Haymaker Daily
On bubble jitters
Hello, Subscribers:
NVIDIA just delivered a monster quarter, beating estimates across the board, raised guidance, expanded margins, and posted record data center revenue. By any rational measure, this was a textbook “everything’s working” moment. And… the stock dropped. That disconnect suggests we may have crossed into a part of the cycle where fundamentals alone can’t vault the stock higher.
You can see it in the options market too. The chart of 30-day implied vol tells its own story: each earnings cycle brings a pop in implied volatility, then a reset. But this time, the reset didn’t come. Instead, implied vol kept grinding higher, suggesting the market was paying for upside protection and bracing for a potential volatility event. What it got was perfection, and a fade.
That tells you two things: (1) positioning was already maxed, and (2) the reaction function has changed. We’re not in the “beat-and-rip” phase anymore, but rather, we appear to be in a regime where crowding, valuation sensitivity, and macro overlays matter more than quarterly precision.
Historically, we’ve seen this movie before, specifically with Cisco during the dot-com cycle. In March 2000, it briefly became the most valuable company on earth, trading at a market cap north of $550 billion and over 100x earnings. It was the undisputed infrastructure layer of the internet build-out because it produced routers, switches, and backbone hardware. The growth story was real, the demand curve was vertical, and the stock was in every institutional and retail portfolio that touched tech.
After peaking in 2000, the stock fell over 80% in the subsequent two years, even though the company continued to grow revenue and beat earnings expectations during much of that slide. The multiple simply couldn’t hold because expectations got ahead of reality and the market ran out of incremental buyers. NVIDIA almost certainly isn’t doomed to the same fate since it’s far more profitable today than Cisco was then, but the setup does rhyme.
David “The Haymaker” Hay
IMPORTANT DISCLOSURES
This material has been distributed solely for informational and educational purposes only and is not a solicitation or an offer to buy any security or to participate in any trading strategy. All material presented is compiled from sources believed to be reliable, but accuracy, adequacy, or completeness cannot be guaranteed, and David Hay makes no representation as to its accuracy, adequacy, or completeness.
The information herein is based on David Hay’s beliefs, as well as certain assumptions regarding future events based on information available to David Hay on a formal and informal basis as of the date of this publication. The material may include projections or other forward-looking statements regarding future events, targets or expectations. Past performance is no guarantee of future results. There is no guarantee that any opinions, forecasts, projections, risk assumptions, or commentary discussed herein will be realized or that an investment strategy will be successful. Actual experience may not reflect all of these opinions, forecasts, projections, risk assumptions, or commentary.
David Hay shall have no responsibility for: (i) determining that any opinion, forecast, projection, risk assumption, or commentary discussed herein is suitable for any particular reader; (ii) monitoring whether any opinion, forecast, projection, risk assumption, or commentary discussed herein continues to be suitable for any reader; or (iii) tailoring any opinion, forecast, projection, risk assumption, or commentary discussed herein to any particular reader’s investment objectives, guidelines, or restrictions.
David Hay is a passive owner of Evergreen Gavekal (“Evergreen”), a registered investment adviser with the Securities and Exchange Commission. As of 03/31/2025 Mr. Hay has no involvement in the day to day operations of Evergreen, nor is he involved with any investment research, or investment management performed by Evergreen. The information herein reflects the personal views of David Hay as a seasoned investor in the financial markets and any recommendations noted may be materially different than the investment strategies that Evergreen manages on behalf of, or recommends to, its clients.
Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this material, will be profitable, equal any corresponding indicated performance level(s), or be suitable for your portfolio. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on an individual’s investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Investors should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.