NVIDIA: When is Enough Profit … Enough?
One artificial intelligence chip stock has captured financial news headlines leaving a cadre of jubilant investors.
After 37 years with the Atlanta Journal-Constitution and now with the AJT, , Jaffe’s focus is lifestyle, art, dining, fashion, and community events with emphasis on Jewish movers and shakers.
Country club locker rooms and mitzvah parties buzzing about “a good problem to have” – when or if to sell NVIDIA, the “darling” AI stock that got an early jump on the revolutionary short- and long-term uses of artificial intelligence.
Put simply, if one invested $1,000 in NVIDIA in 2005, it would be worth $857,383 today. Private investor Lewis Regenstein said, “I did jump on it a year-and-a-half ago. I heard an analyst say that AI was the biggest thing since electricity; and that Nvidia had a monopoly on chips with insatiable demand. Sounded like a good business plan to me!”
Originally making chips for video games, NVIDIA now has partnerships with major cloud providers like Amazon Web Services, Google Cloud, and Microsoft Azure.
Most experienced investors know that trying to outsmart the market is dicey at best. One unnamed financial planner, who not so laughingly states that “a monkey with a dart board would have the same success as we humans.”
Not so with private investor Dr. Hilton Kupshik who bought NVIDIA in the early 2000s and is reluctant to reveal at what [very low] price. He is in no hurry to sell. Kupshik stated, “There is no competitor close to matching NVIDIA chips which are better, faster, and more efficient, meaning using less electricity and running cooler. I’m not selling … look at their order books and see that everything they make has been sold … without even looking at new customers.”
NVIDIA CEO Jensen Huang began humbly as a waiter; and more recently was wise enough to secure a strong footprint in Israel by acquiring Mellanox Tech for $6.9 billion. Israel’s skill in AI, cybertech, scientific innovation, and tech workforce provides 4,000 employees concentrating on projects like robotic surgery, detecting abnormalities in scans, and predicting patient outcomes, within seven research and development centers.
The Times Of Israel’s Sharon Wrobel wrote, “In a year of war, NVIDIA overtook Microsoft as the best firm to work for in Israel … where its activities are the firm’s largest outside the U.S. … it raised funds to donate to nonprofits benefiting both Israelis and Gaza.”
NVIDIA employee Avi Or remains a hostage in captivity.
LinkedIN’s Editor Jessica Hartogs reported that NVIDIA just overcame Apple as the world’s largest company with $3.34 trillion in market capitalization vs. Apple’s $3.35 trillion, stating, “its second quarter earnings more than doubled Wall Street’s estimates.”
As to longevity, local financial guru Ed Mendel posed, “AI is the future, but there may not be enough qualified people around to manage it. Need for electricity could be a problem for growth also.”
As to when to exit, certified financial planner Kenny Baer stated, “NVIDIA continues to lead in AI hardware, gaming, and data center technology, driven by the explosion of AI applications across industries. Recognizing the right moment to sell depends on understanding the company’s future earnings potential relative to its valuation, which is currently high. NVIDIA’s substantial R&D investment and early market lead position it well to retain a competitive edge. For investors looking to delay gains, strategies like holding investments in tax-advantaged accounts or using tax-loss harvesting against other gains might help manage tax impacts.”
One such strategy is a donor advisory fund under the watch of Ghila Sanders, managing director, philanthropic advisory for the Atlanta Jewish Foundation, which manages $400 million in assets across 550 DAFs under the umbrella of the JFGA.
She stated, “This year, we’ve witnessed an inspiring surge in generosity, with many donors leveraging NVIDIA and other highly appreciated stocks to amplify their giving and make a profound impact on the causes they hold dear. Donating appreciated stock offers powerful benefits for both the donor and the charity, and when used to start or contribute to a donor advised fund … it’s a smart and rewarding way to maximize tax advantages and philanthropic reach. A ‘win-win’ that elevates both the giver’s impact and the future of our community!”
She noted that donors can gift the stock or sell it first, and then donate the proceeds. “Donating stock directly is more effective and potentially allows a bigger tax break and helps the charity, since they would get the full amount tax free.”
Kenny Rogers’ “Gambler’s” song, with its lyrics, “Know when to hold them, know when to fold ‘em, know when to walk away” … offers no answers.
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