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E7: NVIDIA AI BUBBLE - We Can't Stay Quiet Any Longer

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💫 Short Summary

An expert dismisses claims of an AI and tech bubble by comparing current market data to the dot-com bubble of 2000, highlighting differences in valuations and returns. The NASDAQ 100 performance and PE ratios in 2000 versus today support the argument that the current market is not in a bubble. The speaker shares personal trading experiences and strategies, emphasizing the importance of adapting strategies to avoid losses. Comparisons between past speculative froth in the stock market and current trends in tech and AI companies are made, with emphasis on Nvidia's exceptional financial performance. The video stresses the importance of understanding market dynamics and technological advancements for sound investment decisions.

✨ Highlights
📊 Transcript
Expert with 26 years of experience debunks AI and tech bubble claims.
01:33
Subscriber base includes hedge fund managers and financial journalists.
Points out variances in valuations and returns compared to the dot-com era.
Emphasizes that the current market is not in a bubble.
Analysis derived from personal experience and thorough research offers a distinctive viewpoint on the current market.
Analysis of NASDAQ 100 performance from 1995-2000 to 2018-2024.
06:53
NASDAQ 100 saw a 12x increase in 5 years from 1995-2000, whereas it only saw a 3x increase from 2018-2024.
Despite being 8% above the 2021 peak, the current market situation is not considered a bubble.
Earnings for companies have been growing, which supports current valuations.
Valuations in 2000 were higher than today's, showcasing a difference in market movements and indicating that the current market situation doesn't resemble a bubble.
A Look at the NASDAQ PE Ratio Over Time
08:45
The NASDAQ PE in March 2000 was 175, compared to 42 today.
If at the same level, NASDAQ today would need to be at 64,000, currently at 16,000.
Tech stocks like Qualcomm, Broad Vision, and ARM Holdings saw massive gains in 1999.
Nvidia is up 245% in the past year, not meeting the criteria of a bubble like in 2000.
MicroStrategy saw a 45x increase in a 12-month period.
Speaker reflects on stock market trading experience.
16:18
Initially made money but ended up losing it all.
Focused on technical trading and developed a process involving moving averages.
Key strategy is selling a stock if it closes below the 200-day moving average.
Emphasizes adapting strategy to avoid losses.
Analysis of stock performance over the past 12 months.
18:22
Comparison of current stocks to those during the dot-com bubble era, with a focus on AI stocks.
Notable increases in some stocks, but smaller magnitude compared to historical trends.
Market valuation metrics indicate the market may not be in a bubble.
Limited number of AI stocks showing significant growth.
Comparison of internet IPOs in 1999 to non-internet related IPOs.
22:47
Significant returns of internet IPOs with companies adding '.com' to their names.
University of Florida study shows surge in IPO activity in 1999 with over 70% first-day return.
Emphasis on parallels between IPO frenzy of 1999 and current trends.
Higher multiples and investor interest in tech and AI companies highlighted.
Increase in IPO activity in late 1990s.
26:09
Companies like VA Linux and The Globe.com saw huge first-day returns despite lack of profitability.
Comparison of late 1990s IPO market to present day, noting lack of similar first-day doubling in recent years.
Changing IPO environment discussed, with mention of companies like ARM as key players in current AI revolution.
Comparison between Nvidia and other leading companies in the AI Revolution.
32:26
Stocks in 2000 were highly speculative, while caution is seen today due to the high market caps of some companies with no sales or earnings.
Discussion on the IPO frenzy and potential future trends in the market.
Analysis of Nvidia versus Cisco and their significance in the current stock market landscape.
Nvidia's exceptional financial performance is showcased, with a net income of $29.7 billion in the last 12 months, surpassing Cisco.
36:35
Despite comparisons in market capitalization, Nvidia's PE ratio remains lower, suggesting that the company is undervalued.
Earnings growth has exceeded the increase in stock price, alleviating concerns of a possible bubble.
The company's gross margins of 72% and rapid growth in sales and earnings provide strong support for its valuation.
Nvidia's market capitalization reaching $1.9 trillion is unprecedented for a company of its size, setting a record for the speed of sales and earnings growth.
Revenue growth of top 10 NASDAQ 100 stocks in 2000 compared to today shows a 12 times increase in total revenues.
41:07
Despite the revenue growth, NASDAQ 100 price has only increased by 370%, suggesting potential undervaluation.
NVIDIA's earnings growth surpassing stock price increase demonstrates strong financial performance.
Understanding stock market dynamics and keeping informed about technological advancements is crucial for investors.
Impact of technology companies on customer financial stability.
43:58
Cisco, Intel, and Oracle targeted smaller companies, leading to financial instability when customers went out of business.
Modern companies like Meta and Tesla, major customers for Nvidia, are financially stable.
Countries are investing in AI networks, with Apple focusing on generative AI.
Nvidia charging a premium for GPUs due to strong demand and high return potential.
Companies like Apple, Nvidia, Microsoft, and Meta are purchasing GPUs instead of building them due to Nvidia's technological lead.
46:08
Competing with Nvidia is challenging, and the speaker highlights the risks of companies like Apple venturing into unfamiliar territories like GPU manufacturing.
Concerns about a market bubble are raised, and the importance of providing objective information to the audience is emphasized.
Doubts are expressed about current stocks resembling the tech bubble of 2000.
Importance of thorough research in making informed investment decisions.
49:19
Speaker's personal experiences from the 1999-2000 market crash are shared to demonstrate how stocks can rise or fall significantly without being considered a bubble.
Differences in valuations and stock performance between the stock market in 2000 and the present day are highlighted.
Risks associated with companies going public too quickly, leading to potential failures and losses for investors, are discussed.
Nvidia's market cap could reach $5.8 trillion if it traded at Cisco's peak PE ratio, with stock price estimated at $2300 per share.
53:22
Meta, Google, Microsoft, Tesla, and Amazon are purchasing from Nvidia, showcasing high quality and potential profitability.
Current tech environment differs from dotcom era as companies like Meta and Salesforce are starting to pay dividends, reflecting strong financial positions.
Research insights emphasize the importance of sound investment decisions and highlight potential opportunities in the market.