Nvidia Is Likely To Have A Time Correction Vs The Broader Market (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• I am correcting my last 'Sell' view on NVIDIA; despite Q2 FY25's result and guidance playing out as per expectations, the stock has not moved down materially as expected.
• Capex spending expectations from NVIDIA's top customers such as MSFT, META, AMZN, GOOGL and TSLA are broadly stable, unlike a few months ago when there were broad downward revisions.
• Chinese players are reducing reliance on NVIDIA by developing their own chips in response to government's moves to reduce US chip reliance and save costs.
• The recent correction in NVDA stock is driven by valuation multiple contraction as earnings growth expectations are still present. I expect this contraction to revert given easing of rates.
• Relative technicals of NVDA vs SPX point to a pause amid a broader uptrend, suggesting a period of ranging action ahead (i.e. a time correction).

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