Nvidia & Robinhood: A Most Peculiar Ascent

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The market, as anyone who’s spent more than five minutes observing it will tell you, is a peculiar beast. It rewards boldness, punishes caution, and occasionally, seems to operate on principles best described as ‘divine caprice’. Recently, two entities – Nvidia, purveyors of enchanted silicon1, and Robinhood Markets, a brokerage oddly named after a medieval outlaw2 – have demonstrated an ascent that can only be described as… spirited. Since January 2023, they’ve posted returns of 1,170% and 875% respectively. And yet, the soothsayers of Wall Street, those analysts who claim to peer into the future of finance, whisper that these stocks remain… undervalued. The sheer illogicality of it all!

  • Among 74 analysts, Nvidia has a median target price of $261 per share. That implies 43% upside from the current share price of $182. A modest increase, really, for a company practically building the infrastructure of tomorrow.
  • Among 28 analysts, Robinhood has a median target price of $123 per share. That implies 62% upside from the current share price of $76. A respectable return, if you don’t mind a bit of historical irony in your portfolio.

Let us delve into the curious cases of these two market anomalies.

Nvidia: The Alchemist’s Workshop

Nvidia is, on the surface, a manufacturer of graphics processing units (GPUs). But to call them merely that is like describing a dragon as ‘a large, scaly lizard’. Their true strength lies in a level of vertical integration that would make even the most ambitious medieval guild envious. Brian Colello at Morningstar observes that Nvidia possesses a ‘wide economic moat’ – a delightfully archaic phrase suggesting a defensive barrier around their profits. This moat, he claims, is built on leadership in GPUs, hardware, software, and the networking tools required to fuel the burgeoning world of artificial intelligence (AI).

Their recent financial results were, shall we say, robust. Revenue climbed 73% to $68 billion, driven by a surge in data center sales. The compute segment rose 58%, while networking exploded with a 263% increase. Gross margin expanded 1.7 percentage points, a sign that they haven’t yet succumbed to the siren song of price wars. Non-GAAP earnings rose 82% to $1.62 per diluted share. A truly impressive feat of financial wizardry.

Surprisingly, the market reacted to this news with a collective shrug, the stock dropping over 5% following the report. Concerns were raised about revenue concentration – half their income comes from a handful of ‘hyperscalers’3 – and the looming threat of soaring memory prices. But Nvidia remains confident, predicting accelerating revenue growth and steady margins in the coming quarter.

The market, it seems, is missing the bigger picture. AI isn’t just a technological trend; it’s a fundamental shift in the fabric of reality. Nvidia dominates the AI infrastructure market, offering turnkey solutions spanning hardware, software, and services. Wall Street estimates their earnings will increase at 49% annually over the next two years. At 39 times earnings, the current valuation looks… almost reasonable.

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Robinhood Markets: The People’s Brokerage (With a Touch of Irony)

Robinhood operates an online trading platform designed for a younger demographic. They’ve cornered the market on millennial and Gen Z accounts, outnumbering their closest competitor by a considerable margin. This positions them well for future growth, as these generations inherit a truly staggering amount of wealth – over $100 trillion – from the baby boomers in the coming decades. A transfer of power, if you will, conducted entirely through the medium of stock options.

Indeed, Robinhood is gaining market share across almost all brokerage service categories, including cryptocurrency, equities, margin lending, and options. They’ve also made a foray into prediction markets, their fastest-growing product line. They initially partnered with exchanges like Kalshi, but have since acquired their own. A rather sensible move, really, controlling the means of prediction is a powerful thing.

Last year, Robinhood announced a suite of AI features called Cortex. They’ve already introduced Cortex Digests, personalized portfolio insights generated by synthesizing breaking news, analyst ratings, and market research. More features are on the way, including Cortex Assistant. Vlad Tenev, the CEO, claims it “could be transformative.” One suspects he may be understating things.

Cortex is one of several perks exclusive to Robinhood Gold, a membership program costing $5 per month or $50 per year. Other benefits include a credit card, cheaper options fees, and a higher yield on uninvested cash. Annualized Gold subscription revenue increased 56% to $200 million in the fourth quarter. A tidy sum, even if one suspects the majority of subscribers are merely hedging their bets against the inevitable robot uprising.

Robinhood stock is down 48% from its high, primarily due to a decline in crypto transaction volume and monthly active users. But total platform assets increased 67% as users engaged more with equities, options contracts, and prediction markets. A curious paradox, isn’t it?

This pullback, I believe, presents a buying opportunity. The current valuation of 38 times earnings isn’t cheap, but it’s reasonable for a company whose earnings are projected to increase at 20% annually through 2027.

  1. 1 Nvidia’s GPUs aren’t merely silicon; they’re enchanted processors, capable of rendering realities beyond our comprehension. Or, you know, running video games.
  2. 2 The irony of a brokerage named after a medieval outlaw is not lost on anyone. It suggests a certain… redistribution of wealth.
  3. 3 ‘Hyperscalers’ are large data centers, essentially digital fortresses housing the world’s information. They’re also incredibly power-hungry.

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2026-02-28 11:43