The traders discuss Nvidia’s strong earnings, positive market signals, and strategic moves amid geopolitical tensions, highlighting its potential to surpass resistance levels despite valuation concerns. They advise cautious optimism, emphasizing the importance of monitoring data, geopolitical developments, and valuation metrics before making investment decisions.
The discussion begins with Microsoft regaining its position as the most valuable stock in the market, valued at nearly $3.5 trillion, a status it hasn’t held since January 24th. The traders are asked whether to buy or sell shares at this high point. The conversation then shifts to Nvidia, which recently reported strong earnings with excellent margins, causing its stock to initially dip from $141 to $134 before rebounding. Analysts are now optimistic, with some suggesting that Nvidia could surpass the $153 resistance level, especially given recent positive developments and analyst support.
The traders discuss Nvidia’s strategic moves, including the development of a new China-specific AI chip, which could influence its export restrictions and geopolitical considerations. There is mention of ongoing tensions between US and China regarding AI chip exports, with Nvidia caught in the middle of this complex landscape. The conversation highlights the uncertainty surrounding these geopolitical issues, with some participants expressing skepticism about predicting the outcome, while others note the importance of Nvidia’s recent progress and guidance.
The conversation also touches on the broader market sentiment and the potential for a stock digestion period, despite Nvidia’s impressive run since its lows. The traders emphasize the risks involved in buying at current levels, noting that stocks can be cut in half quickly if sentiment shifts. They stress the importance of closely monitoring data points and geopolitical developments, especially from Taiwan Semi, which supplies the majority of Nvidia’s high-end GPUs, as indicators of future performance.
Further, the traders acknowledge Nvidia’s recent positive signals, including its success in securing AI deals globally and its ability to navigate export restrictions. They see these developments as affirmations of the company’s strong demand for AI data center products. Despite some remaining uncertainties, they argue that Nvidia has consistently delivered on expectations, making it a compelling, albeit expensive, investment. The valuation metrics—trading at around 27-29 times forward earnings—are discussed in comparison to the Nasdaq’s overall multiple, raising questions about whether investors should prefer Nvidia over other tech stocks.
In conclusion, the traders weigh the risks and rewards of investing in Nvidia at its current valuation. While acknowledging the company’s strong fundamentals, geopolitical challenges, and positive market signals, they caution against rushing in without considering the potential for sharp declines. The overall tone suggests a cautious optimism, emphasizing the importance of data, geopolitical awareness, and valuation in making informed investment decisions in the high-growth AI and tech sectors.