What has not changed? The case on Nvidia

It was impossible to open the news before Nvidia's recent earnings and not read some speculations regarding Nvidia earnings. The media portrayed Nvidia earnings as THE indicator for where AI is going. Articles regarding Nvidia earnings read like suspense movies. From the market open on February 20 to market closing on February 21 (yesterday), Nvidia dropped around 6% or over $40/share. Is there a good reason for this? Apparently not because Nvidia surpassed its earnings expectations, and the after-hour trading post earnings jumped 9%.

What has changed between Feb 14 and Feb 21 (5 trading days)? What has changed within 1 month or 6 months? The only thing that really changed in the industry is the increasing number of new models and deployment of models that need Nvidia GPUs. Nothing else has changed in terms of opportunities or idiosyncratic risks that are associated with Nvidia.

Price should reflect what's already known in the market and aligns with investor expectations. In the case of Nvidia, in my view, it is not that the market isn't efficient, it is that investors are not necessarily understanding the publicly available information regarding artificial intelligence and pace of innovation relative to the Nvidia price.

I think we often focus on what is changing or may be changing. Anticipation of the future and changes is very important. At the same time, it is also important to focus on what has not changed and what's in the current data. What stays true? What are the fundamentals backed by data? What are the dependencies? This is also a key point in private investments. We need to find good assets, understand the numbers, and elements of value. Develop the conviction, be patient, and stay focused (and steady) on the fundamentals and core ways of creating positive value.

My writing reflects my opinion and it is not investment advice.

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