Nvidia was down five bucks this morning.
I still won't touch it.
Not long. Not short. Nothing.
I have traded for 39 years. I covered small cap semiconductor equipment as an analyst. I understand how to price these companies better than most talking heads on television.
But I cannot price Nvidia. Neither can you.
There is an absolute shortage of AI chips right now. Not enough companies exist that design and manufacture them. The supply side is broken and demand keeps accelerating.
This creates what I call a sacred cow. A stock that defies traditional valuation because the economics override everything else.
The Squeeze Nobody Can Break
There are not enough AI chip manufacturers in the world.
That sentence explains everything about Nvidia's valuation. It explains why the stock trades at 32 times earnings and could run to 40. It explains why every short seller who steps in front of this train gets destroyed.
Gianni Di Poce has been calling for 400. I am not going to challenge the guy.
The supply constraint creates a squeeze play. Excess demand chasing limited supply. Basic economics working in real time.
What I Told The Genesis Cog Members
Should Nvidia trade at 32 times earnings? Maybe.
Should it trade at 40? Maybe.
I do not know. Nobody does.
Here is what I do know:
- There is a lack of supply of AI chip creators and manufacturers
- Demand continues to outpace production capacity
- Traditional valuation metrics become meaningless during supply squeezes
- Fighting this trade destroys capital regardless of your thesis
I would not buy this stock because it is too expensive. But I would not call this a bubble.
That distinction matters.
AMD Carries The Same Protection
Advanced Micro trades at roughly a hundred times earnings.
Pricier than Nvidia by that metric. But AMD has a headstart on certain AI applications that Micron cannot match.
Both companies benefit from the same supply constraint. Both stocks carry sacred cow status until the shortage resolves.
I am bullish on these names. I will not short them. I will not buy them either.
The Only Trade That Makes Sense
Do not buy these stocks here. You cannot identify the top because you cannot price them.
Wait until they crash.
When AI chips correct and the panic selling begins, that is your entry. When everyone declares the AI trade dead, you back up the truck.
De Poce does this. I do this. Every professional who survives long term does this.
The current price reflects a future that may or may not materialize. The crash price reflects fear that creates opportunity.
Why Your Short Will Fail
You see Nvidia down on a red tape day and think the top is in.
It is not.
Supply shortages do not resolve in weeks. They take quarters. Sometimes years.
Every rally you short adds to your losses. Every dip you celebrate reverses before you can cover. The squeeze continues until supply catches demand.
I was a semiconductor analyst. I understand the cycle intimately. This is not the part of the cycle where shorts get paid.
Position For Reality
The Genesis COG System identifies exactly when sacred cow status protects certain stocks from traditional analysis. When supply and demand economics override valuation concerns.
Nvidia and AMD fall into this category today. They will not stay there forever.
When the shortage resolves and supply normalizes, these stocks become shortable again. Until then, fighting the squeeze transfers your capital to traders who understand the setup.
I will not buy. I will not short. I will wait for the crash that always comes.
See how Genesis COG detects when supply constraints create untouchable trades →
Professor Jeffrey Bierman
Creator of the Genesis COG System