Welp, Nvidia
I have a family member who I have learned from over the years, who I would say is quite good at trading. The best purchase that comes to mind is the buying of Nvidia stock in 2017. Obviously, that is doing pretty well right now. Nvidia appears to be the first of the computer titans to really grab the AI bull by the horns. In their latest earnings report, they beat earnings expectations by 19% and have toed the $1 trillion dollar market cap line, which would put them up there with companies like MSFT, AAPL, and AMZN on value. They experienced both this jump in earnings and stock price due to the insane amount of chips they sold. These chips were primarily AI related, meaning that their purchase will likely not slow down. Nvidia has long been the leader in my eyes for computer hardware and software. Their processing chips, GPUs (which they invented,) and brand partnerships have long led the industry. They have deep ties with Microsoft for their PCs and have now expanded that partnership to generative AI. Most of what they announced during their earnings report was AI related. Partnerships with Amazon, Oracle, Google, Microsoft obviously, and Dell were all related to AI or the expansion of AI within each of those companies. They have really caught this wave excellently. That’s cool and all, but now the question becomes do you buy? The answer is simple. In one month, you buy. NVDA is going to cool down a little bit, it has to. In the past, I have said that in five years you aren’t going to remember if you bought at 200 or 195, but that doesn’t mean you have a license to be stupid. That advice only extends to companies that are 50/50 on whether they go up or down. NVDA is 100% going to go down, so you might as well save yourself a couple of bucks because small wins will add up. So, now you have to look in the mirror and say, how could I have seen this coming? Let’s answer that question over a couple of different time periods. First, five years ago, how could you have seen NVDA coming? Obviously, you couldn’t see AI coming on the way it has, but you could have looked at its leadership. NVDA has systematically stayed on top of the food chain, in an industry that will not shrink for the foreseeable future. It would be wild to assume that they were not going to continue that run of form. Obviously, hindsight is 20/20, but still, the signs were there. How about over the past year, how could you have seen this coming? Well, again you look at the industry, you look at chip demand continuously increasing, and you look at the American and Chinese governments shelling out gigantic subsidies for chips. While this may not directly influence Nvidia, it does show the intensity of the attitude that is held for chip companies. Then, over the past three months, how could you have seen this coming? AI is taking the world by storm, that much is obvious, but honestly I don’t know if this was a foreseeable future. I didn’t think that demand for chips to feed AI could possibly be this strong. Now, looking toward the future. It appears as if every other semiconductor/chip company is on the back foot compared to Nvidia. In the past, Nvidia has shown they have the ability to hold a lead, why would they lose that now? Nvidia is a buy, don’t let yourself be afflicted by FOMO, try and look at these things rationally, but Nvidia is such a buy.
