2023 has been a strong year for the Nvidia (NASDAQ: NVDA) share price, with it up over 170%. And this impressive form continued in May as the stock rose by 30%.

Entering the month changing hands at $289 and sitting at $378 by the end of it, the artificial intelligence (AI) company that manufactures and designs computer hardware and software, predominantly graphic processing units (GPUs), has gained the attention of a host of investors in the last few weeks.

But what’s been the catalyst for this jump? And with its price soaring, is it too late for investors to buy the stock?

Impressive results

The main reason for the major spike in its share price was the release of its Q1 results. Revenue for the period was up 19% compared to Q4, with its Data Center seeing record revenue of over $4bn. On top of this, net income jumped a massive 44%.

However, arguably more important were the forecasts that the business issued within the results. For Q2, revenue is expected to be $11bn, representing a significant increase on the $7.2bn forecast by Wall Street.

The Nvidia share price rose over 25% in after-hours trading following the release of the results, highlighting the excitement surrounding the company. More widely, US equities also saw a spike on the back of the Silicon Valley-based firm’s rally.

Trillion dollar valuation

With its share price peaking at over $400 towards the tail end of May, Nvidia also spent a short period of time in the exclusive club of companies with a market capitalisation of over one trillion dollars. Joining the likes of Apple, Microsoft, Amazon, and Alphabet, the near $200bn added to its market value following its results made it one of the largest-ever single-day gains in US market history.

The firm is at the forefront of the AI revolution. And with the sector set to boom in the years ahead, it seems that many think that purchasing Nvidia stock is the smartest way to gain exposure to the industry.

Where next?

So, where will the stock head next? And does its impressive performance in May mean investors should be rushing to snap up some shares?

Well, there are a few concerns. Mainly, its valuation is extremely high. Its price-to-earnings ratio currently sits at a staggering 203. For many, this could be deemed excessive.

Furthermore, with its impressive growth, Nvidia may struggle to meet expectations in the years ahead.

Despite this, I like the look of Nvidia. Firstly, comparing it to peers, the stock is still cheaper than a host of competitors.

Also, I think there’s excellent long-term growth potential to be had with the firm. And this has been reinforced by a mass of analysts upgrading their target price for the stock. For example, JP Morgan analysts recently upped their target to $500, while analysts at Barclays have also raised their estimates to a similar price.

While concerns exist, I still deem Nvidia the best stock investors can purchase right now to gain access to the growing industry. Should I have spare cash in the weeks and months ahead, I’ll most certainly be looking to open a position.

The post Here’s why the Nvidia share price soared 30% in May! appeared first on The Twelfth Magpie.

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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Alphabet, Amazon.com, Apple, Barclays Plc, Microsoft, and Nvidia. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The last month has seen the stock recover some of its losses, rising 8%. With the shares trading for around 815p, is now the time to buy?

A tough year

The main reason for Scottish Mortgage’s underperformance this year is due to the type of stocks it holds in its portfolio. The trust targets high-growth companies, including names such as Tesla, Nvidia, and Tencent. And with inflation rising globally, 2022 has seen these stocks suffer.

Firstly, this is because the economic uncertainty caused by inflation tends to see growth stocks take the hardest hit as investors move their money from these riskier investments to ‘safer’ value stocks.

Secondly, to combat inflation, interest rates are pushed up. With growth stocks tending to borrow big, in order to grow, this also means the debt on their balance sheet becomes tougher to pay off. Combined, this has seen the Scottish Mortgage share price suffer.

Not all bad news

Despite its struggles this year, I’m still keen on Scottish Mortgage shares.

To start, instead of looking at the dip in its price as an issue, I’m looking at it as an opportunity. The trust’s management team makes it clear that Scottish Mortgage aims to maximise returns over a five-year period. It uses the FTSE All-World Index as a benchmark for this. And safe to say, it’s outperformed this in the latest five-year stint.

As a long-term investor, this suits me. This focus nullifies any short-term headwinds. And the trust has proven this by surviving multiple crises such as the dotcom bubble and the 2008 financial crisis.

I am also drawn to Scottish Mortgage because of the diversity my portfolio receives from a single investment. The trust has a global portfolio, including unlisted shares, all for a cheap ongoing charge of 0.32%. For me, this is perfect.

One issue I see is its weighting in China. This makes up around 20% of Scottish Mortgage’s holdings. And with the country still struggling to keep a lid on Covid-19 cases, this could be an issue. We’ve seen the impact this has had so far reflected through supply chain concerns. Should this continue, this could drag the Scottish Mortgage share price down.

However, over the long term, I think its Chinese focus will bear fruit. It’s the fastest growing economy in the world. And I have full belief in the management team to pick out future winners. While it may see the trust suffer now, from a long-term perspective this doesn’t bother me.

At 815p, I’d happily snap up Scottish Mortgage shares. Its investment strategy aligns with my needs. And the diversity it offers is a great boost for my portfolio. Trading for nearly half of its 52-week high, I’d buy Scottish Mortgage now and hold for the years to come.

The post At 815p, are Scottish Mortgage shares a buy? appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Despite a small rebound last Friday, 2022 has seen Scottish Mortgage (LSE: SMT) shares plummet by over 40%. The investment trust had been a top performer over the past decade. And in 2020 it showed its resilience, rising over 100% despite the impact of the Covid-19 pandemic. Yet with inflationary pressures this year denting investor confidence, the trust has taken a hit.

As a long-term investor, I think this fall is an opportunity for me to add the trust to my portfolio this month. Let’s find out why.

Why have SMT shares sunk?

The main contributor to the demise of the Scottish Mortgage share price is the performance of its top holdings. This includes companies such as Tesla, Nvidia, and Tencent. With these stocks down 43%, 52%, and 21% this year, respectively, this has reflected negatively on Scottish Mortgage.

The fall of these stocks is part of a wider decline seen among growth stocks. Scottish Mortgage has a large focus on such companies. And as global inflation continues to surge, it’s having a negative effect on these firms. This is largely because, in volatile times, growth stocks tend to be hit the hardest as investors switch their funds to ‘safer’ value stocks.

Long-term vision

So, it’s clear to see that 2022 has been tough for Scottish Mortgage shares. However, I’d still buy the stock today as a long-term addition to my portfolio.

Firstly, I like it due to the diversity it offers my portfolio. The trust has over 100 holdings. And of these, over 50 are unlisted shares, such as SpaceX. This is an opportunity for me to access a variety of opportunities under a single investment.

Further, while inflationary issues are wreaking havoc in the market now, this is a short-term concern. Scottish Mortgage’s management is keen to note how the trust focuses on returns over a five-year period. And while past performance is no indication of future returns, the last five years have seen it return 84% to shareholders. This highlights its long-term potential.

Around a fifth of the trust’s holdings are Chinese. And with ongoing Covid concerns, this could pose a threat to the Scottish Mortgage share price.

However, as the fastest growing economy in the world, and therefore ample opportunities, I think its large weighting to Chinese shares will pay dividends in the long run.

I also have faith in the management team of Tom Slater and Lawrence Burns. Both have played an active role in the trust’s success in years gone by. With a keen eye for investing in companies early, as seen with Tesla, I think these two are more than capable of placing Scottish Mortgage in a position to succeed. 

As such, I’d add the shares to my portfolio today. The diversification that it offers is something I like. And while it may face issues in the near future, it’s proved over time it can reward shareholders. Its heavy weighting to China, coupled with management’s eagle-eyed investment style, could also lead me to see some healthy returns over time.

The post Why I’d buy Scottish Mortgage shares in July! appeared first on The Twelfth Magpie.

More reading

• As SpaceX stock plunges below its opening price, is it time to dump Scottish Mortgage shares?
• An AI beast just racked up 80-fold growth and is now a top holding in this FTSE 100 trust
• SpaceX doesn’t pay a dividend. So how come it may help these investors earn passive income?
• Scottish Mortgage shares are now even cheaper after SpaceX’s amazing stock market debut!
• Most Britons miss out on the first 20 years of investment compounding. Here’s how a Junior ISA or SIPP can change that

Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Scottish Mortgage attracted many investors in 2020 with its 105% rally amid tough market conditions. And over the past decade, it has been a top performer. Yet this year has seen investors desert the trust as issues such as inflation continue to pressure investor confidence.

However, I think the large decline the trust has seen in recent times actually presents me with an opportunity to add Scottish Mortgage shares to my portfolio. Let’s find out why.

Why is SMT down?

After its solid performance in recent times, why has Scottish Mortgage seen such a drastic fall?

To start, it has a large weighting to growth stocks. The trust has holdings in firms such as Tesla. And with global inflation continuing to spike, it will have a detrimental impact on these firms. This is because to combat rising inflation, interest rates are rising. As such, the high levels of debt these companies have to fuel growth will become more difficult to pay off. On top of this, rising inflation tends to see many investors switching their investments to ‘safer’ value stocks. Combining these two factors, it’s easy to see why the share price is falling.

As well as this, Scottish Mortgage also has a substantial focus on tech stocks. This includes holdings such as Nvidia and Amazon. While tech stocks have surged in price over the past few years, they’ve struggled more recently.

SMT opportunities

Despite this, I still think Scottish Mortgage shares would be a strong addition to my portfolio.

Firstly, the above are short-term issues. Management is keen to note that the trust focuses on returns over a five-year period – using the FTSE All-World Index as a benchmark. And while past performance is no guarantee of future returns, the past five years have seen Scottish Mortgage return 92% to shareholders. The trust is also hardened to challenges, such as the 2008 financial crisis. And while such crises have had an instant impact on shareholder returns, in the long run investor’s patience has paid off.

With this said, the departure of James Anderson from the helm could provide to be an issue. After all, he was key in navigating moves such as the investment in Tesla in 2013 when it was trading for just $6. The loss of his eagle eye could have negative impacts on the Scottish Mortgage share price.

It’s now run by fund manager Tom Slater who also played a part in the trust’s rise over the past years. So, despite Anderson’s departure, I believe the capable hands of Slater will be able to keep the trust heading in the right direction.

Why I’m buying

While Scottish Mortgage may face some immediate issues, the trust has proved that over time it can deliver healthy returns to shareholders. I believe its weighting in growth stocks should pay dividends over the long term. And with cheap ongoing charges of just 0.34%, I deem cut-price Scottish Mortgage shares a solid addition to my portfolio.

The post Here’s why I’d buy Scottish Mortgage shares today! appeared first on The Twelfth Magpie.

More reading

• As SpaceX stock plunges below its opening price, is it time to dump Scottish Mortgage shares?
• An AI beast just racked up 80-fold growth and is now a top holding in this FTSE 100 trust
• SpaceX doesn’t pay a dividend. So how come it may help these investors earn passive income?
• Scottish Mortgage shares are now even cheaper after SpaceX’s amazing stock market debut!
• Most Britons miss out on the first 20 years of investment compounding. Here’s how a Junior ISA or SIPP can change that

Charlie Keough has no position in any of the shares mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Amazon and Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

So, why is it on a downward trajectory? And does this fall represent an opportunity for me to grab some cheap shares? Let’s take a look.

Why is the share price down?

So, why after such a strong performance, during a difficult few years, is the Scottish Mortgage share price now falling?

Firstly, the trust is renowned for its large weighting to growth stocks. Examples of these include Tesla, which SMT invested in back in 2013 when the shares were changing hands for around $6. And smart investments like these have been a big part to the large success seen by the fund. However, with global inflation on the rise, this trend tends to see investors switching their money to ‘safer’ value stocks. As a result, the share price has fallen.

Another reason for the fall is Scottish Mortgage’s tech-heavy focus. As of 31 March, its top holdings included Tesla, Nvidia, and Amazon. While these stocks have performed well in the past, 2022 has seen them suffer. The stocks are down 17%, 35%, and 16% year-to-date, respectively, so it’s no surprise that the Scottish Mortgage share price has followed suit.

Wider outlook

With this said, I think these are short-term concerns.

Management makes it clear that the trust has the “aim of maximising its total return to its shareholders over the long term” – and it uses the FTSE All-World Index as a five-year benchmark. While of course, past performance doesn’t represent future returns, in the last five years SMT has returned nearly 140% to patient shareholders. And on top of this, it survived multiple challenges over the years, such as the dotcom crash of 2000, highlighting its resilience.

There’s a case, however, to argue that the Scottish Mortgage share price may continue to fall. To start, its top holding Moderna (7.1%) is forecast to see profits fall from $12bn in 2021 to $2bn by 2024. And while Tesla has been enjoying big growth, its price-to-earnings ratio would suggest it’s seriously overvalued. A correction to this could see the Scottish Mortgage share price come tumbling down.

Despite this, the trust is in the safe hands of Tom Slater and soon-to-retire James Anderson, who have been at the helm for a long period, playing a key part in its success. I have confidence that their eagle-eyed investment style will allow the trust to continue to thrive in the future.

What I’m doing

So, regardless of short-term concerns, I think the falling Scottish Mortgage share price presents a great opportunity. The trust has proved it can survive difficult periods in the future. And despite its dip, I have faith in the management team to guide it. As such, I would buy the shares today.

The post The Scottish Mortgage share price continues to fall! Here’s what I’m doing appeared first on The Twelfth Magpie.

More reading

• As SpaceX stock plunges below its opening price, is it time to dump Scottish Mortgage shares?
• An AI beast just racked up 80-fold growth and is now a top holding in this FTSE 100 trust
• SpaceX doesn’t pay a dividend. So how come it may help these investors earn passive income?
• Scottish Mortgage shares are now even cheaper after SpaceX’s amazing stock market debut!
• Most Britons miss out on the first 20 years of investment compounding. Here’s how a Junior ISA or SIPP can change that

Charlie Keough has no position in any of the shares mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Amazon and Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

So, after a dent in its previous impressive form, does this recent fall present me with an opportunity for me to buy? Or should I be steering clear of adding SMT to my portfolio? Let’s take a look.

SMT share price fall

Let’s begin by looking at why the trust’s share price has taken such a hit recently. One factor it can be attributed to is rising interest rates. As my colleague Andrew Mackie highlighted, interest rates have slowly begun to creep up again after they were slashed near zero during the pandemic. And this, along with soaring inflation, has had a direct impact on SMT due to its heavy exposure to unlisted and growth stocks.

As these companies tend to be indebted in order to fuel growth, rising interest rates mean these debts will become more difficult to handle. As such, in times like these investors tend to put their money into value stocks. 

A further reason for the fall is SMT’s tech-heavy weighting. With its top 10 holdings including ASML, Nvidia, and NIO, this means that when tech companies are doing well (as they were), the Scottish Mortgage share price rises. However, the recent tech sell-off means that these stocks have tumbled in price, reflected in the drop off the SMT share price, highlighting the negative connotations that can exist with its large exposure to the sector.

Long-term outlook

However, there are factors that excite me when looking at SMT. One reason I would consider adding SMT to my portfolio is its long-term outlook. The fund managers aim to beat the FTSE All-World Index over a five-year rolling period, and its history clearly shows that SMT can do so. For comparison, the Scottish Mortgage share price is up over 220% in the last five years, while the FTSE 100 has managed just 5%. Given this, the current dip could just be short-term volatility, therefore presenting me with a good opportunity to buy some shares at a reduced price.

Further, while many of SMT’s big holdings are tech stocks, the trust does allow me to enjoy exposure to an array of sectors within a single investment. For example, another one of its top holdings (8.1%) is pharmaceutical stock Moderna, best-known for its Covid-19 vaccine. 

It also provides further diversification through its global investment strategy, an example being its weighting in China. And for me, this is an attractive factor.

Should I buy?

So will I buy? Well, this depends. If I was considering adding SMT to my portfolio for a shorter timeframe than five years – then no. However, as a long-term investor, I think SMT at its current price could be a solid addition to my portfolio. The trust has a proven track record, and the manager’s long-term outlook is one that clearly bears fruit. Even though SMT is experiencing a volatile period, I would look to add some shares to my portfolio today.

The post The Scottish Mortgage share price is down 14%. Should I buy? appeared first on The Twelfth Magpie.

More reading

• As SpaceX stock plunges below its opening price, is it time to dump Scottish Mortgage shares?
• An AI beast just racked up 80-fold growth and is now a top holding in this FTSE 100 trust
• SpaceX doesn’t pay a dividend. So how come it may help these investors earn passive income?
• Scottish Mortgage shares are now even cheaper after SpaceX’s amazing stock market debut!
• Most Britons miss out on the first 20 years of investment compounding. Here’s how a Junior ISA or SIPP can change that

Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended ASML Holding. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.