Why I’m Still holding Nvidia

by | May 31, 2024

Why I’m Still Holding Nvidia

Some of you who have been on this journey with me for a while may remember that back in December I wrote to you about why I believe tech will lead the way in the markets.

In other words: if the market is bullish over any longer time horizon, I think it will be led by tech. I don’t see a scenario where the Magnificent 7 fall apart but the broad market maintains bullish sentiment.

There are a lot of reasons for this, but first I just want to take a look at some of the biggest names in tech:

They’re all up over the last year, and some quite considerably.

These companies also have something really spectacular in common: a market cap above $1 trillion.

So even with Apple’s more modest price increase of 7% over the last year, the numbers are huge when you consider Apple is a $2.9 trillion dollar company.

For me, relying on the already proven tech giants has been a more successful path forward in my own investing compared to trying to predict the next big thing.

Because in the world of tech and investing, predicting the next big thing is really hard. 

However, identifying what’s already succeeding and jumping on board is substantially less hard.

Here’s the trend I noticed:

Many of the “next big things” were coming from the biggest companies on the planet.

We often talk about innovation or “ground floor” ideas like they’re always generated by little-known companies trading for pennies on the dollar, but that doesn’t seem to be the case nearly as often as the anecdotal stories about breakthrough technology would lead us to believe.

And there are some obvious reasons for that. I’ll start by quickly mentioning a few of those but, ultimately, I want to talk about a different reason for this. One that I believe is often overlooked.

The reason I’ll share is a key driver of my investment decisions, and I believe it plays a significant role in shaping the next decade of the markets.

Let’s begin with the obvious reasons:

Obvious reason #1: They have the best people working on the next thing all the time.

In the most simplified explanation of this point: When you’re in a position to have the best and the brightest people working around the clock on what the next leap in technology will be, you have a higher probability of achieving that technological leap than anyone else.

Not only that, but these companies don’t necessarily have to originate the idea to claim ownership, leading us to reason #2.


Obvious reason #2: Big companies can simply acquire smaller companies that have the next big thing.

We’ve seen this time and time again. It’s often easier for Facebook to acquire Instagram than to create it (and then compete with Instagram). YouTube is now vying for the number one search engine in the world.  That’s exactly what Google anticipated when they acquired them.

This will continue to happen because these deals just make so much sense:

Big companies want to fend off competition, continue to innovate and find ways to grow. Small companies want money. 

But that’s not the only advantage big companies have…

Obvious reason #3: Big companies have the marketing power to make old ideas work.

If you look at many of the technological “breakthrough successes” since the turn of the century, you’ll see a fairly common denominator: They weren’t actually technological breakthroughs… They were marketing breakthroughs.

There’s no greater example of this than the largest company in the world: Apple Inc.

When iPods came onto the scene, they revolutionized music forever (or at least for a few years until iPhones could do everything iPods could and a million more things).

But when the iPod was released, there were SIX other MP3 players on the market. That didn’t matter much when Apple unleashed its marketing genius though. Within just a few short months, Apple DOMINATED the MP3 market.

Even when Microsoft, another true juggernaut, entered the race, Apple had already taken its victory lap and no one was catching them.

They didn’t invent tablets either, but they DOMINATE the tablet market.

They didn’t invent wireless headphones either, but they DOMINATE the wireless headphone market.

They certainly didn’t invent the smartphone, but they DOMINATE the smartphone market (at least in the US).

The point is, it hasn’t been the innovation breakthroughs that have allowed Apple to take quantum leap after quantum leap in growth. It’s their raving fan base and elite marketing.

They have an uncanny ability to make it seem like they’re bringing something new to the market — and for millions of people to buy in — whether it’s actually new or not.

Obvious Reason #4: They have the research and development budget.

I won’t spend much time on this one because it relates to the first point and it’s pretty self-explanatory. 

The fact is, that technology is costly to develop. The more funds you allocate to R&D, the more likely you are to drive innovation.

And in case you’re not sure who spends the most on R&D, it’s exactly who you’d expect.

Now keep in mind, that ­these numbers are from 2022, so both revenue and R&D spending have grown significantly for some of these companies, ESPECIALLY Nvidia:

And speaking of Nvidia, that’s one name I want to talk about today. A lot of people expect Nvidia to pull back through the rest of the year… And they’re probably right.

But I am still holding it because of what I said above. I am not trying to time the stock or pick the best profit-taking levels, I am simply betting on Nvidia over the long haul to continue winning. And, so far, it’s proven it can do that.

Nvidia Has Room to Run

I discussed momentum in depth yesterday. And we all know these trends and breakthrough technologies are the most powerful opportunities in the entire stock market.

Think about Nvidia and the momentum that the AI boom has created for the company. Since Nvidia’s fiscal fourth quarter of 2023, their revenue has risen from $7 billion to $26 billion this most recent fiscal first quarter of 2025 (their fiscal quarters run about a year ahead of the actual calendar date).

That’s a near 4x increase from a large tech company that’s still able to innovate and create the “next big thing.”

And notice that it is showing up in the revenue. It’s not just AI speculation or “hype” driving the Nvidia surge — they’re putting up real dollars in a big way.

That’s why identifying the momentum with these kinds of trends is so important. There are a lot of methods that can totally miss out on trends. But momentum isn’t one of them.

What that means practically is that you didn’t have to dig into the fundamentals of NVDA to figure out if it would be the AI king. You didn’t need a hot stock tip or any complex analysis.

All you needed was to see the chart… Nvidia was building momentum like no other stock out there. Add in that their market cap was already in the hundreds of billions and you can be sure this was real momentum and not a flash in the pan.

You see, when some in the market claim that Nvidia is overextended and it’s made its run, I say sure… It probably will have some pullbacks along the way.

But let’s never forget that everyone said Apple was overvalued back in 2012… Or Microsoft in 2015 or Amazon in 2018… Just look at what they’ve done since.

In the last month alone, the stock is up about 25% and soared after its last earnings release.

The last earnings were revised higher and higher by Wall Street analysts, and even with those upward revisions Nvidia still beat ALL expectations.

And their projections, backlog, and contract revenue for the coming quarters were revised higher and are showing even more moonshot potential.

So, do I think Nvidia is over-extended and has run out of gas?

In the short term? Maybe. In the long term? Absolutely not.

Nvidia is one stock that has some serious room to run, especially with the growth in AI technologies and the momentum it’s created for Nvidia in the marketplace.

— Nate Tucci

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