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LivestreamMenuOn Tuesday, I visited CNBC headquarters in Englewood Cliffs, New Jersey, for the first time in a long time, to show my twin boys the studios after we watched the Yankees defeat the Dodgers the night before. It was so good to be back inside the mothership visiting dear old friends. More about that later. So I was in the makeup room when Kelly Evans was getting prepped for her shows “The Exchange” and “Power Lunch” and we started talking about the state of the markets. The S & P 500 and semiconductors (via the SMH) have been unchanged since the May 14 spike high. The conversation shifted to how we can help guide investors through not only the “summer doldrums,” but also the question of whether the AI trade is in fact a bubble. Kelly then told me her dad has been watching CNBC to see if he should hold or sell his Nvidia position. Kelly then said there are probably plenty of moms and dads out there with the same question! I asked her if she would mind if I focused this week’s CNBC Pro column around this conversation, and she said: “Sure, go for it.” I’ve known Kelly for over a decade, and she’s the same person in real life as you see on your screen, genuine and incredibly positive. I manage my own parents’ money through my wealth management firm, and I hold Nvidia in our models. It’s a good question, and it deserves a better answer than a simple yes or no. I thought about it on the drive home, and here’s what I came up with. One of the great runs To start, her dad already got it right. Nvidia has been one of the great runs in modern market history. Since the AI story caught fire in 2022, the company hasn’t just grown. It has rewritten what growth at scale looks like. I’ll never forget the May 2023 earnings announcement that shocked the investing world and really got this party started. During Nvidia’s fiscal first-quarter 2024 report, management guided roughly 50% higher than what Wall Street analysts were expecting — not for the quarter a year out, but for the very next quarter. Analysts were at a consensus of $7.2 billion in revenue, but management guided to $11 billion, one of the biggest guidance surprises ever for a company that size. The stock jumped about 24% the next day, added a record amount of market cap in a single session, and that kicked off the momentum as NVDA began its chase toward trillion-dollar market cap status. Fiscal year 2026 revenue came in around $216 billion, up roughly 65% on the year. The data center business alone has scaled something like 13 times since fiscal year 2023, when total company revenue was just $27 billion! Nvidia still controls the vast majority of the data center GPU market, better than 90% by most estimates, while AMD sits in the low single digits for market share. That dominance is real, and it’s defined by more than fast chips. Their proprietary CUDA software, which developers build on to power NVDA GPUs, is a major obstacle for competitors and creates genuine switching costs, and Nvidia’s yearly product cadence is punishing for anyone trying to catch up! But here’s the part I want to make sure Kelly’s dad, and my dad, know: You cannot 13x a business again from a $200 billion base the way you can from a $15 billion one. The law of large numbers is now the strongest force acting on this stock. The explosive phase is most likely behind it. And for the first time in years there’s credible competition arriving, with AMD shipping its first rack-scale system to big customers. I still expect Nvidia to lead for the next several years. I just wouldn’t underwrite another three years like the last three. Think durable, decelerating growth, not another moonshot. Look at those raw revenue growth figures projected through the next five years. The nominal growth is tremendous, but the rate of change simply can’t keep up, and the descent from 60%-100% annual growth rates down to a more modest 15%-20% pace cements this outlook. The coming competition Let’s add AMD’s revenue and growth rate alongside Nvidia’s. You’ll see AMD’s year-over-year growth rate in gray is expected to rally into 2028 as NVDA’s is pointing lower. More evidence of AMD closing Nvidia’s ~95% market share gap? AMD is delivering a credible threat through its first rack-scale AI system, Helios , now shipping to customers including Microsoft , which CNBC framed as the first true competitor in years to Nvidia’s Blackwell and Vera Rubin systems. An on-air CNBC guest suggested AMD could eventually capture 20%-25% of the market, and AMD has 12 gigawatts of committed demand from OpenAI and Meta . Then there are custom ASICs — application-specific integrated circuits that are designed to do one particular job extremely well, rather than being general-purpose — which represent another source of pressure. Think of Nvidia’s GPUs as a Swiss Army knife: flexible, able to tackle many AI jobs through CUDA software. The all-purpose Nvidia GPUs cost quite a bit more than the single-purpose, inflexible ASICs, with Google and its TPU being a famous example. Google’s TPU is supported by Broadcom , and other hyperscalers are designing their own in-house chips. The argument against this is that ASICs are one-trick ponies and run on less flexible software, so perhaps Nvidia’s massive market share remains intact as the AI revolution spreads to different industries and to companies that aren’t in a financial position to build chips in-house. Looking at analyst estimates for EPS over the next three years, you see NVDA is expected to earn $4.77 per share for fiscal 2026, with that number projected to climb to $9.00 next year, $12.84 in 2028, and $15.98 in 2029. That’s insane growth that lies ahead. Looking at the charts If we look at the chart of NVDA, we see the stock price has been mostly sideways since Q1 of 2024, with a nice move higher in the summer of 2025. I would identify a “pivot zone” from $167-$153 that should act as support on a pullback, keeping the uptrend and our bullish thesis intact. Pondering position size So the next part of this question we need to tackle as financial advisors is position sizing. When a winner grows into an outsized slice of your portfolio, the question is “should I sell?” The real question is: what percentage of my overall portfolio does NVDA now represent, and should I reduce the holding to bring it more in line with market weight? You need a yardstick, and for our models at Inside Edge Capital, we use the S & P 500 weighting. Nvidia is currently the largest holding in the S & P, representing about 7% of the index. If you own a plain vanilla S & P 500 mutual fund or ETF, you’re holding a 7% position in Nvidia. So the exercise you should do is add up your direct Nvidia shares and the Nvidia you own inside your funds. If that total is meaningfully above the 7% benchmark, you’re making an active bet that NVDA will outperform the index. For context, we’re currently market weight NVDA in our flagship growth portfolio at a 7% weighting, since the stock has been technically range-bound, as shown in the chart above. If some news catalyst wakes up the stock and it again shows market leadership, we’ll increase the allocation. For context, the largest position we’ve ever held in Nvidia is about 12%. I don’t say any of this from a distance. As I said, I manage my own parents’ money, and I’m proud to do it. I was watching the results my parents were getting from their prior wealth manager as I was gearing up to launch my own firm, and I knew their watered-down, overly diversified style had produced sub-par returns for years. I’m so glad to get them back on the right side of this bull trend, letting true compounding grow their portfolio. The reason this article hit home for me is that Kelly’s dad’s question stuck with me. I had my twins at CNBC HQ, where I’ve made so many memories and participated in over 300 financial broadcasts. I’m in my fifth three-year contract with CNBC, and it’s very significant to me. The people at CNBC have treated me like family for the last decade and a half, but this is not about me or my memories. This is about spreading the message that building wealth through investment in the capital markets — in this amazing AI evolution — can create financial security and even generational wealth for our families and friends, now and beyond their years, through solid and disciplined investment principles. I would even argue that what we do is just as important as a doctor who takes care of us while we’re here. The money we’re building should take care of our families after we’re gone. Back to Kelly’s dad and my dad, they are going to be fine. Not because Nvidia is guaranteed to go higher, but because professionals are asking them the right questions. Not “in or out,” but, for a technology staple like Nvidia, “how much?” and “does this still fit the life we’re trying to fund?” —Todd Gordon, Founder of Inside Edge Capital, LLC We offer active portfolio management and financial planning for retail investors, as well as regular market updates like the idea presented above. Visit us at https://www.insideedgecapital.com/cnbc DISCLOSURES: Todd owns NVDA personally and for clients of his wealth management company Inside Edge Capital, LLC. Charts shown are Koyfin and TIKR All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.Read More
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