Markets with Madison: Is it too late to buy US$1 trillion Nvidia? NZ investor’s call

If you bought Nvidia stock in October last year, you would have made more than three times your money as it briefly tipped above US$400 a share this week, valuing it at US$1 trillion (in late trading today it was at US$399.28 for a US$979m market cap).

However, many investors believe the technology stock is overvalued when compared to its current and future earnings, leading to some recent profit-taking.

New Zealand and Australia investment group Jarden bought Nvidia stock in September but recently trimmed its stake.

Global equity analyst Ben Stewart told Markets with Madison the firm is reviewing the rest of its Nvidia holding. However, he believed it had more upside opportunity.

“Nvidia’s got a pretty strong history of beating the street and also beating its own guidance.”

Nvidia’s value has surged by as much as 180 per cent this year, helping push the Nasdaq index up 31 per cent in the year to May.

The chipmaker was founded in 1993 and invented graphics processing units (GPUs) in 1999, which were used to power 3D graphics in gaming and generative artificial intelligence. For example, 10,000 GPUs powered OpenAI’s ChatGPT service.

In today’s episode of Markets with Madison, Stewart discusses Nvidia’s earnings potential and the bull and bear arguments for investors looking to buy in or sell out.

Plus, an S&P Dow Jones Indices director reveals if you’re better off putting your money in a passive index/fund, or giving it to an active manager.

Get investment analysis and insights from the experts on Markets with Madison every Monday and Friday on the NZ Herald.

Disclaimer: The information provided in this programme is of a general nature, and is not intended to be personalised financial advice. We encourage you to seek appropriate advice from a qualified professional to suit your individual circumstances.