Nvidia retreats from an all-time high: Here's what you should know
TLDRThe discussion revolves around the recent market performance of semiconductor stocks, particularly NVIDIA, which has seen significant growth despite some concerns about a potential pullback. The conversation touches on the impact of AI on the valuation of these companies, with NVIDIA and Broadcom being notable for their meaningful AI revenues. The panelists debate whether the market has overvalued these stocks based on their AI potential, considering the fundamentals and the need for these companies to deliver on expectations. They also mention the strategy of buying semiconductor stocks during market dips, which has been a common practice, and express hope for improved fundamentals and stock performance in the future.
Takeaways
- 📈 The semiconductor market, particularly NVIDIA, has experienced significant growth, with NVIDIA up 80% year to date.
- 📊 NVIDIA's core business performance was not strong, yet the company's stock price has been soaring, possibly due to profit-taking.
- 🤔 There is a debate on whether the market has overvalued companies like NVIDIA due to their association with AI, despite AI not being a major part of their business.
- 🔍 Only a few companies, such as NVIDIA and Broadcom, have meaningful AI revenues that contribute significantly to their overall numbers.
- 🚀 Broadcom's AI business has grown strong enough to offset weaknesses in their core business, leading to an increase in their stock numbers.
- 📝 The stock market has largely ignored the core businesses of semiconductor companies and focused on their AI potential.
- 📊 The valuations of companies succeeding in the AI space are not considered crazy, with NVIDIA's stock not being expensive if they meet expectations.
- 📉 Despite high valuations, the stocks of semiconductor companies have not gone down, indicating continued investor interest.
- 🛍️ Investors have been buying semiconductor stocks on dips, a common strategy in the industry, even though the stocks did not significantly drop.
- 🔮 There is hope that in the second half of the next year, the fundamentals of the semiconductor industry will improve, leading to further stock growth.
Q & A
What is the main concern regarding the semiconductor market discussed in the transcript?
-The main concern is whether the soaring semiconductor stocks, particularly NVIDIA, are in danger of a significant pullback due to their high valuations and the potential for profit-taking.
How has NVIDIA's stock performed in the past year?
-NVIDIA's stock has performed exceptionally well, with an increase of 80% year to date and 70% year-over-year.
What was the panelist's reaction to NVIDIA's intraday move of $100 or almost 10%?
-The panelist joked that it might be due to someone getting too close to the sun, implying that the move might be overextended.
What is the significance of the $1000 price point for NVIDIA's stock?
-Reaching the $1000 price point is considered a milestone, and there might be profit-taking as investors react to this psychological threshold.
How did the panelist address the core business performance of Marvell?
-The panelist mentioned that Marvell's core business was not good, which is weighing on its stock performance.
What is the panelist's view on the AI market's impact on semiconductor stocks?
-The AI market has had a positive impact, giving an 'AI halo' to companies like NVIDIA, but the panelist questions whether this has been overdone for companies where AI is not a significant part of their business.
Which companies have meaningful AI revenues, according to the transcript?
-NVIDIA and Broadcom are mentioned as having meaningful AI revenues that significantly contribute to their overall numbers.
How did Broadcom's AI business perform in comparison to its core business?
-Broadcom's AI business was strong enough to offset a $2 million or $2.5 billion headwind from their core business, keeping their numbers up.
What is the panelist's opinion on the valuations of companies succeeding in the semiconductor market?
-The panelist believes that the valuations are not crazy for companies that are succeeding, and NVIDIA's stock is not expensive if they can deliver on expectations.
What is the panelist's outlook on the semiconductor stocks for the next year?
-The panelist hopes that the fundamentals will pick up in the second half of the next year, leading to an actual increase in stock prices rather than just buying the dips.
What does the panelist suggest about the typical behavior of investors in the semiconductor market?
-The panelist suggests that investors typically buy semiconductor stocks when there is 'blood in the streets,' but in this case, they have been buying the dips even though the stocks did not significantly go down.
Outlines
📈 Semiconductor Market Discussion
The paragraph discusses the performance of semiconductor companies, particularly NVIDIA, in the market. It highlights NVIDIA's significant intraday move and year-over-year growth, as well as the broader market's focus on AI and its impact on stock valuations. The conversation touches on the core businesses of companies like Marvell and Broadcom, the latter's strong AI revenue, and the market's reaction to their financial reports. The speakers also debate whether the current valuations are justified and when fundamentals might need to improve to support the stock prices.
🤔 Market Valuations and Fundamentals
This paragraph continues the discussion on market valuations, focusing on the success of companies like NVIDIA and Broadcom in the AI sector. It addresses the question of whether the market has overvalued these companies based on their AI narratives rather than their core businesses. The speakers consider the need for fundamentals to catch up with the stock gains and the possibility of a re-rating for these companies. They also mention AMD's impressive stock performance and the general market behavior of buying semiconductor stocks during downturns.
Mindmap
Keywords
💡Earnings
💡Bubble Trouble
💡Semis
💡Profit-Taking
💡AI Market
💡Core Business
💡Stock Valuation
💡Fundamentals
💡Multiples
💡AI Halo
💡Market Correction
Highlights
NVIDIA experienced a $100 intraday move, almost a 10% increase.
NVIDIA is up 80% year to date.
The core businesses for some companies like Marvell were not good, which might weigh on their stock performance.
There is speculation about profit-taking with NVIDIA approaching the $1000 mark.
The AI market is still strong and has had a monster year.
NVIDIA and Broadcom are the two names with meaningful AI revenues.
Broadcom offset weakness in their core business with a strong AI business.
AMD's stock has risen 130% since November 1st.
The valuations for companies succeeding in the AI space are not considered crazy.
NVIDIA's stock is not expensive if they can deliver on expectations.
Broadcom's stock is trading in the mid-20s, more expensive than its own history.
The semiconductor stocks have not gone down despite high multiples.
Investors have been buying the cuts in semiconductor stocks, a normal strategy.
There is hope that in the second half of the next year, the numbers will pick up and the stock will actually go up.
