The fundamental story on Nvidia remains very strong, says Haverford Trust's Hank Smith

RESULTS AND HE SAID I WASN'T AWARE UNTIL YOU MENTIONED. WE DO WHAT WE DO IS THE RIGHT WAY TO THINK ABOUT IT. >> IT IS. SO NOW NVIDIA HAS REPORTED THOSE RESULTS, LET'S TALK ABOUT THE POSSIBLE IMPACTS ON THE MARK. HANK SMITH IS INVESTOR STRATEGIST AT HAVERFORD TRUST. HANK, WERE YOU AT THE WATCH PARTY? >> IT'S INTERESTING, I BELIEVE "THE WALL STREET JOURNAL" COMMENTED BECAUSE THERE WERE NO MAJOR SPORTING EVENTS GOING, PARTICULARLY NFL FOOTBALL, THIS WAS THE BEST EVENT IN TOWN. >> SO YOU WERE LISTENING CLOSELY, WHAT DID YOU TAKE AWAY, OBVIOUSLY STRONG NUMBERS ACROSS THE BOARD. BUT MAYBE EXPECTATIONS THAT WERE IMPOSSIBLY HIGH IF YOU LOOK ACROSS THE STREET? >> YEAH, BUT THEY EXCEEDED EXPECTATIONS BOTH ON THE TOP LINE AND THE BOTTOM LINE. AND, LOOK, WHEN YOU'RE GROWING AS FAST AS THEY ARE, YOUNITPICK. O O OVERALL, A VERY STRONG EARNINGS REPORT. AND THE CURRENT CHIP HOPPER IS STILL SEEING STRONG DEMAND. AND YOU'RE ONLY A QUARTER OR TWO AWAY FROM THE NEXT GENERATION, BLACKWELL, COMING. SO THAT'S JUST A SIGN OF HOW IMPORTANT THIS COMPANY TO THE BUILDOUT OF A.I. ACROSS THE ENTIRE TECH INDUSTRY. >> WHY DO YOU THINK THE STAOCK S OFF? IT'S NOT OFF BY A LOT, 2.5%? >> WELL, YOU HAVE TO BE LOOK, DON'T FORGET, EARLIER THIS MONTH, HAD IT A 25% DRAWDOWN FROM A HIGH IN JUNE OF 140. IT GOT DOWN TO 100, OR 101, IT'S SINCE RECOVERED A LITTLE BIT. SO YOU'RE GOING TO EXPECT VOLATILITY IN A NAME LIKE THIS. AND, ACTUALLY, SOME -- A DOWNDRAFT, WE LOOKED AT THAT PRETTY POSITIVELY. BECAUSE WE'LL ADD TO THE STOCK WITH DOWNDRAFTS. >> DOWNDRAFTS OF EVEN 2.5%? I THINK THAT'S THE QUESTION FOR INVESTORS WHO ALREADY OWN THIS STOCK, WHAT WOULD YOU TELL THEM TO DO? FOR INVESTORSS WHO DON'T OWN THS STOCK AND ARE THINKING ABOUT JUMPING IN? >>YEAH, THAT'S A HUGE CHALLENGE. IF YOU DON'T OWN THE STOCK, IF YOU HAVE THE PATIENCE FOR THAT KIND OF DRAWDOWN, YOU'RE RIGHT, 2.5% ISN'T ENOUGH, THAT'S JUST NOISE. BUT, AGAIN, EARLIER THIS MONTH, YOU HAD A 25% OF DRAWDOWN. AND YOU JUST HAVE TO HAVE DISCIPLINE, TO WAIT, BE PATIENT, TAKE ADVANTAGE OF THAT, KNOWING THAT THE FUNDAMENTAL STORY REMAINS VERY, VERY STRONG. SURE THERE WILL BE SOME DECELERATION IN GROWTH OVER THE NEXT SEVERAL YEARS, THERE WOULD HAVE TO BE WHEN YOU'RE THAT LARGE OF A COMPANY. BUT THE COMPANY IS IMPACT. AND AS MARC BENIOFF SAID, WE'RE IN THE VERY EARLY STAGES OF THIS A.I. BOON. >> JENSEN HUANG SPEAKING YESTERDAY LOOKED LIKE HE WAS REALLY TRYING TO POINT TO THE IDEA THAT DATA CENTERS -- THAT THEIR DATA CENTER BUSINESS HAS MORE DIVERSE CUSTOMERS THAN PEOPLE THINK. PEOPLE LOOK AT IT AND THINK IT'S JUST THE HYPER SCALERS. HE SAID THEY'RE ONLY 35% OF THE BUSINESS, BUT THEN HE WENT ON TO SAY IN AN INTERVIEW I WAS LISTEN TO, 55% OF CUSTOMERS THAT AREN'T HYPERSCALERS, I DON'T KNOW WHERE THAT GETS YOU, 33%. HIS POINT IS IT'S NOT JUST THE HYPERSCALERS. HOW IMPORTANT IS THAT TO INVESTORS? >> WELL, I THINK IT'S A VERY IMPORTANT POINT. AND LOOK, I'M NOT SURE THERE'S AN INDUSTRY, A SECTOR OUT THERE, THAT ULTIMATELY WON'T BENEFIT FROM A.I., INCLUDING OUR SECTOR. THE MONEY MANAGEMENT BUSINESS. AND SO, LOOK, WE'RE AT THE BEGINNING, THE INFANCY, WE'RE NOT IN THE EIGHTH OR NINTH INNING. WE'RE IN THE SECOND OR THIRD INNING. >> RIGHT. >> OF, YOU KNOW, SECULAR TREND. >> I THINK THAT'S PROBABLY TRUE, BUT THERE AREN'T A LOT OF COMPANIES THAT HAVE THE DEEP POCKETS THAT CAN AFFORD TO PAY THESE SORT OF PREMIUMS. SO, I THINK THE QUESTION BECOMES, WHILE A.I. MIGHT BENEFIT EVERYONE, AND YOU CAN THINK OF PLACES LIKE HOSPITALS AND DRUG KCOMPANIES AND ALL KINS OF PLACES THAT WOULD BENEFIT FROM THIS, WHICH OF THEM ARE ABLE TO PAY THAT SORT OF PREMIUM? AND HOW FAR DO PRICES HAVE TO COME TO DOWN? HOSPITALS, SOME OF THEM OPERATING ON 1% MARGINS. >> WELL, THAT'S TRUE. BUT OTHER -- YOU KNOW, A LOT OF BUSINESSES THAT -- YOU KNOW, IN THE FINANCIAL SECTOR, YOU LOOK AT, YOU KNOW, TOP TEN, TOP 20 COMPANIES. LOOK AT WHAT JPMORGAN IS SPENDING ON TECHNOLOGY OVER THE PAST SEVERAL YEARS. IT'S JUST MASSIVE. AND THE NUMBER OF EMPLOYEES THEY HAVE THAT ARE ENGINEERS AND TECHN TECHNOLOGISTS, IT IS MASSIVE. SO, YOU KNOW, YOUR POINT, TO SOME OF THE LOWER MARGIN BUSINESSES, IT IS A GOOD POINT. BUT I STILL BELIEVE THEY'LL FIND THE MONEY TO INVEST IN A.I. >> HANK, WHEN YOU'RE LOOKING AT THE RANGES, WHAT WOULD BE A PRICE YOU'D BUY IN AT? A PRICE THAT WOULD MAKE YOU THINK, OKAY, THIS IS GETTING A LITTLE RICH? BECAUSE WE DO SEE THAT BIG TRADING RANGE? >> YEAH, LOOK, I THINK IF YOU GOT DOWN INTO THE LOW 100% IN THAT AREA, I THINK THAT WOULD BE AN EXCELLENT BUYING OPPORTUNITY. AND, YOU KNOW, YOU MENTIONED VOLATILITY EARLIER. IT WASN'T TOO LONG AGO IN THE FIRST NINE MONTHS OF 2022 THAT THIS STOCK SOLD OFF OVER 70%. NOW, I'M NOT SUGGESTING YOU'RE GOING TO HAVE THAT KIND OF DOWNDRAFT ANYTIME IN THE NEAR FUTURE. ALL I'M SAYING IS, YOU CAN HAVE VOLATILITY IN COMPANIES THAT HAVE GREAT PASS IN TERMS OF REVENUE. WE SAW THAT BACK IN THE 1990s, DURING THAT DECADE WITH THE CISC