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If there's a stock that's hotter than Tesla's was these days, it's undoubtedly Nvidia's. They're due to report their quarterly results in the next 48 hours, and this stock has multiplied in less than seven months—not by two, ladies and gentlemen, but almost by three! This makes it one of the most expensive stocks in the market and certainly the best-performing stock of the year.
The big question is, what will happen to Nvidia's stock now, right after their earnings call? What were the analysts' forecasts? How are we preparing? And what are Nvidia's shares reminding me of right now? What do I think would be a good target price to buy them, and why? So, I hope you're ready, and hit that blue "like" button, because in this video we're going to analyze Nvidia's fundamentals.
We'll also look at their quarterly results, see what information they gave us, what information they're expecting to release now, and whether those quarterly results will be enough to convince the market that... This stock is trading at extraordinary multiples. But anyway, let's get back to the beginning, ladies and gentlemen.
Let's start with our Nvidia chart. We're not going to get too technical right now, although we will as we go along with the video. Well, since it hit a low of around $108.08, as we mentioned, here you can see it below, in October 2022, just 7 months ago, we said that Nvidia's stock has tripled. We're not talking about Nvidia stock, or rather, a startup recognized for its tremendous potential, or a biotechnology company, or a palantir that's starting to make very interesting money, by the way, and that's going to end the year with profits.
Ah, we're talking about a company worth, well, about $250 billion when it was at $108, and since it tripled, we have it right now here at approximately $775 billion. In seven months, of course, you could also say that at its peak it was a company worth almost a billion dollars, and I mean a billion.
Millions of dollars, excuse me, a trillion dollars that had just deviated, that had just fallen to 250 billion dollars before returning these 750 million dollars. So we can say, it's not that Envy was worth a trillion dollars, suddenly the Fed happened, something happened, the market went to hell, and now, well, indeed, it's recovering.
But the fact that all this has happened in such a short time should really worry those who have massive profits sitting here at around $313, especially if we bought it around $ 130 or $150, which perhaps considers a price we could see it return to relatively soon. The stock has risen almost 120% throughout this year and is the best-performing name.
As we said in the Hundred, the time to buy cyclical stocks like semiconductors, like Envy, is when the option doesn't look good, it has no supporters, and when everyone is putting all their weight behind it. The usual: we want to buy stocks that are looking a bit besieged right now. I 'm not talking specifically about Foot Locker, but it's an example.
Okay, and after a couple of months, maybe more than seven, we'll see Food Locker triple again. That would be a case of envy, but I don't think it will happen with Food Locker, especially not in seven months. It's often said that those who cannot remember the past are condemned to repeat it, and it's also easy to deceive ourselves, like the "I would n't do it that way" syndrome.
But let's play a little game. We're going to look at Cisco stock, we're going to put it on Wikipedia so we can see it another way, and we're going to go back to the year 2000. Okay, there are the Cisco shares. You see, they're worth $57. Of course, who would have bought them back then, right? Knowing what we know now about how tough Cisco was and how it collapsed in 2000, and it still hasn't recovered.
That charm... I think it's never recovered its all-time highs. Yes, it was worth $61 at one point. Who would have invested in that? Not in the past. Who would have invested their hard-earned money in these shares at those now-famous valuations from 2000? Obviously, that's a... Rhetorical question: Cisco is the symbol, one of the symbols of the dot-com bubble.
It was trading at a price back then, at its approximate peak of 57-78, with a value of 30, a multiple of 30 in sales. What does that mean? Envy is trading at 29. Obviously, of course, Envy is the child of the AI movement. With Microsoft, and we're not going to get into it or not, but Microsoft is also in a bubble like Envy, although it's also easy to defend its overvaluation a bit.
So, beyond this bubble, what could happen, if it's possible, if it's not possible, let's look a little further ahead in the video at Envy's earnings, the estimated UFOs. Oh, and the revenue and so on. If we stay in a purely technical perspective, as we see, it's not as overheated as in my opinion, and I think in the opinion of many of you as well.
The fundamental aspect, the RSI (Relative Strength Index) of Nvidia's stock, is here at 69, below 70, even anything above it. At 70, it's said to be overbought according to the textbook definition, but textbooks rarely work in the stock market, and I expect the RSI to eventually plateau a bit. The video stock also plateaued in this area, and the RSI could come back down.
However, the higher Envy goes, the faster and riskier the reversal will be, in my opinion. As always, buying Envy shares in this area, or on this pullback, is less risky. Obviously, buying them up here means we could have a pullback and say, "I'll enter and set a stop loss," but fundamentally, as we understand it, it doesn't make much sense.
Now, let's take a look at the expected results. Envy's quarterly results are here; we have them below. We covered them, and we'll cover them again this Wednesday. Last quarter, Envy is expected to report earnings of around $91 ( excuse me, dollars, I meant 91 cents per share) and around $6.5 billion in revenue, as we're seeing.
The first quarter, with expected margins of 64.1 and 66.5, given the company's recent history, seems fairly certain that they can exceed both revenue and profit. They usually do, and estimates have been steadily increasing across the board, aided by the fact that Nvidia's fourth-quarter results were up.
Jason Juan and Elisa Nvidia Ulises typically set a forecast that is relatively easy for them to beat. However, while beating their quarterly results is n't going to be magic, it might be good or bad. The bar is much higher now for Nvidia's stock to continue outperforming, as it's priced, as we understand it, too high, even beyond perfection.
It's likely that simply exceeding a potential double-dip by a few cents, or even just a slightly higher forecast, could end up disappointing the markets. As we see, the stock is trading at a sales multiple of almost 30. At this point, it seems the market... Expecting Nvidia's AI technology to solve world famine or pollution overnight is something we don't believe will happen.
We could also consider selling due to exhaustion, meaning that given the recent rise to $318, many—I don't know who—are eager to stop buying Nvidia shares and start selling. The money coming into Nvidia is drying up. Well, at some point it has to end. The trend is telling you it wo n't, but at some point, investors large and small will say, " I'm getting off this train.
It's become too inflated." Over the last seven months, it has tripled, and even if the numbers hold true, or slightly better, fundamental investors shouldn't forget the valuation history. Let's say Nvidia's best earnings growth is 10% year- over-year. Its highest value in the last four years has been 7%.
To say Nvidia hasn't grown beyond 7% year-over-year, and in top line, over the last four years, we've had this boom. Technology and Gaming, well, that's right, we would end up at around 700, excuse me, 700, 7.15 billion dollars per quarter, which is well below the average of 1.7 billion to 7.5 billion dollars needed for each quarter to reach the estimated revenue of 30 billion dollars by 2024.
Obviously, there will be seasonal fluctuations and not all quarters will be the same, but we understand the trend that if we want to reach certain somewhat normal valuations, 300, 30 billion dollars, top, where should we be heading? Let's see if we get in here in the middle. I thought we were already there, we should be approximately...
Well, here you have it, already in the hype, 33, here at 28, it should stay in the middle, 30 billion dollars. In short, simply reach, or even exceed by 10%, agreed. Although it has never achieved it, the last four years may not mean much given the expectations and, as we said again, the high valuations that the company has right now.
Also known for its Multiple valuation compression. This is destined to affect the stock sooner or later. It means the company has stopped growing and suddenly the market says, "Wow, this company hasn't been growing as much as its stock has been growing." So its stock grew thanks to a multiple expansion, thanks to the market becoming a little more forgiving of the stock, due to a bit of a fever.
Oh, the big question is what will happen when it goes back to taking a path like the Metaverse did. Because we all remember the Metaverse, right? From a business perspective, the truth is that I'm waiting for some signs of recovery, both in the Gaming segment. I was talking about it. There's also a day, even very ugly, with a relatively weak desktop GPU processing unit, to follow industry trends.
We remember that PC sales or the reports we're getting are still coming in quite low. In the fourth quarter call, Mr. Jason Juan had no qualms about where he believes the future lies: it's in Artificial Intelligence. While I'm sure the first quarter won't be any different, it remains to be seen if the operating systems end up providing more details, and that, Juan ends up giving us a little Plus details on what the future growth of Nvidia will be, and hey, we're going to reach this 10% revenue growth because we're very far off, as we'll see below.
Well, we can put it now because otherwise, a little more. Last year, last quarter, excuse me, quarterly revenue was down 21%, fiscal revenue was flat, and we're talking about not recovering substantially in the most important segments: 52% a year ago, 33% a year ago, 55% a year ago, 25% a year ago. It's a sting, but the market seems to care very little.
This Wednesday, when we hear the quarterly results from Mide, when we actually have them, because we probably won't be able to hear them, they're too late. I'll be quite eager to hear more partnerships related to AI and details and details with those already announced. If Jason Juan isn't able to maintain the AI game to keep Nvidia's high evolutions going, if there's a small slippage, if there is, and maybe it doesn't happen, and maybe Nvidia's stock keeps going up, but Cisco's stock also went up and up until it stopped.
Do n't misunderstand me, I 'm not suggesting that everyone should own Envy shares, nor that they should buy them, nor that they should short sell. Many short positions have obviously been lost along the way. It's possible that if we have fantastic profits just before Earnis, to reduce risk, we should reduce positions, sell upside code, or simply manage our risk.
Because we can have a 100% return. In fact, there are people in the group who are seeing more than 100% in profits with their Envy shares. But remember one thing: the 100% you see on the screen isn't yours until we cash out. If we don't cash out, that 100% can end up at 20% or even minus 15%, which is awful.
It's terrible to have a 100% position that turns negative regardless of whether we're late and would like to see the euphoria continue a little longer or decrease so we can increase our positions. I ca n't tell you what each person should do; it will depend a lot on your appetite for risk. Risk your appetite for the moment, your insight as traders.
And if you're also looking for more investment, whether long- term, short-term, etc., etc., I ca n't end up combining them all. What I mean is, well, I really like video as a company, you know what I mean. And we have videos on the channel about the three best companies for beginners that I like the most.
Four or five years ago, we were talking about Nvidia, we were talking about Microsoft, about Apple, but in video, it was there, it was top-notch. And I still watch them, I admire the CEO, Jason Juan, and I think he has a unique combination of being very honest, being visionary, and also being quite respected by the market.
But that can't end up turning us into a "buy everything at any price" kind of person. One thing is for sure: sooner or later, personally, and I'll confirm it for you, I'll tell you when it happens. If you want to know right away, join the private group. The first link in the video description is a discount code.
Take advantage of it. Sooner or later, I will have a very important position in Nvidia again, but I will look for it at the right price, maybe very close to around $150. The price may not be The perfect one when it returns. But it's unlikely to be in the midst of a mania, as I think everyone's opinion is right now.
The price of Nvidia's stock right now doesn't matter to me, but I do care a little about the valuation and the overall tone of the company. When it comes to finding Nvidia positions, we can consider two things. Technically, it seems that a level of 262 could be interesting; it's very possible it will return here.
And if we also look at something else, Nvidia's stock had a tremendous rally since 2021. We talked about Nvidia long before that. The Nvidia editions... Well, I don't know, maybe they were worth $82 before this whole super rally started. The situation, okay, we had the situation... excuse me, this is the situation.
Ah, here we have, let's say, the Nvidia Valley zone. $130 seems like a very affordable value that Nvidia could eventually reach, and suddenly, what happened, Nvidia's stock shot up to $346. With that, they took a machete and came back, and even if you... You see, here we have a $140 level, which we saw here around July of last year, and also at the beginning and end of last year.
And after catching up a bit with the $130-$140 range where Nvidia had moved and felt very comfortable, we fell a little below that, came back, and the situation is repeating itself a bit—we jumped from $140. Where are we going to end up? What's going to happen? Really, if things get a little worse, it's in terms of learning very quickly because I don't want to make an extraordinary video.
And you've already spent quite a bit of time with Jason Juan. As we were saying, he's going to talk a lot about [something], it's likely he'll also mention things about gaming, things about [something], but what we expect is that he'll fulfill his Outlook and end up mentioning the future of [something] and the future of [something] with Microsoft, Nvidia, and the cloud, and that Amazon is also going to get into it, and that Apple is also going to get into Microsoft, and everyone is going to get into it.
You're in the ambulance and you have to buy shares right now, but as I was saying, perhaps there's always a better time to buy shares when they're not in a fever zone, and perhaps there's a better time to sell them when the shares are in a fever zone. As always, now I'd really like to hear your opinions on Nvidia shares.
Do you have them in your portfolio? Are you cutting positions? Are you eliminating them before they're too late? Are you all selling? Or, like many others, are you rubbing your hands together right now because maybe this will be the catalyst for Nvidia shares to start falling? Are you comparing Puigs for this week, Puigs for next week, shorting in some other way?
As always, let us know down here in the comments. I'm really curious to know what you think. And remember, I don't have time to include it in this video, but AMD's earnings were very good, very bad. We covered them live, and I left a little horrified by how bad the shares had been. The next day, as we're seeing, they only recovered a little because of all this.
Oh, as always. Thank you so much for watching! I hope you enjoyed it. We'll see you in the next video.
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