This portfolio update follows the completion of Q2 earnings results (for companies reporting their 31Mar or 30Apr quarters). NVDA and SNOW were the last of my portfolio companies to release their Q2 results (27Aug). I intend to continue posting detailed portfolio updates on a quarterly basis, typically after the end of an earnings reporting cycle. For more frequent updates on the portfolio composition, I post regularly on X (formerly Twitter). The posts there can be seen by following @gauchorico. I have also been posting weekly changes to the portfolio’s allocations (which I no longer include in these quarterly updates) on X.
PRIOR PORTFOLIO UPDATES
PORTFOLIO PERFORMANCE
I can still recall sitting in Finance 101 course during first semester of my MBA program. The professor was explaining Efficient Market Hypothesis, which states that in financial markets all information is always available to all market participants. Therefore, the hypothesis concludes that it is impossible for anyone to consistently achieve higher returns than the overall market return. Examples of individuals, such as Warren Buffett and Stanley Druckenmiller, who achieved greater-than-market returns are explained away as temporary phenomena that will eventually revert to the mean.
This hypothesis never made sense to me. One example came just a couple of weeks ago, when APP reported its Q2 earnings result. The shares dropped sharply in the after-hours trading session because, at first glance, revenue looked weak following the divestiture of the Company’s gaming segment. With that segment no longer included, the y/y comparison looked soft. In reality, results far exceeded expectations; the stock price should have risen, not fallen. Several of my investor friends and I were able to profit from this temporary anomaly.
There are many reasons why Efficient Market Hypothesis has critical gaps in its logic. First, not all information is available to everyone. Second, not every investor uses all available information. Third, some information is more relevant other information, and some investors are better at discounting irrelevant information and heavily weighting highly relevant information. Fourth, some investors are much better at predicting the future than others. Fifth, some investors are better at separating their emotions from the buy and sell buttons. There are probably other reasons, but, as they say, the proof is in the pudding: there are investors who outperform the market over long stretches.
| Year | GauchoRico Return | GauchoRico Cumulative Return | S&P 500 (TR) Return | S&P 500 (TR) Cumulative Return |
|---|---|---|---|---|
| 2017 | +61.6% | +61.6% | +22.8% | +22.8% |
| 2018 | +55.9% | +152.0% | -5.2% | +16.5% |
| 2019 | +41.8% | +257.3% | +31.5% | +53.2% |
| 2020 | +245.6% | +1134.7% | +18.4% | +81.4% |
| 2021 | +27.7% | +1477.3% | +28.7% | +133.4% |
| 2022 | -71.4% | +350.5% | -18.1% | +91.1% |
| 2023 | +33.9% | +503.0% | +26.3% | +141.4% |
| 2024 | +82.7% | +1001.5% | +25.0% | +201.8% |
| 2025* | +29.0% | +1320.8% | +10.8% | +234.3% |
| * through 8/31/2025 |
I am one of many whose results refute Efficient Market Hypothesis, unless, of course, my future results underperform to such a degree that my long-run returns revert to the mean. The S&P 500 (including its dividends), a proxy for the total stock market, has outperformed the GauchoRico Growth Stock Portfolio in two of the last nine years (2021 and 2022). The GauchoRico portfolio’s cumulative return in the 8.67 years (through the end of August 2025) since the start of 2017 is now +1320.8% compared to the S&P 500 (TR)’s return of +234.3%. In those eight years and eight months, the portfolio’s CAGR was +35.8% compared to +14.9% for the S&P 500 (TR), which includes dividends.
The journey to achieve the >35% average annual returns was not a smooth one. In 2021, I wrote a post about big portfolio drawdowns. These ~35% drawdowns have happened quite often, and greater (50-80%) drawdowns have occurred on average about once every eight years. However, the in-between positive rallies have more than compensated for the big drops. The last big drop for the GauchoRico occurred between 17Dec 2024 and 4Apr 2025: this drawdown was 35%, inline with typical big drops. However, since 4Apr, the portfolio has rallied 80.7%.
It’s been a volatile start to 2025 after the portfolio gained 82.7% in 2024. The portfolio reached a YTD high on 28Aug at +31.25% and a YTD low on 4Apr at -28.6%. The portfolio’s YTD return finished August 2025 at +29.0% compared to the S&P 500 (Total Return) index at +10.8%.
| DATE | GauchoRico Portfolio (YTD) | S&P500 Total Return (YTD) |
|---|---|---|
| Jan25 | 5.0% | 2.8% |
| Feb25 | -6.5% | 1.4% |
| Mar25 | -19.2% | -4.3% |
| Apr25 | -12.1% | -4.9% |
| May25 | 3.7% | 1.1% |
| Jun25 | 15.1% | 6.2% |
| Jul25 | 19.9% | 8.6% |
| Aug25 | 29.0% | 10.8% |
OVERALL ASSET ALLOCATIONS
The GauchoRico Growth Stock Portfolio now comprises slightly less than 50% of my total assets. The following posts explain my reasons for no longer having virtually all of my assets in the Growth Stock Portfolio:
July 2022: When Should the Game Change?
July 2024: How I Changed My Money Game
May 2025: Safe Bucket and Investing for Fixed-Income: What Are the Risks?
The bulk of my other assets are allocated to my Safe Bucket, which includes a) the GauchoRico Fixed-Income Portfolio (newly created in 2025), and b) residence(s) for personal use (provide no income). The purposes of the Safe Bucket are to provide shelter and generate income for my living expenses. In contrast, the GauchoRico Growth Stock Portfolio’s goal is to maximize long-term CAGR. Both portfolios have been doing their job with the Growth Stock Portfolio in its ninth year growing at greater than 35% CAGR and the Fixed-Income Portfolio yielding enough income to fund my lifestyle. If you are interested to know more about my Fixed-Income Portfolio, you can read my first Fixed-Income Portfolio update. Together, the Growth Stock Portfolio and the Safe Bucket comprise 95% of my assets.
The remaining 5% of my assets are in a combination of more speculative investments, which include equity stakes in some private start-ups, cryptocurrency, and a very small macro/trend-following trading account. The majority of these other assets are in cryptocurrency, and the cryptocurrency holdings are currently allocated as follows: BMNR (51%), ETH (44%), and IBIT (5%). Until very recently (July 2025), I was never interested in investing in cryptocurrency, as I had viewed it as a probable Ponzi scheme. The change of heart can be attributed to a) my increasing concern about the lack of government fiscal responsibility and the possibility that USD devaluation as the inevitable outcome, and b) several recent developments that point to cryptocurrencies being broadly accepted and recognized and maybe going mainstream. In my opinion, cryptocurrency is a currency, not a business with financials that can be analyzed. Therefore, I won’t include cryptocurrency assets as part of the GauchoRico Growth Stock Portfolio.
ALLOCATIONS
| 8/31 | 7/31 | 6/30 | 5/31 | 4/30 | 3/31 | 2/28 | 1/31 | 12/31 | |
|---|---|---|---|---|---|---|---|---|---|
| NVDA | 19.9%* | 27.0%* | 25.4%* | 22.1%* | 20.0%* | 22.2%* | 21.5%* | 16.8%* | 18.1% |
| RDDT | 18.2% | 15.1% | 13.8% | 11.9%* | 9.0% | 8.8% | 2.4% | — | — |
| MELI | 15.8% | 15.4% | 19.6% | 21.3% | 22.1%* | 21.2% | 21.2% | 19.3% | 17.4%* |
| AMZN | 14.3% | 14.4% | 13.1% | 13.1% | 13.4% | 15.0% | 12.2% | 11.8% | 11.4% |
| AXON | 13.5% | 13.8% | 14.7% | 16.8% | 15.6% | 15.7% | 13.3% | 11.1% | 10.6% |
| APP | 10.2% | 5.1% | 4.4% | 1.0% | — | — | — | — | — |
| ALAB | 3.3% | 2.5% | — | — | — | — | — | — | — |
| SNOW | 2.0% | 1.9% | 2.7% | 2.6% | 2.3% | 2.3% | 2.3% | 2.1% | 1.9% |
| GOOGL | 1.0% | 1.0% | — | — | — | — | — | — | — |
| SEZL | — | 3.9% | — | — | — | — | — | — | — |
| TSLA | — | — | 2.6%* | 8.4%* | 6.2%* | 6.1%* | 19.5%* | 25.7%* | 27.3%* |
| IOT | — | — | — | — | 1.1% | 1.1% | — | — | — |
| ROOT | — | — | — | — | 4.1% | 4.3% | 5.1% | 6.7% | 5.3% |
| BORR | — | — | — | — | — | — | 0.9% | 1.1% | — |
| ASPN | — | — | — | — | — | — | — | 5.3%* | 5.8%* |
| Cash | 1.7% | 0.4% | 4.0% | 3.4% | 6.6% | 4.8% | 2.2% | 0.4% | 3.3% |
The allocation details described below are as of August 31, 2025. One of the nine positions in the portfolio is leveraged with long-term call options. NVDA: Of the 19.9% position, 18.5% is in shares and 1.4% is in Jan2027 $125 call options. The portfolio composition includes 96.8% shares, 1.7% cash, 1.4% long-term call options, and 0.1% short-term call options.
PORTFOLIO CHANGES
Changes since 31May 2025
My last portfolio update was on 31May 2025. I no longer report my detailed changes in my portfolio updates, but I have been reporting my allocation changes (buys, sells, and conversions between shares and LEAPS) on a weekly basis on my X account: For more granular updates, see @gauchorico.
EARNINGS RESULTS
Since the last portfolio update, all portfolio companies reported their latest quarterly results. I’ll review them in the order they reported.
TSLA (reported results on 23Jul)
I sold the last of my remaining TSLA position on 1Jul. TSLA had been a position in my portfolio since August 2023. My primary reason for investing was my conviction that the Company would succeed in bringing full self-driving to the automotive industry. I still believe that Tesla will achieve this and may be on the cusp of doing so. I also continue to believe that autonomy of humanoid robots will be easier to achieve than autonomy of automobiles. TSLA shares may rise substantially from here, but after Elon decided to start a new political party, I dumped my shares. Yes, I held through Elon’s DOGE escapades and his brand-damaging political rants and polarizing opinions, but his feud with the world’s most powerful man — someone both vindictive and highly influential with all sorts of regulatory bodies critical to Elon’s companies — was the last straw for me as an investor. There are other great companies led by effective and singularly focused CEOs, that can yield great returns for investors. I’ll stick with those.
GOOGL (reported results on 23Jul)
Alphabet (Google) reported Q2 results on 23Jul. In my 1Dec2024 portfolio update, I compared the so-called Mag7 tech companies and ranked GOOGL dead last citing the threat of AI disrupting its search business and missed opportunities in AI. In addition, the U.S. Department of Justice is pursuing efforts to remedy GOOGL’s dominance in internet search — efforts that could ultimately result in the breakup of the Company. Together, these pose multiple threats to GOOGL’s primary source of revenue: advertising derived from internet search, which comprises 74% of GOOGL’s total revenue. Why would I invest in GOOGL?
My conviction in GOOGL as an investment is not high (~1% allocation). Of the concerns above, the only one I view as significant is the possible disruption of GOOGL’s search business from AI. I don’t foresee the breakup of the Company, and, even if it does, the sum of the parts could be worth more than an intact GOOGL. Google search revenue grew 11.7% y/y in Q2, which is healthy growth for a business of its size and not an indication of disruption by AI. GOOGL continues to invest heavily in AI, and its “Other Bets” revenue, while small compared to the overall size of the Company, could benefit from AI breakthroughs with limited downside and large potential upside. In addition, AI adoption will make GOOGL more efficient, so we can expect greater output from its knowledge workers leading to higher net margins. To summarize, I hold GOOGL for two reasons: 1) the worries appear overblown, and 2) by investing in a variety of “Other Bets,” GOOGL stands a chance to significantly benefit from some unpredictable and unknowable advances in AI.
The Company has two tickers: GOOG and GOOGL. They are economically identical, except that GOOGL has voting rights whereas GOOG does not. Since GOOGL was trading at a slightly lower share price than GOOG (go figure), I bought the lower-priced shares with the voting rights.
AMZN (reported results on 31Jul)
AMZN reported Q2 results on 31Jul. Again, I’d like to refer back to my 1Dec2024 portfolio update (see AMZN section). My view of AMZN remains the same.
AMZN continues to invest in automation; the Company announced that they surpassed one million robots deployed. The focus remains on increasing automation, further reducing delivery times while providing customers with a great experience and unrivaled purchasing choices. For investors, this should translate into greater efficiencies, reduced costs, and increased operating margin. I’m pleased with the continued and focused efforts in this regard.
AWS revenue grew only 17.5% y/y, and this was the disappointment that likely led to the stock price decline after the earnings result announcement. By comparison Azure and GCP grew faster at 34% and 32%, respectively. This large difference can only be partially explained by the difference in size/scale of the cloud providers. AWS now has a $124B revenue annual run rate. The AWS backlog is now $195B. That’s a lot of future revenue that AMZN can’t currently fulfill. There’s a capacity issue, not a demand issue. CEO Jassy attributed the largest, but not the only, contributor of the relative slow AWS growth to a limitation in power (i.e., energy to electrify their data centers). Jassy added that the backlog will take multiple quarters (I take that to mean more than two) to work through. If there’s a capacity problem primarily limited by total available energy, then there are two ways to solve that problem: 1) get more energy, 2) improvement energy efficiency (i.e. increase tokens generated per watt), or 3) both. With every new GPU release the energy efficiency improves. Comparing the NVDA H100 to the B300: tokens per watt have increased by more than 4x, so switching H100s for B300s would give a data center more than 4x the compute capacity.
I’m not quite sure why MSFT and GOOG were able to grow their cloud businesses at about twice the rate of AMZN. It could be that they’re more interested in gaining market share while AMZN may be more interested in controlling costs and preserving margin. I’ve heard reports that AMZN is purchasing proportionally fewer top-of-the-line GPUs from NVDA than MSFT and GOOG. AMZN is investing heavily in their own Trainium 2 chips.
I believe that AMZN has only a short-term issue that will resolve over the next few quarters. With the backlog and the migration from on-prem to cloud only 15% complete, this is going to be a long race with a lot of opportunity to come. With the share price drop immediately after earnings, I decided to leverage 25% of my shares into Jan 2027 $220 call options. I recently reversed that trade, resulting in about 11% more shares (on the shares that were swapped back and forth).
RDDT (reported results on 31Jul)
RDDT reported Q2 2025 on 31Jul. I previously posted my updated thoughts on RDDT and the recent quarter.
MELI (reported results on 4Aug)
MELI reported its Q2 2025 quarter. Overall, the high-level financials show that MELI remains on track. Net revenue was up 34% y/y, a slight deceleration from the Q1 result but still above the >30% I like to see. Most of the other metrics looked strong as well, with items sold up 31% y/y, unique active buyers increasing 25% y/y, FinTech monthly active users rising 30% to 68M, FinTech assets under management surging 109% y/y, and net interest margin after losses (NIMAL) remaining stable at 23%. Adjusted FCF was $454M, lower than last year’s $678M; however, when backing out CapEx and FinTech funding for both quarters, Q2 2025 adjusted FCF increased 21% compared to Q2 2024. It wasn’t a perfect quarter, but it was clearly an on-track quarter. I see no reason to change the allocation.
AXON (reported results on 4Aug)
When I first invested in AXON in July 2023, the Company was growing revenue in excess of 30%. Since then, AXON has maintained its top-line growth above 30% and its stock price has risen by more than 300%. I’ve been monitoring AXON’s growth and its business every quarter, and I still believe it can maintain its revenue growth above 30%. As long as I believe that this strong growth can continue, I expect to remain a shareholder. The Q2 2025 earnings results did not disappoint.
The financial metrics remain on track. Revenue grew 32.6% y/y, a slight sequential improvement over Q1’s 31% y/y growth. It’s important to point out that AXON’s higher-margin Software & Services segment (39% growth) continues to outpace AXON’s lower-margin Connected Devices segment (29% growth); this will not only help AXON increase margins in the quarters to come but also provide support for continued higher revenue growth rate; the revenue contribution of the Software & Services segment is 43.7% of the total revenue compared to a 41.8% contribution a year ago. In addition, Software & Services delivers largely recurring revenue, providing revenue reliability for future quarters; ARR growth for Q2 was 39% y/y. These financial metrics and the composition of the revenue give me high confidence that AXON will continue to post >30% top-line growth in the coming quarters (and years).
Management’s commentary on the state of the business was extremely positive on the conference call. In short, the business is firing on all cylinders. AXON has traditionally sold into the state and local public safety market. AXON has been able to increase the spend per officer in the United States to more than $600 (from less than $300 a few years ago). The increase has largely come from AXON’s new products. Uptake of new product categories has been particularly strong, with >30% of Q2 bookings coming from new product categories. Many of these new products are AI-related software, which carry high gross margins. AXON is also seeing increasing opportunities in enterprise, federal (U.S.), and international markets; increased traction in these markets support AXON’s continued strong growth. In Q2, AXON’s international sales contributed 20% of total revenue, up from 12% in Q1 and 16% in Q2 2024. Another promising category is AXON’s drone business, which is garnering much interest. AXON’s acquisitions of Sky-Hero in 2023 and Dedrone in 2024 were very timely, and offerings in the drone space will offer additional growth opportunities for AXON in the coming years. The Q2 2025 earnings call is well worth a listen.
In addition to the great results and future prospects, I’ll add that AXON’s management team appears to be operating at a very high caliber. CEO Rick Smith focuses on engaging with customers to uncover unmet needs and growth opportunities to flesh out the product roadmap. He seems to have complete trust and faith in the rest of the senior executives to manage AXON’s operations. This division of roles and responsibilities has been working, and I’d expect it to help drive future growth and success for AXON. I’m happy to continue to own a high-allocation position in the portfolio.
ALAB (reported results on 5Aug)
ALAB is a new position in the portfolio, first purchased in late July, prior to the Q2 2025 earnings result. The shares were purchased using proceeds from the sale of some NVDA shares and NVDA Jan2027 $125 call options. The rationale for moving some funds from NVDA to ALAB was that ALAB, while also in the same AI ecosystem as NVDA, could potentially deliver greater returns, given it’s a smaller, faster growing company.
ALAB provides networking hardware and software for AI and cloud infrastructure applications. One might assume its products would be a commodity with low margins, but that’s not the case–ALAB’s non-GAAP gross margins are in the mid- to high-70%s, indicating both pricing power as well as product differentiation. Like NVDA, ALAB is riding the AI wave, and I’d expect its growth and results to remain strong as long as spending on AI infrastructure continues to grow. So far there are no signs of CapEx spending on AI slowing. While NVDA’s data center revenue grew 142% from fiscal 2023 to 2024, ALAB’s revenue growth grew 242%.
For the recently reported Q2 2025, ALAB reported revenue growth of 149.7%, beating the top end of guidance by 9.7%. Meanwhile, non-GAAP OpEx spending grew 71.4%, demonstrating ALAB continues to show operating leverage. Non-GAAP operating margin came in at 39.2%, and FCF margin was an incredible 70.2%! Q3 revenue growth guidance at the top end was 85.7%, which I’d expect to come in closer to 95%. ALAB is also a GAAP profitable business. While NVDA remains a top holding in the portfolio, ALAB offers what may continue to be a higher-growth alternative.
APP (reported results on 6Aug)
While I purchased a small position in APP after the Q1 2025 earnings result, I hadn’t yet fully examined the business. APP is in the advertising business, providing end-to-end solutions and AI-driven tools to help clients acquire new customers and maximize revenue from ad spend. The Company previously had a mobile games app business, which it divested on 30Jun. For this reason, it’s important for investors to exclude results for the apps business when making comparisons to prior periods.
APP reported Q2 results on 6Aug. The results that follow are for the ad business only (apps business results from prior periods are excluded). Revenue grew 77.0% y/y, which was an acceleration compared to the results of the prior four quarters. Adjusted EPS surged 162.8%! Gross margin reached 88.4%, and non-GAAP operating margin was an incredible 80.7% — a level I don’t recall seeing from any business before. Non-GAAP operating expenses actually declined 1% y/y despite the top line growing 77%! APP is effectively printing money with a FCF margin of 61.0%. With revenue growth and financials like this, APP is a business I feel compelled to own. The advertising market is huge (well over $1T) so APP should have plenty of room to grow with a revenue run rate of about $5B/year. The word is that APP will soon be added to the S&P 500 index, which will create additional demand for APP shares. Since my last portfolio update at the end of June, I’ve significantly increased my allocation.
SNOW (reported results on 27Aug)
SNOW reported Q2 FY2026 results on 27Aug. I’ve been waiting for SNOW to become an AI beneficiary and show revenue growth reacceleration. Finally! After many quarters of revenue growth in the high 20%s, SNOW’s revenue growth in Q2 was 31.8% y/y, up sequentially from 25.7%. More than half of SNOW’s 12,068 customers use SNOW’s AI tools every week. While SNOW is a small position in the portfolio, I’ll continue to hold my shares to let this thesis play out.
NVDA (reported results on 27Aug)
I’m writing the following several days before the 27Aug earnings results, so my thoughts going into earnings are the following:
NVDA has been in the portfolio for more than two years (August 2023). My initial investment was made immediately after it became clear that AI infrastructure investments were exploding and poised to be huge. I stayed invested because I believed that this AI infrastructure investment cycle would last a long time, much longer than previous semiconductor boom-bust cycles, and longer than most other investors expected. So far, my assessment has been correct, and it continues to be correct as shown by the Q2 reports of the hyperscalers. CapEx spend by these hyperscalers, and more recently by additional companies, such as Oracle and the neoclouds (CoreWeave, Nebius, and others) continues to grow larger and faster than the market expected.
NVDA reported its Q2 FY26 results on 27Aug. Revenue grew 56% y/y to $46.7B, beating guidance by 3.9%. Notably, the result included zero revenue from China, meaning NVDA is still growing this fast despite losing all revenue from the world’s second-largest AI infrastructure market! Looking ahead to Q3, the Company provided $54B in revenue guidance, which equates to 54% growth compared to Q3 FY2025; again, the guidance includes zero revenue from China. I expect NVDA will deliver $55B in Q3 revenue for 57% growth, a small acceleration from Q2’s 56% growth. There’s also the possibility of regaining the China business, which the CFO estimates between a $3-5B potential for Q3. If NVDA wins that China business back (say $4B), then the y/y revenue growth for Q3 becomes 68%! Will NVDA regain access to the China business? It’s uncertain; that’s a decision that rests with the governments of the United States and China. It would be a shame if NVDA sales to China were blocked by the U.S. and/or Chinese governments because allowing the sales is a win for both countries as well as for NVDA and its Chinese customers. For my investment in NVDA to perform going forward, it’s important, but not essential for NVDA to be able to sell into the China market.
Many investors are concerned because NVDA’s data center revenue didn’t meet analysts’ expectations for Q2. They fear growth is slowing. While growth is indeed slowing, that fear seems misguided because NVDA continues to sell everything that can be produced. Not only are the new Blackwell GPUs sold out, H100s and H200s are sold out as well. Demand continues to outstrip available supply. There was no demand problem in Q2; in fact, some reports suggest demand exceeds supply by ten to one! Therefore, to say that data center revenue is weak or decelerating is completely irrelevant and misses the point. The real question should be: how long will AI infrastructure demand and growth persist? On the earnings call, the CFO said that NVDA now expects $3-4T of AI CapEx spend on AI infrastructure before the end of the decade. That’s about 4.5 years away, and I think the CFO’s number going to be an underestimate. The data centers being planned for next year are gigawatt-scale, whereas in 2025 and 2024 they were on the order of hundreds and tens of megawatts, respectively. Data center size is increasing roughly 10x per year.
The reason for this rapidly growing buildout is simple: increasing demand for compute (i.e., tokens generated) driven by increasing demand for inference. Every time someone asks ChatGPT or Grok a question, a datacenter somewhere is using NVDA GPUs to reason through that question. The longer the LLM thinks, the more compute is consumed. More people are asking more complex questions with more follow-up questions, and the new and improved models are able to and need to think longer to get the answers. Longer thinking means more GPU compute consumed. Soon AI agents will research topics, retrieve results, employ other AI agents, discuss with sub-AI agents, and take actions on behalf of people. These agentic AIs will consume enormous quantities of compute, much more than a person querying an LLM. This rapidly growing compute demand can only be met with more installed GPUs, most of which are procured from NVDA. NVDA continues to sell everything that can be produced, and I expect this situation to persist for at least several more years.
Meanwhile, the big tech companies are in a race to AGI (artificial general intelligence). This race is heating up with intense competition for the best AI researchers, some of whom are being poached by META with $100M/year pay packages! The top researchers don’t just care about the money; they want to make important contributions to the field, and to do that, they need resources — most importantly, access to large quantities of compute. The tech companies with most compute available to their researchers can attract the best researchers because the best researchers can make important breakthroughs. All of this means more GPUs purchased from NVDA.
Data center revenue grew 142% in FY2025, and it’s on track to exceed 50% in FY2026. For FY2027, Wall Street analysts covering NVDA estimate that NVDA’s revenue will grow 31%. Again, their estimates will be wrong — see my portfolio update from one year ago. Around the same time last year (August), the analyst community’s estimates for NVDA’s FY25 and FY26 revenue growth was 100% and 39%, respectively. The final FY25 result was 114% and FY26 is on track to hit 58%.
I believe NVDA’s FY27 revenue growth will exceed 45% without additional China sales and upside if sales to China resume. In total, I’m expecting $300B+ in FY2027 revenue with a 45% free cash flow margin ($135B+ in FCF). NVDA’s current enterprise value multiple on next year’s FCF estimate is about 31x, which is not expensive considering its high revenue growth rate. Even with the Street’s FY27 estimate of 31% growth, the analysts’ price target consensus is above $200 (around $207); in fact, I could only find two analysts with a price target below $200 (both have $195). If 31% revenue growth next year supports a stock price above $200, what stock price would 45%+ warrant? Today’s price is just under $175.
NVDA remains my highest conviction and highest allocation position in the portfolio.
FINAL THOUGHTS
For the past several portfolio updates, I’ve expressed my concerns about various developments and ongoing challenges in the world. These include the level of debt in the U.S. and most other developed economies, the continued high deficit spending exacerbating the high debt level, the unraveling of the global system of trade, the possible breakdown of the rule of law in the U.S., the threat of rising authoritarianism, and the uncertainty about what would happen to its nuclear weapons stockpile if the Russian Federation collapsed. My concerns remain, and I continue to think about what actions I can take to insulate my life and finances against various possible risks and scenarios. The Growth Portfolio, the Fixed-Income Portfolio, and the more recent investments in cryptocurrency are all pieces of my positioning to mitigate the risks and threats that I see.
I don’t only see threats. I am very optimistic regarding the advancement of technology, AI in particular. Technological advancements are occurring at an accelerating rate, and the impact on society and on the economy (and individual companies) continues to be very meaningful. The investments in the Growth Stock Portfolio, about 50% of my assets, are heavily skewed toward companies that can greatly benefit from technological advancements.
The challenges I mentioned above combined with rapid technological change, make the near-term future murky. I believe the next four years are going to be very interesting and probably quite turbulent. Let’s hope the positives end up outweighing the negatives.
The opinions, thoughts, analyses, stock selections, portfolio allocations, and other content is freely shared by GauchoRico. This information should not be taken as recommendations or advice. GauchoRico does not make recommendations and does not offer financial advice. Each person/investor is responsible for making and owning their own decisions, financial and otherwise.