Nvidia: is the selloff a buying opportunity?

00:00:00: Woof!

00:00:00: Hi and welcome to Swissco's daily market talk.

00:00:04: It's Thursday, the twelfth of November.

00:00:06: Technology is having a highly emotional week this week with ups-and-downs on the back of various news and earnings that flow in!

00:00:14: So yesterday, Corvi Results & Anthropics IPO boosted appetite among technology investors.

00:00:22: today near reports that Jensen Huang could be ousted waiting for stock price complex.

00:00:31: NVIDIA fell more than eight percent in the after hours trading yesterday on the news and share price has fallen below the one hundred sixty dollars per share level.

00:00:41: so my question today is, Has NVIDia become too cheap not to buy?

00:00:46: So we will talk about that just a minute.

00:00:49: I'll encourage you!

00:01:00: financial advice.

00:01:09: So appetite for technology was back.

00:01:11: Ladies and gentlemen, yesterday Koviv's stronger than expected results gave investors something more appealing to chew on.

00:01:19: then the stronger than expect inflation numbers that rattle the market sentiment just a day before while Anthropics upcoming IPO is wetting investors' appetite for another serving of AI.

00:01:31: so now it's like hundred rebounded.

00:01:33: two point twenty eight percent in yesterdays trading session as enthusiasm just complex, push some uncomfortable thoughts about interest rates.

00:01:44: Inflation financing of AI the falling cash flow levels at hyperscaler.

00:01:48: is Jensen Huang's relationship with a suspected Chinese spy into the background.

00:01:54: now inflation has not disappeared.

00:01:57: neither have their risk off tighter monetary policy.

00:02:00: they're risk of slower AI.

00:02:01: build out massive spending on AI DLAT ROIs increasing the question financing and all that have not disappeared, but investors sure found something else to look at.

00:02:12: But things got worse again.

00:02:13: after Deval is another report broke on CEO Jensen Huang!

00:02:18: This one pointed out another love affair between Huang and a company executive this time AND that the board Amidia share price fell up to ten percent in the after-hours trading and has settled just below the one hundred fifty nine dollar per share level.

00:02:35: That's more than an eight percent loss compared to the closing level.

00:02:40: again, I keep repeating this way don't have a model for Jensen risk but demands.

00:02:43: love affairs has costed company A few tens of billions of US dollars And zooming out amidia was already struggling with intense buying selling pressure on AI complex before a fair surface.

00:02:56: The share was trading above the two hundred and forty three dollar level in early October before coming down substantially, it wasn't only CEO's fault but after the CEO affair analysts have just started to significantly pull back their support.

00:03:14: Morgan Stanley for example removed NVIDIA from its top pick list and an analyst at Beard will cut his price target from five hundred U.S dollars to just two hundred US dollars per share.

00:03:26: that's a big cut.

00:03:28: Today, Nasdaq futures are lower on NVIDIA.

00:03:31: Now, NVIDia stands for around seven percent of NasdaQ's hundred total market cap meaning that a ten-percent fall in NVIDA's share price pulls the index down by point seven percent.

00:03:41: it is actually leading losses this morning as Korean Cosby Indexes giving back more than one per cent.

00:03:47: Antiax which is home to TSMC The company that builds NVIDI's chips is down by about two point eighty percent at the time I'm talking here.

00:03:57: The Chinese star fifty, on the other hand is having a nice rebound with more than two percent gain at that time.

00:04:03: I'm talking here this morning.

00:04:05: That's on hope that NVIDIA WOOS would increase demand for local chips in China!

00:04:10: Anyway, my question to you today is Has NVIDIA become cheap enough ahead of next week's earnings and Is this week's carnage a buying opportunity?

00:04:20: Now looking at numbers.

00:04:21: At one hundred fifty nine dollars per share the stock now trades around seventeen times as expected earnings for fiscal year ending in January And just ten times earnings expected for next year.

00:04:34: That is remarkably inexpensive, ladies and gentlemen provided that those earnings materialize of course but there's no reason not to materialise.

00:04:44: Second number assumes earnings growth of roughly seventy-one percent, mind you!

00:04:50: quite feasible because for comparison, analysts expect earnings to grow around ninety five percent this fiscal year.

00:04:58: So the forecast actually assumes a slow down in earning.

00:05:01: so it is plausible looking at the revenue side.

00:05:04: The underlying revenue forecast is ambitious as roughly six hundred and ninety one billion US dollars next year compared with four hundred and twelve billion US Dollars This Year.

00:05:13: that's about two hundred eighty billion U.S.

00:05:16: dollars of additional sales Next Year.

00:05:19: Is It Achieveable?

00:05:20: Potentially, yes.

00:05:21: Is it already secured?

00:05:22: Well that's where investors need reassurance.

00:05:24: but given the company's track record well It is achievable.

00:05:28: I mean these numbers are not exceptional for a company like NVIDIA.

00:05:31: So the question is will it be achievable without Jensen Huang?

00:05:36: That's the price to pay for buying NVIDIA at a discount today.

00:05:40: There is no credible way, as I said before, to put a precise revenue loss on Jensen Huang's departure.

00:05:47: but customers buy NVIDia's computing power they buy software and networking ecosystem And those advantages Those products that Jensen-Huang and NVIDA built together will not disappear with their CEO.

00:06:00: They will not dissapear overnight.

00:06:02: So there risk would be rather disruption to strategic decisions Product execution and customer relations over time.

00:06:09: Don't laugh please!

00:06:10: But yes, the risks are longer termed rather than immediate risk.

00:06:14: So if you perform scenario analysis on earnings risk If for example next fiscal year's earnings came in twenty percent below todays forecast because Jensen Huang has left all for any other reason actually The stock price would trade at around twelve-and a half times those reduced earnings at one hundred fifty nine dollars per share.

00:06:34: A thirty percent shortfall would lift that multiple to roughly fourteen point three times.

00:06:39: Now these are stress scenarios, they're not predictions of what Jensen Huang's departure will pose but actually show the current price leaves some room for disappointment and thats whats makes NVIDIA quite cheap today.

00:06:54: So to question off is this week's carnage a buying opportunity?

00:06:58: I'd say potentially yes.

00:07:00: so please don't hesitate share your opinion below in the comments.

00:07:04: Now zooming out, all the MVD troubles are reinforcing rotation toward non-technology pockets off of market this morning with European indices for example.

00:07:40: Leading gains there set a positive start as macroeconomic setup is also encouraging.

00:07:46: Oil prices or down with US crude trading near EURUSD per barrel level and Brands crude near EurUSD Per Barrel Level.

00:07:55: The latter obviously helps solving bonds.

00:07:57: that was triggered by a hotter than expected U.S.TPR report the day before.

00:08:02: But inflation risks are coming back because Japan just printed a seven percent rise in October, producer prices that was higher than expected and US PPI numbers will be closed tomorrow and they could potentially give investors reason to keep cementing their rate hike expectations for December.

00:08:23: So my take is that the technology sentiments will be volatile in the coming days.

00:08:28: I mean, there are so many news and events on the wire yesterday.

00:08:32: Anthropics upcoming IPO had suddenly changed sentiment remember?

00:08:36: And headlines from Jensen Huang to anthropic.

00:08:39: today before the bail need use which is another neocloud company we'll be releasing his earnings.

00:08:44: investors will focus on that.

00:08:46: rotation toward non-technology could continue obviously if The News or not great as capital leaves technology Stucks.

00:08:53: Some investors could also sell their technology holdings today to make some space for next week's anthropic IPO.

00:08:59: We do have an unlocked discussion that will shortly be published both in French and English So don't forget to watch it.

00:09:06: But as I was saying yesterday, the rotation trade would also bump into hockey central bank Expectations cheaper energy prices Today with counter just a part of that stress because here The crack spread is one that matters for inflation and as Fed's Waller stressed earlier this week, the fact that oil is available.

00:09:39: So this is all for today.

00:09:46: I'm Ipega Skardishkaya and thank you for joining me, And Thank You For All Your Beautiful And Supportive Comments!

00:10:10: market commands and please don't forget to hit the like button on these videos.

00:10:19: so let us know that you enjoy them.

00:10:22: So I will meet again tomorrow, until then good day

00:10:41: trading!