Nvidia - What does the result indicate? The expectation & Result of Nvidia…

hey guys welcome back to B before we get into the video I wanted to bring to your notice that my uncle's V Shas an shasan and I have rolled out our substack which is basically a Blog SL newsletter where we're going to post our original research onto it and we've analyzed macroeconomic Trends and a lot of you know my uncle Anan shasan and I regularly write for the Hindu and these articles are also going to be made available for you in the substack the link is m oatm investing. substack docomo and please give us comments and feedback on what you read thank you hey guys welcome back to B today we're going to be talking about uh Nvidia this is a company which we've talked about extensively on the channel even though I must confess our circle of competence is uh doesn't cover Nvidia or uh you know semiconductor chips so or AI or AI so any criticisms uh from you guys on uh anything we cover on this topic is completely valid and we hope and we welcome it yeah we welcome it and we hope some new fresh perspectives can be seen in the comment section below so that being said uh an interesting development has occurred and I think from a finance perspective it still uh holds value to discuss what's going on with Nvidia and uh where it has gone in the past and where it may go in the future and where it it is at current ly so let's look at uh what's up with Nvidia so the thing is NVIDIA recently released their quarter Revenue growth and this has been something which has been highly anticipated most investors have been looking forward to this in the US uh maybe not so much in India but I guess even in India a lot of us have been tracking it let me recap something about what Nvidia has meant for the S&P 500 as well as the NASDAQ in the US so Nvidia has been a huge anchor uh which has basically powered the S&P 500 and made sure it doesn't sink underwater and it's been something which has led to Monumental gains in the S&P 500 Nvidia share over the past year has gone up by almost 157% uh as of the time of recording this video which is quite a huge rise in a year yeah Reliance has taken five years to do that yeah so that is more of a standard time frame even doubling in 5 years is considered a big feat that's more than 10% per year so Nvidia has done it in a matter of a year which is crazy so that that's uh something which should we should be considering and the fact is also other companies such as Microsoft and Amazon have also done well over the past year and uh apple as well riding heavily on the AI boom and the thing is the NASDAQ did suffer a lot after interest rates weren't moved in the last meeting of uh the Federal Reserve they said that you know we're going to to stand uh where we are and we're going to monitor things and the market took a beating because there have been outsized uh expectations on Revenue which were placed upon these companies which is why if you recall in a lot of our previous videos we said Nvidia we have no problems with the company's fundamental business model what we do have a problem is with the valuation and the expectation which the market has and has attached to Nvidia and its uh compatriots so that's what I want to be talking about today because today the market has given us a clear signal as to what its expectations were what Nvidia had been able to meet and how far the differences is there a difference between Market expectation and what Nvidia has delivered so key Point here Nvidia in the last quarter basically year-over-year doubled their revenue uh more than doubled 122% increase from the previous year in last quarter it uh Revenue doubled to $30 billion that's a huge sum of money which we're talking about and this is a pretty good result which Nvidia has posted any investors means this should be a blockbuster return which Nvidia has been able to show within one year yes so this is pretty good return which nvdia has posted how has the market reacted to this let's take a sneak peek well during trading hours the market price for NVIDIA dipped by 2% which okay that's surprising let's see what happened after hours after hours interestingly enough as we're talking about this the market is tanked NV stock price and after trading and it's gone down by 8% and that can only tell us that when the market reopens uh later tonight we'll end up seeing Nidia take a nice price hit though nice is probably conditional on which side of the bet you're on but what this tells us is that maybe we were right in what we were thinking or at least right now it looks as if we were right there are a lot of factors at play of course the fact of the matter is Jerome Powell is yes he is dubish now he's saying that he's going to cut interest rates but we don't know at what rate he's going to cut and some people think it's been a little late and Nvidia said that the revenue guidance for the next quarter is going to be $32.5 billion which was a little ahead of the consensus forecast so they beat Revenue Expectations by 2% and we still have the stock price tanking by 8% I don't that I don't know what uh who's dumping Nvidia and and you know what kind of expectations sky high expectations they have about it because we talked about this we talked about how investors don't seem to have a very realistic perspective on Nvidia and maybe they're levered to the point where they need those kind of returns to be able to pay off the debt that could be another you know part and parcel of this um idea so what do you think about what's happening with Nvidia right now because it's very interesting well what I think is going to be happening is um if fed does cut the interest rate that means there's no more liquidity in the market meaning stock prices are going to go up even further so there are opportunities in the American Market which in the short term can give fabulous returns compared to Nvidia in the short term so there could be investors who are just moving their money to those options to exercise those options in the short term because of what the FED is doing because fed's reaction may change or even come to stop if the inflation moves around and with the election cycle coming ahead there's a lot of volatility uncertainty in the American market so there are lots of pockets of opportunity so if you are an investor and Invidia is overpriced as it is so to see in the short term you going to be breathing room are we going to see another year bumper Year from here for another 12 months are we going to see another 150% rise in stock price I doubt it so looking that all into consideration people are taking a gamble taking a wager saying that okay I can come back to Nvidia in about the same price maybe around 10 15% this way or that way and take my money out of that and play with it somewhere else and come back yeah another interesting factoid for those of you at home the company has authorized an $50 billion in share BuyBacks uh they think best allocation for their companies uh you know free cash flow is buying up shares of their own shares which is interesting to me so that tells me that either Nvidia is trying to push their stock price up which it may well be doing so or their Capital allocators think that uh you know there's not much money to be made in just expanding their business so they're taking their money and buying uh you know stock Buy Backs to reward their investors for taking a bet on n but be that as it may if Nvidia you know has very good gross margins and it does it has a gross margin of 75% for the gross margin of 75% I don't know which person wouldn't like take that money and invest it back into the business why would you do a stock buyback either you think that the market is severely undervaluing your stock or this is just a way to push up the market price and reward your investors I don't see why if I personally was running buers at the helm of a company with a gross profit margin of 75% i w know why they doing the sh yeah I I I would be investing unless the owner of the company wants to reward himself yeah unless the owner of the company wants to reward himself I would much rather be because the buyback might have claws built in where it's so favorable for the owner yeah must be of course B did that recently yeah where you know every thousand shares you get one share they buy back or some crap like that so cool very few people will be in the spectrum of BU enjoying that buy back yeah so Vos at the helm of Nvidia right now given that they're also facing supply chain issues like they're they're facing troubles with pushing out their new Blackwell chip so and those of you at home who are techies can tell us more about the blackw chip in the comments below but I'm not really focusing on the NR of the chip my point here is operational if they are you know facing supply chain issues why aren't they taking the 50 billion 50 billion is a huge amount of money let's not lot of change lot of table change yeah it's a lot of change so that's enough money to probably set up multiple foundaries if they need to so I don't understand why they're not channeling it into back into their business so this is they definitely know something we don't yeah that's probably what I think is well so there's something going on behind the scenes maybe this is why the stock price is also Tak beating yeah possibly and uh interestingly enough there's another idea that given that the labor data is you know not so hot in the sense that the labor labor market is cooling down given that the labor market is cooling down which is an indication for whether the economy is cooling down maybe there's a flight away from risk so people are cashing in their profits on Nvidia and they're saying okay I've made what money has to be made uh I'm going to move to treasuries because interest rates are going to go down I'm going to make a lot of money when interest rates come down that could be happening there many possible explanations and the thing with the market is all of these explanations could be wrong it could simply be market movement yes could be so that being said uh those of you who are at home we hope you're uh to track this and there's a nice case study on seeing how Bubbles form and how Bubbles May pop this isn't to say that Nvidia is a poor company of course not but this video is more of a case study on how price movements occur in the market and how you can get caught on the wrong end of things and within one day lose 8% especially if for on a leverage bet and you know this is you don't take those bets yeah you don't take those these the point is that this video is precisely that what you just said these highlights why you cannot take these kind of bets it's literally like looking at the weather and seeing it's raining and then figure out why is it raining what happened in the other side of the world to create the clouds here and such density to create the rain why did the air pressure change so rapidly to create rain I mean if you can believe that nonsense then you can definitely take these kind of bits and I was approached today and asked whether they can buy chip companies in India and first of all I didn't even know we had chip chip manufacturers in India we're just setting it up T us so I'd say please be well you can't emulate that strategy here and that strategy is done in the US at least until unless we see a Revival in the bubble and Revival in the AI boom I doubt there's much more upside to that and even if there is upside I feel the AI boom Revival only happen when we sort our energy problem yeah coming to that so it it feels quite risky at this point and you know that we at this channel prefer to follow the rules of Warren Buffett which says that first rule of uh investing not to lose money second rule don't forget rule number one so please guys don't forget these two rules there's plenty of time to make money um you don't have to rush into it you're not losing out on any opportunities so that being said we hope uh those of you at home will hire a proper SE register adviser and consult with them we are not SE registered advisers this is purely educational so that being said thank you very much for joining us on B today if you like the video please hit the like button please subscribe if you haven't already hit the Bell icon to get notified of when we upload our latest video and finally if you have any opinions comments you'd like to express in case uh any teis out there want to tell us more about the black H chip or anything related to Nvidia please do leave it in the comment section below it's always a delight to read your comments thank you again for watching be rich thank you it's a great privilege and honor that so many of you in thousands have subscribed to my channel and have supported me I have written two books in English the Alchemy of money and ordinary stocks extraordinary profits these books are published by us and are ready if you want to 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