Intel 1995-2000 vs NVDA 2016-?

Lots of feedback on what I said about NVIDIA yesterday. It is now the hottest technology company / stock in the market. Citi made the bull case for why it could double to 300. This sort of thing makes me nervous. Reversals can be sharp and vicious, especially when a stock goes parabolic and everyone is on the same side of a trade.

And you can see how overbought this stock is right now in the chart below. Take a look at relative strength over 80 in the bottom pane:

The last time it got this overbought, we saw a 20% sell-off during a five month consolidation process that ended in May. As I noted yesterday, the best stocks throughout history have shaken people out every year with catastrophic drawdowns. NVDA will not be immune to that dynamic and all good trades come to an end.

But what if it’s more than a trade?

The idea behind the rise of NVDA is that it is the Intel of the AI age, as quintessential to all of the new technology trends as Intel once was as the PC revolution exploded across the world. The PC era really kicked into high gear in the mid-1990’s with the launch of Windows 95 from Microsoft. Almost every computer running Microsoft was also running one of Intel’s Pentium chips. It was a package deal we called WinTel, and the term “Pentium” became like Q-Tip – a brand name so powerful that it became synonymous with the whole category.

This continued on for five or six years until the tech crash, that really had nothing to do with computer sales.

Here’s Intel’s stock, in terms of percentage gains, from the start of 1995 – the company’s watershed year – into March of 2000:

That’s a monster stock, one of the greatest runs of all time for a large tech company.

Now here’s NVDA, one year and four months from its moment of liftoff – when the world woke up to what the company was doing in AI and why it mattered:

These are serious gains too, no doubt. But we haven’t seen anything compared to the Intel run. Bulls would say the best is yet to come. Bears would say “I knew Intel, and this is no Intel.” Pragmatists would look at the drawdowns of the Intel chart – even during its epic run – and say “There’ll be a better opportunity to get in.”

It’s possible that all three could be right! That’s what makes markets challenging and fascinating.

If you missed my post about NVDA yesterday, it’s here:

The Most Important 24 Minutes of Your Year (TRB)

 

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. Time for New Market Leadership? - TradingGods.net commented on Jun 12

    […] caught up with this, and invited Citron’s CEO to participate in the discussion. Jim Cramer and Josh Brown, both NVDA fans, were also part of the impromptu debate. One question was why Citron picked this […]

  2. eatverts commented on Sep 22

    … [Trackback]

    […] Find More on on that Topic: thereformedbroker.com/2017/06/09/intel-1995-2000-vs-nvda-2016/ […]

  3. PI News Wire commented on Sep 22

    … [Trackback]

    […] Information to that Topic: thereformedbroker.com/2017/06/09/intel-1995-2000-vs-nvda-2016/ […]

  4. blazing trader review commented on Sep 23

    … [Trackback]

    […] There you can find 57506 additional Information to that Topic: thereformedbroker.com/2017/06/09/intel-1995-2000-vs-nvda-2016/ […]

  5. is bitcoin loophole safe? commented on Sep 27

    … [Trackback]

    […] Info on that Topic: thereformedbroker.com/2017/06/09/intel-1995-2000-vs-nvda-2016/ […]

  6. Sex chemical commented on Oct 29

    … [Trackback]

    […] Information on that Topic: thereformedbroker.com/2017/06/09/intel-1995-2000-vs-nvda-2016/ […]

  7. cc shopping commented on Nov 27

    … [Trackback]

    […] Find More Information here on that Topic: thereformedbroker.com/2017/06/09/intel-1995-2000-vs-nvda-2016/ […]

  8. click here for service commented on Nov 27

    … [Trackback]

    […] Info on that Topic: thereformedbroker.com/2017/06/09/intel-1995-2000-vs-nvda-2016/ […]

  9. pengeluaran hk 2020 commented on Dec 01

    … [Trackback]

    […] Find More on on that Topic: thereformedbroker.com/2017/06/09/intel-1995-2000-vs-nvda-2016/ […]

  10. td banking online commented on Dec 06

    … [Trackback]

    […] Find More Information here on that Topic: thereformedbroker.com/2017/06/09/intel-1995-2000-vs-nvda-2016/ […]

  11. azure devops commented on Dec 09

    … [Trackback]

    […] Find More Info here on that Topic: thereformedbroker.com/2017/06/09/intel-1995-2000-vs-nvda-2016/ […]

  12. Skrotbilar köpes Uddevalla commented on Dec 26

    … [Trackback]

    […] Find More Info here on that Topic: thereformedbroker.com/2017/06/09/intel-1995-2000-vs-nvda-2016/ […]