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Monday, July 15, 2024

Is It Too Late To Buy Nvidia? Ex-Morgan Stanley VP Weighs In

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A $10,000 investment in AI chip maker Nvidia when it first went public in 1999 would be worth over $30 million today.

Though investors usually aim to “buy low and sell high,” Mark Newton, a former Morgan Stanley technical strategist/vice president and the current global head of technical strategy at research firm Fundstrat, takes a different approach with Nvidia: “Buy high, sell higher.”

In a Wednesday episode of Yahoo Finance’s Stocks in Translation podcast, Newton answered a question about if investors should buy Nvidia today or wait for it to come down.

He said he is “almost always” of the “buy high, sell higher” school of thought because a low-performing stock can take a while to grow, and it’s hard to tell if you’ve timed an investment well.

“That’s where a lot of investors go wrong,” Newton said.

Related: Employees Who Worked at This Company for the Past 5 Years Are Now Multi-Millionaires in ‘Semi-Retirement’

With the “buy high, sell higher” strategy, the stock proves that it can perform, making it a safer bet.

“Sometimes when the horse gets out of the barn, you have to go chase it because it might not come back,” Newton said.

Newton disclosed that he owns Nvidia stock and that two factors, risk tolerance and time frame, matter the most when considering buying it.

Nvidia is responsible for one-third of S&P 500 gains this year.

Related: Elon Musk Praises Nvidia CEO Jensen Huang’s Leadership Style

Nvidia’s more than 3,000% stock growth in the past five years has catapulted the tech giant from a valuation of $346 billion in January 2023 to more than $3 trillion on Wednesday. It briefly became the most valuable company in the world in mid-June and is now only surpassed by Microsoft and Apple.

Nvidia is currently leading the Magnificent Seven, a group consisting of Amazon, Alphabet, Apple, Meta, Nvidia, Microsoft, and Tesla, in stock growth.

At the time of writing, the AI chip maker had a year-to-date return of about 146%.

Jensen Huang, co-founder and CEO of Nvidia, displays the new Blackwell GPU chip in March 2024. Photographer: David Paul Morris/Bloomberg via Getty Images

The secret to Nvidia’s growth is its graphics processor units (GPUs), which the company initially sold for gaming.

Over time, Nvidia figured out that the GPUs it used for graphics tasks could also be used for machine learning and AI.

Nvidia now has more than 80% of the GPU market share, and its chips power OpenAI’s ChatGPT.

Related: In Just 5 Words, Nvidia CEO Jensen Huang Summed Up the Company’s AI Chip Dominance Strategy



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