The beauty of being in New York in April is that you get to celebrate spring in Central Park, even though temperatures still force you to run with gloves, a beanie and a heat-tech top from Uniqlo.
The magnolia, cherry, crabapple and dogwood trees are in full bloom, while the garden beds are carpeted in daffodils and tulips. Spring is a time of rejuvenation after the barrenness of a bleak winter, yet sharing conversations with friends and family, there are hardly feelings of hope and joy.
The thought of having to vote for either Joe Biden or Donald Trump in the November presidential election has left them inconsolable about what lies ahead for America in the next four years. Neither candidate is considered fit to fulfil the duties of the highest office in the world — in competence or body and mind.
Perhaps the biggest criticism is that no-one believes Biden or Trump is learned enough to further the country’s interests. What those interests are remains a mystery, as both seem to succumb to political pressures from either the extreme left or far right. It makes it difficult for an outsider, like me, to establish who are America’s friends or foes. Not unlike their economic policies, the lines are blurred. Although it is clear Trump is pro-growth, if elected, he would continue where he left off in 2020, cutting taxes and imposing import duties on goods from China and Europe.
The stock market is taking the election in its stride with the primary focus remaining on interest rates, inflation and the health of the economy. At dinner tables, though, the talk turns to Nvidia. Everyone seems to have a position in the trendy semiconductor business, but not all are long, and discussions can turn heated over the outlook for the business.
I find it easier to argue about the prospects for Nvidia than to dwell on who to vote for in November. The spend on data centres in 2023 was about $250bn, and according to Nvidia’s CEO Jensen Huang this number could grow by 20% a year in the near future. At present, Nvidia’s major customers are the large cloud giants, but Huang believes that artificial intelligence (AI) is the start of a new industrial revolution and is setting his sights on other business sectors as well, such as healthcare, retail, and manufacturing.
We fall into the trap of valuing Nvidia on its current set of earnings, ignoring its talent for developing new generation products that could boost its revenue and underpin its importance in the advancement of AI. Supply chain constraints and competition are obvious risks facing the firm, but for the meantime, its GPUs (graphic processing units) are in short supply, and Nvidia has a long lead on any challengers.
AI will be the investment theme of the next decade, with US tech companies steering the revolution. All the large players are well represented in this ground-breaking sector, with the skills and funding to maintain their dominance. Despite contrary views, valuations are still reasonable.
Nvidia has run hard and could possibly ease back letting earnings catch up with the share price. But the company’s future is far from over. Its operations are still youthful and full of life, which is more than can be said about Biden or Trump!
• Shapiro is chief global equity strategist at Sasfin Wealth.
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