Nvidia's Share Of The Mega Cake Is Getting Bigger And Bigger

May 08, 2020 4:04 PM ETNVIDIA Corporation (NVDA)25 Comments
The European View profile picture
The European View
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Summary

  • After the first sell-off, the market rushes to NVIDIA. The outperformance is an extremely bullish signal for the post COVID-19 time.
  • NVIDIA continues to work hard to shape the future despite the current volatility.
  • The company will probably emerge as a winner from the current crisis.

Introduction

NVIDIA (NASDAQ:NVDA) could outperform the broader market in the next few years. While the business world continues to feel the impact of COVID-19, the company is shaping the future of the way we live, work, and move forward (literally and figuratively). The market also seems to assume this, as the company has finally turned its back on the short cryptocurrency turbulence. We will probably not return to these price ranges.

(Source: Seeking Alpha Premium)

The market does not seem to attach any importance to COVID-19

Compared to its peer group, NVIDIA has best withstood the volatility of COVID-19. At the time I am writing this article, the share price is even slightly up. This means that the company has outperformed the broader market. The S&P 500 (-14.6 percent) and the Dow Jones (-21 percent) performed much worse in this respect.

ChartData by YCharts

The longer the COVID-19 crisis lasts, the more important is the pricing behavior of companies. Thus, two phases can be identified in the above picture. It is easy to see that the companies, as well as the broader market, crashed relatively synchronously into the second half of March. These are typical market developments that occur in such crashes. Investors try to build up liquidity or secure profits and then simply sell everything they have, which triggers such price falls. However, the market realized relatively quickly that there would also be winners. There will also be companies that have excellent prospects for the future and are, therefore, worth an investment despite volatility. It also plays a role that a large amount of money from the central banks and the unprecedented state aid programs have so far been able to give the market-specific stability.

Core businesses become even more important

So far, NVIDIA's business has been built on two

ChartData by YCharts

ChartData by YCharts

This article was written by

The European View profile picture
12.97K Followers
Runner of the TEV Blog | Lawyer For Competition Law And Antitrust | Private InvestorI am a long-term oriented investor and in my early thirties. I hold a law degree and a doctor in law and love investing and talking about my and others' investments. I regularly write about my research and investments on various investor platforms and on the TEV Blog. Living and working in Europe in an international law firm as a lawyer for antitrust & competition, I may have another view on American companies, especially when it comes to the reputation of a company or possible alternatives here in Europe. Hence, I try to build a diversified portfolio not only with American blue chips but also with smaller and maybe hidden European Champions. Given that, I am very sensitive and close to the political and economic fundamental environment in Europe. My readers benefit from this. When it was foreseeable that Qualcomm would be fined by the European Commission, I calculated the exact amount in advance and was able to inform my readers about it. The same applies to the European Commission's first interim measures against Broadcom, which were the first in two decades. Furthermore, I was the first analyst (to my best knowledge), who predicted without any doubts a dividend cut by Deutsche Telekom. **My articles represent my opinion only and in no way constitute professional investment advice. It is the responsibility of the reader to conduct their due diligence and seek investment advice from a licensed professional before making any investment decisions.**

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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