Nvidia (NVDA) fell slightly on Thursday afternoon. CapWealth Founder and Chief Investment Officer Tim Pagliara joins Market Domination Overtime to provide insights into Nvidia’s recent performance and key concerns for the tech giant and its customers.
Pagliara explains that a “better bet” than Nvidia is to invest in the companies that provide the supporting infrastructure for AI: “I mean, nobody really talks about it, but a Google search today versus a Google search with AI it takes 10 to 15 times more energy, and that hasn’t reached the market yet. So I see energy companies, GE Vernova (GEV) as an example, really benefiting from this. sustainable in the long term because our utilities, industry, our network, all of that needed updating anyway.”
For more expert insights and the latest market action, click here to watch this full episode of Market Domination Overtime.
This post was written by Nicolau Jacobino
Video transcript
NVIDIA presidents sing a noon sale link to customers’ tech giants.
Today.
Our next guest today sees a huge concern for NVIDIA and its customers for more or let’s welcome Tim Pagliaro Cap Wealth Chief Investment Officer, Tim.
Good to see you.
So maybe we’ll start there, Tim with NVIDIA, you know, investors have piled into Tim.
The street loves that name.
I mean, almost 90% of the analysts who cover NVIDIA say you should buy it right here, but you’re cautious about NVIDIA.
Why?
Well, for the reason there’s so much consensus, you know, I think it was 10 days in a 10 day period, NVIDIA added more market capitalization than Warren Buffett created at Berkshire Hathaway in 60 years.
So that should give everyone pause about, you know, where things were going.
I was asked in an interview yesterday which technology company will reach the $4 trillion mark first.
And I said, well, I think you need to split this into two parts.
Um, you know, which one will hit first and then which one will be sustainable in a $4 trillion company and I chose Microsoft.
Um, but I think Navidi will probably at this point get it right first just because of the fervor and the consensus that everyone thinks you need to own this to be successful.
Long term, Tim.
Um, it’s Julie here when you look at NVIDIA, what’s your extrapolation to the rest of the market?
In other words, what’s going on with NVIDIA?
A sign of risk for the rest of the market or do you think it’s just specific to the market?
I think it’s a little of both.
Um, but I think, you know, for value investors, people look in places where no one else is looking.
I think it’s a huge opportunity because, you know, you have NVIDIA, its market cap exceeds energy, it exceeds utilities, it exceeds the value of GE, the last time we went through something like this was in 1998-1999 .
Ironically, the favorite at that time was Coca Cola.
It was at a rate of 18% per year, adding up to 21% annual increases in dividends.
And you could have taken a dozen companies and you could have owned them or you could have owned Coca Cola.
It’s the same thing with NVIDIA now.
You can own the whole energy complex, the whole utilities complex, General Electric or you can own NVIDIA, you can have 15 Intels, I think that’s the number or maybe a little more, or you can own NVIDIA.
So how sustainable is this ultimately with long-term earnings and profits given the inherent nature of the chip industry.
You know, it’s not a good bet from my point of view.
So in my experience, Tim, what would be, in your opinion, a better bet?
A Smarter Bet Now, give us some ideas of where you would feel most comfortable committing capital.
Well, I think it’s, you know, when you look at artificial intelligence, we look at a pick and shovel type approach, like in a goal race, you know, sell the shovel, sell the picks.
Um, in this case, you know, it’s electricity, you know, complex.
I mean, nobody really talks about it.
But, you know, a Google search today compared to a Google search with AI takes 10 to 15 times more energy and that hasn’t hit the market yet.
And so I see energy companies, you know, Ge Ver Nova as an example, um, is really benefiting from this so you can make money on the edges.
Um, I think in a more sustainable way in the long term, because our utility industry, our grid, all of that needed to be upgraded anyway.
And that will only accelerate the need for it.
Um, you know, a lot of these stocks have also been tendered this year and their valuations, you could say, are getting stretched as well.
But do you think there’s more upside, for utilities and some other types of infrastructure providers, selectively based on valuation, they still seem, you know, much cheaper and more sustainable in the long run.
I mean, the construction, you know, of an energy complex building the grid.
This isn’t that, it’s probably a 1,520 year process at this point.
So I think there’s a very long road ahead for AAA, you know, intelligence, for example, if you look at three years from now, five years from now, when they get their cap back, starting to generate revenue, they have AAA a very, very bright future. .
You know, they already have a chip that they claim will be faster than videos.
There’s no aa and again, I’m not, I’m just trying to tell a cautionary tale.
Um and, and some reasons why investors should be cautious, because this is where people lose a lot of money.
You guys talked about this.
You know, people have been around a long time, look at Cisco, you know, Cisco had the highest market capitalization of any company in the world when these things change, it’s a long recovery.
You know, people forget that it took Microsoft 13 years after the 2000 peak just to get back to where it was.
That’s a long time for investors who are used to making money every day.
Yes, good reminder, Tim.
Thank you very much.
Appreciate it.
You are welcome.
