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ERROR: type should be string, got "https://www.barrons.com/articles/nvidia-stock-will-rebound-after-brutal-stretch-parnassus-portfolio-manager-says-51562979980\nWhy Nvidia Stock Will Rebound After a Brutal Stretch, According to a Fund Manager\nLauren R. Rublin\nTodd Ahlsten, Parnassus Core Equity Photograph by ioulex\nBarron’s recently caught up by phone with the members of our January Roundtable. Here are the latest investment views and stock picks of Todd Ahlsten, lead portfolio manager of Parnassus Core Equity fund at Parnassus Investments in San Francisco.\nBarron’s: Where to from here, Todd?\nTodd Ahlsten: Equity prices have surpassed all our expectations this year. Geopolitics and slowing economic growth have been headwinds, but the Federal Reserve’s dovish stance on monetary policy and hopes for a trade deal have overwhelmed the negative sentiment. The market expects the Fed to be pretty aggressive in the second half [in cutting interest rates]. But these stimulants are being priced into stocks. Given the recent move in prices and valuations, we’ve pulled forward returns from the back half of the year.\nIt could be a flattish environment for quite some time, as we see whether companies can meet earnings expectations and stocks can grow into their current valuations. The S&P 500 is up 19% year to date. The European economy is slowing. German bunds yield negative 37 basis points [a basis point is a hundredth of a percentage point]. The 10-year Treasury yield is around 2%. It is hard to paint a picture that is massively bullish on stocks, or at least the market indexes. But buying durable businesses that can generate intrinsic value through two full business cycles is what we’re trying to solve for.\nYou picked some good ones at the January Roundtable. How about an update, and another round?\nWe continue to own all the companies we recommended. They have a long runway. Cadence Design Systems [ticker: CDNS] and Synopsys [SNPS] have had a fantastic start to the year. Demand for their software and hardware continues to accelerate as customers design more-complex chips and devices. Both companies beat earnings estimates in the first quarter. They have pricing power and sign long-term deals, allowing them to grow despite the trade conflict.\nCerner [CERN], which supplies health-care information technology, also got off to a great start. The company is committed to generating higher operating margins; management hopes to hit 20% margins by the end of this year and 22.5% by the end of next year. An activist investor, Starboard Value, got involved after the Roundtable, which led to a board refresh. We think that’s progress. In addition to margin growth, Cerner has committed to repurchase stock and initiate a dividend. They just won a Veterans Administration contract that is starting to scale; it could add $250 million in incremental revenue every year for the next four years. The company has net cash and is optimizing its capital structure.\nWhere do you stand on Linde [LIN]?\nThe big industrial gas company has been a long-term holding. The stock has done well this year. Linde is guiding toward 9% to 13% earnings growth this year. It was created through the merger of Praxair and Linde, and could realize up to $900 million in cost synergies by year three of the combination. It is also benefiting from a pricing tailwind due to limited capacity additions in the industry. We see operating-margin improvement for the next several years due to the company’s strong backlog, its pricing power, and the cost synergies.\nAs for Walt Disney [DIS], how can you not be impressed with [CEO Robert] Iger’s vision? At the company’s April analyst day, Disney offered more clarity about its Disney+ streaming service; it expects to have 60 million to 90 million subscribers by the end of fiscal 2024. Other properties, including ESPN+ and Hulu, are also adding subscribers.\nHow about some new picks?\nSure. Trimble [TRMB] has an $11 billion market cap. It is an industrial technology company focused on selling hardware and software for construction, agriculture, trucking, and surveying. For example, using its technology helps farmers save water and use fewer pesticides. That’s the ESG [environmental, social, and governance] component. Trimble helps to make land more productive, and take costs out of construction. It is uniquely positioned to help digitize industrial end markets. The total addressable market is $50 billion.\nWe met with Trimble CEO Steve Berglund a few weeks ago, and think he’s got a great strategy. Since he took over in 1999, revenue has grown at a 14% annual rate, and operating income, at a 20% rate. He is generating a lot of value, has an excellent team, and is digitizing large markets. The current valuation of 20 times forward earnings is too low given Trimble’s mix of recurring software-subscription revenue and its significant growth prospects. Trimble has deep relationships, sticky customers, and wide-moat incumbency.\nTodd Ahlsten's Picks\nMy second pick, Nvidia [NVDA], has fallen sharply from its peak last year, which is part of our contrarian bet. The company has a $97 billion market cap. Nvidia sells graphics processing units, or GPUs, which go into data centers and gaming products. The shares were $290 last October, and traded for 37 times earnings. Then a cryptocurrency bet backfired, inventory got backed up in the gaming channel, and they had a product transition. Negative sentiment on trade also hurt.\nWhat could spur a rebound?\nYou need a little controversy to have a great opportunity. Of these two picks, Nvidia is suffering from the bigger misunderstanding. The company trades for about 25 times expected earnings. Our average cost is around $150, slightly below the stock’s recent $160. Nvidia’s best days are ahead. The opportunity is tremendous. Nvidia spent about $13 billion on research and development in the past 10 years, laying the groundwork for a software system called CUDA. About a million people are developing GPUs based on CUDA software. This gives Nvidia a very wide moat.\nNvidia talked about Clara, its health-care and medical-imaging platform, at its analyst day. It is driven by Nvidia’s software stack. This is called domain-dependent expertise, and it could give the company a long runway for growth. Nvidia’s GPUs are going into data centers, hyperscale cloud computing, artificial intelligence applications, machine learning, autonomous vehicles, and much more. This isn’t just a semiconductor company, but a hardware and software company. The CEO, Jensen Huang, recently visited us and shared his long-term vision for building Nvidia into a platform company, with applications in many different areas of the economy. If you are a three- to 10-year investor, this could be a fantastic asset. If there is a trade deal and the economy is good, it could start to work even sooner. The long-term upside is so good that you can deal with some short-term volatility.\nSince you are an ESG-oriented investor, what is the ESG case for Nvidia?\nData centers use a ton of energy. Nvidia’s GPUs and CUDA are going a long way toward helping reduce energy demand. On the social side, Nvidia is a fantastic place to work. Jensen is committed to diversity and inclusion. Employees are loyal. The company has a good board and has had good governance for years.\nRead All the 2019 Midyear Roundtable\nTodd Ahlsten: Why Nvidia Stock Will Rebound After a Brutal Stretch\nRupal Bhansali: China Is a Bigger Problem for the Global Economy Than You Think\nScott Black: Small-Cap Stock Picks for an Expensive Market\nHenry Ellenbogen: The 2020 Election Is the Ultimate Wild Card for the Market\nMario Gabelli: The Charms of Trucks, Farm Equipment and Baseball\nAbby Joseph Cohen: The Economic Opportunity Washington Is Missing\nWilliam Priest: A Cold War With China Has Already Started\nOscar Schafer: Dollar Tree and Other Stock Picks\nMeryl Witmer: The Specter of a Democratic President Is Bad for the Market\nMidyear Roundtable Report Card\n2019 Roundtable Report Card\n2018 Midyear Roundtable: Good News for Stockpickers\n2019 Roundtable Part 1: Goodbye to Gloom\n2019 Roundtable Part 2: What to Buy Now\nWrite to Lauren R. Rublin at lauren.rublin@dowjones.com"