Welcome back to another week with Wide Moat Research. Today, I’ll share the stories I’m tracking and the news that should be on your radar.

Last week was quite volatile for stocks. But today, that’s old news since Nvidia (NVDA) is reporting after the bell.

By the time you read this, you might have already seen its quarterly results. But since I’m writing this Monday morning, I’ll only point out the obvious – that the graphic-chipmaker’s stock can move the market all on its own.

Investors and the investment media are obsessed with it. So much so, that, as The Wall Street Journal writes:

Nvidia’s earnings day has become a major event on Wall Street, drawing comparisons with Federal Reserve meetings and key economic reports for their influence over the broader market. “Nvidia Day” has inspired memes, watch parties, and large, risky bets on the stock’s next moves.

Nvidia is an important company to the market, no doubt. But it’s risky to put any asset on such a pedestal. As I always say, don’t fall in love with an investment because it’s not going to do the same back.

But the markets will do what the markets will do. So let them.

But it might interest readers to know that I recently advised my subscribers to steer clear of Nvidia. Here’s what I said:

Nvidia is clearly the best-in-breed player in the semiconductor space. Those are generally the companies we like to own at Wide Moat Research. But Nvidia’s current valuation is based on expectations of future cash flows that we aren’t sure will come to fruition. Buying NVDA shares near all-time highs involves more speculation than we feel comfortable with.

Right now, it’s unclear as to whether or not the Big Tech spenders are going to generate attractive ROIs on their massive AI budgets. And if they don’t, their investors will force them to pull back on spending. If that happens, Nvidia’s sales are going to slump, resulting in significant multiple compression… and falling share prices.

Warren Buffett Just Bought Domino’s
While everyone else fawns over big tech and the artificial intelligence (“AI”) wave, Warren Buffett bought up a pizza chain.

After recently reducing shares in Apple (AAPL), the Oracle of Omaha purchased Domino’s Pizza (DPZ) instead. Yahoo Finance wasn’t alone in calling it “the biggest surprise” to come out of Berkshire Hathaway’s (BRK-A)(BRK-B) quarterly 13-F filing. And it left many scratching their heads in confusion.

Not me though.

I ran eight Papa John’s (PZZA) shops back in the day. So I know a little something about pizza. Perhaps more than I’d like to. It can be an exhausting business to be in, dealing with mostly young and foolish employees. The larger public doesn’t realize this, but I had to pay premium car insurance for my delivery drivers – an additional cost I couldn’t blame them for.

Regardless, whenever I opened a new franchise, I would always research surrounding competitors first. And let me tell you… Domino’s was always a solid contender. I’ll even admit that today, I prefer it over Papa John’s. It just has a better taste with competitive prices, in my opinion.

From an investment perspective, DPZ has been a good stock to own, rising some 3,000% over the last 20 years. And its price-to-earnings (P/E) and price-to-book (P/B) ratios are running on the low end of their 10-year ranges. So, basically, Buffett saw the deal and went for it.

The Nvidia-obsessed can shrug the story off. But I respect Buffett for knowing the value of a “boring” business like Dominoes.

— Brad Thomas

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Source: Wide Moat Research