As NVIDIA's market value hit the trillion-dollar mark, the market has seen an increase in bearish voices. On June 2nd, it was reported that an institution under the Rothschild family, an old European financial dynasty, indicated that it had reduced its holdings in NVIDIA, inevitably reigniting speculation that "NVIDIA's market value has peaked"...
Even a strong company like NVIDIA has not been able to escape the "fate" of being reduced.
On June 2nd, media reports stated that Benjamin Melman, the Global Chief Investment Officer (CIO) of the asset management firm Edmond de Rothschild, revealed that the company had been overweight in NVIDIA since the end of 2020, but has now partially taken profits, and the current position is "much smaller."
In addition to the Rothschild family, many well-known capital players who once participated in this "carnival," such as the "father of valuation," have started to leave the market, and the well-known investment guru "Wood Sister" has also publicly expressed bearish views. Many opinions believe that NVIDIA's valuation is inflated and its pricing is ahead of schedule. Of course, behind these doubts, there is not only concern about NVIDIA but also worry about the bubble in AI concept stocks.
The Rothschild family reduces NVIDIA
NVIDIA, whose market value has just broken through the trillion-dollar mark, has been reduced by the European old financial family Rothschild.
In this "carnival" in the field of AI, NVIDIA can be considered one of the most "real gun and ammunition" concept stocks, and naturally, it is also one of the most benefited concept stocks. At present, NVIDIA has established an unshakable position in the industry with its monopolistic AI chips. This year, NVIDIA's stock price has risen by more than 170%.
And even the "astute" world-class investment institutions have begun to "fear" NVIDIA's rapid growth.
It is understood that this asset management institution is located in Geneva, Switzerland, and is a company under the Rothschild family (Rothschild), a European old financial family with a history of more than 200 years, currently managing an asset scale of 79 billion Swiss francs (approximately $87.1 billion).
As early as 2015, when NVIDIA first exploded, Edmond de Rothschild had increased its holdings in NVIDIA, with the number of shares held once reaching more than 1.6 million shares. Subsequently, as NVIDIA's stock price climbed, the institution began to continuously reduce its holdings, and in the first quarter of 2018, it reduced to less than 10,000 shares. Then, in the third quarter of 2022, it continued to increase its holdings while NVIDIA's stock price continued to decline, and by the end of 2022, it had increased its holdings by more than 200,000 shares.In November 2022, NVIDIA's "efforts" in ChatGPT have yielded results, bringing NVIDIA an astonishing revaluation opportunity. The stock price has risen by more than 170% since the beginning of the year and has recently reached a market value of one trillion dollars.
As of today's press release, NVIDIA's stock price is reported at $393.27 per share. Compared to the third quarter of 2022, NVIDIA's stock price was only $140 per share, making the Rothschild family's increase and decrease in holdings extremely accurate.
At present, NVIDIA has become the "monopolist" of AI chips. For the chip market, if you want to make products related to ChatGPT, it is best to use NVIDIA's AI chip products in conjunction with NVIDIA's unified computing device architecture. NVIDIA founder Huang Renxun once stated that the only GPU that can actually process ChatGPT is NVIDIA's HGX A100, and ChatGPT requires approximately 10,000 NVIDIA GPUs.
NVIDIA CFO Cres said that the current demand for AI computing power has exceeded the company's expectations for the next few quarters, and the orders are too many to handle.
With the continuous increase in market demand, NVIDIA's performance will see significant growth. NVIDIA expects second-quarter revenue to reach $11 billion, a year-on-year increase of 64%, setting a record for the highest single-quarter sales in NVIDIA's history, far exceeding Wall Street's previous expectations.
However, the Rothschild family, which has already reduced its holdings, has a cautious attitude towards NVIDIA's current growth. Global Chief Investment Officer (CIO) Benjamin Melman said, "Will we increase our position in AI technology? Given the high valuation of AI, we are becoming less and less certain... If (valuation) continues to grow, we will even become more cautious."
Is NVIDIA's trillion-dollar market value luck?
There are also many world-class investors who hold the above view.
Damodaran, known as the "father of valuation," said on May 30: "Until this morning, NVIDIA was still in my investment portfolio. Finally, it was removed from the investment portfolio because I couldn't bear such an increase."
According to Damodaran, NVIDIA's market value increased by $300 billion in a week, which is challenging the absolute limit of sustainable value.From the perspective of NVIDIA's market value breaking through the trillion-dollar mark, Aswath Damodaran compares NVIDIA with other members of the "trillion-dollar club," stating that other trillion-dollar companies use software to attract a large number of end-users to their ecosystems, thereby gaining more profits from new products and services. In contrast, NVIDIA is essentially a hardware company, selling chips to other companies, and often faces inherent limitations.
In Damodaran's view, NVIDIA has only found the opportunity for a stock price surge by following the software needs of downstream companies. Therefore, Damodaran evaluates NVIDIA's sharp rise in stock price as "just lucky."
Damodaran predicts that NVIDIA currently holds 80% of the $25 billion artificial intelligence chip market, and the most optimistic forecast is that the market size will reach $350 billion in 10 years. Even assuming NVIDIA's future market share reaches 100%, Damodaran's valuation is still 20% lower than the recent stock price.
"I like the company NVIDIA, but as an investment, I can't come up with a valuation of over $400 per share," Damodaran said.
Cathie Wood, the founder of ARK Investment Management, also holds a similar view. Previously, "Wood Sister" had stated that this chip manufacturer with the highest market value in the world is "overpriced." "Since 2014, ARK Investment has believed that NVIDIA saw the future of artificial intelligence earlier than most other chip companies. However, calculated at 25 times this year's expected revenue (price-to-sales ratio), NVIDIA's pricing is still ahead of the curve."
In addition, NVIDIA's expected revenue is not even comparable to Tencent's during the same period, but its market value is more than twice that of Tencent.
Moreover, NVIDIA executives have also reduced their holdings. On May 30th, U.S. time, NVIDIA EVP and CFO Kress Colette continued to sell 6,124 shares of the company's equity, with an average reduction price of $400.254 to $417.79, cashing out about $2.49 million.
Behind many capital bigwigs starting to short NVIDIA is the industry's skepticism about the AI concept. Michael Hartnett, the most accurate forecaster on Wall Street since last year and a strategist at Bank of America, said in a recent report that technology stocks and the AI concept are forming a bubble, and investors can sell related stocks.
David Rosenberg, a well-known economist and president of research institution Rosenberg Research, also warned that investors blindly rushing into AI concept stocks may pay a high price, and there is a bubble in the AI concept.
NVIDIA's Hidden WorriesAt present, NVIDIA still dominates the artificial intelligence chip industry with its solid technology and has no "rival" in the industry at the moment.
According to relevant information, NVIDIA has built a computing power barrier with Graphics Processing Unit (GPU) + Compute Unified Device Architecture (CUDA), which has increased the speed of simple calculations by tens of times.
These two technologies have laid the foundation for NVIDIA's advanced and monopolistic position in artificial intelligence chips. The advancement lies in the fact that well-known technology companies such as Apple and AMD only started to launch platforms that compete with NVIDIA's CUDA after NVIDIA. The monopoly lies in the fact that the only GPU that can currently actually process ChatGPT is NVIDIA's HGX A100.
However, the "invincible" NVIDIA is already "in the spotlight", attracting many competitors trying to surpass.
There are reports that Microsoft is cooperating with AMD to expand into the field of artificial intelligence processors, which is part of a multi-pronged strategy to ensure the acquisition of more sought-after components. These companies are joining forces to provide alternatives to Nvidia Corp., which is understood to be the AI function chip of NVIDIA's image processing unit, and at present, this chip also dominates the market.
In addition to joining forces with Microsoft, AMD has merged multiple AI teams into an organization led by former Xilinx CEO Victor Peng, continuing to attack the emerging AI market, not only including chips but also software from data centers to the edge.
The "nearby" giants are "eyeing", and the uncertain factors brought by Chinese manufacturers cannot be ignored.
Although the two NVIDIA graphics cards that support the operation of ChatGPT have been restricted from being exported to China, founder Huang Renxun still sees the importance of the Chinese market. Huang Renxun said that there is only one large chip demand market in the world, which is China.
According to data from the Global Semiconductor Industry Association, the total global semiconductor sales last year were $555.9 billion, of which the Chinese market sales scale was $192.5 billion, ranking first in the world.
In addition, some industry insiders believe that the lack of A100 or H100 is not fatal to the current AI large model research and development field, and many Chinese technology companies have also started to exert themselves. Companies such as Tencent, Alibaba, and Huawei may become future competitors of NVIDIA. At present, Huawei has released the Ascend plan to promote high-quality talents to participate in the development of AI basic software and hardware platform operators, network models, and industry reference designs.
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