Nvidia's AI revolution only in 'second or third inning'

Tue, Feb 20, 2024, 2:07 PM

"[Nvidia's] stock is up 50% after today's shedding of 4%... but the CEO Jensen [Huang]... said, hey, we're in the second or third inning. That's pretty good. May not want to be in Nvidia in the ninth inning or extra innings but that's a pretty long runway," Mahoney says. "Out estimation is going to be six, eight, ten quarters, we could see sequential growth."

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Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

JULIE HYMAN: Market is facing a big test tomorrow after the close with those Nvidia results. But investors had plenty to consider today with Walmart and Home Depot reporting, plus the biggest deal of the year announced. Joining us now, Ken Mahoney, Mahoney Asset Management CEO.

Hey, Ken, it's good to see you here. So all of that said, stocks ended up falling today. What do you think is going on here, especially with this sort of Nvidia anticipation?

KEN MAHONEY: Look, a lot of cross-currents today. I mean, look, I think they were taking the leaders to the laggards. And look, it's about time, right? I mean, we've been running in circles where Nvidia coming in today was up almost up 50% year-to-date. Year-to-date was, what, six weeks, seven weeks. It's about to take some back a little bit. As you said, after the bell tomorrow, Nvidia's going to post earnings. There's a little air out after that. We'll see.

But certainly, if you look at the green and red as we were just talking about, the green were kind of staples. We also saw some pharmaceuticals flashing green, some banks here. And they're literally coming out of money. And some of the fast money, some of the hot money going to rotate.

But again, liquidity is pretty high. Money did not exit the market as far as I see it today. They just rotated to the laggards as these leading stocks have gone up so fast, even parabolic, I would say.

JOSH LIPTON: And, Ken, Nvidia reporting tomorrow after the close, you know, that is the last of that Magnificent Seven, Ken, to report results. Do you still like those names here?

KEN MAHONEY: We really do. I mean, look, Nvidia, everybody feels like they missed it. I mean, look, the stock is up almost 50% after today's shedding of 4%. I think its worst levels down 6% today. But the CEO Jensen of Nvidia said, hey, we're in a second or third inning. That's a pretty good-- that's pretty good.

Hey, you not want to be in the video in the ninth inning or extra innings, but that's a pretty long runway. Our estimation is maybe 6, 8, 10 quarters, we could see sequential growth. Again, the only problem I think Nvidia is going to have is not demand, making sure supply chains and all that stuff works to get the chips out the door. So again, I think Nvidia, if it backs off for your viewers, I think it's a buy. And again, I listened to the CEO very closely when he says, hey, you don't miss it, we're more in the second or third inning of this artificial intelligence revolution.

JULIE HYMAN: Ken, I also want to ask you a little bit about deals, because, of course, the one announced today wasn't the only one according to various folks who measure this stuff. We are seeing a significant increase this year in deal flow, especially in the US, especially in large deals. What do you do as an investor with that information? What does that tell you?

KEN MAHONEY: Well, it tells you that they hope to think 1 plus 1 equals 3. They want to cut some expenses. Also, look this administration is pretty much antitrust, you know, putting these things together. That's why today, Discovery is trading about a 15% discount. You know, it's not trading right there where it closed.

And I think the reason why, though, again, the pushback should be wait a second. We're in a global economy. So great, put a Capital One together, you put, in this case, Discovery together. We're not just competing here in the US. We're competing around the world. And so we have to get bigger. We have to cut expenses. We do that through mergers.

So there's two sides of the story. One side is, hey, by these mergers, it's going to cost consumers more money. We don't like that. But the other side is saying, wait a second, we're not just competing here in the US, we're competing around the world. And we definitely need more critical mass to do that.

JOSH LIPTON: Ken, thanks so much for joining the show today. Appreciate the time and insight.

KEN MAHONEY: Great. Thank you.

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Nvidia's AI revolution only in 'second or third inning'

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