Hi YXI friends,

It’s maybe hard to believe that people are starting to call Nvidia a laggard during the most recent “everything rally”. But equally, its impossible not to notice an unusually muted reaction to Nvidia’s latest earnings, with the stock now underperforming S&P 500 by 5% since the Election, even after today’s bounce.

Over the weekend, it has been reported China has launched an antitrust investigation into Nvidia. The potential fines can be as high as $1.03 billion. Although Nvidia can make that back in just 2 weekdays, it is the rising geopolitical risks that begin to concern investors. After the news report, Nvidia fell by 2.6% on Monday and again 2.7% on Tuesday, not counting the 1.8% drop on Friday that was likely due to someone knowing something ahead of the news circulation.

Is now the time to bravely buy the dip or wisely sell a potentially difficult holding? Let’s go through Nvidia’s latest earnings, valuation, China’s investigation, and price technicals to form a rounded decision.

Table of Contents

• 1. Nvidia Is Still Growing Incredibly Fast

• 2. Profit Margins Remain Steady

• 3. Valuation Appears Attractive

• 4. China’s Issue With Nvidia

• 5. Technical Analysis Suggests Bull Run Unfinished

• 6. Rating: Overweight

DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

1. Nvidia Is Still Growing Incredibly Fast

In Nvidia’s latest quarter, Q3 FY2025, the quarterly revenue came in at $35.1 billion, beating the average estimate by 6%, marking a 94% YoY growth. This means Nvidia, despite a deceleration, has still nearly doubled from last year.

On a trailing-twelve-month basis (TTM), revenue is now $113 billion, up 150% from a year ago. This growth rate still justifies a high valuation multiple (more on this below).

Nvidia is not invulnerable, however. Nvidia has continued to warn supply constraints for both Hopper and Blackwell systems, with expected tightness going into next financial year due. Challenges in the Blackwell chip delivery stem from both high demand and complexity in its manufacturing.

Moreover, Nvidia is highly dependent on TSMC for its advanced manufacturing capabilities, as are many of Nvidia’s competitors. We have also seen some of its customers, such as Amazon, building their own custom chips to achieve better price-performance.

In terms of customer concentration risk, four customers accounted for nearly half of Nvidia’s revenue in Q3 (names not disclosed but think Alphabet, Microsoft, Meta, Amazon).

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