NVIDIA

NVIDIA is a company that manufactures graphics processing units (GPU), which are specialized components that work alongside CPUs and power artificial intelligence systems like CHATGPT. Since January 2023, NVIDIA has experienced a significant upward trend of 95% and is scheduled to release its quarterly earnings next week.

However, the company is currently in a phase known as a bull trap. At its current level, it can only continue to appreciate by 17 to 26% before experiencing a decline. This situation is reminiscent of the stock market’s behavior in 2008, where stocks initially rose amidst the Federal Reserve increasing interest rates, ultimately leading to the 2008 recession.

Looking ahead, the emergence of artificial intelligence is expected to create a productivity boom that has been observed only a few times in the past 75 years.

Historical examples include the post-World War II productivity boom in the 1950s, another in the 1980s driven by the introduction of personal computers, and a subsequent boom in the 1990s sparked by the internet. These booms resulted in productivity increases ranging from 1% to 3%.

With AI, there is potential for a 1.5% annual increase in productivity over the next five years, which could have a positive impact on stocks, expand price-to-earnings ratios, and help reduce inflation.

With this data, if you’re interested in Nvidia, I bet you can look before you leap.