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06-22

[Weak] [Weak]

Nvidia Stock Price Outlook: Will NVDA Suffer a Dot-Com Bubble Type Disaster?

06-20

[Weak] [Weak] [Weak]

Nvidia: The Paper Gains Need To Be Converted To Cash

06-18

Never ever trust articles from this website.

Nvidia: Brace For Gamma-Squeeze Breakdown And Potential Price Pressure On June 21

2022-02-06

No brain.. take a look at PYPL price. fall like stone.

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The company dominates the competition with an 80% market share for AI chips. Still, its stock price is at an all-time high again, which begs whether its valuation is sound. </p><h2 id=\"id_1243175279\">Nvidia Stock Q1 Success</h2><p>Nvidia experienced substantial growth across the year. The company’s current financial reports for the first quarter of fiscal 2025 show a significant increase in revenue to $26.04 billion, up 262% year over year.</p><p>The gross margin also improved to 78.4% from 64.6% in the same quarter last year. Nvidia’s earnings per share for the first quarter of fiscal 2025 were $6.12, which is 416% up YOY. </p><h2 id=\"id_3583760166\">AI Might Be Overhyped </h2><p>Nvidia’s financial success seems to justify the hype in its stock. However, this might not be the case when we consider the AI market as a whole. About $50 billion has been invested in Nvidia’s chips, but AI startups have only generated around $3 billion in sales. </p><p><em>The Wall Street Journal </em>interviewed John Chambers, the CEO of <strong>Cisco Systems</strong> (NASDAQ:<strong>CSCO</strong>) during the dot-com bubble. He draws some parallels between Cisco then and Nvidia right now.</p><p>Both companies had a dominant market share in a large new market while benefiting from large investments from the industry before it was profitable. Cisco’s stock today trades at around $47, never recovering from its peak of $77 in 2000. </p><h2 id=\"id_2206758967\">Competitive Risks Are Prevalent</h2><p>Nvidia faces fierce competition in the semiconductor production industry, with the major two being <strong>Intel </strong>(NASDAQ:<strong>INTC</strong>)<strong> </strong>and <strong>Advanced Micro Devices </strong>(NASDAQ:<strong>AMD</strong>).</p><p>China’s development of its semiconductors could threaten Nvidia’s position internationally. China has long relied on foreign companies for semiconductors like Nvidia, but it plans to produce 70% of its domestic chip use by 2025.</p><p>Cheap Chinese chips could flood the international markets like its EVs, disrupting pricing for everyone in the industry. </p><h2 id=\"id_873566403\">Nvidia’s Valuation Is a Gamble </h2><p>Even though Cisco’s stock price never recovered, that didn’t mean it wasn’t a good company. Today, it still has around 41% of the market share and generates over $12 billion a year in revenue.</p><p>Similarly, Nvidia doesn’t have to be a bad company for its stock to be overvalued and for investors to never make their money back for many years. </p><p>Analysts have an average price target of $124.14, below its current trading price as of writing. This shows that the market is doubting Nvidia as it continues to break all-time highs seriously.</p><p>The higher the stock price, the more investors will sell off to take home their profits. </p><p>It’s currently trading at a trailing Price-to-sales (P/E) ratio of 79.29x and a forward P/E of 52.08x, which accounts for the estimated earnings increase next year.</p><p>Even so, if we compile the trailing P/E ratio for all the stocks in the Magnificent 7 — a list of tech conglomerates that many already consider overvalued — we get an average P/E ratio of 48.31x. Many of these companies are poised to ride the AI wave but still at a much lower valuation. </p><h2 id=\"id_674521919\">Great Company, Lousy Stock </h2><p>Nvidia’s stock price has done exceptionally well. It’s financials, no doubt, back that story.</p><p>However, great companies don’t necessarily mean outstanding stock. It took the Nasdaq-100 15 years to recover from the bubble despite many of those stocks being household names today.</p><p>The growth of the AI industry is legitimate, but Nvidia isn’t the only way you can invest in it.</p></body></html>","source":"investorplace_stock_picks","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Nvidia Stock Price Outlook: Will NVDA Suffer a Dot-Com Bubble Type Disaster?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nNvidia Stock Price Outlook: Will NVDA Suffer a Dot-Com Bubble Type Disaster?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-06-22 10:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://investorplace.com/2024/06/nvidia-stock-price-outlook-will-nvda-suffer-a-dot-com-bubble-type-disaster/><strong>InvestorPlace</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Nvidia Corp (NVDA) has seen an impressive performance with 155.58% upside year-to-date with solid financials.AI boom is comparable to the dot-com bubble concerning Nvidia.Nvidia’s stock trades are ...</p>\n\n<a href=\"https://investorplace.com/2024/06/nvidia-stock-price-outlook-will-nvda-suffer-a-dot-com-bubble-type-disaster/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"IE00BFSS7M15.SGD":"Janus Henderson Balanced A Acc SGD-H","LU0234570918.USD":"高盛全球核心股票组合Acc Close","IE00BJJMRX11.SGD":"Janus Henderson Balanced A Acc SGD","LU0417517546.SGD":"Allianz US Equity Cl AT Acc SGD","IE0034235295.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"A\" (USD) ACC","LU0079474960.USD":"联博美国增长基金A","LU0889565833.HKD":"FRANKLIN TECHNOLOGY \"A\" (HKD) ACC","IE00BDCRKT87.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"ADC\" (USD) INC","LU0719512351.SGD":"JPMorgan Funds - US Technology A (acc) SGD","LU0080751232.USD":"富达环球多元动力基金A","LU0353189680.USD":"富国美国全盘成长基金Cl A Acc","LU1242518857.USD":"FULLERTON LUX FUNDS - ASIA ABSOLUTE ALPHA \"I\" (USD) ACC","IE00BJJMRY28.SGD":"Janus Henderson Balanced A Inc SGD","IE00BMPRXR70.SGD":"Neuberger Berman 5G Connectivity A Acc SGD-H","IE00BMPRXN33.USD":"NEUBERGER BERMAN 5G CONNECTIVITY \"A\" (USD) ACC","LU0321505868.SGD":"Schroder ISF Global Dividend Maximiser A Dis SGD","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","LU0234572021.USD":"高盛美国核心股票组合Acc","LU0109392836.USD":"富兰克林科技股A","IE0004445015.USD":"JANUS HENDERSON BALANCED \"A2\" (USD) ACC","LU1242518931.SGD":"Fullerton Lux Funds - Asia Absolute Alpha A Acc SGD","NVDA":"英伟达","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","LU0097036916.USD":"贝莱德美国增长A2 USD","LU0979878070.USD":"FULLERTON LUX FUNDS - ASIA ABSOLUTE ALPHA \"A\" (USD) ACC","LU0320765059.SGD":"FTIF - Franklin US Opportunities A Acc SGD","LU1852331112.SGD":"Blackrock World Technology Fund A2 SGD-H","IE00B3M56506.USD":"NEUBERGER BERMAN EMERGING MARKETS EQUITY \"A\" (USD) ACC","LU1059921491.USD":"NORDEA 1 GLOBAL STABLE EQUITY \"HB\" (USDHDG) ACC","LU0198837287.USD":"UBS (LUX) EQUITY SICAV - USA GROWTH \"P\" (USD) ACC","LU0276348264.USD":"THREADNEEDLE (LUX) GLOBAL DYNAMIC REAL RETURN\"AUP\" (USD) INC","LU1244550221.USD":"FRANKLIN GLOBAL MULTI-ASSET  INCOME \"A\" (USDHEDGED) INC (M)","LU1064131342.USD":"Fullerton Lux Funds - Global Absolute Alpha A Acc USD","LU0731783394.SGD":"Fidelity Global Dividend A-MINCOME(G)-SGD","SG9999001440.SGD":"United Global Dividend Equity Fund A SGD Dist","LU0256863811.USD":"ALLIANZ US EQUITY \"A\" INC","LU1244550494.USD":"FRANKLIN GLOBAL MULTI-ASSET INCOME \"A\" (USDHEDGED) ACC","LU0289739343.SGD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (SGD) ACC"},"source_url":"https://investorplace.com/2024/06/nvidia-stock-price-outlook-will-nvda-suffer-a-dot-com-bubble-type-disaster/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2445075366","content_text":"Nvidia Corp (NVDA) has seen an impressive performance with 155.58% upside year-to-date with solid financials.AI boom is comparable to the dot-com bubble concerning Nvidia.Nvidia’s stock trades are higher than its peers, and the company faces strong competitive pressure.Source: Sergio Photone / Shutterstock.comNvidia’s (NASDAQ:NVDA) current 10-for-1 stock split has gained investor’s attention because it makes the Nvidia stock more accessible to small investors.Overall, Nvidia’s performance has been awe-inspiring, with an 155.58% upside year-to-date. The company dominates the competition with an 80% market share for AI chips. Still, its stock price is at an all-time high again, which begs whether its valuation is sound. Nvidia Stock Q1 SuccessNvidia experienced substantial growth across the year. The company’s current financial reports for the first quarter of fiscal 2025 show a significant increase in revenue to $26.04 billion, up 262% year over year.The gross margin also improved to 78.4% from 64.6% in the same quarter last year. Nvidia’s earnings per share for the first quarter of fiscal 2025 were $6.12, which is 416% up YOY. AI Might Be Overhyped Nvidia’s financial success seems to justify the hype in its stock. However, this might not be the case when we consider the AI market as a whole. About $50 billion has been invested in Nvidia’s chips, but AI startups have only generated around $3 billion in sales. The Wall Street Journal interviewed John Chambers, the CEO of Cisco Systems (NASDAQ:CSCO) during the dot-com bubble. He draws some parallels between Cisco then and Nvidia right now.Both companies had a dominant market share in a large new market while benefiting from large investments from the industry before it was profitable. Cisco’s stock today trades at around $47, never recovering from its peak of $77 in 2000. Competitive Risks Are PrevalentNvidia faces fierce competition in the semiconductor production industry, with the major two being Intel (NASDAQ:INTC) and Advanced Micro Devices (NASDAQ:AMD).China’s development of its semiconductors could threaten Nvidia’s position internationally. China has long relied on foreign companies for semiconductors like Nvidia, but it plans to produce 70% of its domestic chip use by 2025.Cheap Chinese chips could flood the international markets like its EVs, disrupting pricing for everyone in the industry. Nvidia’s Valuation Is a Gamble Even though Cisco’s stock price never recovered, that didn’t mean it wasn’t a good company. Today, it still has around 41% of the market share and generates over $12 billion a year in revenue.Similarly, Nvidia doesn’t have to be a bad company for its stock to be overvalued and for investors to never make their money back for many years. Analysts have an average price target of $124.14, below its current trading price as of writing. This shows that the market is doubting Nvidia as it continues to break all-time highs seriously.The higher the stock price, the more investors will sell off to take home their profits. It’s currently trading at a trailing Price-to-sales (P/E) ratio of 79.29x and a forward P/E of 52.08x, which accounts for the estimated earnings increase next year.Even so, if we compile the trailing P/E ratio for all the stocks in the Magnificent 7 — a list of tech conglomerates that many already consider overvalued — we get an average P/E ratio of 48.31x. Many of these companies are poised to ride the AI wave but still at a much lower valuation. Great Company, Lousy Stock Nvidia’s stock price has done exceptionally well. It’s financials, no doubt, back that story.However, great companies don’t necessarily mean outstanding stock. It took the Nasdaq-100 15 years to recover from the bubble despite many of those stocks being household names today.The growth of the AI industry is legitimate, but Nvidia isn’t the only way you can invest in it.","news_type":1},"isVote":1,"tweetType":1,"viewCount":84,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":319003742466224,"gmtCreate":1718895207578,"gmtModify":1718895377243,"author":{"id":"3574807189087941","authorId":"3574807189087941","name":"LuoChunfeng","avatar":"https://static.itradeup.com/news/3bd2fbf9d90e26b2f600b2c5d7c54244","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false},"themes":[],"htmlText":"[Weak]&nbsp;[Weak]&nbsp;[Weak]&nbsp;&nbsp;","listText":"[Weak]&nbsp;[Weak]&nbsp;[Weak]&nbsp;&nbsp;","text":"[Weak] [Weak] [Weak]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/319003742466224","repostId":"2444055984","repostType":2,"repost":{"id":"2444055984","pubTimestamp":1718894170,"share":"https://www.laohu8.com/m/news/2444055984?lang=&edition=full","pubTime":"2024-06-20 22:36","market":"sg","language":"en","title":"Nvidia: The Paper Gains Need To Be Converted To Cash","url":"https://stock-news.laohu8.com/highlight/detail?id=2444055984","media":"seekingalpha","summary":"Nvidia stock has been rising due to the retail investor excitement about the stock split.At the same time, the sales growth is expected to slow, while the valuation multiples point to the bubble.Furth","content":"<html><head></head><body><ul style=\"\"><li><p>Nvidia stock has been rising due to the retail investor excitement about the stock split.</p></li><li><p>At the same time, the sales growth is expected to slow, while the valuation multiples point to the bubble.</p></li><li><p>Further, the macro environment is deteriorating, with recession risks rising, which should negatively affect a cyclical company like Nvidia.</p></li></ul><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/e266fe86c663b9c3cdda0b5f8e602dc7\" alt=\"jetcityimage\" title=\"jetcityimage\" tg-width=\"750\" tg-height=\"500\"/><span>jetcityimage</span></p><h2 id=\"id_844493039\">NVDA is not a long-term buy and hold</h2><p>Investors who bought Nvidia (NASDAQ:NVDA) stock last year or even recently this year have significant paper gains, as NVDA is up 174% YTD, and an astonishing 3547% over the last 5 years. Nvidia is now $3.33T market cap company, the largest company by market cap in the world.</p><p>Here is the NVDA chart.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/e8db7fdae785a966b2c8b7e35d93a443\" alt=\"Data by YCharts\" title=\"Data by YCharts\" tg-width=\"635\" tg-height=\"424\"/><span>Data by YCharts</span></p><p>However, NVDA is not a long-term buy and hold stock at this point, as I will explain in this article, and thus the investors who currently own NVDA with hefty paper capital gains have to eventually convert these paper gains into cash - they have to sell Nvidia.</p><p>Otherwise, depending on the timing of the purchase and the average purchase price, these paper gains are likely to significantly shrink, or potentially turn into paper losses.</p><p>Specifically, as I will explain, NVDA stock is likely in a bubble based on valuations, and thus the bubble will eventually burst. It&#39;s correct that NVDA had an amazing sales growth over the last 12 months, but NVDA sales are heavily concentrated in only two customers, the mysterious Customer A and Customer B, and this is a major risk to future sales growth if one of these customers pulls back. Most importantly, the NVDA sales growth is expected to significantly slow down, even not assuming the risk associated with the concentrated sales, and assuming that the broad economy will not enter a recession.</p><p>Thus, NVDA is currently valued as if the growth over the last 12 months will continue indefinitely, which is an irrational assumption. The economy is slowing down, slipping towards a recession, which means that the demand from Customers A and B will slow down, and the broad demand for NVDA chips will also slow down, likely producing negative YOY sales growth over the next few quarters. The semiconductor market is cyclical, and the GenAI theme will prove to be cyclical as well.</p><h2 id=\"id_2378348616\">Technical considerations</h2><p>First, let&#39;s look at the technical considerations, since the bubbles are irrational by definition, dominated by the positive feedback traders or trend followers who buy strictly based on charts.</p><p>On March 8, NVDA had a sharp intraday reversal, which in-fact pointed to the potential top, and the March 8 price was the peak - until the NVDA Q1 earnings announcement and the stock split announcement, which triggered another leg higher.</p><p>The stock split does not have any fundamental significance, and yet, NVDA continued to spike higher after the stock split announcement. The retail investor was particularly excited about the stock split. In my opinion, this is the key marking of the top.</p><p>On March 11th, I wrote that NVDA was potentially topping, based on technical analysis, and assigned the HOLD rating, to evaluate the price pattern. Obviously, March 8 was not the top. The price did correct below the 50dma, but rebounded strongly after the stock split.</p><p>Technically, there is no indication that NVDA is at the top now - the price keeps climbing, as the chart below shows.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/7ce414244ee67aa3c097427efdddfac8\" alt=\"Barchart\" title=\"Barchart\" tg-width=\"640\" tg-height=\"350\"/><span>Barchart</span></p><h2 id=\"id_1855740321\">Fundamental considerations</h2><p>With respect to valuation, it&#39;s widely known that NVDA is extremely expensive.</p><ul style=\"\"><li><p>GAAP PE ttm is at 76</p></li><li><p>forward GAAP PE is at 56</p></li><li><p>PS ratio is at 40</p></li></ul><p>These are very expensive valuations. Broadcom (AVGO) is the closest peer, and it similarly overvalued based on PE ratios, but significantly cheaper based on PS ratio at 19, which points that NVDA&#39;s profit margins are unsustainably high.</p><p>In fact, NVDA has EBIT margins of around 60%, which will be difficult to maintain, as the demand for its chips slows and the competition in the sector heats up, and this points to slower earnings growth.</p><p>High valuations can be justified if sales growth is expected to continue to be very high. However, the sales growth is slowing. Here is the fact, NVDA had 18% revenue growth QoQ for FY25 Q1, where the total revenue was $26B. NVDA guides that FY25 Q2 total revenue will be $28B, which is only 7.7% QoQ growth. Thus, the revenue growth is slowing.</p><p>Thus, you have a situation where the profit margins are unsustainably high, and where the revenue growth is slowing. The combination of these two variables is negative for earnings growth.</p><p>In addition, NVDA has a very concentrated sales with only two customers representing 24% of the total revenue. Here is the warning from the recent NVDA 10Q statement:</p><blockquote><p>Sales to one direct customer, Customer A, represented 13% of total revenue and sales to a second direct customer, Customer B, represented 11% of total revenue for the first quarter of fiscal year 2025, both of which were attributable to the Compute &amp; Networking segment. There was no direct customer that represented 10% or more of total revenue for the first quarter of fiscal year 2024.</p></blockquote><h2 id=\"id_3506160230\">Macro considerations</h2><p>None of the assumptions above assumes that the US economy could significantly slow, and potentially slip into a recession. The semiconductor industry is highly cyclical and the potential recession could have a negative effect on NVDA sales.</p><p>Based on the recent data, the US economy is slowing, and slipping towards a recession. Yet, NVDA stock keeps climbing.</p><h2 id=\"id_3271725306\">Implications</h2><p>Here are the facts.</p><ul style=\"\"><li><p>The NVDA stock is very expensive, based on the valuation multiples.</p></li><li><p>Yet, the revenue growth rate is slowing.</p></li><li><p>The macro environment is deteriorating, the recession risks are rising.</p></li></ul><p>In this situation, where the macro risks and the firm-specific risks are rising, while the price is also rising fueled by the retail investor excitement about the stock split, it makes sense to consider converting the paper gains to cash.</p><p>Now, bear in mind that trading around the bubble is very difficult. Isaac Newton got burned trading around the South Sea Bubble. He took the profit in the South Sea stock, but the stock kept climbing, so he got back near the top. As the price kept falling, he kept buying the &#34;dip&#34;, yet the price kept falling. He lost most of his fortune and proclaimed:</p><blockquote><p>I can calculate the motions of the heavenly bodies, but not the madness of the people.</p></blockquote></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Nvidia: The Paper Gains Need To Be Converted To Cash</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nNvidia: The Paper Gains Need To Be Converted To Cash\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-06-20 22:36 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4699997-nvidia-the-paper-gains-need-to-be-converted-to-cash><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Nvidia stock has been rising due to the retail investor excitement about the stock split.At the same time, the sales growth is expected to slow, while the valuation multiples point to the bubble....</p>\n\n<a href=\"https://seekingalpha.com/article/4699997-nvidia-the-paper-gains-need-to-be-converted-to-cash\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","IE00BJJMRX11.SGD":"Janus Henderson Balanced A Acc SGD","LU0072462426.USD":"贝莱德全球配置 A2","BK4543":"AI","BK4588":"碎股","LU0056508442.USD":"贝莱德世界科技基金A2","LU0080751232.USD":"富达环球多元动力基金A","BK4141":"半导体产品","LU0353189680.USD":"富国美国全盘成长基金Cl A Acc","BK4503":"景林资产持仓","IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","LU1242518857.USD":"FULLERTON LUX FUNDS - ASIA ABSOLUTE ALPHA \"I\" (USD) ACC","LU0061474960.USD":"天利环球焦点基金AU Acc","IE00BBT3K403.USD":"LEGG MASON CLEARBRIDGE TACTICAL DIVIDEND INCOME \"A(USD) ACC","LU0109391861.USD":"富兰克林美国机遇基金A Acc","LU0820561909.HKD":"ALLIANZ INCOME AND GROWTH \"AM\" (HKD) INC","IE00BMPRXN33.USD":"NEUBERGER BERMAN 5G CONNECTIVITY \"A\" (USD) ACC","IE00B19Z9P08.USD":"LEGG MASON CLEARBRIDGE US AGGRESSIVE GROWTH \"A\" (USD) INC","LU0320765646.SGD":"FTIF - Franklin Income A MDIS SGD-H1","BK4581":"高盛持仓","BK4512":"苹果概念","IE00B19Z9Z06.USD":"Legg Mason ClearBridge - US Aggressive Growth A Acc USD","LU0061474705.USD":"THREADNEEDLE (LUX) GLOBAL DYNAMIC REAL RETURN \"AU\" (USD) ACC","LU0466842654.USD":"HSBC ISLAMIC GLOBAL EQUITY INDEX \"A\" (USD) ACC","LU0097036916.USD":"贝莱德美国增长A2 USD","LU0238689110.USD":"贝莱德环球动力股票基金","BK4548":"巴美列捷福持仓","LU0979878070.USD":"FULLERTON LUX FUNDS - ASIA ABSOLUTE ALPHA \"A\" (USD) ACC","LU1670711040.USD":"M&G (LUX) GLOBAL DIVIDEND \"A\" (USD) ACC","LU0861579265.USD":"联博低波幅策略股票基金A","IE00B3M56506.USD":"NEUBERGER BERMAN EMERGING MARKETS EQUITY \"A\" (USD) ACC","IE00BD6J9T35.USD":"NEUBERGER BERMAN NEXT GENERATION MOBILITY \"A\" (USD) ACC","LU0965509283.SGD":"AB LOW VOLATILITY EQUITY PORTFOLIO \"AD\" (SGDHDG) INC","LU0444971666.USD":"天利全球科技基金","IE00BFSS8Q28.SGD":"Janus Henderson Balanced A Inc SGD-H","LU0061475181.USD":"THREADNEEDLE (LUX) AMERICAN \"AU\" (USD) ACC","BK4532":"文艺复兴科技持仓","IE0034235188.USD":"PINEBRIDGE GLOBAL FOCUS EQUITY \"A\" (USD) ACC","BK4554":"元宇宙及AR概念","BK4592":"伊斯兰概念","LU1551013425.SGD":"Allianz Income and Growth Cl AMg2 DIS H2-SGD","IE0009356076.USD":"JANUS HENDERSON GLOBAL TECHNOLOGY AND INNOVATION \"A2\" (USD) ACC","NVDA":"英伟达","LU0289739343.SGD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (SGD) ACC","IE00BLSP4239.USD":"Legg Mason ClearBridge - Tactical Dividend Income A Mdis USD Plus","BK4575":"芯片概念","LU0943347566.SGD":"安联收益及增长平衡基金AM H2-SGD","BK4566":"资本集团","LU0234570918.USD":"高盛全球核心股票组合Acc Close"},"source_url":"https://seekingalpha.com/article/4699997-nvidia-the-paper-gains-need-to-be-converted-to-cash","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2444055984","content_text":"Nvidia stock has been rising due to the retail investor excitement about the stock split.At the same time, the sales growth is expected to slow, while the valuation multiples point to the bubble.Further, the macro environment is deteriorating, with recession risks rising, which should negatively affect a cyclical company like Nvidia.jetcityimageNVDA is not a long-term buy and holdInvestors who bought Nvidia (NASDAQ:NVDA) stock last year or even recently this year have significant paper gains, as NVDA is up 174% YTD, and an astonishing 3547% over the last 5 years. Nvidia is now $3.33T market cap company, the largest company by market cap in the world.Here is the NVDA chart.Data by YChartsHowever, NVDA is not a long-term buy and hold stock at this point, as I will explain in this article, and thus the investors who currently own NVDA with hefty paper capital gains have to eventually convert these paper gains into cash - they have to sell Nvidia.Otherwise, depending on the timing of the purchase and the average purchase price, these paper gains are likely to significantly shrink, or potentially turn into paper losses.Specifically, as I will explain, NVDA stock is likely in a bubble based on valuations, and thus the bubble will eventually burst. It's correct that NVDA had an amazing sales growth over the last 12 months, but NVDA sales are heavily concentrated in only two customers, the mysterious Customer A and Customer B, and this is a major risk to future sales growth if one of these customers pulls back. Most importantly, the NVDA sales growth is expected to significantly slow down, even not assuming the risk associated with the concentrated sales, and assuming that the broad economy will not enter a recession.Thus, NVDA is currently valued as if the growth over the last 12 months will continue indefinitely, which is an irrational assumption. The economy is slowing down, slipping towards a recession, which means that the demand from Customers A and B will slow down, and the broad demand for NVDA chips will also slow down, likely producing negative YOY sales growth over the next few quarters. The semiconductor market is cyclical, and the GenAI theme will prove to be cyclical as well.Technical considerationsFirst, let's look at the technical considerations, since the bubbles are irrational by definition, dominated by the positive feedback traders or trend followers who buy strictly based on charts.On March 8, NVDA had a sharp intraday reversal, which in-fact pointed to the potential top, and the March 8 price was the peak - until the NVDA Q1 earnings announcement and the stock split announcement, which triggered another leg higher.The stock split does not have any fundamental significance, and yet, NVDA continued to spike higher after the stock split announcement. The retail investor was particularly excited about the stock split. In my opinion, this is the key marking of the top.On March 11th, I wrote that NVDA was potentially topping, based on technical analysis, and assigned the HOLD rating, to evaluate the price pattern. Obviously, March 8 was not the top. The price did correct below the 50dma, but rebounded strongly after the stock split.Technically, there is no indication that NVDA is at the top now - the price keeps climbing, as the chart below shows.BarchartFundamental considerationsWith respect to valuation, it's widely known that NVDA is extremely expensive.GAAP PE ttm is at 76forward GAAP PE is at 56PS ratio is at 40These are very expensive valuations. Broadcom (AVGO) is the closest peer, and it similarly overvalued based on PE ratios, but significantly cheaper based on PS ratio at 19, which points that NVDA's profit margins are unsustainably high.In fact, NVDA has EBIT margins of around 60%, which will be difficult to maintain, as the demand for its chips slows and the competition in the sector heats up, and this points to slower earnings growth.High valuations can be justified if sales growth is expected to continue to be very high. However, the sales growth is slowing. Here is the fact, NVDA had 18% revenue growth QoQ for FY25 Q1, where the total revenue was $26B. NVDA guides that FY25 Q2 total revenue will be $28B, which is only 7.7% QoQ growth. Thus, the revenue growth is slowing.Thus, you have a situation where the profit margins are unsustainably high, and where the revenue growth is slowing. The combination of these two variables is negative for earnings growth.In addition, NVDA has a very concentrated sales with only two customers representing 24% of the total revenue. Here is the warning from the recent NVDA 10Q statement:Sales to one direct customer, Customer A, represented 13% of total revenue and sales to a second direct customer, Customer B, represented 11% of total revenue for the first quarter of fiscal year 2025, both of which were attributable to the Compute & Networking segment. There was no direct customer that represented 10% or more of total revenue for the first quarter of fiscal year 2024.Macro considerationsNone of the assumptions above assumes that the US economy could significantly slow, and potentially slip into a recession. The semiconductor industry is highly cyclical and the potential recession could have a negative effect on NVDA sales.Based on the recent data, the US economy is slowing, and slipping towards a recession. Yet, NVDA stock keeps climbing.ImplicationsHere are the facts.The NVDA stock is very expensive, based on the valuation multiples.Yet, the revenue growth rate is slowing.The macro environment is deteriorating, the recession risks are rising.In this situation, where the macro risks and the firm-specific risks are rising, while the price is also rising fueled by the retail investor excitement about the stock split, it makes sense to consider converting the paper gains to cash.Now, bear in mind that trading around the bubble is very difficult. Isaac Newton got burned trading around the South Sea Bubble. He took the profit in the South Sea stock, but the stock kept climbing, so he got back near the top. As the price kept falling, he kept buying the \"dip\", yet the price kept falling. He lost most of his fortune and proclaimed:I can calculate the motions of the heavenly bodies, but not the madness of the people.","news_type":1},"isVote":1,"tweetType":1,"viewCount":52,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":318100684304608,"gmtCreate":1718699787968,"gmtModify":1718700641870,"author":{"id":"3574807189087941","authorId":"3574807189087941","name":"LuoChunfeng","avatar":"https://static.itradeup.com/news/3bd2fbf9d90e26b2f600b2c5d7c54244","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false},"themes":[],"htmlText":"Never ever trust articles from this website.","listText":"Never ever trust articles from this website.","text":"Never ever trust articles from this website.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/318100684304608","repostId":"2444914192","repostType":2,"repost":{"id":"2444914192","pubTimestamp":1718687821,"share":"https://www.laohu8.com/m/news/2444914192?lang=&edition=full","pubTime":"2024-06-18 13:17","market":"sg","language":"en","title":"Nvidia: Brace For Gamma-Squeeze Breakdown And Potential Price Pressure On June 21","url":"https://stock-news.laohu8.com/highlight/detail?id=2444914192","media":"seekingalpha","summary":"Nvidia Corporation investors have scored a big win. The stock is up more than 200% over the past twelve months, outperforming the S&P 500 by almost 10x.Although Nvidia's exceptional performance has so","content":"<html><head></head><body><ul style=\"\"><li><p>Nvidia Corporation investors have scored a big win. The stock is up more than 200% over the past twelve months, outperforming the S&amp;P 500 by almost 10x.</p></li><li><p>Although Nvidia&#39;s exceptional performance has some fundamental backing, I believe a substantial portion of the price rally is due to bullish momentum in trading and speculation.</p></li><li><p>Over the past few months, bulk buying of call options forced option dealers to hedge their position by purchasing the stock, thus creating a feedback loop of rising prices.</p></li><li><p>The &#34;Gamma-squeeze&#34; may come to an end on June 21, as nearly 5 million open interest in call contracts will expire. The big option expiration event may result in a sharp share price drop as options dealers start unwinding their hedges.</p></li><li><p>On a fundamental view, using a residual earnings model, I see Nvidia shares as overvalued -- calculating an implied target price of $76.4 per share.</p></li></ul><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/6b03877646adf7f8e7fd7cce2f119d47\" tg-width=\"750\" tg-height=\"500\"/></p><p>JasonDoiy</p><p></p><p>Congratulations to all the <strong>NVIDIA Corporation</strong> (NASDAQ:NVDA) investors and long-positioned traders. The stock is up 207% over the past twelve months, outperforming the S&amp;P 500 (SP500) by more than 175 percentage points. With Nvidia equity trading at about 80x TTM earnings and 40x book value, market sentiment is splitting more aggressively: One camp of market participants argues that Nvidia&#39;s bull market has more room for upside (for example, see here, here, and here), while the other camp sees shares as grossly overvalued (for example, see here, here, and here).</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/d74c07654049ae62a47c86f4772a16b9\" tg-width=\"640\" tg-height=\"227\"/></p><p>Seeking Alpha</p><p></p><p>Personally, I would position myself in the second camp. While there is certainly a fundamental component to Nvidia&#39;s eye-watering performance, I argue that a large part of the share price rally has been driven by bullish momentum in options trading and associated hedging flows.</p><p>On that note, regarding the 21st of June, we are approaching a key option expiration date that may negatively shift the Gamma momentum for Nvidia, as almost 5 million open interest in Call contracts expires. This should significantly lower the bullish hedging activity of options dealers, and thus give Nvidia shares more &#34;freedom&#34; to trend towards fair value. From a fundamental view, I value Nvidia stock using a residual earnings model and calculate an implied target price equal to $76.4 per share.</p><h2 id=\"id_2894606858\">Fundamentals Boom, But Growth And Margins Likely To Level Out</h2><p>Nvidia&#39;s latest earnings report highlighted ongoing strong demand for AI-related CAPEX spending. During the period from February to the end of May, the company accumulated $26 billion of revenues, up 18% vs. Q4 and up 262% vs. the same period one year prior, while beating consensus by 5%. EPS came in at $6.12, beating consensus by 9%. Notably, the strong performance was mainly driven in the Data Center segment, where revenue reached a record $22.6 billion, up 23% QoQ and up 427% YoY.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/5ac189656b684e3bc437ac2ef458e134\" tg-width=\"640\" tg-height=\"236\"/></p><p>Nvidia Q1 FY 2025 report</p><p></p><p>On a high level, the key message from Nvidia&#39;s earnings call with analysts was that demand continues to outpace supply for Hopper and Blackwell. Moreover, Nvidia suggested that the company sees accelerating demand from GenAI for both Inference and Training. Guidance for Q2 came in at about $28 billion for revenues and $6.2 - $6.8 for EPS (Not split adjusted, to keep EPS outlook comparable with Q1 reporting. Split adjusted it would be 0.62-0.68 cents; modelling anchored on non-GAAP gross margin guidance of about 75.5%, and non-GAAP operating expenses guidance of about $2.8 billion).</p><p>Nvidia&#39;s strong Q1 print undoubtedly highlights that there is a solid fundamental component attached to NVDA&#39;s record-breaking bull run. However, while the fundamentals are solid and pointing upward, the implied valuation of Nvidia shares may excessively discount the positive commercial momentum. Pointing to the cyclical nature of the semiconductor industry, paired with accelerating competitive dynamics in AI chip development, I argue that Nvidia&#39;s triple-digit YoY topline expansion rate and 60% EBIT margin may not be defendable over time. For example, equity research analysts at BNP Paribas have broken down Nvidia&#39;s growth outlook by segment and concluded that Nvidia&#39;s topline growth will likely slow to 20-25% YoY by the end of FY 2025 <em>(Source: BNP Paribas, research note on NVDA dated 23 May 2024).</em></p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/6db85a3b8bd7dc1d7b0b1298ad560b46\" tg-width=\"609\" tg-height=\"428\"/></p><p>BNP Paribas</p><p></p><h2 id=\"id_3822326567\">The Importance Of Gamma...</h2><p>Positive Gamma is crucial for upside momentum in the market because it influences how options market makers adjust their hedging strategies, which can amplify price movements. On a more detailed level, Gamma measures the rate of change of delta, which is the sensitivity of an option&#39;s price to changes in the underlying asset&#39;s price. When traders or market makers sell options, they often hedge their positions by buying or selling the underlying asset to stay delta-neutral, meaning they aren&#39;t exposed to price changes in the underlying asset. In that context, positive Gamma means that as the underlying asset&#39;s price increases, the delta of the options also increases, requiring more buying of the underlying asset to maintain a neutral position.</p><p>This self-reinforcing mechanism can contribute to strong upward momentum. In scenarios where there is significant call option buying like it has certainly been the case with NVDA stock, there is a build-up of positive Gamma, which can lead to sharp rallies for the reasons explained.</p><h2 id=\"id_1655613019\">...And What It May Imply For Nvidia Stock</h2><p>The strong commercial momentum for Nvidia&#39;s products has driven speculative call-buying for NVDA stock. On that note, I highlight that Call open interest for Nvidia with expiration dated 21 June almost reaches 5 million contracts, or 500 million of underlying shares (notional worth close to $65 billion!), with most of the strikes centered in the range of $120-$140. Across expiration dates, the cumulative open Call interest is about 13-14 million contracts or $175 billion worth of notional.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/71d6b37b547ba6adcbdd3851b0acec0b\" tg-width=\"640\" tg-height=\"190\"/></p><p>optioncharts.io</p><p></p><p>The enormous open interest for Nvidia shares has resulted in an equally enormous net positive Gamma exposure, with most of the Gamma anchored to the 21st June expiration date.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/0bc5cb82bdf12010eb3817212a94e3b8\" tg-width=\"640\" tg-height=\"194\"/></p><p>optioncharts.io</p><p></p><p>Bringing the Gamma exposure into context, I highlight that a 1% move in Nvidia shares would result in $2.5-3.0 billion of <em>buying</em> activity to hedge the options&#39; Delta. With Nvidia shares moving up and down during the day, the hedging activity likely accounts for 25-30% of trading volume, according to my rough estimates.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/f2363bd5dc3058686a5cc10f04e835e6\" tg-width=\"640\" tg-height=\"384\"/></p><p>optioncharts.io</p><p></p><p>Now, the interesting takeaway for readers relates to the previously highlighted observation that about 5 million NVDA options contracts are expiring on June 21st. Once these options expire, the associated hedging flow will also stop to support NVDA shares with buying pressure. Moreover, investors should note that when market participants buy call options, market makers who sell these options often hedge their positions by buying the underlying stock to remain delta-neutral. As the expiration date approaches, market makers may start unwinding their hedges, which involves selling the stock they previously bought. This could lead to notable downward pressure on the share price.</p><h2 id=\"id_533550909\">Valuation: Fair Value Likely At $76.4 Per Share</h2><p>To find a valuation anchor for stocks, I am a great fan of using the residual earnings model approach. This model is based on the principle that a company&#39;s valuation should equal its discounted future earnings after accounting for the capital charge. According to the CFA Institute:</p><blockquote><p><em>Conceptually, residual income is net income less a charge (deduction) for common shareholders&#39; opportunity cost in generating net income. It is the residual or remaining income after considering the costs of all of a company&#39;s capital.</em></p></blockquote><p>For my valuation model of Nvidia stock, I make the following assumptions:</p><p><strong>EPS Forecast</strong>: I use the consensus analyst forecast from the Bloomberg Terminal through 2027. Beyond 2027, I consider estimates too speculative to be reliable. However, the 2-3 year analyst consensus is typically accurate.</p><p><strong>Capital Charge</strong>: I use the CAPM model to estimate Nvidia&#39;s cost of equity, which suggests a rate of 9.7%.</p><p><strong>Terminal Growth Rate</strong>: I apply a terminal growth rate of 4% post-2027, which, I believe, is reasonable (around 1.5-2.0 percentage points above nominal GDP growth to reflect structural growth in the digital economy).</p><p>Investors with different assumptions about Nvidia&#39;s cost of capital and terminal growth rate can refer to the enclosed sensitivity table.</p><p>Based on these assumptions, I calculate a base-case target price for Nvidia of approximately $76.4 per share.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/8c05cd4ca9d5784f08c4a0ba8e87e5f2\" tg-width=\"640\" tg-height=\"229\"/></p><p>Company Financials; Bloomberg &amp; Author&#39;s EPS Estimates; Author&#39;s Calculation</p><p></p><p>My base-case projection for Nvidia&#39;s target price suggests a potential downside. However, it is crucial for investors to consider the risk and reward ratio of investing in a company from a &#34;scenario&#34; perspective. To evaluate different scenarios based on various assumptions, I have created a sensitivity table analyzing Nvidia&#39;s cost of equity and terminal growth rate. See below.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/7382f09b5c4fe6bde18fbc4305eb7b6a\" tg-width=\"640\" tg-height=\"167\"/></p><p>Company Financials; Bloomberg &amp; Author&#39;s EPS Estimates; Author&#39;s Calculation</p><p></p><h2 id=\"id_4155478804\">Investor Takeaway</h2><p>Nvidia investors have scored a big win. The stock is up more than 200% over the past twelve months, outperforming the S&amp;P 500 by almost 10x. Although Nvidia&#39;s exceptional performance has some fundamental backing, I believe a substantial portion of the price rally is due to bullish momentum in trading and speculation.</p><p>One key consideration in this context is options trading and associated hedging flows. Over the past few months, bulk buying of call options forced option dealers to hedge their position by purchasing the stock, thus creating a feedback loop of rising prices. However, the &#34;Gamma-squeeze&#34; may come to an end on June 21, as nearly 5 million open interest in call contracts will expire. This could notably pressure bullish trading momentum and may result in price pressure as options dealer start unwinding their hedges.</p><p>On a fundamental view, using a residual earnings model, I see Nvidia shares as overvalued -- calculating an implied target price of $76.4 per share.</p><h2 id=\"id_1420899705\">A Note On Risk</h2><p>The Gamma dynamic has certainly been a major force in driving Nvidia Corporation shares higher. However, investors should note that other factors to consider are important too. On that note, Nvidia&#39;s valuation may continue to challenge skeptics, driven by strong underlying fundamentals and sustained demand for AI-related technologies. In fact, as long as Nvidia&#39;s revenue growth rate and profit margins remain robust, investors may continue to like Nvidia stock at current prices, buying the flow coming to market from option dealers&#39; books, and the stock may defy expectations of a correction.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Nvidia: Brace For Gamma-Squeeze Breakdown And Potential Price Pressure On June 21</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nNvidia: Brace For Gamma-Squeeze Breakdown And Potential Price Pressure On June 21\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-06-18 13:17 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4699645-nvidia-brace-for-gamma-squeeze-breakdown-and-potential-price-pressure-on-june-21><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Nvidia Corporation investors have scored a big win. The stock is up more than 200% over the past twelve months, outperforming the S&P 500 by almost 10x.Although Nvidia's exceptional performance has ...</p>\n\n<a href=\"https://seekingalpha.com/article/4699645-nvidia-brace-for-gamma-squeeze-breakdown-and-potential-price-pressure-on-june-21\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"IE00BFSS8Q28.SGD":"Janus Henderson Balanced A Inc SGD-H","LU0289961442.SGD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"AX\" (SGD) ACC","IE0034235188.USD":"PINEBRIDGE GLOBAL FOCUS EQUITY \"A\" (USD) ACC","BK4548":"巴美列捷福持仓","IE0009356076.USD":"JANUS HENDERSON GLOBAL TECHNOLOGY AND INNOVATION \"A2\" (USD) ACC","LU0289739343.SGD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (SGD) ACC","IE00B7KXQ091.USD":"Janus Henderson Balanced A Inc USD","LU0256863811.USD":"ALLIANZ US EQUITY \"A\" INC","BK4554":"元宇宙及AR概念","BK4532":"文艺复兴科技持仓","LU0348723411.USD":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","LU0276348264.USD":"THREADNEEDLE (LUX) GLOBAL DYNAMIC REAL RETURN\"AUP\" (USD) INC","LU0234570918.USD":"高盛全球核心股票组合Acc Close","LU0238689110.USD":"贝莱德环球动力股票基金","LU0061475181.USD":"THREADNEEDLE (LUX) AMERICAN \"AU\" (USD) ACC","BK4534":"瑞士信贷持仓","LU0170899867.USD":"EASTSPRING INVESTMENTS WORLD VALUE EQUITY  \"A\" (USD) ACC","LU0417517546.SGD":"Allianz US Equity Cl AT Acc SGD","IE00B19Z9505.USD":"美盛-美国大盘成长股A Acc","LU0109391861.USD":"富兰克林美国机遇基金A Acc","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","LU0072462426.USD":"贝莱德全球配置 A2","LU0082616367.USD":"摩根大通美国科技A（dist）","GB00BDT5M118.USD":"天利环球扩展Alpha基金A Acc","LU0056508442.USD":"贝莱德世界科技基金A2","LU0080751232.USD":"富达环球多元动力基金A","IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","LU0353189680.USD":"富国美国全盘成长基金Cl A Acc","BK4527":"明星科技股","NVDA":"英伟达","LU0061474960.USD":"天利环球焦点基金AU Acc","IE00BJJMRY28.SGD":"Janus Henderson Balanced A Inc SGD","IE00B1BXHZ80.USD":"Legg Mason ClearBridge - US Appreciation A Acc USD","IE00BMPRXN33.USD":"NEUBERGER BERMAN 5G CONNECTIVITY \"A\" (USD) ACC","BK4588":"碎股","BK4579":"人工智能","BK4550":"红杉资本持仓","LU0234572021.USD":"高盛美国核心股票组合Acc","BK4503":"景林资产持仓","IE0004445015.USD":"JANUS HENDERSON BALANCED \"A2\" (USD) ACC","BK4551":"寇图资本持仓","LU0353189763.USD":"ALLSPRING  US ALL CAP GROWTH FUND \"I\" (USD) ACC","LU0175139822.USD":"AB FCP I Global Equity Blend A USD","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","LU0097036916.USD":"贝莱德美国增长A2 USD","LU0289960550.SGD":"AB FCP I - GLOBAL EQUITY BLEND PORTFOLIO 'A' (SGD) ACC","BK4549":"软银资本持仓","IE00B3M56506.USD":"NEUBERGER BERMAN EMERGING MARKETS EQUITY \"A\" (USD) ACC","LU0198837287.USD":"UBS (LUX) EQUITY SICAV - USA GROWTH \"P\" (USD) ACC","LU0316494557.USD":"FRANKLIN GLOBAL FUNDAMENTAL STRATEGIES \"A\" ACC"},"source_url":"https://seekingalpha.com/article/4699645-nvidia-brace-for-gamma-squeeze-breakdown-and-potential-price-pressure-on-june-21","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2444914192","content_text":"Nvidia Corporation investors have scored a big win. The stock is up more than 200% over the past twelve months, outperforming the S&P 500 by almost 10x.Although Nvidia's exceptional performance has some fundamental backing, I believe a substantial portion of the price rally is due to bullish momentum in trading and speculation.Over the past few months, bulk buying of call options forced option dealers to hedge their position by purchasing the stock, thus creating a feedback loop of rising prices.The \"Gamma-squeeze\" may come to an end on June 21, as nearly 5 million open interest in call contracts will expire. The big option expiration event may result in a sharp share price drop as options dealers start unwinding their hedges.On a fundamental view, using a residual earnings model, I see Nvidia shares as overvalued -- calculating an implied target price of $76.4 per share.JasonDoiyCongratulations to all the NVIDIA Corporation (NASDAQ:NVDA) investors and long-positioned traders. The stock is up 207% over the past twelve months, outperforming the S&P 500 (SP500) by more than 175 percentage points. With Nvidia equity trading at about 80x TTM earnings and 40x book value, market sentiment is splitting more aggressively: One camp of market participants argues that Nvidia's bull market has more room for upside (for example, see here, here, and here), while the other camp sees shares as grossly overvalued (for example, see here, here, and here).Seeking AlphaPersonally, I would position myself in the second camp. While there is certainly a fundamental component to Nvidia's eye-watering performance, I argue that a large part of the share price rally has been driven by bullish momentum in options trading and associated hedging flows.On that note, regarding the 21st of June, we are approaching a key option expiration date that may negatively shift the Gamma momentum for Nvidia, as almost 5 million open interest in Call contracts expires. This should significantly lower the bullish hedging activity of options dealers, and thus give Nvidia shares more \"freedom\" to trend towards fair value. From a fundamental view, I value Nvidia stock using a residual earnings model and calculate an implied target price equal to $76.4 per share.Fundamentals Boom, But Growth And Margins Likely To Level OutNvidia's latest earnings report highlighted ongoing strong demand for AI-related CAPEX spending. During the period from February to the end of May, the company accumulated $26 billion of revenues, up 18% vs. Q4 and up 262% vs. the same period one year prior, while beating consensus by 5%. EPS came in at $6.12, beating consensus by 9%. Notably, the strong performance was mainly driven in the Data Center segment, where revenue reached a record $22.6 billion, up 23% QoQ and up 427% YoY.Nvidia Q1 FY 2025 reportOn a high level, the key message from Nvidia's earnings call with analysts was that demand continues to outpace supply for Hopper and Blackwell. Moreover, Nvidia suggested that the company sees accelerating demand from GenAI for both Inference and Training. Guidance for Q2 came in at about $28 billion for revenues and $6.2 - $6.8 for EPS (Not split adjusted, to keep EPS outlook comparable with Q1 reporting. Split adjusted it would be 0.62-0.68 cents; modelling anchored on non-GAAP gross margin guidance of about 75.5%, and non-GAAP operating expenses guidance of about $2.8 billion).Nvidia's strong Q1 print undoubtedly highlights that there is a solid fundamental component attached to NVDA's record-breaking bull run. However, while the fundamentals are solid and pointing upward, the implied valuation of Nvidia shares may excessively discount the positive commercial momentum. Pointing to the cyclical nature of the semiconductor industry, paired with accelerating competitive dynamics in AI chip development, I argue that Nvidia's triple-digit YoY topline expansion rate and 60% EBIT margin may not be defendable over time. For example, equity research analysts at BNP Paribas have broken down Nvidia's growth outlook by segment and concluded that Nvidia's topline growth will likely slow to 20-25% YoY by the end of FY 2025 (Source: BNP Paribas, research note on NVDA dated 23 May 2024).BNP ParibasThe Importance Of Gamma...Positive Gamma is crucial for upside momentum in the market because it influences how options market makers adjust their hedging strategies, which can amplify price movements. On a more detailed level, Gamma measures the rate of change of delta, which is the sensitivity of an option's price to changes in the underlying asset's price. When traders or market makers sell options, they often hedge their positions by buying or selling the underlying asset to stay delta-neutral, meaning they aren't exposed to price changes in the underlying asset. In that context, positive Gamma means that as the underlying asset's price increases, the delta of the options also increases, requiring more buying of the underlying asset to maintain a neutral position.This self-reinforcing mechanism can contribute to strong upward momentum. In scenarios where there is significant call option buying like it has certainly been the case with NVDA stock, there is a build-up of positive Gamma, which can lead to sharp rallies for the reasons explained....And What It May Imply For Nvidia StockThe strong commercial momentum for Nvidia's products has driven speculative call-buying for NVDA stock. On that note, I highlight that Call open interest for Nvidia with expiration dated 21 June almost reaches 5 million contracts, or 500 million of underlying shares (notional worth close to $65 billion!), with most of the strikes centered in the range of $120-$140. Across expiration dates, the cumulative open Call interest is about 13-14 million contracts or $175 billion worth of notional.optioncharts.ioThe enormous open interest for Nvidia shares has resulted in an equally enormous net positive Gamma exposure, with most of the Gamma anchored to the 21st June expiration date.optioncharts.ioBringing the Gamma exposure into context, I highlight that a 1% move in Nvidia shares would result in $2.5-3.0 billion of buying activity to hedge the options' Delta. With Nvidia shares moving up and down during the day, the hedging activity likely accounts for 25-30% of trading volume, according to my rough estimates.optioncharts.ioNow, the interesting takeaway for readers relates to the previously highlighted observation that about 5 million NVDA options contracts are expiring on June 21st. Once these options expire, the associated hedging flow will also stop to support NVDA shares with buying pressure. Moreover, investors should note that when market participants buy call options, market makers who sell these options often hedge their positions by buying the underlying stock to remain delta-neutral. As the expiration date approaches, market makers may start unwinding their hedges, which involves selling the stock they previously bought. This could lead to notable downward pressure on the share price.Valuation: Fair Value Likely At $76.4 Per ShareTo find a valuation anchor for stocks, I am a great fan of using the residual earnings model approach. This model is based on the principle that a company's valuation should equal its discounted future earnings after accounting for the capital charge. According to the CFA Institute:Conceptually, residual income is net income less a charge (deduction) for common shareholders' opportunity cost in generating net income. It is the residual or remaining income after considering the costs of all of a company's capital.For my valuation model of Nvidia stock, I make the following assumptions:EPS Forecast: I use the consensus analyst forecast from the Bloomberg Terminal through 2027. Beyond 2027, I consider estimates too speculative to be reliable. However, the 2-3 year analyst consensus is typically accurate.Capital Charge: I use the CAPM model to estimate Nvidia's cost of equity, which suggests a rate of 9.7%.Terminal Growth Rate: I apply a terminal growth rate of 4% post-2027, which, I believe, is reasonable (around 1.5-2.0 percentage points above nominal GDP growth to reflect structural growth in the digital economy).Investors with different assumptions about Nvidia's cost of capital and terminal growth rate can refer to the enclosed sensitivity table.Based on these assumptions, I calculate a base-case target price for Nvidia of approximately $76.4 per share.Company Financials; Bloomberg & Author's EPS Estimates; Author's CalculationMy base-case projection for Nvidia's target price suggests a potential downside. However, it is crucial for investors to consider the risk and reward ratio of investing in a company from a \"scenario\" perspective. To evaluate different scenarios based on various assumptions, I have created a sensitivity table analyzing Nvidia's cost of equity and terminal growth rate. See below.Company Financials; Bloomberg & Author's EPS Estimates; Author's CalculationInvestor TakeawayNvidia investors have scored a big win. The stock is up more than 200% over the past twelve months, outperforming the S&P 500 by almost 10x. Although Nvidia's exceptional performance has some fundamental backing, I believe a substantial portion of the price rally is due to bullish momentum in trading and speculation.One key consideration in this context is options trading and associated hedging flows. Over the past few months, bulk buying of call options forced option dealers to hedge their position by purchasing the stock, thus creating a feedback loop of rising prices. However, the \"Gamma-squeeze\" may come to an end on June 21, as nearly 5 million open interest in call contracts will expire. This could notably pressure bullish trading momentum and may result in price pressure as options dealer start unwinding their hedges.On a fundamental view, using a residual earnings model, I see Nvidia shares as overvalued -- calculating an implied target price of $76.4 per share.A Note On RiskThe Gamma dynamic has certainly been a major force in driving Nvidia Corporation shares higher. However, investors should note that other factors to consider are important too. On that note, Nvidia's valuation may continue to challenge skeptics, driven by strong underlying fundamentals and sustained demand for AI-related technologies. In fact, as long as Nvidia's revenue growth rate and profit margins remain robust, investors may continue to like Nvidia stock at current prices, buying the flow coming to market from option dealers' books, and the stock may defy expectations of a correction.","news_type":1},"isVote":1,"tweetType":1,"viewCount":34,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9098656424,"gmtCreate":1644120172943,"gmtModify":1676533892418,"author":{"id":"3574807189087941","authorId":"3574807189087941","name":"LuoChunfeng","avatar":"https://static.itradeup.com/news/3bd2fbf9d90e26b2f600b2c5d7c54244","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false},"themes":[],"htmlText":"No brain.. take a look at PYPL price. fall like stone.&nbsp;","listText":"No brain.. take a look at PYPL price. fall like stone.&nbsp;","text":"No brain.. take a look at PYPL price. fall like stone.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9098656424","repostId":"2208317024","repostType":4,"isVote":1,"tweetType":1,"viewCount":41,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"3479274806242608","authorId":"3479274806242608","name":"kiekie","avatar":"https://static.laohu8.com/picture166","crmLevel":1,"crmLevelSwitch":0},"content":"Don't worry, PYPL has a promising future.","text":"Don't worry, PYPL has a promising future.","html":"Don't worry, PYPL has a promising future."}],"imageCount":0,"langContent":"EN","totalScore":0}],"hots":[{"id":9098656424,"gmtCreate":1644120172943,"gmtModify":1676533892418,"author":{"id":"3574807189087941","authorId":"3574807189087941","name":"LuoChunfeng","avatar":"https://static.itradeup.com/news/3bd2fbf9d90e26b2f600b2c5d7c54244","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false},"themes":[],"htmlText":"No brain.. take a look at PYPL price. fall like stone.&nbsp;","listText":"No brain.. take a look at PYPL price. fall like stone.&nbsp;","text":"No brain.. take a look at PYPL price. fall like stone.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9098656424","repostId":"2208317024","repostType":4,"repost":{"id":"2208317024","pubTimestamp":1644039774,"share":"https://www.laohu8.com/m/news/2208317024?lang=&edition=full","pubTime":"2022-02-05 13:42","market":"us","language":"en","title":"3 No-Brainer Stocks to Buy With $1,000 Right Now","url":"https://stock-news.laohu8.com/highlight/detail?id=2208317024","media":"Motley Fool","summary":"These outstanding companies have the potential to generate market-crushing returns.","content":"<html><head></head><body><p>The <b>S&amp;P 500</b> has had a cold start to the new year, down 6% in the month of January. This situation might be scaring investors out of the market entirely, as the downward trend could continue with uncertainty about inflation, the Fed&#39;s pending rate hikes, and the ongoing pandemic adding to the worries. </p><p>But if you&#39;re an investor with a long time horizon, like me, then now could be the perfect time to add fresh capital to your portfolio. When the market seems overly pessimistic and full of fear is usually the best time to be aggressive. </p><p>With $1,000 to invest, look no further than <b>Lululemon</b> (NASDAQ:LULU), <b>Netflix</b> (NASDAQ:NFLX), and <b><a href=\"https://laohu8.com/S/PYPL\">PayPal</a></b> (NASDAQ:PYPL) as worthy additions to your portfolio. </p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/49376da1d2e252d0075d0ae47df63c83\" tg-width=\"700\" tg-height=\"466\" width=\"100%\" height=\"auto\"/><span>Image source: Getty Images.</span></p><h2>1. Lululemon </h2><p>Since February 2017, Lululemon&#39;s stock has soared 390%, an outstanding investment if you got in at that time. This performance can be attributed to Lululemon&#39;s impressive sales and profit growth of 166% and 175%, respectively, over the past five years. Expanding the store footprint, now at 552 locations, also helped. </p><p>This burgeoning apparel brand sports a better gross margin, at 57.2%, than industry leader <b>Nike</b>. A higher metric generally indicates customers&#39; propensity to pay premium prices for a company&#39;s products. In Lululemon&#39;s case, having a strong direct-to-consumer presence -- a channel that represented 40% of sales in the most recent quarter -- is crucial for brand relevance. </p><p>The business first gained popularity as a seller of yoga pants to women, but it has now become a major men&#39;s outfitter. The men&#39;s segment increased revenue 44% year over year in the fiscal 2021 third quarter, while the women&#39;s segment grew 25%. Diversification of revenue sources is a positive sign. </p><p>Lululemon shares have lost 30% in value over the past three months as the threat of higher interest rates negatively impacts high-multiple, high-growth stocks. Consequently, investors are presented with a great opportunity to buy shares in this thriving retailer at a meaningful pullback. </p><h2>2. Netflix </h2><p>This top streaming stock reported fourth-quarter 2021 financial results on Jan. 20 that disappointed investors. Management guided to 2.5 million net new subscribers in the current quarter, far less than the 6.9 million Wall Street was expecting. But despite the stock being down 17% since that announcement, Netflix has been a massive winner, rising 200% over the past five years. </p><p>Quarterly membership growth has certainly been irregular and unpredictable after the pandemic started in the spring of 2020, but the secular shift away from traditional cable TV and toward streaming is not going away. According to data from <b>S&amp;P Global</b>, there were 1.1 billion households worldwide with a cable TV subscription in 2020. This means that Netflix, with its 221.8 million customers today, still has a large runway for expansion in the years ahead.  </p><p>Billionaire hedge fund manager Bill Ackman, through his firm Pershing Square Capital Management, took advantage of the market souring on Netflix by scooping up 3.1 million shares. His firm is now a top-20 shareholder in the company. Ackman has a proven track record of pouncing on attractive investment opportunities when the time is right. That&#39;s a great endorsement for why you might want to consider owning Netflix stock as well.  </p><h2>3. PayPal</h2><p>Another major historical winner is fintech behemoth PayPal. Its stock has climbed 379% since the business was spun off from <b><a href=\"https://laohu8.com/S/EBAY\">eBay</a></b> in July 2015. PayPal has long been a pioneer in the digital payments space, and it now counts an impressive 426 million active accounts, of which 34 million are merchants. </p><p>I think there are three main factors that make PayPal a special business. For starters, the company&#39;s brand exemplifies a relentless focus on security and ease of use. These characteristics, along with massive scale to the tune of $1.25 trillion in total payment volume in 2021, are probably why e-commerce giant <b>Amazon</b> chose to partner with PayPal&#39;s Venmo starting this year. </p><p>Additionally, PayPal possesses remarkable financial metrics. In 2021, the company&#39;s non-generally accepted accounting principles (GAAP) operating margin of 24.8% was stellar. And the business continued to prove that it&#39;s a cash machine, generating $5.4 billion in free cash flow during the 12-month period. </p><p>Lastly, the company is not done growing. Along with the Amazon partnership, initiatives to bolster the PayPal mobile app and an acquisition like that of Japanese buy now, pay later specialist Paidy showcase management&#39;s huge ambition to one day have 1 billion daily active users. </p><p>PayPal&#39;s shares are off more than 50% from their recent high set in July 2021. The stock currently trades for a lower and more attractive price-to-earnings (P/E) ratio of below 40, making it a solid investment right now. </p></body></html>","source":"fool_stock","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>3 No-Brainer Stocks to Buy With $1,000 Right Now</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n3 No-Brainer Stocks to Buy With $1,000 Right Now\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-02-05 13:42 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com/investing/2022/02/04/3-no-brainer-stocks-to-buy-with-1000-right-now/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>The S&P 500 has had a cold start to the new year, down 6% in the month of January. This situation might be scaring investors out of the market entirely, as the downward trend could continue with ...</p>\n\n<a href=\"https://www.fool.com/investing/2022/02/04/3-no-brainer-stocks-to-buy-with-1000-right-now/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BK4554":"元宇宙及AR概念","BK4106":"数据处理与外包服务","BK4532":"文艺复兴科技持仓","BK4108":"电影和娱乐","BK4534":"瑞士信贷持仓","BK4507":"流媒体概念","BK4548":"巴美列捷福持仓","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4566":"资本集团","BK4524":"宅经济概念","LULU":"lululemon athletica","BK4535":"淡马锡持仓","BK4559":"巴菲特持仓","BK4527":"明星科技股","BK4538":"云计算","BK4550":"红杉资本持仓","BK4503":"景林资产持仓","BK4551":"寇图资本持仓","BK4122":"互联网与直销零售","BK4561":"索罗斯持仓","NFLX":"奈飞","AMZN":"亚马逊","PYPL":"PayPal","BK4504":"桥水持仓","BK4202":"服装、服饰与奢侈品"},"source_url":"https://www.fool.com/investing/2022/02/04/3-no-brainer-stocks-to-buy-with-1000-right-now/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2208317024","content_text":"The S&P 500 has had a cold start to the new year, down 6% in the month of January. This situation might be scaring investors out of the market entirely, as the downward trend could continue with uncertainty about inflation, the Fed's pending rate hikes, and the ongoing pandemic adding to the worries. But if you're an investor with a long time horizon, like me, then now could be the perfect time to add fresh capital to your portfolio. When the market seems overly pessimistic and full of fear is usually the best time to be aggressive. With $1,000 to invest, look no further than Lululemon (NASDAQ:LULU), Netflix (NASDAQ:NFLX), and PayPal (NASDAQ:PYPL) as worthy additions to your portfolio. Image source: Getty Images.1. Lululemon Since February 2017, Lululemon's stock has soared 390%, an outstanding investment if you got in at that time. This performance can be attributed to Lululemon's impressive sales and profit growth of 166% and 175%, respectively, over the past five years. Expanding the store footprint, now at 552 locations, also helped. This burgeoning apparel brand sports a better gross margin, at 57.2%, than industry leader Nike. A higher metric generally indicates customers' propensity to pay premium prices for a company's products. In Lululemon's case, having a strong direct-to-consumer presence -- a channel that represented 40% of sales in the most recent quarter -- is crucial for brand relevance. The business first gained popularity as a seller of yoga pants to women, but it has now become a major men's outfitter. The men's segment increased revenue 44% year over year in the fiscal 2021 third quarter, while the women's segment grew 25%. Diversification of revenue sources is a positive sign. Lululemon shares have lost 30% in value over the past three months as the threat of higher interest rates negatively impacts high-multiple, high-growth stocks. Consequently, investors are presented with a great opportunity to buy shares in this thriving retailer at a meaningful pullback. 2. Netflix This top streaming stock reported fourth-quarter 2021 financial results on Jan. 20 that disappointed investors. Management guided to 2.5 million net new subscribers in the current quarter, far less than the 6.9 million Wall Street was expecting. But despite the stock being down 17% since that announcement, Netflix has been a massive winner, rising 200% over the past five years. Quarterly membership growth has certainly been irregular and unpredictable after the pandemic started in the spring of 2020, but the secular shift away from traditional cable TV and toward streaming is not going away. According to data from S&P Global, there were 1.1 billion households worldwide with a cable TV subscription in 2020. This means that Netflix, with its 221.8 million customers today, still has a large runway for expansion in the years ahead.  Billionaire hedge fund manager Bill Ackman, through his firm Pershing Square Capital Management, took advantage of the market souring on Netflix by scooping up 3.1 million shares. His firm is now a top-20 shareholder in the company. Ackman has a proven track record of pouncing on attractive investment opportunities when the time is right. That's a great endorsement for why you might want to consider owning Netflix stock as well.  3. PayPalAnother major historical winner is fintech behemoth PayPal. Its stock has climbed 379% since the business was spun off from eBay in July 2015. PayPal has long been a pioneer in the digital payments space, and it now counts an impressive 426 million active accounts, of which 34 million are merchants. I think there are three main factors that make PayPal a special business. For starters, the company's brand exemplifies a relentless focus on security and ease of use. These characteristics, along with massive scale to the tune of $1.25 trillion in total payment volume in 2021, are probably why e-commerce giant Amazon chose to partner with PayPal's Venmo starting this year. Additionally, PayPal possesses remarkable financial metrics. In 2021, the company's non-generally accepted accounting principles (GAAP) operating margin of 24.8% was stellar. And the business continued to prove that it's a cash machine, generating $5.4 billion in free cash flow during the 12-month period. Lastly, the company is not done growing. Along with the Amazon partnership, initiatives to bolster the PayPal mobile app and an acquisition like that of Japanese buy now, pay later specialist Paidy showcase management's huge ambition to one day have 1 billion daily active users. PayPal's shares are off more than 50% from their recent high set in July 2021. The stock currently trades for a lower and more attractive price-to-earnings (P/E) ratio of below 40, making it a solid investment right now.","news_type":1},"isVote":1,"tweetType":1,"viewCount":41,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"3479274806242608","authorId":"3479274806242608","name":"kiekie","avatar":"https://static.laohu8.com/picture166","crmLevel":1,"crmLevelSwitch":0},"content":"Don't worry, PYPL has a promising future.","text":"Don't worry, PYPL has a promising future.","html":"Don't worry, PYPL has a promising future."}],"imageCount":0,"langContent":"EN","totalScore":0},{"id":319460476612744,"gmtCreate":1719022223164,"gmtModify":1719024673775,"author":{"id":"3574807189087941","authorId":"3574807189087941","name":"LuoChunfeng","avatar":"https://static.itradeup.com/news/3bd2fbf9d90e26b2f600b2c5d7c54244","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false},"themes":[],"htmlText":"[Weak]&nbsp;[Weak]&nbsp;&nbsp;","listText":"[Weak]&nbsp;[Weak]&nbsp;&nbsp;","text":"[Weak] [Weak]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/319460476612744","repostId":"2445075366","repostType":2,"repost":{"id":"2445075366","pubTimestamp":1719023400,"share":"https://www.laohu8.com/m/news/2445075366?lang=&edition=full","pubTime":"2024-06-22 10:30","market":"us","language":"en","title":"Nvidia Stock Price Outlook: Will NVDA Suffer a Dot-Com Bubble Type Disaster?","url":"https://stock-news.laohu8.com/highlight/detail?id=2445075366","media":"InvestorPlace","summary":"Although Nvidia has been all the hype, maybe now is time to take a step back and reconsider investment into the stock.","content":"<html><head></head><body><ul style=\"\"><li><p><strong>Nvidia Corp </strong>(<strong>NVDA</strong>) has seen an impressive performance with 155.58% upside year-to-date with solid financials.</p></li><li><p>AI boom is comparable to the dot-com bubble concerning Nvidia.</p></li><li><p>Nvidia’s stock trades are higher than its peers, and the company faces strong competitive pressure.</p></li></ul><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/476de51cd5cfc273151e9a63b9d311d8\" alt=\"Source: Sergio Photone / Shutterstock.com\" title=\"Source: Sergio Photone / Shutterstock.com\" tg-width=\"768\" tg-height=\"432\"/><span>Source: Sergio Photone / Shutterstock.com</span></p><p><strong>Nvidia’s </strong>(NASDAQ:<strong>NVDA</strong>) current 10-for-1 stock split has gained investor’s attention because it makes the Nvidia stock more accessible to small investors.</p><p>Overall, Nvidia’s performance has been awe-inspiring, with an 155.58% upside year-to-date. The company dominates the competition with an 80% market share for AI chips. Still, its stock price is at an all-time high again, which begs whether its valuation is sound. </p><h2 id=\"id_1243175279\">Nvidia Stock Q1 Success</h2><p>Nvidia experienced substantial growth across the year. The company’s current financial reports for the first quarter of fiscal 2025 show a significant increase in revenue to $26.04 billion, up 262% year over year.</p><p>The gross margin also improved to 78.4% from 64.6% in the same quarter last year. Nvidia’s earnings per share for the first quarter of fiscal 2025 were $6.12, which is 416% up YOY. </p><h2 id=\"id_3583760166\">AI Might Be Overhyped </h2><p>Nvidia’s financial success seems to justify the hype in its stock. However, this might not be the case when we consider the AI market as a whole. About $50 billion has been invested in Nvidia’s chips, but AI startups have only generated around $3 billion in sales. </p><p><em>The Wall Street Journal </em>interviewed John Chambers, the CEO of <strong>Cisco Systems</strong> (NASDAQ:<strong>CSCO</strong>) during the dot-com bubble. He draws some parallels between Cisco then and Nvidia right now.</p><p>Both companies had a dominant market share in a large new market while benefiting from large investments from the industry before it was profitable. Cisco’s stock today trades at around $47, never recovering from its peak of $77 in 2000. </p><h2 id=\"id_2206758967\">Competitive Risks Are Prevalent</h2><p>Nvidia faces fierce competition in the semiconductor production industry, with the major two being <strong>Intel </strong>(NASDAQ:<strong>INTC</strong>)<strong> </strong>and <strong>Advanced Micro Devices </strong>(NASDAQ:<strong>AMD</strong>).</p><p>China’s development of its semiconductors could threaten Nvidia’s position internationally. China has long relied on foreign companies for semiconductors like Nvidia, but it plans to produce 70% of its domestic chip use by 2025.</p><p>Cheap Chinese chips could flood the international markets like its EVs, disrupting pricing for everyone in the industry. </p><h2 id=\"id_873566403\">Nvidia’s Valuation Is a Gamble </h2><p>Even though Cisco’s stock price never recovered, that didn’t mean it wasn’t a good company. Today, it still has around 41% of the market share and generates over $12 billion a year in revenue.</p><p>Similarly, Nvidia doesn’t have to be a bad company for its stock to be overvalued and for investors to never make their money back for many years. </p><p>Analysts have an average price target of $124.14, below its current trading price as of writing. This shows that the market is doubting Nvidia as it continues to break all-time highs seriously.</p><p>The higher the stock price, the more investors will sell off to take home their profits. </p><p>It’s currently trading at a trailing Price-to-sales (P/E) ratio of 79.29x and a forward P/E of 52.08x, which accounts for the estimated earnings increase next year.</p><p>Even so, if we compile the trailing P/E ratio for all the stocks in the Magnificent 7 — a list of tech conglomerates that many already consider overvalued — we get an average P/E ratio of 48.31x. Many of these companies are poised to ride the AI wave but still at a much lower valuation. </p><h2 id=\"id_674521919\">Great Company, Lousy Stock </h2><p>Nvidia’s stock price has done exceptionally well. It’s financials, no doubt, back that story.</p><p>However, great companies don’t necessarily mean outstanding stock. It took the Nasdaq-100 15 years to recover from the bubble despite many of those stocks being household names today.</p><p>The growth of the AI industry is legitimate, but Nvidia isn’t the only way you can invest in it.</p></body></html>","source":"investorplace_stock_picks","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Nvidia Stock Price Outlook: Will NVDA Suffer a Dot-Com Bubble Type Disaster?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nNvidia Stock Price Outlook: Will NVDA Suffer a Dot-Com Bubble Type Disaster?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-06-22 10:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://investorplace.com/2024/06/nvidia-stock-price-outlook-will-nvda-suffer-a-dot-com-bubble-type-disaster/><strong>InvestorPlace</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Nvidia Corp (NVDA) has seen an impressive performance with 155.58% upside year-to-date with solid financials.AI boom is comparable to the dot-com bubble concerning Nvidia.Nvidia’s stock trades are ...</p>\n\n<a href=\"https://investorplace.com/2024/06/nvidia-stock-price-outlook-will-nvda-suffer-a-dot-com-bubble-type-disaster/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"IE00BFSS7M15.SGD":"Janus Henderson Balanced A Acc SGD-H","LU0234570918.USD":"高盛全球核心股票组合Acc Close","IE00BJJMRX11.SGD":"Janus Henderson Balanced A Acc SGD","LU0417517546.SGD":"Allianz US Equity Cl AT Acc SGD","IE0034235295.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"A\" (USD) ACC","LU0079474960.USD":"联博美国增长基金A","LU0889565833.HKD":"FRANKLIN TECHNOLOGY \"A\" (HKD) ACC","IE00BDCRKT87.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"ADC\" (USD) INC","LU0719512351.SGD":"JPMorgan Funds - US Technology A (acc) SGD","LU0080751232.USD":"富达环球多元动力基金A","LU0353189680.USD":"富国美国全盘成长基金Cl A Acc","LU1242518857.USD":"FULLERTON LUX FUNDS - ASIA ABSOLUTE ALPHA \"I\" (USD) ACC","IE00BJJMRY28.SGD":"Janus Henderson Balanced A Inc SGD","IE00BMPRXR70.SGD":"Neuberger Berman 5G Connectivity A Acc SGD-H","IE00BMPRXN33.USD":"NEUBERGER BERMAN 5G CONNECTIVITY \"A\" (USD) ACC","LU0321505868.SGD":"Schroder ISF Global Dividend Maximiser A Dis SGD","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","LU0234572021.USD":"高盛美国核心股票组合Acc","LU0109392836.USD":"富兰克林科技股A","IE0004445015.USD":"JANUS HENDERSON BALANCED \"A2\" (USD) ACC","LU1242518931.SGD":"Fullerton Lux Funds - Asia Absolute Alpha A Acc SGD","NVDA":"英伟达","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","LU0097036916.USD":"贝莱德美国增长A2 USD","LU0979878070.USD":"FULLERTON LUX FUNDS - ASIA ABSOLUTE ALPHA \"A\" (USD) ACC","LU0320765059.SGD":"FTIF - Franklin US Opportunities A Acc SGD","LU1852331112.SGD":"Blackrock World Technology Fund A2 SGD-H","IE00B3M56506.USD":"NEUBERGER BERMAN EMERGING MARKETS EQUITY \"A\" (USD) ACC","LU1059921491.USD":"NORDEA 1 GLOBAL STABLE EQUITY \"HB\" (USDHDG) ACC","LU0198837287.USD":"UBS (LUX) EQUITY SICAV - USA GROWTH \"P\" (USD) ACC","LU0276348264.USD":"THREADNEEDLE (LUX) GLOBAL DYNAMIC REAL RETURN\"AUP\" (USD) INC","LU1244550221.USD":"FRANKLIN GLOBAL MULTI-ASSET  INCOME \"A\" (USDHEDGED) INC (M)","LU1064131342.USD":"Fullerton Lux Funds - Global Absolute Alpha A Acc USD","LU0731783394.SGD":"Fidelity Global Dividend A-MINCOME(G)-SGD","SG9999001440.SGD":"United Global Dividend Equity Fund A SGD Dist","LU0256863811.USD":"ALLIANZ US EQUITY \"A\" INC","LU1244550494.USD":"FRANKLIN GLOBAL MULTI-ASSET INCOME \"A\" (USDHEDGED) ACC","LU0289739343.SGD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (SGD) ACC"},"source_url":"https://investorplace.com/2024/06/nvidia-stock-price-outlook-will-nvda-suffer-a-dot-com-bubble-type-disaster/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2445075366","content_text":"Nvidia Corp (NVDA) has seen an impressive performance with 155.58% upside year-to-date with solid financials.AI boom is comparable to the dot-com bubble concerning Nvidia.Nvidia’s stock trades are higher than its peers, and the company faces strong competitive pressure.Source: Sergio Photone / Shutterstock.comNvidia’s (NASDAQ:NVDA) current 10-for-1 stock split has gained investor’s attention because it makes the Nvidia stock more accessible to small investors.Overall, Nvidia’s performance has been awe-inspiring, with an 155.58% upside year-to-date. The company dominates the competition with an 80% market share for AI chips. Still, its stock price is at an all-time high again, which begs whether its valuation is sound. Nvidia Stock Q1 SuccessNvidia experienced substantial growth across the year. The company’s current financial reports for the first quarter of fiscal 2025 show a significant increase in revenue to $26.04 billion, up 262% year over year.The gross margin also improved to 78.4% from 64.6% in the same quarter last year. Nvidia’s earnings per share for the first quarter of fiscal 2025 were $6.12, which is 416% up YOY. AI Might Be Overhyped Nvidia’s financial success seems to justify the hype in its stock. However, this might not be the case when we consider the AI market as a whole. About $50 billion has been invested in Nvidia’s chips, but AI startups have only generated around $3 billion in sales. The Wall Street Journal interviewed John Chambers, the CEO of Cisco Systems (NASDAQ:CSCO) during the dot-com bubble. He draws some parallels between Cisco then and Nvidia right now.Both companies had a dominant market share in a large new market while benefiting from large investments from the industry before it was profitable. Cisco’s stock today trades at around $47, never recovering from its peak of $77 in 2000. Competitive Risks Are PrevalentNvidia faces fierce competition in the semiconductor production industry, with the major two being Intel (NASDAQ:INTC) and Advanced Micro Devices (NASDAQ:AMD).China’s development of its semiconductors could threaten Nvidia’s position internationally. China has long relied on foreign companies for semiconductors like Nvidia, but it plans to produce 70% of its domestic chip use by 2025.Cheap Chinese chips could flood the international markets like its EVs, disrupting pricing for everyone in the industry. Nvidia’s Valuation Is a Gamble Even though Cisco’s stock price never recovered, that didn’t mean it wasn’t a good company. Today, it still has around 41% of the market share and generates over $12 billion a year in revenue.Similarly, Nvidia doesn’t have to be a bad company for its stock to be overvalued and for investors to never make their money back for many years. Analysts have an average price target of $124.14, below its current trading price as of writing. This shows that the market is doubting Nvidia as it continues to break all-time highs seriously.The higher the stock price, the more investors will sell off to take home their profits. It’s currently trading at a trailing Price-to-sales (P/E) ratio of 79.29x and a forward P/E of 52.08x, which accounts for the estimated earnings increase next year.Even so, if we compile the trailing P/E ratio for all the stocks in the Magnificent 7 — a list of tech conglomerates that many already consider overvalued — we get an average P/E ratio of 48.31x. Many of these companies are poised to ride the AI wave but still at a much lower valuation. Great Company, Lousy Stock Nvidia’s stock price has done exceptionally well. It’s financials, no doubt, back that story.However, great companies don’t necessarily mean outstanding stock. It took the Nasdaq-100 15 years to recover from the bubble despite many of those stocks being household names today.The growth of the AI industry is legitimate, but Nvidia isn’t the only way you can invest in it.","news_type":1},"isVote":1,"tweetType":1,"viewCount":84,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":319003742466224,"gmtCreate":1718895207578,"gmtModify":1718895377243,"author":{"id":"3574807189087941","authorId":"3574807189087941","name":"LuoChunfeng","avatar":"https://static.itradeup.com/news/3bd2fbf9d90e26b2f600b2c5d7c54244","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false},"themes":[],"htmlText":"[Weak]&nbsp;[Weak]&nbsp;[Weak]&nbsp;&nbsp;","listText":"[Weak]&nbsp;[Weak]&nbsp;[Weak]&nbsp;&nbsp;","text":"[Weak] [Weak] [Weak]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/319003742466224","repostId":"2444055984","repostType":2,"repost":{"id":"2444055984","pubTimestamp":1718894170,"share":"https://www.laohu8.com/m/news/2444055984?lang=&edition=full","pubTime":"2024-06-20 22:36","market":"sg","language":"en","title":"Nvidia: The Paper Gains Need To Be Converted To Cash","url":"https://stock-news.laohu8.com/highlight/detail?id=2444055984","media":"seekingalpha","summary":"Nvidia stock has been rising due to the retail investor excitement about the stock split.At the same time, the sales growth is expected to slow, while the valuation multiples point to the bubble.Furth","content":"<html><head></head><body><ul style=\"\"><li><p>Nvidia stock has been rising due to the retail investor excitement about the stock split.</p></li><li><p>At the same time, the sales growth is expected to slow, while the valuation multiples point to the bubble.</p></li><li><p>Further, the macro environment is deteriorating, with recession risks rising, which should negatively affect a cyclical company like Nvidia.</p></li></ul><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/e266fe86c663b9c3cdda0b5f8e602dc7\" alt=\"jetcityimage\" title=\"jetcityimage\" tg-width=\"750\" tg-height=\"500\"/><span>jetcityimage</span></p><h2 id=\"id_844493039\">NVDA is not a long-term buy and hold</h2><p>Investors who bought Nvidia (NASDAQ:NVDA) stock last year or even recently this year have significant paper gains, as NVDA is up 174% YTD, and an astonishing 3547% over the last 5 years. Nvidia is now $3.33T market cap company, the largest company by market cap in the world.</p><p>Here is the NVDA chart.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/e8db7fdae785a966b2c8b7e35d93a443\" alt=\"Data by YCharts\" title=\"Data by YCharts\" tg-width=\"635\" tg-height=\"424\"/><span>Data by YCharts</span></p><p>However, NVDA is not a long-term buy and hold stock at this point, as I will explain in this article, and thus the investors who currently own NVDA with hefty paper capital gains have to eventually convert these paper gains into cash - they have to sell Nvidia.</p><p>Otherwise, depending on the timing of the purchase and the average purchase price, these paper gains are likely to significantly shrink, or potentially turn into paper losses.</p><p>Specifically, as I will explain, NVDA stock is likely in a bubble based on valuations, and thus the bubble will eventually burst. It&#39;s correct that NVDA had an amazing sales growth over the last 12 months, but NVDA sales are heavily concentrated in only two customers, the mysterious Customer A and Customer B, and this is a major risk to future sales growth if one of these customers pulls back. Most importantly, the NVDA sales growth is expected to significantly slow down, even not assuming the risk associated with the concentrated sales, and assuming that the broad economy will not enter a recession.</p><p>Thus, NVDA is currently valued as if the growth over the last 12 months will continue indefinitely, which is an irrational assumption. The economy is slowing down, slipping towards a recession, which means that the demand from Customers A and B will slow down, and the broad demand for NVDA chips will also slow down, likely producing negative YOY sales growth over the next few quarters. The semiconductor market is cyclical, and the GenAI theme will prove to be cyclical as well.</p><h2 id=\"id_2378348616\">Technical considerations</h2><p>First, let&#39;s look at the technical considerations, since the bubbles are irrational by definition, dominated by the positive feedback traders or trend followers who buy strictly based on charts.</p><p>On March 8, NVDA had a sharp intraday reversal, which in-fact pointed to the potential top, and the March 8 price was the peak - until the NVDA Q1 earnings announcement and the stock split announcement, which triggered another leg higher.</p><p>The stock split does not have any fundamental significance, and yet, NVDA continued to spike higher after the stock split announcement. The retail investor was particularly excited about the stock split. In my opinion, this is the key marking of the top.</p><p>On March 11th, I wrote that NVDA was potentially topping, based on technical analysis, and assigned the HOLD rating, to evaluate the price pattern. Obviously, March 8 was not the top. The price did correct below the 50dma, but rebounded strongly after the stock split.</p><p>Technically, there is no indication that NVDA is at the top now - the price keeps climbing, as the chart below shows.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/7ce414244ee67aa3c097427efdddfac8\" alt=\"Barchart\" title=\"Barchart\" tg-width=\"640\" tg-height=\"350\"/><span>Barchart</span></p><h2 id=\"id_1855740321\">Fundamental considerations</h2><p>With respect to valuation, it&#39;s widely known that NVDA is extremely expensive.</p><ul style=\"\"><li><p>GAAP PE ttm is at 76</p></li><li><p>forward GAAP PE is at 56</p></li><li><p>PS ratio is at 40</p></li></ul><p>These are very expensive valuations. Broadcom (AVGO) is the closest peer, and it similarly overvalued based on PE ratios, but significantly cheaper based on PS ratio at 19, which points that NVDA&#39;s profit margins are unsustainably high.</p><p>In fact, NVDA has EBIT margins of around 60%, which will be difficult to maintain, as the demand for its chips slows and the competition in the sector heats up, and this points to slower earnings growth.</p><p>High valuations can be justified if sales growth is expected to continue to be very high. However, the sales growth is slowing. Here is the fact, NVDA had 18% revenue growth QoQ for FY25 Q1, where the total revenue was $26B. NVDA guides that FY25 Q2 total revenue will be $28B, which is only 7.7% QoQ growth. Thus, the revenue growth is slowing.</p><p>Thus, you have a situation where the profit margins are unsustainably high, and where the revenue growth is slowing. The combination of these two variables is negative for earnings growth.</p><p>In addition, NVDA has a very concentrated sales with only two customers representing 24% of the total revenue. Here is the warning from the recent NVDA 10Q statement:</p><blockquote><p>Sales to one direct customer, Customer A, represented 13% of total revenue and sales to a second direct customer, Customer B, represented 11% of total revenue for the first quarter of fiscal year 2025, both of which were attributable to the Compute &amp; Networking segment. There was no direct customer that represented 10% or more of total revenue for the first quarter of fiscal year 2024.</p></blockquote><h2 id=\"id_3506160230\">Macro considerations</h2><p>None of the assumptions above assumes that the US economy could significantly slow, and potentially slip into a recession. The semiconductor industry is highly cyclical and the potential recession could have a negative effect on NVDA sales.</p><p>Based on the recent data, the US economy is slowing, and slipping towards a recession. Yet, NVDA stock keeps climbing.</p><h2 id=\"id_3271725306\">Implications</h2><p>Here are the facts.</p><ul style=\"\"><li><p>The NVDA stock is very expensive, based on the valuation multiples.</p></li><li><p>Yet, the revenue growth rate is slowing.</p></li><li><p>The macro environment is deteriorating, the recession risks are rising.</p></li></ul><p>In this situation, where the macro risks and the firm-specific risks are rising, while the price is also rising fueled by the retail investor excitement about the stock split, it makes sense to consider converting the paper gains to cash.</p><p>Now, bear in mind that trading around the bubble is very difficult. Isaac Newton got burned trading around the South Sea Bubble. He took the profit in the South Sea stock, but the stock kept climbing, so he got back near the top. As the price kept falling, he kept buying the &#34;dip&#34;, yet the price kept falling. He lost most of his fortune and proclaimed:</p><blockquote><p>I can calculate the motions of the heavenly bodies, but not the madness of the people.</p></blockquote></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Nvidia: The Paper Gains Need To Be Converted To Cash</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nNvidia: The Paper Gains Need To Be Converted To Cash\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-06-20 22:36 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4699997-nvidia-the-paper-gains-need-to-be-converted-to-cash><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Nvidia stock has been rising due to the retail investor excitement about the stock split.At the same time, the sales growth is expected to slow, while the valuation multiples point to the bubble....</p>\n\n<a href=\"https://seekingalpha.com/article/4699997-nvidia-the-paper-gains-need-to-be-converted-to-cash\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","IE00BJJMRX11.SGD":"Janus Henderson Balanced A Acc SGD","LU0072462426.USD":"贝莱德全球配置 A2","BK4543":"AI","BK4588":"碎股","LU0056508442.USD":"贝莱德世界科技基金A2","LU0080751232.USD":"富达环球多元动力基金A","BK4141":"半导体产品","LU0353189680.USD":"富国美国全盘成长基金Cl A Acc","BK4503":"景林资产持仓","IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","LU1242518857.USD":"FULLERTON LUX FUNDS - ASIA ABSOLUTE ALPHA \"I\" (USD) ACC","LU0061474960.USD":"天利环球焦点基金AU Acc","IE00BBT3K403.USD":"LEGG MASON CLEARBRIDGE TACTICAL DIVIDEND INCOME \"A(USD) ACC","LU0109391861.USD":"富兰克林美国机遇基金A Acc","LU0820561909.HKD":"ALLIANZ INCOME AND GROWTH \"AM\" (HKD) INC","IE00BMPRXN33.USD":"NEUBERGER BERMAN 5G CONNECTIVITY \"A\" (USD) ACC","IE00B19Z9P08.USD":"LEGG MASON CLEARBRIDGE US AGGRESSIVE GROWTH \"A\" (USD) INC","LU0320765646.SGD":"FTIF - Franklin Income A MDIS SGD-H1","BK4581":"高盛持仓","BK4512":"苹果概念","IE00B19Z9Z06.USD":"Legg Mason ClearBridge - US Aggressive Growth A Acc USD","LU0061474705.USD":"THREADNEEDLE (LUX) GLOBAL DYNAMIC REAL RETURN \"AU\" (USD) ACC","LU0466842654.USD":"HSBC ISLAMIC GLOBAL EQUITY INDEX \"A\" (USD) ACC","LU0097036916.USD":"贝莱德美国增长A2 USD","LU0238689110.USD":"贝莱德环球动力股票基金","BK4548":"巴美列捷福持仓","LU0979878070.USD":"FULLERTON LUX FUNDS - ASIA ABSOLUTE ALPHA \"A\" (USD) ACC","LU1670711040.USD":"M&G (LUX) GLOBAL DIVIDEND \"A\" (USD) ACC","LU0861579265.USD":"联博低波幅策略股票基金A","IE00B3M56506.USD":"NEUBERGER BERMAN EMERGING MARKETS EQUITY \"A\" (USD) ACC","IE00BD6J9T35.USD":"NEUBERGER BERMAN NEXT GENERATION MOBILITY \"A\" (USD) ACC","LU0965509283.SGD":"AB LOW VOLATILITY EQUITY PORTFOLIO \"AD\" (SGDHDG) INC","LU0444971666.USD":"天利全球科技基金","IE00BFSS8Q28.SGD":"Janus Henderson Balanced A Inc SGD-H","LU0061475181.USD":"THREADNEEDLE (LUX) AMERICAN \"AU\" (USD) ACC","BK4532":"文艺复兴科技持仓","IE0034235188.USD":"PINEBRIDGE GLOBAL FOCUS EQUITY \"A\" (USD) ACC","BK4554":"元宇宙及AR概念","BK4592":"伊斯兰概念","LU1551013425.SGD":"Allianz Income and Growth Cl AMg2 DIS H2-SGD","IE0009356076.USD":"JANUS HENDERSON GLOBAL TECHNOLOGY AND INNOVATION \"A2\" (USD) ACC","NVDA":"英伟达","LU0289739343.SGD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (SGD) ACC","IE00BLSP4239.USD":"Legg Mason ClearBridge - Tactical Dividend Income A Mdis USD Plus","BK4575":"芯片概念","LU0943347566.SGD":"安联收益及增长平衡基金AM H2-SGD","BK4566":"资本集团","LU0234570918.USD":"高盛全球核心股票组合Acc Close"},"source_url":"https://seekingalpha.com/article/4699997-nvidia-the-paper-gains-need-to-be-converted-to-cash","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2444055984","content_text":"Nvidia stock has been rising due to the retail investor excitement about the stock split.At the same time, the sales growth is expected to slow, while the valuation multiples point to the bubble.Further, the macro environment is deteriorating, with recession risks rising, which should negatively affect a cyclical company like Nvidia.jetcityimageNVDA is not a long-term buy and holdInvestors who bought Nvidia (NASDAQ:NVDA) stock last year or even recently this year have significant paper gains, as NVDA is up 174% YTD, and an astonishing 3547% over the last 5 years. Nvidia is now $3.33T market cap company, the largest company by market cap in the world.Here is the NVDA chart.Data by YChartsHowever, NVDA is not a long-term buy and hold stock at this point, as I will explain in this article, and thus the investors who currently own NVDA with hefty paper capital gains have to eventually convert these paper gains into cash - they have to sell Nvidia.Otherwise, depending on the timing of the purchase and the average purchase price, these paper gains are likely to significantly shrink, or potentially turn into paper losses.Specifically, as I will explain, NVDA stock is likely in a bubble based on valuations, and thus the bubble will eventually burst. It's correct that NVDA had an amazing sales growth over the last 12 months, but NVDA sales are heavily concentrated in only two customers, the mysterious Customer A and Customer B, and this is a major risk to future sales growth if one of these customers pulls back. Most importantly, the NVDA sales growth is expected to significantly slow down, even not assuming the risk associated with the concentrated sales, and assuming that the broad economy will not enter a recession.Thus, NVDA is currently valued as if the growth over the last 12 months will continue indefinitely, which is an irrational assumption. The economy is slowing down, slipping towards a recession, which means that the demand from Customers A and B will slow down, and the broad demand for NVDA chips will also slow down, likely producing negative YOY sales growth over the next few quarters. The semiconductor market is cyclical, and the GenAI theme will prove to be cyclical as well.Technical considerationsFirst, let's look at the technical considerations, since the bubbles are irrational by definition, dominated by the positive feedback traders or trend followers who buy strictly based on charts.On March 8, NVDA had a sharp intraday reversal, which in-fact pointed to the potential top, and the March 8 price was the peak - until the NVDA Q1 earnings announcement and the stock split announcement, which triggered another leg higher.The stock split does not have any fundamental significance, and yet, NVDA continued to spike higher after the stock split announcement. The retail investor was particularly excited about the stock split. In my opinion, this is the key marking of the top.On March 11th, I wrote that NVDA was potentially topping, based on technical analysis, and assigned the HOLD rating, to evaluate the price pattern. Obviously, March 8 was not the top. The price did correct below the 50dma, but rebounded strongly after the stock split.Technically, there is no indication that NVDA is at the top now - the price keeps climbing, as the chart below shows.BarchartFundamental considerationsWith respect to valuation, it's widely known that NVDA is extremely expensive.GAAP PE ttm is at 76forward GAAP PE is at 56PS ratio is at 40These are very expensive valuations. Broadcom (AVGO) is the closest peer, and it similarly overvalued based on PE ratios, but significantly cheaper based on PS ratio at 19, which points that NVDA's profit margins are unsustainably high.In fact, NVDA has EBIT margins of around 60%, which will be difficult to maintain, as the demand for its chips slows and the competition in the sector heats up, and this points to slower earnings growth.High valuations can be justified if sales growth is expected to continue to be very high. However, the sales growth is slowing. Here is the fact, NVDA had 18% revenue growth QoQ for FY25 Q1, where the total revenue was $26B. NVDA guides that FY25 Q2 total revenue will be $28B, which is only 7.7% QoQ growth. Thus, the revenue growth is slowing.Thus, you have a situation where the profit margins are unsustainably high, and where the revenue growth is slowing. The combination of these two variables is negative for earnings growth.In addition, NVDA has a very concentrated sales with only two customers representing 24% of the total revenue. Here is the warning from the recent NVDA 10Q statement:Sales to one direct customer, Customer A, represented 13% of total revenue and sales to a second direct customer, Customer B, represented 11% of total revenue for the first quarter of fiscal year 2025, both of which were attributable to the Compute & Networking segment. There was no direct customer that represented 10% or more of total revenue for the first quarter of fiscal year 2024.Macro considerationsNone of the assumptions above assumes that the US economy could significantly slow, and potentially slip into a recession. The semiconductor industry is highly cyclical and the potential recession could have a negative effect on NVDA sales.Based on the recent data, the US economy is slowing, and slipping towards a recession. Yet, NVDA stock keeps climbing.ImplicationsHere are the facts.The NVDA stock is very expensive, based on the valuation multiples.Yet, the revenue growth rate is slowing.The macro environment is deteriorating, the recession risks are rising.In this situation, where the macro risks and the firm-specific risks are rising, while the price is also rising fueled by the retail investor excitement about the stock split, it makes sense to consider converting the paper gains to cash.Now, bear in mind that trading around the bubble is very difficult. Isaac Newton got burned trading around the South Sea Bubble. He took the profit in the South Sea stock, but the stock kept climbing, so he got back near the top. As the price kept falling, he kept buying the \"dip\", yet the price kept falling. He lost most of his fortune and proclaimed:I can calculate the motions of the heavenly bodies, but not the madness of the people.","news_type":1},"isVote":1,"tweetType":1,"viewCount":52,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":318100684304608,"gmtCreate":1718699787968,"gmtModify":1718700641870,"author":{"id":"3574807189087941","authorId":"3574807189087941","name":"LuoChunfeng","avatar":"https://static.itradeup.com/news/3bd2fbf9d90e26b2f600b2c5d7c54244","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false},"themes":[],"htmlText":"Never ever trust articles from this website.","listText":"Never ever trust articles from this website.","text":"Never ever trust articles from this website.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/318100684304608","repostId":"2444914192","repostType":2,"repost":{"id":"2444914192","pubTimestamp":1718687821,"share":"https://www.laohu8.com/m/news/2444914192?lang=&edition=full","pubTime":"2024-06-18 13:17","market":"sg","language":"en","title":"Nvidia: Brace For Gamma-Squeeze Breakdown And Potential Price Pressure On June 21","url":"https://stock-news.laohu8.com/highlight/detail?id=2444914192","media":"seekingalpha","summary":"Nvidia Corporation investors have scored a big win. The stock is up more than 200% over the past twelve months, outperforming the S&P 500 by almost 10x.Although Nvidia's exceptional performance has so","content":"<html><head></head><body><ul style=\"\"><li><p>Nvidia Corporation investors have scored a big win. The stock is up more than 200% over the past twelve months, outperforming the S&amp;P 500 by almost 10x.</p></li><li><p>Although Nvidia&#39;s exceptional performance has some fundamental backing, I believe a substantial portion of the price rally is due to bullish momentum in trading and speculation.</p></li><li><p>Over the past few months, bulk buying of call options forced option dealers to hedge their position by purchasing the stock, thus creating a feedback loop of rising prices.</p></li><li><p>The &#34;Gamma-squeeze&#34; may come to an end on June 21, as nearly 5 million open interest in call contracts will expire. The big option expiration event may result in a sharp share price drop as options dealers start unwinding their hedges.</p></li><li><p>On a fundamental view, using a residual earnings model, I see Nvidia shares as overvalued -- calculating an implied target price of $76.4 per share.</p></li></ul><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/6b03877646adf7f8e7fd7cce2f119d47\" tg-width=\"750\" tg-height=\"500\"/></p><p>JasonDoiy</p><p></p><p>Congratulations to all the <strong>NVIDIA Corporation</strong> (NASDAQ:NVDA) investors and long-positioned traders. The stock is up 207% over the past twelve months, outperforming the S&amp;P 500 (SP500) by more than 175 percentage points. With Nvidia equity trading at about 80x TTM earnings and 40x book value, market sentiment is splitting more aggressively: One camp of market participants argues that Nvidia&#39;s bull market has more room for upside (for example, see here, here, and here), while the other camp sees shares as grossly overvalued (for example, see here, here, and here).</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/d74c07654049ae62a47c86f4772a16b9\" tg-width=\"640\" tg-height=\"227\"/></p><p>Seeking Alpha</p><p></p><p>Personally, I would position myself in the second camp. While there is certainly a fundamental component to Nvidia&#39;s eye-watering performance, I argue that a large part of the share price rally has been driven by bullish momentum in options trading and associated hedging flows.</p><p>On that note, regarding the 21st of June, we are approaching a key option expiration date that may negatively shift the Gamma momentum for Nvidia, as almost 5 million open interest in Call contracts expires. This should significantly lower the bullish hedging activity of options dealers, and thus give Nvidia shares more &#34;freedom&#34; to trend towards fair value. From a fundamental view, I value Nvidia stock using a residual earnings model and calculate an implied target price equal to $76.4 per share.</p><h2 id=\"id_2894606858\">Fundamentals Boom, But Growth And Margins Likely To Level Out</h2><p>Nvidia&#39;s latest earnings report highlighted ongoing strong demand for AI-related CAPEX spending. During the period from February to the end of May, the company accumulated $26 billion of revenues, up 18% vs. Q4 and up 262% vs. the same period one year prior, while beating consensus by 5%. EPS came in at $6.12, beating consensus by 9%. Notably, the strong performance was mainly driven in the Data Center segment, where revenue reached a record $22.6 billion, up 23% QoQ and up 427% YoY.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/5ac189656b684e3bc437ac2ef458e134\" tg-width=\"640\" tg-height=\"236\"/></p><p>Nvidia Q1 FY 2025 report</p><p></p><p>On a high level, the key message from Nvidia&#39;s earnings call with analysts was that demand continues to outpace supply for Hopper and Blackwell. Moreover, Nvidia suggested that the company sees accelerating demand from GenAI for both Inference and Training. Guidance for Q2 came in at about $28 billion for revenues and $6.2 - $6.8 for EPS (Not split adjusted, to keep EPS outlook comparable with Q1 reporting. Split adjusted it would be 0.62-0.68 cents; modelling anchored on non-GAAP gross margin guidance of about 75.5%, and non-GAAP operating expenses guidance of about $2.8 billion).</p><p>Nvidia&#39;s strong Q1 print undoubtedly highlights that there is a solid fundamental component attached to NVDA&#39;s record-breaking bull run. However, while the fundamentals are solid and pointing upward, the implied valuation of Nvidia shares may excessively discount the positive commercial momentum. Pointing to the cyclical nature of the semiconductor industry, paired with accelerating competitive dynamics in AI chip development, I argue that Nvidia&#39;s triple-digit YoY topline expansion rate and 60% EBIT margin may not be defendable over time. For example, equity research analysts at BNP Paribas have broken down Nvidia&#39;s growth outlook by segment and concluded that Nvidia&#39;s topline growth will likely slow to 20-25% YoY by the end of FY 2025 <em>(Source: BNP Paribas, research note on NVDA dated 23 May 2024).</em></p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/6db85a3b8bd7dc1d7b0b1298ad560b46\" tg-width=\"609\" tg-height=\"428\"/></p><p>BNP Paribas</p><p></p><h2 id=\"id_3822326567\">The Importance Of Gamma...</h2><p>Positive Gamma is crucial for upside momentum in the market because it influences how options market makers adjust their hedging strategies, which can amplify price movements. On a more detailed level, Gamma measures the rate of change of delta, which is the sensitivity of an option&#39;s price to changes in the underlying asset&#39;s price. When traders or market makers sell options, they often hedge their positions by buying or selling the underlying asset to stay delta-neutral, meaning they aren&#39;t exposed to price changes in the underlying asset. In that context, positive Gamma means that as the underlying asset&#39;s price increases, the delta of the options also increases, requiring more buying of the underlying asset to maintain a neutral position.</p><p>This self-reinforcing mechanism can contribute to strong upward momentum. In scenarios where there is significant call option buying like it has certainly been the case with NVDA stock, there is a build-up of positive Gamma, which can lead to sharp rallies for the reasons explained.</p><h2 id=\"id_1655613019\">...And What It May Imply For Nvidia Stock</h2><p>The strong commercial momentum for Nvidia&#39;s products has driven speculative call-buying for NVDA stock. On that note, I highlight that Call open interest for Nvidia with expiration dated 21 June almost reaches 5 million contracts, or 500 million of underlying shares (notional worth close to $65 billion!), with most of the strikes centered in the range of $120-$140. Across expiration dates, the cumulative open Call interest is about 13-14 million contracts or $175 billion worth of notional.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/71d6b37b547ba6adcbdd3851b0acec0b\" tg-width=\"640\" tg-height=\"190\"/></p><p>optioncharts.io</p><p></p><p>The enormous open interest for Nvidia shares has resulted in an equally enormous net positive Gamma exposure, with most of the Gamma anchored to the 21st June expiration date.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/0bc5cb82bdf12010eb3817212a94e3b8\" tg-width=\"640\" tg-height=\"194\"/></p><p>optioncharts.io</p><p></p><p>Bringing the Gamma exposure into context, I highlight that a 1% move in Nvidia shares would result in $2.5-3.0 billion of <em>buying</em> activity to hedge the options&#39; Delta. With Nvidia shares moving up and down during the day, the hedging activity likely accounts for 25-30% of trading volume, according to my rough estimates.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/f2363bd5dc3058686a5cc10f04e835e6\" tg-width=\"640\" tg-height=\"384\"/></p><p>optioncharts.io</p><p></p><p>Now, the interesting takeaway for readers relates to the previously highlighted observation that about 5 million NVDA options contracts are expiring on June 21st. Once these options expire, the associated hedging flow will also stop to support NVDA shares with buying pressure. Moreover, investors should note that when market participants buy call options, market makers who sell these options often hedge their positions by buying the underlying stock to remain delta-neutral. As the expiration date approaches, market makers may start unwinding their hedges, which involves selling the stock they previously bought. This could lead to notable downward pressure on the share price.</p><h2 id=\"id_533550909\">Valuation: Fair Value Likely At $76.4 Per Share</h2><p>To find a valuation anchor for stocks, I am a great fan of using the residual earnings model approach. This model is based on the principle that a company&#39;s valuation should equal its discounted future earnings after accounting for the capital charge. According to the CFA Institute:</p><blockquote><p><em>Conceptually, residual income is net income less a charge (deduction) for common shareholders&#39; opportunity cost in generating net income. It is the residual or remaining income after considering the costs of all of a company&#39;s capital.</em></p></blockquote><p>For my valuation model of Nvidia stock, I make the following assumptions:</p><p><strong>EPS Forecast</strong>: I use the consensus analyst forecast from the Bloomberg Terminal through 2027. Beyond 2027, I consider estimates too speculative to be reliable. However, the 2-3 year analyst consensus is typically accurate.</p><p><strong>Capital Charge</strong>: I use the CAPM model to estimate Nvidia&#39;s cost of equity, which suggests a rate of 9.7%.</p><p><strong>Terminal Growth Rate</strong>: I apply a terminal growth rate of 4% post-2027, which, I believe, is reasonable (around 1.5-2.0 percentage points above nominal GDP growth to reflect structural growth in the digital economy).</p><p>Investors with different assumptions about Nvidia&#39;s cost of capital and terminal growth rate can refer to the enclosed sensitivity table.</p><p>Based on these assumptions, I calculate a base-case target price for Nvidia of approximately $76.4 per share.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/8c05cd4ca9d5784f08c4a0ba8e87e5f2\" tg-width=\"640\" tg-height=\"229\"/></p><p>Company Financials; Bloomberg &amp; Author&#39;s EPS Estimates; Author&#39;s Calculation</p><p></p><p>My base-case projection for Nvidia&#39;s target price suggests a potential downside. However, it is crucial for investors to consider the risk and reward ratio of investing in a company from a &#34;scenario&#34; perspective. To evaluate different scenarios based on various assumptions, I have created a sensitivity table analyzing Nvidia&#39;s cost of equity and terminal growth rate. See below.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/7382f09b5c4fe6bde18fbc4305eb7b6a\" tg-width=\"640\" tg-height=\"167\"/></p><p>Company Financials; Bloomberg &amp; Author&#39;s EPS Estimates; Author&#39;s Calculation</p><p></p><h2 id=\"id_4155478804\">Investor Takeaway</h2><p>Nvidia investors have scored a big win. The stock is up more than 200% over the past twelve months, outperforming the S&amp;P 500 by almost 10x. Although Nvidia&#39;s exceptional performance has some fundamental backing, I believe a substantial portion of the price rally is due to bullish momentum in trading and speculation.</p><p>One key consideration in this context is options trading and associated hedging flows. Over the past few months, bulk buying of call options forced option dealers to hedge their position by purchasing the stock, thus creating a feedback loop of rising prices. However, the &#34;Gamma-squeeze&#34; may come to an end on June 21, as nearly 5 million open interest in call contracts will expire. This could notably pressure bullish trading momentum and may result in price pressure as options dealer start unwinding their hedges.</p><p>On a fundamental view, using a residual earnings model, I see Nvidia shares as overvalued -- calculating an implied target price of $76.4 per share.</p><h2 id=\"id_1420899705\">A Note On Risk</h2><p>The Gamma dynamic has certainly been a major force in driving Nvidia Corporation shares higher. However, investors should note that other factors to consider are important too. On that note, Nvidia&#39;s valuation may continue to challenge skeptics, driven by strong underlying fundamentals and sustained demand for AI-related technologies. In fact, as long as Nvidia&#39;s revenue growth rate and profit margins remain robust, investors may continue to like Nvidia stock at current prices, buying the flow coming to market from option dealers&#39; books, and the stock may defy expectations of a correction.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Nvidia: Brace For Gamma-Squeeze Breakdown And Potential Price Pressure On June 21</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nNvidia: Brace For Gamma-Squeeze Breakdown And Potential Price Pressure On June 21\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-06-18 13:17 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4699645-nvidia-brace-for-gamma-squeeze-breakdown-and-potential-price-pressure-on-june-21><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Nvidia Corporation investors have scored a big win. The stock is up more than 200% over the past twelve months, outperforming the S&P 500 by almost 10x.Although Nvidia's exceptional performance has ...</p>\n\n<a href=\"https://seekingalpha.com/article/4699645-nvidia-brace-for-gamma-squeeze-breakdown-and-potential-price-pressure-on-june-21\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"IE00BFSS8Q28.SGD":"Janus Henderson Balanced A Inc SGD-H","LU0289961442.SGD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"AX\" (SGD) ACC","IE0034235188.USD":"PINEBRIDGE GLOBAL FOCUS EQUITY \"A\" (USD) ACC","BK4548":"巴美列捷福持仓","IE0009356076.USD":"JANUS HENDERSON GLOBAL TECHNOLOGY AND INNOVATION \"A2\" (USD) ACC","LU0289739343.SGD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (SGD) ACC","IE00B7KXQ091.USD":"Janus Henderson Balanced A Inc USD","LU0256863811.USD":"ALLIANZ US EQUITY \"A\" INC","BK4554":"元宇宙及AR概念","BK4532":"文艺复兴科技持仓","LU0348723411.USD":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","LU0276348264.USD":"THREADNEEDLE (LUX) GLOBAL DYNAMIC REAL RETURN\"AUP\" (USD) INC","LU0234570918.USD":"高盛全球核心股票组合Acc Close","LU0238689110.USD":"贝莱德环球动力股票基金","LU0061475181.USD":"THREADNEEDLE (LUX) AMERICAN \"AU\" (USD) ACC","BK4534":"瑞士信贷持仓","LU0170899867.USD":"EASTSPRING INVESTMENTS WORLD VALUE EQUITY  \"A\" (USD) ACC","LU0417517546.SGD":"Allianz US Equity Cl AT Acc SGD","IE00B19Z9505.USD":"美盛-美国大盘成长股A Acc","LU0109391861.USD":"富兰克林美国机遇基金A Acc","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","LU0072462426.USD":"贝莱德全球配置 A2","LU0082616367.USD":"摩根大通美国科技A（dist）","GB00BDT5M118.USD":"天利环球扩展Alpha基金A Acc","LU0056508442.USD":"贝莱德世界科技基金A2","LU0080751232.USD":"富达环球多元动力基金A","IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","LU0353189680.USD":"富国美国全盘成长基金Cl A Acc","BK4527":"明星科技股","NVDA":"英伟达","LU0061474960.USD":"天利环球焦点基金AU Acc","IE00BJJMRY28.SGD":"Janus Henderson Balanced A Inc SGD","IE00B1BXHZ80.USD":"Legg Mason ClearBridge - US Appreciation A Acc USD","IE00BMPRXN33.USD":"NEUBERGER BERMAN 5G CONNECTIVITY \"A\" (USD) ACC","BK4588":"碎股","BK4579":"人工智能","BK4550":"红杉资本持仓","LU0234572021.USD":"高盛美国核心股票组合Acc","BK4503":"景林资产持仓","IE0004445015.USD":"JANUS HENDERSON BALANCED \"A2\" (USD) ACC","BK4551":"寇图资本持仓","LU0353189763.USD":"ALLSPRING  US ALL CAP GROWTH FUND \"I\" (USD) ACC","LU0175139822.USD":"AB FCP I Global Equity Blend A USD","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","LU0097036916.USD":"贝莱德美国增长A2 USD","LU0289960550.SGD":"AB FCP I - GLOBAL EQUITY BLEND PORTFOLIO 'A' (SGD) ACC","BK4549":"软银资本持仓","IE00B3M56506.USD":"NEUBERGER BERMAN EMERGING MARKETS EQUITY \"A\" (USD) ACC","LU0198837287.USD":"UBS (LUX) EQUITY SICAV - USA GROWTH \"P\" (USD) ACC","LU0316494557.USD":"FRANKLIN GLOBAL FUNDAMENTAL STRATEGIES \"A\" ACC"},"source_url":"https://seekingalpha.com/article/4699645-nvidia-brace-for-gamma-squeeze-breakdown-and-potential-price-pressure-on-june-21","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2444914192","content_text":"Nvidia Corporation investors have scored a big win. The stock is up more than 200% over the past twelve months, outperforming the S&P 500 by almost 10x.Although Nvidia's exceptional performance has some fundamental backing, I believe a substantial portion of the price rally is due to bullish momentum in trading and speculation.Over the past few months, bulk buying of call options forced option dealers to hedge their position by purchasing the stock, thus creating a feedback loop of rising prices.The \"Gamma-squeeze\" may come to an end on June 21, as nearly 5 million open interest in call contracts will expire. The big option expiration event may result in a sharp share price drop as options dealers start unwinding their hedges.On a fundamental view, using a residual earnings model, I see Nvidia shares as overvalued -- calculating an implied target price of $76.4 per share.JasonDoiyCongratulations to all the NVIDIA Corporation (NASDAQ:NVDA) investors and long-positioned traders. The stock is up 207% over the past twelve months, outperforming the S&P 500 (SP500) by more than 175 percentage points. With Nvidia equity trading at about 80x TTM earnings and 40x book value, market sentiment is splitting more aggressively: One camp of market participants argues that Nvidia's bull market has more room for upside (for example, see here, here, and here), while the other camp sees shares as grossly overvalued (for example, see here, here, and here).Seeking AlphaPersonally, I would position myself in the second camp. While there is certainly a fundamental component to Nvidia's eye-watering performance, I argue that a large part of the share price rally has been driven by bullish momentum in options trading and associated hedging flows.On that note, regarding the 21st of June, we are approaching a key option expiration date that may negatively shift the Gamma momentum for Nvidia, as almost 5 million open interest in Call contracts expires. This should significantly lower the bullish hedging activity of options dealers, and thus give Nvidia shares more \"freedom\" to trend towards fair value. From a fundamental view, I value Nvidia stock using a residual earnings model and calculate an implied target price equal to $76.4 per share.Fundamentals Boom, But Growth And Margins Likely To Level OutNvidia's latest earnings report highlighted ongoing strong demand for AI-related CAPEX spending. During the period from February to the end of May, the company accumulated $26 billion of revenues, up 18% vs. Q4 and up 262% vs. the same period one year prior, while beating consensus by 5%. EPS came in at $6.12, beating consensus by 9%. Notably, the strong performance was mainly driven in the Data Center segment, where revenue reached a record $22.6 billion, up 23% QoQ and up 427% YoY.Nvidia Q1 FY 2025 reportOn a high level, the key message from Nvidia's earnings call with analysts was that demand continues to outpace supply for Hopper and Blackwell. Moreover, Nvidia suggested that the company sees accelerating demand from GenAI for both Inference and Training. Guidance for Q2 came in at about $28 billion for revenues and $6.2 - $6.8 for EPS (Not split adjusted, to keep EPS outlook comparable with Q1 reporting. Split adjusted it would be 0.62-0.68 cents; modelling anchored on non-GAAP gross margin guidance of about 75.5%, and non-GAAP operating expenses guidance of about $2.8 billion).Nvidia's strong Q1 print undoubtedly highlights that there is a solid fundamental component attached to NVDA's record-breaking bull run. However, while the fundamentals are solid and pointing upward, the implied valuation of Nvidia shares may excessively discount the positive commercial momentum. Pointing to the cyclical nature of the semiconductor industry, paired with accelerating competitive dynamics in AI chip development, I argue that Nvidia's triple-digit YoY topline expansion rate and 60% EBIT margin may not be defendable over time. For example, equity research analysts at BNP Paribas have broken down Nvidia's growth outlook by segment and concluded that Nvidia's topline growth will likely slow to 20-25% YoY by the end of FY 2025 (Source: BNP Paribas, research note on NVDA dated 23 May 2024).BNP ParibasThe Importance Of Gamma...Positive Gamma is crucial for upside momentum in the market because it influences how options market makers adjust their hedging strategies, which can amplify price movements. On a more detailed level, Gamma measures the rate of change of delta, which is the sensitivity of an option's price to changes in the underlying asset's price. When traders or market makers sell options, they often hedge their positions by buying or selling the underlying asset to stay delta-neutral, meaning they aren't exposed to price changes in the underlying asset. In that context, positive Gamma means that as the underlying asset's price increases, the delta of the options also increases, requiring more buying of the underlying asset to maintain a neutral position.This self-reinforcing mechanism can contribute to strong upward momentum. In scenarios where there is significant call option buying like it has certainly been the case with NVDA stock, there is a build-up of positive Gamma, which can lead to sharp rallies for the reasons explained....And What It May Imply For Nvidia StockThe strong commercial momentum for Nvidia's products has driven speculative call-buying for NVDA stock. On that note, I highlight that Call open interest for Nvidia with expiration dated 21 June almost reaches 5 million contracts, or 500 million of underlying shares (notional worth close to $65 billion!), with most of the strikes centered in the range of $120-$140. Across expiration dates, the cumulative open Call interest is about 13-14 million contracts or $175 billion worth of notional.optioncharts.ioThe enormous open interest for Nvidia shares has resulted in an equally enormous net positive Gamma exposure, with most of the Gamma anchored to the 21st June expiration date.optioncharts.ioBringing the Gamma exposure into context, I highlight that a 1% move in Nvidia shares would result in $2.5-3.0 billion of buying activity to hedge the options' Delta. With Nvidia shares moving up and down during the day, the hedging activity likely accounts for 25-30% of trading volume, according to my rough estimates.optioncharts.ioNow, the interesting takeaway for readers relates to the previously highlighted observation that about 5 million NVDA options contracts are expiring on June 21st. Once these options expire, the associated hedging flow will also stop to support NVDA shares with buying pressure. Moreover, investors should note that when market participants buy call options, market makers who sell these options often hedge their positions by buying the underlying stock to remain delta-neutral. As the expiration date approaches, market makers may start unwinding their hedges, which involves selling the stock they previously bought. This could lead to notable downward pressure on the share price.Valuation: Fair Value Likely At $76.4 Per ShareTo find a valuation anchor for stocks, I am a great fan of using the residual earnings model approach. This model is based on the principle that a company's valuation should equal its discounted future earnings after accounting for the capital charge. According to the CFA Institute:Conceptually, residual income is net income less a charge (deduction) for common shareholders' opportunity cost in generating net income. It is the residual or remaining income after considering the costs of all of a company's capital.For my valuation model of Nvidia stock, I make the following assumptions:EPS Forecast: I use the consensus analyst forecast from the Bloomberg Terminal through 2027. Beyond 2027, I consider estimates too speculative to be reliable. However, the 2-3 year analyst consensus is typically accurate.Capital Charge: I use the CAPM model to estimate Nvidia's cost of equity, which suggests a rate of 9.7%.Terminal Growth Rate: I apply a terminal growth rate of 4% post-2027, which, I believe, is reasonable (around 1.5-2.0 percentage points above nominal GDP growth to reflect structural growth in the digital economy).Investors with different assumptions about Nvidia's cost of capital and terminal growth rate can refer to the enclosed sensitivity table.Based on these assumptions, I calculate a base-case target price for Nvidia of approximately $76.4 per share.Company Financials; Bloomberg & Author's EPS Estimates; Author's CalculationMy base-case projection for Nvidia's target price suggests a potential downside. However, it is crucial for investors to consider the risk and reward ratio of investing in a company from a \"scenario\" perspective. To evaluate different scenarios based on various assumptions, I have created a sensitivity table analyzing Nvidia's cost of equity and terminal growth rate. See below.Company Financials; Bloomberg & Author's EPS Estimates; Author's CalculationInvestor TakeawayNvidia investors have scored a big win. The stock is up more than 200% over the past twelve months, outperforming the S&P 500 by almost 10x. Although Nvidia's exceptional performance has some fundamental backing, I believe a substantial portion of the price rally is due to bullish momentum in trading and speculation.One key consideration in this context is options trading and associated hedging flows. Over the past few months, bulk buying of call options forced option dealers to hedge their position by purchasing the stock, thus creating a feedback loop of rising prices. However, the \"Gamma-squeeze\" may come to an end on June 21, as nearly 5 million open interest in call contracts will expire. This could notably pressure bullish trading momentum and may result in price pressure as options dealer start unwinding their hedges.On a fundamental view, using a residual earnings model, I see Nvidia shares as overvalued -- calculating an implied target price of $76.4 per share.A Note On RiskThe Gamma dynamic has certainly been a major force in driving Nvidia Corporation shares higher. However, investors should note that other factors to consider are important too. On that note, Nvidia's valuation may continue to challenge skeptics, driven by strong underlying fundamentals and sustained demand for AI-related technologies. In fact, as long as Nvidia's revenue growth rate and profit margins remain robust, investors may continue to like Nvidia stock at current prices, buying the flow coming to market from option dealers' books, and the stock may defy expectations of a correction.","news_type":1},"isVote":1,"tweetType":1,"viewCount":34,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}