The holidays are over, and the new year is starting as it often does… with a nasty flu season.
The Centers for Disease Control and Prevention estimates that more than 18 million Americans have been infected as of January 10. And 230,000 people have already been hospitalized.
Flu season typically peaks in February, which means the worst of the outbreak could still be ahead.
On top of that, another “bug” is making the rounds this year… Influential economist Ed Yardeni calls it “AI Fatigue.”
Yardeni recently told Bloomberg that he’s “tired of [the artificial intelligence (“AI”) story]” and “suspect[s] a lot of other people are [weary] of the whole issue.”
The AI story took Wall Street by storm when OpenAI released its generative AI chatbot on November 30, 2022. It provided a user-friendly way to create original text, speech, and images via user prompts.
We continue to believe it’s the most disruptive technology innovation of our lifetime. Hardly a day goes by that we don’t read about fascinating new applications…
Take the medical field. Dr. Samir Abboud, chief of emergency radiology at the Northwestern Feinberg School of Medicine, recently told the Wall Street Journal that generative AI helped him slash the time it takes to write an X-ray report from 75 seconds to 45 seconds.
That’s speeding up access to time-sensitive information that doctors rely on to save lives. There are countless other examples across industries.
But we understand Yardeni’s sentiment. Three years is a long time for a story to stay top-of-mind for investors. A certain amount of AI Fatigue was inevitable.
But we believe there’s a lot more upside ahead.
By moving on to other ideas – like gold, which has continued to soar (as we predicted it would last September) – investors are giving up on AI far too soon.
The Poster Child for AI Fatigue Is a Compelling Buy
No single stock has been more emblematic of the AI story than high-performance chip designer Nvidia (NVDA).
The company’s graphic processing units (“GPUs”) provide the raw computing power that customers like OpenAI, the creator of ChatGPT, rely on to process large and complex AI workloads.
It’s fair to say that the AI boom couldn’t have happened without Nvidia’s high-performance semiconductors.
And yet, there are three clear signs that investors have caught the AI Fatigue bug when it comes to this winning stock…
- 1. The latest news about Nvidia’s next-generation AI platform (Rubin) was a yawner.
- 2. There’s growing skepticism about Nvidia’s ability to maintain high margins.
- 3. Nvidia’s stock is trading at a substantial discount.
Let’s go through these one by one…
1. The Latest News About Nvidia’s Next-Generation AI Platform (Rubin) Was a Yawner.
On January 5, Nvidia announced that Rubin is in full production. And it will be available during the second half of this year.
Rubin is designed to serve the complex demands of AI workloads. Plus, it’s faster and more efficient than Nvidia’s predecessor – the Blackwell platform. For instance, Rubin eliminates latency bottlenecks between the platform’s central processors, which enables customers to train AI models using 25% fewer GPUs.
Microsoft will deploy Rubin at its new state-of-the-art Fairwater AI data center in Wisconsin. Amazon (AMZN) and Google will also be major customers.
During this year’s Consumer Electronics Show (“CES”) in Las Vegas, Nvidia CEO Jensen Huang said Rubin had been in design and testing phases for about five years, not the usual one year. That’s because it incorporates so many new technologies…
One breakthrough feature is its ability to keep chips at an appropriate temperature in data centers without expensive water chillers. This news sent shockwaves through the sector… Building technologies leader Johnson Controls (JCI), for one, closed down 9% the week this news was disclosed.
Of course, groundbreaking innovations like Rubin require a massive research and development (R&D) budget. But that’s not a problem for a highly profitable company like Nvidia…
Each quarter, it pours billions of dollars into new R&D, making it nearly impossible for competitors to keep pace.
Mark Lipacis, senior managing director at investment-advisory firm Evercore ISI, estimates that Nvidia has an eight-year lead over competitors. We wouldn’t be surprised if this lead expands after Rubin is widely deployed later this year.
But investors weren’t impressed with the Rubin news earlier this month. In fact, NVDA shares closed down 2% the week ending January 9, while the Nasdaq 100 Index closed up 2%.
This underperformance is due in part to another investor worry…
2. There’s Growing Skepticism About Nvidia’s Ability to Maintain High Margins.
During a Q&A session at the recent CES, Wolfe Research analyst Chris Caso asked Huang how Nvidia expects to maintain high profit margins. It’s one of the most frequent queries Wolfe gets from clients.
Tech companies compete aggressively for market share. So it’s normal for that dynamic to winnow profit margins over time.
A consistent, or rising, margin is actually an economic anomaly. And it usually indicates that a business is providing goods and services customers can’t get elsewhere. This is certainly the case for Nvidia.
Over the past 12 months, Nvidia’s gross profit margin – the price markup over the cost of goods sold – was a remarkable 70%. That’s lower than last year’s 76%, but the same as it was two years ago (70%). For context, the gross profit margin of the SPDR S&P 500 Fund (SPY) was about half as much – 35% over the last 12 months.
Extremely high margins invite lots of competition. And this could gradually reduce Nvidia’s profitability.
But Nvidia’s culture of continuous innovation should shield the company from that fate. In response to Caso, Huang said, “In the long term, our margins are directly related to the value that we deliver.” In other words, to maintain high margins, Nvidia must continue to deliver exceptional value to its customers.
We agree with Huang, and expect the company to continue doing just that. Rubin is just the latest example. You can be sure that Nvidia’s big announcement for next year’s CES is already in the works.
Now let’s review the third sign that Nvidia investors have caught the AI Fatigue bug…
3. Nvidia’s Stock Is Trading at a Substantial Discount.
According to our valuation model, Nvidia’s current share price implies that its next 12 months (“NTM”) revenue will be about $250 billion. After that, the implied growth rate is around 15% per year.
That’s well below the FactSet consensus estimate of $303 billion in NTM sales and about 40% growth per year over the next two years.
This FactSet forecast anticipates that revenue will accelerate in the second half of 2026, as Rubin reaches big customers. That sounds right to us. In fact, our NTM revenue expectation is $300 billion.
To be conservative, we’re modeling 20% annual revenue growth thereafter. That’s above the 15% growth rate currently baked into shares, but well below the 65% year-over-year growth rate. (That’s the trailing 12-month (“TTM”) basis as of October 2025, compared with the TTM basis as of October 2024.)
Nvidia’s sales have soared over the past two years. And the company’s growth rate has naturally slowed as the market matures. That will likely continue, though not to the degree implied by its current share price.
We don’t expect Nvidia to lose substantial market share to competitors like Advanced Micro Devices (AMD). It’s too good an innovator to let that happen.
With the Rubin AI platform now in full production, we estimate Nvidia’s intrinsic value to be $290 per share, or about 33 times NTM earnings before interest, taxes, depreciation, and amortization (“EBITDA”). At the current share price, near $180, the stock is trading at a hefty 38% discount.
In summary, we stand by the prediction we first made in a May 2023 issue of Select Value Opportunities, the service I publish exclusively for Stansberry Alliance members…
Generative AI will be the greatest technology disruption of our lifetime.
So don’t succumb to the AI Fatigue bug. Three years in, this story is still unfolding. And no company is better prepared to exploit it than Nvidia.
Good investing,
Mike Barrett
A strange change is coming to the stock market – and it’s about to have dramatic consequences for anyone over the age of 50.
“If you own popular AI stocks like Nvidia, you’re in for a big shock,” says Whitney Tilson, who predicted the 2000 Tech Wreck and founded a $200 million hedge fund firm.
He isn’t the only leading figure warning investors to tread carefully.
Michael Burry, who made hundreds of millions shorting banking stocks before 2008, just placed a $1 billion bet against AI stocks – he’s short both Nvidia and Palantir.
And if Whitney is correct, what’s coming to AI stocks next won’t be a crash or mass rush for the exits…
It’s something far more dangerous – a permanent change that could leave millions behind.
That’s why he’s stepping forward today, to reveal the one place you can move your money today, which could outperform stocks, bonds and gold in the near future.
