☕️ Should you be worried about Nvidia?
Apr 16, 2025Howdy! 👋
Markets held flat Tuesday but are down in early going as chip makers lead things lower or so goes the headline.
In reality?
The computers are at it again.
That’s what the networks can’t be bothered to report because reality just isn’t as saucy as hype driven headlines. 🤦
Stocks like Nvidia, AMD and other chip makers are widely held, highly liquid and the source of tremendous options activity... which means they're being sold not because big money fears bad results like you're being told but because the big money wants to rebalance holdings and ditch leverage.
Inclusion in scores of ETFs, funds and the like amplifies the situation.
Investing is about focus, not noise.
- Plan
- Execute
- Repeat.
Here’s my playbook.
1 – How I see current market conditions
I was deeply honoured to be invited back to the Cow Guy Close, an award-winning news program on RFD TV hosted by my longtime friend and colleague, the super savvy Scott Shellady aka “the Cow Guy” because of his colourful cow jackets.
Enjoy! (Watch)
2 – If you’re worried about Nvidia
Okay, time for some tough love.
Nvidia just announced a $5.5B charge related to unsellable H20 processors and export commitments to China. (Read)
Shares dropped overnight faster than a rookie trader in a zero-day options pit and are still down this morning.
Here’s the deal.
$5.5B sounds like a boatload of money but it's just 4.21% of Nvidia’s fiscal 2025 revenue.
If that rattles you, you’re not an investor… you’re a speculator. That’s okay, but don’t confuse the two.
Betting against Jensen Huang today would be like betting against Steve Jobs back in the day.
I know what I'll be doing and, btw, hope you do too.
If you’re an OBAer keep an eye on your email for two high-probability trade ideas later today (if volatility holds like I think it might.
Keith's Investing Tip: Panic is not a strategy. Discipline is.
3 – Lyft’s big move... and Tesla’s bigger one
Lyft is acquiring Free Now—a major European mobility app jointly owned by BMW and Mercedes—for $199 million. (Read)
This marks Lyft’s first international expansion, giving it access to over 150 cities across nine countries, including Germany, the U.K., and France.
This looks great … until you realize Tesla already has the vehicles on the road.
What's more, as Tesla’s FSD software improves and regulatory barriers fall, every existing Tesla becomes a potential revenue-generating asset — ready to join a fully autonomous fleet at the flip of a switch or the push of a button.
That’s Zero to One, not “N+1”:
- Lyft needs more drivers
- Tesla needs one update
Contrary to what most investors think, scale isn’t about size—it’s about leverage.
Tesla’s got it, Lyft’s chasing it.
Keith's Investing Tip: Understanding Return to Scale is key in a situation like this—and especially when it comes to investing in digital stocks. The more a company like Tesla scales with software, the lower the cost per unit, and the greater the profit margins.
A pair trade could work nicely... Long Tesla / Short Lyft
Hmmm.🧐
4 – Surprise, the real auto opportunity in tariffs isn’t new cars
Most investors are focused on tariffs, EVs, and how both will impact new car incentives.
But the real growth?
I think it’s going to hit the used car market, where prices will rise and inventory will dry up faster than a popsicle in Phoenix.
Consumers are still under financial pressure.
Financing is tough.
And automakers have cut new vehicle production too far.
The math says demand for used vehicles will spike.
Used car pricing is almost always that way - a classic case of supply and demand. The imbalance tends to favor sellers at the moment imho.
Monitor companies like CarMax (KMX) and AutoNation (AN) for sympathy plays. Also, this could be the break Carvana (CVNA) needs to finally make some decent coin.
Maybe there is a silver lining after all.
5 – Yet another reason to avoid Google 🤦️
Google's got more legal trouble than a bad poker player.
Two of the most recent headwinds-of many I have repeatedly warned you were coming:
- Google is facing a £5 billion lawsuit in the U.K. for allegedly abusing its dominance in search advertising to overcharge businesses. (Read)
- Just yesterday, Japan’s Fair Trade Commission issued a cease-and-desist order accusing Google of violating the country's anti-monopoly laws. (Read)
People love Google but I'm in the "no thanks" camp and have been for a long time.
Happily, I might add.
Google has seriously underperformed the rest of the ‘Magnificent 7' over the past decade.
Sometimes what you don’t buy is just as important as what you do.
Case in point, one of my favorite alternatives - and I think still a super compelling investment choice btw - has returned investors 40x more than GOOG.
Keith’s Investing Tip: Many investors doom themselves to poor performance because they fall in love with stocks they own rather than staying focused on the long-term themes driving ‘em. And that matters longer-term because having even just a few shares of the right stocks on hand can result in life-changing wealth.
A single share of my fave - for instance and to drive this point home - would have set you back ~$.53 on May 1, 2015 (split adjusted etc). Earlier this morning that’s worth $105.43, a 19,792% return which means that every $1,000 invested back then would translate to ~$198,843 today.
No doubt you see my point.
People love to play the victim, thinking “everybody but me is making money” or that “I can’t do this.”
Yes, dang it, YOU can!!! 💯
And, on a related note, if you’d like some help and the confidence needed to set your own path, I’ll be here.
Bottom Line
Economists, clickbait artists, and the doom squad love to tell you all the things that might go wrong. I often joke that they've predicted 10 of the last 2 actual downturns.
The world's best investors?
They're laser-focused on what’s likely to go right.
Profits are always the currency of success.
As always, MAKE it a great day.
You got this – I promise!
Keith 😀
