To The Moon

Yesterday, NVIDIA fell 1.88% and its share price approached the last low. From the perspective of technical analysis, the previous low of $206.5 is a strong support level. If it holds on, it is expected to usher in a rebound. On the contrary, breaking the position may open a new decline cycle.

At this juncture, talk boldly about which direction NVIDIA will choose.

First of all, why did NVIDIA fall? Looking back at history can always let us see the future.

The semiconductor sector should be said to be the most beautiful after 2020. Any one of NVIDIA, AMD, ASML and TSMC will double its growth.

Behind this is the outbreak of demand for electronic products caused by the epidemic. We can also see that the performance of these semiconductor leading stocks has ushered in rapid growth in the past two years.

The super boom brought over overvalued value. At the end of last year, NVIDIA's valuation exceeded 80pe, a new high since 2000; ASML's net profit rate exceeded 25 Pb, far exceeding the average of 5-8 Pb before the epidemic.

High growth matches overvalued values, and the problem seems small, but semiconductors have cycles.

Take NVIDIA for example. The revenue of the game Department accounts for about 45%, while the game graphics card is often used for mining.

Last November, the price of bitcoin peaked and has fluctuated at the bottom so far. The game business has begun to slow down in the four seasons report.

On the one hand, the digital currency market is depressed. On the other hand, Ethereum modifies the consensus mechanism from workload proof to equity proof, which means that node operators only need to pledge a certain amount of Ethereum, that is, they can obtain income in the form of verifying nodes, and there is no need to use card display miner for mining.

In China, graphics card prices have plunged.

The game business accounts for a large proportion. Even if the data center business continues to sing, NVIDIA's performance in the second half of the year may not be as good as expected.

In addition to the adverse fundamentals, the compression of the Fed's interest rate hike on the valuation of growth stocks is inevitable.

In the past two years, the semiconductor sector has risen sharply. On the one hand, it is the business cycle. On the other hand, the large release of water under the epidemic of the Federal Reserve has also greatly boosted the valuation.

With the worst inflation in 40 years this year, the Fed's interest rate hike and table contraction are on the way, which is obviously unfavorable to the high valuation sector.

Therefore, looking back at the market of US stocks this year, the sectors with better growth are concentrated in undervalued pharmaceuticals and some consumer stocks, and the risk aversion style of the market is obvious.

Finally, when we debated whether NVIDIA would hit a new low, AMD, TSMC and application materials in the semiconductor sector have reached a new low. Therefore, NVIDIA may not escape bad luck!

According to Bloomberg's forecast, in fiscal year 2023, NVIDIA's revenue growth dropped to 29.4%; It continued to decline to 17% in fy2024.

Assuming that it can be realized, NVIDIA's current P / E ratio is 37 times in fiscal year 2023 and 32 times in fiscal year 2024.

I'm afraid there is little room for such valuation and growth:

$NVIDIA Corp(NVDA)$ $AMD(AMD)$ $Taiwan Semiconductor Manufacturing(TSM)$ $ASML Holding NV(ASML)$