NVIDIA Corporation (NVDA)

Getting to the point where it is very expensive in the context of semiconductors and technology. The semiconductors as a group have broken. Tech has gone on to make new highs. If you have been invested in the stock, and made some good money, he would have been out of this a while ago. He would lock in profits at this time.

This has been a wonderful performer, and for good reason. It is in the forefront of making chips that can be used in all sorts of artificial AI intelligence applications. On top of that, there is such excitement about the potential for autonomous self driving cars, and their chips are key to certain of the mechanisms. The problem is, at 38X earnings, he just can’t pull the trigger.

It has been really caught up in the growth mania mostly because of bit coin. They have okay valuation, great return on equity, 45 PE, phenomenal balance sheet and they beat in the most recent quarter. He is in no man’s land for him.

This is dead in the heart of the semiconductor space. It has momentum, but they have an enormous addressable market. He recognizes that if they missed their earnings they would get hurt, but autonomous driving and augmented reality are going to be a reality going forward, and he wants to participate in that.

His view on the whole technology space is that the market is effectively pricing in the loss of cyclicality for semiconductor stocks. The technical chart is showing it going straight up and to the right. The market is not appreciating that semiconductor stocks are very cyclical and that China is building out a major industry and more supplies are going to come on stream. We need to see a correction in this space.

Broadcom (AVGO-Q), Nvidia (NVDA-Q) or Amazon (AMZN-Q) for a long-term hold? He likes all of them. They are all very interesting companies. We all know the story of Amazon, and Nvidia is on fire with their new graphic chips. Broadcom has been doing a great job of consolidating the traditional computer chip industry. This one is the higher risk one. You make more money in the short term, until somebody comes out with a chip that knocks it out of the box.

Great tech company, but really expensive. It has had a huge run and he would stay on the sidelines until there is a huge ramp up in earnings to justify the ramp up in the stock price.

If you like to roll the dice, then buy some of this and cross your fingers. A story that has had at least 3 huge cycles since he has been following it. When it gets to the top, it has one of those moments when the market quits and the stock falls. His FMV is 66% lower than the current price. Typically, when these stocks correct, they not only correct back to their FMV, but below it.

This is dead centre of a couple of really key long-term themes. They produce GPU’s that are used for highly intensive computing power for things like artificial intelligence, machine learning, autonomous driving and augmented reality. These are all things that are early days.

A core holding for him. When you get a theme that gets into gear for good reason, long-term secular changes, they can go a long way. This one is right at the heart of autonomous driving and artificial intelligence machine learning, and looks as though it is the leader in the semiconductor group. Semiconductors have had a great move over the last 2 years. As long as this market continues to behave well, and he thinks it is quite good right now, this company should continue to perform well.

He loves tech, which has been robust. You are paying a mid-teen, high teen growth, but you are paying at 25-30 times, which is quite rich. Wouldn’t be surprised that over the summer there was some shakeout. Semis fall firmly into the category of momentum right now, so you might be better off giving it a little bit of time. Keep it on your radar.

He likes this company tremendously. It has been a great company. They make graphic chips that are used in many applications. Slowly pick away at this and buy it on dips.

Had recommended this in the past at around $100. Added to his holdings on the pullback at around $92. Something is going on that he thinks the street is finally catching up to. Nobody is ever really excited about buying the stock after it has gone up 100%. In this case, he actually thinks this has another 100% upside. What they are doing on the GPU chips, a lot of analysts are saying it is akin to what was happening with Intel. He is so impressed with the numbers that are coming through. On their last earnings report, the stock rocketed up 20% or so. Use Stops to protect yourself

He likes this space. The stock price on this is lofty. Technically, you are likely to see a bit of consolidation, which would be a positive result. Ultimately you could be fine with this, but he would just give it a little bit of time.

Looking at the chart, we are probably at a point where we are running into a wall. He would be inclined to take some money off the table. Moving forward, he feels the market is going to reward more analog type stories than digital processes or the graphic chips. That is really a call on emerging markets. Desktops, and even laptops, are going to slow down. Analog chips are a better story and that is the place to be.