NVIDIA Case Study: a 2x Return

Ace Management Partners LLC

Case Study: The NVIDIA Asymmetry

Why We Bought as China Fears Weighed on NVIDIA (March 2025)

The Thesis

In early 2025, NVIDIA faced growing concern over tighter export restrictions, tariffs, and the durability of AI spending. The possibility of losing business in China was weighing on expectations for one of the world’s most important technology companies. Contemporaneous market coverage

At Ace Management Partners LLC, our thesis was that the China fears were overblown relative to NVIDIA’s broader growth opportunity. China mattered. But the scale and momentum of the business elsewhere gave NVIDIA a powerful engine for growth even under more restrictive conditions.

We purchased shares on March 10, 2025, at $109.93. The opportunity rested on a straightforward judgment: global AI infrastructure demand could outweigh a substantial setback in a single market.

1. The China Question: Putting the Exposure in Perspective

The figures available at our purchase showed a business becoming less dependent on China for incremental growth.

• The Exposure: China, including Hong Kong, contributed $17.1 billion, or 13.1% of fiscal 2025 revenue by customer billing location, down from 16.9% a year earlier.
• The Growth Engine: Revenue billed outside China reached $113.4 billion, growing approximately 124%, versus 66% in China.
• The Implication: Approximately 90% of NVIDIA’s incremental annual revenue came from billing locations outside China. That growth provided substantial capacity to absorb regional weakness. FY2025 filing; calculated comparisons

Billing location does not establish where products were ultimately used.

2. The Valuation: Understanding the Growth Behind the Multiple

At our purchase price, NVIDIA carried an implied equity value of approximately $2.68 trillion. Against its latest reported annual revenue of $130.5 billion, that translated to approximately 20.6 times trailing sales. Valuation calculation in research notes

• The Starting Point: NVIDIA had just reported 114% annual revenue growth and a 75% GAAP gross margin. The sales multiple reflected a business with unusually strong growth and profitability. February 2025 results
• The Near-Term Outlook: Management guided the next quarter to $43 billion in revenue. Annualizing that midpoint implied $172 billion in sales and an entry multiple of approximately 15.6 times that annualized run rate. This was a quarterly-guidance calculation, not a full-year forecast or consensus forward P/S. Company guidance

The valuation still required strong execution. A broad slowdown or margin deterioration could have caused meaningful losses. Our thesis depended on sustained growth making the entry price attractive over time.

3. The Structural Advantage: A Global Infrastructure Buildout

NVIDIA’s opportunity extended across the processors, networking, systems, and software used to build AI infrastructure. Its product ramp and customers’ investment plans offered tangible evidence of that opportunity. CFO commentary

• The Product Cycle: Blackwell generated $11 billion in its initial revenue quarter, Q4 fiscal 2025—NVIDIA’s fastest product ramp. February 2025 CFO commentary
• The Customer Commitment: Before our purchase, Microsoft had announced plans to invest approximately $80 billion in AI-enabled data centers during its fiscal 2025, with more than half in the United States. This was a substantial demand signal, although the spending covered far more than NVIDIA equipment. Microsoft’s January 2025 outlook

Conclusion: The Asymmetric Bet

The China risk subsequently materialized. In April 2025, after our purchase, new H20 export licensing requirements disrupted sales. NVIDIA recorded a $4.5 billion charge in the following earnings report. May 2025 results

Yet the business continued to expand. On NVIDIA’s later, revised customer-headquarters reporting basis, fiscal 2026 China revenue fell approximately 21%, while revenue outside China increased approximately 86%. Growth elsewhere added $90.8 billion, more than offsetting China’s $5.4 billion decline. Both years use the same revised basis in this comparison. FY2026 filing; calculated comparisons

Total annual revenue reached $215.9 billion, up 65%. By February 2026, NVIDIA was guiding the next quarter to $78 billion while assuming no Data Center compute revenue from China. The growth engine at the center of our thesis was delivering. February 2026 results and outlook

Our NVIDIA investment illustrates the value of measuring a widely discussed risk against the full business. We believed global growth could exceed the damage from tighter China restrictions. As that growth became visible in reported results, the shares reached more than twice our entry price.

Performance refers to share-price appreciation from the stated purchase price to the May 12, 2026 closing price, excluding dividends, fees, and taxes. It is a historical valuation milestone, not a claim of a sale, realized proceeds, current value, or the return of Ace’s overall portfolio.