Nvidia will due well in the future for many reasons. Their just released Q2, however, was horrendous because of “Gaming”? What primarily held them up and a big reason to remain bullish on this company is due to their involvement in Datacenters and Cars? I thought that they outsources production and were primarily a software company.
July 16 this year Timothy Green at The MotleyFool.com wrote about why despite broad PC declines Nvidia was still a buy: https://www.fool.com/investing/general/2015/07/16/how-immune…
Then today he explains why Nvidia revenue growth was destroyed by The decline in Gaming/Crypto here:
The problem NVIDIA faces is that it doesn’t have a great idea of how much gaming demand is actually tied to cryptocurrency. Cryptocurrency miners buy graphics cards through the same channels as gamers, so the demand picture becomes muddled. Still, a reasonable guess this time around would have been “a lot,” given the intensity of the cryptocurrency frenzy during the pandemic.
Cryptocurrency markets started to implode earlier this year, so a big drop in demand for graphics cards shouldn’t have blindsided NVIDIA. And yet it did. Again. NVIDIA let channel inventories balloon, and now it’s paying the price. The company is using discounts to move inventory, and it took $1.34 billion in charges related to its current inventory and purchase obligations.
My point is that our stock have none of their inventory issues, my way of saying what Saul has been saying for years here. And for this I am grateful.
Thanks Saul,
Best,
Jason
20 Likes
I was looking for an opportunity to say thanks as well, and this thread looks like a good spot. I’m a growth skeptic (even more so after a year of Motley Fool -50% returns), but you all do a remarkable job of sorting the rare wheat kernel from the chaff. I won’t agree with you on everything, but I did take your SNOW advice (among a couple of others) in small size, and it did well.
Thanks, and I apologize for what will likely be many crusty comments from me in the future!
– Jay
1 Like
Hi Jay,
When you said,
…you all do a remarkable job of sorting the rare wheat kernel from the chaff.
It made me want to ferret out some subtlety in my point to my last post. When I said,
Nvidia, the company is using discounts to move inventory, and it took $1.34 billion in charges related to its current inventory and purchase obligations.
To put a point on this earlier point, our companies have no obligations related to inventory issues, none.
Sometimes I lose the forest for the trees; but, our companies do have an amazing business model:face_with_monocle:
.
Best
Jason
3 Likes
HiJason,
As always, thanks for your very thoughtfully written note. I completely agree about the fact that our SAAS companies have an edge in terms of not having to worry at all about the inventory/ supply constraints issues…Nice niche we have there…
However, since you also mentioned about NVDA, I could not help but pitch in…I am sure you know this as well as I do…This is a behemoth, a monster of a company…sure, there may be cyclical nature to its business, but this truly is a front runner for joining the trillion dollar club.
It has multiple prongs…and Its only getting started in the data side of things! With its AI, it will have an increasingly important role to play in the EV era…And then we have one hellulava of a CEO in Mr. Huang.
As a bonus ( I say bonus as there is speculation involved), if, a big if, metaverse takes off, then yet another huge TAM…and so yeah, I dont think NVDA needs crypto…will be a nice add-on, but for sure, it doesn’t need that to excel.
My thoughts were - This would be one where you buy, ignore the cyclicality, and be pleasantly surprised with what happens in 10 years.
I am sure there are many brilliant investors out here and would love to hear their take on NVDA…May be I am allowing my bias to blind me, and so would appreciate any view, which supports or negates NVDA as a solid LTBH.
Thanks to Saul and the board members,
Peter
18 Likes
Hi Peter,
I appreciate your sentiment regarding how amazing Nvidia is as a company. There’re not currently in Revenue Hypergrowth stage at this time, so on this forum it is not appropriate to go into why I no longer hold them in my Portfolio. But, I can’t wait to see Jensen Huang give his keynote at Nvidia’s Annual Conference again. I’ve watched it every year since I bought Nvidia at $15/share when I first joined the Motely Fool. I practically fall over from the advancements and where they’re taking us. There’s a lot to like for sure!
I brought Nvidia up here because many here were invested in them when I started reading Saul’s blog and when I started to learn how to go deep into understanding the individual business models, as I went from owning 45 companies to now 7. Everything you said about Nvidia is true, IMO. For my money, I’m happy owning what I do.
Snowflake 23%
Cloudflare 21%
Datadog 16%
MongoDB 16%
Bill.com 11.5%
Crowdstrike 11%
Monday.com 1.5%
Best
Jason
14 Likes
Thanks Jason. I agree with what you said.
I guess I was intrigued when you mentioned NVDA as an example, and wondered if I had missed something (I would have never guessed where Fastly was heading to, had it not been for Saul’s dissection)…but I see now what you meant and the context with which you used it. Thanks for confirming your opinion on it. Much appreciated.
Peter
3 Likes