Nvidia Has Lost $1.5 Trillion — Is The Worst Still To Come?

NVIDIA

Across the shows: 101 speakers in other episodes, 82 bullish and 54 bearish calls, past 30 days

• Gil Luria · D.A. DavidsonBearish

  Nvidia's China sales risk could hit its numbers if chips were funneled to China through Asia.

  The allegations that Nvidia sold chips via Mega Speed to China, if the investigation finds knowing wrongdoing, would limit Nvidia's business going forward. Luria estimates up to 20% of backward-looking revenue may have been funneled to China. He notes arrests tied to GPU smuggling outside Mega Speed, so the risk extends beyond one company and could affect Asia numbers.

  “that NVIDIA knowingly sold chips to China that it shouldn't have, that NVIDIA knowingly sold chips to compute providers they knew would provide access to Chinese companies. That's the big risk”at 3:50

• Gil Luria · D.A. DavidsonBullish

  Nvidia could sell all its chips next year even with zero Asia sales; demand is healthy.

  Even if up to 20% of past Asia revenue was funneled to China, Luria argues demand is strong enough to absorb Nvidia's full supply next year without Asia sales. Demand for AI compute is very high, so revenue estimates would not need to fall by the full amount of any lost sales.

  “the demand environment right now is so healthy that you could probably still sell all the chips that NVIDIA can make next year without selling anything into Asia.”at 6:22

• Gil Luria · D.A. DavidsonUncertain

  Nvidia has no CEO succession plan and must create one now, even if Huang stays.

  Luria argues Huang built the AI ecosystem and is the key figure behind Nvidia's product and customer trust, and that the company has no successor. He says that even a small chance of Huang having to step down requires an internal and external succession program now, because the industry moves fast. Customers are unlikely to switch because of the story, but a successor must keep the product roadmap and relationships.

  “There's no succession at NVIDIA, so that's a problem they have to solve immediately.”at 8:13

• Gil Luria · D.A. DavidsonBearish

  Nvidia is now a high-risk, high-reward semi; Broadcom, AMD and Micron offer better risk-reward.

  Luria says the Huang scandal has already cost Nvidia about $1 trillion, and the stock carries uncertainty from the investigation, possible China sales issues and CEO risk. He ranks Nvidia below Broadcom, AMD and Micron, which offer similar upside with lower risk.

  “NVIDIA is now one of the highest risk semis... The risk is high. The reward is high. There are other semis where the risk is lower and the reward is also high.”at 10:09

CoreWeave

Across the shows: 91 speakers in other episodes, 27 bullish and 100 bearish calls, past 30 days

• Gil Luria · D.A. DavidsonBearish

  CoreWeave earns less than its cost of capital, a negative carry; unlikely to survive tougher conditions.

  Luria calculates CoreWeave's return on its investment at about 3% (adjusted operating income times four over net PP&E), while its cost of capital from interest expense is above 9%. This is a negative carry even in the best compute market. The company says unsecured debt is no longer available, so it must raise equity and get customer prepayments. Luria says it will not make it if conditions tighten, and that the Nvidia backstop that supported shareholders is gone with Huang.

  “This is a negative carry trade even in the best market for compute imaginable. If they can't get a sufficient return right now, I don't know when they ever will.”at 13:17

• Ed Elson · Prof G MediaBearish

  Investors should stay away from CoreWeave given its heavy capital needs and rising funding risk.

  Elson points to exploding credit default swap spreads and bond yields, and to the need to raise tens or hundreds of billions in an anxious capital market. Combined with Luria's view that CoreWeave cannot issue unsecured debt and must raise equity, the risk is too high. He concludes that investors should avoid the stock despite the earnings pop.

  “yes, absolutely stay away from Corweave.”at 14:57

Advanced Micro Devices

Across the shows: 15 speakers in other episodes, 14 bullish and 1 bearish calls, past 30 days

• Gil Luria · D.A. DavidsonBullish

  AMD offers high growth with lower risk than Nvidia; its multiple looks low if buildout continues.

  Luria groups AMD with Broadcom and Micron as semis with a premium valuation that is still low relative to expected growth of 50 to 100% next year in a healthy market. If the data center buildout continues, the multiple is low. AMD avoids the Nvidia-specific China and leadership risks, so its risk-reward is better.

  “These are also stocks trading at a very big premium to the market in spite of the fact that they're going to grow 50 to 100% next year in a healthy market”at 10:09

Micron Technology

Across the shows: 29 speakers in other episodes, 26 bullish and 18 bearish calls, past 30 days

• Gil Luria · D.A. DavidsonBullish

  Micron offers high growth with lower risk than Nvidia; its multiple looks low if buildout continues.

  Luria names Micron alongside Broadcom and AMD as a semi expected to grow 50 to 100% next year in a healthy market. He argues its multiple is low if the data center build-out keeps going, and that it lacks Nvidia's exposure to China-sales and leadership issues, so the risk is lower while the reward remains high.

  “These are also stocks trading at a very big premium to the market in spite of the fact that they're going to grow 50 to 100% next year in a healthy market”at 10:09

Broadcom

Across the shows: 10 speakers in other episodes, 9 bullish and 5 bearish calls, past 30 days

• Gil Luria · D.A. DavidsonBullish

  Broadcom offers high growth with lower risk than Nvidia; its multiple looks low if buildout continues.

  Luria says Broadcom trades at a premium to the market but is expected to grow 50 to 100% next year in a healthy market. If the data center buildout continues past delays, its multiple is low. Unlike Nvidia, it does not face the same China-sales and CEO-succession episode, so its risk is lower and its reward still high.

  “These are also stocks trading at a very big premium to the market in spite of the fact that they're going to grow 50 to 100% next year in a healthy market”at 10:09

Anthropic

Across the shows: 112 speakers in other episodes, 152 bullish and 90 bearish calls, past 30 days

• Ed Elson · Prof G MediaBearish

  Anthropic's cut IPO valuation to $1.3T shows AI euphoria is ending in public markets.

  Anthropic's target fell from $2 trillion to $1.3 trillion, a drop of nearly 40% if it were public. Elson argues public AI names have seen multiples halved, with Broadcom, Micron and SK Hynix down, and Nvidia off more than 30% from its October highs. If Anthropic traded like Nvidia it would be near $1 trillion, so the AI exuberance of private markets no longer exists in public markets.

  “Sentiment is waning. Valuations are returning to earth. And as sexy as Anthropic might be, this new IPO price is evidence that the era of AI euphoria is about to come to an end.”at 33:53

Tariffs & trade policy

• Justin Wolfers · University of Michigan

  Tariffs won't be undone soon, since the president imposed them without Congress.

  Wolfers says the tariffs and energy shocks were put in place without passing the House or Senate and may not be legal, and the president's strategy was to act and rely on slow courts. Democrats gaining Congress does not directly reverse them, so he expects more of the same. A reversal would need a veto override or political pressure on the president, such as the earlier beef tariff cut, and he would not pencil one in soon.

  “The bloke's only got two years left. I would expect more of the same. I don't expect those shocks to be undone anytime soon.”at 22:54

US elections & politics

• Justin Wolfers · University of Michigan

  Midterm results won't change the economy's path; the president's agenda proceeds without Congress.

  Wolfers argues the tariffs and other policies were enacted without Congress's approval, so changing the party in control of the seats does not change the process. The president is term-limited, so his incentives are the same as before the election. He sees only indirect pathways, such as a veto override or political pressure, to change the trajectory.

  “so I was making the case that the Trump agenda has gone ahead without Congress, so if you change the identities of the people who are in the seats that were irrelevant to the process, all you're doing is changing the name cards at an institution that was irrelevant.”at 25:50

US rates & the Fed

• Justin Wolfers · University of Michigan

  More Fed rate hikes are likely because inflation persists and policy is not yet restrictive enough.

  Wolfers says unemployment is very low and inflation keeps going beyond the initial impulse. Fed officials believe rates are not yet at neutral and are unsure whether they have tapped the brake. He argues the case for tapping the brake is strong, and that it is hard to escape the conclusion that several rate hikes are coming.

  “they're not yet sure they've even tapped to the brake. And I think the argument for tapping the brake seems pretty strong”at 30:26

US inflation

• Justin Wolfers · University of Michigan

  Inflation is becoming one persistent underlying story, not a set of one-off shocks.

  Wolfers says wages growing 3.1% mean business costs are not rising fast, and productivity should be helping, so cost pressures look contained and inflation should drift toward or below 2%. It is not, which suggests inflation has taken hold. He is less convinced by the one-off explanations of food, energy, goods, shelter and housing, and now sees one underlying inflation story rather than several temporary shocks.

  “I've started to move from just waiting for the one offs to work their way out of the system to starting to believe a little more, actually, there's just one thing going on, and it's called inflation.”at 31:41