Nvidia's Market Position: Long-Term Bullish Outlook

Nvidia remains a dominant player due to its robust ecosystem and AI investments driving long-term growth.

### Bullish on Nvidia: Navigating the AI Landscape and Market Dynamics
* 📈  There are numerous reasons to remain optimistic about Nvidia, as the company has consistently led the semiconductor space, driving **significant growth over the past decade**.
* 💡  Nvidia's success is attributed to its **robust ecosystem**, including a **large community of developers** utilizing its **CUDA platform**, making it a **defensible business model**.
* 🔍  While Nvidia remains a key player, competition is emerging with other companies like Broadcom also performing well, indicating a **more diversified market landscape**.
* 🤖  Major hyperscale players, such as Microsoft and Alphabet, continue to invest in AI, leveraging their platforms to **scale their technologies**, although it's still early to determine the **ultimate winners** in this space.
* 📊  Apple is well-positioned to benefit from AI integration due to its **ecosystem ownership**, allowing it to **enhance its products** without needing to develop foundational AI technologies.
* 💼  Salesforce is considered a strong player in the AI space, as its established software solutions create a **significant barrier for new startups** trying to penetrate large enterprises.
* 🌍  Despite macroeconomic concerns, including interest rate fluctuations, careful stock selection can still yield positive returns, with Nvidia's performance potentially **influencing broader market benchmarks**.
* ⚖️  Political risks related to AI regulation and competition with other countries may impact innovation, but the **rapid pace of technological advancement** suggests that the economy will continue to **prioritize AI development**.

Why remain bullish on Nvidia? Yeah, well, I think there's a lot of reasons to still like the company. I mean, they've driven a salary compared about a thousand acts in the last ten years, and they continue to be the leaders in the space. And I right now. Just too important of an area to to light up the gaps. And so I think that the large companies will still spend. I think there's a tension of like just, you know, what is spending more mean and does that mean expectations? And that's what the market's really going to be focused on going forward. And so I think, like there's a lot of great reasons to like the stock long term. I think that at the same time, you have to remember that semiconductors are very cyclical and they're also secular. So I think that's part of our job to navigate, navigate the environment. So basically, brace yourself for

potential short-term volatility, but longer-term, you're still bullish on money coming in to the likes of NVIDIA, but does it broaden out at the moment? It's not like NVIDIA is the only picks and shovels game in town. You start seeing Broadcom doing relatively well on some wins. What do you make of NVIDIA really reigning the main place to wait on I? Yeah, well, I think that the reason why NVIDIA has been so good in terms of its success is because it's a platform. It's not just a champion's show. They have a big ecosystem with a lot of developers writing on their code and CUDA, and so it's all built by an ecosystem platform. And so I think that's why it's such a defensible business. And, you know, it's available everywhere. It's ubiquitous on the cloud. You can have it on Prime, and it got great support for their chips.

And so I think that's largely the reason. I now I think is it could be changing in terms of the complexion going forward is more concentrated among the hyperscale players. And they're very sophisticated buyers of chips. They can do a lot of their own software. And so I think there will always be a balance between the hyperscale makes their own chips with significant volumes like you see in Google with their TPU. That's very aimed at search. And so I think that will continue, you know, in other ways. And so I think they can coexist essentially. I like that point that you've been making and we were just hearing how data track is saying the same thing, that there is a willingness on a capital expenditure perspective coming from hyperscale, as you were in a number of those Hyperscalers Microsoft matter, for example, Alphabet and Matta seem to manage to nuance the argument of why they put money in there, whereas Alphabet people were worried about just

spending CapEx at all costs. What do you make of the Hyperscalers' decision to keep on putting money in? Yeah, I think that Mark did a nice job of kind of illuminating why he's spending so much and I like with personalized chatbots and like how that can go through the platform. You know, I think that you should have Google out at the same time and they have a lot of AI expertise, even leaders in the field. They have great chefs as well. And so, you know, I think that it's too early to call who is going to be the winner or loser. They all have big platforms and user bases where they can scale their A.I. investments. And so, you know, it's I think it's too early to call like who's going to win or lose. But at the same and at the same time, they all have really great businesses. Return on A.I. are AI is this horrible acronym that suddenly coming into the marketplace?

What do you make of, though, the returns that we need to start seeing? You're a key holder in Apple. I think again, T Rowe Price overall is about the seventh biggest holder of Apple stock out there. That company again, managing to tell us why they can be in a I bet where does the money end up flowing in terms of return on investment? Yeah. I think that I will be looking for a return on investment. I think Apple specifically is in a great position because they're kind of the ecosystem owner, right? So they can integrate great technologies into their phones, into their hardware, you know, just like they did with Google Search. And so they didn't have to develop Google search, but they definitely benefit from users using Google search. And so chatting with teams, the same thing are going for they don't have to develop a frontier model. They can integrate it with their phones. Now, I think you can argue whether long

term somebody should own the frontier model here. But right now Apple's strategy is really focused on what they're really good at, which I think is design and integration with your life of their products and services. And so it's an interesting way to build capital like Twitter. And this kind of archive proliferation here is interesting that you're in Salesforce and that's been a company that's trying to show off its AI prowess, but make clear that they are going to be able to reap rewards from their investment. Do you think it can? You know, I think that Salesforce is really a sticky software company. I don't think it's going anywhere. It was kind of like they're got a game to lose, I think, at this point. And so I think they have a good moat. They have products that are coming out. I think the question is like, how do they price them? How do they drive our life for their customers?

And I think the whole space is kind of going through this seat versus consumption of AI. And so I get I work through. Well, you might not how many seats that you need. So I think there's a there's that business model that's being figured out. But I do think that if you look at startups that are in the space, it can be hard for them to get into large enterprises where Salesforce sits just because you need to let them engineer your whole system. And that can be actually a pretty big move. Well said. There has been other companies that we've been questioning how much they can align themselves with the AI tailwinds. One of them, Cisco, for example, Dell. Initially, we thought, yes, really within this ecosystem, they're going to be there for the service, for the networking. And then every now and then we get caught off guard and feel that perhaps they're not so well.

What do you make of the bottoming out story of a Cisco, for example? Yeah, well, you know, I think that what we've seen is that kind of legacy tech has in some ways reinvented itself like Dow and becoming a beneficiary. I think here Cisco has been largely kind of not on the beneficiary list. And I think in the recent quarter, they have some revenue coming through. The business is bottoming. It's a value idea. It's, you know, it's got a lot of a good amount of cash flow and dividend yield. And so from that aspect, it adds a little bit to the portfolio that, you know, the rest of the tech stocks might not offer. And so, you know, I think that there's a place for, you know, various stocks in portfolio construction and with borrowing fundamentals and potentially like an attractive valuation, it, you know, it could be good.

you've been great at articulating why you believe AI is such a winning story. But juxtapose that with the overall macro picture here. We see the market get hit on the fact of whether or not we will have interest rate cuts. How much do you factor that in in the here and now when you're looking at a portfolio allocation? Yeah. I mean, it's definitely an area that you can't ignore. The macro is super important. You have to be aware of like what's going on top down. At the same time, I think that we kind of take a stock by stock and look at where expectations are. Like the likelihood that they beat expectations, how well the company is positioned. So no matter you like what direction the macro is going, like you should be able to create outperform either way just by relative selection of stocks. And so, you know, when I think about kind of in video, I like a lot of it,

you know, it's going to be a really big break here. Like we never had this amount of debate. I think in terms of, you know, are we kind of near the single peak or is it going to continue? And so, you know, we do a lot of fundamental weren't understand like kind of where the products are positioned and how to think about the set up of the stock that you're managing. The Science and technology Fund, does it suddenly amaze you that the whole world now thinks in video is a macro moment? Its earnings might dictate the rest of the benchmarks? Yeah, it's a phenomenal moment. I mean, think about it. The stock as has just been amazing. I remember I started covering it about seven, eight years ago, and you would never have thought it would be 3 trillion. So everybody has underestimated that. The company, you know, through multiple cycles. And so it's been, you know, phenomenal. It's because, you know, they offer so

much value. And yeah, and like, we've seen this like kind of a vision of stellar compute play out. And so I think everyone now recognizes that. And so, you know, it is it is pretty phenomenal. I think that part of the reason why Nvidia is so important is because there are a lot of A.I. multipliers through the economy and there's a lot of market cap creation because India is doing well. And there is this like an idea that long term value creation, productivity driving through the economy. So I think it's a big moment for the market for sure. And so we're we're excited to see what happens next. Political risk in any way affect that? I'm sorry. Could you say that again? Political risk in any way affect that? The macro risk, the politics, the element that maybe we have a change, change in the White House, would that in any way change the innovation focus? Yeah.

You know, it's really hard to kind of call politics, I think. You know, I think there's a tension of like how much you regulate AI and Nvidia as such a dominant player, perhaps, you know, pushing computing versus like we are in an airspace race kind of with third countries. And at the same time, we're trying to kind of stymie China's efforts to develop. I like, I think that we can also, it's hard to then also like kind of restrict our own company. So my view is that like the space is moving so fast, we're trying to push the envelope here. I don't think, you know, politics will really change that, given how important it is to the economy in the future.

Nvidia Passes Microsoft Market Cap

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Bloomberg Technology

Nvidia has consistently driven growth and remains a leader in the semiconductor space, with a strong ecosystem of developers and widespread availability.

The company's success is attributed to its platform model and defensible business, while also facing competition from hyperscale players.

Despite potential short-term volatility, the long-term outlook for Nvidia remains positive, with ongoing capital expenditure from hyperscalers.

Hyperscalers are investing heavily in AI, with companies like Google and Apple having significant expertise and user bases to scale their investments.

It's too early to determine the winner in the AI race, as all these companies have strong platforms and great businesses.

Apple's strategy focuses on integrating AI technologies into their products, while Salesforce aims to leverage its sticky software model to drive customer value and reap rewards from its AI investments.

The Impact of AI on Business Models and Legacy Tech

The AI space is evolving, with startups struggling to penetrate large enterprises like Salesforce.

Companies like Cisco and Dell have had mixed success in aligning with AI tailwinds, with Cisco's recent quarter showing signs of revenue growth and a potential bottoming out.

Legacy tech companies are reinventing themselves, and Cisco's strong cash flow and dividend yield may offer a unique value in portfolio construction.

The Impact of Macro Factors on Portfolio Allocation

Macro factors, such as interest rate cuts, are important to consider in portfolio allocation.

The speaker emphasizes a stock-by-stock approach, focusing on company expectations and relative selection to create outperformance.

The significance of NVIDIA's success and its potential to influence market benchmarks is highlighted as a remarkable moment in the company's history.

The Impact of Nvidia on AI and the Economy

Nvidia's importance lies in its role as a key player in AI multiplication and market cap creation, particularly benefiting from India's success.

The company's dominance in computing is crucial in the global race for AI innovation, while also trying to stymie China's development efforts.

The fast-paced nature of the AI space makes it unlikely that political changes will significantly impact Nvidia's innovation focus.