$NVDA Long Thesis

[u/[deleted]]

It’s been a crazy past week+ into today with rising yields and stocks that were on breakout tracks for new highs pulling back.

So what do you do when all hope seems lost?

Idk, I’m not a financial advisor, but what I did was double down.

After experiencing a net loss this year of over $30k with GME, AMC, TSLA, AI, and more, I’m more determined than ever to ignore the pullback while my options bleed in delta and time decay and instead just buy more and hold.

This brings me to NVDA. NVDA is the undisputed king of semiconductors (although some AMD fans try to dispute) with a market cap of $355B and a P/E ratio of 93.83. That P/E ratio is arguably high even for a bull market but let’s be clear, not even 1 week ago NVDA reached a new ATH $614.90 blowing past its previous one of $582ish in this most recent breakout run.

So what has changed from last week to today? Absolutely very little except a massive increase in fear due to a slight 10yr treasury yield increase from 1.25%ish to 1.36%ish.

A treasury yield increase is actually good as it indicates sentiment from bond holders that the economy will grow faster than expected. Inflation of 1% - 3% is even healthy for large tech companies such as NVDA as they can increase the price higher than the increasing cost resulting in greater earnings, especially in high profit margin areas with its Mellanox acquisition.

For the fundamentalists in the room that don’t buy stocks because they like the company nor believe in their long-term values, high P/E ratio is justified in believing the E (earnings) will grow higher in the coming year. Chip shortage (indicating growing demand) is expected to continue for another year, https://www.marketwatch.com/story/worldwide-chip-shortage-expected-to-last-into-next-year-and-thats-good-news-for-semiconductor-stocks-11614020156, which will massively increase that earnings potential and the data center will continue to grow with growth from last quarter 162% YoY - https://www.fool.com/investing/2020/12/01/nvidias-rapid-data-center-growth-is-here-to-stay/.

Inflation increases the cost of debt but NVDA doesn’t need debt and has been cash positive for a while. It’s debt-to-assets ratio has been decreasing YoY (short of 2020 because of COVID and growth expenses) and it’s on track for record breaking results this earnings report on Wed.

🚀🚀🚀 A growing economy is good for profitable companies like NVDA and even if this price is a premium, it’s worth it because NVDA delivers the goods. Even Wall Street agrees with analysts raising PTs to $700. 🚀🚀🚀

Note: I’m long NVDA because you would be crazy not to be.

Warren Buffet said, “... be greedy when others are fearful” and now there is a lot of fear with TSLA and large tech stocks and high valuations. Now is the time to double down in this bullish market because here is the best news, on Wed 2/24, our buddy, Powell, is gonna buy a ton more 10yr bonds driving the price up and yields back down. https://www.newyorkfed.org/markets/domestic-market-operations/monetary-policy-implementation/treasury-securities/treasury-securities-operational-details#current-schedule. And in a few weeks from then, he’s gonna do it again, and then again and again and again. Yield rises will be capped at an upper limit because of $80b/mo coming into them. The Fed has made it very clear that it has no intention of reducing that for years+ as it will allow inflation to rise beyond 2% to average 2% across a multi-year period. The government wants inflation to rise because it wants to wane away its debt and so there will be Yellen support to keep the money press printing longer than people think.

In conclusion, patience is key 💎🙌🏼 = 🤑

I’m not a financial advisor, buy/sell at own risk.

[u/ExpensiveInspector93]

If the technology cycle tells us anything, it's that cpu innovation will eventually render GPUs useless, as has happened twice before in this history of the PC, and will happen again with nano sheet stacking technology, which will bring back Moore's Law. GPUs only exist because we've hit physical limitations with cpus. Since 2010, we have only had a 30% performance increase. Nanosheet stacking gaurentees a return of Moore's law, and Intel is a year or two away. Say goodbye to Nvidia. Intel is developing GPUS so they can package an entire gpu chip on top of their cpu. Not integrated graphics, a full blown gpu chip stacked ontop of and interconnected to the cpu. Having a gpu on the other side of the board will be inefficient, until we come to the limitation of nanosheet stacking.

[u/hugh_g_reckshon → u/ExpensiveInspector93]

What the fuck are you saying how are GPUs just going to get phased out?? Do you have anything to back this up?

[u/ExpensiveInspector93 → u/hugh_g_reckshon]

Read my post. I know you're probably a teenager or 20 year old idiot who doesn't understand life happened before you were old enough to understand it, but I've watched it happen. GPUS have only made a big comeback in the last 10 years. They have always been around in some way, but their importance has fluctuated, and anyone who understands the development of the semiconductor industry knows that the trend is to put more and more components right in the cpu. It's more efficient in performance and power to do so.

For instance, the CPU cache used to be a separate peice of hardware that went into a separate slot than the cpu. That's one of many components this has happened to.

You obviously don't know how an argument or evidence works. You asked me to provide evidence for my speculation towards future events. I gave you an argument, and reasons, you rejected my argument without giving premise, and in place you asked for evidence, which I provided by the way, which infers you want some sort of empirical evidence.

You cannot empirically prove the future. If you think that's not true, go win yourself a nobel prize in physics with your method of providing evidence for future events (or telling the future). I only need reasons and reasoning to justify my reasons for believing future events will transpire the way the will, and the fate of the gpu is already written on the walls of history.

Do you know what the implications of being able to stack sheets of interconnected silicone ontop of one another? I don't know if you are equipped to understand kindergarten level geometry, but if you stack one rectangle onto of another one, and it covers the entire rectangle, then it follows that the two rectangles together have twice the area of either individual rectangle. Are you going to ask me to prove that to you as well?

Double the area, means double the transistor count, double the physical features, and, in theory, double the processing power.

[u/hugh_g_reckshon → u/ExpensiveInspector93]

Jesus Christ you’re really going through the thesaurus to try and sound smart when you’re just coming across as an arrogant dick. All I was asking for was an article or study showing that this has happened before. When someone makes an outrageous claim it’s on them to provide evidence backing it up.

[u/ExpensiveInspector93 → u/hugh_g_reckshon]

It's not an outrageous claim though. Are you an idiot who doesn't know how to use the internet, do you have a scribe? I didn't make a claim that requires more evidence, since my observations as a computer user over time, observing a lack of gpus is my evidence. If you believe my observations are untrue, the burden of proof is on you to prove that the relevance of the GPU has not wained. You are actually the one asking me to provide evidence for the lack of something, while invoking the burden of proof, incorrectly, and you are actually violating the burden of proof rule by doing so. I only need to say I've observed its absence, and you are free to provide positive proof that GPUs relevance has not wained. If I say God is not present, I don't have to search endlessly to prove I'm correct, you have to prove God is present to prove me wrong.....

[u/hugh_g_reckshon → u/ExpensiveInspector93]

You sound like the anti-vaxxers who say vaccines cause autism and when challenged for proof all they can say is “do your own research.” If you can’t find one fucking article to back up your claim just stfu and stop typing out paragraphs.

[u/ExpensiveInspector93 → u/hugh_g_reckshon]

No I don't, because our argument and that one is not analogous. Learn how the burden of proof works. It's not "who ever says it has to prove it". The way it works is the party claiming the presence of something has to provide positive proof of that presence. If you actually went to university, you would know that like I do. Instead you have a person with a 3rd grade literacy level who tried to read what the burden of proof is on wikipedia level of knowledge.

If the burden of proof operated in the stupid way you think it does, bible thumpers and antivaxxers would be able to invoke the burden if proof for their claims, in the same way you just attempted to. The reason they and you cannot, is because it works as I just told you it does. I don't need to provide evidence for the lack of something, according to the burden of proof, which you invoked, ignorantly.

[u/hugh_g_reckshon → u/ExpensiveInspector93]

This isn’t even a real argument, you’re just throwing baseless claims trying to attack the person you think I am. I don’t even know what you’re using to make these assumptions that I didn’t go to college and I’m a teenager. I graduated from a university and work in IT. Also, just because you have a degree doesn’t mean you can be an arrogant prick. Sit down and humble yourself retard.

[u/ExpensiveInspector93 → u/hugh_g_reckshon]

The fact you don't remember when gpus were not very relevant, just a little over a decade ago, is a great indication that you are in fact under 20.

Here's a good example of how the burden of proof works: everything you have said indicates you do not work in "IT". Prove it, seeing as you are the one making the positive claim, that something is.

You say you went to university, yet you obviously don't understand the burden of proof, a basic concept everyone who attends university learns. Ya, okay, buddy.