Did you know that the Nasdaq Composite Index, mostly consisting of technology stocks, has seen periods of explosive growth, reflecting the sector's impact on the global economy?

Compared to the advent of AI, previous leaps in technology seem like child’s play, however.

In this edition of Equity Eats, we explore:

• Cathie Woods Is Worried About Nvidia, And She Isn’t The Only One: First, we’ll examine how Cathie Wood questions Nvidia's rapid growth amid a booming AI demand, highlighting potential overbuilding of GPU capacity 😲

• Too Much Cash: Next, we’ll be debunking the safety of hoarding cash, instead recommending diversified investments for long-term gains 💵

• Is China Cheap: Finally, we’ll dive into China’s enticing yet risky investment landscape, scrutinized for its value traps amidst structural challenges 🤔

With Equity Eats, you’ll be able to understand the market at a profound level.

Cathie Woods Is Worried About Nvidia, And She Isn’t The Only One 😲

ARK Invest’s Cathie Wood has concerns about Nvidia stock after its spectacular run, and she isn’t alone.

The stock has surged 290% in the past 12 months and consistently continues to hit new highs 🚀

The gain may be warranted, though.

The company reported revenue of $60.9 billion in February, a 126% increase from the prior year.

Chief Financial Officer Colette Kress said on the earnings conference call that demand for coming chips “far exceeds” supply.

Woods argues that there could be an overbuilding of GPU capacity, which could lead to a correction in excess inventories, particularly among the cloud customers that account for more than half of Nvidia’s data center sales.

Others say they are concerned about how gains in Nvidia stock have boosted shares of other semiconductor makers.

More likely, P/E multiples will continue to expand in the face of the AI rally as AI demand continues to outpace supply.

There may be a period of profit-taking following a Nvidia AI conference that begins on March 18, but the medium term outlook remains strong despite the worries 💪

Too Much Cash 💵

Is cash king?

Every other asset class outperforms cash in the long run, so long-term investors shouldn’t be sitting in cash.

They should be building a portfolio that is diversified and able to take advantage of long-term trends rather than just hiding on the sidelines until everybody feels better 📈

Equity markets are volatile, but a well diversified portfolio stands the test of time and gains will compound over the years.

Waiting for the world to end and sitting in cash is almost like refusing to leave your home for fear of getting harmed in the dangerous world 😱

But fear is inflicting the greatest harm.

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Is China Cheap? 🤔

China is cheap, but cheap for a reason.

Chinese stocks trade at nine times forward earnings.

There is value, but it’s probably a value trap, as the Chinese market swings a lot.

If you’re an experienced trader and that’s the business you’re in, maybe you can catch an upswing in the Chinese market and it could be a powerful one.

But China has three huge structural problems.

One is its very fast declining birthrate and consequently declining and aging population 👴🏻

Second, it overinvested in overpriced real estate 🏢

But overlaid on all that, the most important problem in China is that it is suffocated by a paranoid, authoritarian regime 👿

Inner Circle Macro Update 🔍

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