NVIDIA Corporation (NVDA)

A pretty toppy time for this stock. Technically it looks fine, and fundamentals underpin it. If you can get into this now and want to play it as a trend, be very, very careful. The company looks like it is still putting up 15%-20% growth numbers. As long as they are doing that, you are going to have an elevated PE and a somewhat justifiable valuation. When these things break, it is going to be pretty violent.

They had significant amount of success. He does not feel it will grow faster than people think it will so he stays on the sidelines. Expectations are very high and it is reflected in the market.

This has been the poster child for augmented reality, machine learning and gaming. All 3 areas are big secular growth areas. You pay up for the best company in that sector.

He exited his position on a pullback this summer. Thought it couldn’t go any higher, but regrets selling it. They seem to be in the right place at the right time, and seemed to be in everything for the last 2 years. Their latest craze is there foray into autonomous driving. Have even signed a big deal with DHL in Europe in autonomous delivery trucks. Seems to be in the right place in a lot of different areas.

It is in the center of a couple of structural changes taking place in the world’s economy. One is artificial intelligence and autonomous driving and the other is augmented reality. Breadth within the semiconductor industry is expanding. The multiples are expanding. This is a leader in the group. It broke out recently – a nice break out, and then pulled back over the last couple of days. There are always shakes in these types of stocks. This is a great entry point.

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.