NVIDIA's winning streak and why Stephanie Link is buying

in in Starbucks. We saw it's up 26% year-to date. Um, what do you think is happening here with this particular story? What else do you like in that space if anything? >> Well, the CEO is getting it done and it's he's getting it done. The turnaround much faster than expected. This is Brian Nickel. Has a great had a great track record at Chipotle. The stock was over up over a thousand% um when he was the CEO of Chipotle. So now he's doing his thing. He's got all kinds of plans in place to fix the stores, to fix the products, service and all of that, but I think on top of that, now you have this catalyst about AI and what they could do there and lowering costs because we got to get those margins higher. That's the one beef on the name, right? Because he's spending so much fixing it all. Um, so that's that's the one thing that that I'm that I'm watching closely. Uh, but I also think discretionary is poised to outperform between now and the end of the year should oil prices stay even here. They don't even have to go down more. We're already off 35% from the peak seen uh back in April. [clears throat] I mean it's the only negative sector year to date. So there is only one way to go [laughter] from here. But your other move today really plays into how we began our program and what we're witnessing in the market over the last you know session and a and a quarter uh if if you will and that is the move that you made that we documented on halftime buying Nvidia for the very first time. There are buyers out there who are just not going to let these stocks but if you're running too far away from them in either direction. >> This is bestin class on sale. Aren't we supposed to buy low and sell high? And this stock is trading at 18 times forward estimates on PE, 15 times EBITDA, the cheapest since 2019. >> Cheapest in seven years, right? You heard Christina say that >> since 2019, the cheapest. And I had never owned it. I I chose Broadcom and I did well there, but I want to own best-in-class. They've got 97% market share in GPUs. They've got excellent software, proprietary software that's hard to duplicate. The stock has underperformed the group by 53% year-to date and 72% in the past year. I got to think that there's some catch-up here. When a company is growing earnings at 100%, revenues at 80%, gross margins 75% and free cash flow, they're going to have 26 billion next year. Like all of that is so compelling to me. I don't have a catalyst per se. I think the quarter could be it, but I do think I'm gonna stay patient on it and I'll keep buying more because, you know, it's hard to chase some of these other semiconductor names. Even though they've had such a nice run and now we've had a pullback, they're still up a lot. >> How do you, Cam, view what's going on in this market? Make sense of it for us? Yeah, look, I think that we still have to respect the fact that the market is still very much in an uptrend and that 50-day moving average has been incredibly resilient despite all the things that we've thrown at it. Even though we've had a re-engagement of the war, you had a brief uplip in in oil prices. And all that comes down to is that we've been in a world where earnings have been so resilient. 12 month forward earnings estimates are up 20% year to date. And so in order to get to those price targets of 8,000 plus by the end of the year, all you have to assume is that we get to 2027 numbers of $400 a share. Now put today's valuation on it of 20 times and that's how you get to 8,000. The big question is can we still trade at 20 times? Is this a market that still deserves that somewhat premium valuation? And we have seen a big derating in things like the Mag 7, including Nvidia. you certainly have a bigger weight within something like semiconductors which is more cyclical and arguably uh deserves a lower multiple. So in order to get to 8,000 you or not to get to 8,000 you have to effectively argue that you can't keep trading at 20 times. >> Yeah. How do you see it here? >> So I do we very much agree that the earnings and upward earnings revisions momentum keeps this market moving higher. What I think I can add here is how much the AI story has dramatically changed this year. Um, Mag 7, what Mag 7 and being one example, but really how quickly investors have moved on from that theme. And not because the earnings isn't there or the valuations hasn't become supportive, >> but because [laughter] of the earnings surprise and the second derivative of the earnings graph. >> When you say the surprise, how strong it's been. >> The earnings surprise. So every single quarter when we look at earnings growth for this magnificent group, it's not just are you growing earnings earnings nearly 30% but by how much are you surprising expectations and they keep beating but by how much is really what has changed for the group. Two years ago they were beating by 15 percentage points. Now they're beating by 5 percentage points. And so I think this is a really important lesson for memory and all of the hottest stocks that the turn there comes not because the earnings really fall off a cliff >> but because it has become fully appreciated. Are we there yet? >> Probably not. >> Clearly the magnitude of that rally is moving a lot faster than it did for the Mag 7. So I do think the theme moves on a lot more quickly too. two full. >> It bothered us too that your employees weren't [music] taking full advantage of their retirement plans. So, Vanguard created something to give them a little edge. With Vanguard's well on your way, 87% of employees took action to improve their financial well-being. Vanguard discipline that delivers. >> Maybe Nvidia falls into that category too, just given where it's, you know, valuation has gone. It's it's in the, you know, MTUM uh ETF. that's been pretty volatile. Hasn't gone much of anywhere. If you back that out, you know, year-to- date, you'll get a better look at really what Nvidia's done. Uh, as you know, people wait for this stock to to get going again. It had that draw down in the late spring. It had a nice pickup and now it's been back doing a little bit of nothing. Stephanie Link joins us now because uh this is a big deal for her. Uh, you bought Nvidia, so it's nice to have you. Thanks for joining. Tell us why. Tell our viewers why this was the time to do that. Yeah, I I've never owned Nvidia um regretfully, but it's the valuation that is very compelling to me for what you're getting. This is best in breed on sale, and that's what I like to do. It's 18 times PE. It's 15 times EBIT DA. This is the cheapest the stock has been since 2019. It is underperformed the group 53% year to date. In the past year, it's underperformed the group by 72%. So, it's been a big lagard and I think it's going to play catch-up because the fundamentals are extremely strong. This is a company that has 97% market share in server GP in the server GPU market. They have proprietary software platform. They've got new compute platforms that are coming. They're even getting into expanding into CPUs. So, this is a company that actually grew earnings 130% year-over-year last quarter. Revenues of 85% gross margins in the mid70s and it's sustainable there in my belief. and free cash flow is going to double from this year to next year to $26 billion. So, I think the fundamentals are very strong. I don't understand why the action has been so poor, but I think the valuation now makes so much sense to me um for the long term. >> Josh, good move here. >> It's been in the works for the works. >> Look, anytime Stephanie and I agree on a stock, I I feel way more confident than when she and I disagree. Um, and Stephanie and I have been talking about Nvidia on this show for the last 15 years, and she's made a ton of money in names like Broadcom that have been rallying right alongside, but we're just on behalf of the Nvidia shareholders, we're thrilled to welcome her with open arms. I I would point out there's a little bit of a shareholder transition in Nvidia taking place. I think a lot of the action that you're seeing in Micron, those are the same people that were attending earnings release parties in Manhattan two summers ago for Nvidia. The the momentum crowd has completely left the stock. I know there's a remnant of it that's still held in MTUM and some of the big momentum strategies, but it has not been a momentum stock in a long time. >> I think it's better than a momentum stock. I think now what you have um is a fairly low risk to the future outlook. I agree with what Stephanie had to say there about the proprietary platform. That's why I've been >> bullish in the stock for a long time and uh you don't have to pay a 4050 multiple on this thing like you might have to for some other areas within semiconductors. So I I think it's great that she's in and I hope we make money together. >> Brenn, what do you think? >> So obviously glad to have you in. I've been in it for a long time. I had some of my position get called away at 200. I do think it's important though. I get that the company is cheaper today than it's been in a long time, but I do think when I go back, I want to say in at the end of 2022, it had a market cap, >> I think, of around 350 or 60 billion. We're just shy of five trillion today. So, as a longtime investor, I kind of asked myself, is this four to five trillion somewhat like upper Earth orbit that we can't get past because that's such a big number and that even though they continue to surprise the stock gets cheaper, it is a $5 trillion company. And so that that's that's why I'm comfortable once again still selling calls because the stock just gets cheaper and cheaper. Jensen saw all of this coming ahead of time. So, I think the stock should be much higher, but I'm just questioning, will the market allow a 5 trillion company to go to 10 trillion? I don't know. It may take a long time to do that. But great ad, but I still like selling calls against it. Yeah. >> Hey, Brent, our mutual acquaintance, Adam Parker, >> has been writing and talking about Nvidia as though it's not just a company, it's an asset class. And, you know, some people will dispute that and they'll say there's more competition coming and they're not just going to own GPUs forever. And that's fine. But um I do think if you look at the earnings growth since that time that you referenced then in 2022, earnings growth is actually outpacing stock price and market cap growth, which is why it's cheaper today than it was four years ago. >> And I think so long as they can continue with reasonable levels of earnings growth, there's no reason why 5 trillion has to be a hard cap. >> Right. Right. But I mean earnings growth typically does outpace stock growth. I mean, the earnings growth of Micron is is three-fold of the stock price over the last year. And so, that to me is is normal. Once again, I'm in Nvidia. I love Nvidia. I think Nvidia should be higher. I'm just saying that it seems to be in the penalty box. So, when I look at it, I'm saying, why is it in the penalty box? And so, this is just anecdotal. Is it because it's just 10 10 or 11xed over the past uh three and a half years? And it's a $5 trillion company. It's like the biggest company in the world that the market's just like, "Okay, that's enough right now." Cuz it shouldn't be in the penalty box, but it clearly is. It's negative for the year. >> Mhm. Steph, I'll give you the last word before we go. >> Well, I mean, I think you've seen massive rotation out of Nvidia, by the way. Also, Broadcom, these were the leaders for years and now they are the laggers. And I think the fundamentals have only gotten better and the visibility has only gotten better and yet the valuations have pulled back. So, look, I own Marll and that thing scares me because it goes up a lot and goes down a lot and I'm up 200% in it. So I I I own some of the momentum in in semiconductors, but I