My Nvidia Plan Moving Forward
What I'm doing with a huge winner
As readers of Spilled Coffee know Nvidia NVDA 0.00%↑ is one of my largest positions. It was also one of my stock picks for 2023. Investing Update: 3 Stocks for 2023. Here is some of what I said from that post on 1/21/2023.
The best in class in this sector is Nvidia. I’ve added to my position a few times in the back half of last year. I bought the SMH ETF as I wanted more exposure to semis in addition to Nvidia and didn’t love any other individual stock. I expect Nvidia to be among the biggest winners as the market begins to turn bullish. It’s a high beta name so the ups and downs can bring volatility. After being down 50% in 2022, it’s up 25% so far in 2023 and from the lows it’s now up almost 65%.
With 84% of their revenue coming internationally and their high performance chips powering gaming, automotive, AI (artificial intelligence) and their rapidly growing data centers, I continue to remain heavily invested in Nvidia. It’s hard to find many stocks with as much upside as Nvidia presents over the long-term.
In looking back, I originally started a small position on 1/21/2022 at $244. I wrote about it in, Investing Update: Why I’m Buying Nvidia.
Nvidia (NVDA) I started a position in Nvidia. I’ve wanted to get some semiconductor exposure in my portfolio. My view is that semis are going to be the new oil. We saw how important they are to most all things that are made nowadays. Anything that has any type of technology in them needs semiconductors to work.
I was looking at AMD as well but really like the long term future of Nvidia. Their chips are the most advanced and technological in the world. They also have one of the most visionary CEOs in Jensen Huang. When you talk innovation and building the future of technology, he is right there behind Elon Musk in my opinion.
Nvidia currently 30% off it’s previous high. If it goes down more, I will add to my position. Like Google, which I also recently bought, this is a buy with an eye on the long term.
It did go down and I continued to add to it and lowered my cost basis. I bought all the way down to $138 on 9/1/2022. Investing Update: Is Everyone Now Bearish? That was my last buy which at the time was a new 52-week low.
Nvidia Added to my position at $138. It hit a new 52-week low after the US imposed a new license requirement for the company's AI chips to China and Russia. My feeling is this is another short-term related negative story for Nvidia. Very long this name.
It did end up setting a new low at $108. I did have another buy order in at $100, which never filled.
At the time it was hard to continue buying because it felt like I continued to try and catch a falling knife but kept getting cut. From my initial buy on 1/21/2022 at $244 until my last buy on 9/1/2022 at $138 I’d purchased eight blocks of shares during that time. I discussed each purchase in my Investing Updates below, sort oldest to newest.
Investing Update: Why I’m Buying Nvidia
Investing Update: Putting Cash to Work
Investing Update: Why I Sold Facebook
Investing Update: Why I Bought Goldman Sachs
Investing Update: Where Do We Go From Here?
Investing Update: My 2nd Half Game Plan
Investing Update: Insiders Are Still Buying
Investing Update: Is Everyone Now Bearish?
Fast forward to last week and Nvidia has absolutely skyrocketed. Thursday was its best single day ever up 25%. Then the run continued into this week setting new all-time highs and becoming only the 7th U.S. stock ever to hit $1 trillion in market cap.
YTD +180% (Biggest gainer YTD in the S&P 500)
From my first buy of $244 +64%
From my last buy $138 +191%
From the low of $108 +271%
The rush of upgrades came fast and furious following Nvidia’s rally. I think the best comment came from Evercore, "What can we say other than just WOW!.. It sure feels like nearly every cloud dollar is going to $NVDA this year"
The actual earnings breakdown below courtesy of
were just a home run all over the place.
As I evaluate my current position in Nvidia I’ve decided to not trim or sell my current position.
The reason, I mean who can go against a founder and CEO who tattoos the logo of his company on his arm.
That was a joke!
Right now Nvidia is positioned to lead this AI revolution. The demand for their chips are out the door and around the block. They have the momentum and there currently is no competitor for these chips. If your building AI related software you need Nvidia’s chips.
Their technological advantage is evident as it seems no matter the new technology that’s being developed, Nvidia is always the key player. High-end gaming chips, bitcoin mining, the metaverse and now AI all rely on Nvidia. Simply put, right now Nvidia is used to build technologies. Any new technologies that come about after AI will also likely need to use the king of data centers.
So what do you do when a stock you own runs up to a well over 100% gain in a few months time? There were two questions that I asked myself on whether to hold or sell. Taxes don’t come into my decision as I own Nvidia in a tax sheltered account.
Is there a better place to put the money from selling Nvidia shares? I don’t think another stock that I own, nor any other offers what Nvidia still does in terms of upside at these levels.
Am I comfortable with Nvidia being my second largest position and if I didn’t own Nvidia now would I buy it today? The answer to both is yes.
I may at some point trim shares if I want to raise some cash to add to another existing stock of mine or to start a new position in something. I’m fully invested and in all likelihood, those funds would come from selling some Nvidia shares to do so.
I’ve had a very high conviction on this stock and still continue to do so. It’s hard when you get an outsized return in a short area of time. Sometimes you’re right and sometimes you’re wrong. It’s nice when you’re right. But then you remember all the times that you were wrong. I mean even a broken clock is right twice a day. This is all apart of learning as an investor. Moving forward I could be wrong or I could be right. Regardless who you are or how many years you’ve been doing this, you don’t know. Nobody knows. That’s the fun part.
The Coffee Table ☕
This weekend my wife and I watched the movie Air. It’s the story about Nike and Sonny Vaccarro landing Michael Jordan and how the Jordan brand was born. It was a superb movie. The cast is incredible, Matt Damon, Jason Bateman, Viola Davis, Chris Tucker and Ben Affleck. The music was a number of the classic songs from the 80s. Easily the best movie I’ve seen this year.
Each year I like to see which companies lead the Top 100 brand reputations rankings and where they compare to a year earlier. 2023 Harris Poll 100 reputation rankings. American companies with the best and worst reputation. Patagonia, Costco, John Deere, Trader Joe’s and Chick-fil-A round out the top 5.
I found this rather interesting from
. Fast food chains with the most locations in the U.S.
Source: Turner Novak
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Disclaimer: This is not investment advice. You should not treat any opinion expressed as a specific inducement to make a particular purchase, investment or follow a particular strategy, but only as an expression of an opinion. Do your own research.