DELL - LRT Capital - Nvidia: What Is The Fair Valuation For NVDA?
2024-06-12 09:25:00 ET
Summary
- It is understandable that many default to the assumption that AI advancements are highly beneficial for Nvidia and consequently they opt to invest in NVDA stock.
- Nvidia has maintained extremely high gross margins and this raises the question of whether Nvidia could face a similar fate as Google.
- I anticipate the emergence of other providers of AI chips that will challenge Nvidia's dominance, and while Nvidia will likely respond, its substantial margins leave room for competitors to make inroads.
- There are risks associated with investing in AI: if the AI boom encounters any setbacks or obstacles, Nvidia's stock price could easily experience a substantial decline.
The following segment was excerpted from this fund letter.
Nvidia Corporation ( NVDA )
Over the past several weeks, I've dedicated significant time to exploring the realm of Artificial Intelligence ('AI'). My investigations have encompassed building proprietary AI tools, programming in Python, and examining businesses that provide AI-powered solutions or are capitalizing on the current boom. It is undeniable that AI has sparked a surge of innovations, leading to a colossal demand for computational power. This phenomenon is both understandable and undeniable.
The spectrum of innovation within the AI industry is truly awe-inspiring. Breakthroughs, novel models, and advanced technological capabilities are emerging on a weekly basis. However, for individuals lacking a scientific background, the intricacies of such innovations can be challenging to grasp. This lack of understanding creates a fertile ground for speculation and mania, as people often resort to projecting their own fantasies onto the subject....
LRT Capital - Nvidia: What Is The Fair Valuation For NVDA?