Has the Nvidia (NVDA) and SMCI Bubble Burst?

Summary

Nvidia's recent earnings report exceeded expectations, with a revenue of $30 billion, up 15% quarter-over-quarter and 122% year-over-year, and earnings per share at 68 cents, 4 cents above estimates. Despite this, the stock price dropped 7% after hours, prompting discussions on whether Nvidia's growth potential is waning. The video also addresses Super Micro Computer's (SMCI) plummeting stock price due to accounting irregularities, cautioning against investing in companies with a history of financial fraud.

Takeaways

• 📈 Nvidia reported better-than-expected earnings with revenue at $30 billion, exceeding expectations by $1.3 billion.
• 🔼 They beat earnings per share estimates, reporting 68 cents compared to the expected 64 cents.
• 💹 Nvidia raised their forward guidance for Q3 2025 to $32.5 billion in revenue, an increase of $8 billion from previous estimates.
• 📊 Year-on-year revenue increased by 122%, and earnings per share (both GAAP and non-GAAP) saw significant growth of 168% and 152% respectively.
• 📉 Despite the positive earnings report, Nvidia's stock price dropped over 7% in after-hours trading, raising questions about the stock's valuation.
• 💡 The speaker's intrinsic value calculation for Nvidia is $122, with a conservative valuation at $94, indicating a potential buying range.
• 🚫 The speaker advises against adding more Nvidia shares unless the price drops significantly, highlighting a preference for a margin of safety.
• 📉 The speaker sold cash-secured put options at a $97 strike price, aiming to average down their cost basis if assigned shares.
• 🚨 Super Micro Computer (SMCI) faced a sharp decline in stock price due to accusations of accounting irregularities, leading to a drop of over 20%.
• ❌ The speaker warns against investing in companies with a history of financial fraud, citing examples like Worldcom and Enron, which ended in bankruptcy.

Q & A

What was the outcome of Nvidia's recent earnings report?

Nvidia reported better-than-expected earnings, beating on both revenue and earnings per share. Their revenue was $30 billion, which was $1.3 billion above expectations, and their earnings per share were 68 cents, 4 cents above expectations.

How did Nvidia's stock price react to the earnings report?

Despite the positive earnings report, Nvidia's stock price dropped over 7% after hours.

What is the intrinsic value of Nvidia according to the speaker's valuation?

The speaker's intrinsic value for Nvidia is $122, which is based on certain growth projections and assumptions.

What is the speaker's conservative valuation for Nvidia?

The speaker's conservative or pessimistic valuation for Nvidia is $94.

What are the buy points for Nvidia that the speaker has identified?

The speaker has identified buy points at $105, $95, $75, and $71 for Nvidia, based on technical analysis and support levels.

Why did the speaker sell cash-secured put options on Nvidia?

The speaker sold cash-secured put options at a $97 strike price to collect a premium, which would lower his average purchase price for more Nvidia shares if assigned.

What is the comparison the speaker makes between Nvidia and Cisco during the dotcom boom?

The speaker compares Nvidia to Cisco during the dotcom boom, noting that while Cisco's revenue increased 15-fold and its stock price increased 42-fold during the six-year boom, Nvidia's revenue has only increased fivefold in the 1.7 years since the AI Revolution began, suggesting there may be more growth potential for Nvidia.

What is the speaker's stance on buying stocks of companies accused of financial fraud?

The speaker advises against buying stocks of companies accused of financial fraud, citing examples of Worldcom and Enron, which went to zero after such accusations.

What happened to Super Micro Computer (SMCI) that caused its stock price to drop significantly?

Super Micro Computer (SMCI) was accused of accounting irregularities by Hindenburg Research, which led to a significant drop in its stock price.

Why did the speaker decide not to invest in Super Micro Computer (SMCI) despite its previous recommendation?

The speaker decided not to invest in SMCI after further research revealed concerns such as inconsistent negative free cash flow, high customer concentration risk, and the use of commodity components in their products, which did not meet his investment criteria.