Company Interview / Hatem still positive on Nvidia

Key Points:

Market concentration in major US tech stocks with stretched valuations AI expenditure driven by free cash flow from industry leaders Nvidia (NASDAQ:NVDA) faces high expectations amid rapid revenue and profit growth Tesla (NASDAQ:TSLA) shifts focus towards AI and robotics, with aggressive future targets

Hatem Dhiab from Gerber Kawasaki states that the current market is exhibiting notable concentration in major US technology giants, with valuations appearing stretched and equities priced for perfection. Dhiab argues, however, that the massive investments into AI are being funded by free cash flows generated by extremely robust companies, rather than hype or speculation commonly associated with traditional market bubbles. Dhiab sees the ongoing expenditure on AI as essential for these companies to maintain their transformative edge and build foundational infrastructure for the next technology wave.

Revenue growth among the leading technology firms, referred to as the "Mag Seven," is averaging 25%, with profit growth at 27%, excluding Tesla (NASDAQ:TSLA). Dhiab highlights the extraordinary growth expectations placed on Nvidia (NASDAQ:NVDA), forecasting revenue growth of 55% and suggesting the business is in very healthy shape, supported by a pipeline of almost $500 billion in booked revenues for the coming years. Dhiab believes that despite notable transactions such as the sales of Nvidia shares by SoftBank and Peter Thiel, investor focus on such moves is disproportionate compared to the widespread holding of Nvidia shares.

On Tesla, Dhiab expresses scepticism around Elon Musk's massive pay package, stressing the aggressive targets required, including an $8.5 trillion market cap and $200 billion in profits. Dhiab considers the company’s rebranding towards AI and robotics indicative of wider ambitions despite slower car business growth.