NVIDIA Stock Analysis (NVDA)- The Best Artificial Intelligence Stock?

0:00 Nvidia stock analysis in January of 1999 nvidia IPO for just $1 64 a share on May 15th 2020 NVIDIA closed at nearly three hundred and forty dollars per share after taking a major dip down to the hundred eighty hundred and ninety dollar level back in mid-march if you had invested just one thousand dollars back in January of 1999 Nvidia IP owed your position would be worth over two hundred and fourteen thousand dollars as of May 15th 2020 this shows the power of buying

0:48 A profitable and innovative company and just never selling it as long as you're bullish fesus remains intact Nvidia got its start by making graphics processing units or GPUs for things like personal computers competitive gaming and even cryptocurrency mining however in recent years NVIDIA GPUs have gotten so powerful that they have shifted their focus into artificial intelligence such as deep learning for autonomous vehicles robotics and data centers it is clear

1:22 That an Nvidia has had an incredible run in the 21st century both as a publicly traded company and as an innovator but the more relevant question to US investors today is would Nvidia make a good investment at fresh all-time highs nine-to-five investing nvidia makes most of its money by selling its graphics processing units which have a wide range of applications across many different industries these industries include automotive media and entertainment oil and gas in medical

2:07 Imaging invidious broader markets include gaming data center professional visualization and actually automotive according to Nvidia is most recently filed 10k for the fiscal year ending January 31st 2020 NVIDIA has shifted its focus over the last several years from PC graphics to artificial intelligence including deep learning according to Nvidia deep learning basically allows robots computers and autonomous vehicles to perceive and understand the world this allows NVIDIA

2:40 GPUs to deliver features and services that would actually be impossible with traditional coding NVIDIA has two main business segments these business segments include number one ppyou graphics processing unit and number two Tegra processors the GPU segment is basically just Nvidia selling their graphics processing units to customers for a broad range of applications applications for these graphics processing units include gaming including virtual reality computer aided

3:12 Design and big data research the Tegra business segment basically includes sales of the Tegra processor which incorporates an entire computer on the one chip by having multi-core CPUs and the GPU basically in one package this revolutionary technology is what drives the supercomputing for robots drones and even autonomous vehicles it is a challenge to understand everything the invidious processors and GPUs can do but two things are crystal clear to me

3:46 Number one NVIDIA is very dependent on sales of technology which means they're very dependent on demand for technology but here's the thing that kind of realized when I was thinking diversification might be an issue is that these GPUs are used in so many different places across so many different industries so I really don't think that versification is a major concern this diversification however does not make me less concern for the intense current and future competition

4:15 That NVIDIA faces from competitors like AMD and Intel number two Nvidia is a clear leader in artificial intelligence and deep learning which takes us to the next topic in this video a key to outperform in the market is to identify major trends that change the systemic landscape of the economy I'm talking about trends such as the explosion of e-commerce in the last decade or so that has destroyed brick-and-mortar companies like GameStop ng and C I am talking

4:48 About the type of trends that will have countless losers but a couple really big winners it is becoming clearer and clearer that artificial intelligence is one of those trends that is going to boom in the next five to ten years and farther into the future in fact experts have forecasted that the artificial intelligence market as a whole will grow by about 37% from 2018 to 2025 as artificial intelligence and evitable reshapes the economy there will be many

5:22 Losers but there will also be some very big winners for example Nvidia is one of the leading companies developing the artificial intelligence technology that will power driverless vehicles their computing platform called Nvidia Drive has several hundred partners including automakers HD mapping companies Tier one suppliers sensor manufacturers startups and more that all work with Nvidia to develop and deploy these deep learning artificial intelligence systems to

5:58 Self-driving vehicles nice once fully perfected autonomous driving will bring about many efficiencies in our economy including the reduction of labor costs a reduction in fatalities and motor vehicle related deaths and fuel efficiency this will result in tremendous cost savings for any company that relies on drivers another consideration is artificial intelligence we'll never get tired from driving too much it will never get behind the wheel drunk and in general artificial

6:34 Intelligence is going to make many less mistakes than a human driver would because of invidious leadership and artificial intelligence in many other ways than just nvidia drive i think that nvidia will end up benefiting tremendously from this macro trend of shifting towards artificial intelligence and as I kind of alluded to a minute ago it is not going to just be self-driving than Nvidia will benefit from they are likely going to benefit from shift to AI

7:03 And dozens of different ways and dozens of different industries and let me be abundantly clear here I am NOT trying to patronize anyone that has a job that could be automated away in the near future I am simply trying to tell you that I believe artificial intelligence is going to gain more and more traction in the years to come and as a result of this there will be major cost savings for companies which will result in profits for shareholders and during this

7:33 Trend I would forever be a shareholder than a bystander and it's not like I'm exempt from this trend my job of being an accountant is that severe risk of getting replaced by AI I'm just hoping that I can retire before this habit artificial intelligence is coming and it will change society and the way our economy operates forever it's not an if it's a win and I want to be abundantly clear here because the last thing I want to do on my channel is ruffle anyone's

8:03 Feathers we're here to talk about investing but I see artificial intelligence taking jobs as a reality it's just going to happen I don't think there's anything you can do to stop it and ultimately I would rather be invested heavily in artificial intelligence rather than just waiting for it to take my job if you are enjoying this video so far please smash that like button like I smash this broken TV that I bought for $10 off of Craigslist and a potentially

8:34 Unconvincing attempt to convince you to smash alike budget doing the small action really helps me grow my channel and reach more people and pursue my passion so it means a lot to me thank you invidious current valuation is the one thing that makes me not want to make an investment in it at this very moment even given what I said about the growth of artificial intelligence if you look at this historical price to earnings ratio graph that I made for Nvidia over

9:02 The last five years you can see that investors are going to have to pay a historically high price for every dollar of Nvidia earnings as compared to the past invidious price to earnings ratio is actually at all-time highs in May of 2020 their price to earnings ratio as of May 15th 2020 based on the last fiscal year's earnings and the current price is actually a whopping 75 and even if you look at the PEG ratio which considers growth investors are always going to pay

9:35 More for a very high growing company rather than a low growth company so their PEG ratio is actually three point five nine as of May 15th 2020 which a PEG ratio of under 1 is what's considered favorable so this is really not that good either from a valuation standpoint from a technical analysis perspective Nvidia is trading at all-time highs which means there is most likely going to be a lot less resistance this reduced resistance or pockets of sellers at certain levels on the stock

10:09 Chart typically happens at all-time highs because there is nobody trying to sell the stock to break-even like there would be at all other areas of the chart this is an attractive aspect of the stock however you guys know we keep it real here on 9 to 5 investing Nvidia at nearly 340 dollars is probably just a little bit over value if you look at my price to earnings ratio graph you can see that as of January 31st 2019 you could have bought Nvidia for a price to

10:43 Earnings ratio of just about 22 to really drive this point home an investor in January of 2019 is going to pay $22 per dollar of earnings from Nvidia where has an investor in May of 2020 the time of record in this video is going to pay about $75 per dollar of Nvidia earnings so clearly based on our analysis of the historical price to earnings ratio for Nvidia this is not the best deal I'm not saying nothing has happened with the company since 2019 that warns a higher

11:19 Price I'm just saying I think we could definitely get Invidia at a better price in the future my personal strategy would be to wait until we see a nother significant market dip think it's inevitable given the current situation right now and then I'll look up the load up on NVIDIA shares but as always this is just my strategy and you need to make your own investment decisions next I just briefly want to discuss in videos revenue their revenue growth has been pretty solid at

11:49 About a 17 percent compound annual growth rate over the last five years I am in accounting so I'm relatively familiar with this but I just wanted to let you guys know that Nvidia closes out their year end on January 31st so usually companies will have a 1231 traditional year end but there will be companies that have alternative you're in so what does this mean well this means that nvidia z' 2020 physically february 1st 2019 to January 31st 2020 and in this time period what they call

12:25 Their 20 2015 11 billion dollars in revenue next let's talk about what's probably a lot more important than revenue in most cases net income their net income has grown at a compound annual growth rate 35 percent over the last five years Nvidia finished out fiscal year 2020 about 2.8 billion dollars in that income which is substantially less than fiscal year 2019 which had about 4.1 billion dollars of net income this is likely due to the market being flooded with used

13:03 GPUs because of bitcoins meteoric rise in 2017 and the subsequent fall in 2018 the higher the price of Bitcoin the more attractive it is for people to buy and videos GPUs to - whenever Bitcoin mining became a lot less profitable many miners sold off their GPUs to others which definitely hurt demand for new NVIDIA GPUs Bitcoin bottomed out at about three thousand dollars in late 2018 all the way down from a high of about $20,000 per Bitcoin in late 2017 so the effects

13:39 From this Bitcoin crash are probably felt the hardest in fiscal year 2020 remember in videos year-end is a little different than other companies basically their fiscal year 2020 would be from February 1st 2019 to January 31st 2020 Nvidia's net profit margin was about 26% in fiscal year 2020 up from about 12% in fiscal year 2016 but most of these gains can probably be attributed to the tax cuts in job act that reduced the top marginal tax bracket for corporations

14:16 From 35% to 21% but at the end of the day and video's margins have been pretty stable over the last five years and uncertain times like we had today it is important to consider how much cash a company has in the bank compared to their liabilities if a company runs out of cash and can no longer serve as their liabilities then they will likely have to go bankrupt or do a secondary offering which as you probably know will make the stock price tanked so if you

14:46 Look at the graph that I made here you can see that NVIDIA has a very healthy reserve of about 11 billion dollars in cash whereas they have only about 3.3 billion dollars in long-term debt this is a ratio that I am a comfort with as we head into a potential recession or depression as unemployment has been skyrocketing a lot of public votes so in conclusion I think that a video would make a great addition to my personal portfolio because they have the headwinds of artificial

15:18 Intelligence at the company's back they have excellent fundamentals of course outside of the current valuation I believe that this trend towards artificial intelligence will push Nvidia to even higher all-time highs but I will wait until I see a market crash because I believe in the short term the stock market is not lining up with economic reality and eventually it always catches up so I'll be waiting until I can get a better price on Nvidia personally please

15:47 Let me know what you think in the comment section below do you think that I'm going to be missing my opportunity for this price on NVIDIA forever will you be waiting for the market to crash to by any Nvidia shares if you have any questions about Nvidia stock I did a lot of research so I could probably answer them but leave the comment because I will reply to every single comment that you guys leave thank you so much for watching and have a great day nine-to-five investing