premium valuation. Yes, that is high but growth in the coming years will bring this stock onside. You must keep your eyes on this. There's a sea change in semis and these guys are in the forefront. No, this isn't a bubble like cryptos, because AI chips have real applications from companies seeking their chips to upgrade.

CEO Jensen Huang is the most important man in tech. He is the modern da Vinci. NVDA just became a trillion-dollar company. Companies are falling over themselves to get Nvidia's chips for generative AI. He's long pounded the drum on NVDA and continues to.

It has great tailwinds for the long term.. Its chart has been parabolic and it is trading at 65 X 2025 earnings. It is a good company to buy even though technically not at this time.

It's very frustrating, because we're backtracking to the bad days with the huge divergence between tech and everything else. She's scared by crowded trades. If you're comfortable owning Nvidia at 50x PE, then you're also comfortable with Zoom, Tesla, Teladoc, etc. She is not this kind of portfolio manager. She watches valuations and looks long term.