Is that Nvidia’s net income?
No, that was $6.1bn
Is that their revenue?
No, that was $13.5bn
It’s not the market cap because I know that’s a mighty $1.2 trillion
So, what’s $56bn?
The value of Nvidia’s shares that traded yesterday – equal to the market cap of Heineken
Wow, people really wanted those shares!
Sure, that’s why it popped 6% at the open
Except, others clearly didn’t, because it closed flat on the day..
Stock market technicians call that an “exhaust move”
Well imagine you wanted to buy Nvidia early this year at $150 but revenue had been falling so you decided to wait
And then they beat the estimates in Feb, and it popped 14%, how would you have felt?
but I’ve read the books which all say good investors are patient so I must be patient and wait for a pullback
Okay, and then last quarter they announced amazing numbers & the share popped +26%, How are you feeling then?
Even more irritated – stupid books and their patience
Right, so you take up meditation and try ignore the share price, but it keeps rising
And yesterday you read headlines like:
“Nvidia’s AI surge is just getting started” (WSJ)
“How Nvidia won the race to power AI’s engines” (Times)
and all the articles contain words like, “blowout”, “surge” and “smash”
and the share pops 6% to $502
How are you feeling now?
I’m so mad – I throw away the books and cancel my meditation classes
Because this is a rocket and I knew it!
I’m not waiting a moment longer
And that’s how you get an “exhaust move”
Yes, but revenue growth was an amazing +101%
Sure, but I know one company that grew revenue
+433% one quarter & then
+430% the next & then
+408% the next
Wow! That share must have been incredible
It was over $400 back then but it’s since fallen 83% to $67
What? Was it profitable?
Very – 40% margins
Has the business collapsed?
Oh no, it’s grown
It’s only the valuation that’s collapsed and 40x sales to 4x sales is VERY damaging to your wealth
Oh, Btw Nvidia is on 36x sales
Sorry, which company is this?
Come on, you can’t compare the two – the AI trend is here to stay
And you don’t think online meetings are here to stay?
Yes but there’s loads of competition in that space – Teams & Google Meets
Do you mean competition from the same guys who are developing their own AI chips..
Nvidia spent $8bn in R&D over the past 12 months
Alphabet spent $43bn
Do you really think Nvidia will outrun all these big guys (and others) forever?
They might, but I don’t fancy those odds
Well, Nvidia’s share price only seems to rise
Not so fast – it fell from $300 in Nov 2021 to $108 in Oct 2022 -64%
Admittedly Cramer did name his new dog, “Nvidia” about then
And yesterday he told his audience, “You own it, don’t trade it”
So if you don’t believe my “exhaust move” theory,
You better hope he doesn’t call his next pet “AI”