The Case for NVDA

Note 1: I am an amateur investor. I make a lot of mistakes. If investing were a cartoon the Market would be the Roadrunner and I would be Wyle E Coyote.…

Here are a few quotes from some of the subscription services from people I noted this weekend:

  1. Lance Roberts

Technical Composite

The technical overbought/sold gauge comprises several price indicators (RSI, Williams %R, etc.), measured using “weekly” closing price data. Readings above “80” are considered overbought, and below “20” are oversold. The current reading is 12.58 out of a possible 100.

  1. Jason Goefert

More than 90% of stocks in the S&P 500 declined today.

It’s the 5th time in the past 7 days.

Since 1928, there have been exactly 0 precedents. This is the most overwhelming display of selling in history.

  1. Andres Cardenal

“When considering the nominal amount of money that has been lost in stocks and bonds, we are witnessing the largest destruction of wealth in history.”

"We have looked at valuations for the companies in the portfolio from multiple perspectives in recent months. We have used revenue, projected earnings, and discounted cash flows to assess valuations.

Different investors would rather use one tool or the other, but the main conclusion should not change by much. At the end of the day, if you are using consistent assumptions, a stock that is cheap should ultimately be cheap across different valuation methods, and this is the case for the stocks in the portfolio.

Most of them are trading at record low valuation levels while executing very well in a challenging environment.

History has shown time and again that buying high-quality businesses at attractive valuations ultimately leads to superior returns over the long term.

However, it is easy to get scared when prices are collapsing, and we tend to think that maybe we will never recover.

However, good companies always come back from bear markets, usually sooner than expected and stronger than before."

Note 2: Andres maintains a real money portfolio of about 25-30 companies, practically all of which, would be recognizable to the folks who gravitate to high growth.

So…what I get from all this, just simply reenforces my predatory instincts with the question being whether these are timely predatory instincts or Wyle E Coyote predatory instincts. Regardless…the summary would be something like this:

  1. Its Bad out there but it could get Badder.

  2. We’re talking Historical level wealth destruction.

  3. There are a great many negative factors lined up against the economy with inflation being the worst of it.

  4. Buying great companies at lower valuations is a long term winning formula for outstanding future returns.

Now…what I am trying to figure out this weekend is whether NVDA really is all it’s proposed to be by several of the services I follow. Linked to this is a gradual shift - a rethinking of prior thinking regards portfolio roster composition. What I am thinking currently is this:

  1. Reserve STARTER companies for “Saul” type zoom - zoom high growth sorts - which, on the by and by, it is currently fashioned now. Stay at a maximum of 70% of allocation for these guys.

  2. Use 20% of allocation for the Bench companies which are larger more established companies but who still have a great deal of runway ahead of them. Theoretically - this would add ballast and stability for 20% of the roster - or - put another way, the Bench would be comprised entirely of proven veterans with upside.

  3. Continue to use the Scout Team as a landing place for smaller cap companies with promise.

Now all this may seem like a nominal if not an entirely minor change; however, should the Bench companies consist of solid veterans with proven histories and highflying potential performance upside then I would anticipate far less turbulence and trading within the portfolio than I am used to.
Seems reasonable. So…who might the candidates be for solid veterans with proven histories and highflying potential performance upside be? Ok…let me give it a shot:

MELI (Already on the Roster)

Why just three? Keeping the Bench at just 3 companies allows me to provide each with a more meaningful allocation - or something like that. Why those 3? I dunno - I just thunk it up and need a little more time to work on it.

So Today I want to explore NVDA which I have never - as far as I can remember, invested in. That being the case I have to ask myself why now? Well…because, thats why!

Out of the large number of services I follow an overwhelming majority include NVDA in their recommenced portfolios. And one of them just went bonkers - head over heels - crush level on the company with attenuated razor sharp logic and heavy duty supporting data and stuff. Now…I ask you: How can an amateur investor argue with that? So what did I come away with based on that attenuated razor sharp logic and heavy duty supporting data and stuff? Simply this:

Going forward AI is going to rule the world for a great many reasons and NVDA is in the catbird seat. Or something pretty close to that.

Then - even though a number of the other subscription services I follow have always thought highly of NVDA, which for whatever reason I had studiously ignored, I decided to then un-studiously not ignore them and went back and reviewed them all. So all that added to my following 15 minute Deep Dive Research Expedition bring me to this:

Nvidia - World Leader in Accelerated Computing Stuff.

Here is what NVDA says about NVDA:


“Our work in AI is transforming everything from gaming to healthcare to transportation—and profoundly impacting society.”

Important Tip #1: When searching for companies that are profoundly impacting society its probably best to focus on those companies impacting society in positive ways. I suppose.

Investor Relations:

A few Data Points:

Current Price: $158.80
52 Week Range: $153.29 - 346.47
About 54% Below its High.
About 3.6% Above its Low.
Market Cap: 395.73B
EV/Revenue: 13.69
YTD Momentum: -47.28%

So - just based on the Data Points above - a really powerful company that has the inside track in dominating trends that are changing the world - AND is at the lower end of its historic valuation might be worth a Bench Level roster position. But - deep dive researcher that I am - I want to dive a little deeper. Ok…ok not that much deeper…but maybe just a little.

Note 3) I am not particularly adept at deep dive analysis of what Tech companies do - which, is exactly why I try to let folks that are much smarter than me do it. Luckily there are a great many folks that meet that criteria. I attribute this fascinating tidbit not as PDL but to Quirks of Quail.

Here are the Revenue Growth figures from NVDA’s last 4 QTRS:

Most Recent +46.4%; +52.77%; +50.3%; and 68.3%

Looks like they are fading and tracking to the right hand column to me - but, this could be misleading simply due to the massive opportunity blooming ahead of them. Seems reasonable.

Here is their Press Release from their latest Earnings Report:…

Highlights Included:

  • Record quarterly revenue of $8.29 billion, up 46% from a year ago.

  • Record quarterly revenue for Data Center and Gaming

  • Non-GAAP earnings per diluted share were $1.36, up 49% from a year ago and up 3% from the previous quarter.

  • “We are gearing up for the largest wave of new products in our history with new GPU, CPU, DPU and robotics processors ramping in the second half. Our new chips and systems will greatly advance AI, graphics, Omniverse, self-driving cars and robotics, as well as the many industries these technologies impact,”

  • During the first quarter of fiscal 2023, NVIDIA returned to shareholders $2.10 billion in share repurchases and cash dividends.

  • On May 23, 2022, the board of directors increased and extended the company’s share repurchase program to repurchase additional common stock up to a total of $15 billion through December 2023.

Pretty good report…right? Then the shoe dropped:

  • Revenue is expected to be $8.10 billion, plus or minus 2%. This includes an estimated reduction of approximately $500 million relating to Russia and the COVID lockdowns in China.

Shortly thereafter the headline read like this:…

A couple of recent Scouting Reports:…

Summary: Yeah go for it!…

Summary: Not so Fast.

Let’s see:

  • Proven World Leading Company in its Industry

  • Potential to Dominate the AI crossroads of the world economy going forward.

  • Historical Low Valuation

  • All the Professionals Like it. (At least the ones I follow)

  • Revolutionary New Products Coming Soon (Thats what they say)

So where do I come down after looking through it all: Undecided if not Meh…Unless…all these smarty pants subscription service folks all have gotten it right. And…I pay them for their professional opinions…right. So…what would be the point of paying for a multitude of professional advice if - when they all align - you don’t consider it. So…I’ll consider it.

The bottom line truth here, given the absolute slaughter in Tech, is that you could probably throw darts at the list of the top 25 tech companies and going forward it would be just fine. You would do well even though, intelligent stock picking might well do Weller. And it’s not like a robust declared recession might push prices every lower - especially in the heavyweight division that NVDA fights in. So…we’ll see what Tuesday brings and I’ll worry about it then.

I dunno.

All the Best,


this is a short and lazy response bc I am just slammed in real life:

I love NVDA.
I believe/believed in the DC and AV stories, as far back as 2015-2016.
I sold way too early in 2017. (I tend to sell early it seems)

In 2018, I thought about jumping back, and then it infamously collapsed in Nov 2018, due to crypto slump.

So I would point out that crypto is going thru another slump, which may or may not be over. Supposedly NVDA is more insulated now to crypto, but I kind of have to wonder about that.

Read elsewhere that GPUs are starting to flood the market again, after a long supply drought.
This is on top of NVDA being ready to release their next-gen GPUs, I believe this Fall or Winter.

My guess is with possible recession/inflation, and surplus of existing GPU cards in market, the newer versions may not fly off shelves as fast as hoped. This is largely a Gaming comment, which is still a mammoth (and slower-growing) segment of their business.

DC should grow well, but may also take budgetary hits due to corp america dialing back expenses and capex projects where they can, in face of weaker economy.

AV or Autonomous Vehicles is a mammoth upside area, but it still remains many years out, unfortunately, I think. I was a huge fan and optimistically hoped for full AV autos everywhere by 2025, but we just don’t seem there yet.
This is a longer discussion than I can have now, but ideally you need all cars to be AV cars in order for it to maximize the benefits. We will go thru a (long?) phase of very-few cars and then some-cars then half-of-all-cars are AV, before we hit critical mass and the driving laws essentially get re-written.

Humans become the problem in an AV-auto world. And I think AV’s vs human-drivers will become akin to anti-vaxxers or NRA members, who simply won’t embrace change or relinquish their right to drive without a fight. What is the nirvana of all AV-autos on road? Imagine every auto moving forward at same time when a light turns, vs the slow delayed snake motion. Efficiency off the charts. But in a human/AV hybrid model, I just see accidents and insurance blame-game nightmares. In short, the real world has come crashing down on my once-hopeful AV-dreams.

There is a side AV market, for factories and delivery vehicles…think commercial applications. Even perhaps in the area of drones and flight-based vehicles. That may move forward a lot faster than replacing humans on the road.

Finally - NVIDIA isn’t the only game in town to power AV. Nothing is promised to them, but they had early on made a lot of promising auto mfr partnerships.

Then you have the wonderful future of Metaverse. If GPUs needed to power, then NVDA truly has another mammoth TAM. But like AV’s, this is years out from mass adoption. I got the original Oculus, and have the latest version, too. I am a huge proponent. But content remains limited, the tech is very good, but still far short of completely being a reality-replacement, especially in areas of comfort and practicality of wearing bulky headsets. We are just not yet near the “Ready Player One” type of VR world. I do think it is largely inevitable.

So this basically means, will NVDA be discounted in the short-term, because they had a helluva run since 2015. Hard to make an argument against the stock making sense at $100 instead of near $150, for example.

So I will hold out for $100.