NVIDIA's Hot Until It Is Not
Once upon a time I was into computer gaming. The gaming experience (speed and graphics) with a NVIDIA GeForce was epic. I could not afford it back then, thanks to the price tag but I could live with buying an alternative graphics card.
Today, NVIDIA is a powerhouse for AI chips and its "moat" the CUDA software model.
The public hullabaloo around NVIDIA is something similar to what I hear of Bitcoin (when it was up 10x). Only difference is 摩根大通 CEO Jamie Dimon isn't on TV hammering NVIDIA for being a fraud.
People are getting swept away by the favourable noise and the "AI wave". The narrative around entire existing IT infrastructure being replaced by AI chips sounds convincing but a single company getting all the benefit is a bit too much considering how competitors can hang out like honey-bees to snatch margin opportunities (many tech businesses have risen in last few months now with AI Hype).
Jeff Bezos famously said: "Your margin is my opportunity." The Magnificent Seven has already signalled (Meta, Microsoft) that they are already working on internal alternatives.
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Most credible experts do say NVIDIA is years ahead and it has displayed that by launching new chips that are launched in a matter of months rather than even a year. Jensen Huang, its CEO in his traditional black jacket is active on the media and doing a good job so far (credit to him for being the only tech CEO around for last 30 years).
Some key questions that have been ringing with me:
For all wanting a verdict whether to invest in NVIDIA, my best advice is to understand what is the best fair price to pay for a business like this plus ensure you have a margin of safety whereby if its earnings drop by 45% (PEG ratio is at 1.45; PEG ratio of 1.0 is ideal) your portfolio won't be in doldrums.
Note: The views expressed here are solely my own and do not represent those of any past or present employer. Any views here are not investment recommendations.
Applied physics.(JOIN ME) the work presented here is entirely new
5 个月NVIDIA is part of a larger problem Immigration policy & the flooding of migrants into the U.S., monetary policy created by a private banking system & men with private interests and private accumulations of wealth, appointed, unelected and unaudited, performing without oversight, business practice(s), including private equity takeover and sell-off, mergers & acquisitions, government shutdowns due to an emerging global world health presence, and now Artificial Intelligent systems poised to replace as much as 25% of our professional workforce over the next five years, & the American family has no chance Add on the effects of this private banking system we call the federal reserve and the experience of coming off the gold standard, creating runaway inflation to the tune of ten percent annually, as a home and car cost $14,000 & $1,200 respectively, in 1970, but cost $1.5 Million & $60,000 today, and the family, even local and federal government(s) are left scrambling Analysts and educators in our business schools do not recognize this runaway economy. Is it perhaps because we measure inflation utilizing three subsidized markets, in energy, transportation and agriculture? AI is but a single threat MARK applied physics
Healthtech Innovation and Strategy
5 个月Great piece, I really enjoyed reading this!
Product Strategy @ PNC | Driving Product Innovation, MBA
5 个月Some sort of price correction has to be inevitable. NVIDIA has become a “story stock” and it seems like a lot of future value has been priced in already. Thoughtful piece.