Well, this you don't see every day. a top 5% analysts just said that this is the cheapest AI play in the market right now. It's actually trading cheaper than basically all of many if not all of its peers. Now of course he's talking about Nvidia the stock that did over 200% this year and is trading near all-time highs.

How can it be the cheapest AI play in the market right now. Listen to this. The Firm believes Nvidia is the cheapest AI stock which may sound counterintuitive Shares are already up 235% so far this year and trading less than 3% from an all-time high burn scen Stacy Rasin is behind that in video call Stacey Great to have you on the show. Welcome! So first of all, as you know on this channel, we don't feed you.

We teach you how to fish. So this is exactly what I want you to do. This is the process I use and this is the process I want you to use the first thing I do when I hear an analyst speak and share their opinion I check out how good this analyst really is because it might be a clown I I Want to see if this is a Bozzo or a superstar So this guy is from Bing Alliance he's ranked at the top 5% of 8,000 analysts top 300, 70% success rate, and 18% of upside pair rating. So not this guy is a superstar is at top 5% He's ranked 299 out of over 8,000 analysts.

So I know what he's talking about. But now I want you to listen to what he has to say specifically because it says it very mildly. But that's a huge issue I Want you to pay attention. Listen to this.

It feels a little weird to complain about the stock. A stock? That's that's that's more than tripled year to dat, right? Um, but while that's happened, like stocks up a bunch, forward earnings estimates over last year up I don't know, they've quadrupled, they're up 4X Or something. The multiple has actually been cut by 2third. Nvidia Today is trading under 25 times.

It hasn't traded there since the crypto bubble burst in in in the end of 2018, and it's actually a discount to the overall semiconductor industry. The stock, the socks is it 26 times that hasn't happened since 2014. So this is very important. and I know it was very low key in what he said.

but I want you to pay attention. He's saying something that is critical. as value investors people tend to over focus on price to earnings and price to earnings. Which means what is the stock price compared to the amount of earnings the company is generating is one way of looking at the company's valuation if it's expensive or cheap.

But the mistake people is looking at current price earnings. Which is a huge mistake because it shows you the past. What you need to be looking is forward price to earnings. Because forward price to earnings is the guidance we have about the company.

And as long as the guidance is correct, this is the true valuation of the company. And in the case of Nvidia, you can see that if you look at the current price to earnings which is 64, which by the way in itself is not expensive for a company like this. but the forward PE the forward price earnings based on estimates is 26 26 PE Tesla is trading at 70 PE forward PE That is so that is not an expensive company. NVIDIA Started off as a massively expensive play.

They were triple digits PE But as they've generated more and more revenues, massive amounts of growth, they literally grew into the valuation and they're now Trading at 26 forward PE That's not a high valuation. Um, it is in fact the cheapest on a forward earnings basis. the cheapest of all the stocks you would think about as AI plays AMD or or Intel or maybe Marvel Nvidia is at 25 times Intel's at like 26 if you can believe it. Marvel's I don't know 30 or something and AMD is over 40 times earnings.

And while they're still quite expensive on the price to sales, that assuming the revenues will keep growing at this pace again, will grow into this just like PE happened forward PE of 26. There's nobody that can claim that this is expensive, especially for a market leader and a quasi Monopoly like Nvidia. And speaking about quasi monopolies, listen to this. I would say it's Nvidia's game to lose though.

And but but what I like about Nvidia is they are not like laying back and getting f up and happy right? They're continuing to push the envelope. they're investing, They're actually shaping the market. and they've actually like they're They're accelerating their own product road. So anything that's even out there today, even if we're competitive like it's not going to be competitive for long, Nvidia's got like their their next gener.

It's called the H200 that launches in Q2 of next year they've got an entirely new architecture. It's called Blackwell that launches in the second half of next year. like this is a moving Target and Nvidia do their credit. they they are continuing to push that if they screw something up.

I mean sure, but like they haven't screwed anything up yet. Now what he's saying here is super important. This is an Nvidia game to lose. Which means that this Market is being monopolized right now by Nvidia and unless they screw up somehow, it's their market.

And Jensen Wing who I think is a top three CEO in the market doesn't have a track record of screwing up much so I think it's pretty safe to assume they not going to screw up. Now what's more important here is the second item which I want you to pay attention to. Listen to this like if Nvidia does 70 billion next year, that will be viewed as disappointing. What he's saying here is that the company is cheap if the estimates are true.

Now, if you look at the estimates of Nvidia the company has been spot on. Even when they gave crazy estimates where people were like this does not make any sense. There's no way that this can be true. and then they hit it every freaking time.

It's cheap because people are worried that the numbers are getting so big so quickly. You just worry about sustainability. Now what he's talking about here is the classic: Casino Example: When you go into Casino you lose some money and then you feel like the casino has your money. It's money.

My money inside that little Casino I Got to get it back. It's not your money anymore my guy. This is the casino's money. Forget about what it was.

It isn't Now the same thing with Nvidia Yeah, a year ago this was a $120 stock in 2022, but now it's no longer a $120 stock. Those days are long gone. Tesla used to be a $20 stock before the many splits. Those days are also long gone.

The the question whether a company is expensive or cheap has nothing to do with the historical stock price it used to have. not a year ago, not five years ago. It's about how much revenues, How much growth? What's the fundamentals are saying versus the stock price? Yeah, so you got to remember some of these big numbers we're seeing like I think Nvidia's their current number is 300 billion A& said 400 at least Nvidia's number I know includes It's not just the the chips, it's also the chips and the servers and the networking and all the infrastructure that goes. And they actually sell all of that stuff.

So in that context, those numbers are not in. They're not crazy like they're actually like, like, quite plausible over time in terms of getting a return. Like you're absolutely right that that's what needs to happen over the long term is companies need to be able to build business models on this stuff that either is driving revenue or driving efficiencies and saving costs. or ideally both.

I Think there's already evidence that this is happening. It is. It is still early. you know, things like chat GPT Have only been around for a year, but there's already evidence that that models and and and different ways of doing things in leveraging this technology are happening.

They they're getting. It'll take some time. Um, but I'm I'm confident that those those will happen if they did not happen. By the way, that that would be the kiss of death for this whole space.

Like not not just Nvidia like lot lots of names right? I Don't think that's the case I Don't think this company is slowing down anytime soon. Over the past five years, they've increased research and development spending by 300% I Don't know a lot of companies that do that with the exception of perhaps Tesla and maybe paler, their R&D spend is insane. Nvidia has this DNA of not resting on its Laurels But more importantly, I want you to take a look at the fundamentals: Revenues are up 150% of the past three years. net income is up 34% over the past year.

Cash is up 700% over the past 5 years. Return on Equity 59% return on equity for investors While this is true, that this is a basically an infrastructure play in which Nvidia has the Monopoly but at some point while the upgrades will make a lot of money, the cycle will end. But Nvidia has reinvented itself so many times before to believe that it's just going to die out this time once this cycle ends in three and four years. Now if I was a betting man, I don't know if I would have taken that bet.

Now look, Nvidia is a great company. Obviously this is an individual decision. This isn't financial advice. Do your own research.

Find out for yourself if you want to be a part of this company because when you buy stock of a company company, you become an owner of a piece of the company. It's not a piece of paper, it's not a number on your app. Do you want to be an owner of this company the next 5 years If the answer is no, don't invest If the answer is yes, consider investing. Now if you want to learn more about how to become a better long-term investor, we have a few spots open in our Academy.

We're currently in the module of Financial Statement analysis. Would love for you to join our Discord is absolutely insane. Would love to have you there. And if you want to get this app I showed you on the screen which I use for the ratios for the fundamentals it's called stock MVP it's my software I help to build it I'm proud of it.

You can get it right now at 40% off before the end of this year with the coupon code last 40. All the details are in the description and in the pin comment. Go get it, try it out! I'll see you in the next video.