This year, Nvidia (NVDA) has added over $1 trillion in market cap and in the last 12 months, it has added the value of Amazon.
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Now, back to Nvidia. This company is more valuable than the combined value of the GDPs of Nigeria, Ghana, South Africa, Egypt, Algeria and Angola. This explosive growth begs the question: should you invest in Nvidia?
There is an optimistic (bull) case or a pessimistic (bear) case for investing in Nvidia (NVDA). On the bull side, the demand for AI and everyone from big tech companies to SMEs is overwhelming. Investors only want CEOs and CFOs to talk about their business and investment strategy for AI. Since Nvidia designs the best processors to power these AI models, they have the strategic good fortune of finding themselves as the only supplier of gold in the middle of the biggest gold rush in history.
The bear case is that while AI is already transformative, its impact won’t be equal across all businesses. Eventually, CFOs might realize they’re pouring millions into AI without seeing proportional revenue growth. When that happens, they’ll likely cut costs, leaving Nvidia’s revenue and stock in a precarious position.
Here’s the thing, no one knows how this will play out. If you believe in the transformative power of AI and believe Nvidia is that company, here are two ways to think about investing in Nvidia and protecting your portfolio:
- Dollar Cost Average. Set up a recurring purchase for Nvidia on Bamboo because by investing regularly, you avoid the risk of buying all your shares at the highest point.
- Invest with ETFs. Nvidia is about 6% of the S&P 500 and investing in an S&P 500 ETF like VOO and SPY can help you diversify. For context, the only companies that have a bigger impact on the S&P 500 are Apple and Microsoft. You can also invest in AI ETFs like Global X Artificial Intelligence & Technology ETF (AIQ) and First Trust Dow Jones Internet Index Fund (FDN).
Hims and Hers Health (HIMS)
GLP-1 drugs like Ozempic and Wegovy are equally as revolutionary as AI. GLP-1 drugs are a type of medication used to help control blood sugar levels with a remarkable side effect of weight loss. The problem is they are expensive. Ozempic costs about $1,000/month and Wegovy costs about $1,400/month.
Imagine the market’s surprise when direct-to-consumer pharmaceutical startup, Hims & Hers Health (HIMS) said it is selling injectable GLP-1 weight loss drugs for $199/month, 85% less than Wegovy and Ozempic. Shares of the company rose 30% when the news was announced and now the stock is up 35% in the past month.
The demand for GLP-1 drugs has significantly outpaced supply and it has also given pharmaceutical companies the ability to jack up the price. Hims and Hers wants to disrupt that and the company has told its customers to expect “consistent” availability.
Demand for GLP-1 drugs has far outpaced supply, allowing pharmaceutical companies to hike prices. Hims & Hers aims to disrupt this by offering consistent availability at a much lower price.
However, what this move has shown is that this company has very smart and agile leadership because they’ve seized an opportunity that others overlooked.
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