Last July, I unveiled what I thought could be the most important technology stock in the world going forward live on my show The Halftime Report. That stock was NVIDIA (NVDA) and it went on to become the best performing stock in the S&P 500 for 2016.
I don’t have the original clip, but here’s an abbreviated version:
When I first started talking about NVDA, what I was thinking about was not the company’s next quarterly earnings report, because I have no edge on that sort of stuff whatsoever. Instead of that, what I really enjoy thinking about are the very big ideas. The stuff where I recognize how the world is changing and do my best to understand where it’s headed next and what that might mean. I am about as good (or bad) at this as anyone else, admittedly, but every once in awhile I nail a big idea.
NVDA, which I still have a position in, has tripled since my mention last summer and I’ve been talking about it and reading about it ever since. I’m pretty well versed in the story by now. Today, it’s a $95 billion company, and a lot of that market cap has been added in just the last few months. I’m showing price and market cap below:
Unfortunately, I have no idea of where the stock is headed next. For all I know, it could drop from over 150 where it trades these days back down to 75 (the greatest stocks in history mostly have one thing in common – they make their investors suffer the whole way up with massive drawdowns).
This isn’t about that.
I’m bringing up the company for another reason. I think that, regardless of where the company’s share price goes from here, they have built the semiconductor architecture that will change our world over the next decade. NVDA’s ability to bring parallel processing, scaled for everything from tiny Internet Of Things devices to massive virtual reality systems, puts them in an emblematic place at the forefront of every major trend. Augmented Reality, Virtual Reality, AI, Deep Learning, Machine Learning, Autonomous Cars, Video Gaming, Cloud Computing, Robotics – all of it requires the type of architecture that NVDA has pioneered, which is transcending the bounds of Moore’s Law.
If you’re like the typical trader or investor, you hear these terms and you see NVDA mentioned alongside articles about them, but you may not have a good understanding of why the Graphical Processing Unit (GPU) chip and all of the technology around it are now so important.
This is why I want you to take 24 minutes tonight to listen to NVDA co-founder and CEO Jensen Huang explain it in his own words.
In the embedded audio below, you’ll hear a short interview with the Financial Times’s innovation editor, John Thornhill, recorded at the end of May but just released yesterday on the web. Understanding the next wave of technology and innovation begins with understanding the chipsets that will be the guts of it. As Huang explains, just as software has eaten the world, now it’s AI’s turn to eat all the software. I think that he, more than perhaps any CEO, has a grip on what’s about to happen and how businesses, investors and inventors can fit into it. Semiconductor stocks, as a sector, have been making new all-time highs almost every day this summer, and leading the market.
What’s interesting is that no one outside of the tech world and maybe a subset of growth stock investors even knows his name. Certainly not in comparison with a Jack Ma or a Tim Cook or even a Satya Nadella or Jack Dorsey. If you ask the average person what an Intel or a Qualcomm chip goes into, most of them can tell you “a PC” or “a cellphone.” You won’t find many civilians who can talk about the use cases for NVDA GPUs. At least, not today.
And yet the kind of stuff Huang is working on – along with all of the other AI pioneers – is going to be so integral to our lives in the coming decade and beyond. So I’m not suggesting you listen to this and run out to buy the stock. Rather, I want you to consider just how big all of these technological challenges are, and how amazing the world will be as they get solved and a million innovations blossom all around us.
I hope this is helpful for you. I think it could be the most important 24 minutes of your investing year.