NVDA Thoughts 8/28: Tonight's NVDA earnings are being called the single biggest earnings event in years, potentially ever. Not sure I agree with that but it's splitting hairs since it is, without question, in the top 3-4. But what does that really mean?
Here's the rub - If you are holding NVDA, I just don't see much risk in the current price or long term narrative. NVDA remains in the mix as potentially the single greatest stock to lead the way into a new market/technology paradigm, similar to MSFT, CSCO or even late-coming AAPL. Without a doubt, NVDA is the most important stock in 30 years. That's where the argument starts. I could make a strong case that it's even greater than both due to potential market. But that will play out in time.
NVDA bears when it was trading at $700 have been 100% incorrect. That's not to say their thesis wasn't a good one at the time, it just didn't pan out and it's looking worse by the quarter. Basically put, the thesis was mostly surrounding capitalization risk due to any number of AI related threats. Now with a nearly $3.2T capitalization, the size thesis is even more noteworthy. Where can the largest stock of all time, which got there so quickly, go from here. It's already at $3.2T.
Can it rise another 50% to nearly $5T? So often what we think can or cannot happen, because it hasn't happened before, limits our belief of the possibility. Can't say I'm not questioning it either. But, at the same time, NVDA's growth story is not nearly complete. Without question it's going to continue to grow. The question remains: How much is already built into the stock as it is expensive to sales, and to a lesser degree, forward P/E valuation.
Above all else, regardless of what happens at 4:00 PM EST today with earnings, I believe NVDA is only a buy. doesn't mean it won't tank 20% on just one of the risk factors playing out. That may be the path of least resistance. I exited my $105 Calls taken not long ago for a stellar gain because I didn't want to risk earnings. I now have a protective collar in place for my shares to protect from the downside. But, I can tell you that any downside is going to bring opportunity and I will be buying again if I get the chance. I'm looking at that $105 level again (which is why I purchased those $110 Puts in the collar).
NVDA is an "own don't trade" at the core level. Meaning, that if you have a well weighted position, you keep it. If it's overweight, you sell a bit. If it's underweight, you wait and look for an opportunity to perhaps add more. For myself, even as an overweight position that I have been slowly unwinding, I'm willing to trade around it on weakness ... not strength.
The market cap. is a concern to me as we are in uncharted waters. But so, too, are we in the uncharted waters with AI and the surrounding narrative. Still in the early innings and NVDA is the easy winner. But there are currents and waves in these waters, as well as opportunities for competition. As we are seeing with SMCI, some names will be lapped by NVDA and the running pack. It' the law of the market land. I continue to lean into my favorite names in the space, led by NVDA.
The numbers that will be released today will be intriguing but will not end the rally, AI or future prospects. Own, don't trade (unless you're trading around a position).
Though my NVDA is overweight in every account, I find myself hoping for a selloff AH so that I can capitalize once again. I just have no fear of the future when looking at NVDA over the next 36 mos. Maybe I should have more. But, if that fear is in greater competition, let's not forget that we can take advantage of that as well. I'm already positioned in AVGO, DELL, MU, QCOM, AMD, MRVL, AEHR, etc. I'll be looking for opportunities to add to these positions or take my first in a name like TSM.
Good luck all.
TJ |
