Nvidia News
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The facts are that Nvidia is increasing its market share across the entire AI infrastructure. So despite 'news' of various competitors and partners developing new XPU/Asics etc, Nvidia is becoming more embedded within the stack. Jensen commented on OpenAi's Jalapeno, saying 'he's pleased for his partners and wishes then every success-we didn't wake up losers'.
If you look at their latest results, their revenue is 10X the size of AMD and almost 30X the net income! Nvidia generate AMDs annual profit in 21 days(and falling). And the bit that most have forgotten, AMD has given away 20% of the entire company to its customers(for zero $) just to get them to buy their product.
Long live the King
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The Telegraph has just told me that Nvidia is planning an additional $150bn share buyback. I'm also reassured that this is A Good Thing by the same publication.
Will this Good Thing occur in the form of increased share price immediately or a gradual increase in the coming months/years?
In short, while I can understand how this happens, can someone explain the consequences to me using small words?
Thanks!
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A simplistic worked example .
A company has 1000 shares outstanding
The company generates earnings of $10,000-which equates to $10/share (EPS)The company's treasury department purchases its own stock. It buys its own stock on the open market (because management believes it's undervalued). The stock is trading at at $200/share.
They purchase 25 shares for $200 ($5000) and cancel them.
Shares outstanding are now 1000-25 =975 and using the same earnings of $10k, EPS rise to $10.26
The notion being that a companies stock (per share) is now worth more because the EPS/cashflow, whatever the metric is now greater. Or put another way, less shares sharing the same earnings.
The main take away with buy backs is it's a strong signal that management think(and they are best placed to know) that the stock is undervalued. After all the primary objective of management re capital allocation is to achieve the best return for shareholders.
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Thanks Adam. Hugely helpful, as always.
I'm guessing therefore that this big signal of management confidence will lead to a share price rise as people view the company more confidently, as well as the higher future EPS (as per your explanation).
So A Good Thing indeed!
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The main overhang for Nvidia stock is it's now the most valuable company in existence. This clearly weighs of the minds of investors so I believe it is a psychological issue albeit temporary in the grand scheme of things. If you step back and look at the numbers, their PE, cashflow, ROI, take your pick is about 2X(better) than it was 2 years ago. Granted its valuation was 'full' back then when PE's were 50! We had price to sales of 25X.
The market seems to forget material information only to 'remember' when certain things are repeated or come to fruition. Management stated only weeks ago that revenue in 2027 will be $750B+ and you can take 50% of that straight to the bottom line. Here is a giant, growing at 50% per annum with a multiple in the teens. Granted it won't maintain that beyond a few short years but imo there arent many if any other businesses that offer such compelling ratios, risk vs reward, growth with low relative multiples and very important, durability. Apple for example trades at twice the multiple whilst having 1/3rd the growth. Im not suggesting Apple is over valued-it mimics a bond more than equity due to its elite credit worthiness(equal to govt debt in fact).
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right on cue. Jensen Huang said this yesterday. Very similar narrative to the above
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At risk of explaining egg-sucking to grandmas:
Another thing that I have seen over my years in tech (cough, now retired, of course) are share splits.Again, & in general, often a sign of a company doing well: share price has been rocketing, for example, to $200 a share. They split - the number of shares doubles, but the price halves: no material difference in the market cap of the company, BUT perhaps the share price can continue an upward trajectory - happy days.
In my personal case, on joining a company, I was advised to join ASAP, because within a week, a share split was scheduled to happen. Made quite a material difference to our later situation, even though at the time I really didn't understand it
Of course, a company in trouble might split the other way -
Adam, you are absolutely right that the Nvidia price is a psychological issue.
Many of us struggle to accept that the upward trajectories of several companies can continue without some event. Some youtube experts continuously predict the next market crash....yet here we are.My view is to take some gains from time to time. A wise head once suggested when things are on an upward path, take perhaps 10% a year to cash: invest it, spend it, but remove it from the vagaries of the market. Of course there are times when hindsight clearly makes that the wrong decision, but sometimes it works, & some of this is "peace of mind".
For us, I like to keep a 'proportion' of our net worth in cash, or cash-like assets (eg, premium bonds, savings accts) - around 10%. If things get out of kilter, that is what I try to gently rebalance. Rightly or wrongly! -
NVIDIA and Foxconn: Monetising AI
NVIDIA's partnership with Foxconn provides a compelling example of AI moving beyond hype and delivering measurable commercial benefits.
Foxconn, the world's largest electronics contract manufacturer, is deploying NVIDIA's AI technology across its manufacturing operations, reporting remarkable initial results: over 90% improvement in defect-related processes, 50% less injection-moulding changeover work and 25% fewer labour hours spent on production scheduling.
With more than 200 manufacturing facilities globally, the potential savings are enormous.
Estimates suggest that a mature deployment could generate approximately $3 billion in annual productivity savings, against $1.5 billion in ongoing costs and an initial investment of $3ā5 billion.
The crucial point? NVIDIA isn't simply selling expensive chips. It's selling the infrastructure that enables customers to generate substantial financial returns.
Now multiply that opportunity across automotive, aerospace, pharmaceuticals, logistics and manufacturing worldwide.
This is how AI becomes an economic revolution.
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Well this is going to work wonders for the share price, Iām sure!
Nvidia launches investigation into CEO's affair with suspected Chinese spy
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Well this is going to work wonders for the share price, Iām sure!
Nvidia launches investigation into CEO's affair with suspected Chinese spy
@Cappo said in Nvidia News:
Well this is going to work wonders for the share price, Iām sure!
Nvidia launches investigation into CEO's affair with suspected Chinese spy
'Zactly what I came on here to say! Although NVDA is actually up a whisker in after-hours.
(And she's a pretty girl, so he's got taste...
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I've followed Jensen Huang closely for years, and throughout that time he has demonstrated nothing but integrity, exceptional leadership and an unwavering commitment to NVIDIA. He's also human, and whilst the allegations are disappointing, nothing illegal has been established.
I find it extremely difficult to believe that someone who has devoted his life to building one of the world's most important companies would knowingly jeopardise its future, his reputation or his country.
Crucially, an alleged personal indiscretion is not evidence of corporate misconduct, compromised technology or a national security breach. Those are very different things, and we should not confuse speculation with established facts.
Inevitably, those with vested interests will exploit the uncertainty, amplifying FUD to suit their own narrative. Ultimately, NVIDIA's investment case rests on its technology, competitive position, earnings and execution. None of those fundamentals has been shown to have changed.
Until credible evidence emerges to suggest otherwise, I see little reason to panic.
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Personal indiscretion is indeed different to corporate problems.
I guess that the big question is whether the fall-out will cause (or force) Jensen to step down as leader of the company. The company is much more than him, but his leadership has brought it to the position it is in now and the loss of that leadership would be a very large blow. I have no idea how likely this is to happen but hope that it doesn't.
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If he has done nothing wrong re sharing info then not a chance he will step aside.
