Reminder: We believe AI is a bubble and have made the decision to ride the bubble.
June 18, 2024: Nvidia's Financial Dominance (NVDA)
For the last year we have been referring to the AI phenomena as a bubble, perhaps not so much in financial terms but rather in terms of the psychology, the speculative frenzy. It's true in Nvidia's case, the stock could be cut in half and still be discounting the future with a 2-3% discount factor i.e. 33 to 50 times free cash flow.
However! Despite this we have been pitching a "Ride the Bubble" approach to the stock for over a year (we have an almost full decade with this one but it was in the last thirteen months that we thought it bubblelicious). Here's a July 1, 2023 post:
....So, we are faced with the decision whether-or-not to play a dangerous little game, riding the bubble knowing full well it is a bubble, or retiring to the sidelines.For now one of our favorite economists with one of our favorite stories.
Here's the version hosted at MIT:
This paper presents a case study of a well-informed investor in the South Sea bubble. We argue that Hoare’s Bank, a fledgling West End London bank, knew that a bubble was in progress and nonetheless invested in the stock: it was profitable to “ride the bubble.” Using a unique dataset on daily trades, we show that this sophisticated investor was not constrained by such institutional factors as restrictions on short sales or agency problems...
The two most important parts of the paper "II. Hoare’s Trading Performance" and "III. Causes of Success" are definitely worth a couple minutes....
And from Newsweek, January 7 some of the retail stuff:
Nvidia had a lot of announcements prepared for CES 2025. The company announced its new line of RTX 50 series graphics cards, updates to AI-powered DLSS 4, new Blackwell GPUs, and updates to Geforce NOW, its cloud game streaming service.
Here is everything you need to know about Nvidia's CES 2025 announcements.
Nvidia CES 2025 announcements:
- Nvidia Geforce RTX 50 series graphics cards launched, starting at $549
- New AI features announced for Nvidia Broadcast and content creators
- DLSS 4 introduces multi-frame generation
- Nvidia Reflex 2 Frame Warp technology reduces PC latency
- GeForce RTX 50 series gaming laptops get improved battery and performance
- Geforce NOW cloud gaming getting native Steam Deck app
- Geforce NOW launching in India and Latin America in 2025
- Geforce NOW coming to Meta Quest 3, Apple Vision Pro, and more
....MUCH MORE
We'll have more on the big stories, autonomous vehicles, agentic AI and humanoid robots later today.
January 19, 2024 at $594.91 "AI: Lessons From The South Sea Bubble".
February 6, 2024:
The stock is down $11.87, so a little less than half yesterday's up-move. $681.45 last after trading as low as $663.00 (down $30.31 and almost the entire Monday $31.72 up-move.) Unfortunately there is a gap on the chart at $660 so it didn't completely fill. Nervous-making....
By-the-bye, that $660 ($66, new style) is the "cut in half" number.
Earlier this morning the stock got to $889.68 and we are still pitching the "ride the bubble" approach—up $220 since the last mention, Feb. 6—but that could change anywhere between today and the end of the NVDA GTC conference (Mar. 21)....If interested in some of our history with the big dog there are links embedded in January 2024's "Nvidia expands its reach in China’s electric vehicle sector" (NVD
