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Yahoo
05-05-2025
- Business
- Yahoo
Wall Street Just Punished Nvidia--Here's Why That Could Be a Huge Mistake
Nvidia (NASDAQ:NVDA) just posted its worst start to the year since 2022, falling 15.3% year-to-datedespite everything pointing to surging AI demand. The pullback has little to do with fundamentals and everything to do with fear. With Trump floating new tariffs and refusing to rule out a recession, investors are jittery. But here's the thing: Nvidia's AI engine hasn't slowed one bit. Warning! GuruFocus has detected 3 Warning Signs with NVDA. Just look at the data. Taiwan Semiconductor (NYSE:TSM)Nvidia's main AI chip partnerreported a 43% jump in February sales. Foxconn, meanwhile, rolled out its FoxBrain AI platform with help from Nvidia's local supercomputing team. The growth levers are still turning. Melius Research's Ben Reitzes thinks so too. He's still calling NVDA a Buy, even as he trimmed his target to $170 from $195, citing short-term regulatory fog. At just 24.2x forward earnings (well below its 5-year average of 40x), the stock isn't priced like a company defining the next decade of computing. All eyes now turn to Nvidia's GPU Technology Conference next week. CEO Jensen Huang is expected to map out the future: Blackwell Ultra, Rubin GPUs, an Arm-based CPU called Vera, and what's coming in 2027. Innovation's not slowingjust investor appetite. If Nvidia outlines a clear product pipeline and reaffirms long-term AI tailwinds, this selloff could look like a rare buying window in hindsight. This article first appeared on GuruFocus.
Yahoo
05-05-2025
- Business
- Yahoo
Wall Street Just Punished Nvidia--Here's Why That Could Be a Huge Mistake
Nvidia (NASDAQ:NVDA) just posted its worst start to the year since 2022, falling 15.3% year-to-datedespite everything pointing to surging AI demand. The pullback has little to do with fundamentals and everything to do with fear. With Trump floating new tariffs and refusing to rule out a recession, investors are jittery. But here's the thing: Nvidia's AI engine hasn't slowed one bit. Warning! GuruFocus has detected 3 Warning Signs with NVDA. Just look at the data. Taiwan Semiconductor (NYSE:TSM)Nvidia's main AI chip partnerreported a 43% jump in February sales. Foxconn, meanwhile, rolled out its FoxBrain AI platform with help from Nvidia's local supercomputing team. The growth levers are still turning. Melius Research's Ben Reitzes thinks so too. He's still calling NVDA a Buy, even as he trimmed his target to $170 from $195, citing short-term regulatory fog. At just 24.2x forward earnings (well below its 5-year average of 40x), the stock isn't priced like a company defining the next decade of computing. All eyes now turn to Nvidia's GPU Technology Conference next week. CEO Jensen Huang is expected to map out the future: Blackwell Ultra, Rubin GPUs, an Arm-based CPU called Vera, and what's coming in 2027. Innovation's not slowingjust investor appetite. If Nvidia outlines a clear product pipeline and reaffirms long-term AI tailwinds, this selloff could look like a rare buying window in hindsight. This article first appeared on GuruFocus.
Globe and Mail
09-04-2025
- Business
- Globe and Mail
Is Nvidia's Artificial Intelligence (AI) Business Recession-Resistant?
Nvidia (NASDAQ: NVDA) held its GPU Technology Conference (GTC) 2025 last month in San Jose, California. The artificial intelligence (AI) chip leader's annual happening is widely considered the world's leading AI event. I watched CEO Jensen Huang's two-hour keynote address in real time, caught a couple of his interviews, and viewed several panel discussions about AI and humanoid robots. Great information was shared during all these events, particularly Huang's keynote. It was chock-full of promising new product launches and partnerships, reinforcing my bullish view of Nvidia stock as a long-term investment. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » But there was one incredibly bullish thing he said during GTC week that most investors probably aren't aware of. It wasn't uttered during his keynote or an interview, but at the GTC Financial Analyst Q&A on March 19. Is Nvidia's AI business better than "just" recession-resistant? A Wall Street analyst asked this question at the Q&A event: "If there's a recession, what does that do to your business? To AI demand?" Huang's answer: "If there's a recession, I think that the companies that are working on AI are going to shift even more investment toward AI because it's the fastest growing [area/space]. Every CEO will know to shift toward what is growing." I think a reasonable interpretation of his answer is that he's suggesting a recession should increase, or at least not decrease, demand for the company's AI -enabling products. Those products, collectively, garnered at least 87% of the company's total revenue in its most recent quarter, which ended in late January. (The data center segment's products are essentially all AI-enabling, and this segment took in about 87% of the company's revenue in the most recent quarter.) Huang's answer might seem counterintuitive, but it makes sense upon reflection. CEOs, especially in certain industries, realize that AI investments are now so critical that they are a necessity. Innovations in AI are occuring so rapidly that companies that cut back on AI investments even for a relatively brief time will likely fall behind their competitors in AI capabilities. This could lead to an existential crisis from which they might not ever recover. Let's say that Apple decided to cut back on its AI investments during the next economic downturn or full-fledged recession. It could risk potentially permanently losing some of its iPhone customers to competitors, namely makers of cellphones that use Alphabet 's Android operating system. That would be a risky move, since the iPhone is its bread-and-butter product. As Palantir CEO Alex Karp bluntly put it in the AI-powered data analytics company's third-quarter 2024 earnings release, "The world will be divided between AI haves and have-nots." Indeed, it seems probable that the AI haves, which could be companies or countries, will be winners, and the AI have-nots will be losers. Nvidia is built to weather tough times Data by YCharts. Data as of each company's most recently reported quarter. Free cash flow numbers are for the trailing-12-month period. What if Huang's statement proves inaccurate and demand for AI-enabling products and services -- including Nvidia's -- decreases during the next economic downturn or recession? Investors should fear not, as Nvidia's balance sheet is hardy. The company is in a better position than most of its peers and competitors to weather a downturn in demand leading to lower revenue, earnings, and cash flows. As the chart shows, Nvidia's cash position and long-term debt are roughly equal at about $8.5 billion to $8.6 billion. Chipmaker Advanced Micro Devices (AMD) has more cash than long-term debt, so it's also in good shape in this respect. But chipmakers Broadcom and Intel have much more long-term debt than they have cash, so they're using a lot of cash to service their debt. This is an OK situation for Broadcom because it has strong cash flows, at least currently, but Intel is bleeding cash. Over the last year, Intel's free cash flow (FCF) was negative-$15.7 billion, almost double its cash on hand. Nvidia is an FCF machine. Over the past year, it churned out $60.9 billion in FCF. It could easily use its cash flow to pay down, or even fully pay off, its long-term debt. But it makes sense that it doesn't do so. The company's big cash position coupled with its massive FCF provides it with many options for investing in long-term growth initiatives. Should you invest $1,000 in Nvidia right now? Before you buy stock in Nvidia, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $578,035!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of April 5, 2025 Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Beth McKenna has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Intel, Nvidia, and Palantir Technologies. The Motley Fool recommends Broadcom and recommends the following options: short May 2025 $30 calls on Intel. The Motley Fool has a disclosure policy.
Yahoo
09-04-2025
- Business
- Yahoo
Is Nvidia's Artificial Intelligence (AI) Business Recession-Resistant?
Nvidia (NASDAQ: NVDA) held its GPU Technology Conference (GTC) 2025 last month in San Jose, California. The artificial intelligence (AI) chip leader's annual happening is widely considered the world's leading AI event. I watched CEO Jensen Huang's two-hour keynote address in real time, caught a couple of his interviews, and viewed several panel discussions about AI and humanoid robots. Great information was shared during all these events, particularly Huang's keynote. It was chock-full of promising new product launches and partnerships, reinforcing my bullish view of Nvidia stock as a long-term investment. But there was one incredibly bullish thing he said during GTC week that most investors probably aren't aware of. It wasn't uttered during his keynote or an interview, but at the GTC Financial Analyst Q&A on March 19. A Wall Street analyst asked this question at the Q&A event: "If there's a recession, what does that do to your business? To AI demand?" Huang's answer: "If there's a recession, I think that the companies that are working on AI are going to shift even more investment toward AI because it's the fastest growing [area/space]. Every CEO will know to shift toward what is growing." I think a reasonable interpretation of his answer is that he's suggesting a recession should increase, or at least not decrease, demand for the company's AI-enabling products. Those products, collectively, garnered at least 87% of the company's total revenue in its most recent quarter, which ended in late January. (The data center segment's products are essentially all AI-enabling, and this segment took in about 87% of the company's revenue in the most recent quarter.) Huang's answer might seem counterintuitive, but it makes sense upon reflection. CEOs, especially in certain industries, realize that AI investments are now so critical that they are a necessity. Innovations in AI are occuring so rapidly that companies that cut back on AI investments even for a relatively brief time will likely fall behind their competitors in AI capabilities. This could lead to an existential crisis from which they might not ever recover. Let's say that Apple decided to cut back on its AI investments during the next economic downturn or full-fledged recession. It could risk potentially permanently losing some of its iPhone customers to competitors, namely makers of cellphones that use Alphabet's Android operating system. That would be a risky move, since the iPhone is its bread-and-butter product. As Palantir CEO Alex Karp bluntly put it in the AI-powered data analytics company's third-quarter 2024 earnings release, "The world will be divided between AI haves and have-nots." Indeed, it seems probable that the AI haves, which could be companies or countries, will be winners, and the AI have-nots will be losers. What if Huang's statement proves inaccurate and demand for AI-enabling products and services -- including Nvidia's -- decreases during the next economic downturn or recession? Investors should fear not, as Nvidia's balance sheet is hardy. The company is in a better position than most of its peers and competitors to weather a downturn in demand leading to lower revenue, earnings, and cash flows. As the chart shows, Nvidia's cash position and long-term debt are roughly equal at about $8.5 billion to $8.6 billion. Chipmaker Advanced Micro Devices (AMD) has more cash than long-term debt, so it's also in good shape in this respect. But chipmakers Broadcom and Intel have much more long-term debt than they have cash, so they're using a lot of cash to service their debt. This is an OK situation for Broadcom because it has strong cash flows, at least currently, but Intel is bleeding cash. Over the last year, Intel's free cash flow (FCF) was negative-$15.7 billion, almost double its cash on hand. Nvidia is an FCF machine. Over the past year, it churned out $60.9 billion in FCF. It could easily use its cash flow to pay down, or even fully pay off, its long-term debt. But it makes sense that it doesn't do so. The company's big cash position coupled with its massive FCF provides it with many options for investing in long-term growth initiatives. Before you buy stock in Nvidia, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $461,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $578,035!* Now, it's worth noting Stock Advisor's total average return is 730% — a market-crushing outperformance compared to 147% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 5, 2025 Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Beth McKenna has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Intel, Nvidia, and Palantir Technologies. The Motley Fool recommends Broadcom and recommends the following options: short May 2025 $30 calls on Intel. The Motley Fool has a disclosure policy. Is Nvidia's Artificial Intelligence (AI) Business Recession-Resistant? was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
04-04-2025
- Business
- Yahoo
Jensen Huang Recently Delivered Incredible News for Nvidia Investors
Nvidia (NASDAQ: NVDA) supplies some of the world's most advanced graphics processing units (GPUs) for data centers -- hardware that developers use to power and train artificial intelligence (AI) software. Demand for its chips far exceeds what it can currently supply, which helps explain how the company has added over $2.3 trillion to its market capitalization since the start of 2023. At Nvidia's annual GPU Technology Conference (GTC) last month, CEO Jensen Huang laid out some incredible catalysts that could accelerate the company's already rapid growth. With its stock currently trading down 27% from its record high amid the sharp sell-off in the broader market, this could be a significant buying opportunity. Large language models (LLMs) sit at the foundation of every AI application. These models are trained on mountains of data, and the more data an LLM can access, the "smarter" the resulting tool will be. However, training them requires massive amounts of computing power -- particularly parallel processing power -- which is why there is so much demand for Nvidia's data center GPUs. Up until recently, LLMs delivered "one-shot" responses, meaning a chatbot would rapidly generate a single output for every prompt input by the user. While this method was fast and effective, it failed to weed out inaccuracies, which detracted from their value and the user experience. Now, top developers like OpenAI, Anthropic, and DeepSeek are focusing on an entirely different approach called test-time scaling, or "reasoning." Rather than simply ingesting endless amounts of data, these models spend more time "thinking" before rendering responses to inputs. In other words, they make better use of the data they already have, and are more apt to clear up any inaccuracies behind the scenes before releasing the final output. This approach has been wildly successful, producing some of the most advanced AI models to date, such as OpenAI's GPT-4o series, DeepSeek's R1, Anthropic's Claude 3.7 Sonnet, and Alphabet's Gemini 2.5 Pro. However, reasoning models require significantly more computing power. Huang says each response consumes 10 times more tokens (words, punctuation, and symbols) because of how much "thinking" goes on in the background, and as a result, the models are also much slower to render a final output. Huang says GPUs will need to be 10 times faster to offset this, and he estimates that developers will soon need a staggering 100 times more computing power to deploy reasoning models with a satisfactory user experience. Nvidia's new Blackwell GPU architecture is a step in that direction. In some configurations, a Blackwell GB200 GPU can perform AI inference 30 times faster than the company's previous generation of chips, which were based on its Hopper architecture. Plus, last month, Nvidia revealed its new Blackwell Ultra architecture, which will be capable of delivering 50 times more performance than Hopper because it's specifically designed for reasoning models. The continuing shift toward reasoning models could be a significant tailwind for Nvidia's GPU sales. At GTC last month, Huang said the top four providers of cloud infrastructure services (and thus, the world's largest operators of data centers) have ordered a whopping 3.6 million Blackwell GPUs already, which is almost triple the number of Hopper chips they purchased last year. Those four cloud providers are Amazon Web Services, Microsoft Azure, Google Cloud, and Oracle Cloud Infrastructure. That list doesn't include other big spenders that are developing AI for their own purposes, like Meta Platforms, Tesla, and OpenAI, so the total number of Blackwell orders is almost certainly much higher. This could just be the beginning: Huang predicts AI infrastructure spending will top $1 trillion annually by 2028, and much of that will go toward AI accelerator chips such as those that Nvidia provides. Nvidia's data center business generated $115.2 billion in revenue during its fiscal 2025 (which ended Jan. 26). That was up 142% compared to the prior year. If Huang's forecast is right, the company's sales likely have substantial room to grow. The 27% drop in Nvidia stock from its recent all-time high has created an opportunity for investors to buy it at an attractive valuation relative to its history. It currently trades at a price-to-earnings (P/E) ratio of 36.9. That's its cheapest level in three years, and also a 38% discount to its 10-year average P/E ratio of 59.5. Moreover, Wall Street's consensus estimates (as provided by Yahoo! Finance) suggest that Nvidia's earnings per share (EPS) for fiscal 2026 will come in at $4.53. That gives the stock a forward P/E ratio of just 23.9. In other words, Nvidia would have to soar by 149% by the end of this fiscal year just to trade in line with its 10-year average P/E ratio of 59.5 (assuming Wall Street's EPS estimate proves to be accurate). With that said, I think investors should look beyond the next 12 months because, if Huang is correct, Nvidia shareholders' best returns might be realized over the next three to five years instead. Before you buy stock in Nvidia, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $676,774!* Now, it's worth noting Stock Advisor's total average return is 824% — a market-crushing outperformance compared to 164% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 1, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Anthony Di Pizio has the following options: long April 2025 $200 puts on Tesla and long April 2025 $210 puts on Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, Oracle, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. Jensen Huang Recently Delivered Incredible News for Nvidia Investors was originally published by The Motley Fool
