Dear Reader,
Today I want to talk about Nvidia.
A lot of folks have asked me what I think of Nvidia, and if it is a buy up here.
I’ll tell you something.
Nvidia has bounced back very nicely since we reversed these misguided Liberation Day tariff policies.
I’m not saying we shouldn’t reshore manufacturing to some degree…
But I am saying we shouldn’t be reshoring Nike sneakers, cheap t-shirts, things like that.
We should be reshoring things critical to our national security -
Drugs, heavy manufacturing like cars, because if we go to war again we’ll need to make more tanks; we’ll need to reshore submarine manufacturing, things of this nature.
I’m a big fan of reshoring things critical to national security.
Anyway, the point I’m coming around to is that a lot of folks have asked me what I think of Nvidia up here at $135 a share, which is really close to its all time high of $150.
Now, we have a market cap of $3.3 trillion.
So, is Nvidia a buy up here?
I’ll tell you something, right now the stock is trading close to where it was trading six months ago when everything was great…
Before you had tariff risk, before they came out and said they’re going to lose $15 billion in lost sales to China.
The stock is really trading where it was when everything was great for the company.
So, I’m not sure Nvidia is really a buy up here.
What I can say is this - I do like the direction the Trump administration is taking with trade on Nvidia now.
So if you look at what the Biden administration did and the Trump administration was doing the past couple years, what they started to do is they started to actually come up with a list of countries and use these AI chips as leverage.
They were gonna just hand them out or trade with them based on the specific countries.
If there were level one allies, level two allies and so forth, you’d get a certain allowance of chips a year.
But Nvidia and the semiconductor industry, the AI industry in general, really said, “no, you can’t do it that way.”
So Trump went to the Middle East and you could tell that they’re changing how they deal with AI chips now.
They are starting to pivot from being really critical in terms of which of our allies can have our AI chips, to blocking countries from getting China chips…
Which is much more effective.
Because you want our chips in as many products around the world as possible.
You want our Nvidia chips, our Intel chips, our Broadcom and AMD chips to be in everything.
Because this is how we gain power.
By having our “brains” running everything out there.
Nvidia is a perfect example of that.
We’re moving away from trade restrictions on our allies, controlling the tap on who can have Nvidia chips and how many…
Which incentivizes them to go to companies like China’s Huawei, whose chips are getting really close to Nvidia’s.
We certainly don’t want to do that.
When we look at this Middle East deal, which I’m a very big fan of, I see Trump doing the kind of business deal I think the American people elected him to do.
We’re flipping the script from controlling the flow of Nvidia chips to allies, to blocking countries from buying China chips.
The Trump administration has decided that if you buy chips from Huawei, (essentially the “Nvidia” of China), you will get penalties.
So that’s positive news for Nvidia.
On the negative side, Nvidia won’t be selling any chips to China - not even the ones they adjusted and made specifically for the Chinese market.
So, where’s the money in the chip sector?
We just had a webinar about this.
[Editor’s Note: we expired the webinar, but just re-opened it for today only since Dylan’s talking about it. Here’s today’s link.]
We believe the component chips behind Nvidia’s power consumption is a very big deal.
They’re called “power chips” and they help save energy, which is a huge deal for AI - a massive and growing energy hog.
And right now (not for long) - these chips are little-known and their stocks trade CHEAP.
The very best one, in my view, is a chipmaker trading around $4 a share that has $3/share in cash on its books.
It’s buying back stock…
Has already had two takeover offers.
So my answer to the Nvidia question I’ve been getting from everyone is, Nvidia still trades too rich for my blood…
The real value I see is in the #1 AI takeover target for 2025 I told you about last week.
I had my team re-open the link just for today.
Click here for the most undertold story in AI and our #1 AI pick >>>
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