Artificial Intelligence (AI) is on every investor’s lips these days, and Nvidia is probably the hottest AI stock.
When the Nasdaq closed on Tuesday night, Nvidia stock was trading at just over $450. This results in a market valuation of the technology company at $1.147 billion, equivalent to 12.215 billion crowns – or 12-13 times Equinor.
Nvidia had a stellar year with an increase of 218 percent, compared to a 36 percent increase in the Nasdaq index. This largely reflects Nvidia’s strong position in AI and the increased demand for the company’s products as a result of developments in the field of generative AI, says equity manager Erling Kise, and continues quickly:
– It has also resulted in the stock now trading at 50 times expected earnings for next year, which is significantly higher than our portfolio as a whole, which is trading at 17 times earnings.
Kise is part of the management team at DNB Teknologi. Essentially, a simple mutual fund that can invest in technology, large and small, through software, smartphones and computers. Managers have followed Nvidia for years, and can now take part in the wave of generative AI, as machines use available information to create images, text, and other creative works.
In recent years, DNB Teknologi has expanded, with funds having NOK 48 billion under management, while the team manages a total of NOK 82 billion under strategy. The DNB fund now owns Nvidia shares worth more than 2 billion kronor.
Rise before the numbers are released
The company entered the exclusive $1,000 billion club over the summer, where Apple, Microsoft, Alphabet, and Amazon already find themselves.
On Wednesday, the computer chip company’s stock rose 2.1 percent on Wall Street.
The three major indices on Wall Street looked like this at 17.50 Norwegian time:
- The broad Standard & Poor’s 500 index rose 0.9%.
- The Dow Jones Industrial Average rose 0.4 percent
- The Nasdaq Technology Index rose 1.5 percent
At the same time that investors’ eyes are on Nvidia stock this evening, there is a lot of excitement associated with the annual economic summit in Jackson Hole, which begins on Thursday. There, the US central bank will hold a summit with other central banks, and the market will look for signals from central bankers who will discuss monetary policy.
KI: The competition is heating up
Nvidia announces quarterly reports on Wednesday, and great interest has been building in what management and Nvidia’s chief say about artificial intelligence. Bloomberg News wrote earlier this week that Nvidia’s numbers could also be interesting to stock investors – if no longer interesting – From Federal Reserve Chairman Jerome Powell’s speech on Friday.
In a Bloomberg overview, 59 analysts have coverage of Nvidia. Of these, only one has a sell recommendation for the stock, while a total of 52 analysts say “buy!”.
It’s important to note that a lot of the demand for AI is already reflected in Nvidia’s pricing. At the same time, we see signs of increased competition in the market in the coming years, especially from players like AMD and from ASICs initiatives internally at breakneck companies like Amazon, Google and Microsoft. Casey says this could erode Nvidia’s market share in the future.
DNB Teknologi shareholders received a 34 per cent return this year, driven by income expectations linked to generative AI. The weak krone contributed seven percent to the fund’s returns.
Despite the strong competition, we still believe that Nvidia can pull off a positive surprise in the short term given the continued rapid growth in demand for AI services. This is reflected in our position of 4.2 percent in Nvidia, although this is 2.5 percent less than the benchmark weight. Our exposure is part of our overall strategy to balance our portfolio and also reflects our caution given the stiff competition in the AI sector, says Kise about DNB’s technology stake investments.
DNB directors have followed the company for some time. For nearly five years, managers have been known to make a lot of money by shorting the same stock.
– When we invest, we primarily think of creating a long-term return that is better than the fund’s benchmark, and movements in the krone have little effect on how the fund is positioned and we have no idea why the krone has weakened or what will happen in the future, Casey says.(conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We’d like you to share our statuses using links that lead directly to our pages. Reproduction or other use of all or part of the Content may be made only with written permission or as permitted by law. For more terms see here.
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