Is it me or is NVIDIA pretty much everywhere?

[james.hendrickson]

Guys

So, I'm making an effort to keep an eye on the markets. And I'm looking at at ton of ETFs, stock funds, recommended investment allocations and at this point...it looks like Invidia Corp (NVIDIA) is in half the stuff I check. Like, for example, I'm following this lady on Twitter, Alice Mia, and she's posting about a couple of ETFs she's holding.

So, I go and check them, and a couple are holding NVIDIA. Then I go to Schwab, and half of the investing themes they're recommending are holding NVIDIA also.

Its everywhere.

[kork13]

It's not terribly surprising. If you weren't primed to look for NVIDIA, you'd probably notice that Apple, Google, and others all feature prominently as well.

Why? Simple. NVIDIA is literally the biggest company in the US stock exchange. It's as big as blue chip gets, leads as a high-earning growth stock, and it's integral into many other industries via their microchips, and a frequent market driver. It would be patently foolish for any MF/ETFs: to exclude NVIDIA, unless it's something like a balanced fund selling slow growth & steady dividends... But otherwise, the king reigns supreme.

[james.hendrickson]

So, the one thing I'd point out here is that if you want to diversify in the stock market, you'd have to dig a little deeper into your funds or holdings to be sure they AREN'T holding NVIDIA.

[ua_guy]

You have to get out of large cap and big index funds. NVIDIA is as hard to avoid as the others in the mag seven like Apple, Google, Meta, Tesla, etc.

When analysts talk about the current bubble being all about AI, they're not wrong. All the big stuff is riding on it. If AI collapses, the wheels fly off the market.

[Jluke]

It’s kind of how indexing and ETFs are supposed to work, unless you are picking sector ETFs then you can avoid the MAG 7 or whatever the latest craze is. Remember FAANG?

hold the big players and winners (hopefully).

hope the index times things right when others creep up or need to drop off.

[disneysteve]

So, the one thing I'd point out here is that if you want to diversify in the stock market, you'd have to dig a little deeper into your funds or holdings to be sure they AREN'T holding NVIDIA.

Or just buy VTI and be done. Stop trying to pick stocks. You waste more time and more money and hamper your long term return doing what you're doing.

[srblanco7]

So, the one thing I'd point out here is that if you want to diversify in the stock market, you'd have to dig a little deeper into your funds or holdings to be sure they AREN'T holding NVIDIA.

Not sure I’d (personally) try to avoid NVIDIA, but in the name of diverse investments, including mid cap and small cap index funds (or ETFs) as well as an international index fund are straightforward options (and would be “NVIDIA-free”).

[disneysteve]

Not sure I’d (personally) try to avoid NVIDIA, but in the name of diverse investments, including mid cap and small cap index funds (or ETFs) as well as an international index fund are straightforward options (and would be “NVIDIA-free”.

Or again, just buy VTI. And add an international index fund.

[srblanco7]

Or again, just buy VTI. And add an international index fund.

Big fan of VTI (our largest position), but it doesn't accomplish James' goal of identifying funds that avoid NVIDIA.

[disneysteve]

Big fan of VTI (our largest position), but it doesn't accomplish James' goal of identifying funds that avoid NVIDIA.

I understand, but I think James is heading in the wrong direction based on this thread and numerous other comments he has made here. He's looking to beat the market, which is a virtually impossible goal. Study after study has proven that definitively.

[srblanco7]

I understand, but I think James is heading in the wrong direction based on this thread and numerous other comments he has made here. He's looking to beat the market, which is a virtually impossible goal. Study after study has proven that definitively.

"The stock market is a device for transferring money from the impatient to the patient." – Warren Buffett

[myrdale]

People are going to need chips in the long term for computers and phones.

I don't know what to make out of the future of AI. I find myself wondering on some photos and videos if they are real or AI at this point. Even if they get so they are indistinguishable what is the driving factor (beyond X-rated). As for AI summaries really it's just google search with extras (sometimes wrong extras). Ultimately I think its a bubble.

I wish I bought in 10 years ago, I don't think they are overpriced but I don't plan on buying in now.

[disneysteve]

People are going to need chips in the long term for computers and phones.

I don't know what to make out of the future of AI. I find myself wondering on some photos and videos if they are real or AI at this point. Even if they get so they are indistinguishable what is the driving factor (beyond X-rated). As for AI summaries really it's just google search with extras (sometimes wrong extras). Ultimately I think its a bubble.

I wish I bought in 10 years ago, I don't think they are overpriced but I don't plan on buying in now.

The driving factor is replacing human workers to reduce operating costs. As you noted, it is already getting hard to tell real photos and videos from AI-generated ones. With that being true, companies will no longer need to pay photographers and videographers and models and actors and editors and designers the way they do today.

Is AI a bubble? Yes, I think it is, but not in the same way as the dot com bubble was. In that case, there was money pouring into companies that had no product or revenue or profit but only had a good idea. Lots of those companies just never materialized into viable businesses and that's when the bubble popped.

AI is different. There are companies with substantial revenue and real product and profit. What makes it a bubble is valuation. The stock prices are most likely far above the actual value of the companies. I don't think the big players are going to vanish but at some point stock prices will need to come down to earth to reflect company values. Also, we're still in the very early days of AI. There's a zillion companies in the sector. That won't last. Some companies will fade away. Many will get bought out and merged into others. Five or ten years down the line, we'll see consolidation into a few big players, just as we saw with the dot com era.

[srblanco7]

The driving factor is replacing human workers to reduce operating costs. As you noted, it is already getting hard to tell real photos and videos from AI-generated ones. With that being true, companies will no longer need to pay photographers and videographers and models and actors and editors and designers the way they do today.

Is AI a bubble? Yes, I think it is, but not in the same way as the dot com bubble was. In that case, there was money pouring into companies that had no product or revenue or profit but only had a good idea. Lots of those companies just never materialized into viable businesses and that's when the bubble popped.

AI is different. There are companies with substantial revenue and real product and profit. What makes it a bubble is valuation. The stock prices are most likely far above the actual value of the companies. I don't think the big players are going to vanish but at some point stock prices will need to come down to earth to reflect company values. Also, we're still in the very early days of AI. There's a zillion companies in the sector. That won't last. Some companies will fade away. Many will get bought out and merged into others. Five or ten years down the line, we'll see consolidation into a few big players, just as we saw with the dot com era.

Agreed that this isn't the dot com bubble, but perhaps worth noting - from a broad market perspective - some items for comparison. AI generated summary below (so I'm not vouching for its complete accuracy) -

Key Insights
P/S Ratio: The S&P 500's price-to-sales ratio has surpassed its dot-com peak, reaching new historic highs.
P/E Ratio: The traditional and cyclically adjusted P/E ratios are near their dot-com levels but have not yet exceeded the 44.2x peak seen in March 2000.
Company Fundamentals: A key difference is that many of today's mega-cap tech leaders, particularly in AI, are highly profitable and generating significant earnings, unlike many speculative companies during the dot-com era that had little to no revenue or profit.
Market Concentration: The current market concentration in a handful of mega-cap stocks is at a record high, even more so than during past speculative periods like the "Nifty Fifty" or dot-com bubbles.
Earnings Driven: A large portion of the recent price rally has been driven by improving earnings expectations (EPS), rather than solely P/E expansion as seen in the late 1990s.

And as it relates to your last point regarding companies "fading away" it's perhaps reinforced in a broader market sense by noting that 367 companies in the S&P 500 have "turned over" in the last 20 years.