Is it time to take profits on Nvidia (NVDA) stock?
Nvidia (NVDA) stock has already doubled in 2024, just like I predicted.
This is one of the best stock performances I’ve ever seen.
And it made investors all the more excited for the Nvidia GTC 2024 conference.
During the keynote speech, President of Nvidia — Jensen Huang revealed the company’s ground-braking AI chip…
Nvidia Blackwell GPU is the world’s most powerful chip for artificial intelligence.
It’s 3X to 4X faster than the best chip on the market today, and up to 25X more efficient. Here’s Jensen Huang holding the beast (left side):
Source: Nvidia GTC keynote 2024
Nvidia also announced project Groot (or Gr00t), an AI model that will power humanoid robots of the future.
Source: Nvidia GTC keynote 2024
Since the stock didn’t move much following the GTC 2024 conference, investors started wondering if Nvidia (NVDA) is still a good AI stock to own?
Here’s the thing…
Nvidia is one of the best businesses in history…
It buys silicon wafers from Taiwan Semiconductor (TSM) — which makes the chips from 3 tablespoons of sand — for roughly $700 apiece. It then packages the chips and sells them to the likes of Google (GOOG) and Microsoft (MSFT) for $50,000!
It’s one of the biggest markups in history — greater than any Louis Vuitton bag or Rolex watch.
But here’s the problem: Nvidia is moving too fast for its own good. Its AI chips are 100X faster than they were a decade ago.
All the other parts that make up a data center — networking equipment that allows the chips to “talk” to each other and so on — have only gotten about 4X faster.
Investors should be aware that this creates a major bottleneck where Nvidia’s chips can only work 30% of the time. The other 70% of the time, these $50,000 chips sit idle… but still take up full power.
It’s like driving a Ferrari in Manhattan. You can only go so fast.
Nvidia will keep on winning. But I expect a lot of spending to shift toward the lagging parts of the data-center equation: cooling equipment, storage, next-gen fiber optic cables, and so on.
Does that mean it’s time to take profits on Nvidia?
We took profits on Nvidia stock (again) inside my Disruption Investor portfolio last month.
Our analysis tells us it’s time to reinvest Nvidia profits into other AI infrastructure winners.
But we didn’t sell all the shares of Nvidia. Only half.
The time to fully exit Nvidia isn’t here yet. You can read about the 2 signals I’m watching for that will tell me when to sell NVDA stock here.
The introduction of the new Blackwell GPU AI chip at the GTC 2024 keynote has me convinced Nvidia’s bull run will continue.
But AI infrastructure stocks provide a better investing opportunity.
I’ll have more to say about this in my investing letter The Jolt⚡.
Click here to join us. It’s FREE.
You’ll also learn about:
- my favorite up-and-coming stocks,
- other megatrends beside AI,
- and my latest thoughts on the overall market.
I publish The Jolt⚡ every Monday/Wednesday/Friday.
