this post was submitted on 13 Feb 2024
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Nvidia:
*Quarterly revenue of $6.05 billion, down 21% from a year ago
*Fiscal-year revenue of $27.0 billion, flat from a year ago
$1.8 TRILLION market cap
Make it make sense. Market Makers are juicing this thing. US stock market is hilarious 😂
They are down after the tail end period of ultra high demand. That doesn't change anything want them being a clear market leader with the ability to basically set prices to whatever the duck they want and sell out.
I'll try. But... It's complicated, and so this - despite being a wall of text, is going to be a rather over simplifcation.
The first thing to understand: The Stock Market is a form of Gambling. Valuation is based on historic trends, and Speculation of where it will go - the more information you have, the better you can guess - but it is still just a guess because competitors exist, and competitors sometimes purposefully misslead (ex. Sandbagging performance numbers, or releasing only lower tier products with a rebrand of top tier product, and so on).
Right now - Housing is in a bit of a strange state, with housing shortages leading to increased prices might sound like a great thing for real-estate -however, there is a growing call to ban corporate ownership of residential properties, ban short term rental projects, and so on - all of which when actually happens tends to drop real-estate prices (not immediately). The growing discontentment with HOA's also makes these types of organizations less desirable.
Another thing happening in the general wider market - Failing Media companies. People are distrusting the mainstream news more and more. People are fed up with the state of movies coming out of say Disney, or Warner Brothers - to the point a while back now Warner Brothers brought in a new CEO who canned a pile of complete or near complete projects because it was deemed cancelling already finished products would be less harmful and less costly than releasing them in the long run. And that is all BEFORE the writer strike, situation with actors, and so on.
And if that isn't all: Shipping from China to the rest of the world got more expensive - due to conflict in the middle east, and the Houthis firing rockets and such at commercial ships in the area - shipping companies have largely diverted. What this means, is Higher Fuel, and Lower Turn around times on each ships journey.
If you put this all together - what you are going to be looking for as an investor is a company that: 1. Is likely to grow, or be stable. 2. Has a strong stake in it's respective industry relative to it's competitors. 3. Has a Track record for creating profit. 4. Is less volatile in regards to shipping costs etc (as in: produces something companies NEED). And NVIDIA checks every one of these boxes - at least, for now.
TLDR: Shorter version? There is a lot of demand for NVIDIA stock do to it's relative perceived stability, and chance to grow - and NVIDIA isn't splitting it's stock or whatever else in order to sell more stocks at a lower price.
Thanks for your take. I think it may be the amount of (irrational) Calls SoftBank has opened and the associated Delta hedging.
The stock is completely detached from any sort of fundamental rationale
Nah, The Stock Market is basically gambling, just - it's result time is measured in days, weeks, months, and years, depending on the investment strategy you are after.
When you get a state where a group of people have a TONNE of money, and want to put it somewhere to avoid it depreciating to inflation, that money gets put into whatever the considered safest bet is. The issue is, when you have only a handful of big safe bets - those end up being the option everyone dives on, leading to overvaluation relative to the actual performance of the company. This is what leads to future price corrections.
Companies doing hedging and so on are just a part of the puzzle.
They are going straight up, as AI is the new next automobile. You'd be a fool to still hesitate to invest into a large company being behind all future technical infrastructure. Companies are hot to replace whatever they can with AI and they all need GPUs to run their models.
So, buy high and sell low
Got it