'Fast Money' traders talk buying or selling Nvidia into strength

Key Concepts

• Nvidia's market capitalization and stock performance
• Analyst ratings and price targets for Nvidia
• China chip development and export restrictions
• AI chip demand and data center growth
• Valuation of Nvidia compared to the Nasdaq
• Potential risks of investing in Nvidia
• Taiwan Semiconductor Manufacturing Company (TSMC) and its role in Nvidia's supply chain
• Blackwell architecture and next-generation chips
• Sovereign AI deals and government partnerships

Nvidia's Market Dominance and Stock Performance

• Nvidia has surpassed Microsoft to become the most valuable stock in the market, with a total value of almost $3.5 trillion.
• This is the first time Nvidia has been at the top since January 24th.
• The stock is currently trading around $141 after a strong earnings report.
• The earnings report was considered very good, with great margins.
• The stock initially sold off after the earnings report, dropping to $134, but has since recovered.
• Analysts are increasingly positive on the stock, and there is a potential to break through the $153 level.

China Chip Development and Export Restrictions

• Nvidia is reportedly developing a new China chip, the P30, that complies with export restrictions on AI chips.
• There has been a lot of back and forth regarding exclusions for US tech brands like Nvidia, Tesla, and Apple in China.
• The situation regarding export restrictions is unclear.

AI Chip Demand and Data Center Growth

• Nvidia is involved in sovereign AI deals and partnerships with governments worldwide.
• Meta's deal with Constellation is an example of the strong demand for AI data centers.
• The demand for AI data centers is alive and well and hasn't altered at all.

Valuation and Risks

• Nvidia is trading at 27-29 times 12-month forward earnings, while the Nasdaq is at 25-26 times.
• Despite positive sentiment, there are risks associated with buying into Nvidia at high valuations.
• The stock could potentially be cut in half in a short period of time.
• It's important to stay close to data points and monitor guidance from companies like Taiwan Semiconductor Manufacturing Company (TSMC).

Taiwan Semiconductor Manufacturing Company (TSMC)

• TSMC manufactures almost 90% of Nvidia's high-end GPUs.
• Guidance and information from TSMC can provide insights into Nvidia's performance.

Blackwell Architecture and Next-Generation Chips

• Questions surrounding Blackwell supply and Nvidia's next wave of chips have been answered.
• There is still some uncertainty, but Nvidia has a track record of delivering on its promises.

Notable Quotes

• "Nvidia is the out of the two. That's the third one that I've obviously not gotten right."
• "These stocks can get cut in half. And it happened in a very short period of time."
• "The demand out there for AI data center is alive and well and hasn't even altered at all."

Conclusion

Nvidia's recent surge to become the most valuable stock reflects its dominance in the AI chip market and the strong demand for AI data centers. While the company faces challenges related to China and export restrictions, its partnerships with governments and its track record of innovation suggest continued growth. However, investors should be aware of the risks associated with high valuations and the potential for market corrections. Monitoring data points from TSMC and staying informed about industry trends are crucial for making informed investment decisions.