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Nvidia $NVDA Surging Higher – Take Profits or Ride the A.I. Wave?

Calvin Lo

Nvidia stock (NVDA) has been surging after its recent quarterly earnings (Q1 FY2024). NVDA is up +39% the past month and a massive +180% YTD. Its market cap is close to breaching the $1 trillion mark. Nvidia is riding the artificial intelligence (AI) wave higher, driven by demand for its powerful chips that can handle heavy computing workloads necessary for almost every AI application including data centres, electric vehicles, robotics, etc.

For NVDA investors, is it time for you to take profits after such a huge run or just hold and enjoy the ride? If you’re not a shareholder, is it time for you to get some exposure to what some are touting the AI revolution through NVDA stock?

A.I. Wave

Unless you’re living under a rock and have not at least tried out ChatGPT or its successor GPT-4, you would probably understand a little why there’s so much buzz around generative AI recently. Tech companies have actually been hard at work for many years on AI, in areas like chatbots and photo editing to more advanced applications like autonomous driving and robotics.

Not to mention all the movies we’ve seen about robots taking over the world, e.g. Terminator and i.Robot. For some strange reason, movies do come true but hopefully the robots don’t really take over.

My point is, advancements in AI will probably lead to huge productivity improvements in our lifetimes. AI workloads take up huge computing power, and that’s where Nvidia’s GPUs come in. Nvidia provides the proverbial ‘picks and shovels’ to the AI industry.

Why did Nvidia shares surge?

For context, NVDA stock surge has been trending up shortly after ChatGPT impressed upon its release on 30 November 2021. More recently though, NVDA surged +24% the day after its latest earnings on 24 May 2023 as it guided for $11B revenue next quarter, a huge increase of +64% YoY and +52% QoQ. Needless to say, those figures were way above consensus estimates, hence the resulting pump.

Read: Nvidia quarterly results

Buy, Sell, or Hold?

Back to the question. Ultimately, this depends on how much conviction you have in the AI trend and the size of your position if any. That said, here are some actions I personally considered (not financial advice):

  1. Do nothing. Just hold and ride the AI wave until signs of a reversal (people realising AI was overhyped) or outright bubble popping.
  2. Sell out completely, take my profits and run. Wait for the hype to die down and hopefully share price will fall back to reasonable valuations to jump back in.
  3. Buy in regular intervals, i.e. DCA, in order to gain exposure to a growing secular trend of AI. Set a stop loss or at least have a clear exit plan should things turn south real quick.

What I’m Doing

I’m pretty much in the AI is the future camp, more so than metaverse or crypto. However, I felt that valuations have run up too fast for NVDA in particular, so I’m not keen to buy or increase my exposure in the stock. On the other hand, I’m not a trader and my timing sucks so I’m not going to try to sell high, buy low.

What I’ve done is to trim some of my position from the Family Portfolio, down to ~3% weight. For now, I will likely leave the rest alone and ride whatever comes next, be it boom or bust.

Concurrently, I’m looking to backfill my exposure to semiconductors via an ETF like the VanEck Semiconductor ETF (SMH), which I reviewed here.

For other semiconductor ETFs, refer to this list from ETF.com.

Are you buying, selling, or HODLing Nvidia stock or other semiconductor stocks?

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Disclaimer: This is not financial advice. I am not professional financial advisor nor do I work in the finance industry. Anything I write here is purely my personal opinion. Please do your own research and due diligence before investing into anything. All investments come with associated risks. Best to consult a financial advisor if you’re still unsure.

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One thought on “Nvidia $NVDA Surging Higher – Take Profits or Ride the A.I. Wave?”

  1. Pingback: Portfolio Update May 2023 – Powered Higher By Growth Stocks, Nvidia, Tesla, Palantir | Finance Gnome

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