May 30

Five Things That Could Knock Nvidia Down

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Okay, it’s up 10,000% since May of 2013 and is now the best performing stock in America during the past decade. Everyone is obsessed. It’s the biggest story in the market this year. Cramer has now named a second family dog after it. Jensen Huang’s name is now in the mainstream alongside Bill Gates, Steve Jobs, Mark Zuckerberg, Jeff Bezos, Elon Musk. I get asked about the stock everywhere I go. No one seems to be talking about anything else.

If you’ve been invested in the stock for any length of time, you have now made a lot of money. And when you read articles like this at the Wall Street Journal, you start to feel as though nothing can stop this story.

Which is why now is a perfect time for us all to remind ourselves that stocks trading 170x earnings don’t normally reward the people who come in at these levels. And its an even better time to review some of the biggest risks to the story, because no matter where the price goes from here, sooner or later one of these things is more likely to happen than not.

Here are five things that could knock Nvidia on its ass, springing from my own paranoid imagination, having held onto the stock for eight years and counting…

  1. China invades / blockades Taiwan (or even looks like it’s about to).
  2. Massive technological breakthrough rendering $20,000 GPUs unnecessary for the future of AI.
  3. Government ban – any country – of ChatGPT or similar technology.
  4. Out-of-the-blue product malfunction or chip recall.
  5. Intel / AMD get their shit together and / or Apple, Amazon, Google, Microsoft AI chips go publicly available.

These are the ones I can picture. What am I missing? I’m sure there are others.

Right now it appears as though endless demand for top of the line GPUs will continue for as far as the eye can see and Nvidia is “the only arms dealer” in the world who can supply them. How likely is it that this state of play can continue on indefinitely? History says not very.

Not trying to kill anyone’s buzz. Just thinking out loud. Be careful anointing the next Jesus Stock. Unexpected things that have never happened before happen all the time.


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Company Specific, The Reformed Broker


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