Okay, so it’s up 10,000% since May 2013 and it’s now the best performing stock in America for the past decade. Everyone is obsessed. It’s the biggest story on the market this year. Cramer has now named a second family dog after him. Jensen Huang’s name is now in the mainstream alongside Bill Gates, Steve Jobs, Mark Zuckerberg, Jeff Bezos, Elon Musk. I get asked about stock everywhere I go. No one seems to be talking about anything else.
If you’ve been invested in the stock for a while, you’ve now made a lot of money. And when you read articles like this at the Wall Street Journalyou start to feel like nothing can stop this story.
That’s why now is a good time for all of us to remember that stocks trading at 170 times earnings don’t normally reward people for getting to those levels. And it’s an even better time to review some of the biggest risks in history, because no matter where the price goes from here, sooner or later one of these things is more likely to happen than unlikely.
Here are five things that might knock Nvidia on the ass, from my own paranoid imagination, having held stock for eight years and counting…
- China invades/blocks Taiwan (or even appears to be about to).
- A massive technological breakthrough rendering $20,000 GPUs useless for the future of AI.
- Government ban – regardless of country – of ChatGPT or similar technology.
- Sudden product malfunction or chip recall.
- Intel/AMD get their act together and/or Apple, Amazon, Google, Microsoft AI chips become publicly available.
These are the ones I can imagine. What am I missing? I’m sure there are others.
Right now, it looks like the endless demand for high-end GPUs will continue as far as the eye can see, and Nvidia is “the only arms dealer” in the world that can supply them. What is the probability that this game state can continue indefinitely? The story doesn’t say much.
Don’t try to kill anyone’s buzz. Just think out loud. Be careful anointing the next Jesus Stock. Unexpected things that have never happened before happen all the time.