My Thoughts on NVIDIA

Before I get started, I just want to state that I am not a financial advisor, nor is this a signal to buy or sell any positions in $NVDA. These are all my personal thoughts and will be written with underlying biases. Please take this post with a grain of salt and come to your own conclusion when it comes to making any decisions or allocations.

To start off, I want to say that this is going to be a piece about evaluating the organization more than its technical ability to produce chips.

$NVDA has been an extreme outlier when it comes to its placement in the markets over the past couple of years. In the past five years, we’ve seen a 3,000% increase in the price of their underlying equity, with the explosion really starting in the beginning of 2023, when AI technology really hit the mainstream media with ChatGPT. I believe that NVIDIA is an amazing organization with a lot of capabilities being presented to it, and they have a lot of future potential.

There is a significant amount of bullish strength in the organization, but they are heavily over priced in the markets at this point. But just because $NVDA has a lot of potential does not mean that it is the time to attempt to allocate funds to the organization.

Simply put, I believe that $NVDA is an amazing organization, but you should be extremely hesitant to allocate money to it at this time.

If you look at the historical data on $NVDA, if you look at the previous year and a half, it has been a no-brainer to allocate into $NVDA at any time and simply hold, but if you look at the previous movements, this is where things get sketchy.

$NVDA is going to be hosting their 6th stock split on June 7th, doing a 10:1 split. This is an amazing sign for the organization and allows retail traders to allocate into the organization with a lower barrier of entry, meaning that the hypothetical demand for their equity increases. I would say that there is an extremely high likelihood that $NVDA does continue to move up leading into the stock split as people are FOMOing into their position, but I would not recommend attempting to allocate into $NVDA right now, with the anticipation of holding $NVDA long at this current evaluation.

At their current evaluation, I believe that the underlying equity is heavily overpriced and will cause the overall markets to fall heavily once $NVDA returns to true value.

Assuming that people continue to blindly purchase into $NVDA, the price hypothetically should only continue to increase, but this is not the time to attempt to allocate based on speculation.

If you look at historical data, during Q4 2021 - Q3 2022, we had major global news about the Russia/Ukraine war that negatively impacted the economy, but we saw that semiconductors were the leading industry for the markets to come down. $NVDA dropped roughly 65% during that year's timeframe, making lows trading right above $100/share.

I am not saying that $NVDA is going to drop 65% from its current evaluation, but I am just stating that very recently, $NVDA did continually drop for an entire year, and once this bubble that $NVDA is growing decides to pop, that this is going to wipe out many traders.

What do I think is going to realistically happen to $NVDA from this point?

I think that $NVDA will continue to move up leading into the stock split, making new all-time highs in the process. However, I am expecting to see some choppier market conditions and increased volatility on the way up. They should only continue to move up going into the split as people are purchasing shares in speculation that this split, and depending on what happens after the split, is up for debate.

In the case that the split causes positive inflow to the organization, $NVDA can easily become the most valuable organization in the world, overtaking both $AAPL and $MSFT. This would be an amazing feeling going into the summer season and retail coming back into the markets, as this would push $SPY and the general markets to new highs.

The other side of this is that $NVDA does not have a good split as traders sell off their positions, as $NVDA did not move up heavily enough to justify holding the position, causing $NVDA to sell off.

Both of these scenarios can realistically happen, but it is just a matter of being both comfortable and confident enough to know how to navigate.

What is my sentiment?

If you are holding your $NVDA long, with zero intentions of selling the position, keep holding your position but you should look to sell covered calls on your position to collect premium on the back half of the trade. You are not worried about short-term volatility, and you should be fine

If you are waiting to get into $NVDA, don’t look at $NVDA for a while. The organization is too strong, and it won’t come down anytime soon, but it is too overpriced to want to allocate into the organization and have confidence in holding at this evaluation.

If you are bearish, $NVDA. You are right on the sentiment, but you are wrong. The organization is too strong at this point, where, yes, it is highly overvalued, but this is not the time to attempt to fight the momentum. You will get wiped out if you are not quick enough with your allocation and have the perfect timing. Wait until there is major news or a confirmation of a reversal prior to entering into an $NVDA short

If you are holding $NVDA in general, without anticipation of holding the position forever, look to sell the organization into the FOMO that is being created right now. You should be up nicely on your position at this point, and there is no reason that you should not look to realize gains. If you want to take profit but retain exposure in the organization, look to take your cost basis out of the position to re-allocate elsewhere but keep your profits in the form of a zero-cost basis equity play. Taking profit on $NVDA never hurts, and realistically, they do need to come down in evaluation. Look to take profit on your position now and load back up on equity once there is a dip.

The best way to capitalize on $NVDA in these market conditions, in my opinion, is via actively scalping and day trading the organization when you can when you have both the comfort and confidence to allocate on an intraday basis. Capitalize on the short-term momentum and realize gains in the process.

Final thoughts

I think that $NVDA is an amazing organization with extremely strong, bullish momentum. You should not attempt to fight this momentum until there is a confirmation of a reversal, but I would be hesitant to allocate into the organization now at this point as it is heavily overvalued. If you are looking to capitalize on the opportunities available, look to actively day trade and scalp it when you can.

This will be a great time with lots of opportunities presented to us, but it is just a matter of being able to remain consistent and protect your bottom line.

Be careful if you are attempting to allocate into $NVDA at these current prices, but congratulations to anyone who has been holding $NVDA long over the previous couple of years. Let’s see what this stock split ultimately does to the organization, and see where it goes here over the next couple of weeks!