Wanted to publish another post on my thoughts regarding cutting back.

So I looked at NVDA when it was $100 ($1000 pre-split). It was expensive and I didn’t understand much about it so I passed.

In the recent couple months, I had a HK$1.3M additional capital come in, so I decided to give NVDA a shot.

The 2025 agentic AI and autonomous story

So I decided to dip my toes into NVDA because of the CES event.

They are partnering with car companies to develop self-driving technology, as well as get involved in the robotics AI industry.

These are the spaces that I have a big interest in, and with NVDA being the leading chip developer, I think maybe I can try getting in a little.

Over-valuation?

But I had always thought that NVDA is overvalued, probably even back when it was $100/share.

I started buying around $130-135 and now it’s back to $120 after the deepseek shock.

The thing is, with such a large company, a 40-50x PE and 30x forward PE, is probably assuming everything will go perfectly.

Based on Aswath Damodaran’s valuation, I had stayed away previously but heck I thought maybe dipping my toes a bit wouldn’t be a bad idea

The story change

With deepseek coming along, the story of NVDA isn’t broken yet I don’t think, but it does put a dent in it.

I agree with Mr Damodarans narrative that, AI will be split into the premium and cheap routes.

The cheap AI stuff won’t really need high-grade Nvidia chips.

The premium stuff will likely still need them.

So the company will stay relevant probably for years to come, but it won’t be what investors have expected.

Conclusion – cut the position in half

NVDA is currently 5%+ of my US stock portfolio.

As of writing this Sunday, I can’t make a move yet.

But I think I will cut that position to 3-5%, and maybe sell 30-40% of the NVDA holdings.

I already have a -11% unrealized loss on it. Part of me want to keep “buying the dip” and getting cheaper NVDA shares.

But thinking about it clearly, it’s likely a story change that is going to depress an already much overvalued company.

I will still keep a small position since they are still relevant in a sense, and the story might change again or they might innovate in a huge way.

Taking realized loss can be difficult so I want to use this post to make sure I keep myself in a rational state.

Should I have not invested?

I don’t necessarily “regret” the initial decision per se.

I went in knowing full well about the overvaluation anyway.

And I managed a small position, which I added on the way down but it is still quite small.

Now that I have time to clearly think though it and also saw Damodaran’s latest video about its valuation (his price target is $70) … I made this new decision but I live well with my previous decision as well.

20250211 Update

At the end, I sold 1/3, which was 20 shares of NVDA, keeping 40.

Sold at $113 and it turned out to be the lowest of the low. It has recovered to $135 since then.

Part of me thinks – oh I wish I hadn’t sold … that 20 shares would’ve gained $20/share and that would’ve been an extra $400 now.

Looking back at the post though, do I really regret that I sold? Probably not.

Maybe I should’ve sold the 20 shares in 2 or 3 separate stages instead of getting scared and dumping all at once. Nevertheless, my analysis on NVDA stays the same and I am comfortable holding 3-5% of stock portfolio on it.

If I ever make another new decision based on new information or just new learning about the company, I might buy back in more. And yes I would be buying back in more expensively, but that’s how long term investing works.

I’d say I am still pretty uneducated about NVDA so keeping a small position for now makes sense. If I can be as informed about it as TSLA then I could be comfortable buying any dips and HODLing it. For now I definitely don’t have that kind of conviction on NVDA so I will keep learning.