ALERT! Cramer on Nvidia :<(

Investment Analysis Clubs Saul’s Investing Discussions
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https://www.thestreet.com/video/jim-cramer-nvidia-is-going-t…

Cramer sold Nvidia and believes that Nvidia will miss this quarter. You will have to listen to his broadcast for details, if any he gives. I just read the article underneath. He of course says Nvidia has a great future, etc., but will miss this quarter and therefore best not to be too greedy after all of this profit.

Seems to me that we are at the bottom of a new Wall of Worry (WoW). We had climbed the previous one and sucked the worry out of the market, and then bam the Fed comes and pounds it back into us, and now investors are fearful that their is a turn in the cyclical tide, no reason to buy as better prices will be had in the future.

What happens is, assuming they are not correct about the change in the economic cyclical tide (which many in the market may link to the slow down of the Chinese economy due to the trade war, yet another nail in reaching towards the bottom of a new WoW) slowly, step by step, investors start buying back into the market, climbing that WoW, slowly, then more rapidly, but with fits and starts until less and less worry as we climb higher up the wall so more and more investors pile back in.

Those who are the bottom of the wall will either be called “bag holders” when instead stopping at the ground the WoW starts digging a deeper hole to form its base, and then start the slow climb out of the ditch, back to where the bag holders, or ignored because no one else likes to give credit to investors who were smarter than them simply because they held and bought while everyone else panicked at or near the bottom of the WoW.

Cramer, obviously a mainline figure in both the institutional and consumer investor communities is signaling exactly this, better to get out, take your profits and not take the chance of being a bag holder, then be a nobody in the end who ended up holding near the bottom and kicked butt on our returns on the way back up.

Such moves the invisible spirits of the market. Cramer selling out Nvidia on the cusp of its latest and most revolutionary chip release. Sensing that the recent market crash accurately portrays fundamental realities to come. No basis for it probably, but that is why we each follow our own signs, and Cramer found his to follow, whatever it is.

Tinker

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I was literally getting ready to post this.

From what I can tell, Cramer did not specify why he thinks Nvidia will miss. He mentioned he hasn’t heard anything from NVDA specifically but doesn’t like what he’s hearing from AMD. AMD forecast Q3 growth of 7% yoy FWIW. And Nvidia just launched a new revolutionary GPU and there’s something going on with CPUs(other than being disrupted by NVDA)

However, as bullish as I am there is one thing making me a little nervous about a possible miss and that’s the typhoon that hit Asia around the time that RTX 2080 Ti was getting ready to ship. This has caused a delay in the availability of the top shelf card. Preorder customers started shipping Oct 2 as opposed to Sep 20 something from the launch orders. General availability has not started so far as I can tell or maybe it’s just that they are all sold out. But I think it’s the former.

But if you really want one there are some on EBay for like $1800.

Either way it’s all about the Q4 forecast. They are launching so many new products. That will be where the bacon is.

Darth

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a possible miss and that’s the typhoon that hit Asia around the time that RTX 2080 Ti was getting ready to ship. This has caused a delay in the availability of the top shelf card. Preorder customers started shipping Oct 2 as opposed to Sep 20 something from the launch orders. General availability has not started so far as I can tell or maybe it’s just that they are all sold out. But I think it’s the former.

But if you really want one there are some on EBay for like $1800.

Either way it’s all about the Q4 forecast. They are launching so many new products. That will be where the bacon is.

Darth,

NVDA’s Q3 is not over yet. Their quarter ends near the end of October so perhaps the shipment that you mentioned can still go out before the end of Q3.

Whatever happens in Q3, I think Q4 is likely to be a monster due to all the new products launched and due to the CapEx spending that companies will do before the end of 2019. Q4 for NVDA ends at the end of January, and due to their AIs assisting their finance team in getting financials ready for year end reporting, we can expect the Q4 results in mid-february, about 2 weeks after they close the books.

Chris

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For anyone who cares, I have medium sized position in NVSA (6.5%). I don’t really follow it’s ups an downs as I look at it as a long term as close to buy and hold I might get. If the stock goes down this qtr or next does not really concern me. They are so far in front of the rest of the computing world in both h/w and supporting s/w you can’t even see the competition in the rear view mirror.

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Cramer sold Nvidia and believes that Nvidia will miss this quarter. You will have to listen to his broadcast for details, if any he gives. I just read the article underneath. He of course says Nvidia has a great future, etc., but will miss this quarter and therefore best not to be too greedy after all of this profit.

It is not often that one finds a company so well positioned in its market as Nvidia is today with which Cramer agrees “He of course says Nvidia has a great future, etc.” A quarter’s earnings is just noise in a buy and hold position but important for traders and market entertainers (Cramer). To trade in and out you have to pay two commissions, taxes, and run the possibility of a loss if the stock runs away from you. It simply is not worth it.

Denny Schlesinger

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Seems to me that we are at the bottom of a new Wall of Worry (WoW). We had climbed the previous one and sucked the worry out of the market, and then bam the Fed comes and pounds it back into us, and now investors are fearful that their is a turn in the cyclical tide, no reason to buy as better prices will be had in the future.

What gives you confidence we hit a near-term bottom? Friday’s dead cat bounce?

I don’t know if it is or isn’t. I did my share of adding recently. But, I wouldn’t be surprised if the market continued a decline from here.

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Smorgasbord,

If you read my post I did not call a bottom, nor did I call a top, nor did I call anything.

Neither did I on June 26, 2018, or February 11, 2016, or March 7, 2009, nor even April 1, 1929 (albeit, at all these points in time, if you were in quality companies, not in naked options, and not on margin, and you simply kept holding and contributing each month (until there was a time to sell as companies change) you did very well for yourself). That is all I am calling.

I was told Nvidia was too risky at $50, and $100. In fact I was told that $100 was a psychological number and one should not mess with it…now Cramer is the one telling me something. Is he wrong, is he right, I do not know and make no comment in regard other than one along the meaning of the above commentary given in this post and in the prior post.

Tinker

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From what I can tell, Cramer did not specify why he thinks Nvidia will miss</i/>

His general theory is economy is already slowing and fed rate hikes may push that into recession. Maybe concern about future spending, econ growth. He was negative on MU too for that reason He did list a few cloud stocks to buy last week.

Karthik

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Let me be clear I was not saying that Nvidia will miss. Too many growth drivers and too many super cool life changing technologies going on.

Just discussing a possible negative. They missed crypto by $80M last quarter and still handily beat and raised. Nearly every company we talk about is involving themselves in some way with GPU accelerated computing. They are the common thread. It’s difficult for us to predict but NVDA and Saturn V have it down pretty good.

The delay could not effect the quarter at all. When do preorders get recognized? Any way you look at it it’s in this quarter.

DL Training is gang busters. ML training and data analytics is ramping with RAPIDs. AGX is ramping. CLARA is ramping. Autonomous is ramping. Inference is ramping. Provis and ray tracing is ramping. Edge AI is ramping. Ray tracing and AI gaming is ramping. AI cockpit is ramping.

This is a company in demand.

Darth

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Listened to what Jim said. He’s basically selling on fear. I don’t believe AMD can be a barometer for NVDA, so any weakness there doesn’t concern me. But he admits NVDA is a long-term secular growth company. So I’m not selling. Even bought more last week.

bjurasz

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A quarter’s earnings is just noise in a buy and hold position but important for traders and market entertainers (Cramer). To trade in and out you have to pay two commissions, taxes, and run the possibility of a loss if the stock runs away from you. It simply is not worth it.

Denny Schlesinger

Mostly true as far as it goes but if you never trade out then you’re reconciled to riding every losing position down 80-100% while bemoaning the Cramers and the bears of the world, ‘evil’ hedge funds, ‘stupid markets,’ and all the other excuses bag-holders invent for their own greed/foolishness.

I long ago decided it was not worth it - financially or emotionally - to ride stocks down 50% and hope they came back. Much better to sell if the facts have changed, and that includes when hi-growth stocks are no longer beating expectations. Stocks get re-rated down from 30-40x to 15-20x all the time.

Ask ANET holders if they should have sold 100 points ago and be able to buy MORE of the equity here [if they’re fervent believers].

naj

The tax tail should never wag the portfolio dog.

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Much better to sell if the facts have changed,

What I’m saying is the position to take WHEN FACTS HAVE NOT CHANGED – that’s what “a buy and hold position” means to me. You are talking about a different scenario.

‘evil’ hedge funds, ‘stupid markets,’ and all the other excuses bag-holders invent for their own greed/foolishness.

You forgot flying saucers, body snatchers, voodoo dolls and vampires! LOL

I believe professionals have an interest in churning the market to generate interest, trades, and commissions. Can you imagine Cramer saying “nothing noteworthy happened today?” That would be the death of a Market Entertainer.

Denny Schlesinger

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As I stated, I mostly agree with you but the market is always changing and that includes market psychology.

NVDA could do everything they claim and still trade down from 30x to 20x. Maybe it’d still beat the market if that happens. Maybe not. Maybe you’d be better off in OKTA, I don’t know.

Look at how Google’s PE has compressed over time. They’ve only gotten better and better. It went from 48x to 16x in under 5 years!

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Look at how Google’s PE has compressed over time. They’ve only gotten better and better. It went from 48x to 16x in under 5 years!

16??? Did I miss that?

Nadjor:

You have been quite the contrarian at times…but also pretty solid in your analysis…have enjoyed your posts when I have stopped by from time to time.

On your above statement however…even if PE compresses, assuming 40% YoY revenue growth, how does the stock not rise over 3-5 years???

NVDA is at the spear tip of the data/AI/Gaming and what will likely be autonomous in next 5 years+. It is New Paradigm and that is unlikely to be shaken in next several years. They are very commonly mistaken as a pure “gaming” company…data will likely overtake gaming revenue in next 2-3 years.

So present PE is 34 with revenue growth rate of 40% and earnings growth rate of 80%.

With the assumption that these growth rates remain intact…march me out year by year for the next 5 years and show me how PE compression would concern an investor.

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As I stated, I mostly agree with you but the market is always changing and that includes market psychology.

I know you did and I know the market has whims. If you look at long terms results by sector you’ll find that high tech tends to outperform, it’s the way to bet. Growth outperforms value, it’s the way to bet.

Maybe it’d still beat the market if that happens. Maybe not. Maybe you’d be better off in OKTA, I don’t know.

Betting on “maybe, I don’t know” is NOT the way to bet.

Look at how Google’s PE has compressed over time. They’ve only gotten better and better. It went from 48x to 16x in under 5 years!

The P/E ratio has little to do with “getting better and better” and a lot to do with growth and market penetration. I’ve been talking about the “S” curve for years. It represents the anatomy of growth, not just in the stock market but in all sorts of things such as in yeast. Web search is a mature sector, there can’t be many more markets to conquer. That means that growth slows to a vegetative rate and the P/E ratio contrats. You can see that in many mature high tech companies, Cisco, Microsoft, Oracle

https://invest.kleinnet.com/bmw1/stats30/MSFT.html
https://invest.kleinnet.com/bmw1/stats25/CSCO.html
https://invest.kleinnet.com/bmw1/stats30/ORCL.html

When it comes to Nvdia, you have to realize that it is at a different point in its growth life cycle. Nvdia started out as a gaming business. It just so happens that gaming is very demanding, more so than most business applications. I don’t know how Nvdia happened on GPUs but about three years ago “the adjacent possible” happened. This is a term used in evolution, when something used for some purpose becomes adapted for a new use. AI and GPUs are a marriage made in evolutionary heaven. Suddenly there is talk of the death of the von Neumann architecture (CPUs). AI has been a long time coming but suddenly all the parts came together, lots of data, fast storage, and GPUs. Machine learning, deep learning, and inference are just getting started and are finding their way into just about everything. Getting back to the “S” curve, they are at the bottom of the “S.” We should see a decade or two of very fast growth like Cisco, Microsoft, Oracle saw three decades ago. Of course their P/E ratios will compress in time, but not just now.

I only have room for three or four high tech stocks in my portfolio. They should all be high tech building blocks, storage, data organization, switching, computing power, and effective deployment of the software. Said in ticker symbols: PSTG, MDB, ANET, NVDA, and PVTL. My timing might not delight Cramer but it’s the way to bet for a low churn buy and hold portfolio.

Denny Schlesinger

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Suddenly there is talk of the death of the von Neumann architecture (CPUs).

Denny, great write up about why NVDA is doing so well and still has runway, is still on the steep part of the S-curve. Related to the death of the von Neumann architecture, I thought this was a great link below, from one of the top-dogs in computer architecture:

https://spectrum.ieee.org/view-from-the-valley/computing/har…

Right now, NVDA is the next Intel. I think Patterson is correct, there will be yet another architecture (possibly multiple domain-specific ones) in the next few years. I would not be surprised if NVDA was a player in that new space as well.

Bill Jurasz

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What Cramer does is theatrics and stock touter and doesn’t belong on the board…not this one anyway.

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General availability for RTX 2080 Ti and 2070 has hit the shelves. Still some time left in Q3 for NVDA. Will watch and see if they sell out.

https://www.nvidia.com/en-us/geforce/20-series/?nvid=nv-int-…

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You have been quite the contrarian at times…but also pretty solid in your analysis…have enjoyed your posts when I have stopped by from time to time.

On your above statement however…even if PE compresses, assuming 40% YoY revenue growth, how does the stock not rise over 3-5 years???

NVDA is at the spear tip of the data/AI/Gaming …

So present PE is 34…

As I indicated, stock would re-rate, now down to 26.5x PE, or down 25% since my two posts here.

It’s easy to forecast 40% topline growth for the next 5 years. Much harder to actually do it, esp in a time of tariffs and trade wars.

…but maybe it’s a buy here?!

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