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irrational exuberance. Nvidia was at 104 before earnings literally 1 month ago. It is up 50% since then. The earnings were good, but not that good. There has been no news or new basis to support Nvidia's gains except reference back to the month-old earnings report. The p/e is over 50, and more than double the industry average.
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stronger competition will break Nvidia's monopoly on certain segments. AMD aka Nvidia's competition, is up this week on actual news, including its contract to provide GPUs for Apple's iMac lineup, as well as AMD graphics cards being sold out everywhere thanks to the crypto miner boom. AMD's new Vega cards will be a real contender against Nvidia that will cut into Nvidia's profit margins and market share. Gaming graphics is still a large part of both companies. Gaming was more than half Nvidia's revenue in the last quarter. AMD is making a datacenter play, too.
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AI is not going to be a large market this year, and there will be plenty of time for Google to take over the AI market if it wants to. Google has already taken steps in that direction. Pricing an AI monopoly projected out for several years into the stock is irrational.
I would short Nvidia, except that I now see Nvidia exactly like Tesla. It has become a reservoir for the hopes and dreams of sci-fi nerds. That is why it, like Tesla, has become so detached from the underlying values. Nvidia is basically a "Tesla lite" where people pouring money into it tell themselves it is NOT Tesla and they are NOT investing in it out of gayness for Elon Musk, but instead because of the good numbers. The same good numbers that led to pullbacks in the 130s recently. 125-140 was a range I could believe was justified based on earnings. 156 is not. Irrational exuberance has taken over. The bubble has begun to inflate.
Welcome to the new Tesla. Welcome to Tesla lite.
Submitted June 08, 2017 at 11:56AM by pewpsprinkler http://ift.tt/2raf9QK
