Skip to main content

AI bubble is losing air. How much lower can NVIDIA go?

July 30, 2024

How much lower can NVIDIA go? 

Well, like any other stock, the most NVIDIA "can" go down is 100%. That is possible, yet highly unlikely. We think that this summer NVIDIA will go down to $100 per share for a market capitalization of about $2.2T. In about a year, NVIDIA should be trading anywhere from $50 to $75 a share. 

How much higher can NVIDIA stock go? 

Well, theoretically, there is no limit to appreciation. At its peak in June 2024, NVIDIA had return almost 300,000% from its initial public offering in 1999. Of course, most of that was led by the AI boom / bubble. In theory, NVIDIA could continue rising forever. That is possible, yet extremely unlikely. So what is the sweet spot for NVIDIA between a possibility of evaporating to 0% of its current value to appreciating to infinity. 

What is the true value of NVIDIA?

No one knows. Economic value is an opinion. Market value is the opinion formed between buyers and sellers. Money itself is a derivative opinion. Money is an expression or reflection of an underlying opinion about the value of a holding or payment. We think that NVIDIA should go down an additional 5% this summer. A $100 per share valuation for a market capitalization of about $2.2T should be okay for NVIDIA this summer. Eventually, NVIDIA will keep losing value down to a valuation of about $1T. Yes, we think that NVIDIA is hugely overvalued. It will shed $1T as easily as it gained. Easy comes; easy goes. 

How's NVIDIA doing today?

As of today, NVIDIA is down about 26% from its peak, trading at about $104 per share for a market capitalization of about $2.55T. On June 20, 2024, NVIDIA shares rose intraday to $140 per share, for an incredible market capitalization of about $3.4T. That absurd valuation made NVIDIA the most valuable company in the world, and probably in the history of humanity. It made absolutely no sense. We predicted a 30% decline. It's been a 26% already. NVIDIA has shed $850 billion within the past 40 days. That is over about $21 billion dollars per day! NVIDIA's race to a floor has been certainly faster than what we anticipated. 

What is next for NVIDIA?

No one knows. The future has not been created yet. Investors and speculators keep pushing and selling NVIDIA. We think that NVIDIA is still significantly overvalued. Within a year it could lose about 50% of its value. Yet since the stock has been pushed and continues to be pushed so heavily to institutional investors, it is hard to predict how many "false positives" NVIDIA may register from now until its eventual semi-permanent decline anywhere between $75 and $50 per share.

Stay tuned.

www.creatix.one 


Comments

Popular posts from this blog

When will the Tesla bubble burst?

December 11, 2024 When will the Tesla bubble burst?  We don't know Fools rush in. It's impossible to know exactly when the Tesla bubble will finally burst. Unfortunately for us at Creatix, we began shorting Tesla too soon. We are down almost 40% on our position as of today. We are not fooling ourselves thinking that we were ever make money on the short position. We truly doubt that Tesla can go down 40% any time soon.  We would love to add to the short position, but it would exceed our $3,000 limit on the stupid bets that we do for fun. We're not Mr. Beast. We have a very limited budget for ridiculousness. We would love to short Tesla tomorrow morning at the ridiculous share price of $424. Tesla is trading at an incredible 116 times earnings, which gives Tesla a market capitalization of $1.32 Trillion. Elon Musk added today $13.4 billion to his fortune. Yes, $13 billion in one day. Yesterday, he had added $11 billion. Yes, that's $24 billion in 2 days.  Six months ago, ...

Is there a Tesla bubble?

December 10, 2024 Is there a Tesla bubble? You bet. As of December 10, 2024, Tesla (Ticker: TSLA) is approaching an all-time high valuation, with a current share price of $401. The record closing price stands at $410, achieved on November 4, 2021. This gives the American electric car maker a market capitalization of $1.26 Trillion.  Tesla is trading at 110 times earnings. The average price to earnings ratio in the "traditional" automotive industry (excluding Tesla, and also excluding Chinese car makers) is about 6.7. That is, while almost all car makers in the world trade at 7 times earnings in average, Tesla is trading at 110, which is 15 times the industry average.  Major Automakers (Excluding Tesla and Chinese car makers) ranked by P/E: Subaru Corporation (Ticker: 7270.T): 12.0 Suzuki Motor Corporation (Ticker: 7269.T): 10.0 Toyota Motor Corporation (Ticker: TM): 9.70 Isuzu Motors Limited (Ticker: 7202.T): 9.0 Honda Motor Co., Ltd. (Ticker: HMC): 8.0 Mazda Motor Corporatio...

What if you could invest in the best and forget about the rest? You can.

December 9, 2024 Do you want to invest in the best companies in the U.S. and forget about the rest?  It's easy. Buy shares of low cost exchange traded funds (ETFs) that track the performance of the S&P 500. Three of these ETFs are the Vanguard's "VOO"; iShares "IVV", and State Street's "SPDR". What is the S&P 500? The Standard & Poor's 500 Index (S&P 500) is a stock market index (list) designed to measure the weighted performance of the best 500 publicly traded companies in the United States. S&P 500 Timeline and Milestones: 1923: Standard Statistics Company introduced the first stock market index, a precursor to the S&P 500. It tracked 233 U.S. companies across various industries. 1941: Standard Statistics merged with Poor's Publishing, forming Standard & Poor's Corporation. 1957: The modern S&P 500 was launched. It was the first stock market index to be calculated using a computer, enabling real-tim...