Nvidia’s Loss is Your Opportunity

Nvidia has a problem. In fact, the entire AI space does too, but it’s probably not what most investors are thinking of right now. Sitting in front of our screens with dozens of tabs open of various charts, it was hard to miss the huge sell-off that took place yesterday for Nvidia shares. 

Given Nvidia’s place atop the tech throne, I’ll bet there were quite a few of you pained by the nearly 10% drop since Monday. 

What was the latest cause for the herd to panic and sell? Well, at first glance the immediate issue seems to be political. 

The addition of J.D. Vance to the Trump ticket put a dour mood on companies like Nvidia due to his antitrust position on Big Tech. 

On the other side of the aisle, President Biden’s ongoing Chip War against China may hit a new phase as his administration weighs new trade restrictions to prevent the country from accessing chipmaking technology. 

To be fair, it’s not just Nvidia that’s suffering; the market is taking this opportunity to take some profits off the table. 

But what if I told you that the Trump-Vance ticket and President Biden’s Chip War are the least of Nvidia’s concerns right now?

It’s true, and here’s why…

Big Tech’s Trouble With Chips

Every day, there are more than 10 million queries made to ChatGPT. 

That number was from back in February of 2024, so I wouldn’t be shocked if it’s way more than that now. But going with that figure, we’re talking about nearly $100,000 a day to run ChatGPT, or roughly $3 million a month. 

Dig a little deeper than that and you’ll find that ChatGPT draws on more than 500,000 kilowatts of electricity on a daily basis — equal to roughly 180,000 homes in the United States. 

In fact, more than 14,000 ChatGPT queries have been made since you started reading this article. 

But these power concerns aren’t new, right? 

About a month ago, we talked about how the widespread adoption of AI technology will wreak havoc on our power grid for years to come. 

It’s also no secret that Nvidia’s chips are notoriously power hungry. I cringed a little after CEO Jensen Huang unveiled the company’s newest megachip — the Blackwell accelerator GPU — which holds more than 200 billion transistors and can use 1,200 watts of electricity!

Now, the smart investors will see the forest through the trees… and that will lead them to one conclusion.

The True Crisis for Nvidia

Push the political fears aside for now, because the truth is that massive tech players like Nvidia will be just fine when the November elections are finally over. 

In fact, this sell-off is more of a buying opportunity than anything if you are a true believer in Nvidia. And no matter how you look at it, Nvidia shares do have their place in most portfolios, depending on what your goals are. 

Remember, Nvidia absolutely dominates the AI chip market… which means that the biggest threat isn’t from finding enough power or political shenanigans, but rather from competition. 

Imagine a rival company that is able to cut power usage significantly and still solve some of the major issues that every GPU faces. 

But this rival would have to be more attractive, wouldn’t it? 

At current metrics, Nvidia would have to experience considerable growth going forward to make a decent return; the stock is trading at almost 70 times its trailing earnings right now. 

Even after the recent stock split, you’re still paying out around $118 per share of Nvidia. 

What if you could pick up shares of this tiny, under-the-radar Nvidia competitor at a fraction of that cost — shares are trading just shy of $3 as I write this. Plus, its recent product is not only matching the performance of Nvidia’s A100 chip in specific applications, but it’s also outperforming other competitors like Intel. 

Perhaps it’s time you took a look at the details yourself.

Until next time,

Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

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