Citron's next target: NVDA

Investment Analysis Clubs Saul’s Investing Discussions
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That bozo is at it again. You know he was just WAITING for the right moment to scare everyone again. With AAPL reporting yesterday and it not being a mega-blowout, and various other things going on over the last week or so, the market overall is down today. Perfect time to churn out some more scare news.

https://twitter.com/CitronResearch/status/959439895524556800…

If you’re not a trader, this might be a very good opportunity to load up or add to an existing NVDA position. My cost basis is well protected even if it does go all the way to $200 like he postulates (let’s all guess where his shorts are positioned…), and the position is already 12% even at today’s dropped-price, but I might add more if the stars align properly.

“Hey Andrew, may your bacon always be burnt, buddy.”

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Bless him. Would love to add more for the long haul. Two of my best performers - SHOP and IRBT - were bought/added to after short attacks, while HUBS laughed off the short attack on their business. I have never had a long term winner that wasn’t derided as overvalued, sometimes for over a decade and counting.

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Sure you read the comments below his outburst. He is full of it. The manipulation going on everyday is extraordinary. Take yesterday. Someone supposedly late in the afternoon blurted out that Amazon was going to have poor numbers and it tanks over $60.00. However, if you are a large market trader with inside knowledge or how shall I say it without being slanderous, provide false information regardless, with the aim of shorting and then going long, you are going to make a lot of money and it has absolutely nothing to do with the stock or Company.

Been going on forever and will continue to do so and there is nothing ordinary Joe Bloe can do about it.

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I actually expected a reaction from the masses, but so far NVDA is down only ~1.5%, and that’s pretty much in line with the rest of the market and tech after AAPL’s earnings report yesterday.

49% of me wants it to actually dip to $200, 51% says let it keep running… it’s fun (and a little exciting, I’m not going to lie) when you can measure each percentage point as $1000 (or whatever). February 9 should kill off any Citron FUD anyway – NVDA has a strong history of beating their guidance, and there’s little reason to think they won’t again for Q4/EOY report.

The humor part of the Citron angle is that they directly tie NVDA’s success and run-up to Bitcoin and other cryptocurrency. That’s only like 5% or maybe a little more the NVDA revenue stream (we don’t know, exactly, because they don’t/won’t break it out, but my math says it’s between 5-7% and others have said between 4% and 13%) – and what we DO know is that their desire is to deliver to gamers, not miners.

The most telling part of how awful the Citron “research” is, is that all of the high-end NVDA cards have been completely out of stock EVERYWHERE for months. Whether that’s miners or gamers, that’s a good sign for Q4 revenue no matter whether you think miners should all die in a fire.

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Many months ago NVIDA fell from about $120 to the low $90’s based on a negative report. Was that Left that issued the report? In a very dumb move I trimmed my NVIDA holdings as a result. hopefully wiser now.

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My wife doubled her position at 247. However, it is a tiny position.

There is a small gap in the chart around 200. If we can grab a bunch at 200 I might send flowers to Citron.

I will not wait for 200. Citron has been wrong on most of these “Saul” stocks. Even though Saul had to be dragged kicking and screaming into this one.

http://stockcharts.com/h-sc/ui?s=NVDA&p=D&b=5&g=…

If you check the chart, there are gaps at 220 and 200.

We will probably add at 220, and maybe at 200 also.

We are looking forward to the earnings report and listening to the latest videos.

Cheers
Qazulight

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Thank you Mr Left

I would love to buy more NVDA. But not at recent prices. So maybe this will give me a chance, especially if we get a tech correction at the same time . You know a correction is due when every day at the market close you ask yourself “how much money did I make today?” rather than “did I make or lose money today?”

Making the very big assumption that AI is the real thing this time, NVDA is a nearly sure winner. But we should keep in mind that this is round 3 for AI, it was much touted the last two times over the last few decades but failed to deliver. And real world applications are still pre chasm, they may never make the leap past early adapters.
AI is mentally “available” to most because of umpteen book and movies and thus investors may be over estimating present potential. Not saying that is true, just that we should keep it in mind.

I am looking at users, their sales and bottomline, growing from AI use. Wish I knew who they were. Had some CGNX but sold it recently

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(let’s all guess where his shorts are positioned…)

Is that another term for “pantload”? I prefer that terminology when referring to Mr. Left

:slight_smile:

Dominic

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However, if you are a large market trader…with the aim of shorting and then going long, you are going to make a lot of money…and there is nothing ordinary Joe Bloe can do about it.

Are you kidding?

That’s exactly the opportunity the average Joe Bloe can take advantage of if he knows his companies well and knows that it is FUD and should be ignored. I have Andrew Luck/Citron to thank for lowering my cost basis on quite a few stocks now, UBNT and SHOP the most recent winners.

Looking forward to more gifts from Andrew.

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I agree with you foodles but what I was really getting at was certain institutions formulating a rumor and they can take advantage of the false situation immediately. Joe Bloe can always take advantage of it albeit at a later stage.

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Foodles,
That’s exactly the opportunity the average Joe Bloe can take advantage of if he knows his companies well and knows that it is FUD and should be ignored.

While you’re technically correct, your statement is somewhat of an oxymoron. Everything after the word “if” describes someone other than the “the average Joe Bloe.”

Most likely, if you hang out on this board, you are not average. By definition, the indexes describe the average performance of a given sample set.

At the same time, the opportunity is most certainly available to the above average Joe Blue. Though I rarely trade options, if I see a significant drop, I’m buying some calls as I already hold all the NVDA stock I want to hold.

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But we should keep in mind that this is round 3 for AI, it was much touted the last two times over the last few decades but failed to deliver. And real world applications are still pre chasm, they may never make the leap past early adapters.

If you go back and look at round 1 and 2 you will find only some technology demonstrations.

But now we have real applications. Have you noticed that deep learning is being used for voice recognition and natural language processing for all the various voice assistants? They are big sellers. Now.
Or language translation…you can google this if you are unsure which side of the chasm this is on.
Or face recognition. If you aren’t using FB maybe you don’t know how well this works.
Product recommendation…buy something on Amazon to try this.
Movie recommendations…check out Netflix.

There are numerous other application in use that “they” might not want to let you know they are using. Tracking you in brick and mortar stores to see what things you are attracted to and what you actually buy in order to better layout the stores.

Autonomous driving. Yes it might be years away from fully autonomous but there are some things in some cars now. Ever hear of Tesla’s auto pilot? Or what about the automatic emergency braking in at least one high end car from most auto makers.

Robot vacuums. Some just randomly drive around sucking up dust. Others use computer vision to remember where they’ve been and map out the room to be more efficient.

There are numerous other examples that are being widely researched by experts in their fields. This didn’t happen the first couple of times around. Oil and gas exploration is one area. Medical MRI and X-ray reading (for example to detect cancer earlier than a human can).

Numerous more examples can be found just by googling it. Oh…and Google is using it to make searching better.

Mike

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Did anyone bother to read the Citron tweet?

BTC is down slightly over 50% in two months, and most cryptocurrencies have traded comparably. It’s probably worthwhile to acknowledge this might hit NVDA backlog/guidance at some point. Andrew Left feelings aside, I think the point expressed in the tweet is not just reasonable, but pretty likely in the near future.

I would lean towards the upper end of the expressed range of revenue exposure to cryptocurrency mining (10%). I know I am a broken record on custom ASICs - they are the domain of serious mining (eg, https://www.amazon.com/gp/product/B075MH4HSL). I think the domain of amateur mining on GPUs is a dead end (more so that all mining, but that is a digression too far), but dreams die slow so maybe the effect will lag a quarter or two. If you know serious gamers, you know that mid- to high-end graphics card supplies are tight and have a strong aftermarket (and that it’s not because of gaming demand). Certainly if you google for “gpu price trends” you can find PCPartPicker data and decide for yourself.

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Nvidia’s exposure to crypto mining is around 1%, AMD is more material, around 5%. Gamers cannot get hold of the latest gaming GPUs. Nvidia is asking merchants to limit each customer 2 GPUs so that gamers can get the GPUs.

I think Nvidia would be quite happy if crypto mining with GPUs just disappeared and went away. It is hurting their stance with gamers.

So no, I do not see crypto-Mining as very material to NVidia. It is material to AMD. And more than being not very material, it is hurting their business with gamers.

The market is down 666 points today. And with the Citron short thing, NVDA still outperformed the market.

I cannot predict short term stock swings. But that is my opinion on Nvidia.

Perhaps Citron can tell us who is going to take any material market share from Nvidia in the data center? Not AMD. Not Intel. Specify it, who and with what?

Autonomous driving has not even really started. And Nvidia has more competition, really? We don’t even know who the market leaders will be in that market yet!

But moving on.

Tinker

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“But moving on.”

You have a fabless chipmaker selling at 15 times sales in a rising rates environment. It’s priced for excellent execution in a volatile market. The are executing great, and are rewarded for it. If they disappoint, people should be prepared for a nontrivial (perhaps temporary) correction and cryptocurrencies falling 50% is a plausible route for a disappointment.

I can’t specify who or when for you. I don’t claim have enough expertise in this field to predict it. But https://www.nytimes.com/2018/01/14/technology/artificial-int… names five well funded startups (Cerebras, Graphcore, Wave, Cambricon, and Horizon Robotics). And https://techcrunch.com/2017/12/24/the-ai-chip-startup-explos… has more details on some of them as well as more information about Google 2nd gen TPU and Apple’s proprietary GPU. I would expect any of them to take NVDA head on, but certainly they can compete in niches that cumulatively could be problematic. I have no doubt that VC is going to look at NVDA margins as an opportunity.

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https://www.pcworld.com/article/3147846/computers/intel-may-…

Obviously I don’t know. But I wager that intel and Nvidia are major founders of many of these AI start ups, and they could buy them with no trouble at all prior to their going public.

But if these new AI companies were of such promise, then why is intel giving up its futuristic iGPU tech and paying AMD a fortune to share GPU tech with them, after paying Nvidia $1.5 billion for the privilege earlier?

When one actually starts to see a new disruptive technology adopted in a material fashion, then one can react to it. Until then, it takes more than just a new technology to take the market by storm. Their is an entire infrastructure of things that need to take place ot enable a new technology ot take any marketshare.

And a product that is just slightly better won’t do it. It has to be much better, and it has to meet a moving goal post as what GPUs can do, at the power they can do it as, continues to improve.

ASICS, sure. ASICS can perform specific functions at better power and speed. But they are limited to specific tasks.

When there is actually a product let me know. At that point we can discuss it and see if it is actually gaining material marketshare or not. I am never wedded to any such tech or company. I have seen many disruptions. There is no disruption presently in the marketplace, or presently in any scientific journal that is a threat to Nvidia.

Quantum computing is still years away from being a potential disruption threat. Good luck to the new start ups, who unlike many start ups, have not actually hyped and given any specifics about what they are working on, nor announced and customer wins. Start ups are usually not very shy about such things.

This is not being flippant, this is simply being, when there is evidence, not just some esoteric potential, then it is time to look closer. Otherwise, one wastes their time as every new and exciting tech has some challenger, and most never materialize.

Tinker

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Btw/ just in more context, I have no doubt that VCs looked at Intel’s margins, Microsoft’s margins, Cisco’s margins, Arista’s margins, EMC’s and NTAP’s margins, etc. doesn’t make for a credible competitive company.

Again, worth keeping track of, but really, not until such time as there is some real commercial deployment to speak of.

Tinker

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names five well funded startups (Cerebras, Graphcore, Wave, Cambricon, and Horizon Robotics).

If any of these companies are serious competition in the AI space I would expect them to be good candidates for being bought…by someone.

Mike

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As for crypto mining and NVDA stock price I believe this would have been relavent a few months ago. NVDA performed largely in line with cryptos as the market was coupling the two together, I think wrongly given the minute amount of revenue Nvidia actually receives from this market. For more than a month the market has decoupled Nvidia from crypto. Bitcoin(I know Nvidia has nothing to do with mining BTC) has decreased around 50% from its high in December while Nvidia has climbed >20%. I think the market has moved beyond mining for NVDA and focused more on Nvidia’s future following CES.

As for other competing technologies to disrupt Nvidia. Sure it could happen. Right now Nvidia is the standard for training deep learning neural networks. They achieve this by creating extremely capable parallel accelerators (called GPUs but are now more evolved and specialized to this task) and layering the industry standard CUDA software on top that provides the platform for all those billions of transistors to behave in the neural network manner. This software is open sourced allowing any user anywhere to plug in and play. The results are spectacular. 320 trillion operations per second. The limitations they run up against are only in what the other hardware is. This is where companies like ANET and PSTG night prove to be as important for the future of DL. Not only do potential competitors to Nvidia need to catch up, the whole computing industry needs to catch up just to feed these monsters.

The future NVDA beating chip could be in the works somewhere. Whoever or whatever that is is unknown. What is known is nothing available or on the horizon comes close in terms of beating Nvidia where it is now.

Nvidia’s 4 Key AI/DL platforms:

Volta Tesla(Datacenter): 120 TFLOPs/300W
Volta Titan(Desktop): 112TFLOPs/250W
Volta Pegasus(Autonomous Car) : 320Trillion Operations per second/30Wx2 Xavier chips
Pascal Jetson (Edge) : ? TFLOPs/ 7W

Who will be the best at Auto vehicles is very much uncertain, but Nvidia certainly has promise.

These are breakthroughs enabling breakthroughs and an avalanche of AI/ML uses including thousands, maybe millions of uses not even yet known. Every industry is figuring out what to do with all of this, and Nvidia is cutting huge swaths of partnerships and product placements that once embedded will be very difficult to dig out and replace unless these unknown AI chips and software create a huge leap forward from Nvidia.

And Nvidia is not standing still. Thousands of software and hardware engineers are spending billions to develop the next generation. And each generation is multiples better than the last in performance and efficiency.

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I find it interesting the way Huang has started to mention the number of engineering-years some of these new chips NVDA is putting out have behind them. I think one he brought on stage at CES had about 50,000 engineeeing years or some such (might have even been more). I think with him mentioning that, he is pointing out in a not-too-subtle way that NVDA is very, very far ahead of the competition, and for someone to catch up is going to take a massive effort.

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