Independent Solutions Wealth Management Portfolio Manager Paul Meeks joins Yahoo Finance Live to discuss Nvidia’s AI potential and plans.
video transcript
– After losing its only remaining sales rating, Nvidia is getting a boost from the streets here today. from 175 to 355. Today, the chipmaker is up just over 2%. However, year-to-date, we see a gain of almost 90%.
Currently joined by Paul Meeks, Wealth Management Portfolio Manager for Independent Solutions. I’m honoured to be able to meet you. Obviously, Nvidia has a lot of upside potential. At least, HSBC thinks in terms of his AI and investments in it. What do you think of your current take on NVIDIA and the run-up we’ve already seen so far?
– So when you see this phone today, you hit the nail on the head. This is the last analyst to make a sale. And what happens with reported sell-side research is that when the stock price moves, the call needs to change. So I don’t know if anything has been gradually revealed today. Nvidia thinks he’ll be one of the leaders in the basket of AI stocks, but at the moment, I think the stock is a little higher, maybe more. It can even be very expensive.
I own the stock, but it’s not one of my big holdings. Not because there is an underlying problem. I hope it works. After being up 90% almost year-to-date, I think it may be ahead. Let’s hear what they have to say about their prospects on our next conference call. I hope you won’t be disappointed.
– Yeah, it’s really hard to imagine room for more to do after they’ve had a year. How has artificial intelligence essentially remade the entire sector from an investor’s perspective?
– We’re all coalescing about who drives these chips, especially when it comes to semiconductor names. Well, the good thing about these AI chips is that they are much more priced and much more profitable. So while some of Nvidia’s moves may be justified, others will too. I think Advanced Micro Devices, AMD will be a player in this space. The problem with that particular company, at least in the short term, is that it’s diluted by the rather poor fundamentals of the global PC business. But there will be more than that, but perhaps he will be the leader, especially in the AI segment, with Nvidia.
– Paul, in my opinion, what’s the worst route we’ve certainly seen in chip makers last year? Nvidia was one of the names that was under a lot of pressure until about the fall of October. The worst is past and what do the runways of growth for these many names look like?
– I think semiconductor companies should do well in the second half. The only question is how much of it is already built into the stock price. Many PC companies are doing poorly. The smartphone industry is in decline, and even though most of the semiconductor industry has moved away from these two ends of his market over time, at least some dependence still remains.
The future is uncertain until demand for both smartphones and PCs recovers. AI is great. It’s going to be a big problem over time, but for now there are some other areas we have to worry about. Stocks that have just risen since the 1990s have potential if they don’t offer good fundamentals, such as beating out huge numbers in the next few quarters. , people will say, wow, that stock is kind of expensive. You cannot buy it here. Maybe I should sell it.
– How are Paul, some of the names in these chips, and perhaps others in the tech space, profiting from the perception that the Fed will pause, if not rate cuts later this year?
– That’s my biggest concern. At this point, I think it’s the 80/20 rule, not only in semiconductors, but in technology as well. In the first quarter of 2023, the NASDAQ is up his 17%, which is a great year for his one quarter, while the more value-driven Dow is flat. I don’t think it’s because technology companies necessarily stand out.
The biggest talk of the tech industry so far this year is how many people can be laid off to cut costs. What moved these stocks, and almost solely what moved these stocks, is that the Fed not only stopped raising rates (I think that’s accurate), it turned around, turned around, and started cutting rates. This is the recognition. I don’t think that part happens. And if that doesn’t happen, until the second half of next year, which is my prediction, there will be some resurgence in these stocks, especially tech stocks and other aggressive growth stocks that are driven entirely by the view that discount rates will continue. There may be In other words, the Fed will start pivoting with lower interest rates. I don’t think so.
– Calculations may be on the horizon. Thanks to Paul Meeks for joining the conversation.
