Welcome back to the drills of Carlson show this episode.
We're going to be looking at a very popular fast-growing
company. That's dominated the market over
the past five years. It's Nvidia.
And this company is in every one of these growing categories,
like gaming, artificial intelligence data, centers AI on
5G, autonomous systems and the Omniverse.
It's in all of them because they are a massive GPU maker.
That's Graphics, that's visuals. That's things that we look at in
our computer every single day. I Have an Nvidia graphics card
in this computer that I'm using to record all of this right now.
So this company is on fire, it's deleting GPU maker and it's in a
secular growth Trend but this company is also down 48 percent
year-to-date giving us the opportunity to maybe buy this
company for cheaper. In fact, at one point last year
it was trading at 333 dollars, now it's at 157.
So in today's episode I'm going to be doing a full analysis on
Nvidia. I'll be telling you the pros and
cons of the company and if I think it's a bye For today's
price. Now, we also have some other
news to get into as well. I may have been incorrect on
Amazon. I said in my previous episode
that I thought Prime day would be sort of a flop, I didn't
think it would be that big this year and it was their biggest
year ever. They sold 300 million items on
Prime day. We also have news at Hulu is now
growing faster than Disney plus which is just wild.
Disney owns both Disney plus, obviously, and Hulu.
And now, Hulu is growing faster, but there's some other important
pieces of information. Formation in this article here,
relating to Disney that I think is very important if your
Netflix investors. So we'll be looking at that as
well. So we have a full analysis of
Nvidia to get into. We have some news on Amazon and
Hulu to get into. Let's go ahead and just start
right off. This is the story fund.
Now just to give an update on the performance over time,
obviously since the beginning of the year this portfolio hasn't
done well, most attack us sold off but over the past month, we
are up almost eight percent that's six thousand nine hundred
dollars. So we are Making back a lot of
the Lost gains over time. This is beat the S&P 500 over
the past 30 days. And if we look at this
benchmarked against the S&P 500, I updated this as of just a few
minutes before recording, this is what it looks like.
The blue line is my portfolio. The red line is the S&P 500.
So, right now, the S&P 500 is down, -1.1 9% my portfolios down
25%, which is pretty bad. We have a long ways to make up,
but I'm going to be tracking this.
Until the end of 2025 right now we're going through a big
sell-off but things could turn around very quickly.
I could see these companies really taking off in the future
so I haven't given up hope I still believe when we look at
this, at the end of 20 25, I still believe there's more than
a 50% chance that I'll outperformed the S&P 500.
Now a lot of people disagree but we'll see what happens with that
either way. I'll be tracking it showing it
transparently every single week week by week.
So if you want to follow along, just subscribe to the channel
and hit the thumbs up icon. As it helps recommend it to
other people in the YouTube algorithm.
Now, before we jump specifically into Nvidia and doing analysis
on this, seeing, if it's a good time to add it to the story
fund, let's go ahead and just give a quick update on a couple,
a couple companies in my portfolio Amazon and Netflix.
First of all, I was incorrect. We have this article here and it
just proved me wrong. Which in this case I was, I was
happy to be proven wrong, Amazon sold more than 300 million items
on Prime day, Prime members worldwide.
Wide purchase more than 100,000 items per minute, 100,000 items
per minute around the clock. That is incredible to think
about last year, they sold 250 million items this year, they
sold 300 million. So at the end of the day, you
can look at different things online and try to get hints of
what's going on. But you don't know for sure
Amazon was sending people home and certain fulfillment centers,
but that's likely because they even overbuilt with this excess
demand, they still overbuilt to some extent.
They have a lot of employees there that they probably don't
need. They don't want to fire everyone
because they're eventually believing that they're going to
have to hire them back and so they'd rather just keep them.
So Amazon is probably overpaying for employees and fulfillment
centers right now. But their ideas that they won't
be in a year or so, when demand catches up to what their current
build out is and I'm happy to be proven incorrect on this Prime
Day news. Now the other news of my
portfolio is regarding Netflix, we have news here from Hulu.
Now the only Thing I wanted to highlight and how I think this
will tie into Netflix, is I've been saying for some time that a
lot of these streaming services are simply giving out, huge
discounts in order to learn early subscribers in and they're
going to give price increases over time.
And the reason that this is important to Netflix is right
now. Everybody considers Netflix to
have a bad value proposition Netflix charges anywhere from
like ten dollars to 18 dollars, depending on the tear you have
and people are seeing. Wow. $10 a month, twelve dollars
a month compared to this other streaming service.
That's only five dollars a month or $9 a month.
Netflix is a ripoff. The reason why is all those
other streaming services for the most part aren't profitable.
They're not making any money, they're being subsidized and
eventually they will raise prices and as they raise prices
the value proposition for Netflix will increase
comparatively speaking and you can see this happening right
here as part of this news, they said on Friday.
Disney said that beginning in late.
Late, August, the monthly subscription cost for ESPN would
rise from 699 2999. So $7 to $10 a month.
They just raised it three bucks a month or from 6999 annually to
9999 annually. All of these companies are going
to have to raise their pricing over time.
Making the value proposition. Look better for Netflix.
So that's just a quick portfolio update.
I haven't made any changes as of now, I've just been doing
research looking at my company's.
Seeing if they're going in the right direction, we have a lot
of earnings. Reports coming up between Amazon
and Netflix. Netflix is, is tomorrow, as I
said, I think it's likely to be a train wreck.
I don't know for sure. I can't see the future.
I don't have any inside information or anything like
that, but they're expected to lose 2 million subscribers.
And Netflix also has third-party analysis.
They have people that do analysis on this tracking
different metrics that say, they might lose 2.8 million which
would be a complete disaster. So tune in tomorrow if you want
to potentially see a disaster. I'll do a reaction video on it
and give you my take on it, but I'm not expecting anything.
Great from this quarter, I'm holding the company because of
the next five years, how I think things will unravel over a much
longer time line, but if you're invested in this company in the
short-term, just expect it to be volatile.
So there's an update on the story fund and a couple new
stories. And I'll have another update out
this week with my reaction. And Netflix is earnings.
Now, let's go ahead and transition to Nvidia.
Now, why are we even talking about Nvidia?
Well obviously, it's because Nancy, You Pelosi's husband who
never talks to Nancy Pelosi about stocks, I'm sure they
never discussed the matter. He happened to just buy millions
of dollars of Nvidia stock, right before Congress votes.
On a chip, Bill house Speaker. Nancy Pelosi is, husband,
purchased up to 5 million in stock options on the
Semiconductor Company. Nvidia ahead of this week's
vote, on the chips, act that would see billions of dollars in
subsidies pour it into the chip manufacturing industry.
So, Nancy Pelosi has A snack of not only you know she's in
Congress doing all that type of stuff that she happens to be
very good at timing purchases into companies before Congress
acts to do things that are very beneficial to those companies
Industries. So this is just one more case
where Nancy Pelosi shows off her incredible timing.
And with that said, let's go ahead and take a look at this
stock. Nvidia is a company that a lot
of people think they say Joseph, it should be in the story fund,
it's one of these fast growing tech companies.
It fits in with the theme of the story.
One that is true. Let me go through a couple
considerations. I think big considerations at
least when I do analysis on Nvidia.
The first thing that I look at is what type of company it is
and what sector and the type of things are going into nvidia's
big into gaming, artificial intelligence data, centers AI on
5G, autonomous systems and the Omniverse.
Now, when most investors, especially retail investors that
are new to the stock market. They look at companies and they
think, wow, there In everything, that's the future.
This is where I want my money to go.
This is what's going to work really hard for me, there in all
the exciting places, gaming, AI data, centers 5G, autonomous
systems, the Omniverse can any company get better than this
when I look at this, it's a red flag to me.
This is actually not a great thing because boring is good and
investing the more boring. A company.
Probably the better results you're going to have over a
given time, line, the type of companies that get all the All
the attention from investors on the forums.
And on line on TV are the type of companies that typically have
one common side effect. The side effect is a very poor
one. If you're wanting good
investment Returns, the side effect being that they're
typically overvalued. Now I'm not saying that Nvidia
is overvalued right now, we'll get into the valuation later but
being in these industries and being in a very hot sector which
is GPU makers and all these different things that they're
going into gives me a suspicion. That I really need to pay
attention to valuation on this company that I should very much
do good valuation analysis because I think there's a high
likelihood that a company that's in all of these industries.
Maybe bid up a little bit more than other companies.
Peter Lynch said, if I could avoid a single stock, it would
be the hottest stock in the hottest industry.
The one that gets the most favorable publicity, the one
that every investor hairs about in the carpool or the commuter
train and succumbing to social pressure often buys he said if
you could avoid one company it would be that.
One. And you could replace the
carpool or the commuter train with YouTube videos.
Tick, Tock, Twitter, that type of thing.
Social media, a lot of people talk about exciting companies
with exciting Futures and they have exciting projects and that
helps investors get lured into buying them at ever increasing
prices. So keep that in mind.
That's the very first thing that I look at with Nvidia.
It's in a very hot sector and all these different categories.
I think there's a good chance, it might be a bit up to high
valuation, having said that A lot of these companies that were
exciting companies have been sold off over the past year and
it looks like Nvidia wasn't Spirit as well.
This company had too much enthusiasm and you can see that
getting taken out of the stock right now, all the excitement
and enthusiasm is leaving this company, it's down, 48 percent,
year-to-date down by almost half, we have in the past year
and Via trading all the way up to $333 per share.
Now, it's trading at 168. So it's trading down, maybe 70%.
Over the past year. Now we're going to go ahead and
jump into all the fundamentals and evaluation of this company.
But I want to explore further what they're going into and what
their game plan actually is a little bit of qualitative
research. I want to go ahead and play,
just a couple clips from a recent interview.
This is last year with the CEO of Nvidia.
And he's talking about some of the opportunities here, how he
looks at the company, he's been the CEO for a long time and he's
directed this company in a very good direction.
So he's very ambitious. He wants to conquer very A huge
things with Nvidia and this is him highlighting.
A lot of his vision, we are going to be successful deploying
Global fleets of autonomous vehicles.
We're going to, of course, develop these vehicles in a
Digital Universe. We call Omniverse.
Of course when a teach these robotic cars, how to drive and
virtual cities, we're going to deploy it through a network of
Partners, our partner. Mercedes-Benz as you know,
builds millions of cars on the market and, and together, it's a
trillion dollar market. We Create.
We could deploy the fleet of cars, a safe efficient to
operate. And and it starts with some
basic invention. This is the autonomous driving
vehicle Network, Nvidia believes that their position to be one of
the major players making the, the gpus, the the tech that
actually does all of these calculations that can do all the
visualizations of these autonomous networks.
So, that's one big category. They want to grow into, they
want to make all the software and the hardware for and they
want to sell it to different companies, like Mercedes BMW,
whatever they can. And so this is moving outside of
just having a desktop computer or a gaming computer.
They want to grow into vehicles and have every vehicle be a
computer. Now, if his vision here came to
fruition, this would be like a trillion dollar market.
Be a massive market for NVIDIA. This next clip is a CO talking
about the Omniverse. We waste too much materials
because we can't simulate the logistics and the manufacturing
Logistics. So we wasted Whole bunch of
things to over compensate for the fact that we don't simulate.
We want to simulate all factories.
In many verses. In this Omniverse, we want to
simulate plants in Omniverse want to stimulate the world's
power grids in the Omniverse. So this would actually be
something that saves companies a lot of money if they're able to
simulate things that they have to do physically right now,
that's obviously another big growth path for them.
Now, before we move on to the next part of this analysis, I
have to give a quick shout-out for today's sponsor of today's.
Video which is FTX u.s. they're known as a large crypto currency
exchange that has over a million users using it and it's true.
You can buy and sell cryptocurrency.
I don't own any crypto currency. I don't, I don't understand it.
I don't do analysis on it. It doesn't generate cash flows.
And I like companies like Nvidia that can generate cash flow for
me. Now, FTX wants people to know
that even though they are known for doing cryptocurrencies,
they're moving across different verticals from FTS and into
stocks, this is something they're building out rapidly.
Working very hard on their stock platform.
It's in beta as of right now, but it should be opened up to a
wider. Wider audiences.
As the week's go on over the next couple of weeks, a lot more
of you will be gaining access. I own some Amazon.
You can buy fractional shares, you can buy and sell any time
the markets open. There's no trading fees.
No setup fees and a brokerage is a member of finra and Si P c--
insured and you can sign up now for free, using the link in the
pin, comment below. So try it out.
Let me know what you think. If you sign up users For a code
Carlson. My last name that gives you $10
back. Instant credit upon your first
100 dollar trade. Let me know what you think.
So far, the feedback has been positive.
So the CEO of Nvidia is a Visionary.
He has a vision of the future of his company, how his products
will fit into the future, and I think he's genuine with it.
I really think that he's a good CEO.
He's been the CEO for a very long time, and I think he will
direct this company better than most other CEOs, even the
competitors, like, AMD and Intel, and my opinion, nvidia's
in the right track. Now, Having said that, the the
future is uncertain. We don't really know how this is
going to play out, but we can look at some things of the past.
And one thing I always like to do is look at the past
performance of a company, look at the volatility of it, see how
it compared against the S&P 500 and the QQQ, and we can look at
that with Nvidia since 2017. So roughly five years ago,
Nvidia has out performed both, indexes albeit with much greater
volatility. Look at the volatility of this
company so it has outperformed And but if you bought sense 2021
at any time, you likely probably are in the red at this point to
get the good returns, you had to have purchased at 2019 2020 and
held on and you can see that in late 2021, it went up to an
all-time high with a lot of other tech companies.
Now it's old down dramatically this year, so this is what the
performance looks like, over the past five years and this is what
the performance looks like, since 2010.
So we're looking at a bigger time Horizon.
Now, again, since 2016 Nvidia took off above Indices and now
it's just crushing the indices since then except with much
greater volatility and that's something that I really want to
highlight because a lot of people think they believe they
can withstand High volatility but at the end of the day, it's
very difficult to withstand like this big dip in 2018, that would
have been difficult to hold the company through the big dip in
2021. That's discouraging to a lot of
investors. Now, another thing that's
difficult to see what this chart, but I can hit the
logarithmic scale here is since 2010 to 2016 18 and video
actually dramatically underperformed.
The indices. So half of this time Horizon,
you would have been holding a stock that was underperforming
the indices and then suddenly it started to outperform with
greater volatility overall. Nvidia is a highly volatile
company. We can even zoom out to a bigger
timeline to see more volatility. Here's what the performance
looks like since 2002. So, going back, 20 years, you
can't really see anything beyond 2016.
Unless we hit logarithmic hair, this is what it looks.
Like though since 2002, it took that huge dip way below the
indices then it climbed back above it.
So it had a couple good years of performance, then it dipped
down, way more, then it climbed back almost close to it, but it
was still under performing until 2016 and just recently it
started to outperform. This is why ends up on
everybody's radar right now is because it's currently
outperforming even with this huge sell-off.
Nvidia is outperforming, but keep in mind, if you had
invested in this company since And to it took you all the way
to 2016 until you started to get any Alpha by owning this stock.
So, it is a very volatile, very inconsistent performing company.
Now, why is this company so volatile?
Well, the earnings are volatile in the company.
Let's go ahead and look at it using qualtrics insights, this
is a website I developed as part of the patreon membership.
So if you join the patreon, you gain access to this website and
there is a free trial. So if you haven't tried it out,
go ahead. Join the patron, you will not
get charged till the end of the And I think you'll love it.
A lot of people are using it every day.
We have thousands of users, let me go ahead and just highlight
on this EPS chart, the cyclic ality and volatility of nvidia's
earnings we have right here earnings going up from 1999 to
2001. Then earnings dropping from 2002
to 2003, then earnings going up from 2004 to 2007, then them
dropping going up, dropping going up, zigging up and down.
And then the earnings climbed, like crazy since 2015.
That's why the stock price took off since 2016.
Now, it drop back down, 2018, there's a huge drop in the stock
price, then it dropped again. And now, it's gone.
Back up quite a bit and it's dropping again.
When you look at this chart here, is this a company that has
consistently growing earnings? The answer is obviously no, it
is a cyclical company. Many people tell me the cyclic.
A ladies over with Nvidia. Transition into a new phase and
these chip makers are no longer cyclical.
I don't buy it yet. You have to prove me wrong on
this. I have to see a company that's
very steady growing earnings over long period of time to
prove to me that's not cyclical. This earnings shows me a picture
of a highly cyclical, highly volatile company.
It's okay to own those but in my opinion it is a negative.
Because if you time it by buying anywhere at the top and then the
stock price goes down, you have to wait until the other.
Cycle takes place, and it goes back up, and that can be very
difficult to do. A lot of investors, even in a
good stock, the end up buying at the wrong time, and they end up
holding it until it goes down, they get discouraged and then
they sell out. So having this be a highly
cyclical company. That doesn't have consistent
earnings is something to keep in mind, we can take a look at a
couple companies that aren't cyclical to see the benefits of
them. Here's Costco similar EPS chart.
Notice how the earnings just go like this, Generally speaking,
it might fluctuate slightly, there's a couple quarters where
it goes down, but generally speaking, the earnings grow on a
consistent basis. There's no cyclic ality to it.
Come depression, recession growth period, doesn't matter,
Costco's earnings will keep growing.
This is non cyclical. That is a superior trait of a
company, something that investors do value and even in
the tech category, there are a lot of companies that are less
cyclical. I would argue than Nvidia,
Microsoft's earnings aren't perfectly as And as Costco's,
they have some times where they've gone relatively flat,
but overall it's far less cyclical than nvidias nvidia's.
Earnings are far more volatile, more cyclical, and that in my
opinion, is a - it's something investor should be cautious.
About most investors have an inflated view of their ability
to hold onto companies during these dramatic stock price Rises
and falls. And if you're investing in a
company that has the earnings rise and fall, the stock price
will follow. So, just keep that in mind, if
you're looking at investing in this company, you're likely
going to be buying Company that has a dramatic rise in price and
a dramatic fall in price continually over the next 10
years that can be difficult to deal with.
Now in the story fund, I have a lot of volatile companies and
cyclical companies. So this isn't a disqualifier.
I'm fine. Holding companies like Nvidia as
long as I believe. They have a bright future and
they're good valuation. Let's go ahead and look at some
of the fundamentals here. I want to take a look at the
revenue of this company. It's been growing at an insane
Pace 46 percent year over year was our last quarter.
Look at this quarterly Revenue, With this is something abnormal
year-over-year. Look at this girl's back in.
2019, it was two point, two billion dollars in Revenue.
Last quarter they did 8.29 from 2.2 on one quarter to eight
point two nine with no slowdown in sight.
The revenues just taken off like a rocket over the past five
years and on a note of that insane Revenue growth.
Their revenue actually is Diversified pretty evenly into
different categories. For example, we have data center
here, this is from their investors, Sanitation, their
revenues growing 83 percent year over year from their data center
Revenue. That's incredibly fast growth,
15% quarter to quarter, then if we look at this, the revenue
from their data center is 3.7 billion.
So three billion seven hundred fifty million and then we have
the gaming category which is growing 31 percent
year-over-year, very fast growth, but slower than the data
centers. But the revenue for gaming is
3.6 billion. So we have data centers with 3.7
gaming with 3.6. That means that data centers and
gaming are, right? At the same level of Revenue,
the data centers, probably going to outpace the gaining for the
foreseeable future, but I like the fact that the revenue split
evenly between these two categories.
Just means the revenue of the company is more Diversified now,
professional visualization, actually decreased slightly last
quarter, probably because it took off so quickly.
I don't think this is going to go down continually.
They're forecasting it to go up over time, but this is also 622
million. So we have three different
categories here. We have data centers gaming, and
professional visualization that their revenue is Diversified,
and then they have other categories beyond that, meaning
that this Revenue isn't just one product.
It's not a one-hit. Wonder product going off.
That might go away. It's split between a couple of
different applications. Now as the revenue is growing,
we do want to see similar growth with the ibadah.
Preferably this is goody but a growth but not perfectly as
consistent as a revenue. So they have variable expenses
and loans and Investments. They have to make that affect
this eBay. Ada.
Now, the most important metric, out of all the earning proxies
we can look at between the EPS, the net income Ibaka and the
cash flow. My favorite one is the free cash
flow. Look at the free cash flow.
This company over time over the past 20 years, 20 or so years.
The free cash flow went from being a mixture of negative and
positive swinging back and forth to now only positive every
single quarter of every single year they do post positive free
cash flow. So if you're investing in
Nvidia. This isn't some unprofitable
company that can't walk on their own two feet.
This is a profitable company. Posting free cash flows every
quarter that generally over time are growing.
This is the exact Trend. I want to see with every company
when I break this down, on a free cash flow per share basis,
it's still growing generally speaking but not quite as fast.
Meaning, they're probably issuing some shares.
So the free cash flow of the company is growing.
The free cash flow per share is growing, those are both good
things that you want to see. But we want to look at the
valuation. How much is This company
generating and free cash flow every year compared to its
current share price, one metric that I've been looking at for
every company on investing in is the free cash flow yield of the
company, you can think of it like the dividend yield.
But instead of dividends, it's the yield of the free cash flow
of the company. You get that by looking at the
past 12 months of free cash flow, the company's generated.
So the trailing 12 months, then you divide that by the share
price, then you have the yield the free cash flow.
Yield of Nvidia right now. Is 2.1 percent.
Two point one, that is very low. That means that the company with
the current share price does not generate a lot of free cash flow
based on one share. It's very small amount and even
though the free cash flow is growing at a fast pace, it would
basically have to double overnight to get to the same
level evaluation as many other companies.
For example, while nvidia's at a free cash flow yield of 2.1,
Microsoft's already had a yield of 3.3 apples at a free cash
flow. Yield of 4.2 Texas Roadhouse.
The company, my dividend portfolio is that a free cash?
Will yield a 4.7 getting up to 5% metas at a free cash flow
yield of eight percent. So Nvidia is on the very low
end, it does not generate a lot of free cash flow over the past
12 months compared to its current share price.
What that tells me as an investor is that some of my
concerns about this company, a very popular company and a lot
of popular Technologies with high expectations.
Has the share price bid up to a point.
We're investors have incredibly high expectations for NVIDIA,
their pricing in a lot of growth.
Lots of consistent explosive growth with this company to
continue growing Beyond how much it's already grown.
They want it to generate double the amount of free cash flow
just to get in the same category as a company like apple.
So when I look at this, this is kind of the second red flag of
this company. It's not only cyclical but even
during a time period what's done really well, it's generating a
Sent 2.1 percent free cash flow yield.
That is very low. So I'd have to be incredibly
bullish on the company, incredibly bought into the
future of it and I'd have to have a strong belief that the
free cash will be explosive over the next five years to be paying
this low of a current free cash flow yield for the company.
We look at the other metrics here.
The net income is growing over time, with the free cash flow,
the EPS obviously is growing over time.
The cash in deposition is incredibly good.
This is a cash-rich company. They have more cash.
And debt, 20 billion dollars in cash and they have eleven point
seven billion dollars in long-term debt nvidia's in a
very cash-rich position which is something I'd love to see with
my company's there is zero chance of this company going
bankrupt. If they have a bad cycle because
it's a cyclical company. If it go through a tough Market
time, they'll be able to survive it for multiple years.
They'll be able to survive and continue on the dividend is
really non-existent. At this point, I wouldn't even
consider Nvidia a dividend company.
It's just a symbolic dividend for pennies per quarter per
share, they haven't raised it since 2018, I don't even know
why they're still paying it. The dividend yield is point one
percent so you could call it a dividend company.
But in my opinion it's not their payout.
Ratios for point two, nine percent, the shares outstanding
have been going up over time, which means the company has been
diluting, the shareholders by issuing more shares, likely to
pay for stock-based. Compensation with all their
engineers and developers that a company like, this has to employ
now This isn't necessarily problematic but it's certainly
not something I'd like to see. I'd like at the very least a
company like Nvidia to use their free cash flows and buy back,
just enough shares to at least keep it flat.
So, they're not diluting their current shareholders, but there
are some companies that do this Salesforce is one of them.
Amazon is one of them generally speaking.
This is something I'd like to avoid.
Now, we can look at some of the expenses for this company.
What I like to look at with a company, like, Nvidia is a
research and development. This is not necessarily a bad
thing in my A opinion. This is what keeps the moat for
NVIDIA. So as they're spending more and
more on R&D every year, that should further increase their
mode from their competitors, like, Intel AMD different
companies that make any type of chips.
This is increasing their mode, this investment into research
and development. If this wasn't going up, if they
weren't spending more money on this, I actually think that
would be concerning. So overall, when I look over
Nvidia, I see an incredibly high quality company across the board
- this year's outstanding, they're Little bit of dilution
but they could end this at any time so it's not really a
problem. The rest of the fundamentals are
all moving in the right direction.
Growing revenues ibadah free cash flow per share data income,
the earnings per share their cash position is incredibly
good. The dividends not really
existent, but this isn't a dividend paying company.
They're not fooling anyone with that and the share price has
come down significantly over the past year.
So overall looking at this company and doing analysis on
it, here are my final thoughts on it.
The stock is popular there in growing.
Categories that are very exciting.
This is a double-edged sword. It's popular meaning that it's
likely overvalued, boring companies have better
valuations, but it is an exciting categories that
probably have more growth potential in the future than
your average company. So that's a double-edged sword.
You have to be careful about that.
I believe Nvidia has a wide moat.
They do have a lot of competition with AMD, with
Intel, with TSM with all these different chip makers.
But they've separated themselves to be the category leader.
They have a lot of talent. They pay them high salaries to
keep that talent, that girl, their research and development
budget every year and I think they're going to keep their moat
and their distance from their competitors.
For a long time in the future, Nvidia is cyclical.
This is something that some investors argue has come to an
end. It's no longer cyclical Joseph
because they're in so many different categories.
Chips are so common, gpus are so common that they're going to be
selling all the time. I have to have this be proven
wrong. I need to be proven wrong that
this companies no longer cyclical because all throughout
its life for the past. Past 20-plus years, this
company's earnings have gone up, and down, and up, and down, and
up and down. Highly volatile.
Giving investors a roller coaster ride without performance
and under performance. That is something that I don't
generally. Like in these companies, it
trades at a 29 PE, which is a very low price to earnings but
on a free cash flow basis which is the main metric I've been
using. It's still very expensive and
Vidya has a 2% 2.1 percent free, cash flow yield Microsoft is at
3.30 Apples at 4.2 Texas Roadhouse different companies
and different categories are in the range of five percent meta.
Is that a eight percent free cash flow yield.
So if my goal is, an investor is to buy the most free cash flow
in the future for the cheapest price.
Today, there's other considerations.
There's other companies, Microsoft is selling their
current free cash flow for cheaper and Microsoft has 85
percent of their revenue is reoccurring.
So, that's a company that's really not cyclical at this
point and that leaves the conundrum with Nvidia.
I just have a lot of other companies, I can invest in that
I still think are arguably on much cheaper valuation.
So overall, that's my look at Nvidia, I think it's a high
quality company with a great future great leadership.
I think it will outperform the majority of companies in the
stock market over the next 10 years.
I do have concerns about the valuation.
It's more fair now than it was a year ago, but there's still
other companies that I believe are trading at a bigger
discounts. So, as of right now, it'll sit
on the watch list. I'll be looking at a time to
enter into this. Any, but it's not going to be
today. So I hope you enjoyed this
little look and video. Let me know what you think and
I'll see you in the next video. Any, but it's not going to be
today. So I hope you enjoyed this
little look and video. Let me know what you think and
I'll see you in the next video.