5 Most Overvalued Companies According to the Media

2. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Holders: 180

NVIDIA Corporation (NASDAQ:NVDA) has been one of the biggest winners of the AI-led rally in the stock markets, given the huge demand for chips made by Nvidia that are used in powering AI software systems like ChatGPT. But there are a number of analysts who believe NVIDIA Corporation (NASDAQ:NVDA) is now overvalued based on overly optimistic expectations. After all, giants like AMD are working to quickly catch up with NVIDIA Corporation (NASDAQ:NVDA) in the AI semiconductor industry. Microsoft recently debuted its own chips for AI systems. Recent reports also suggest that Sam Altman was working on raising billions of dollars for AI-focused chips venture before he was ousted by OpenAI.

O’keefe Stevens Advisory made the following comment about NVIDIA Corporation (NASDAQ:NVDA) in its Q3 2023 investor letter:

“This quarter, we actively reduced our position in our favorite company, NVIDIA Corporation (NASDAQ:NVDA). Over the past several years, I have consistently noted the concentration of the top 5 holdings in our portfolio, with NVDA comprising 26% of the last quarter’s 40%. The business, management, and outlook are nothing short of excellent. The business has a dominant market share in a rapidly growing market with competition seemingly years behind, though, fighting hard to gain share. Gross margin is expected to exceed 70% in 2024 and expand in 2025, reflecting the premium customers pay for their advanced technology. Revenue growth of 30%+ on a $50B base and a return on equity over 50%. If this isn’t the best business in the world currently, certainly it is in the top 5.

Jensen is the reason we held onto the stock despite our unease about the valuation. Jensen came to the U.S. from Thailand and was sent to a boarding school in rural Kentucky for troubled youth by his aunt and uncle, who mistook it for a prep school. When buying an ownership stake in the business, we must ask ourselves who we partner with. Are they honest? Capable? Aligned?

Honest: Listening to Jensen (while promotional) is like a breadth of fresh air. He tells you how it is. When the business looked like it was headed for failure in 2009, Jensen reduced his salary to $1….” (Click here to read the full text)