To The Moon

If you talk about the hottest stock in the near future, none other than $NVIDIA Corp(NVDA)$ . With the spring breeze of artificial intelligence, this graphics card giant has stepped into the "trillion market capitalization club".

This staggering rise is reminiscent of $Tesla Motors(TSLA)$ in 2020. The difference is that when Tesla rose sharply, it also drove many other new energy automakers including $NIO Inc.(NIO)$ $XPeng Inc.(XPEV)$ and $Li Auto(LI)$ to dance, also allowed several start-up electric vehicle companies to complete their IPOs at a high position, such as $Lucid Group Inc(LCID)$ and $Rivian Automotive, Inc.(RIVN)$ .

While $NVIDIA Corp(NVDA)$ does not seem to have the same level benchmarking company. Where will this wave of $NVIDIA Corp(NVDA)$ stock fever driven by artificial intelligence go?

1. The track direction is clear

In fact, after the mobile Internet market has stabilized, the industry has entered a mature stage, or no longer has the potential for explosive growth, and giant companies have entered the ranks of value stocks.

$Apple(AAPL)$ , which opened the curtain of this era, stands on the top of the world.

Corresponding to the launch of Tesla's Shanghai Gigafactory, the mass production problems that have plagued Musk for many years have been solved, and the new energy industry has taken the lead in landing. Now the industrial ecology has been formed, and the industry competition has entered a new stage.

However, after the hype of metaverse and other concepts, there is still a lack of application scenarios, and it has gradually cooled down. At the same time, the emergence of ChatGPT has made the commercialization direction of artificial intelligence more clear, and has become another new industry with rapid growth potential after new energy.

There is no doubt that just like the electric car industry led by $Tesla Motors(TSLA)$ in 2020, artificial intelligence has become the next biggest thing.

The capital market has affirmed this trend: In the current market environment where the P/E ratio of the $S&P 500(.SPX)$ Index is about 18 times, $Tesla Motors(TSLA)$ 12-month forward P/E ratio has reached nearly 40 times, while $NVIDIA Corp(NVDA)$ current stock price-earnings ratio is even higher. 45 times.

However, compared with $Tesla Motors(TSLA)$ ’s ultra-high valuation of seventy to eighty times, the current $NVIDIA Corp(NVDA)$ pricing is not outrageous, and the proportion of institutional holdings is relatively high. Compared with $Tesla Motors(TSLA)$ , which gathered retail investors, $NVIDIA Corp(NVDA)$ ’s share price is not too high not big.

2. Cook, Musk and Jensen Huang visiting China one after another

Of course, geopolitics is an unavoidable factor when studying the development of the technology industry.

The era of rapid development of the mobile Internet is also the honeymoon period of market globalization and Sino-US relations. We have witnessed the business miracles of American technology and brand links with Chinese production and consumer manufacturing. The global industrial chain that created Apple is the most prominent case.

When the new energy vehicle industry was booming, the situation was different from that of $Apple(AAPL)$ during the period of great development. Globalization had already cracked, but in the end it was China’s super factory that rescued Musk from the dire straits, and thus the current electric vehicle industry ecology emerged. , and China is still the world's most important electric vehicle production base, not one of them.

$NVIDIA Corp(NVDA)$ 's 2023 financial report shows that $NVIDIA Corp(NVDA)$ 's revenue in the Chinese market accounts for as much as 47% of the global market. It is not an exaggeration to say that it is half of the country.

Because of this, $Apple(AAPL)$ 's Cook and $Tesla Motors(TSLA)$ 's Musk visited China one after another, and it is reported that $NVIDIA Corp(NVDA)$ 's Huang Jensen will also come to China next.

These three companies are at different stages of development, and can even be said to represent different eras, so the intentions and circumstances of their visits to China are completely different.

$Apple(AAPL)$ is working hard to reduce its dependence on China's industrial chain. Although Cook appeared in the Apple retail store in Beijing in late March, the basic trend of relocating the supply chain cannot be changed.

In contrast, Musk's first visit to China in 3 years can be described as a "special forces tour" with high specifications, high attention, and intensive arrangements.

Musk arrived in Beijing on May 30, and was received by the three ministers of the Ministry of Foreign Affairs, the Ministry of Industry and Information Technology, and the Ministry of Commerce, and also enjoyed the banquet of the chairman of CATL .

As for the specific changes in business that Musk’s visit to China will bring about, no details have been released yet, but the revealed willingness to cooperate shows that Tesla may increase energy storage and autonomous driving Chinese inputs in the next step.

As soon as Musk left, some media revealed that Jensen Huang may visit Shanghai in June. Jensen Huang said that "the public must recognize China's technological progress in cloud computing, Internet services, digital payments, electric vehicles and autonomous driving technologies."

Bloomberg quoted people familiar with the matter as revealing that Jensen Huang Renxun will meet with executives from companies such as Tencent and Bytedance, and conduct exchanges and cooperation with manufacturers in related fields.

3.Where are the investor opportunities?

For investors, $Apple(AAPL)$ 's industry chain has created a large number of investment opportunities, and its latest VR products have also given the market new expectations.

After a round of hype, the new energy industry is also ushering in a more stable competitive landscape. After the market has undergone major adjustments, the opportunity of Musk's visit to Huawei is expected to usher in a new stage of development and investment opportunities.

Musk has been saying recently that Tesla will usher in a breakthrough in intelligent driving: "Tesla will usher in a 'ChatGPT moment', and people will suddenly see that 3 million cars will be able to drive autonomously. Autopilot."

I don’t know whether Musk intends to combine the breakthrough of intelligent driving with the Chinese market during this trip to China. Analysts generally see $Tesla Motors(TSLA)$ 's "Full Self-Driving" (FSD) feature, which is not yet priced in the current stock price, as an opportunity.

The problem $NVIDIA Corp(NVDA)$ faces is that it operates in a narrower market than other "trillion dollar club" members.

Enterprises in the "trillion club" have a large number of end users, thus forming a huge ecosystem. $NVIDIA Corp(NVDA)$ currently occupies 80% of the artificial intelligence chip market. Although there are no competitors at the same level, no matter how large the single market is, there are still opportunities for investors. If you are particularly confident in the chain investment target, you might as well buy the $NASDAQ 100(NDX)$ index fund, or still focus on the leading companies on the track.