NVIDIA Corporation (NVDA)

Their issue isn't fundamentals. Everybody is bullish it, but where is the marginal buyer to drive shares higher? It's a permanent compounder, but there is competition on the horizon.

Languished over the last few weeks, and so he's happy they have an underweight position.

Don't buy it at $183 today. If you want to trade it wait for it to drop 70% back to 2022 levels. It is not for a long term hold.

The knock against it is the circular investing. AMZN and GOOG just came out with new chips in the last week. Can be a very cyclical area. Everybody's putting their hand up and saying, yes, we're in an AI bubble. The CEO says we're not. Bubbles don't usually happen when everyone's watching.

Q3 was a beat and a raise. Blackwell sales are off the charts. The hyperscalers like that there's an independent source for chips. Buying back stock. Trades at 24x PE for 2027, growing at 38%. Excellent risk/reward.

There will be a tipping point for this stock, margins will come down, and you won't want to be in it. But it's way too early for that. AI will change everything, and these companies are only dipping in at 3%, while the rest of the world is way lower.

Demand remains insatiable. They delivered an excellent quarter, far exceeding expectations. Trades at 39x PE and is growing dramatically at 55% revenue growth. If so, then next year EPS growth would be 61%. Is still margin expansion. People are starting to buy chips from Google and Broadcom, which may replace Nvidia's, so this could reduce NVDA's chip prices. Those chip-buyers have to see revenues from using those chips, though.

Markets and Bitcoin were down today. If market leader Nvidia heads higher, so will stocks, but if Bitcoin continues to fall, so will stocks. Nvidia's deal with Synopsys could be a much stickier and predictable business. Wall Street loves business-to-business like this deal which gives NVDA new momentum.

It has underperformed the Mag 7 of late, but over the past 3 years, GOOG is up 1,000% (Google only 250%). The stock is taking a breather like it did last year. Also, their earnings have grown as fast as the stock. We'll probably enter a period where $180-200 is a peak. She has January calls at $200, and is happy to sell calls right now.

Prefers Alphabet to Nvidia and is a bigger holding for him. Eventually, there will be competition for Nvidia, whose margins are much too big.

The 800-pound gorilla. No question that they have a wave of demand. 

Big question that some investors have is just how much investment is going to be required to build out all these data centres? In many cases, the companies building them have been capital-light. Sums to be invested are massive. Can these companies get a return on the investment they're making? That's creating a bit of a wobble in the market.

He wishes he knew, because then he could make a lot more money ;)  When we look at the whole tech market, everything is priced to perfection. If there's a stumble, these names can rocket down 10-20% in a day. He doesn't know that that's going to happen, but expectations are very high. Great business, but overpriced.

We'll see what happens. If NVDA stumbles and does not meet expectations, it could be a bad tomorrow for the company. A game he doesn't want to play, as there's too much danger on the downside.

They just announced a monster revenue beat, an earnings beat, and their AI business beat revenue estimates

Bit of risk-off has come into markets in the last week or two. Mixed news. Good news today on GOOG, where BRK took a position. Yet on the other side, some prominent hedge funds have sold or sold short positions in the AI space. NVDA, for example, was divested from a very important hedge fund run by Peter Thiel. If Peter Thiel is selling NVDA, you have to sit up and take notice.

The reaction to earnings will come down to the Q&A--whether the stock rises or falls. She expects good questions on the circular financing and open AI. The CEO always delivers and expects a great number.