We trimmed Nvidia (NVDA)

If you’ve followed the markets in 2024, you’ve likely seen the excitement surrounding Nvidia and their market-moving dominance. Following nearly a +140% run up year-to-date, we elected to trim our position in Nvidia (NVDA) in an effort to lock in gains after strong returns.

Much like we’ve mentioned in the past, the trades reflect us playing “offense” – cutting back on Nvidia gives us the opportunity to add to our position in the company (or others on our watchlist) at lower levels should we see an expected pullback given the increasingly rich valuations today.

Let’s dive in.

Trimming Nvidia

The story for markets in 2024 has been centered on (i) the timing of the Fed’s monetary easing policy and (ii) the artificial intelligence supercycle. Nvidia (NVDA) sits at the center of the AI boom and has powered markets back to all-time highs (see year-to-date performance below). The AI revolution is well underway while Nvidia and its AI computing capabilities sit at the helm.

The big question heading into the Q1 earnings report was whether Nvidia’s latest numbers could justify the dizzying run-up in its stock, and the report didn't disappoint. Demand continues to exceed supply. However, uncertainty surrounding the sustainability of demand in 2025 and beyond looms large.

Although our revenue and earnings estimates have risen substantially since we initiated the position in September, the stock price has risen even more. Said differently, the stock is up 130% year-to-date but our estimates haven’t risen 130%, which means the stock is now more expensive on a valuation basis.

Given the historic run year-to-date, we believe the risk/reward at these levels is much less attractive and elected to trim the position back to its original weight to lock in gains for clients. Our confidence in the company hasn’t wavered; however, we believe it’s prudent to manage risk following the stock’s remarkable performance over the last six months.

With markets sitting close to all-time highs, we’ve elected to hold the proceeds in cash – the market isn’t screaming ‘cheap,’ and we think we may get another bite at the apple down the road.

As always, let us know if you have any questions about the recent trades; we’re happy to assist.

– Your Titan Team

As of writing, NVDA is a holding in Titan's Flagship strategy.

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