Nvidia's annual revenue in 2024 was $60B. In comparison, Apple made $391B. Microsoft made $245B. Amazon made $575B. Google made $278B. And Nvidia is worth more than all of them. You'd have to go very far down the list to find a company with a comparable ratio of revenue or income to market cap as Nvidia.
Yes revenue has grown xx% in the last quarter and year, but the stock is valued as if it will keep growing at that rate for years to come and no one will challenge them. That is the definition of a bubble.
How sound is the investment thesis when a bunch of online discussions about a technical paper on a new model can cause a 20% overnight selloff? Does Apple drop 20% when Samsung announces a new phone?
People do not understand. If you want to make money in the stock market, find growing companies. Pricing of the growing companies is different from others. Since it is not clear when the growth will end, there is a high probability that there will be extreme things in pricing. Since they are market leadership and can lead the price. Don't compare growing companies with others. That's a big fallacy. Their price always overshooted. I don't have any investments in Nvidia, but reality is that. This is why economists always talk about growth.
One might argue that very high margins could be a bad sign. If you assume that Apple is efficient at being Apple, then there is not a whole lot of room for someone else to undercut them at similar cost of goods sold. But there is a lot of room to undercut Nvidia with similar COGS — Nvidia is doing well because it’s difficult to compete for various reasons, not that it’s expensive to compete.
I don't see it, instead of 100 GPUs running the AIs we have today, we'll have 100 GPUs running the AI of the future. NVIDIA wins either way. It won't be 50 GPUs running the AI of today.
All other things being equal, less demand means lower profits. Even if demand still outstrips supply, it's still less demand expected than a month ago.
What needed 1000k of Voltas, needed 100k of Amperes, needed 10k of Hopper, will need 1k of Blakwell.
Nvidia has increased compute by a factor of 1 million in the past decade and it's no where near enough.
Blackwell will increase training efficiency in large clusters a lot compared to Hopper and yet it's already sold out because even that won't be enough.
What does "to be fair" mean in this context? There's nothing fair or even an alternative point of view. Even the most bullish NVidia investor would agree with this statement.
No one expects this growth to be sustained for a decade. Companies aren't prices based on hypothetical growth rates in 10 years time.
anyway it's not dramatic. vs 50 for Amazon. $147 was close to historical max for NVidia. Not fair either. last month in was less than $140 average, just estimate.
Stock market valuations are not about current revenue. That’s just a fundamental disconnect from how the financial markets work.
In theory it’s more about forward profits per share, taking into account growth over many years. And Nvidia is growing faster than any company with that much revenue.
Obviously the future is hard to predict, which leaves a lot of wiggle room.
But I say in theory, because in practice it’s more about global liquidity. It has a lot to do with passive investing being so dominant and money flows.
Money printer goes brrr and stonks go up.
That is not the only thing that matters, but it seems to be the main thing.
If it were really about future profits most of these companies would long since be uninvestable. The valuations are too high to expect a positive ROI.
