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Thursday, 07/06/2017 7:30:42 PM

Thursday, July 06, 2017 7:30:42 PM

Post# of 13647
In anticipation of the August earnings release, it is important to note a few key considerations in regard to this stock which can easily be added to the FAANG index and be know as "FAANNG" in the not too distant future. Hopefully this does not occur as the herd mentality with FAANG will hide the true upside potential for NVDA.

Yes the PE of 46x depending on the day may seem high, but if one drills down properly, it is not so much in reality.

First and foremost, traditional gaming markets are not slowing, in fact they continue to grow. People of all ages enjoy gaming and those in the over 40+ category are becoming active participants/customers. As such, the Citron call of trading back to $130 on gaming chip slowdown is hard to concur with. Recent price volatility is the result of profit taking and short term sector rotation, nothing more.

2) Growth of AI/ML apps in the datacenter and automotive verticals are ever increasing.

3) Autonomous Driving market is enormous and not just Tesla, which can't turn a profit with no competition currently, so how will they when others enter?

Items 2 & 3 above are at the head of the class now, no longer in the back row.

4) Chips for Artificial Intelligence also extend to Drones and Robotics which will encounter explosive growth through 2025.

These markets are evolving quicker than most Wall Street Analysts can keep up with, so the historic value of institutional research is not as impactful as it once was...the recent Red Hat Earnings release is the perfect example of this as they blew away the highend EPS and Revs and also raised guidance.

If we look at all of these factors, plus the fact that the leadership team at NVDA is exceptional, it is a reasonable expectation to see NVDA rally strong a few weeks prior to the August earnings release and set a series of higher highs thereafter.

One final thought, if the corporate tax rate is reduced to 15% or more likely 25%, the return of offshore cash will most likely make NVDA a significant acquisition target.

Just food for thought...








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