Why Warren Buffett doesn t invest in Nvidia? (2024)

Why Warren Buffett doesn t invest in Nvidia?

Buffett famously doesn't rush into hot "it" stocks, so Nvidia wouldn't typically be his cup of tea, according to Wedbush Securities tech analyst Dan Ives. "The value-centric model makes some of these AI names not in Warren's wheelhouse (for now)," Ives said.

As of March 15, 44% ($159 billion) of the $366 billion portfolio Buffett oversees at Berkshire Hathaway was being put to work in three widely owned AI stocks -- and no, Nvidia isn't one of them.

The Vanguard Group, Inc. is currently the largest shareholder, with 8.3% of shares outstanding.

Nvidia stock price crashed over 5.50% on Friday due to two major reasons — weakness in auto major, and disappointing US job date hitting Fed rate cut buzz, say stock market experts. Nvidia share price crashed over 5.50 percent on Friday and erased around $128 billion of investors.

The shares trade for 36 times forward earnings estimates, a very reasonable level considering Nvidia's tremendous growth prospects. Nvidia has already scored an AI win, but there may be many more AI wins to come -- and that could be great news for investors who choose to buy and hold the stock for the long term.

Semiconductor designer Nvidia (NASDAQ: NVDA) has made many millionaires in recent years. Its stock has more than tripled in the last year alone.

The top individual shareholders of Nvidia are Jen-Hsun ("Jensen") Huang, Colette M. Kress, and Mark A. Stevens, and the top institutional shareholders are Vanguard Group Inc., BlackRock Inc. (BLK), and FMR LLC.

AMD generally leads in frame rates, but Nvidia leads in ray tracing. Both AMD and Nvidia do a good job of ironing out compatibility issues and performance issues for games. It's impossible to declare a winner—both graphics card drivers break and unbreak as software gets updated and patched.

Nvidia's Relative Strength Index

This indicates that its price has risen sharply in a relatively short period and is trading at levels perceived to be above its intrinsic value or justified by market fundamentals. This often suggests that the asset is overvalued and may undergo a price correction in the near future.

Nvidia is an American technology company that designs, manufactures, and sells semiconductor chips and graphics processors, along with other software.

Can Nvidia reach $1000?

Eight years ago, Nvidia (NASDAQ: NVDA) mostly sold computer chips to make video games look prettier – the shares went for $8 apiece. In 2024, the shares change hands for over $800. Nvidia is the third-largest company in the world.

NYU finance professor Aswath Damodaran, known as the "Dean of Valuation," thinks Nvidia's fair value assuming a revenue CAGR of 32% over the next five years is $436. Nvidia's current share price is more than twice that amount.

Even though 54 out of 60 analysts still rate Nvidia a buy, the stock has gotten ahead of the analysts' traditional consensus 12-month price target. That combination of favorable ratings and a target below the current price gives some food for thought: A year isn't a lengthy period for a committed long-term investor.

Nvidia and Microsoft are both promising plays on the AI market, but Nvidia's simpler business model, higher growth rates, and more reasonable valuations make it the better buy.

This analysis corroborates my initial assertion: Nvidia doesn't seem overvalued. When we look at forward multiples, NVDA's current ratios are actually below those observed over the past several years. Moreover, I'd like to compare NVDA's ratio to that of other dominant AI players, such as Microsoft (MSFT) .

How Much Debt Does NVIDIA Carry? You can click the graphic below for the historical numbers, but it shows that NVIDIA had US$9.71b of debt in January 2024, down from US$11.0b, one year before. However, it does have US$26.0b in cash offsetting this, leading to net cash of US$16.3b.

Key Points. Nvidia's stock has seen extraordinary growth over the last decade, but maintaining its recent 67% annual return rate is unlikely in the future. Investing $20,000 in Nvidia in 2016 could have made you a millionaire by 2024.

Key Points. Nvidia has turned out to be an outstanding investment over the years. The chip designer seems set to keep growing at a terrific pace from here. Investors looking to achieve million-dollar portfolios would do well to buy Nvidia right now.

Assuming Nvidia is still trading at the same forward P/E, its stock price could reach $3,360 by the end of 2030, or 328% above the current share price. That would put its market cap at over $8 trillion.

According to the latest TipRanks data, approximately 57.64% of Nvidia (NVDA) stock is held by retail investors. Vanguard owns the most shares of Nvidia (NVDA).

Where does Nvidia make the most money?

The compute and networking segment is more profitable than the graphics segment. In Nvidia's fiscal year ended Jan. 28, the compute and networking segment's operating income (or operating profit) contributed 78% of the company's total revenue, and an even greater percentage of its total segment operating income.

and Alphabet Inc.'s Google are Nvidia's largest customers, accounting for nearly 40% of its revenue, as they rush to invest in hardware for AI computing. In the fiscal fourth quarter, which ended Jan.

However, Apple is the more valuable company right now, with a market capitalization of $2.8 trillion, and that is likely to increase as it wins more customers with the iPhone. This means Nvidia, which has a market of just under $2 trillion, will likely have to keep growing at high rates to surpass Apple's market value.

Huawei developed the Ascend series of chips as a rival to Nvidia's line of AI chips. The Chinese company's main product, the 910B chip, is its main rival to Nvidia's A100 chip, which launched roughly three years ago. Analysts have estimated China's AI chip market to be worth $7 billion.

It will also remain an underdog in the GPU and CPU markets -- instead of leading those two markets like Nvidia and Intel. AMD is still a promising semiconductor play, but its broader diversification, slower growth rates, and lower market share should prevent it from becoming the "next Nvidia" over the next few years.