Is there any bullish argument left for NVDA going into 2023?

Submitted by Schwimmbo t3_zzxqzs in wallstreetbets

First off, I am aware that NVDA literally got cut in half YTD. So, on average, shorting it throughout 2022 has been a massively profitable undertaking and "the time to buy puts was exactly 1 year ago".

With those snarky comments out of the way, NVDA is still sitting on a PE of ~62 and forward PE of ~38.

That seems way too high in the current macroeconomic environment.

  • Fed isn't done raising rates yet. We are yet to reach the terminal rate and they have been clear in wanting to keep it there for a while.
  • Rates take some time to work through the real economy. I do think we haven't seen the pain JPOW spoke of, at least in the real economy.
  • There's been real and heavy gamer backlash against the 4000 series GPUs when prices were revealed. Gamers genuinely think NVDA has lost the plot and think they can charge whichever price.
  • Coupled with the end of GPU crypto mining, the market is likely flooded with cheap and still very high performance 3000 series GPUs, not generating any new revenue for NVDA.
  • Their GPUs are used for state of the art AI projects in other companies. I'm far from an expert but those are expensive projects and could easily be perceived as "not essential in these trying times" making said companies pause these projects, reducing yet again demand for NVDA's GPUs.

As I said, yes the stock has lost 50% in 2022 so some of the above has definitely been priced in. What is going to drive demand for their products in such a way that they meet revenue and EPS targets? Let alone allow them to give upbeat guidance?

Positions: none so far, thinking about throwing a few grand into longer dated puts.

Calling all devil advocates to come up with a bullish reasoning to spark discussion and gauge if the ship has sailed for this dumb gamble or the bearish reasoning does hold merit and is an educated guess that should net profits.

Have a great NY and may our portfolios be green in 2023.

Edit: cleared a few typos.

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Adseg5 t1_j2e6lay wrote

But bro just wait for the 50 series!! Hype train is already rolling! Grass is always greener!! 🙄🙄🙄

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Fuhnancial t1_j2eawuv wrote

The cool thing about percentages is that it can lose 50% of the 50% it already lost. Just buy the puts already img

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TopDeckHero420 t1_j2edazo wrote

Discrete GPU sales are the lowest in 20 years. Low/mid range stuff isn't expected for quite a few months, so guess it depends on how long you want to go. They gained market share and AMD didn't really hurt them with RDNA3 and the performance isn't going to challenge them much this generation. And their pricing is just as whack. So.. shrug.

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funbis t1_j2ej57o wrote

I am pretty bearish for NVDA in a short term. Under the current rate environment, their main revenue stream from data center will unlikely to produce strong growth. Other growth areas will take time to pan out. The stock price already down 50% from the peak but the PE ratio remaining very high. Longer term NVDA has good growth potential because it is well positioned in AI growth areas.

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silicon_replacement t1_j2el9sd wrote

Upside will.come from either government or business side,

Government cloud will buy more nvda hardware

New man less vehicle and planes

More business has to adopt

It has to be the business spending to save them, as business is using pretax dollar, consumer used after tax doller, so gaming is really hard to take off, the only thing is from business side,

Trump has 6 year tax loss on his business, but his business total value goes up, i.e his real estate, he is the biggest con on the Democrat controlled system

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Startedat10k t1_j2ep7hv wrote

The bullish argument: Is there any bearish argument left that isn't priced in?

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usually_guilty99 t1_j2eqrks wrote

NVDA GPU is like TSLA. Because of time to market, they reign in supremacy. With AI/ML taking front and center, GPUs will be in great demand for 2023+. But NVDA GPU does have competition. AMD has a much cheaper alternative. Benchmarks show that performance is comparable. We know that Datacenter/Cloud business is expanding. But will AMD be ready for the Cloud business surge in 2023 or 2024? Not sure.

Plus, Fed is certainly not done raising interest rates.

My call - NVDA has a reasonable run rate ahead in 2023 but not what we saw in 2021-22.

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Not_Sure_68 t1_j2er0zy wrote

Real rates are already way too high for an economy built upon cheap credit. The fed will pivot and light a fire under shares of overpriced tech shares like NVDA long before rate rises actually have a chance to arrest price inflation. Even the dishonest fed people know this that's why they incessantly lie about price inflation...which has clearly not been "transitory".

If you're going to short this sucker down 50% already, then you'd better watch the fed like a hawk as one whiff of backing off their token rate hikes could lead to a monster tech rally.

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Yul_B_Alwright t1_j2euqxn wrote

If everything is cyclical, short term bear with more rate hikes and talk of recession. I'm expecting market to keep taking a beating. Long term bull as I'm a fan boy of them and fell they have great long term plays in mind.

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Schwimmbo OP t1_j2faroo wrote

Replying to Not_Sure_68 (#1,238,930)

>If you're going to short this sucker down 50% already, then you'd better watch the fed like a hawk as one whiff of backing off their token rate hikes could lead to a monster tech rally.

That's for sure.

The ridiculous "FeD wIlL pIvOt" rumours a couple of months ago cost me a lot of money lol.

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Not_Sure_68 t1_j2fc51q wrote

Replying to Schwimmbo (#1,246,386)

Ridiculous? Why? Because it didn't happen on your timetable?

So then, when will the fed stop "tightening", in your learned opinion? When they do will they simply go back to easy money policy? ...iyo?

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Schwimmbo OP t1_j2fogtg wrote

Replying to Not_Sure_68 (#1,246,916)

Ridiculous because the Fed has been extremely transparent about them raising the rates, the pace thereof and the duration. A WSJ article claiming a pivot whilst JPOW sounded hawkish every speech and causing a rally... Yeah, that's ridiculous. Why can't the markets just accept that they'll act on what they said lol.

Besides that I nowhere claimed that I know when they'll stop the tightening.

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Not_Sure_68 t1_j2fsna0 wrote

Replying to Schwimmbo (#1,252,395)

JPOW is the same dood that insisted inflation was transitory. I don't believe the fed because they lie all the time. Anyway, if they wished to fight price inflation then they'd move fed funds to a rate above price inflation and stop screwing around with silly 25 - 75 bp hikes.

Even at 425 to 450 bp on fed funds, which took nearly a year to get to btw, there's zero chance they'll get a handle on price inflation. Instead they're simply normalizing high levels of price inflation while slowing destroying debt and equity markets. Here I thought the fed always aimed for 2% price inflation to steal slowly from savers...now 2% has turned into 7% and people are happy when it stops going up for a couple months. lol

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dCrumpets t1_j2ftgq3 wrote

NVDA graphics cards are much better than AMD for ML workloads. ML training workloads increase in their size every year as the industry cranks out ever better models. I firmly disagree on companies cutting their ML development in a deteriorating environment; for many companies, strong ML IS the economic future of their company.

NVDA stays high because as much as things could possibly deteriorate in the short term, in the mid to long term, NVDA makes one of the most critical products for the advancement of technology. When it dips, people will buy it, and at some point, we’re going to get a bullish tech market again and the shares will achieve an even greater premium. Their growth prospects in the ~10 year span are better than most mega cap companies, yet they are also one of the safest growth investments out there.

No doubt, you might make money playing NVDA, but I would watch out how long you’re short.

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