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it it still meets our minimum hurdle rate of return so 15% at a compound annual rate over 5 years and so you'll see it in some of our more specialized portfolios uh we're we're looking for uh better values but the the risks to uh Nvidia would include cyclical when I hear shortages shortages shortages about gpus or anything I begin to think about um about the cyclicality of a group uh competition Tesla is coming up with its own chip uh meta platforms Google their own chips uh for more specialized large language models uh and and then the tech itself we're learning from meta platforms the Llama model uh is able to do with less computing power but more data uh it's able to deliver better models Kathy would discuss the recent price Target raises for NVIDIA by Major analysts such as Oppenheimer and Goldman SA highlighting the company's strong growth potential analysts see several Tailwinds propelling envidia performance with sustained momentum expected through 2025 after significant gains in 2024 nvidia's stock has surged about 150% year-to date and analysts believe the company has room to continue expanding Beyond data centers into other sectors like gaming and Automotive making it a key player in the AI and Chip Market would explained that although Arc invest initially sold off much of its Nvidia stock they remain positive about the company's long-term potential she noted that Nvidia still meets their minimum hurdle rate of return though they are cautious about cyclical risks such as chip shortages and increasing competition from companies like Tesla meta and Google which are developing their own AI chip would also mention technological advancements such as meta's llama model which require less computing power posing additional risks to nvidia's dominance despite selling a significant stake in Nvidia earlier would emphasized Arc invests broader AI strategy which involves identify Nvidia has become a check the box stock for many investors what is pivoting toward other AI opportunities such as Tesla uipath and paler which she believes are underappreciated but poised for strong growth in the AI sector yeah evercore isi Goldman they had been out with their notes early to start the weekend at end last week as well here so all of these things considered a lot more affordability perhaps on the mindset of retail investors in Nvidia especially as it's been talked about by Goldman Sachs that means is the applications sitting on top of the models that then sit on top of the chips and so if you've already got the chips and the chips are going to continue to grow out you think about the inferential technology that these companies were talking about a computex a couple weeks back or just two weeks ago as everyone was saying sure we have 60,000 chip data centers right now that could easily get to a 1 million chip data center that continues to benefit Nvidia that's why we have analysts come on our show talking about how yeah this market cap that we've seen it get to this three trillion could just be the still starting point here which is crazy and especially after the 10 for one stock split one question I had was how we have we reached the ceiling where is there more room to run here and consistently we've heard from guests that on our show analysts they're saying that there is more room to run gaming Automotive there uh two areas of the business that there's some potential growth opportunities there yeah andinia getting the best positioning stature from Oppenheimer on this from the full stack AI Hardware networking and software Solutions here so we'll continue to track shares of nvda throughout the week here you were in Nvidia before it was cool you were buying it at $4 back in 2014 you rode the wave on this particular stock Kathy to 330 back in 2021 but the recent rally you've missed because the flagship Arc Innovation ETF you sold out of your main stake back in January why yes uh so if you um uh we're very positive on Nvidia we have been very positive on Nvidia we bought it down when it hit nearly $100 uh in the fourth quarter last year uh and and then it tripled as some of our other uh AI oriented stocks Stood Still so uh you know we're looking at believe it or not many people do not believe this about us we're looking at relative valuations of uh names in the AI space and we were looking at uh Nvidia 25 times sales which is where it is and Tesla which is probably the biggest AI story out there is at six times earnings uip paath yesterday anal at Goldman Sachs also Argus research raising their respective price targets now Argus saying that there's continued momentum that we could see for NVIDIA shares in 2025 after strong growth in 2024 so you know this is a stock that has just been on such a tear up about 150% year to date and now all of these analysts seeing a lot more room to run as they go beyond just a data center but also opportunities in some of their other areas of the business so there are puts and takes here as there always are how many frustrated investors have got in touch with you via Twitter or the other forms in which you connect with your your own purchases of the ETFs I mean there must have been a lot of frustration that you kept it in some funds but not the main Arc ETF I'll tell you what has happened mostly is people who understood the Nvidia story we were pounding the table on it on 2014 you know really till 2021 um and many people actually put it into their portfolios their own portfolios and they may have held it we have not gotten uh much push back and the reason is people know uh that we are on we are on AI but we're doing it in a little bit of a differentiated way in media has become a check the box stock that's why the valuation is where it is um uh but we are looking for those plays uh that have not only the the vision from management team point of view and Broad distribution but also proprietary data and AI expertise really until very recently so paler you mentioned or UI path you mentioned Tesla you mentioned there's actually quite a few though it seems relatively limited overall AI Focus names that you have am I missing something there are there far more AI exposure within your Flagship fund or are you really just deciding that there are going to be a few key names that you back no twio would be another name almost every company except for well actually even including uh the multiomic companies like exact Sciences uh uh are using uh their own proprietary data and their broad distribution networks to gather information and create better products and services so I would say almost every company that we have in the portfolio is in some way shape or form we ask the question how are you harnessing this uh powerful tool called uh artificial intelligence and I would say 90% of the names in the portfolio are harnessing it and do have proprietary data what caught my eye and we've actually seen so much disruption already to the market capitalization of companies when they have found themselves disrupted by for example a chat gbt I think of C the education company but you noted that Apple for example its apps platform could be disintermediated by chat PT platforms is that a key company that we need to worry about being disrupted what other names do you think that come to mind that maybe the market has it wrong on how much they could be overwhelmed by this new competitor well uh for Google uh chat G GPT was either the worst thing that has ever happened to it or or maybe the best thing uh we tend to think it's going to be disintermediated though uh by chat GPT and other chat Bots we're not going to need the kind of search and therefore advertising that drives uh Google's model so we we do worry uh about that one um and as you said uh uh Apple uh you know there are many people think that even Amazon is going to be disrupted not only by social commerce so people just uh shopping through Instagram and uh other other social media sites Pinterest um but uh it also could be disintermediated as if consumers use chat G GPT and other AI tools to say I want exactly this kind of item at the cheapest price anywhere in the world uh and it would go directly to that source so you know any platform that has served as you know an intermediary is uh is at risk we would say Oppenheimer has raised its price target for NVIDIA increasing it from $10 to $150 highlighting the numerous factors contributing to the company's sustained growth this upward revision comes in the wake of invidious impressive performance with a stock increase of approximately 150% year-to date analy from various firms including Goldman Sachs and Argus research are optimistic about Nvidia potential in 2025 noting that the company has opportunities not just in data centers but also in gaming and Automotive sectors demand for NVIDIA chips is anticipated to grow significantly particularly as more applications emerge on top of AI models that rely on these Technologies Kathy Wood CEO of Ark invest has expressed her confidence in invidious long-term prospects while acknowledging the Stock's current High valuation what emphasizes the need for careful consideration of relative valuations within the AI space particularly given the cyclical nature of the semiconductor industry and Rising competition from companies like Tesla and Google while she has moved some of her Investments away from Nvidia she remains focused on identifying undervalued opportunities that leverage AI as the AI landscape evolves viewers might wonder what potential do you see in Nvidia stock moving forward and how do you think the competitive landscape will impact nvidia's growth in the coming years years
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