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09-27

Patience is the key to win

Nvidia Stock Falls. What's Driving The Chip Maker Today

08-01

$SIA(C6L.SI)$ Share price at $8++ earlier has already factored all the positive surge in passenger load and fare prices. The travel sentiment is back to normal as per pre-covid days and many airlines have adjusted strategies to reduce fare price to keep up with the competition. Moving forward SIA financial report will be reporting positive figures but forward guidance will not be as fantastic as recent few quarters results. Breaching and maintaining above $7 will be a challenge unless management can work something out like SATS taking over Worldwide flight services.

07-19

Yup agreed any significant dip is a buy for long term holdings

Here Is Why Nvidia Still Has More Upside

07-05

Current price is defined by market sentiments and don't seem to correlate with any technical analysis for now. No one can predict when is the real price correction is coming. Let's enjoy the moment while it lasts :)

Nvidia: Marching Higher But How Long Can It Last?

07-03

$DBS Group Holdings(D05.SI)$ SGX no more hope. STI index rises but totally no market breadth. This situation has already been around for donkey years but no one from SGX management is able to make any improvement. Can only c more companies delisting.

01-24

$Nanofilm(MZH.SI)$ A very wrong decision by SGX to list such company. Perhaps delisting it will be the best option for all

2023-05-04

$YANGZIJIANG SHIPBLDG HLDGS LTD(BS6.SI)$ Take note XD for YZJ on Wed, May 10

2023-03-15

Just an excuse for fund managers to dump and buycheap

Dow Falls 500 Points as Credit Suisse Adds Pressure to Already Troubled Banking Sector

2023-02-01

$YANGZIJIANG SHIPBLDG HLDGS LTD(BS6.SI)$ bull or bears?

2022-08-30

Detailed and informative write up. Tks for the time & effort!

Sorry, the original content has been removed

2022-08-18

$SINGAPORE EXCHANGE LIMITED(S68.SI)$Breaking $10 barrier finally [Miser]

Go to Tiger App to see more news

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What's Driving The Chip Maker Today","url":"https://stock-news.laohu8.com/highlight/detail?id=2470708696","media":"Dow Jones","summary":"Nvidia was falling on the last day of an eventful week for chip makers.Nvidia shares were down 1.4% at $122.34 in premarket trading Friday. The stock closed 0.4% higher on Thursday.Concerns that delay","content":"<html><head></head><body><p>Nvidia was falling on the last day of an eventful week for chip makers.</p><p>Nvidia shares were down 1.4% at $122.34 in premarket trading Friday. The stock closed 0.4% higher on Thursday.</p><p>Concerns that delays of Nvidia&#39;s next-generation Blackwell chips will persist could be weighing on the leading chip maker&#39;s stock. In early August, a report citing industry sources said volume shipments of the Blackwell B200 chip would be delayed for three months.</p><p>Many on Wall Street are still bullish. Susquehanna analyst Christopher Rolland notes that its pricing still holds up well and that the investment case for Nvidia remains strong.</p><p>&#34;Nvidia has become the world&#39;s de facto enabler of AI,&#34; Rolland wrote in a note Thursday. While others now offer similar AI accelerators for less, Rolland says Nvidia&#39;s competitive advantages lie in the vertical integration of semiconductor design, holistic systems, and software.</p><p>It has also increasingly focused on building AI supercomputers rather than standalone chips, providing significant performance advantages, according to Rolland.</p><p>Out of 64 analysts covering the stock, 94%, including Rolland, rate Nvidia Buy, according to FactSet. The average price target is $149.49, implying a 20.5% upside.</p><p>Chip stock rallied Thursday after memory-chip maker Micron Technology reported better-than-expected earnings Wednesday after market close which indicated chip makers still have room to grow.</p><p>Nvidia shares have risen 150% so far this year and through to Thursday&#39;s close. That compares with a 20% rise in the S&amp;P 500 index and a 21% rise in the Nasdaq Composite Index over the same period.</p></body></html>","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 Falls. 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What's Driving The Chip Maker Today\n</h2>\n\n<h4 class=\"meta\">\n\n\n<div class=\"head\" \">\n\n\n<div class=\"h-thumb\" style=\"background-image:url(https://static.tigerbbs.com/150f88aa4d182df19190059f4a365e99);background-size:cover;\"></div>\n\n<div class=\"h-content\">\n<p class=\"h-name\">Dow Jones </p>\n<p class=\"h-time\">2024-09-27 18:38</p>\n</div>\n\n</div>\n\n\n</h4>\n\n</header>\n<article>\n<html><head></head><body><p>Nvidia was falling on the last day of an eventful week for chip makers.</p><p>Nvidia shares were down 1.4% at $122.34 in premarket trading Friday. The stock closed 0.4% higher on Thursday.</p><p>Concerns that delays of Nvidia&#39;s next-generation Blackwell chips will persist could be weighing on the leading chip maker&#39;s stock. In early August, a report citing industry sources said volume shipments of the Blackwell B200 chip would be delayed for three months.</p><p>Many on Wall Street are still bullish. Susquehanna analyst Christopher Rolland notes that its pricing still holds up well and that the investment case for Nvidia remains strong.</p><p>&#34;Nvidia has become the world&#39;s de facto enabler of AI,&#34; Rolland wrote in a note Thursday. While others now offer similar AI accelerators for less, Rolland says Nvidia&#39;s competitive advantages lie in the vertical integration of semiconductor design, holistic systems, and software.</p><p>It has also increasingly focused on building AI supercomputers rather than standalone chips, providing significant performance advantages, according to Rolland.</p><p>Out of 64 analysts covering the stock, 94%, including Rolland, rate Nvidia Buy, according to FactSet. The average price target is $149.49, implying a 20.5% upside.</p><p>Chip stock rallied Thursday after memory-chip maker Micron Technology reported better-than-expected earnings Wednesday after market close which indicated chip makers still have room to grow.</p><p>Nvidia shares have risen 150% so far this year and through to Thursday&#39;s close. That compares with a 20% rise in the S&amp;P 500 index and a 21% rise in the Nasdaq Composite Index over the same period.</p></body></html>\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","LU0061474960.USD":"天利环球焦点基金AU Acc","IE00BMPRXR70.SGD":"Neuberger Berman 5G Connectivity A Acc SGD-H","IE00BJLML261.HKD":"HSBC GLOBAL EQUITY INDEX \"HCH\" (HKD) ACC","BK4581":"高盛持仓","IE00BKDWB100.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5H\" (SGDHDG) ACC","IE00BYXW3230.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"AA\" (USD) ACC","BK4549":"软银资本持仓","IE00BKPKM429.USD":"NEUBERGER BERMAN GLOBAL SUSTAINABLE EQUITY \"A\" (USD) ACC","IE00BDRTCR15.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"ADC\" (USD) INC A","IE00B775H168.HKD":"JANUS HENDERSON BALANCED \"A5M\" (HKD) INC","IE00B5949003.HKD":"JANUS HENDERSON GLOBAL TECHNOLOGY AND INNOVATION \"A\" (HKD) ACC","BK4548":"巴美列捷福持仓","IE00BK4W5L77.USD":"HSBC GLOBAL FUNDS ICAV US EQUITY INDEX \"HC\" (USD) ACC","IE0004445015.USD":"JANUS HENDERSON BALANCED \"A2\" (USD) ACC","LU0057025933.USD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"AX\" (USD) ACC","LU0006306889.USD":"SCHRODER ISF US LARGE CAP \"A\" (USD) INC AV","IE00BK4W5M84.HKD":"HSBC GLOBAL FUNDS ICAV US EQUITY INDEX \"HC\" (HKD) ACC","LU0061474705.USD":"THREADNEEDLE (LUX) GLOBAL DYNAMIC REAL RETURN \"AU\" (USD) ACC","BK4554":"元宇宙及AR概念","BK4532":"文艺复兴科技持仓","IE00B1BXHZ80.USD":"Legg Mason ClearBridge - US Appreciation A Acc USD","IE00B3M56506.USD":"NEUBERGER BERMAN EMERGING MARKETS EQUITY \"A\" (USD) ACC","IE00BFSS8Q28.SGD":"Janus Henderson Balanced A Inc SGD-H","BK4567":"ESG概念","IE0034235188.USD":"PINEBRIDGE GLOBAL FOCUS EQUITY \"A\" (USD) ACC","BK4534":"瑞士信贷持仓","IE0034235303.USD":"PINEBRIDGE US RESEARCH ENHANCED CORE EQUITY \"A\" (USD) ACC","IE0009356076.USD":"JANUS HENDERSON GLOBAL TECHNOLOGY AND INNOVATION \"A2\" (USD) ACC","BK4533":"AQR资本管理(全球第二大对冲基金)","HK0000320223.HKD":"TAIKANG KAITAI CHINA NEW OPPORTUNITIES FUND \"A\" (HKD) ACC","NVDA":"英伟达","IE00B7KXQ091.USD":"Janus Henderson Balanced A Inc USD","BK4543":"AI","HK0000320264.USD":"TAIKANG KAITAI CHINA NEW OPPORTUNITIES FUND \"A\" (USD) ACC","BK4527":"明星科技股","IE00BN29S564.USD":"JANUS HENDERSON BALANCED \"A3\" (USD) INC","IE0034235295.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"A\" (USD) ACC","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","IE00B19Z9505.USD":"美盛-美国大盘成长股A Acc","IE0004445239.USD":"JANUS HENDERSON US FORTY \"A2\" (USD) ACC","IE00BJJMRX11.SGD":"Janus Henderson Balanced A Acc SGD","IE00BHPRN162.USD":"BNY MELLON BLOCKCHAIN INNOVATION \"B\" (USD) ACC","GB00BDT5M118.USD":"天利环球扩展Alpha基金A Acc"},"source_url":"https://dowjonesnews.com/newdjn/logon.aspx?AL=N","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2470708696","content_text":"Nvidia was falling on the last day of an eventful week for chip makers.Nvidia shares were down 1.4% at $122.34 in premarket trading Friday. The stock closed 0.4% higher on Thursday.Concerns that delays of Nvidia's next-generation Blackwell chips will persist could be weighing on the leading chip maker's stock. In early August, a report citing industry sources said volume shipments of the Blackwell B200 chip would be delayed for three months.Many on Wall Street are still bullish. Susquehanna analyst Christopher Rolland notes that its pricing still holds up well and that the investment case for Nvidia remains strong.\"Nvidia has become the world's de facto enabler of AI,\" Rolland wrote in a note Thursday. While others now offer similar AI accelerators for less, Rolland says Nvidia's competitive advantages lie in the vertical integration of semiconductor design, holistic systems, and software.It has also increasingly focused on building AI supercomputers rather than standalone chips, providing significant performance advantages, according to Rolland.Out of 64 analysts covering the stock, 94%, including Rolland, rate Nvidia Buy, according to FactSet. The average price target is $149.49, implying a 20.5% upside.Chip stock rallied Thursday after memory-chip maker Micron Technology reported better-than-expected earnings Wednesday after market close which indicated chip makers still have room to grow.Nvidia shares have risen 150% so far this year and through to Thursday's close. That compares with a 20% rise in the S&P 500 index and a 21% rise in the Nasdaq Composite Index over the same period.","news_type":1},"isVote":1,"tweetType":1,"viewCount":38,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":333536782495880,"gmtCreate":1722474835336,"gmtModify":1722474839385,"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"3578392292744824","idStr":"3578392292744824"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/C6L.SI\">$SIA(C6L.SI)$&nbsp;</a> Share price at $8++ earlier has already factored all the positive surge in passenger load and fare prices. The travel sentiment is back to normal as per pre-covid days and many airlines have adjusted strategies to reduce fare price to keep up with the competition.&nbsp; Moving forward SIA financial report will be reporting positive figures but forward guidance will not be as fantastic as recent few quarters results. Breaching and maintaining above $7 will be a challenge unless management can work something out like SATS taking over Worldwide flight services.","listText":"<a href=\"https://ttm.financial/S/C6L.SI\">$SIA(C6L.SI)$&nbsp;</a> Share price at $8++ earlier has already factored all the positive surge in passenger load and fare prices. The travel sentiment is back to normal as per pre-covid days and many airlines have adjusted strategies to reduce fare price to keep up with the competition.&nbsp; Moving forward SIA financial report will be reporting positive figures but forward guidance will not be as fantastic as recent few quarters results. Breaching and maintaining above $7 will be a challenge unless management can work something out like SATS taking over Worldwide flight services.","text":"$SIA(C6L.SI)$ Share price at $8++ earlier has already factored all the positive surge in passenger load and fare prices. The travel sentiment is back to normal as per pre-covid days and many airlines have adjusted strategies to reduce fare price to keep up with the competition. Moving forward SIA financial report will be reporting positive figures but forward guidance will not be as fantastic as recent few quarters results. Breaching and maintaining above $7 will be a challenge unless management can work something out like SATS taking over Worldwide flight services.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":97,"commentSize":6,"repostSize":595,"link":"https://ttm.financial/post/333536782495880","isVote":1,"tweetType":1,"viewCount":16646,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":329153318805616,"gmtCreate":1721365616096,"gmtModify":1721365625197,"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"3578392292744824","idStr":"3578392292744824"},"themes":[],"htmlText":"Yup agreed any significant dip is a buy for long term holdings","listText":"Yup agreed any significant dip is a buy for long term holdings","text":"Yup agreed any significant dip is a buy for long term holdings","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/329153318805616","repostId":"1134782232","repostType":2,"repost":{"id":"1134782232","pubTimestamp":1721360845,"share":"https://ttm.financial/m/news/1134782232?lang=&edition=fundamental","pubTime":"2024-07-19 11:47","market":"us","language":"en","title":"Here Is Why Nvidia Still Has More Upside","url":"https://stock-news.laohu8.com/highlight/detail?id=1134782232","media":"Seeking Alpha","summary":"SummaryNvidia can continue to rally higher despite its impressive run.The company's CUDA software could be a key factor in its continued success.Nvidia's data center opportunity is significant and cou","content":"<html><head></head><body><h2 id=\"id_1308591037\" style=\"text-align: left;\">Summary</h2><ul style=\"\"><li><p>Nvidia can continue to rally higher despite its impressive run.</p></li><li><p>The company&#39;s CUDA software could be a key factor in its continued success.</p></li><li><p>Nvidia&#39;s data center opportunity is significant and could be underestimated by the market.</p></li></ul><p>When I wrote my first article on Nvidia Corporation more than a year ago, the stock had a hold rating among Seeking Alpha analysts with valuation being the major driver of that rating. More than 200% later, the stock is still a hold among analysts, with 11 rating it at least a buy and 24 rating a hold or less as of the time of writing. Again, the bear case seems to revolve around the lofty growth prospects for the company. While the tripling of the stock in just over the past year should mean the hold rating is more accurate now than it was then, this article will discuss why Nvidia might still have more upside.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/0d2606530852b285d9480dab8438a0ef\" alt=\"Nvidia Continues to Divide Analysts (Seeking Alpha)\" title=\"Nvidia Continues to Divide Analysts (Seeking Alpha)\" tg-width=\"444\" tg-height=\"269\"/><span>Nvidia Continues to Divide Analysts (Seeking Alpha)</span></p><h2 id=\"id_1978085403\" style=\"text-align: left;\">Recap of How Nvidia (Briefly) Became the Most Valuable Company in the World</h2><p style=\"text-align: left;\">In my first article on Nvidia written more than a year ago, I focused on remarks made by Nvidia CEO Jensen Huang stating that data centers present today were not ready for AI and that will spur capex spending of $250 billion a year (that grow) for multiple years for products and services Nvidia was essentially the only game in town in. From the article:</p><blockquote><p>So not only should Nvidia be a $1 trillion market cap, but it should also topple Apple as the world&#39;s most valuable company if what Huang said turns out to be true. The question becomes, why is Nvidia trading at just below $1 trillion, rather than at almost $3 trillion like Apple?</p></blockquote><p style=\"text-align: left;\">Well now that Nvidia did reach that $3 trillion valuation, its natural that questions arise about the sustainability of that valuation. In the risks section of that article, I mentioned that Nvidia might lack that iOS factor that Apple had and kept consumers in this article. In today&#39;s article, I&#39;ll discuss how CUDA could be just that.</p><h2 id=\"id_2251319734\" style=\"text-align: left;\">Why CUDA Could Be Nvidia&#39;s iOS</h2><p style=\"text-align: left;\">In 2007, Nvidia developed Compute Unified Device Architecture (CUDA for short) to help use its GPUs in parallel computing for non-graphics workload. To simplify this in extremely basic terms, the main way computing is done is by solving problems one at a time (sequential computing), Nvidia didn&#39;t just design GPUs, it built the architecture necessary to try and solve really large computing problems by breaking them down into smaller problems and solving them all simultaneously (or in parallel). CUDA, again in very basic terms, is the piece of software that helps developers tell machines that they want to use the hardware for parallel computing (which is necessary for AI workloads).</p><p style=\"text-align: left;\">That piece of software was built with Nvidia&#39;s GPUs in mind and vice versa. And because Nvidia was really early, CUDA became the go-to programming platform for training AI models. As a result, those who preferred working with CUDA had to use NVIDIA GPUs, and those who were using the company&#39;s GPUs were better off using CUDA, creating a virtuous cycle for Nvidia.</p><p style=\"text-align: left;\">In my opinion, this is a crucial part of Nvidia&#39;s bull case and where the similarities are with Apple&#39;s iPhone. For years, Apple traded at 10x earnings on the premise that this is just a hardware company and eventually someone will make a more compelling or cheaper piece of hardware and win all the market share. That threat never materialized precisely because of iOS. Similarly, in Nvidia&#39;s case, it is no longer about making a better chip or a cheaper one for that matter, competitors must also solve the software part of the equation. This is arguably the more difficult part of competing with Nvidia as the longer this takes the more entrenched Nvidia will become.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/98eb3188446c0c6de9a9d8b2dca536b4\" alt=\"Nvidia&#39;s virtuous cycle (created by author)\" title=\"Nvidia&#39;s virtuous cycle (created by author)\" tg-width=\"640\" tg-height=\"360\"/><span>Nvidia&#39;s virtuous cycle (created by author)</span></p><p style=\"text-align: left;\">If you think about Apple&#39;s business, it&#39;s a two-headed dragon. You buy an iPhone, a quality piece of hardware, the Apple upsells you with the services enabled by its iOS and software. Powering the iOS also means that consumers who buy an iPhone are unlikely to switch and will buy other Apple hardware products, creating a consumer lock-in. Similarly, with Nvidia, consumers buy the GPUs today because they are perceived to be the best on the market. But there is also a software component required to activate the capabilities of those GPUs. It is Nvidia&#39;s leadership in CUDA that maintains its competitive advantage. Like with Apple, when it&#39;s time for consumers to upgrade their GPU, they will stick to Nvidia because CUDA only works with Nvidia. And if they want AMD they will have to learn its computing software and switch the training models they created which creates a significant switching cost that is similar to that faced by Apple consumers.</p><h2 id=\"id_689495477\" style=\"text-align: left;\">Nvidia&#39;s Data Center Opportunity is Enormous</h2><p style=\"text-align: left;\">One simple way to understand just how large Nvidia&#39;s opportunity could be is to look at AI startup CoreWeave. The company jumped to a $19 billion valuation just a few weeks ago, thanks to being one of the main providers of Nvidia GPUs. Here is an interesting bit from the company&#39;s blog:</p><blockquote><p>With over 45,000 GPUs in our fleet, we are the largest private operator of GPUs in North America. Our GPU infrastructure is delivered from 5 data centers in Chicago, North Carolina, New Jersey and New York, and rivals the assets operated by the large cloud computing companies.</p></blockquote><p style=\"text-align: left;\">This works out to about 9,000 GPUs for the type of data center required to run AI workloads. The US International Trade Commission estimated that there were roughly 8,000 data centers worldwide in 2021. Now if you believe AI is the new internet, those 8,000 data centers are going to be refined for AI workloads (revisit the recap on Nvidia&#39;s initial bull thesis). That means 72 million GPUs, and that&#39;s without any growth in the number of data centers, something that looks destined to happen. At a cost of at least $30,000 per GPU, that is approximately $2.2 trillion in GPU sales. Sure that, as GPUs keep improving, less of them will be needed. But that will be more than offset by the growth in data centers and the rise in unit prices of GPUs.</p><p style=\"text-align: left;\">CNBC recently reported that Nvidia holds 80% share of AI chips. So that is potentially $1.8 trillion in sales going to Nvidia with sky high-margins. And that&#39;s just data center revenue, so excluding gaming for example and other verticals. So even if you assume that capex cycle takes 10 years (and it will likely take less) Nvidia&#39;s average sales per quarter in that case ($44 billion in this case) would be almost double what it generated for the whole of 2023.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/290635b2939a5df2807025c7f5e8291d\" alt=\"revenue by segment from the 10-k\" title=\"revenue by segment from the 10-k\" tg-width=\"640\" tg-height=\"264\"/><span>revenue by segment from the 10-k</span></p><p style=\"text-align: left;\"><strong>Nvidia&#39;s financials will look vastly different in just a few years (company filings)</strong></p><p style=\"text-align: left;\">Let&#39;s focus on the Compute &amp; Networking segment given its the relevant one for my thesis. As discussed in the paragraph above, even if the AI transition takes a decade to optimize the data centers present today and assuming there is no growth in the number of data centers worldwide, Nvidia would generate an average revenue over the next 10 years of $176 billion excluding graphics. And because of CUDA, Nvidia actually can lock in customers for now. The faster the transition to AI data centers, the more Nvidia sells given its dominant competitive position, which entrenches CUDA&#39;s position as the platform for parallel processing, and in turn leads to more GPU sales in the future. There is also the DGX cloud business which offers AI-training-as-a-service platform and customizable AI models for the enterprise, which can help cement Nvidia&#39;s competitive position even more. As a result, it is highly likely the company can maintain its current margins of 67% and generate operating income of $118 billion on average over the next 10 years just from compute &amp; networking. let&#39;s assume its net interest income is $0 instead of the current $820 million. Slap the current corporate tax rate on those earnings and Nvidia&#39;s income would be $93 billion. That means Nvidia is selling at 31x forward earnings assuming: 1) Transition to AI takes 10 years, 2) There is no growth in the number of data centers worldwide. 3) Gaming and other high-growth avenues like automotive make no money for 10 years. Given how unlikely those 3 factors are, I feel that valuation has a lot of margin of safety and propels my reiterating of the buy rating</p><h2 id=\"id_1815304581\" style=\"text-align: left;\">Competition is Coming</h2><p style=\"text-align: left;\">There are signs of competition coming for Nvidia&#39;s dominant position. The first one is probably Apple Intelligence. There are two main reasons why Apple Intelligence is a threat to Nvidia. The first is that Apple Inc. (AAPL) will use its own chips, meaning Nvidia won&#39;t make its way to Apple devices even if AI is the new internet. The second issue is that Apple will do some if not most of the AI workloads on the device. This implies that the use of Nvidia GPUs could be less than forecast if companies embrace what is in essence a type of edge AI, given Nvidia&#39;s GPUs will mostly be in data centers.</p><p style=\"text-align: left;\">Another issue to be wary of is the concentration of sales. There is one mystery customer that makes up a significant number of Nvidia&#39;s sales:</p><blockquote><p>Sales to one customer, Customer A, represented 13% of total revenue for fiscal year 2024, which was attributable to the Compute &amp; Networking segment. One indirect customer which primarily purchases our products through system integrators and distributors, including through Customer A, is estimated to have represented approximately 19% of total revenue for fiscal year 2024, attributable to the Compute &amp; Networking segment. Our estimated Compute &amp; Networking demand is expected to remain concentrated. There were no customers with 10% or more of total revenue for fiscal years 2023 and 2022.</p></blockquote><p style=\"text-align: left;\">In a way, this is an important indication on validity of the thesis that AI is the new internet. If the thesis is valid, sales concentration should decline over time as everyone embraces AI. If it is not, then the concentration should persist and Nvidia will be at the whims of this customer. Investors must pay attention to this metric.</p><p style=\"text-align: left;\">The growth in AMD Inc. (AMD) and Intel Corporation (INTC) GPUs is also a threat, given they use their own competing programming platform, which would undermine CUDA in the long-term if it takes off. OpenAI for example launched its own CUDA alternative. Meta meanwhile launched software that enhanced interoperability between Nvidia and AMD GPUs, a move designed to undermine CUDA. From Reuters:</p><blockquote><p>Software has become a key battleground for chipmakers seeking to build up an ecosystem of developers to use their chips. Nvidia&#39;s CUDA platform has been the most popular so far for artificial intelligence work.</p><p>However, once developers tailor their code for Nvidia chips, it is difficult to run it on graphics processing units, or GPUs, from Nvidia competitors like AMD. Meta said the software is designed to easily swap between chips without being locked in.</p></blockquote><p style=\"text-align: left;\">These efforts have yet to change the competitive dynamics in my opinion, but it is the key battle investors need to keep their eye on as they assess Nvidia.</p><h2 id=\"id_3390154013\" style=\"text-align: left;\">Conclusion: Nvidia is Still Attractive</h2><p style=\"text-align: left;\">Despite the stock&#39;s impressive run up over the past 12 months or so, Nvidia still has room to run thanks to the huge opportunity in GPU sales for the data center. Nvidia&#39;s CUDA also provides high conviction that the company can continue to maintain its 80% share in GPUs. The biggest risk however is that big tech players are trying their hardest to dislodge Nvidia&#39;s leadership in the computing platform part of the supply chain. Having said that, this risk is yet to materialize and so the stock remains a buy, especially on any dips. The market is not a zero-sum game by any means however, and these attempts to dislodge CUDA could help AMD and Intel as well.</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>Here Is Why Nvidia Still Has More Upside</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\">\nHere Is Why Nvidia Still Has More Upside\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-07-19 11:47 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4704774-here-is-why-nvidia-still-has-more-upside><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryNvidia can continue to rally higher despite its impressive run.The company's CUDA software could be a key factor in its continued success.Nvidia's data center opportunity is significant and ...</p>\n\n<a href=\"https://seekingalpha.com/article/4704774-here-is-why-nvidia-still-has-more-upside\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"NVDA":"英伟达"},"source_url":"https://seekingalpha.com/article/4704774-here-is-why-nvidia-still-has-more-upside","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1134782232","content_text":"SummaryNvidia can continue to rally higher despite its impressive run.The company's CUDA software could be a key factor in its continued success.Nvidia's data center opportunity is significant and could be underestimated by the market.When I wrote my first article on Nvidia Corporation more than a year ago, the stock had a hold rating among Seeking Alpha analysts with valuation being the major driver of that rating. More than 200% later, the stock is still a hold among analysts, with 11 rating it at least a buy and 24 rating a hold or less as of the time of writing. Again, the bear case seems to revolve around the lofty growth prospects for the company. While the tripling of the stock in just over the past year should mean the hold rating is more accurate now than it was then, this article will discuss why Nvidia might still have more upside.Nvidia Continues to Divide Analysts (Seeking Alpha)Recap of How Nvidia (Briefly) Became the Most Valuable Company in the WorldIn my first article on Nvidia written more than a year ago, I focused on remarks made by Nvidia CEO Jensen Huang stating that data centers present today were not ready for AI and that will spur capex spending of $250 billion a year (that grow) for multiple years for products and services Nvidia was essentially the only game in town in. From the article:So not only should Nvidia be a $1 trillion market cap, but it should also topple Apple as the world's most valuable company if what Huang said turns out to be true. The question becomes, why is Nvidia trading at just below $1 trillion, rather than at almost $3 trillion like Apple?Well now that Nvidia did reach that $3 trillion valuation, its natural that questions arise about the sustainability of that valuation. In the risks section of that article, I mentioned that Nvidia might lack that iOS factor that Apple had and kept consumers in this article. In today's article, I'll discuss how CUDA could be just that.Why CUDA Could Be Nvidia's iOSIn 2007, Nvidia developed Compute Unified Device Architecture (CUDA for short) to help use its GPUs in parallel computing for non-graphics workload. To simplify this in extremely basic terms, the main way computing is done is by solving problems one at a time (sequential computing), Nvidia didn't just design GPUs, it built the architecture necessary to try and solve really large computing problems by breaking them down into smaller problems and solving them all simultaneously (or in parallel). CUDA, again in very basic terms, is the piece of software that helps developers tell machines that they want to use the hardware for parallel computing (which is necessary for AI workloads).That piece of software was built with Nvidia's GPUs in mind and vice versa. And because Nvidia was really early, CUDA became the go-to programming platform for training AI models. As a result, those who preferred working with CUDA had to use NVIDIA GPUs, and those who were using the company's GPUs were better off using CUDA, creating a virtuous cycle for Nvidia.In my opinion, this is a crucial part of Nvidia's bull case and where the similarities are with Apple's iPhone. For years, Apple traded at 10x earnings on the premise that this is just a hardware company and eventually someone will make a more compelling or cheaper piece of hardware and win all the market share. That threat never materialized precisely because of iOS. Similarly, in Nvidia's case, it is no longer about making a better chip or a cheaper one for that matter, competitors must also solve the software part of the equation. This is arguably the more difficult part of competing with Nvidia as the longer this takes the more entrenched Nvidia will become.Nvidia's virtuous cycle (created by author)If you think about Apple's business, it's a two-headed dragon. You buy an iPhone, a quality piece of hardware, the Apple upsells you with the services enabled by its iOS and software. Powering the iOS also means that consumers who buy an iPhone are unlikely to switch and will buy other Apple hardware products, creating a consumer lock-in. Similarly, with Nvidia, consumers buy the GPUs today because they are perceived to be the best on the market. But there is also a software component required to activate the capabilities of those GPUs. It is Nvidia's leadership in CUDA that maintains its competitive advantage. Like with Apple, when it's time for consumers to upgrade their GPU, they will stick to Nvidia because CUDA only works with Nvidia. And if they want AMD they will have to learn its computing software and switch the training models they created which creates a significant switching cost that is similar to that faced by Apple consumers.Nvidia's Data Center Opportunity is EnormousOne simple way to understand just how large Nvidia's opportunity could be is to look at AI startup CoreWeave. The company jumped to a $19 billion valuation just a few weeks ago, thanks to being one of the main providers of Nvidia GPUs. Here is an interesting bit from the company's blog:With over 45,000 GPUs in our fleet, we are the largest private operator of GPUs in North America. Our GPU infrastructure is delivered from 5 data centers in Chicago, North Carolina, New Jersey and New York, and rivals the assets operated by the large cloud computing companies.This works out to about 9,000 GPUs for the type of data center required to run AI workloads. The US International Trade Commission estimated that there were roughly 8,000 data centers worldwide in 2021. Now if you believe AI is the new internet, those 8,000 data centers are going to be refined for AI workloads (revisit the recap on Nvidia's initial bull thesis). That means 72 million GPUs, and that's without any growth in the number of data centers, something that looks destined to happen. At a cost of at least $30,000 per GPU, that is approximately $2.2 trillion in GPU sales. Sure that, as GPUs keep improving, less of them will be needed. But that will be more than offset by the growth in data centers and the rise in unit prices of GPUs.CNBC recently reported that Nvidia holds 80% share of AI chips. So that is potentially $1.8 trillion in sales going to Nvidia with sky high-margins. And that's just data center revenue, so excluding gaming for example and other verticals. So even if you assume that capex cycle takes 10 years (and it will likely take less) Nvidia's average sales per quarter in that case ($44 billion in this case) would be almost double what it generated for the whole of 2023.revenue by segment from the 10-kNvidia's financials will look vastly different in just a few years (company filings)Let's focus on the Compute & Networking segment given its the relevant one for my thesis. As discussed in the paragraph above, even if the AI transition takes a decade to optimize the data centers present today and assuming there is no growth in the number of data centers worldwide, Nvidia would generate an average revenue over the next 10 years of $176 billion excluding graphics. And because of CUDA, Nvidia actually can lock in customers for now. The faster the transition to AI data centers, the more Nvidia sells given its dominant competitive position, which entrenches CUDA's position as the platform for parallel processing, and in turn leads to more GPU sales in the future. There is also the DGX cloud business which offers AI-training-as-a-service platform and customizable AI models for the enterprise, which can help cement Nvidia's competitive position even more. As a result, it is highly likely the company can maintain its current margins of 67% and generate operating income of $118 billion on average over the next 10 years just from compute & networking. let's assume its net interest income is $0 instead of the current $820 million. Slap the current corporate tax rate on those earnings and Nvidia's income would be $93 billion. That means Nvidia is selling at 31x forward earnings assuming: 1) Transition to AI takes 10 years, 2) There is no growth in the number of data centers worldwide. 3) Gaming and other high-growth avenues like automotive make no money for 10 years. Given how unlikely those 3 factors are, I feel that valuation has a lot of margin of safety and propels my reiterating of the buy ratingCompetition is ComingThere are signs of competition coming for Nvidia's dominant position. The first one is probably Apple Intelligence. There are two main reasons why Apple Intelligence is a threat to Nvidia. The first is that Apple Inc. (AAPL) will use its own chips, meaning Nvidia won't make its way to Apple devices even if AI is the new internet. The second issue is that Apple will do some if not most of the AI workloads on the device. This implies that the use of Nvidia GPUs could be less than forecast if companies embrace what is in essence a type of edge AI, given Nvidia's GPUs will mostly be in data centers.Another issue to be wary of is the concentration of sales. There is one mystery customer that makes up a significant number of Nvidia's sales:Sales to one customer, Customer A, represented 13% of total revenue for fiscal year 2024, which was attributable to the Compute & Networking segment. One indirect customer which primarily purchases our products through system integrators and distributors, including through Customer A, is estimated to have represented approximately 19% of total revenue for fiscal year 2024, attributable to the Compute & Networking segment. Our estimated Compute & Networking demand is expected to remain concentrated. There were no customers with 10% or more of total revenue for fiscal years 2023 and 2022.In a way, this is an important indication on validity of the thesis that AI is the new internet. If the thesis is valid, sales concentration should decline over time as everyone embraces AI. If it is not, then the concentration should persist and Nvidia will be at the whims of this customer. Investors must pay attention to this metric.The growth in AMD Inc. (AMD) and Intel Corporation (INTC) GPUs is also a threat, given they use their own competing programming platform, which would undermine CUDA in the long-term if it takes off. OpenAI for example launched its own CUDA alternative. Meta meanwhile launched software that enhanced interoperability between Nvidia and AMD GPUs, a move designed to undermine CUDA. From Reuters:Software has become a key battleground for chipmakers seeking to build up an ecosystem of developers to use their chips. Nvidia's CUDA platform has been the most popular so far for artificial intelligence work.However, once developers tailor their code for Nvidia chips, it is difficult to run it on graphics processing units, or GPUs, from Nvidia competitors like AMD. Meta said the software is designed to easily swap between chips without being locked in.These efforts have yet to change the competitive dynamics in my opinion, but it is the key battle investors need to keep their eye on as they assess Nvidia.Conclusion: Nvidia is Still AttractiveDespite the stock's impressive run up over the past 12 months or so, Nvidia still has room to run thanks to the huge opportunity in GPU sales for the data center. Nvidia's CUDA also provides high conviction that the company can continue to maintain its 80% share in GPUs. The biggest risk however is that big tech players are trying their hardest to dislodge Nvidia's leadership in the computing platform part of the supply chain. Having said that, this risk is yet to materialize and so the stock remains a buy, especially on any dips. The market is not a zero-sum game by any means however, and these attempts to dislodge CUDA could help AMD and Intel as well.","news_type":1},"isVote":1,"tweetType":1,"viewCount":93,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":324141365989560,"gmtCreate":1720142387137,"gmtModify":1720142390714,"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"3578392292744824","idStr":"3578392292744824"},"themes":[],"htmlText":"Current price is defined by market sentiments and don't seem to correlate with any technical analysis for now. No one can predict when is the real price correction is coming. Let's enjoy the moment while it lasts :)","listText":"Current price is defined by market sentiments and don't seem to correlate with any technical analysis for now. No one can predict when is the real price correction is coming. Let's enjoy the moment while it lasts :)","text":"Current price is defined by market sentiments and don't seem to correlate with any technical analysis for now. No one can predict when is the real price correction is coming. Let's enjoy the moment while it lasts :)","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/324141365989560","repostId":"1186205087","repostType":4,"repost":{"id":"1186205087","pubTimestamp":1720136947,"share":"https://ttm.financial/m/news/1186205087?lang=&edition=fundamental","pubTime":"2024-07-05 07:49","market":"us","language":"en","title":"Nvidia: Marching Higher But How Long Can It Last?","url":"https://stock-news.laohu8.com/highlight/detail?id=1186205087","media":"seekingalpha","summary":"My previous article on Nvidia back in March argued that despite the stock’s meteoric rise, the company’s quality and expected performance were reasonable enough to justify its premium price. Since then, the stock has resumed its upward march nearly 50%, briefly making Nvidia the most valuable company in the world. What keeps fueling such outperformance?Companies and countries are partnering with NVIDIA to shift the trillion-dollar installed base of traditional data centers to accelerated computi","content":"<html><head></head><body><h2 id=\"id_2474853313\" style=\"text-align: left;\">Summary</h2><ul style=\"\"><li><p>Nvidia stock continues to rise due to generative AI sentiment, formidable market positioning, and the company exceeding expectations.</p></li><li><p>Nvidia&#39;s performance has prompted comparisons to Cisco during the Dot-Com bubble, but the comparison misses context.</p></li><li><p>Nvidia doesn&#39;t appear to be in a stock bubble, but is at risk of entering a demand bubble.</p></li><li><p>Sky-high expectations for Nvidia and growing risks make the company a hold in my view. Betting against the company remains risky.</p></li></ul><h3 id=\"id_1299028407\" style=\"text-align: left;\">Why Does Nvidia Stock Just Keep Climbing?</h3><p style=\"text-align: left;\">My previous article on Nvidia back in March argued that despite the stock’s meteoric rise, the company’s quality and expected performance were reasonable enough to justify its premium price. Since then, the stock has resumed its upward march nearly 50%, briefly making Nvidia the most valuable company in the world. What keeps fueling such outperformance?</p><p style=\"text-align: left;\">Not much has changed in the past four months for Nvidia. The three themes mentioned in my last article (euphoric sentiment around AI, Nvidia’s market positioning, and exceeding expectations), have all showed little sign of slowing.</p><p style=\"text-align: left;\">The generative AI (gen-AI) theme has been the backbone of a soaring market that is on pace to match its incredible performance in 2023, currently up 15% year-to-date (S&amp;P 500). Despite many companies doing well the past two years, much of the market’s strength is in just a handful of mega-cap tech companies leading the AI race. Since the short-lived dip in October of 2023, over 50% of the S&amp;P 500’s gains are attributable to Nvidia, other semiconductor companies, and the ‘Fab Five’.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/2e05fda677c0d911ad022c7fb9d20402\" alt=\"top heavy market\" title=\"top heavy market\" tg-width=\"640\" tg-height=\"414\"/><span>top heavy market</span></p><p style=\"text-align: left;\"><strong>Financial Times - Unhedged</strong></p><p style=\"text-align: left;\">What’s more is, in the past three months alone, these large tech companies are taking credit for more and more of the rally, while the rest of the S&amp;P 500 has been flat or giving up some gains:</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/52e98936bb7a419dc67b916e6eef8ab5\" alt=\"top heavy 2\" title=\"top heavy 2\" tg-width=\"640\" tg-height=\"411\"/><span>top heavy 2</span></p><p style=\"text-align: left;\"><strong>Financial Times - Unhedged</strong></p><p style=\"text-align: left;\">Investors seem to be placing big bets that AI has the power to transform businesses and economies – and that these mega tech companies will be the primary beneficiaries. Nvidia CEO Jensen Huang, who’s become somewhat of a celebrity, has helped fuel this excitement with his rhetoric around gen-AI:</p><blockquote><p>The next industrial revolution has begun… Companies and countries are partnering with NVIDIA to shift the trillion-dollar installed base of traditional data centers to accelerated computing and build a new type of data center, AI factories, to produce a new commodity, artificial intelligence. AI will bring significant productivity gains to nearly every industry and help companies be more cost and energy efficient while expanding revenue opportunities.</p></blockquote><p style=\"text-align: left;\">The other two themes, Nvidia’s market position and exceeding expectations, have also remained strong. Nvidia once again crushed estimates in Q1, adding to its streak of 8 consecutive quarterly beats. Data Center revenue and bottom-line profitability were the stars last quarter:</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/aef45726bfaf3c0d7ce64b631c0f6a1e\" alt=\"A table with numbers and letters Description automatically generated\" title=\"A table with numbers and letters Description automatically generated\" tg-width=\"640\" tg-height=\"356\"/><span>A table with numbers and letters Description automatically generated</span></p><p style=\"text-align: left;\"><strong>NVDA Q1 Results Doc</strong></p><p style=\"text-align: left;\">These are eye-popping growth rates for a company churning out over $25B in <em>quarterly </em>revenue, yet the trend isn’t stopping. Management is guiding for about $28B in Q2 revenue, representing Y/Y growth of 107%. CFO Kress said much of the quarter’s Data Center revenue came from its older Hopper GPU, the H100; yet the company is still ramping up its H200 processor, recently launched its highest performing superchip (Blackwell), and expects demand to continue outpacing supply for each product. Nvidia has not let up from dominating the Accelerated Computing market and outperforming already lofty expectations – making its stock a hot commodity.</p><h3 id=\"id_3916863916\" style=\"text-align: left;\">So… Is Nvidia in a Bubble?</h3><p style=\"text-align: left;\">The widely understood definition of a bubble is when the price of a stock, asset, or even an entire market exceeds its fundamental value by a wide margin. Value is often measured using price relative multiples like the price-to-earnings ratio, but these aren’t useful when determining if price has disconnected from <em>fundamental value.</em> Fundamental value is most commonly assessed as the present value of expected cash flows through a discounted cash flow (‘DCF’) model, but this only gives us a snapshot of value at a point in time and relies on assumptions. Instead, to judge if Nvidia is in bubble territory, we can look at how price has tracked two common fundamentals over time: earnings per share (‘EPS’) and free cash flow per share. Both reflect any impacts of dilution, and free cash flow is less susceptible to manipulation.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/9d5e77c4710e45ad5a26349e68f5abb8\" alt=\"fundamentals\" title=\"fundamentals\" tg-width=\"635\" tg-height=\"456\"/><span>fundamentals</span></p><p style=\"text-align: left;\"><strong>YCharts</strong></p><p style=\"text-align: left;\">We can see from the above chart that growth in these fundamentals have held incredibly close with Nvidia’s stock price the past 3 years. Nvidia’s performance has prompted recent comparisons to Cisco (CSCO), a poster child of the infamous Dot-Com bubble which saw the NASDAQ rise 800% between 1995 and 2000, only to give up 78% off its gains by 2002. The comparison is not unfounded, as the companies do have several things in common:</p><ul style=\"\"><li><p>Market-wide excitement around a revolutionary technology, leading to a broader rally.</p></li><li><p>Hardware/computing provider for the technology</p></li><li><p>Passed Microsoft as the most valuable company</p></li><li><p>Leader by market share in its respective market</p></li><li><p>Benefited from investments before the industry became profitable</p></li></ul><p style=\"text-align: left;\">It’s easy to assume the companies are directly comparable, take a look at their price charts, and conclude Nvidia is in a bubble. But digging deeper, we see that Cisco’s fundamentals weren’t nearly as strong as Nvidia’s during that period:</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/cd112d624f87efc170f0c782155cf2f7\" alt=\"Fundamentals\" title=\"Fundamentals\" tg-width=\"635\" tg-height=\"456\"/><span>Fundamentals</span></p><p style=\"text-align: left;\"><strong>YCharts</strong></p><p style=\"text-align: left;\">The time frame matters as this chart ends near Cisco’s peak, but as it shows, Cisco’s fundamentals began lagging its stock price a year or so earlier. We have yet to see this happen to Nvidia. Even though Nvidia doesn’t appear to be in a <em>stock </em>bubble as we have it defined, high expectations around AI’s prospects put the company at risk of entering a <em>demand</em> bubble.</p><h3 id=\"id_2368198737\" style=\"text-align: left;\">A Demand Bubble?</h3><p style=\"text-align: left;\">The global AI market is expected to reach $800B+ by 2030 according to Statista. Though there is overlap, the Data Center market is also projected to be half-a-billion dollars by 2028. Nvidia itself projects a long-term total addressable market of $1 <em>trillion </em>across its product suite. Even with nearly $80B in TTM revenue, this would equate to only an 8% market penetration. The runway and optimism for AI-related markets, and Nvidia, are undoubtedly high. Even with a nearly 80% share in GPUs and a formidable competitive position, can the company continue exceeding these expectations? If not, it’s possible Nvidia could be in a <em>demand</em> bubble.</p><p style=\"text-align: left;\">As we’ve seen, Nvidia’s stock price has been a magnet to underlying fundamentals, but this may be beginning to change. Revenue and earnings growth estimates for Nvidia look to be normalizing with analysts expecting growth between 20% and 30% by FY 2026 – quite moderate given its recent numbers. As a result, Nvidia’s forward PE ratio has jumped 50% since March, indicating valuation has recently been more influenced by multiple expansion rather than forward growth and fundamentals.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/93e8a5471983321f902464322d6014a6\" alt=\"fwd PE\" title=\"fwd PE\" tg-width=\"635\" tg-height=\"424\"/><span>fwd PE</span></p><p style=\"text-align: left;\"><strong>YCharts</strong></p><p style=\"text-align: left;\">When we look back at the ratio over three years, we can see how Nvidia’s forward growth expectations drove <em>down</em> the multiple (denominator got bigger), usually after the company reported earnings and guidance revisions. But this wasn’t as dramatic last quarter:</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/4e7f49b400668e5de0fc0f814518dfb3\" alt=\"fwd PE\" title=\"fwd PE\" tg-width=\"640\" tg-height=\"429\"/><span>fwd PE</span></p><p style=\"text-align: left;\"><strong>YCharts</strong></p><p style=\"text-align: left;\">The market looks to be implying higher and higher expectations in the price, putting more pressure on Nvidia to continue outperforming in a big way. While I don’t doubt Nvidia will continue dominating its addressable market, and near-term demand continues to outpace supply, there are a handful of risks to its medium/long-term demand which could make it underperform expectations.</p><p style=\"text-align: left;\">The first risk is uncertainty around the synergies of some AI use cases, both in terms of profitability and timeline. The predictable result would be less future demand for Nvidia, and potentially an oversupply of inventory.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/37a95e6450301c4ef2e581ca0bb54438\" alt=\"demand\" title=\"demand\" tg-width=\"640\" tg-height=\"152\"/><span>demand</span></p><p style=\"text-align: left;\"><strong>NVDA Q1 10Q</strong></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/153dfd56034b8149141a14c18672d97b\" alt=\"demand\" title=\"demand\" tg-width=\"640\" tg-height=\"51\"/><span>demand</span></p><p style=\"text-align: left;\"><strong>NVDA Q1 10Q</strong></p><p style=\"text-align: left;\">Like the internet in the late 90s, many companies are touting AI’s potential to reshape their businesses and generate profits. And like the internet, there were a handful of clear winners, lots of losers, and some that succeeded <em>over time.</em> The market even appears to be more selective with AI stocks as of late:</p><blockquote><p>About 60 per cent of stocks in the S&amp;P 500 have risen this year, but more than half the stocks included in Citi’s “AI Winners Basket” — an index based on the names that were garnering the most excitement among the bank’s clients last year — have declined. More than three-quarters of companies in the AI basket had climbed in 2023.</p></blockquote><p style=\"text-align: left;\">So far, the handful of winners includes Nvidia, semiconductor peers, and the ‘Fab Five’ as we saw – which actually unveils another risk to Nvidia: a large portion of Nvidia’s revenues are expenses for the ‘Fab Five’. 40% of Nvidia’s revenue comes from Microsoft, Meta, Amazon, and Google – each of which have committed billions in capex to build AI infrastructure, but not nearly enough as Nvidia’s revenues are expected to grow:</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/35102b195a0e977cdca20e0747c53e91\" alt=\"investment\" title=\"investment\" tg-width=\"640\" tg-height=\"407\"/><span>investment</span></p><p style=\"text-align: left;\"><strong>Paulsen Perspectives Substack</strong></p><p style=\"text-align: left;\"></p><p style=\"text-align: left;\">Nvidia relies heavily on these hyperscalers for growth, yet each of these firms are also investing billions in internal AI capabilities to reduce reliance on Nvidia. Additionally, most of them compete with Nvidia directly in software, gen-AI applications, or even chips like Google’s TPU. This also doesn’t include more direct competitors like Advanced Micro Devices (AMD) and Intel (INTL) which may be able to compete on price as inferencing overtakes training in AI-workloads. The reason being, inferencing generally takes less computing power than training. Should spend from these major customers dry up and competition increase, Nvidia’s future demand is at risk.</p><p style=\"text-align: left;\">Another potential obstacle to chip demand is data center build out. A credit research report on Nvidia by Barclays pointed out that once databases are built, less compute power is required for deployment. Especially as a higher percentage of workflows move to inferencing.</p><blockquote><p>AI chip demand will eventually normalize once the initial training build has been completed. The inference phase of AI is going to require less computing power than the training phase. High-powered PCs and phones could be capable enough to run inferences locally, reducing the need for growing GPU plants.</p></blockquote><p style=\"text-align: left;\">As the market sifts the wheat from the chaff in AI and data centers are built out further, Nvidia is more susceptible to swings, and possibly a cliff, in demand.</p><h3 id=\"id_840914604\" style=\"text-align: left;\">Expected Value</h3><p style=\"text-align: left;\">We have seen the market’s confidence in Nvidia as evidenced by its climbing stock price in addition to some risks to the company’s future demand, but how well <em>exactly</em> does the market expect it to perform? And for how long?</p><p style=\"text-align: left;\">The Expectations Investing framework provides a useful methodology for measuring and judging the market’s implied expectations. Starting with the current stock price and then leveraging a reverse DCF model, we can assess the market’s expectations for Nvidia. Our starting inputs are consensus estimates for revenue growth and operating profit margin. Analysts expect revenue growth near 100% for this FY 2025 tapering down to just under 20% in FY 2027, so I used an average of 45%. Nvidia achieved an operating margin of nearly 60% the past twelve months, but I expect it to normalize around 50%. Other inputs include the cash tax rate, working capital investment, fixed capital investment, depreciation &amp; amortization, and inflation – each of which I estimated using historical averages or most recently reported figures. I calculated the cost of capital using the CAPM model for cost of equity (beta of 1.5, risk free rate of 4%, equity risk premium of 4%), a 2.3% after-tax cost of debt, and Nvidia’s current capital structure. Here are my inputs:</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/7c5b1325c59afdb868da78302a72c08f\" alt=\"A screenshot of a computer screen Description automatically generated\" title=\"A screenshot of a computer screen Description automatically generated\" tg-width=\"640\" tg-height=\"156\"/><span>A screenshot of a computer screen Description automatically generated</span></p><p style=\"text-align: left;\"><strong>Author</strong></p><p style=\"text-align: left;\">These numbers then flow into a reverse DCF model which calculates the shareholder value per share for each projected year and the market-implied forecast period (‘MIFP’) or the competitive advantage period (‘CAP’). The MIFP or CAP is the number of years the market expects a company to generate returns above the cost of capital, i.e. how long the company will produce the inputted operating value drivers. For Nvidia, the MIFP is between 5 and 6 years.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/2291ad29ab70132f2eef9ed88c0a3c94\" alt=\"A screenshot of a computer Description automatically generated\" title=\"A screenshot of a computer Description automatically generated\" tg-width=\"640\" tg-height=\"364\"/><span>A screenshot of a computer Description automatically generated</span></p><p style=\"text-align: left;\"><strong>Author</strong></p><p style=\"text-align: left;\">This means that to justify the current stock price, Nvidia would need to grow revenues at 45% for about the next 6 years and maintain a 50% operating margin. The result would be <em>$740 billion </em>in revenues by 2030, or about <em>90%</em> of the projected 2030 global AI market we saw earlier. And even with last year’s 125% topline growth, Nvidia averaged only 40% annual revenue growth over the last 5 years. Those are high expectations, especially at Nvidia’s current size. Operating margins of 50% for 6 years are also a big hurdle given increasing competition, which tends to eat away at margins over time.</p><p style=\"text-align: left;\">To judge whether Nvidia is worth buying, we can calculate its expected value based on scenarios and assigned probabilities. I estimated a high and low scenario for the operating value drivers and calculated the shareholder value at 6 years for each. Then I assigned probabilities for the consensus (current stock price) and the scenarios. I view the high case as low probability given the already lofty expectations in the consensus view. Nvidia tends to outperform expectations, so I weighted the consensus at a 40% probability. Finally, I gave the low case a 50% probability, which I view as most likely given the increasing risks to demand and size limitations on Nvidia to produce such high growth. The result was an <strong>expected value of $106.82</strong>. Nvidia looks overpriced by about 14% of fair value.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/0ba2ba2d6b0d40e6ced4d1717d03c638\" alt=\"Exp value\" title=\"Exp value\" tg-width=\"640\" tg-height=\"192\"/><span>Exp value</span></p><p style=\"text-align: left;\"><strong>Author</strong></p><h3 id=\"id_810749726\" style=\"text-align: left;\">A Risky Bet</h3><p style=\"text-align: left;\">On both sides of the Nvidia debate, there remains a whole lot of uncertainty. I have mentioned some risks I see to demand, but the potential of AI is not easy to estimate in the short term, just like the internet. If it happens to be the start of a new ‘Industrial Revolution’, it’s hard to project how well Nvidia could continue to do. There is also uncertainty around timing. Even if demand does drop eventually, it may take a few years or more. Or demand could pick up as use-cases evolve and Nvidia innovates.</p><p style=\"text-align: left;\">Even though Nvidia appears to be overextended with high baked-in expectations, betting against the company is risky. The stock has shown incredible momentum and the company is high quality with a massive moat. Nvidia’s CEO Huang is a visionary, an executor, and an effective capital allocator. Nvidia’s astonishing growth and returns on invested capital averaging about 30% the past decade are all the evidence needed. The company has also stockpiled $30B in cash for further investment in growth. Nvidia has maintained a near 80% market share in GPUs with first-mover advantages. Additionally, big tech companies have increasingly become hard to displace while taking more of the pie in their respective industries.</p><p style=\"text-align: left;\">Nonetheless, Nvidia’s growing risks and current valuation make the stock a hold in my view. A great company can be a bad investment if paid too high a price for.</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: Marching Higher But How Long Can It Last?</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: Marching Higher But How Long Can It Last?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-07-05 07:49 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4702449-nvidia-stock-growing-risks-current-valuation-make-hold><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryNvidia stock continues to rise due to generative AI sentiment, formidable market positioning, and the company exceeding expectations.Nvidia's performance has prompted comparisons to Cisco ...</p>\n\n<a href=\"https://seekingalpha.com/article/4702449-nvidia-stock-growing-risks-current-valuation-make-hold\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"NVDA":"英伟达"},"source_url":"https://seekingalpha.com/article/4702449-nvidia-stock-growing-risks-current-valuation-make-hold","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1186205087","content_text":"SummaryNvidia stock continues to rise due to generative AI sentiment, formidable market positioning, and the company exceeding expectations.Nvidia's performance has prompted comparisons to Cisco during the Dot-Com bubble, but the comparison misses context.Nvidia doesn't appear to be in a stock bubble, but is at risk of entering a demand bubble.Sky-high expectations for Nvidia and growing risks make the company a hold in my view. Betting against the company remains risky.Why Does Nvidia Stock Just Keep Climbing?My previous article on Nvidia back in March argued that despite the stock’s meteoric rise, the company’s quality and expected performance were reasonable enough to justify its premium price. Since then, the stock has resumed its upward march nearly 50%, briefly making Nvidia the most valuable company in the world. What keeps fueling such outperformance?Not much has changed in the past four months for Nvidia. The three themes mentioned in my last article (euphoric sentiment around AI, Nvidia’s market positioning, and exceeding expectations), have all showed little sign of slowing.The generative AI (gen-AI) theme has been the backbone of a soaring market that is on pace to match its incredible performance in 2023, currently up 15% year-to-date (S&P 500). Despite many companies doing well the past two years, much of the market’s strength is in just a handful of mega-cap tech companies leading the AI race. Since the short-lived dip in October of 2023, over 50% of the S&P 500’s gains are attributable to Nvidia, other semiconductor companies, and the ‘Fab Five’.top heavy marketFinancial Times - UnhedgedWhat’s more is, in the past three months alone, these large tech companies are taking credit for more and more of the rally, while the rest of the S&P 500 has been flat or giving up some gains:top heavy 2Financial Times - UnhedgedInvestors seem to be placing big bets that AI has the power to transform businesses and economies – and that these mega tech companies will be the primary beneficiaries. Nvidia CEO Jensen Huang, who’s become somewhat of a celebrity, has helped fuel this excitement with his rhetoric around gen-AI:The next industrial revolution has begun… Companies and countries are partnering with NVIDIA to shift the trillion-dollar installed base of traditional data centers to accelerated computing and build a new type of data center, AI factories, to produce a new commodity, artificial intelligence. AI will bring significant productivity gains to nearly every industry and help companies be more cost and energy efficient while expanding revenue opportunities.The other two themes, Nvidia’s market position and exceeding expectations, have also remained strong. Nvidia once again crushed estimates in Q1, adding to its streak of 8 consecutive quarterly beats. Data Center revenue and bottom-line profitability were the stars last quarter:A table with numbers and letters Description automatically generatedNVDA Q1 Results DocThese are eye-popping growth rates for a company churning out over $25B in quarterly revenue, yet the trend isn’t stopping. Management is guiding for about $28B in Q2 revenue, representing Y/Y growth of 107%. CFO Kress said much of the quarter’s Data Center revenue came from its older Hopper GPU, the H100; yet the company is still ramping up its H200 processor, recently launched its highest performing superchip (Blackwell), and expects demand to continue outpacing supply for each product. Nvidia has not let up from dominating the Accelerated Computing market and outperforming already lofty expectations – making its stock a hot commodity.So… Is Nvidia in a Bubble?The widely understood definition of a bubble is when the price of a stock, asset, or even an entire market exceeds its fundamental value by a wide margin. Value is often measured using price relative multiples like the price-to-earnings ratio, but these aren’t useful when determining if price has disconnected from fundamental value. Fundamental value is most commonly assessed as the present value of expected cash flows through a discounted cash flow (‘DCF’) model, but this only gives us a snapshot of value at a point in time and relies on assumptions. Instead, to judge if Nvidia is in bubble territory, we can look at how price has tracked two common fundamentals over time: earnings per share (‘EPS’) and free cash flow per share. Both reflect any impacts of dilution, and free cash flow is less susceptible to manipulation.fundamentalsYChartsWe can see from the above chart that growth in these fundamentals have held incredibly close with Nvidia’s stock price the past 3 years. Nvidia’s performance has prompted recent comparisons to Cisco (CSCO), a poster child of the infamous Dot-Com bubble which saw the NASDAQ rise 800% between 1995 and 2000, only to give up 78% off its gains by 2002. The comparison is not unfounded, as the companies do have several things in common:Market-wide excitement around a revolutionary technology, leading to a broader rally.Hardware/computing provider for the technologyPassed Microsoft as the most valuable companyLeader by market share in its respective marketBenefited from investments before the industry became profitableIt’s easy to assume the companies are directly comparable, take a look at their price charts, and conclude Nvidia is in a bubble. But digging deeper, we see that Cisco’s fundamentals weren’t nearly as strong as Nvidia’s during that period:FundamentalsYChartsThe time frame matters as this chart ends near Cisco’s peak, but as it shows, Cisco’s fundamentals began lagging its stock price a year or so earlier. We have yet to see this happen to Nvidia. Even though Nvidia doesn’t appear to be in a stock bubble as we have it defined, high expectations around AI’s prospects put the company at risk of entering a demand bubble.A Demand Bubble?The global AI market is expected to reach $800B+ by 2030 according to Statista. Though there is overlap, the Data Center market is also projected to be half-a-billion dollars by 2028. Nvidia itself projects a long-term total addressable market of $1 trillion across its product suite. Even with nearly $80B in TTM revenue, this would equate to only an 8% market penetration. The runway and optimism for AI-related markets, and Nvidia, are undoubtedly high. Even with a nearly 80% share in GPUs and a formidable competitive position, can the company continue exceeding these expectations? If not, it’s possible Nvidia could be in a demand bubble.As we’ve seen, Nvidia’s stock price has been a magnet to underlying fundamentals, but this may be beginning to change. Revenue and earnings growth estimates for Nvidia look to be normalizing with analysts expecting growth between 20% and 30% by FY 2026 – quite moderate given its recent numbers. As a result, Nvidia’s forward PE ratio has jumped 50% since March, indicating valuation has recently been more influenced by multiple expansion rather than forward growth and fundamentals.fwd PEYChartsWhen we look back at the ratio over three years, we can see how Nvidia’s forward growth expectations drove down the multiple (denominator got bigger), usually after the company reported earnings and guidance revisions. But this wasn’t as dramatic last quarter:fwd PEYChartsThe market looks to be implying higher and higher expectations in the price, putting more pressure on Nvidia to continue outperforming in a big way. While I don’t doubt Nvidia will continue dominating its addressable market, and near-term demand continues to outpace supply, there are a handful of risks to its medium/long-term demand which could make it underperform expectations.The first risk is uncertainty around the synergies of some AI use cases, both in terms of profitability and timeline. The predictable result would be less future demand for Nvidia, and potentially an oversupply of inventory.demandNVDA Q1 10QdemandNVDA Q1 10QLike the internet in the late 90s, many companies are touting AI’s potential to reshape their businesses and generate profits. And like the internet, there were a handful of clear winners, lots of losers, and some that succeeded over time. The market even appears to be more selective with AI stocks as of late:About 60 per cent of stocks in the S&P 500 have risen this year, but more than half the stocks included in Citi’s “AI Winners Basket” — an index based on the names that were garnering the most excitement among the bank’s clients last year — have declined. More than three-quarters of companies in the AI basket had climbed in 2023.So far, the handful of winners includes Nvidia, semiconductor peers, and the ‘Fab Five’ as we saw – which actually unveils another risk to Nvidia: a large portion of Nvidia’s revenues are expenses for the ‘Fab Five’. 40% of Nvidia’s revenue comes from Microsoft, Meta, Amazon, and Google – each of which have committed billions in capex to build AI infrastructure, but not nearly enough as Nvidia’s revenues are expected to grow:investmentPaulsen Perspectives SubstackNvidia relies heavily on these hyperscalers for growth, yet each of these firms are also investing billions in internal AI capabilities to reduce reliance on Nvidia. Additionally, most of them compete with Nvidia directly in software, gen-AI applications, or even chips like Google’s TPU. This also doesn’t include more direct competitors like Advanced Micro Devices (AMD) and Intel (INTL) which may be able to compete on price as inferencing overtakes training in AI-workloads. The reason being, inferencing generally takes less computing power than training. Should spend from these major customers dry up and competition increase, Nvidia’s future demand is at risk.Another potential obstacle to chip demand is data center build out. A credit research report on Nvidia by Barclays pointed out that once databases are built, less compute power is required for deployment. Especially as a higher percentage of workflows move to inferencing.AI chip demand will eventually normalize once the initial training build has been completed. The inference phase of AI is going to require less computing power than the training phase. High-powered PCs and phones could be capable enough to run inferences locally, reducing the need for growing GPU plants.As the market sifts the wheat from the chaff in AI and data centers are built out further, Nvidia is more susceptible to swings, and possibly a cliff, in demand.Expected ValueWe have seen the market’s confidence in Nvidia as evidenced by its climbing stock price in addition to some risks to the company’s future demand, but how well exactly does the market expect it to perform? And for how long?The Expectations Investing framework provides a useful methodology for measuring and judging the market’s implied expectations. Starting with the current stock price and then leveraging a reverse DCF model, we can assess the market’s expectations for Nvidia. Our starting inputs are consensus estimates for revenue growth and operating profit margin. Analysts expect revenue growth near 100% for this FY 2025 tapering down to just under 20% in FY 2027, so I used an average of 45%. Nvidia achieved an operating margin of nearly 60% the past twelve months, but I expect it to normalize around 50%. Other inputs include the cash tax rate, working capital investment, fixed capital investment, depreciation & amortization, and inflation – each of which I estimated using historical averages or most recently reported figures. I calculated the cost of capital using the CAPM model for cost of equity (beta of 1.5, risk free rate of 4%, equity risk premium of 4%), a 2.3% after-tax cost of debt, and Nvidia’s current capital structure. Here are my inputs:A screenshot of a computer screen Description automatically generatedAuthorThese numbers then flow into a reverse DCF model which calculates the shareholder value per share for each projected year and the market-implied forecast period (‘MIFP’) or the competitive advantage period (‘CAP’). The MIFP or CAP is the number of years the market expects a company to generate returns above the cost of capital, i.e. how long the company will produce the inputted operating value drivers. For Nvidia, the MIFP is between 5 and 6 years.A screenshot of a computer Description automatically generatedAuthorThis means that to justify the current stock price, Nvidia would need to grow revenues at 45% for about the next 6 years and maintain a 50% operating margin. The result would be $740 billion in revenues by 2030, or about 90% of the projected 2030 global AI market we saw earlier. And even with last year’s 125% topline growth, Nvidia averaged only 40% annual revenue growth over the last 5 years. Those are high expectations, especially at Nvidia’s current size. Operating margins of 50% for 6 years are also a big hurdle given increasing competition, which tends to eat away at margins over time.To judge whether Nvidia is worth buying, we can calculate its expected value based on scenarios and assigned probabilities. I estimated a high and low scenario for the operating value drivers and calculated the shareholder value at 6 years for each. Then I assigned probabilities for the consensus (current stock price) and the scenarios. I view the high case as low probability given the already lofty expectations in the consensus view. Nvidia tends to outperform expectations, so I weighted the consensus at a 40% probability. Finally, I gave the low case a 50% probability, which I view as most likely given the increasing risks to demand and size limitations on Nvidia to produce such high growth. The result was an expected value of $106.82. Nvidia looks overpriced by about 14% of fair value.Exp valueAuthorA Risky BetOn both sides of the Nvidia debate, there remains a whole lot of uncertainty. I have mentioned some risks I see to demand, but the potential of AI is not easy to estimate in the short term, just like the internet. If it happens to be the start of a new ‘Industrial Revolution’, it’s hard to project how well Nvidia could continue to do. There is also uncertainty around timing. Even if demand does drop eventually, it may take a few years or more. Or demand could pick up as use-cases evolve and Nvidia innovates.Even though Nvidia appears to be overextended with high baked-in expectations, betting against the company is risky. The stock has shown incredible momentum and the company is high quality with a massive moat. Nvidia’s CEO Huang is a visionary, an executor, and an effective capital allocator. Nvidia’s astonishing growth and returns on invested capital averaging about 30% the past decade are all the evidence needed. The company has also stockpiled $30B in cash for further investment in growth. Nvidia has maintained a near 80% market share in GPUs with first-mover advantages. Additionally, big tech companies have increasingly become hard to displace while taking more of the pie in their respective industries.Nonetheless, Nvidia’s growing risks and current valuation make the stock a hold in my view. A great company can be a bad investment if paid too high a price for.","news_type":1},"isVote":1,"tweetType":1,"viewCount":113,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":323332708040784,"gmtCreate":1719969125251,"gmtModify":1719969128746,"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"3578392292744824","idStr":"3578392292744824"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/D05.SI\">$DBS Group Holdings(D05.SI)$&nbsp;</a> SGX no more hope. STI index rises but totally no market breadth. This situation has already been around for donkey years but no one from SGX management is able to make any improvement. Can only c more companies delisting.","listText":"<a href=\"https://ttm.financial/S/D05.SI\">$DBS Group Holdings(D05.SI)$&nbsp;</a> SGX no more hope. STI index rises but totally no market breadth. This situation has already been around for donkey years but no one from SGX management is able to make any improvement. Can only c more companies delisting.","text":"$DBS Group Holdings(D05.SI)$ SGX no more hope. STI index rises but totally no market breadth. This situation has already been around for donkey years but no one from SGX management is able to make any improvement. Can only c more companies delisting.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":110,"commentSize":9,"repostSize":946,"link":"https://ttm.financial/post/323332708040784","isVote":1,"tweetType":1,"viewCount":19663,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"4125062122312552","authorId":"4125062122312552","name":"Inspiretion","avatar":"https://community-static.tradeup.com/news/8f8a4cdd155af7221255c7880e81e44a","crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"4125062122312552","idStr":"4125062122312552"},"content":"Singtel also up like crazy, along with ocbc and uob and great eastern. Is this market breadth?","text":"Singtel also up like crazy, along with ocbc and uob and great eastern. Is this market breadth?","html":"Singtel also up like crazy, along with ocbc and uob and great eastern. Is this market breadth?"}],"imageCount":0,"langContent":"EN","totalScore":0},{"id":266344954622248,"gmtCreate":1706061282797,"gmtModify":1706061286303,"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"3578392292744824","idStr":"3578392292744824"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/MZH.SI\">$Nanofilm(MZH.SI)$&nbsp;</a>A very wrong decision by SGX to list such company. Perhaps delisting it will be the best option for all","listText":"<a href=\"https://ttm.financial/S/MZH.SI\">$Nanofilm(MZH.SI)$&nbsp;</a>A very wrong decision by SGX to list such company. Perhaps delisting it will be the best option for all","text":"$Nanofilm(MZH.SI)$ A very wrong decision by SGX to list such company. Perhaps delisting it will be the best option for all","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":2,"repostSize":0,"link":"https://ttm.financial/post/266344954622248","isVote":1,"tweetType":1,"viewCount":909,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"3582958699964444","authorId":"3582958699964444","name":"chew88","avatar":"https://static.tigerbbs.com/977c6fa02effca1970d78c5cedd70374","crmLevel":5,"crmLevelSwitch":0,"authorIdStr":"3582958699964444","idStr":"3582958699964444"},"content":"This stock has given me more than ten thousand [money fans]","text":"This stock has given me more than ten thousand [money fans]","html":"This stock has given me more than ten thousand [money fans]"}],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9947294644,"gmtCreate":1683165657089,"gmtModify":1683165660463,"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"3578392292744824","idStr":"3578392292744824"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/BS6.SI\">$YANGZIJIANG SHIPBLDG HLDGS LTD(BS6.SI)$&nbsp;</a> Take note XD for YZJ on Wed, May 10","listText":"<a href=\"https://ttm.financial/S/BS6.SI\">$YANGZIJIANG SHIPBLDG HLDGS LTD(BS6.SI)$&nbsp;</a> Take note XD for YZJ on Wed, May 10","text":"$YANGZIJIANG SHIPBLDG HLDGS LTD(BS6.SI)$ Take note XD for YZJ on Wed, May 10","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9947294644","isVote":1,"tweetType":1,"viewCount":316,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9949719414,"gmtCreate":1678887621039,"gmtModify":1678888271361,"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"3578392292744824","idStr":"3578392292744824"},"themes":[],"htmlText":"Just an excuse for fund managers to dump and buycheap&nbsp;","listText":"Just an excuse for fund managers to dump and buycheap&nbsp;","text":"Just an excuse for fund managers to dump and buycheap","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":10,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9949719414","repostId":"1140996894","repostType":4,"repost":{"id":"1140996894","weMediaInfo":{"introduction":"Providing stock market headlines, business news, financials and earnings ","home_visible":1,"media_name":"Tiger Newspress","id":"1079075236","head_image":"https://static.tigerbbs.com/8274c5b9d4c2852bfb1c4d6ce16c68ba"},"pubTimestamp":1678887067,"share":"https://ttm.financial/m/news/1140996894?lang=&edition=fundamental","pubTime":"2023-03-15 21:31","market":"us","language":"en","title":"Dow Falls 500 Points as Credit Suisse Adds Pressure to Already Troubled Banking Sector","url":"https://stock-news.laohu8.com/highlight/detail?id=1140996894","media":"Tiger Newspress","summary":"Stock fell on Wednesday as pressure on the financial sector increased with shares of Credit Suisse, ","content":"<html><head></head><body><p>Stock fell on Wednesday as pressure on the financial sector increased with shares of Credit Suisse, a Swiss Bank that has large U.S. and global operations, tumbling more than 25%.</p><p>The Dow Jones Industrial Averagefell 525 points, or 1.6%, while theNasdaq Compositelost 1.4%. The 1.8% slide inS&amp;P 500 futuresput the broad index&#39;s 2.1% year-to-date gain at risk.</p><p>In recent days, a crisis in the financial sector has centered around regional banks as Silicon Valley Bank and Signature Bank collapsed, both casualties of poor management in the face of eight interest rate hikes by the Federal Reserve in the last 12 months. Wednesday morning attention turned to the big banks with shares of Credit Suissehitting an all-time low.</p><p>Saudi National Bank, Credit Suisse’s largest investor, said Wednesday it could not provide any more funding, according to a Reuters report. This comes after the Swiss lender said earlier this weekit had found“certain material weaknesses in our internal control over financial reporting” for the years 2021 and 2022.</p><p>U.S.-traded shares ofCredit Suissedropped more than 27% in the premarket.</p><p>As Credit Suissedragged down the European Bank sector, U.S. big bank shares declined in sympathy.CitigroupandWells Fargoshed nearly 5% each, whileGoldman SachsandBank of Americafell around 3% and 4%, respectively.The Financial Select Sector SPDR Fund (XLF)lost 3.4% in premarket trading, giving up its 2% pop on Tuesday.</p><p>Regional banks, which rebounded Tuesday to lift sentiment for the broader market, fell back into the red again. TheSPDR S&amp;P Regional Banking ETF (KRE)was down 4.6% in the premarket, led by losses inOld National Bancorp,Zions BancorpandFifth Third Bancorp. Despite clinging to gains earlier in extended trading,First Republic Banktumbled 22%.</p><p>Peter Boockvar of Bleakley Financial Group said pressure on the financial sector was growing broadly because the bank failures have changed the mindset of the industry.</p><p>“What this is telling us is there’s the potential for just a large credit extension contraction that banks are going to embark on [to] focus more on firming up balance sheets and rather than focus on lending,” Boockvar said to CNBC’s“Squawk Box.”</p><p>“It’s a balance sheet rethink that the market’s have” Boockvar added, citing that many banks may have bought longer maturity bonds that have reduced in value since the Fed started raising rates. “Also you have to wonder with a lot of these banks if they’re going to have to start going out and raising equity.”</p><p>The producer price indexposted an unexpected declineof 0.1% in February from the prior month, cooling despite economists polled by Dow Jones estimating a 0.3% increase from January. Retail sales also fell 0.4% in February from January, in line with economists expectations.</p></body></html>","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>Dow Falls 500 Points as Credit Suisse Adds Pressure to Already Troubled Banking Sector</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\">\nDow Falls 500 Points as Credit Suisse Adds Pressure to Already Troubled Banking Sector\n</h2>\n\n<h4 class=\"meta\">\n\n\n<a class=\"head\" href=\"https://laohu8.com/wemedia/1079075236\">\n\n\n<div class=\"h-thumb\" style=\"background-image:url(https://static.tigerbbs.com/8274c5b9d4c2852bfb1c4d6ce16c68ba);background-size:cover;\"></div>\n\n<div class=\"h-content\">\n<p class=\"h-name\">Tiger Newspress </p>\n<p class=\"h-time\">2023-03-15 21:31</p>\n</div>\n\n</a>\n\n\n</h4>\n\n</header>\n<article>\n<html><head></head><body><p>Stock fell on Wednesday as pressure on the financial sector increased with shares of Credit Suisse, a Swiss Bank that has large U.S. and global operations, tumbling more than 25%.</p><p>The Dow Jones Industrial Averagefell 525 points, or 1.6%, while theNasdaq Compositelost 1.4%. The 1.8% slide inS&amp;P 500 futuresput the broad index&#39;s 2.1% year-to-date gain at risk.</p><p>In recent days, a crisis in the financial sector has centered around regional banks as Silicon Valley Bank and Signature Bank collapsed, both casualties of poor management in the face of eight interest rate hikes by the Federal Reserve in the last 12 months. Wednesday morning attention turned to the big banks with shares of Credit Suissehitting an all-time low.</p><p>Saudi National Bank, Credit Suisse’s largest investor, said Wednesday it could not provide any more funding, according to a Reuters report. This comes after the Swiss lender said earlier this weekit had found“certain material weaknesses in our internal control over financial reporting” for the years 2021 and 2022.</p><p>U.S.-traded shares ofCredit Suissedropped more than 27% in the premarket.</p><p>As Credit Suissedragged down the European Bank sector, U.S. big bank shares declined in sympathy.CitigroupandWells Fargoshed nearly 5% each, whileGoldman SachsandBank of Americafell around 3% and 4%, respectively.The Financial Select Sector SPDR Fund (XLF)lost 3.4% in premarket trading, giving up its 2% pop on Tuesday.</p><p>Regional banks, which rebounded Tuesday to lift sentiment for the broader market, fell back into the red again. TheSPDR S&amp;P Regional Banking ETF (KRE)was down 4.6% in the premarket, led by losses inOld National Bancorp,Zions BancorpandFifth Third Bancorp. Despite clinging to gains earlier in extended trading,First Republic Banktumbled 22%.</p><p>Peter Boockvar of Bleakley Financial Group said pressure on the financial sector was growing broadly because the bank failures have changed the mindset of the industry.</p><p>“What this is telling us is there’s the potential for just a large credit extension contraction that banks are going to embark on [to] focus more on firming up balance sheets and rather than focus on lending,” Boockvar said to CNBC’s“Squawk Box.”</p><p>“It’s a balance sheet rethink that the market’s have” Boockvar added, citing that many banks may have bought longer maturity bonds that have reduced in value since the Fed started raising rates. “Also you have to wonder with a lot of these banks if they’re going to have to start going out and raising equity.”</p><p>The producer price indexposted an unexpected declineof 0.1% in February from the prior month, cooling despite economists polled by Dow Jones estimating a 0.3% increase from January. Retail sales also fell 0.4% in February from January, in line with economists expectations.</p></body></html>\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1140996894","content_text":"Stock fell on Wednesday as pressure on the financial sector increased with shares of Credit Suisse, a Swiss Bank that has large U.S. and global operations, tumbling more than 25%.The Dow Jones Industrial Averagefell 525 points, or 1.6%, while theNasdaq Compositelost 1.4%. The 1.8% slide inS&P 500 futuresput the broad index's 2.1% year-to-date gain at risk.In recent days, a crisis in the financial sector has centered around regional banks as Silicon Valley Bank and Signature Bank collapsed, both casualties of poor management in the face of eight interest rate hikes by the Federal Reserve in the last 12 months. Wednesday morning attention turned to the big banks with shares of Credit Suissehitting an all-time low.Saudi National Bank, Credit Suisse’s largest investor, said Wednesday it could not provide any more funding, according to a Reuters report. This comes after the Swiss lender said earlier this weekit had found“certain material weaknesses in our internal control over financial reporting” for the years 2021 and 2022.U.S.-traded shares ofCredit Suissedropped more than 27% in the premarket.As Credit Suissedragged down the European Bank sector, U.S. big bank shares declined in sympathy.CitigroupandWells Fargoshed nearly 5% each, whileGoldman SachsandBank of Americafell around 3% and 4%, respectively.The Financial Select Sector SPDR Fund (XLF)lost 3.4% in premarket trading, giving up its 2% pop on Tuesday.Regional banks, which rebounded Tuesday to lift sentiment for the broader market, fell back into the red again. TheSPDR S&P Regional Banking ETF (KRE)was down 4.6% in the premarket, led by losses inOld National Bancorp,Zions BancorpandFifth Third Bancorp. Despite clinging to gains earlier in extended trading,First Republic Banktumbled 22%.Peter Boockvar of Bleakley Financial Group said pressure on the financial sector was growing broadly because the bank failures have changed the mindset of the industry.“What this is telling us is there’s the potential for just a large credit extension contraction that banks are going to embark on [to] focus more on firming up balance sheets and rather than focus on lending,” Boockvar said to CNBC’s“Squawk Box.”“It’s a balance sheet rethink that the market’s have” Boockvar added, citing that many banks may have bought longer maturity bonds that have reduced in value since the Fed started raising rates. “Also you have to wonder with a lot of these banks if they’re going to have to start going out and raising equity.”The producer price indexposted an unexpected declineof 0.1% in February from the prior month, cooling despite economists polled by Dow Jones estimating a 0.3% increase from January. Retail sales also fell 0.4% in February from January, in line with economists expectations.","news_type":1},"isVote":1,"tweetType":1,"viewCount":387,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9955345405,"gmtCreate":1675239875407,"gmtModify":1676538986089,"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"3578392292744824","idStr":"3578392292744824"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/BS6.SI\">$YANGZIJIANG SHIPBLDG HLDGS LTD(BS6.SI)$&nbsp;</a><v-v data-views=\"1\"></v-v> bull or bears?","listText":"<a href=\"https://ttm.financial/S/BS6.SI\">$YANGZIJIANG SHIPBLDG HLDGS LTD(BS6.SI)$&nbsp;</a><v-v data-views=\"1\"></v-v> bull or bears?","text":"$YANGZIJIANG SHIPBLDG HLDGS LTD(BS6.SI)$ bull or bears?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":3,"repostSize":0,"link":"https://ttm.financial/post/9955345405","isVote":1,"tweetType":1,"viewCount":878,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"authorIdStr":"3578392292744824","idStr":"3578392292744824"},"content":"Yzj share movement is heavily manipulated. Going south very fast but going north at snail pace. Nevertheless i bet that Ytz is going north this mth given their financial reporting & dividend announcement soon.","text":"Yzj share movement is heavily manipulated. Going south very fast but going north at snail pace. Nevertheless i bet that Ytz is going north this mth given their financial reporting & dividend announcement soon.","html":"Yzj share movement is heavily manipulated. Going south very fast but going north at snail pace. Nevertheless i bet that Ytz is going north this mth given their financial reporting & dividend announcement soon."}],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9997479080,"gmtCreate":1661844401943,"gmtModify":1676536589696,"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"3578392292744824","idStr":"3578392292744824"},"themes":[],"htmlText":"Detailed and informative write up. Tks for the time &amp; effort!","listText":"Detailed and informative write up. Tks for the time &amp; effort!","text":"Detailed and informative write up. Tks for the time & effort!","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9997479080","repostId":"1147997487","repostType":2,"isVote":1,"tweetType":1,"viewCount":292,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9991896482,"gmtCreate":1660800195549,"gmtModify":1676536402346,"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"3578392292744824","idStr":"3578392292744824"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/S68.SI\">$SINGAPORE EXCHANGE LIMITED(S68.SI)$</a>Breaking $10 barrier finally&nbsp;[Miser]&nbsp;","listText":"<a href=\"https://ttm.financial/S/S68.SI\">$SINGAPORE EXCHANGE LIMITED(S68.SI)$</a>Breaking $10 barrier finally&nbsp;[Miser]&nbsp;","text":"$SINGAPORE EXCHANGE LIMITED(S68.SI)$Breaking $10 barrier finally [Miser]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9991896482","isVote":1,"tweetType":1,"viewCount":277,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"9000000000000664","authorId":"9000000000000664","name":"CaesarHicks","avatar":"https://static.tigerbbs.com/067cda6133365badca6b51d9248d2066","crmLevel":1,"crmLevelSwitch":0,"authorIdStr":"9000000000000664","idStr":"9000000000000664"},"content":"Will price lower than $10 good to buy?","text":"Will price lower than $10 good to buy?","html":"Will price lower than $10 good to buy?"}],"imageCount":0,"langContent":"EN","totalScore":0}],"hots":[{"id":323332708040784,"gmtCreate":1719969125251,"gmtModify":1719969128746,"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3578392292744824","authorIdStr":"3578392292744824"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/D05.SI\">$DBS Group Holdings(D05.SI)$&nbsp;</a> SGX no more hope. STI index rises but totally no market breadth. This situation has already been around for donkey years but no one from SGX management is able to make any improvement. Can only c more companies delisting.","listText":"<a href=\"https://ttm.financial/S/D05.SI\">$DBS Group Holdings(D05.SI)$&nbsp;</a> SGX no more hope. STI index rises but totally no market breadth. This situation has already been around for donkey years but no one from SGX management is able to make any improvement. Can only c more companies delisting.","text":"$DBS Group Holdings(D05.SI)$ SGX no more hope. STI index rises but totally no market breadth. This situation has already been around for donkey years but no one from SGX management is able to make any improvement. Can only c more companies delisting.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":110,"commentSize":9,"repostSize":946,"link":"https://ttm.financial/post/323332708040784","isVote":1,"tweetType":1,"viewCount":19663,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"4125062122312552","authorId":"4125062122312552","name":"Inspiretion","avatar":"https://community-static.tradeup.com/news/8f8a4cdd155af7221255c7880e81e44a","crmLevel":2,"crmLevelSwitch":0,"idStr":"4125062122312552","authorIdStr":"4125062122312552"},"content":"Singtel also up like crazy, along with ocbc and uob and great eastern. Is this market breadth?","text":"Singtel also up like crazy, along with ocbc and uob and great eastern. Is this market breadth?","html":"Singtel also up like crazy, along with ocbc and uob and great eastern. Is this market breadth?"}],"imageCount":0,"langContent":"EN","totalScore":0},{"id":333536782495880,"gmtCreate":1722474835336,"gmtModify":1722474839385,"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3578392292744824","authorIdStr":"3578392292744824"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/C6L.SI\">$SIA(C6L.SI)$&nbsp;</a> Share price at $8++ earlier has already factored all the positive surge in passenger load and fare prices. The travel sentiment is back to normal as per pre-covid days and many airlines have adjusted strategies to reduce fare price to keep up with the competition.&nbsp; Moving forward SIA financial report will be reporting positive figures but forward guidance will not be as fantastic as recent few quarters results. Breaching and maintaining above $7 will be a challenge unless management can work something out like SATS taking over Worldwide flight services.","listText":"<a href=\"https://ttm.financial/S/C6L.SI\">$SIA(C6L.SI)$&nbsp;</a> Share price at $8++ earlier has already factored all the positive surge in passenger load and fare prices. The travel sentiment is back to normal as per pre-covid days and many airlines have adjusted strategies to reduce fare price to keep up with the competition.&nbsp; Moving forward SIA financial report will be reporting positive figures but forward guidance will not be as fantastic as recent few quarters results. Breaching and maintaining above $7 will be a challenge unless management can work something out like SATS taking over Worldwide flight services.","text":"$SIA(C6L.SI)$ Share price at $8++ earlier has already factored all the positive surge in passenger load and fare prices. The travel sentiment is back to normal as per pre-covid days and many airlines have adjusted strategies to reduce fare price to keep up with the competition. Moving forward SIA financial report will be reporting positive figures but forward guidance will not be as fantastic as recent few quarters results. Breaching and maintaining above $7 will be a challenge unless management can work something out like SATS taking over Worldwide flight services.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":97,"commentSize":6,"repostSize":595,"link":"https://ttm.financial/post/333536782495880","isVote":1,"tweetType":1,"viewCount":16646,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9949719414,"gmtCreate":1678887621039,"gmtModify":1678888271361,"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3578392292744824","authorIdStr":"3578392292744824"},"themes":[],"htmlText":"Just an excuse for fund managers to dump and buycheap&nbsp;","listText":"Just an excuse for fund managers to dump and buycheap&nbsp;","text":"Just an excuse for fund managers to dump and buycheap","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":10,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9949719414","repostId":"1140996894","repostType":4,"isVote":1,"tweetType":1,"viewCount":387,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9955345405,"gmtCreate":1675239875407,"gmtModify":1676538986089,"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3578392292744824","authorIdStr":"3578392292744824"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/BS6.SI\">$YANGZIJIANG SHIPBLDG HLDGS LTD(BS6.SI)$&nbsp;</a><v-v data-views=\"1\"></v-v> bull or bears?","listText":"<a href=\"https://ttm.financial/S/BS6.SI\">$YANGZIJIANG SHIPBLDG HLDGS LTD(BS6.SI)$&nbsp;</a><v-v data-views=\"1\"></v-v> bull or bears?","text":"$YANGZIJIANG SHIPBLDG HLDGS LTD(BS6.SI)$ bull or bears?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":3,"repostSize":0,"link":"https://ttm.financial/post/9955345405","isVote":1,"tweetType":1,"viewCount":878,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"idStr":"3578392292744824","authorIdStr":"3578392292744824"},"content":"Yzj share movement is heavily manipulated. Going south very fast but going north at snail pace. Nevertheless i bet that Ytz is going north this mth given their financial reporting & dividend announcement soon.","text":"Yzj share movement is heavily manipulated. Going south very fast but going north at snail pace. Nevertheless i bet that Ytz is going north this mth given their financial reporting & dividend announcement soon.","html":"Yzj share movement is heavily manipulated. Going south very fast but going north at snail pace. Nevertheless i bet that Ytz is going north this mth given their financial reporting & dividend announcement soon."}],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9991896482,"gmtCreate":1660800195549,"gmtModify":1676536402346,"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3578392292744824","authorIdStr":"3578392292744824"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/S68.SI\">$SINGAPORE EXCHANGE LIMITED(S68.SI)$</a>Breaking $10 barrier finally&nbsp;[Miser]&nbsp;","listText":"<a href=\"https://ttm.financial/S/S68.SI\">$SINGAPORE EXCHANGE LIMITED(S68.SI)$</a>Breaking $10 barrier finally&nbsp;[Miser]&nbsp;","text":"$SINGAPORE EXCHANGE LIMITED(S68.SI)$Breaking $10 barrier finally [Miser]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9991896482","isVote":1,"tweetType":1,"viewCount":277,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"9000000000000664","authorId":"9000000000000664","name":"CaesarHicks","avatar":"https://static.tigerbbs.com/067cda6133365badca6b51d9248d2066","crmLevel":1,"crmLevelSwitch":0,"idStr":"9000000000000664","authorIdStr":"9000000000000664"},"content":"Will price lower than $10 good to buy?","text":"Will price lower than $10 good to buy?","html":"Will price lower than $10 good to buy?"}],"imageCount":0,"langContent":"EN","totalScore":0},{"id":266344954622248,"gmtCreate":1706061282797,"gmtModify":1706061286303,"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3578392292744824","authorIdStr":"3578392292744824"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/MZH.SI\">$Nanofilm(MZH.SI)$&nbsp;</a>A very wrong decision by SGX to list such company. Perhaps delisting it will be the best option for all","listText":"<a href=\"https://ttm.financial/S/MZH.SI\">$Nanofilm(MZH.SI)$&nbsp;</a>A very wrong decision by SGX to list such company. Perhaps delisting it will be the best option for all","text":"$Nanofilm(MZH.SI)$ A very wrong decision by SGX to list such company. Perhaps delisting it will be the best option for all","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":2,"repostSize":0,"link":"https://ttm.financial/post/266344954622248","isVote":1,"tweetType":1,"viewCount":909,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"3582958699964444","authorId":"3582958699964444","name":"chew88","avatar":"https://static.tigerbbs.com/977c6fa02effca1970d78c5cedd70374","crmLevel":5,"crmLevelSwitch":0,"idStr":"3582958699964444","authorIdStr":"3582958699964444"},"content":"This stock has given me more than ten thousand [money fans]","text":"This stock has given me more than ten thousand [money fans]","html":"This stock has given me more than ten thousand [money fans]"}],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9947294644,"gmtCreate":1683165657089,"gmtModify":1683165660463,"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3578392292744824","authorIdStr":"3578392292744824"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/BS6.SI\">$YANGZIJIANG SHIPBLDG HLDGS LTD(BS6.SI)$&nbsp;</a> Take note XD for YZJ on Wed, May 10","listText":"<a href=\"https://ttm.financial/S/BS6.SI\">$YANGZIJIANG SHIPBLDG HLDGS LTD(BS6.SI)$&nbsp;</a> Take note XD for YZJ on Wed, May 10","text":"$YANGZIJIANG SHIPBLDG HLDGS LTD(BS6.SI)$ Take note XD for YZJ on Wed, May 10","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9947294644","isVote":1,"tweetType":1,"viewCount":316,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":324141365989560,"gmtCreate":1720142387137,"gmtModify":1720142390714,"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3578392292744824","authorIdStr":"3578392292744824"},"themes":[],"htmlText":"Current price is defined by market sentiments and don't seem to correlate with any technical analysis for now. No one can predict when is the real price correction is coming. Let's enjoy the moment while it lasts :)","listText":"Current price is defined by market sentiments and don't seem to correlate with any technical analysis for now. No one can predict when is the real price correction is coming. Let's enjoy the moment while it lasts :)","text":"Current price is defined by market sentiments and don't seem to correlate with any technical analysis for now. No one can predict when is the real price correction is coming. Let's enjoy the moment while it lasts :)","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/324141365989560","repostId":"1186205087","repostType":4,"repost":{"id":"1186205087","pubTimestamp":1720136947,"share":"https://ttm.financial/m/news/1186205087?lang=&edition=fundamental","pubTime":"2024-07-05 07:49","market":"us","language":"en","title":"Nvidia: Marching Higher But How Long Can It Last?","url":"https://stock-news.laohu8.com/highlight/detail?id=1186205087","media":"seekingalpha","summary":"My previous article on Nvidia back in March argued that despite the stock’s meteoric rise, the company’s quality and expected performance were reasonable enough to justify its premium price. Since then, the stock has resumed its upward march nearly 50%, briefly making Nvidia the most valuable company in the world. What keeps fueling such outperformance?Companies and countries are partnering with NVIDIA to shift the trillion-dollar installed base of traditional data centers to accelerated computi","content":"<html><head></head><body><h2 id=\"id_2474853313\" style=\"text-align: left;\">Summary</h2><ul style=\"\"><li><p>Nvidia stock continues to rise due to generative AI sentiment, formidable market positioning, and the company exceeding expectations.</p></li><li><p>Nvidia&#39;s performance has prompted comparisons to Cisco during the Dot-Com bubble, but the comparison misses context.</p></li><li><p>Nvidia doesn&#39;t appear to be in a stock bubble, but is at risk of entering a demand bubble.</p></li><li><p>Sky-high expectations for Nvidia and growing risks make the company a hold in my view. Betting against the company remains risky.</p></li></ul><h3 id=\"id_1299028407\" style=\"text-align: left;\">Why Does Nvidia Stock Just Keep Climbing?</h3><p style=\"text-align: left;\">My previous article on Nvidia back in March argued that despite the stock’s meteoric rise, the company’s quality and expected performance were reasonable enough to justify its premium price. Since then, the stock has resumed its upward march nearly 50%, briefly making Nvidia the most valuable company in the world. What keeps fueling such outperformance?</p><p style=\"text-align: left;\">Not much has changed in the past four months for Nvidia. The three themes mentioned in my last article (euphoric sentiment around AI, Nvidia’s market positioning, and exceeding expectations), have all showed little sign of slowing.</p><p style=\"text-align: left;\">The generative AI (gen-AI) theme has been the backbone of a soaring market that is on pace to match its incredible performance in 2023, currently up 15% year-to-date (S&amp;P 500). Despite many companies doing well the past two years, much of the market’s strength is in just a handful of mega-cap tech companies leading the AI race. Since the short-lived dip in October of 2023, over 50% of the S&amp;P 500’s gains are attributable to Nvidia, other semiconductor companies, and the ‘Fab Five’.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/2e05fda677c0d911ad022c7fb9d20402\" alt=\"top heavy market\" title=\"top heavy market\" tg-width=\"640\" tg-height=\"414\"/><span>top heavy market</span></p><p style=\"text-align: left;\"><strong>Financial Times - Unhedged</strong></p><p style=\"text-align: left;\">What’s more is, in the past three months alone, these large tech companies are taking credit for more and more of the rally, while the rest of the S&amp;P 500 has been flat or giving up some gains:</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/52e98936bb7a419dc67b916e6eef8ab5\" alt=\"top heavy 2\" title=\"top heavy 2\" tg-width=\"640\" tg-height=\"411\"/><span>top heavy 2</span></p><p style=\"text-align: left;\"><strong>Financial Times - Unhedged</strong></p><p style=\"text-align: left;\">Investors seem to be placing big bets that AI has the power to transform businesses and economies – and that these mega tech companies will be the primary beneficiaries. Nvidia CEO Jensen Huang, who’s become somewhat of a celebrity, has helped fuel this excitement with his rhetoric around gen-AI:</p><blockquote><p>The next industrial revolution has begun… Companies and countries are partnering with NVIDIA to shift the trillion-dollar installed base of traditional data centers to accelerated computing and build a new type of data center, AI factories, to produce a new commodity, artificial intelligence. AI will bring significant productivity gains to nearly every industry and help companies be more cost and energy efficient while expanding revenue opportunities.</p></blockquote><p style=\"text-align: left;\">The other two themes, Nvidia’s market position and exceeding expectations, have also remained strong. Nvidia once again crushed estimates in Q1, adding to its streak of 8 consecutive quarterly beats. Data Center revenue and bottom-line profitability were the stars last quarter:</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/aef45726bfaf3c0d7ce64b631c0f6a1e\" alt=\"A table with numbers and letters Description automatically generated\" title=\"A table with numbers and letters Description automatically generated\" tg-width=\"640\" tg-height=\"356\"/><span>A table with numbers and letters Description automatically generated</span></p><p style=\"text-align: left;\"><strong>NVDA Q1 Results Doc</strong></p><p style=\"text-align: left;\">These are eye-popping growth rates for a company churning out over $25B in <em>quarterly </em>revenue, yet the trend isn’t stopping. Management is guiding for about $28B in Q2 revenue, representing Y/Y growth of 107%. CFO Kress said much of the quarter’s Data Center revenue came from its older Hopper GPU, the H100; yet the company is still ramping up its H200 processor, recently launched its highest performing superchip (Blackwell), and expects demand to continue outpacing supply for each product. Nvidia has not let up from dominating the Accelerated Computing market and outperforming already lofty expectations – making its stock a hot commodity.</p><h3 id=\"id_3916863916\" style=\"text-align: left;\">So… Is Nvidia in a Bubble?</h3><p style=\"text-align: left;\">The widely understood definition of a bubble is when the price of a stock, asset, or even an entire market exceeds its fundamental value by a wide margin. Value is often measured using price relative multiples like the price-to-earnings ratio, but these aren’t useful when determining if price has disconnected from <em>fundamental value.</em> Fundamental value is most commonly assessed as the present value of expected cash flows through a discounted cash flow (‘DCF’) model, but this only gives us a snapshot of value at a point in time and relies on assumptions. Instead, to judge if Nvidia is in bubble territory, we can look at how price has tracked two common fundamentals over time: earnings per share (‘EPS’) and free cash flow per share. Both reflect any impacts of dilution, and free cash flow is less susceptible to manipulation.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/9d5e77c4710e45ad5a26349e68f5abb8\" alt=\"fundamentals\" title=\"fundamentals\" tg-width=\"635\" tg-height=\"456\"/><span>fundamentals</span></p><p style=\"text-align: left;\"><strong>YCharts</strong></p><p style=\"text-align: left;\">We can see from the above chart that growth in these fundamentals have held incredibly close with Nvidia’s stock price the past 3 years. Nvidia’s performance has prompted recent comparisons to Cisco (CSCO), a poster child of the infamous Dot-Com bubble which saw the NASDAQ rise 800% between 1995 and 2000, only to give up 78% off its gains by 2002. The comparison is not unfounded, as the companies do have several things in common:</p><ul style=\"\"><li><p>Market-wide excitement around a revolutionary technology, leading to a broader rally.</p></li><li><p>Hardware/computing provider for the technology</p></li><li><p>Passed Microsoft as the most valuable company</p></li><li><p>Leader by market share in its respective market</p></li><li><p>Benefited from investments before the industry became profitable</p></li></ul><p style=\"text-align: left;\">It’s easy to assume the companies are directly comparable, take a look at their price charts, and conclude Nvidia is in a bubble. But digging deeper, we see that Cisco’s fundamentals weren’t nearly as strong as Nvidia’s during that period:</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/cd112d624f87efc170f0c782155cf2f7\" alt=\"Fundamentals\" title=\"Fundamentals\" tg-width=\"635\" tg-height=\"456\"/><span>Fundamentals</span></p><p style=\"text-align: left;\"><strong>YCharts</strong></p><p style=\"text-align: left;\">The time frame matters as this chart ends near Cisco’s peak, but as it shows, Cisco’s fundamentals began lagging its stock price a year or so earlier. We have yet to see this happen to Nvidia. Even though Nvidia doesn’t appear to be in a <em>stock </em>bubble as we have it defined, high expectations around AI’s prospects put the company at risk of entering a <em>demand</em> bubble.</p><h3 id=\"id_2368198737\" style=\"text-align: left;\">A Demand Bubble?</h3><p style=\"text-align: left;\">The global AI market is expected to reach $800B+ by 2030 according to Statista. Though there is overlap, the Data Center market is also projected to be half-a-billion dollars by 2028. Nvidia itself projects a long-term total addressable market of $1 <em>trillion </em>across its product suite. Even with nearly $80B in TTM revenue, this would equate to only an 8% market penetration. The runway and optimism for AI-related markets, and Nvidia, are undoubtedly high. Even with a nearly 80% share in GPUs and a formidable competitive position, can the company continue exceeding these expectations? If not, it’s possible Nvidia could be in a <em>demand</em> bubble.</p><p style=\"text-align: left;\">As we’ve seen, Nvidia’s stock price has been a magnet to underlying fundamentals, but this may be beginning to change. Revenue and earnings growth estimates for Nvidia look to be normalizing with analysts expecting growth between 20% and 30% by FY 2026 – quite moderate given its recent numbers. As a result, Nvidia’s forward PE ratio has jumped 50% since March, indicating valuation has recently been more influenced by multiple expansion rather than forward growth and fundamentals.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/93e8a5471983321f902464322d6014a6\" alt=\"fwd PE\" title=\"fwd PE\" tg-width=\"635\" tg-height=\"424\"/><span>fwd PE</span></p><p style=\"text-align: left;\"><strong>YCharts</strong></p><p style=\"text-align: left;\">When we look back at the ratio over three years, we can see how Nvidia’s forward growth expectations drove <em>down</em> the multiple (denominator got bigger), usually after the company reported earnings and guidance revisions. But this wasn’t as dramatic last quarter:</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/4e7f49b400668e5de0fc0f814518dfb3\" alt=\"fwd PE\" title=\"fwd PE\" tg-width=\"640\" tg-height=\"429\"/><span>fwd PE</span></p><p style=\"text-align: left;\"><strong>YCharts</strong></p><p style=\"text-align: left;\">The market looks to be implying higher and higher expectations in the price, putting more pressure on Nvidia to continue outperforming in a big way. While I don’t doubt Nvidia will continue dominating its addressable market, and near-term demand continues to outpace supply, there are a handful of risks to its medium/long-term demand which could make it underperform expectations.</p><p style=\"text-align: left;\">The first risk is uncertainty around the synergies of some AI use cases, both in terms of profitability and timeline. The predictable result would be less future demand for Nvidia, and potentially an oversupply of inventory.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/37a95e6450301c4ef2e581ca0bb54438\" alt=\"demand\" title=\"demand\" tg-width=\"640\" tg-height=\"152\"/><span>demand</span></p><p style=\"text-align: left;\"><strong>NVDA Q1 10Q</strong></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/153dfd56034b8149141a14c18672d97b\" alt=\"demand\" title=\"demand\" tg-width=\"640\" tg-height=\"51\"/><span>demand</span></p><p style=\"text-align: left;\"><strong>NVDA Q1 10Q</strong></p><p style=\"text-align: left;\">Like the internet in the late 90s, many companies are touting AI’s potential to reshape their businesses and generate profits. And like the internet, there were a handful of clear winners, lots of losers, and some that succeeded <em>over time.</em> The market even appears to be more selective with AI stocks as of late:</p><blockquote><p>About 60 per cent of stocks in the S&amp;P 500 have risen this year, but more than half the stocks included in Citi’s “AI Winners Basket” — an index based on the names that were garnering the most excitement among the bank’s clients last year — have declined. More than three-quarters of companies in the AI basket had climbed in 2023.</p></blockquote><p style=\"text-align: left;\">So far, the handful of winners includes Nvidia, semiconductor peers, and the ‘Fab Five’ as we saw – which actually unveils another risk to Nvidia: a large portion of Nvidia’s revenues are expenses for the ‘Fab Five’. 40% of Nvidia’s revenue comes from Microsoft, Meta, Amazon, and Google – each of which have committed billions in capex to build AI infrastructure, but not nearly enough as Nvidia’s revenues are expected to grow:</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/35102b195a0e977cdca20e0747c53e91\" alt=\"investment\" title=\"investment\" tg-width=\"640\" tg-height=\"407\"/><span>investment</span></p><p style=\"text-align: left;\"><strong>Paulsen Perspectives Substack</strong></p><p style=\"text-align: left;\"></p><p style=\"text-align: left;\">Nvidia relies heavily on these hyperscalers for growth, yet each of these firms are also investing billions in internal AI capabilities to reduce reliance on Nvidia. Additionally, most of them compete with Nvidia directly in software, gen-AI applications, or even chips like Google’s TPU. This also doesn’t include more direct competitors like Advanced Micro Devices (AMD) and Intel (INTL) which may be able to compete on price as inferencing overtakes training in AI-workloads. The reason being, inferencing generally takes less computing power than training. Should spend from these major customers dry up and competition increase, Nvidia’s future demand is at risk.</p><p style=\"text-align: left;\">Another potential obstacle to chip demand is data center build out. A credit research report on Nvidia by Barclays pointed out that once databases are built, less compute power is required for deployment. Especially as a higher percentage of workflows move to inferencing.</p><blockquote><p>AI chip demand will eventually normalize once the initial training build has been completed. The inference phase of AI is going to require less computing power than the training phase. High-powered PCs and phones could be capable enough to run inferences locally, reducing the need for growing GPU plants.</p></blockquote><p style=\"text-align: left;\">As the market sifts the wheat from the chaff in AI and data centers are built out further, Nvidia is more susceptible to swings, and possibly a cliff, in demand.</p><h3 id=\"id_840914604\" style=\"text-align: left;\">Expected Value</h3><p style=\"text-align: left;\">We have seen the market’s confidence in Nvidia as evidenced by its climbing stock price in addition to some risks to the company’s future demand, but how well <em>exactly</em> does the market expect it to perform? And for how long?</p><p style=\"text-align: left;\">The Expectations Investing framework provides a useful methodology for measuring and judging the market’s implied expectations. Starting with the current stock price and then leveraging a reverse DCF model, we can assess the market’s expectations for Nvidia. Our starting inputs are consensus estimates for revenue growth and operating profit margin. Analysts expect revenue growth near 100% for this FY 2025 tapering down to just under 20% in FY 2027, so I used an average of 45%. Nvidia achieved an operating margin of nearly 60% the past twelve months, but I expect it to normalize around 50%. Other inputs include the cash tax rate, working capital investment, fixed capital investment, depreciation &amp; amortization, and inflation – each of which I estimated using historical averages or most recently reported figures. I calculated the cost of capital using the CAPM model for cost of equity (beta of 1.5, risk free rate of 4%, equity risk premium of 4%), a 2.3% after-tax cost of debt, and Nvidia’s current capital structure. Here are my inputs:</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/7c5b1325c59afdb868da78302a72c08f\" alt=\"A screenshot of a computer screen Description automatically generated\" title=\"A screenshot of a computer screen Description automatically generated\" tg-width=\"640\" tg-height=\"156\"/><span>A screenshot of a computer screen Description automatically generated</span></p><p style=\"text-align: left;\"><strong>Author</strong></p><p style=\"text-align: left;\">These numbers then flow into a reverse DCF model which calculates the shareholder value per share for each projected year and the market-implied forecast period (‘MIFP’) or the competitive advantage period (‘CAP’). The MIFP or CAP is the number of years the market expects a company to generate returns above the cost of capital, i.e. how long the company will produce the inputted operating value drivers. For Nvidia, the MIFP is between 5 and 6 years.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/2291ad29ab70132f2eef9ed88c0a3c94\" alt=\"A screenshot of a computer Description automatically generated\" title=\"A screenshot of a computer Description automatically generated\" tg-width=\"640\" tg-height=\"364\"/><span>A screenshot of a computer Description automatically generated</span></p><p style=\"text-align: left;\"><strong>Author</strong></p><p style=\"text-align: left;\">This means that to justify the current stock price, Nvidia would need to grow revenues at 45% for about the next 6 years and maintain a 50% operating margin. The result would be <em>$740 billion </em>in revenues by 2030, or about <em>90%</em> of the projected 2030 global AI market we saw earlier. And even with last year’s 125% topline growth, Nvidia averaged only 40% annual revenue growth over the last 5 years. Those are high expectations, especially at Nvidia’s current size. Operating margins of 50% for 6 years are also a big hurdle given increasing competition, which tends to eat away at margins over time.</p><p style=\"text-align: left;\">To judge whether Nvidia is worth buying, we can calculate its expected value based on scenarios and assigned probabilities. I estimated a high and low scenario for the operating value drivers and calculated the shareholder value at 6 years for each. Then I assigned probabilities for the consensus (current stock price) and the scenarios. I view the high case as low probability given the already lofty expectations in the consensus view. Nvidia tends to outperform expectations, so I weighted the consensus at a 40% probability. Finally, I gave the low case a 50% probability, which I view as most likely given the increasing risks to demand and size limitations on Nvidia to produce such high growth. The result was an <strong>expected value of $106.82</strong>. Nvidia looks overpriced by about 14% of fair value.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/0ba2ba2d6b0d40e6ced4d1717d03c638\" alt=\"Exp value\" title=\"Exp value\" tg-width=\"640\" tg-height=\"192\"/><span>Exp value</span></p><p style=\"text-align: left;\"><strong>Author</strong></p><h3 id=\"id_810749726\" style=\"text-align: left;\">A Risky Bet</h3><p style=\"text-align: left;\">On both sides of the Nvidia debate, there remains a whole lot of uncertainty. I have mentioned some risks I see to demand, but the potential of AI is not easy to estimate in the short term, just like the internet. If it happens to be the start of a new ‘Industrial Revolution’, it’s hard to project how well Nvidia could continue to do. There is also uncertainty around timing. Even if demand does drop eventually, it may take a few years or more. Or demand could pick up as use-cases evolve and Nvidia innovates.</p><p style=\"text-align: left;\">Even though Nvidia appears to be overextended with high baked-in expectations, betting against the company is risky. The stock has shown incredible momentum and the company is high quality with a massive moat. Nvidia’s CEO Huang is a visionary, an executor, and an effective capital allocator. Nvidia’s astonishing growth and returns on invested capital averaging about 30% the past decade are all the evidence needed. The company has also stockpiled $30B in cash for further investment in growth. Nvidia has maintained a near 80% market share in GPUs with first-mover advantages. Additionally, big tech companies have increasingly become hard to displace while taking more of the pie in their respective industries.</p><p style=\"text-align: left;\">Nonetheless, Nvidia’s growing risks and current valuation make the stock a hold in my view. A great company can be a bad investment if paid too high a price for.</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: Marching Higher But How Long Can It Last?</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: Marching Higher But How Long Can It Last?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-07-05 07:49 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4702449-nvidia-stock-growing-risks-current-valuation-make-hold><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryNvidia stock continues to rise due to generative AI sentiment, formidable market positioning, and the company exceeding expectations.Nvidia's performance has prompted comparisons to Cisco ...</p>\n\n<a href=\"https://seekingalpha.com/article/4702449-nvidia-stock-growing-risks-current-valuation-make-hold\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"NVDA":"英伟达"},"source_url":"https://seekingalpha.com/article/4702449-nvidia-stock-growing-risks-current-valuation-make-hold","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1186205087","content_text":"SummaryNvidia stock continues to rise due to generative AI sentiment, formidable market positioning, and the company exceeding expectations.Nvidia's performance has prompted comparisons to Cisco during the Dot-Com bubble, but the comparison misses context.Nvidia doesn't appear to be in a stock bubble, but is at risk of entering a demand bubble.Sky-high expectations for Nvidia and growing risks make the company a hold in my view. Betting against the company remains risky.Why Does Nvidia Stock Just Keep Climbing?My previous article on Nvidia back in March argued that despite the stock’s meteoric rise, the company’s quality and expected performance were reasonable enough to justify its premium price. Since then, the stock has resumed its upward march nearly 50%, briefly making Nvidia the most valuable company in the world. What keeps fueling such outperformance?Not much has changed in the past four months for Nvidia. The three themes mentioned in my last article (euphoric sentiment around AI, Nvidia’s market positioning, and exceeding expectations), have all showed little sign of slowing.The generative AI (gen-AI) theme has been the backbone of a soaring market that is on pace to match its incredible performance in 2023, currently up 15% year-to-date (S&P 500). Despite many companies doing well the past two years, much of the market’s strength is in just a handful of mega-cap tech companies leading the AI race. Since the short-lived dip in October of 2023, over 50% of the S&P 500’s gains are attributable to Nvidia, other semiconductor companies, and the ‘Fab Five’.top heavy marketFinancial Times - UnhedgedWhat’s more is, in the past three months alone, these large tech companies are taking credit for more and more of the rally, while the rest of the S&P 500 has been flat or giving up some gains:top heavy 2Financial Times - UnhedgedInvestors seem to be placing big bets that AI has the power to transform businesses and economies – and that these mega tech companies will be the primary beneficiaries. Nvidia CEO Jensen Huang, who’s become somewhat of a celebrity, has helped fuel this excitement with his rhetoric around gen-AI:The next industrial revolution has begun… Companies and countries are partnering with NVIDIA to shift the trillion-dollar installed base of traditional data centers to accelerated computing and build a new type of data center, AI factories, to produce a new commodity, artificial intelligence. AI will bring significant productivity gains to nearly every industry and help companies be more cost and energy efficient while expanding revenue opportunities.The other two themes, Nvidia’s market position and exceeding expectations, have also remained strong. Nvidia once again crushed estimates in Q1, adding to its streak of 8 consecutive quarterly beats. Data Center revenue and bottom-line profitability were the stars last quarter:A table with numbers and letters Description automatically generatedNVDA Q1 Results DocThese are eye-popping growth rates for a company churning out over $25B in quarterly revenue, yet the trend isn’t stopping. Management is guiding for about $28B in Q2 revenue, representing Y/Y growth of 107%. CFO Kress said much of the quarter’s Data Center revenue came from its older Hopper GPU, the H100; yet the company is still ramping up its H200 processor, recently launched its highest performing superchip (Blackwell), and expects demand to continue outpacing supply for each product. Nvidia has not let up from dominating the Accelerated Computing market and outperforming already lofty expectations – making its stock a hot commodity.So… Is Nvidia in a Bubble?The widely understood definition of a bubble is when the price of a stock, asset, or even an entire market exceeds its fundamental value by a wide margin. Value is often measured using price relative multiples like the price-to-earnings ratio, but these aren’t useful when determining if price has disconnected from fundamental value. Fundamental value is most commonly assessed as the present value of expected cash flows through a discounted cash flow (‘DCF’) model, but this only gives us a snapshot of value at a point in time and relies on assumptions. Instead, to judge if Nvidia is in bubble territory, we can look at how price has tracked two common fundamentals over time: earnings per share (‘EPS’) and free cash flow per share. Both reflect any impacts of dilution, and free cash flow is less susceptible to manipulation.fundamentalsYChartsWe can see from the above chart that growth in these fundamentals have held incredibly close with Nvidia’s stock price the past 3 years. Nvidia’s performance has prompted recent comparisons to Cisco (CSCO), a poster child of the infamous Dot-Com bubble which saw the NASDAQ rise 800% between 1995 and 2000, only to give up 78% off its gains by 2002. The comparison is not unfounded, as the companies do have several things in common:Market-wide excitement around a revolutionary technology, leading to a broader rally.Hardware/computing provider for the technologyPassed Microsoft as the most valuable companyLeader by market share in its respective marketBenefited from investments before the industry became profitableIt’s easy to assume the companies are directly comparable, take a look at their price charts, and conclude Nvidia is in a bubble. But digging deeper, we see that Cisco’s fundamentals weren’t nearly as strong as Nvidia’s during that period:FundamentalsYChartsThe time frame matters as this chart ends near Cisco’s peak, but as it shows, Cisco’s fundamentals began lagging its stock price a year or so earlier. We have yet to see this happen to Nvidia. Even though Nvidia doesn’t appear to be in a stock bubble as we have it defined, high expectations around AI’s prospects put the company at risk of entering a demand bubble.A Demand Bubble?The global AI market is expected to reach $800B+ by 2030 according to Statista. Though there is overlap, the Data Center market is also projected to be half-a-billion dollars by 2028. Nvidia itself projects a long-term total addressable market of $1 trillion across its product suite. Even with nearly $80B in TTM revenue, this would equate to only an 8% market penetration. The runway and optimism for AI-related markets, and Nvidia, are undoubtedly high. Even with a nearly 80% share in GPUs and a formidable competitive position, can the company continue exceeding these expectations? If not, it’s possible Nvidia could be in a demand bubble.As we’ve seen, Nvidia’s stock price has been a magnet to underlying fundamentals, but this may be beginning to change. Revenue and earnings growth estimates for Nvidia look to be normalizing with analysts expecting growth between 20% and 30% by FY 2026 – quite moderate given its recent numbers. As a result, Nvidia’s forward PE ratio has jumped 50% since March, indicating valuation has recently been more influenced by multiple expansion rather than forward growth and fundamentals.fwd PEYChartsWhen we look back at the ratio over three years, we can see how Nvidia’s forward growth expectations drove down the multiple (denominator got bigger), usually after the company reported earnings and guidance revisions. But this wasn’t as dramatic last quarter:fwd PEYChartsThe market looks to be implying higher and higher expectations in the price, putting more pressure on Nvidia to continue outperforming in a big way. While I don’t doubt Nvidia will continue dominating its addressable market, and near-term demand continues to outpace supply, there are a handful of risks to its medium/long-term demand which could make it underperform expectations.The first risk is uncertainty around the synergies of some AI use cases, both in terms of profitability and timeline. The predictable result would be less future demand for Nvidia, and potentially an oversupply of inventory.demandNVDA Q1 10QdemandNVDA Q1 10QLike the internet in the late 90s, many companies are touting AI’s potential to reshape their businesses and generate profits. And like the internet, there were a handful of clear winners, lots of losers, and some that succeeded over time. The market even appears to be more selective with AI stocks as of late:About 60 per cent of stocks in the S&P 500 have risen this year, but more than half the stocks included in Citi’s “AI Winners Basket” — an index based on the names that were garnering the most excitement among the bank’s clients last year — have declined. More than three-quarters of companies in the AI basket had climbed in 2023.So far, the handful of winners includes Nvidia, semiconductor peers, and the ‘Fab Five’ as we saw – which actually unveils another risk to Nvidia: a large portion of Nvidia’s revenues are expenses for the ‘Fab Five’. 40% of Nvidia’s revenue comes from Microsoft, Meta, Amazon, and Google – each of which have committed billions in capex to build AI infrastructure, but not nearly enough as Nvidia’s revenues are expected to grow:investmentPaulsen Perspectives SubstackNvidia relies heavily on these hyperscalers for growth, yet each of these firms are also investing billions in internal AI capabilities to reduce reliance on Nvidia. Additionally, most of them compete with Nvidia directly in software, gen-AI applications, or even chips like Google’s TPU. This also doesn’t include more direct competitors like Advanced Micro Devices (AMD) and Intel (INTL) which may be able to compete on price as inferencing overtakes training in AI-workloads. The reason being, inferencing generally takes less computing power than training. Should spend from these major customers dry up and competition increase, Nvidia’s future demand is at risk.Another potential obstacle to chip demand is data center build out. A credit research report on Nvidia by Barclays pointed out that once databases are built, less compute power is required for deployment. Especially as a higher percentage of workflows move to inferencing.AI chip demand will eventually normalize once the initial training build has been completed. The inference phase of AI is going to require less computing power than the training phase. High-powered PCs and phones could be capable enough to run inferences locally, reducing the need for growing GPU plants.As the market sifts the wheat from the chaff in AI and data centers are built out further, Nvidia is more susceptible to swings, and possibly a cliff, in demand.Expected ValueWe have seen the market’s confidence in Nvidia as evidenced by its climbing stock price in addition to some risks to the company’s future demand, but how well exactly does the market expect it to perform? And for how long?The Expectations Investing framework provides a useful methodology for measuring and judging the market’s implied expectations. Starting with the current stock price and then leveraging a reverse DCF model, we can assess the market’s expectations for Nvidia. Our starting inputs are consensus estimates for revenue growth and operating profit margin. Analysts expect revenue growth near 100% for this FY 2025 tapering down to just under 20% in FY 2027, so I used an average of 45%. Nvidia achieved an operating margin of nearly 60% the past twelve months, but I expect it to normalize around 50%. Other inputs include the cash tax rate, working capital investment, fixed capital investment, depreciation & amortization, and inflation – each of which I estimated using historical averages or most recently reported figures. I calculated the cost of capital using the CAPM model for cost of equity (beta of 1.5, risk free rate of 4%, equity risk premium of 4%), a 2.3% after-tax cost of debt, and Nvidia’s current capital structure. Here are my inputs:A screenshot of a computer screen Description automatically generatedAuthorThese numbers then flow into a reverse DCF model which calculates the shareholder value per share for each projected year and the market-implied forecast period (‘MIFP’) or the competitive advantage period (‘CAP’). The MIFP or CAP is the number of years the market expects a company to generate returns above the cost of capital, i.e. how long the company will produce the inputted operating value drivers. For Nvidia, the MIFP is between 5 and 6 years.A screenshot of a computer Description automatically generatedAuthorThis means that to justify the current stock price, Nvidia would need to grow revenues at 45% for about the next 6 years and maintain a 50% operating margin. The result would be $740 billion in revenues by 2030, or about 90% of the projected 2030 global AI market we saw earlier. And even with last year’s 125% topline growth, Nvidia averaged only 40% annual revenue growth over the last 5 years. Those are high expectations, especially at Nvidia’s current size. Operating margins of 50% for 6 years are also a big hurdle given increasing competition, which tends to eat away at margins over time.To judge whether Nvidia is worth buying, we can calculate its expected value based on scenarios and assigned probabilities. I estimated a high and low scenario for the operating value drivers and calculated the shareholder value at 6 years for each. Then I assigned probabilities for the consensus (current stock price) and the scenarios. I view the high case as low probability given the already lofty expectations in the consensus view. Nvidia tends to outperform expectations, so I weighted the consensus at a 40% probability. Finally, I gave the low case a 50% probability, which I view as most likely given the increasing risks to demand and size limitations on Nvidia to produce such high growth. The result was an expected value of $106.82. Nvidia looks overpriced by about 14% of fair value.Exp valueAuthorA Risky BetOn both sides of the Nvidia debate, there remains a whole lot of uncertainty. I have mentioned some risks I see to demand, but the potential of AI is not easy to estimate in the short term, just like the internet. If it happens to be the start of a new ‘Industrial Revolution’, it’s hard to project how well Nvidia could continue to do. There is also uncertainty around timing. Even if demand does drop eventually, it may take a few years or more. Or demand could pick up as use-cases evolve and Nvidia innovates.Even though Nvidia appears to be overextended with high baked-in expectations, betting against the company is risky. The stock has shown incredible momentum and the company is high quality with a massive moat. Nvidia’s CEO Huang is a visionary, an executor, and an effective capital allocator. Nvidia’s astonishing growth and returns on invested capital averaging about 30% the past decade are all the evidence needed. The company has also stockpiled $30B in cash for further investment in growth. Nvidia has maintained a near 80% market share in GPUs with first-mover advantages. Additionally, big tech companies have increasingly become hard to displace while taking more of the pie in their respective industries.Nonetheless, Nvidia’s growing risks and current valuation make the stock a hold in my view. A great company can be a bad investment if paid too high a price for.","news_type":1},"isVote":1,"tweetType":1,"viewCount":113,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9997479080,"gmtCreate":1661844401943,"gmtModify":1676536589696,"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3578392292744824","authorIdStr":"3578392292744824"},"themes":[],"htmlText":"Detailed and informative write up. Tks for the time &amp; effort!","listText":"Detailed and informative write up. Tks for the time &amp; effort!","text":"Detailed and informative write up. Tks for the time & effort!","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9997479080","repostId":"1147997487","repostType":2,"repost":{"id":"1147997487","pubTimestamp":1661832312,"share":"https://ttm.financial/m/news/1147997487?lang=&edition=fundamental","pubTime":"2022-08-30 12:05","market":"us","language":"en","title":"The True Bargain In Big Tech Semiconductors: Micron","url":"https://stock-news.laohu8.com/highlight/detail?id=1147997487","media":"Seeking Alpha","summary":"SummaryMicron is in a class by itself for low semiconductor-industry valuations, with a bright long-","content":"<html><head></head><body><h2>Summary</h2><ul><li>Micron is in a class by itself for low semiconductor-industry valuations, with a bright long-term operating future.</li><li>If the cyclical memory chip market rebounds before next summer, an important price bottom for MU is approaching.</li><li>Intelligent investors should create a full position utilizing a cost-average buy plan over the next 3-6 months.</li></ul><p><img src=\"https://static.tigerbbs.com/165826a0c568ca6332f1ffd1cd648035\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/>I wrote afew weeks ago hereabout the horrible and extended valuation setup working against <b>NVIDIA</b>(NVDA) investors. Inlate May here, I mentioned the “value trap” situation for <b>Intel</b>(INTC). Basically, what most analysts and turnaround investors considered a bargain valuation was destined to fall even lower in price as actual operating business results were weakening dramatically. So, which stock is a bargain in the Big Tech semiconductor space, if any?</p><p>My answer is <b>Micron Technology</b>(NASDAQ:MU), one of the largest memory chip makers in the world, which may in fact be worthwhile to own going into September 2022. When you dig deeper and compare valuation numbers (withanalysts projecting a weakDRAM and NAND memory selling market until the summer of 2023) to both its 10-year past and the expensive setups of other large chip makers today, MU is close to tipping into true bargain territory. If you are a value or<i>growth at a reasonable price</i>[GARP] investor, purchasing this well-managed, strongly positioned blue-chip in the technology sector could help out portfolio returns in the years ahead. An added catalyst for investors is the U.S. government is offering tax breaks and other incentives in the<i>CHIPS and Science Act</i>passed this summer. Micron hascommitted to spend $40 billionon new American-based manufacturing capacity, creating up to 40,000 jobs.</p><h2><img src=\"https://static.tigerbbs.com/6b50fda7e112b42fea37113b510ab62c\" tg-width=\"640\" tg-height=\"231\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/><b>Valuation Story</b></h2><p>While NVIDIA is clearly the most expensive major semiconductor name in U.S. trading (especially if chip sales are turning lower in a recession), Micron may be the cheapest in the group, at least from my vantage point. On a variety of calculations, Intel and Micron appear to have similar valuation setups. However, unlike INTC, MU’s low valuation is NOT matched against an imploding revenue and income future. My research conclusion is Micron should be owned before most other semiconductor companies are added to your portfolio, if risk-adjusted analysis is important to you.</p><p>Looking back over 10 years of data, price to trailing earnings, sales, cash flow, and book value highlight a valuation already lower than usual. While price to sales is around long-term averages, most semiconductor companies are selling at massive premiums to the recent past, even after the 2022 bear market in Big Tech. Price is approaching accounting book value, nearing its lowest number since 2016. And, valuations on income and cash flow are well-below normal today.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/73c56af01de9f087babfe9211dfd4f12\" tg-width=\"635\" tg-height=\"467\" width=\"100%\" height=\"auto\"/><span>YCharts, Micron - Fundamental Ratios, 10 Years</span></p><p>Price to trailing free cash flow of 13.7x is “the” bargain choice vs. its largest semiconductor peers and sometimes competitors. Below is a graph of this idea vs. Intel, <b>Advanced Micro Devices</b>(AMD), NVIDIA, <b>Broadcom</b>(AVGO), <b>Marvell Technology</b>(MRVL), <b>Texas Instruments</b>(TXN), <b>NXP Semiconductors</b>(NXPI), <b>Qualcomm</b>(QCOM), and <b>Analog Devices</b>(ADI).</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/0cf3648322e9fa611e8b9195373f14d7\" tg-width=\"635\" tg-height=\"569\" width=\"100%\" height=\"auto\"/><span>YCharts, Micron Peers - Trailing Price to Free Cash Flow, 1 Year</span></p><p>But the valuation news gets even better, when you incorporate balance sheet debt and cash holdings. Micron owned $10 billion in cash and $22.7 billion in total current assets at the end of June against $6 billion in debt and $16 billion in total liabilities. The positive effect on enterprise value calculations is today’s $64 billion in equity market value, which can be reduced based on the large net cash stash. So, EV to EBITDA (total cash flow generation using earnings before interest, taxes, depreciation and amortization) and EV to Revenue numbers are even less expensive than simple stock price comparisons. Reviewing 35 years of information, Micron’s EV to trailing EBITDA ratio of 3.5x is HALF of its long-term average (including recessions, wars, booms and busts). In addition, EV to trailing Revenues is a solid 30% discount to decades of history.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/280d203998d0168ef38e8f4c310c5e2e\" tg-width=\"635\" tg-height=\"433\" width=\"100%\" height=\"auto\"/><span>YCharts, Micron - EV Ratios, 35 Years</span></p><p>Enterprise value multiples are also a great financial exercise to more accurately compare companies with different management styles and leverage uses on an equal playing field, apples-to-apples for metrics. And, since Wall Street is more concerned about future results, we can take a look at “forward” estimates by analysts as part of our EV research (which include a slowdown in Micron’s businesses).</p><p>Perhaps the real eye-opening stat on Micron’s present valuation is found in EV to forward EBITDA data, graphed below. A projected 3.7x ratio is wickedly lower than a median peer group average of 12x, and mean average of 16.3x. Sure, you can argue memory chips sales and margins are more cyclical in nature than other semi-names, with operating losses occurring once every 5-7 years for the company. But, the typical semiconductor firm is selling for a large premium EV to EBITDA reading on the COVID-19 pandemic-related shortages of product. To honestly believe MU’s outlier number is appropriate, you have to also believe memory chips are on the way out for a technology, replaced with something better for all of our gadgets and machines.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/520ea880a7b2f87e1457ba46053e2aca\" tg-width=\"635\" tg-height=\"569\" width=\"100%\" height=\"auto\"/><span>YCharts, Micron Peers - EV To Forward EBITDA</span></p><p>Again, the EV to forward Revenue projection of 2x is nowhere near industry norms. It’s even lower than Intel’s 2.3x. Measured at a median average discount of 60% vs. the peer group and 70% discount to the mean average, investors hunting for bargains have found a target worthy of purchase.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/413caf93446eade36d5ac99a2db16035\" tg-width=\"635\" tg-height=\"569\" width=\"100%\" height=\"auto\"/><span>YCharts, Micron Peers - EV To Forward Revenues</span></p><p>Taken together, the low valuation stats, alongside an approximate industry-normal EPS growth forecast between late 2021 and the middle of 2024 (pictured below), create a hard to ignore buy proposition.</p><h2><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/0be830167e548944421dc216537f4b46\" tg-width=\"635\" tg-height=\"569\" width=\"100%\" height=\"auto\"/><span>YCharts, Micron Peers - EPS Estimates to Late 2024</span></p><b>Technical Trading Picture</b></h2><p>I know investing during bear markets is tough. It’s definitely a different animal than bull markets when it comes to buy decisions, as upside momentum is usually absent in blue chips. I would categorize the -40% Micron decline in price since January as lacking any real sell intensity. If appears to be one centered around the general Big Tech plunge, as industry sales growth slows and interest rates rise (a double whammy knocking price from extended overvaluations).</p><p>For MU specifically, the<i>Accumulation/Distribution Line</i>,<i>Negative Volume Index</i>, and<i>On Balance Volume</i>may have all reached bottoms already. All three have not declined materially over the past year, while they have perked up since late June. If these indicators remain steady while price dips below $50 in coming months, a technically-derived strong buy situation could materialize (on positive momentum divergences vs. a new price low).</p><h2><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/0e60677c762daf3cfe870ffae8f0dfa4\" tg-width=\"700\" tg-height=\"639\" width=\"100%\" height=\"auto\"/><span>StockCharts.com - Micron, 1-Year Chart of Daily Values</span></p><b>Final Thoughts</b></h2><p>If valuations matter as an investor (which they should if you own stocks for years or decades), buying Micron at a forward EV to EBITDA number of 3.7x is a completely different position than NVIDIA at 55x. As an owner, I would much rather receive huge upfront cash flow and income in a company riding a long-term demographic uptrend in memory chips, than gamble on a projected high-growth gaming/crypto-mining/AI future that appears to be faltering.</p><p>Does buying a true bargain in Big Tech guarantee positive investment gains right away? No, but it increases the odds of a large advance after the economy recovers from its recent slowdown (recession). Honestly, Micron could easily dip below $50 a share if hit by another bearish selling wave on Wall Street during the autumn. It may even fall below $40 in a stock market crash scenario. Yet, the odds favoring real “outperformance” of Big Tech names are approaching, either through smaller than average losses or stronger gains over time.</p><p>With interest rates still rising, and America’s inflation future still cloudy and hard to predict, a recession in the economy and memory chip demand overall (including weaker PC sales) may mean patience will be key when investing in Micron. A significant investment payoff may not occur until next summer, for example. If you want to reduce capital risk entering MU shares, a cost-average plan over the next 3-6 months may be the best accumulation approach.</p><p>You can purchase a small starter position at $57 now, then double your stake in two months, and double it again in four months near the beginning of 2023. This plan gives you upside potential right away, with a serious stake (perhaps at lower than current pricing for net cost) ready for a rebound in the second half of next year. Remember, stock price changes tend to look forward by 3-6 months. My best guess is price will bottom between September and December preparing for a stronger operating environment at Micron by the summertime.</p></body></html>","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>The True Bargain In Big Tech Semiconductors: Micron</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\">\nThe True Bargain In Big Tech Semiconductors: Micron\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-08-30 12:05 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4537696-the-true-bargain-in-big-tech-semiconductors-micron><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryMicron is in a class by itself for low semiconductor-industry valuations, with a bright long-term operating future.If the cyclical memory chip market rebounds before next summer, an important ...</p>\n\n<a href=\"https://seekingalpha.com/article/4537696-the-true-bargain-in-big-tech-semiconductors-micron\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"MU":"美光科技"},"source_url":"https://seekingalpha.com/article/4537696-the-true-bargain-in-big-tech-semiconductors-micron","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1147997487","content_text":"SummaryMicron is in a class by itself for low semiconductor-industry valuations, with a bright long-term operating future.If the cyclical memory chip market rebounds before next summer, an important price bottom for MU is approaching.Intelligent investors should create a full position utilizing a cost-average buy plan over the next 3-6 months.I wrote afew weeks ago hereabout the horrible and extended valuation setup working against NVIDIA(NVDA) investors. Inlate May here, I mentioned the “value trap” situation for Intel(INTC). Basically, what most analysts and turnaround investors considered a bargain valuation was destined to fall even lower in price as actual operating business results were weakening dramatically. So, which stock is a bargain in the Big Tech semiconductor space, if any?My answer is Micron Technology(NASDAQ:MU), one of the largest memory chip makers in the world, which may in fact be worthwhile to own going into September 2022. When you dig deeper and compare valuation numbers (withanalysts projecting a weakDRAM and NAND memory selling market until the summer of 2023) to both its 10-year past and the expensive setups of other large chip makers today, MU is close to tipping into true bargain territory. If you are a value orgrowth at a reasonable price[GARP] investor, purchasing this well-managed, strongly positioned blue-chip in the technology sector could help out portfolio returns in the years ahead. An added catalyst for investors is the U.S. government is offering tax breaks and other incentives in theCHIPS and Science Actpassed this summer. Micron hascommitted to spend $40 billionon new American-based manufacturing capacity, creating up to 40,000 jobs.Valuation StoryWhile NVIDIA is clearly the most expensive major semiconductor name in U.S. trading (especially if chip sales are turning lower in a recession), Micron may be the cheapest in the group, at least from my vantage point. On a variety of calculations, Intel and Micron appear to have similar valuation setups. However, unlike INTC, MU’s low valuation is NOT matched against an imploding revenue and income future. My research conclusion is Micron should be owned before most other semiconductor companies are added to your portfolio, if risk-adjusted analysis is important to you.Looking back over 10 years of data, price to trailing earnings, sales, cash flow, and book value highlight a valuation already lower than usual. While price to sales is around long-term averages, most semiconductor companies are selling at massive premiums to the recent past, even after the 2022 bear market in Big Tech. Price is approaching accounting book value, nearing its lowest number since 2016. And, valuations on income and cash flow are well-below normal today.YCharts, Micron - Fundamental Ratios, 10 YearsPrice to trailing free cash flow of 13.7x is “the” bargain choice vs. its largest semiconductor peers and sometimes competitors. Below is a graph of this idea vs. Intel, Advanced Micro Devices(AMD), NVIDIA, Broadcom(AVGO), Marvell Technology(MRVL), Texas Instruments(TXN), NXP Semiconductors(NXPI), Qualcomm(QCOM), and Analog Devices(ADI).YCharts, Micron Peers - Trailing Price to Free Cash Flow, 1 YearBut the valuation news gets even better, when you incorporate balance sheet debt and cash holdings. Micron owned $10 billion in cash and $22.7 billion in total current assets at the end of June against $6 billion in debt and $16 billion in total liabilities. The positive effect on enterprise value calculations is today’s $64 billion in equity market value, which can be reduced based on the large net cash stash. So, EV to EBITDA (total cash flow generation using earnings before interest, taxes, depreciation and amortization) and EV to Revenue numbers are even less expensive than simple stock price comparisons. Reviewing 35 years of information, Micron’s EV to trailing EBITDA ratio of 3.5x is HALF of its long-term average (including recessions, wars, booms and busts). In addition, EV to trailing Revenues is a solid 30% discount to decades of history.YCharts, Micron - EV Ratios, 35 YearsEnterprise value multiples are also a great financial exercise to more accurately compare companies with different management styles and leverage uses on an equal playing field, apples-to-apples for metrics. And, since Wall Street is more concerned about future results, we can take a look at “forward” estimates by analysts as part of our EV research (which include a slowdown in Micron’s businesses).Perhaps the real eye-opening stat on Micron’s present valuation is found in EV to forward EBITDA data, graphed below. A projected 3.7x ratio is wickedly lower than a median peer group average of 12x, and mean average of 16.3x. Sure, you can argue memory chips sales and margins are more cyclical in nature than other semi-names, with operating losses occurring once every 5-7 years for the company. But, the typical semiconductor firm is selling for a large premium EV to EBITDA reading on the COVID-19 pandemic-related shortages of product. To honestly believe MU’s outlier number is appropriate, you have to also believe memory chips are on the way out for a technology, replaced with something better for all of our gadgets and machines.YCharts, Micron Peers - EV To Forward EBITDAAgain, the EV to forward Revenue projection of 2x is nowhere near industry norms. It’s even lower than Intel’s 2.3x. Measured at a median average discount of 60% vs. the peer group and 70% discount to the mean average, investors hunting for bargains have found a target worthy of purchase.YCharts, Micron Peers - EV To Forward RevenuesTaken together, the low valuation stats, alongside an approximate industry-normal EPS growth forecast between late 2021 and the middle of 2024 (pictured below), create a hard to ignore buy proposition.YCharts, Micron Peers - EPS Estimates to Late 2024Technical Trading PictureI know investing during bear markets is tough. It’s definitely a different animal than bull markets when it comes to buy decisions, as upside momentum is usually absent in blue chips. I would categorize the -40% Micron decline in price since January as lacking any real sell intensity. If appears to be one centered around the general Big Tech plunge, as industry sales growth slows and interest rates rise (a double whammy knocking price from extended overvaluations).For MU specifically, theAccumulation/Distribution Line,Negative Volume Index, andOn Balance Volumemay have all reached bottoms already. All three have not declined materially over the past year, while they have perked up since late June. If these indicators remain steady while price dips below $50 in coming months, a technically-derived strong buy situation could materialize (on positive momentum divergences vs. a new price low).StockCharts.com - Micron, 1-Year Chart of Daily ValuesFinal ThoughtsIf valuations matter as an investor (which they should if you own stocks for years or decades), buying Micron at a forward EV to EBITDA number of 3.7x is a completely different position than NVIDIA at 55x. As an owner, I would much rather receive huge upfront cash flow and income in a company riding a long-term demographic uptrend in memory chips, than gamble on a projected high-growth gaming/crypto-mining/AI future that appears to be faltering.Does buying a true bargain in Big Tech guarantee positive investment gains right away? No, but it increases the odds of a large advance after the economy recovers from its recent slowdown (recession). Honestly, Micron could easily dip below $50 a share if hit by another bearish selling wave on Wall Street during the autumn. It may even fall below $40 in a stock market crash scenario. Yet, the odds favoring real “outperformance” of Big Tech names are approaching, either through smaller than average losses or stronger gains over time.With interest rates still rising, and America’s inflation future still cloudy and hard to predict, a recession in the economy and memory chip demand overall (including weaker PC sales) may mean patience will be key when investing in Micron. A significant investment payoff may not occur until next summer, for example. If you want to reduce capital risk entering MU shares, a cost-average plan over the next 3-6 months may be the best accumulation approach.You can purchase a small starter position at $57 now, then double your stake in two months, and double it again in four months near the beginning of 2023. This plan gives you upside potential right away, with a serious stake (perhaps at lower than current pricing for net cost) ready for a rebound in the second half of next year. Remember, stock price changes tend to look forward by 3-6 months. My best guess is price will bottom between September and December preparing for a stronger operating environment at Micron by the summertime.","news_type":1},"isVote":1,"tweetType":1,"viewCount":292,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":354022779605264,"gmtCreate":1727439533684,"gmtModify":1727439537504,"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3578392292744824","authorIdStr":"3578392292744824"},"themes":[],"htmlText":"Patience is the key to win","listText":"Patience is the key to win","text":"Patience is the key to win","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/354022779605264","repostId":"2470708696","repostType":2,"isVote":1,"tweetType":1,"viewCount":38,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":329153318805616,"gmtCreate":1721365616096,"gmtModify":1721365625197,"author":{"id":"3578392292744824","authorId":"3578392292744824","name":"大亮仔","avatar":"https://community-static.tradeup.com/news/ac494343ebdde46c4148356788a0b76b","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3578392292744824","authorIdStr":"3578392292744824"},"themes":[],"htmlText":"Yup agreed any significant dip is a buy for long term holdings","listText":"Yup agreed any significant dip is a buy for long term holdings","text":"Yup agreed any significant dip is a buy for long term holdings","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/329153318805616","repostId":"1134782232","repostType":2,"repost":{"id":"1134782232","pubTimestamp":1721360845,"share":"https://ttm.financial/m/news/1134782232?lang=&edition=fundamental","pubTime":"2024-07-19 11:47","market":"us","language":"en","title":"Here Is Why Nvidia Still Has More Upside","url":"https://stock-news.laohu8.com/highlight/detail?id=1134782232","media":"Seeking Alpha","summary":"SummaryNvidia can continue to rally higher despite its impressive run.The company's CUDA software could be a key factor in its continued success.Nvidia's data center opportunity is significant and cou","content":"<html><head></head><body><h2 id=\"id_1308591037\" style=\"text-align: left;\">Summary</h2><ul style=\"\"><li><p>Nvidia can continue to rally higher despite its impressive run.</p></li><li><p>The company&#39;s CUDA software could be a key factor in its continued success.</p></li><li><p>Nvidia&#39;s data center opportunity is significant and could be underestimated by the market.</p></li></ul><p>When I wrote my first article on Nvidia Corporation more than a year ago, the stock had a hold rating among Seeking Alpha analysts with valuation being the major driver of that rating. More than 200% later, the stock is still a hold among analysts, with 11 rating it at least a buy and 24 rating a hold or less as of the time of writing. Again, the bear case seems to revolve around the lofty growth prospects for the company. While the tripling of the stock in just over the past year should mean the hold rating is more accurate now than it was then, this article will discuss why Nvidia might still have more upside.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/0d2606530852b285d9480dab8438a0ef\" alt=\"Nvidia Continues to Divide Analysts (Seeking Alpha)\" title=\"Nvidia Continues to Divide Analysts (Seeking Alpha)\" tg-width=\"444\" tg-height=\"269\"/><span>Nvidia Continues to Divide Analysts (Seeking Alpha)</span></p><h2 id=\"id_1978085403\" style=\"text-align: left;\">Recap of How Nvidia (Briefly) Became the Most Valuable Company in the World</h2><p style=\"text-align: left;\">In my first article on Nvidia written more than a year ago, I focused on remarks made by Nvidia CEO Jensen Huang stating that data centers present today were not ready for AI and that will spur capex spending of $250 billion a year (that grow) for multiple years for products and services Nvidia was essentially the only game in town in. From the article:</p><blockquote><p>So not only should Nvidia be a $1 trillion market cap, but it should also topple Apple as the world&#39;s most valuable company if what Huang said turns out to be true. The question becomes, why is Nvidia trading at just below $1 trillion, rather than at almost $3 trillion like Apple?</p></blockquote><p style=\"text-align: left;\">Well now that Nvidia did reach that $3 trillion valuation, its natural that questions arise about the sustainability of that valuation. In the risks section of that article, I mentioned that Nvidia might lack that iOS factor that Apple had and kept consumers in this article. In today&#39;s article, I&#39;ll discuss how CUDA could be just that.</p><h2 id=\"id_2251319734\" style=\"text-align: left;\">Why CUDA Could Be Nvidia&#39;s iOS</h2><p style=\"text-align: left;\">In 2007, Nvidia developed Compute Unified Device Architecture (CUDA for short) to help use its GPUs in parallel computing for non-graphics workload. To simplify this in extremely basic terms, the main way computing is done is by solving problems one at a time (sequential computing), Nvidia didn&#39;t just design GPUs, it built the architecture necessary to try and solve really large computing problems by breaking them down into smaller problems and solving them all simultaneously (or in parallel). CUDA, again in very basic terms, is the piece of software that helps developers tell machines that they want to use the hardware for parallel computing (which is necessary for AI workloads).</p><p style=\"text-align: left;\">That piece of software was built with Nvidia&#39;s GPUs in mind and vice versa. And because Nvidia was really early, CUDA became the go-to programming platform for training AI models. As a result, those who preferred working with CUDA had to use NVIDIA GPUs, and those who were using the company&#39;s GPUs were better off using CUDA, creating a virtuous cycle for Nvidia.</p><p style=\"text-align: left;\">In my opinion, this is a crucial part of Nvidia&#39;s bull case and where the similarities are with Apple&#39;s iPhone. For years, Apple traded at 10x earnings on the premise that this is just a hardware company and eventually someone will make a more compelling or cheaper piece of hardware and win all the market share. That threat never materialized precisely because of iOS. Similarly, in Nvidia&#39;s case, it is no longer about making a better chip or a cheaper one for that matter, competitors must also solve the software part of the equation. This is arguably the more difficult part of competing with Nvidia as the longer this takes the more entrenched Nvidia will become.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/98eb3188446c0c6de9a9d8b2dca536b4\" alt=\"Nvidia&#39;s virtuous cycle (created by author)\" title=\"Nvidia&#39;s virtuous cycle (created by author)\" tg-width=\"640\" tg-height=\"360\"/><span>Nvidia&#39;s virtuous cycle (created by author)</span></p><p style=\"text-align: left;\">If you think about Apple&#39;s business, it&#39;s a two-headed dragon. You buy an iPhone, a quality piece of hardware, the Apple upsells you with the services enabled by its iOS and software. Powering the iOS also means that consumers who buy an iPhone are unlikely to switch and will buy other Apple hardware products, creating a consumer lock-in. Similarly, with Nvidia, consumers buy the GPUs today because they are perceived to be the best on the market. But there is also a software component required to activate the capabilities of those GPUs. It is Nvidia&#39;s leadership in CUDA that maintains its competitive advantage. Like with Apple, when it&#39;s time for consumers to upgrade their GPU, they will stick to Nvidia because CUDA only works with Nvidia. And if they want AMD they will have to learn its computing software and switch the training models they created which creates a significant switching cost that is similar to that faced by Apple consumers.</p><h2 id=\"id_689495477\" style=\"text-align: left;\">Nvidia&#39;s Data Center Opportunity is Enormous</h2><p style=\"text-align: left;\">One simple way to understand just how large Nvidia&#39;s opportunity could be is to look at AI startup CoreWeave. The company jumped to a $19 billion valuation just a few weeks ago, thanks to being one of the main providers of Nvidia GPUs. Here is an interesting bit from the company&#39;s blog:</p><blockquote><p>With over 45,000 GPUs in our fleet, we are the largest private operator of GPUs in North America. Our GPU infrastructure is delivered from 5 data centers in Chicago, North Carolina, New Jersey and New York, and rivals the assets operated by the large cloud computing companies.</p></blockquote><p style=\"text-align: left;\">This works out to about 9,000 GPUs for the type of data center required to run AI workloads. The US International Trade Commission estimated that there were roughly 8,000 data centers worldwide in 2021. Now if you believe AI is the new internet, those 8,000 data centers are going to be refined for AI workloads (revisit the recap on Nvidia&#39;s initial bull thesis). That means 72 million GPUs, and that&#39;s without any growth in the number of data centers, something that looks destined to happen. At a cost of at least $30,000 per GPU, that is approximately $2.2 trillion in GPU sales. Sure that, as GPUs keep improving, less of them will be needed. But that will be more than offset by the growth in data centers and the rise in unit prices of GPUs.</p><p style=\"text-align: left;\">CNBC recently reported that Nvidia holds 80% share of AI chips. So that is potentially $1.8 trillion in sales going to Nvidia with sky high-margins. And that&#39;s just data center revenue, so excluding gaming for example and other verticals. So even if you assume that capex cycle takes 10 years (and it will likely take less) Nvidia&#39;s average sales per quarter in that case ($44 billion in this case) would be almost double what it generated for the whole of 2023.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/290635b2939a5df2807025c7f5e8291d\" alt=\"revenue by segment from the 10-k\" title=\"revenue by segment from the 10-k\" tg-width=\"640\" tg-height=\"264\"/><span>revenue by segment from the 10-k</span></p><p style=\"text-align: left;\"><strong>Nvidia&#39;s financials will look vastly different in just a few years (company filings)</strong></p><p style=\"text-align: left;\">Let&#39;s focus on the Compute &amp; Networking segment given its the relevant one for my thesis. As discussed in the paragraph above, even if the AI transition takes a decade to optimize the data centers present today and assuming there is no growth in the number of data centers worldwide, Nvidia would generate an average revenue over the next 10 years of $176 billion excluding graphics. And because of CUDA, Nvidia actually can lock in customers for now. The faster the transition to AI data centers, the more Nvidia sells given its dominant competitive position, which entrenches CUDA&#39;s position as the platform for parallel processing, and in turn leads to more GPU sales in the future. There is also the DGX cloud business which offers AI-training-as-a-service platform and customizable AI models for the enterprise, which can help cement Nvidia&#39;s competitive position even more. As a result, it is highly likely the company can maintain its current margins of 67% and generate operating income of $118 billion on average over the next 10 years just from compute &amp; networking. let&#39;s assume its net interest income is $0 instead of the current $820 million. Slap the current corporate tax rate on those earnings and Nvidia&#39;s income would be $93 billion. That means Nvidia is selling at 31x forward earnings assuming: 1) Transition to AI takes 10 years, 2) There is no growth in the number of data centers worldwide. 3) Gaming and other high-growth avenues like automotive make no money for 10 years. Given how unlikely those 3 factors are, I feel that valuation has a lot of margin of safety and propels my reiterating of the buy rating</p><h2 id=\"id_1815304581\" style=\"text-align: left;\">Competition is Coming</h2><p style=\"text-align: left;\">There are signs of competition coming for Nvidia&#39;s dominant position. The first one is probably Apple Intelligence. There are two main reasons why Apple Intelligence is a threat to Nvidia. The first is that Apple Inc. (AAPL) will use its own chips, meaning Nvidia won&#39;t make its way to Apple devices even if AI is the new internet. The second issue is that Apple will do some if not most of the AI workloads on the device. This implies that the use of Nvidia GPUs could be less than forecast if companies embrace what is in essence a type of edge AI, given Nvidia&#39;s GPUs will mostly be in data centers.</p><p style=\"text-align: left;\">Another issue to be wary of is the concentration of sales. There is one mystery customer that makes up a significant number of Nvidia&#39;s sales:</p><blockquote><p>Sales to one customer, Customer A, represented 13% of total revenue for fiscal year 2024, which was attributable to the Compute &amp; Networking segment. One indirect customer which primarily purchases our products through system integrators and distributors, including through Customer A, is estimated to have represented approximately 19% of total revenue for fiscal year 2024, attributable to the Compute &amp; Networking segment. Our estimated Compute &amp; Networking demand is expected to remain concentrated. There were no customers with 10% or more of total revenue for fiscal years 2023 and 2022.</p></blockquote><p style=\"text-align: left;\">In a way, this is an important indication on validity of the thesis that AI is the new internet. If the thesis is valid, sales concentration should decline over time as everyone embraces AI. If it is not, then the concentration should persist and Nvidia will be at the whims of this customer. Investors must pay attention to this metric.</p><p style=\"text-align: left;\">The growth in AMD Inc. (AMD) and Intel Corporation (INTC) GPUs is also a threat, given they use their own competing programming platform, which would undermine CUDA in the long-term if it takes off. OpenAI for example launched its own CUDA alternative. Meta meanwhile launched software that enhanced interoperability between Nvidia and AMD GPUs, a move designed to undermine CUDA. From Reuters:</p><blockquote><p>Software has become a key battleground for chipmakers seeking to build up an ecosystem of developers to use their chips. Nvidia&#39;s CUDA platform has been the most popular so far for artificial intelligence work.</p><p>However, once developers tailor their code for Nvidia chips, it is difficult to run it on graphics processing units, or GPUs, from Nvidia competitors like AMD. Meta said the software is designed to easily swap between chips without being locked in.</p></blockquote><p style=\"text-align: left;\">These efforts have yet to change the competitive dynamics in my opinion, but it is the key battle investors need to keep their eye on as they assess Nvidia.</p><h2 id=\"id_3390154013\" style=\"text-align: left;\">Conclusion: Nvidia is Still Attractive</h2><p style=\"text-align: left;\">Despite the stock&#39;s impressive run up over the past 12 months or so, Nvidia still has room to run thanks to the huge opportunity in GPU sales for the data center. Nvidia&#39;s CUDA also provides high conviction that the company can continue to maintain its 80% share in GPUs. The biggest risk however is that big tech players are trying their hardest to dislodge Nvidia&#39;s leadership in the computing platform part of the supply chain. Having said that, this risk is yet to materialize and so the stock remains a buy, especially on any dips. The market is not a zero-sum game by any means however, and these attempts to dislodge CUDA could help AMD and Intel as well.</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>Here Is Why Nvidia Still Has More Upside</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\">\nHere Is Why Nvidia Still Has More Upside\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-07-19 11:47 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4704774-here-is-why-nvidia-still-has-more-upside><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryNvidia can continue to rally higher despite its impressive run.The company's CUDA software could be a key factor in its continued success.Nvidia's data center opportunity is significant and ...</p>\n\n<a href=\"https://seekingalpha.com/article/4704774-here-is-why-nvidia-still-has-more-upside\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"NVDA":"英伟达"},"source_url":"https://seekingalpha.com/article/4704774-here-is-why-nvidia-still-has-more-upside","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1134782232","content_text":"SummaryNvidia can continue to rally higher despite its impressive run.The company's CUDA software could be a key factor in its continued success.Nvidia's data center opportunity is significant and could be underestimated by the market.When I wrote my first article on Nvidia Corporation more than a year ago, the stock had a hold rating among Seeking Alpha analysts with valuation being the major driver of that rating. More than 200% later, the stock is still a hold among analysts, with 11 rating it at least a buy and 24 rating a hold or less as of the time of writing. Again, the bear case seems to revolve around the lofty growth prospects for the company. While the tripling of the stock in just over the past year should mean the hold rating is more accurate now than it was then, this article will discuss why Nvidia might still have more upside.Nvidia Continues to Divide Analysts (Seeking Alpha)Recap of How Nvidia (Briefly) Became the Most Valuable Company in the WorldIn my first article on Nvidia written more than a year ago, I focused on remarks made by Nvidia CEO Jensen Huang stating that data centers present today were not ready for AI and that will spur capex spending of $250 billion a year (that grow) for multiple years for products and services Nvidia was essentially the only game in town in. From the article:So not only should Nvidia be a $1 trillion market cap, but it should also topple Apple as the world's most valuable company if what Huang said turns out to be true. The question becomes, why is Nvidia trading at just below $1 trillion, rather than at almost $3 trillion like Apple?Well now that Nvidia did reach that $3 trillion valuation, its natural that questions arise about the sustainability of that valuation. In the risks section of that article, I mentioned that Nvidia might lack that iOS factor that Apple had and kept consumers in this article. In today's article, I'll discuss how CUDA could be just that.Why CUDA Could Be Nvidia's iOSIn 2007, Nvidia developed Compute Unified Device Architecture (CUDA for short) to help use its GPUs in parallel computing for non-graphics workload. To simplify this in extremely basic terms, the main way computing is done is by solving problems one at a time (sequential computing), Nvidia didn't just design GPUs, it built the architecture necessary to try and solve really large computing problems by breaking them down into smaller problems and solving them all simultaneously (or in parallel). CUDA, again in very basic terms, is the piece of software that helps developers tell machines that they want to use the hardware for parallel computing (which is necessary for AI workloads).That piece of software was built with Nvidia's GPUs in mind and vice versa. And because Nvidia was really early, CUDA became the go-to programming platform for training AI models. As a result, those who preferred working with CUDA had to use NVIDIA GPUs, and those who were using the company's GPUs were better off using CUDA, creating a virtuous cycle for Nvidia.In my opinion, this is a crucial part of Nvidia's bull case and where the similarities are with Apple's iPhone. For years, Apple traded at 10x earnings on the premise that this is just a hardware company and eventually someone will make a more compelling or cheaper piece of hardware and win all the market share. That threat never materialized precisely because of iOS. Similarly, in Nvidia's case, it is no longer about making a better chip or a cheaper one for that matter, competitors must also solve the software part of the equation. This is arguably the more difficult part of competing with Nvidia as the longer this takes the more entrenched Nvidia will become.Nvidia's virtuous cycle (created by author)If you think about Apple's business, it's a two-headed dragon. You buy an iPhone, a quality piece of hardware, the Apple upsells you with the services enabled by its iOS and software. Powering the iOS also means that consumers who buy an iPhone are unlikely to switch and will buy other Apple hardware products, creating a consumer lock-in. Similarly, with Nvidia, consumers buy the GPUs today because they are perceived to be the best on the market. But there is also a software component required to activate the capabilities of those GPUs. It is Nvidia's leadership in CUDA that maintains its competitive advantage. Like with Apple, when it's time for consumers to upgrade their GPU, they will stick to Nvidia because CUDA only works with Nvidia. And if they want AMD they will have to learn its computing software and switch the training models they created which creates a significant switching cost that is similar to that faced by Apple consumers.Nvidia's Data Center Opportunity is EnormousOne simple way to understand just how large Nvidia's opportunity could be is to look at AI startup CoreWeave. The company jumped to a $19 billion valuation just a few weeks ago, thanks to being one of the main providers of Nvidia GPUs. Here is an interesting bit from the company's blog:With over 45,000 GPUs in our fleet, we are the largest private operator of GPUs in North America. Our GPU infrastructure is delivered from 5 data centers in Chicago, North Carolina, New Jersey and New York, and rivals the assets operated by the large cloud computing companies.This works out to about 9,000 GPUs for the type of data center required to run AI workloads. The US International Trade Commission estimated that there were roughly 8,000 data centers worldwide in 2021. Now if you believe AI is the new internet, those 8,000 data centers are going to be refined for AI workloads (revisit the recap on Nvidia's initial bull thesis). That means 72 million GPUs, and that's without any growth in the number of data centers, something that looks destined to happen. At a cost of at least $30,000 per GPU, that is approximately $2.2 trillion in GPU sales. Sure that, as GPUs keep improving, less of them will be needed. But that will be more than offset by the growth in data centers and the rise in unit prices of GPUs.CNBC recently reported that Nvidia holds 80% share of AI chips. So that is potentially $1.8 trillion in sales going to Nvidia with sky high-margins. And that's just data center revenue, so excluding gaming for example and other verticals. So even if you assume that capex cycle takes 10 years (and it will likely take less) Nvidia's average sales per quarter in that case ($44 billion in this case) would be almost double what it generated for the whole of 2023.revenue by segment from the 10-kNvidia's financials will look vastly different in just a few years (company filings)Let's focus on the Compute & Networking segment given its the relevant one for my thesis. As discussed in the paragraph above, even if the AI transition takes a decade to optimize the data centers present today and assuming there is no growth in the number of data centers worldwide, Nvidia would generate an average revenue over the next 10 years of $176 billion excluding graphics. And because of CUDA, Nvidia actually can lock in customers for now. The faster the transition to AI data centers, the more Nvidia sells given its dominant competitive position, which entrenches CUDA's position as the platform for parallel processing, and in turn leads to more GPU sales in the future. There is also the DGX cloud business which offers AI-training-as-a-service platform and customizable AI models for the enterprise, which can help cement Nvidia's competitive position even more. As a result, it is highly likely the company can maintain its current margins of 67% and generate operating income of $118 billion on average over the next 10 years just from compute & networking. let's assume its net interest income is $0 instead of the current $820 million. Slap the current corporate tax rate on those earnings and Nvidia's income would be $93 billion. That means Nvidia is selling at 31x forward earnings assuming: 1) Transition to AI takes 10 years, 2) There is no growth in the number of data centers worldwide. 3) Gaming and other high-growth avenues like automotive make no money for 10 years. Given how unlikely those 3 factors are, I feel that valuation has a lot of margin of safety and propels my reiterating of the buy ratingCompetition is ComingThere are signs of competition coming for Nvidia's dominant position. The first one is probably Apple Intelligence. There are two main reasons why Apple Intelligence is a threat to Nvidia. The first is that Apple Inc. (AAPL) will use its own chips, meaning Nvidia won't make its way to Apple devices even if AI is the new internet. The second issue is that Apple will do some if not most of the AI workloads on the device. This implies that the use of Nvidia GPUs could be less than forecast if companies embrace what is in essence a type of edge AI, given Nvidia's GPUs will mostly be in data centers.Another issue to be wary of is the concentration of sales. There is one mystery customer that makes up a significant number of Nvidia's sales:Sales to one customer, Customer A, represented 13% of total revenue for fiscal year 2024, which was attributable to the Compute & Networking segment. One indirect customer which primarily purchases our products through system integrators and distributors, including through Customer A, is estimated to have represented approximately 19% of total revenue for fiscal year 2024, attributable to the Compute & Networking segment. Our estimated Compute & Networking demand is expected to remain concentrated. There were no customers with 10% or more of total revenue for fiscal years 2023 and 2022.In a way, this is an important indication on validity of the thesis that AI is the new internet. If the thesis is valid, sales concentration should decline over time as everyone embraces AI. If it is not, then the concentration should persist and Nvidia will be at the whims of this customer. Investors must pay attention to this metric.The growth in AMD Inc. (AMD) and Intel Corporation (INTC) GPUs is also a threat, given they use their own competing programming platform, which would undermine CUDA in the long-term if it takes off. OpenAI for example launched its own CUDA alternative. Meta meanwhile launched software that enhanced interoperability between Nvidia and AMD GPUs, a move designed to undermine CUDA. From Reuters:Software has become a key battleground for chipmakers seeking to build up an ecosystem of developers to use their chips. Nvidia's CUDA platform has been the most popular so far for artificial intelligence work.However, once developers tailor their code for Nvidia chips, it is difficult to run it on graphics processing units, or GPUs, from Nvidia competitors like AMD. Meta said the software is designed to easily swap between chips without being locked in.These efforts have yet to change the competitive dynamics in my opinion, but it is the key battle investors need to keep their eye on as they assess Nvidia.Conclusion: Nvidia is Still AttractiveDespite the stock's impressive run up over the past 12 months or so, Nvidia still has room to run thanks to the huge opportunity in GPU sales for the data center. Nvidia's CUDA also provides high conviction that the company can continue to maintain its 80% share in GPUs. The biggest risk however is that big tech players are trying their hardest to dislodge Nvidia's leadership in the computing platform part of the supply chain. Having said that, this risk is yet to materialize and so the stock remains a buy, especially on any dips. The market is not a zero-sum game by any means however, and these attempts to dislodge CUDA could help AMD and Intel as well.","news_type":1},"isVote":1,"tweetType":1,"viewCount":93,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}