The $15 Trillion "Glitch" That Could Derail AI
By Adam O'Dell
Chief Investment Strategist, Money & Markets
Banyan Nation,
After the market’s closing bell rings at 4:00pm today … there’s going to be a phone call…
And this single phone call will determine the future of the $15 trillion AI mega trend.
I realize that might sound outrageous — but I’m talking about Nvidia’s (Nasdaq: NVDA) quarterly earnings report.
As you probably already know, Nvidia is the ultimate “picks-and-shovels” play for the rapidly growing AI boom.
The company’s graphics processing units (GPUs) are the hardware of choice for AI researchers, cloud computing systems and more.
Nvidia has built a $3 trillion business around these GPUs.
To put that into perspective…
That’s enough wealth to have turned 3,000,000 people into new Nvidia millionaires…
… Or enough to fill every single seat in every single professional football stadium in the U.S. with brand-new millionaires.
All from a company that was virtually unknown to most investors just a few years ago.
We’ve already seen how a long-term investment in NVDA could’ve paid for nearly half your retirement account, a staggering 17,400% gain!
So you can see why this afternoon’s earnings call will be extremely important.
But this call will also reveal the first signs of a “glitch” that will soon derail NVDA’s freight train momentum — and send a much smaller stock rocketing up for massive gains.
Before we get into that bombshell, I’d like to bring you up to speed on what the experts are saying about the stock…
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Has Wall Street Gone Too Far with Nvidia?
When it comes to guidance from Wall Street experts, I’m usually skeptical to say the least.
Over the years, we’ve seen these experts miss out on so many great opportunities … and then fail to warn investors when a hot stock was clearly taking a turn for the worse.
That’s part of the reason why I spent the last decade building out my own Green Zone Power Ratings system to evaluate investments for my subscribers.
It’s still important to keep up with Wall Street “gossip” because it provides critical insights into how these investors think.
For example, virtually every major firm has NVDA rated as a “buy.” That’s rare, even for top stocks. Companies like Tesla (Nasdaq: TSLA) have almost always had at least a few naysayers.
To be fair, the company has beaten both revenue and earnings estimates across all six of the last six reports. Even as it steadily raised guidance, the beats continued.
But things get really interesting when you start looking at the “big picture” numbers … because they simply don’t add up…
For example, Nvidia’s soaring sales growth has been a key factor in its rapid rise. Sales doubled in 2024, and they’re projected to double again in 2025.
But sales can’t keep doubling each year — even with a tidal wave of demand for AI hardware. By 2026, sales growth is projected to decline by more than two thirds.
That’s an even bigger problem when you look at the price-to-sales ratio for NVDA, which is astronomically high.
We all know that paying high prices is the “name of the game” when it comes to tech investing. Since you’re buying an innovator, you’re buying all their future sales growth, and the market is often eager to price that in.
But at today’s prices, investors are effectively paying a massive premium for future sales growth that seems less and less likely with each passing day.
To top it all off, NVDA is nearly tied for the highest weighting in the S&P 500 — even though it’s substantially more volatile than its peers.
You don’t need to be an AI expert to see why this all smells fishy. The rest of 2024 is likely to be rocky for Wall Street’s favorite AI investment.
And that’s before investors discover the “glitch” that could soon stop AI dead in its tracks.
That’s too big a story to share here in my daily update, so I recorded a special video briefing with everything you’ll need to know before Nvidia’s earnings call this afternoon. Click HERE to watch it now, this time-sensitive presentation is going offline after the market closes today.
To good profits,
Adam O'Dell
Chief Investment Strategist, Money & Markets
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