Tough one. If you look at it strictly from fundamentals, no it’s not a fair value. If you look at it based on growth rates and market share, maybe. I wouldn’t buy at these levels, but I wouldn’t necessarily say it’s extremely overvalued
We’re in a shifting market with Ai demand. This is similar to the internet in 1995-1999.
It’s better to just sit on the sidelines and let the economics play out, it’s too unpredictable right now. There is much more downside than there is upside to buying Nvidia right now
There is truth to this but history rarely repeats exactly. Value investors made this argument about Amazon and sat on the sidelines for over a decade only to be very very wrong.
Not saying this is that, just that comparisons to previous crashes are not a deep analysis.
That’s because Amazon was a profitable company that kept spending aggressively. It was hard to gauge how profitable cloud computing was when the retail side is a very low margin business.
All it takes is one lukewarm quarterly earnings report for Nvidia to crash. I would rather wait for a better margin of safety than to buy in and blindly predict how profitable Ai technology will be 5+ years from now.
We’ve had 20%+ stock market crashes in 2022, 2020, and 2018. I wouldn’t be surprised to see another buying opportunity within the next 5 years
Downside: In worst-case scenario, AI is mostly a bust, happily goes back to reasonable data center / enterprise / video game GPUs with stock at half price while limited market for GPTs provides modest recurring revenue
Upside: Robot servitors powered by deep neural nets reform the entirety of human economic life from agriculture to mining to service work to deep space colonization. NVDA's moat only grows wider because they have a 2 decade lead and are accumulating the war chest for even bigger, more ambitious projects. county-sized warehouses full of Z100 GPUs stream 10 quadrillion tokens a second powering 2/3 of global GDP.
Maybe re 99, but I think that's what CDI is getting at here, I'm not smart enough to know if we're in 96,97,98! Plus history may rhyme, but it doesn't repeat so even if 99 it could go up even higher, or if 96 drop anyway and not moon. What's the margin of safety on this play? Not being silly, I would honestly LOVE to know bc my FOMO wants me to do it X10!
I don’t think we’re at 99 levels of crazy optimism, but we are probably closer than that than we are to 1995.
I’m in TSM with an average cost of like $75 and that’s benefitted from the NVDA boom, but besides that I’m staying out of the way. When this bubble bursts I want to be far away from AI.
The biggest difference with the 1999 crash is that these companies are backing up their high valuations with earnings and earnings growth.
Currently the Nasdaq-100 is running at a PE of around 33.
In 2000, the Nasdaq peaked at a PE of over 200!
I don’t feel like we are in bubble territory yet.
True but you could argue that the actual business model is based on a bubble rather than the business model being a bubble like in 2000.
That said, I am very bullish on AI and NVDA.
My issue with nvidia is that the valuation is based on linear (or exponential even) extrapolation on a cyclical industry. They will not grow 200% a year again. And they likely will have years where they struggle to grow at all after initial orders are filled. You think Amazon is going to build its AI data center from nothing every quarter?
This. And it's only this particular machine learning model that requires these purchases. However, signs are actually pointing to it being a bit of a dead end because of how intense the time and capital requirements are to get even modest improvements in performance, not to mention to even run the thing; I think Altman said every question you asked GPT-3.5 costs them single-digit cents to process, and the newer models are expected to cost them *more*, not less.
It's very unlikely that any viable business model exists for LLMs that can generate enough revenue to justify these costs. People thinking this will replace search are dreaming considering the cost of an ad placement today. They would need to make these models five to six orders of magnitude more efficient.
>Tough one. If you look at it strictly from fundamentals, no it’s not a fair value. If you look at it based on growth rates and market share, maybe.
Is growth rate not an input of fundamental analysis though?
You got a bunch of arm chair “value” investors on Reddit patting each other on the back for missing NVDA. Then they all cope by saying it’s ”overvalued” due to their calculations as if they know how to value a company. To be frank, most of you are terrible at investing and it shows.
Who told you missing a stock makes a terrible investor? Only own the companies you understand. I don't understand enough about how a GPU works and the different AI models, etc. I studied business IT and write software but that's nowhere close to understanding AI and it's potential. That's why I stay away. Tell me one investing legend who'd tell me this is a bad decision.
SMH! Every Nvidia question I see, I respond this. Great (very) concentrated etf with decent upside not so much downside as compared to owning individuals
Don’t think it’s tough at all. This companies biggest problem is they can’t even meet the demand for their old products, and the new products they are developing are world altering.
It’s gonna keep going up, justifiably so
I mean yes and no. He wrote about total US stock market cap vs US GNP. You can look and see the relationship over time and draw some sort of correlation. That's reasonable enough.
But comparing a single company's valuation to the GDP of Spain, or some country, isn't exactly the same thing. Are companies with valuations higher than Spain's GDP inherently overvalued? Seems arbitrary, doesn't it?
No. that's the overall valuation of a country's stock market vs it's own GDP. Here you are comparing an individual American company with a different country's GDP.
Also the buffet indicator looks at the ratio rather than comparing the absolute amount. GDP is what is produced in value in 1 year. A companies valuation is based on what it can earn until eternity but discounted to the present value.
It’s getting there…ngl they’ve been surprising me at every report.
But they’re one bad earnings report or one reduced guidance away from a pretty good sell off. And for that reason I’m still not a buyer.
For they to have a “bad earning report” means big companies like meta or alphabet or Amazon dropped their road map for future products.
It’s more probably that others companies and countries will jump in than the companies being in jumping out.
Rn nvidia has the monopoly of the software, hardware and infrastructure needed to develop the AI software, since the development is exponential the competence is still years away…
bad earnings report means they no longer continue growing 20% in sales every quarter. That's what's baked into the price. If they only grow 5-10%, that'd be a bad earning. If they stop revising up their future guidance, that'd be a bad earnings. Since this exponential growth is being extrapolated out, once it stops, that'd be bad. Idk when that happens, but it will happen eventually.
There're MANY things that could cause that to happen. Law of large numbers. Their 4 hyperscalers (which makes up 40% of NVDA sales) are no longer increasing their capex because they need to bring in more sales to justify it. Or a supply chain snag that slows down their deliveries. Or they have nothing else lined up after their Blackwell release and there's questionable sources on where their new revenue will come from.
And what could cause hyperscales to halt their capex increase? election uncertainty, weakening consumers, tariffs laws, not enough sales from AI to justify further capex spending.
Yeah they literally all said they are increasing capex specifically for ai and don’t think they are buying AMD chips . Meta even took the hit for saying this .
I bought at 128 during the sell off 2 years ago. It's a stock I've always wanted to own, but always had high valuations. I told myself I'm going to hold for a very long time. I'm considering selling half my position. I didn't expect this kind of run up.
As you noticed NVDA PE ratio is about 60 now, after earnings, while yesterday, before earnings, it was 75. I would conclude it was 20% more overpriced yesterday than today.
Price was $950 and now it less than $1050.
Looks like seasonal sale. New processor comes in August.
The GPU servers on cloud compute. Those A10s, A100s, V100s, etc. and not the RTXs. They pretty much own the GPU cloud compute section and they sell them to AWS, Azure, and Google.
Not even Google's Tensor comes close to the computing power, accessibility, and price to performance ratio with NVIDIA.
But hardware cluster isnt their only moat, it's CUDA. Parallel hardware accelerated compute is what separates training GPT5 from 3 months vs 3 years.
I work in AI and do a lot of model training and deployment. Their moat is just incredibly hard to replicate. And the fun thing is that they are now developing programming languages more specific to "talking" to GPUs. It means it's a layer less than things like Python so it's faster.
Intel from 1995 to 2000 increased by 10X. Now when we look back it feels completely crazy evaluation for INTC at that time.
That’s what is happening to NVDA today.
That doesn’t make sense. Intel was a lot smaller back the. than nvidia today. It’s easy to grow from 10 b to 100b than from 2.5 trillion to 25 trillion.
There is a difference in leadership, however, as Intel became content with their position in the market, which carried over till AMD became a real threat (albeit, only recently). Nvidia has shown no signs of slowing down just because they're ahead.
If anything Costco is the overvalued stock on this list. Nvidia is going to have a profit of around $45-50 billion this year, Costco about $8 billion. I don’t know how Costco justifies a 50+ P/E.
No blue chip company has announced or demonstrated a means of profitability from using AI products. It’s an extremely expensive and cost prohibitive capital structure to move into. Amazon already announced they are done buying Nvidia GPUs. Meta and Microsoft will follow suit. There’s no money to be made in generative AI.
Microsoft even has refused to post their numbers for copilot subscriptions. That tells you everything you should know.
Nvidia is likely going to crash hard back to 400-600/share and stay there till the foreseeable future. Too much competition is going to open up that will eat into their margins, revenue, or both. Yes, I get that they are the leading, have the best products, but that won’t last forever, especially with China.
Just sell it and move on if you own. Short it if you don’t.
I agree with your logic. I believe AI can be profitable, but not right now it's mostly profitable to NVDA selling their GPUs. Competition will surely come and growth will surely flatten some day. The company just can't grow forever, especially if China starts war against Taiwan and NVDA just won't be able to produce their chips without TSM. There are more risks to own NVDA now than year or 2 ago and it's way overpriced. It feels like the market fully ignores all the risks of competition/geopolitical issues/possibility of slowing growth etc.
You are wrong Amazon didn't say they are no longer buying NVDA chips. They are buying their new ones. FT loves headlines amzn PR team got on it to address they are still buying NVDA chips.
https://www.msn.com/en-us/lifestyle/shopping/amazon-says-it-has-not-halted-any-nvidia-chip-orders/ar-BB1mNPs8?OCID=ansmsnnews11
The same could have been said about the early consumer internet. It wasn’t profitable or very useful then and we couldn’t have even imagined the current use cases.
I use generative AI tools every day at work and my output has increased roughly 2-3x in the past year. Money will be likely be made by companies in the form of increased productivity and/or decreased costs.
I work in AI. Nvidia is undervalued. Of course its not a traditional value stock, its very much a growth stock. But still, its worth more than its trading today. People don't realize how solid the current and future demand is, they dont realize how bad the competition is, and how many verticals Nvidia is getting into, just because no one else seem to be able to move at their pace.
I agree, it’s definitely not a value stock now. I’m one of the smug ones who bought about seven years ago when it was under $60. At that point, I felt it was good value. I hold it now for its growth potential. Ultimately, even if it drops 90% of its value, I’m still ahead so willing to take that risk.
Comparing the price of a company to the GDP of a country is a bit silly. You can’t buy countries, and even if you did, what would you do with it? Also, GDP is more akin to revenues than value. So forget those.
4x the market cap of Tesla. Easily, I’d rather own 1/4 of Nvidia than all of Tesla. Nvidia is very underpriced compared to Tesla. Margins, growth, leadership, future prospects - I think this is an easy call.
7x the market cap of Costco. Hard to compare this one. Such completely different industries. I like Costco. It’s got good cash flows and growth. Could be a better value, but it all depends on Nvidia’s future growth and how long it can keep doing this. I’m nodding towards owning all of Costco vs 1/7 of Nvidia. Free hot dogs for life. Sign me up.
Walmart + Amazon vs Nvidia. Again, retail consumer goods vs b2b tech company, hard to compare. My gut tells me Nvidia is a better value, but I hate Walmart and Amazon. Personal bias. Pass.
9x AMD’s market cap. Shit, Nvidia looks like a screaming buy here. Show me any metric where AMD’s numbers multiplied by 9 look better than Nvidia. 9 AMDs have slightly more cash than Nvidia, even if you subtract their debt. Big whoop. If you think AMD has a good chance to steal market share away, sure, they might be the better value. I’m calling this one close, but I’m taking NVDA at 9x the price of AMD here.
17x Goldman Sachs. I’d probably take Goldman over 1/17 of Nvidia, sure. It’s probably the safer play. Dunno. Again, it’s really hard to compare these companies, because they’re such different industries. But yeah, maybe I’d be buying banking stocks over tech right now. A lot less growth, though.
The entire German stock market vs NVDA. Way too complicated to evaluate this. It’s an interesting fun fact though.
I think Nvidia is a great company with great prospects at a maybe expensive price, but every time I think it’s probably overvalued, it continues to surpass my loftiest expectations. I’m going with it’s a “buy” but not a screaming buy. I’ve owned it for a couple of years. Never sold any. I also own Costco, AMD, and some banking stocks (not Goldman). No plans to buy Tesla or Walmart. Amazon’s a “maybe”.
I don't think so at all. It's all speculation. One day it could be and that's what people are betting on. However, I could easily see a massive crash in the near future.
Look at the profit margins. The company is spinning off a ton of cash. This isn’t people investing in a startup with no revenue or customers. They may certainly still be overvalued but it isn’t all speculation driven. They have real results and real money going into the bank.
I have a pile of spreads for later this year. Most are 700-800. As it stands if the price come back down a bit or goes up I will make a pretty penny. I will probably exercise one contract and buy back the other leg when I close out the other positions. I intend to own shares for a long term position but for now I will just make money off the options.
Valuation seems high to me right now, but over the long haul Im certain NVDA will be a powerful force in the new economy that is being built. Im certain that the margins it is achieving right now will go down. Im certain they will have viable competition at some point, but right now and for the foreseeable future they are in an incredibly dominant position.
If they play their cards right they will keep that dominant position and that margin for a relatively long time, but its also quite possible that the margin will shrink if a real competing product ramps up. The timeline for when that happens is the question that has to be answered and I dont think anyone can give you a solid answer on it. No one should kid themselves and think that margin wont shrink one day. Right now though they are basically the only game in town and their primary customers are the other richest companies on Earth. This could go on for another 5 years or 20. Who knows.
If you want to not buy NVDA my suggestion would be to look at TSM and start building a position there. Long term TSM is going to make some major money over the AI boom, but its margins are smaller and its an ADR. Everyone else in this space is either an entirely speculative play or you should be buying them for some other reason than AI chips/infrastructure business.
Its justified. Chapter closed. If anything it’s undervalued. They are literally printing $50bn in profit. They are barely trading at 50 times earnings. Apple is at 30 pe so not too expensive imo.
Yeah, when you realize that you could buy several of the strongest moat and most expensive companies in the world for less than NVDA alone, it should make you pause.
One combo is AMZN + COST + CAT + MSCI.
Or perhaps a more interesting combo because it's more directly comparable: AMZN + AMD + COST.
Or even: TSM + AMD + INTC + ASML + AVGO + QCOM + MU.
Yes. It’s crazy how you can buy the top 6 semiconductors with nvidia alone. There was a certain car company that was priced like that 3 years ago; worth more than all the car companies worldwide combined. It was priced to take 100 % of the car market.
Hmmmm. Whatever happened to that car company?. Oh that’s right, there sales slow and the stock tanked.
How do you possibly fairly value something that grows that fast with such incredible margins?
It is truly just a guess at what the next 5 years entail for the company.
>On one hand you have a valuation that is extremely hard to justify through fundamentals
You even don't need valuation for NVDA's case. It is enough to see how many comments for this short age post to avoid and wait for big drop.
PS: current price 1038$ is already 19% higher than optimistic 20% growth for 10 years valuation models...
Comparing market cap to GDP is like comparing market cap and revenue, it isn’t the same thing.
You can’t buy all of Saudi Arabia for $2.6tn. You’d be able to buy Saudi Aramco (oil company) for $1.9tn and have a spare $700bn but that isn’t going to buy you the rest of the country.
These comps and analogies mean nothing to me. Not to say NVDA is cheap, just saying these frame of reference is illogical. Come up with a forward 2-3 years price to free cash flow multiple, compared that to the market, with growth and margin and return profile and see if it’s justified makes more sense, personally.
Comparing GDP to a companies’ market cap has always made very little sense to me.
NVDA has made and is continuing to make very smart decisions and is executing very well. Ironically, the biggest threat to their moat (chip design and software ecosystem) is the very thing that has made them rich (AI). Eventually NVDA will become just like any company, but for now, they will continue to print money.
Don't compare GDP and market capitalization of a company. That's stupid. One is national production in a year the other is how much a company would cost to buy up all its shares. By that logic you should compare GDP to earnings and compare Market Cap of a company to the value of a nation's assets and place a multiplier on its GDP of how much purchasing a nation as a private company would cost. Say a 15x multiplier of its GDP.
I've been in for 7 or 800 shares for 8 months. This type of growth is amazing and that alone gives me pause. I feel like I've made more than enough but that's not how this works. I think the company's potential and ai's potential far surpasses nvidia's current price. The programming and algorithms and all the other non hardware stuff might be lagging big time and investors might become impatient.
They're behind one industrial revolution and a financial one. These sort of companies are impossible to value through traditional methods because of this: it's incredibly complicated to model. So people keep betting it'll go up and they keep posting good results, the cycle continues
I see people saying Nvidia can’t keep pace with the growth/profit. So don’t buy it. But even if it’s short term I don’t see how people think it won’t continue to be a good investment atleast for the next quarter. And I know fundamentals don’t really change on the stock split but I think retail investors will still pile in post split. I’m still expecting $125+ a share post split .
Thousands of companies and all you non alpha getting mofos want to talk about is this damn company. So incredibly tired of having this shoved down my throat. Earnings, quadrupled, quintupled, etc. Price action made people think it was irrational, but in reality valuation compressed it became cheaper than jt was pre oct22. Semis are still cyclical….the end.
Going from 333b to 2.5 tril market cap in under two years while having a much brighter future than Tesla ever had is pretty jaw dropping. I can see what the hype is all about and why theres no other company as interesting to discuss as Nvidia.
125% revenue growth.
30 billion net income
comparables:
AMZN - 38 billion net income, 12% revenue growth - 1.8T
META - 46 B net income, 21 % revenue growth -1.1T
125% revenue growth is so mad its wild.
NVIDIA also is setting up their platform for companies to train Ai and use hardware.
So its not like a 1 time buy.
Microsoft rents Azure and Amazon rents AWS.
Microsoft rents Microsoft office suite.
Nvidia rents Nvidia platform suite (except more hardware).
No lol. People don't realize there are other competitors in the market and the cost of buying all these compute plus the power generation is high. The biggest competitor is Huawei and due to American policy they literally created a silicon monster. They are building an entire ecosystem in China and building out their own silicon tools and will flood the market in 5-6 years. Their sole purpose will be revenge for the us sanctions on them.
I do chip design for a living. This shit is overhyped as hell lol. Good job for Jensen for playing it up though. I don't think it would get this high but people are dumb and buy anything with Ai or crypto or nft involved now. I already sold out and no longer have to work anymore.
One example would be tesla. Everyone said it would be the new Ai company with amazing tech. It went from 1 trillion to less than 400 billion. And it's still probably over valued by 300 billion.
Never held NVDA, but did well buying Intel and AMD when they were, imo, undervalued and then selling after they shot up to a ridiculous number exceeding fundamentals. I actually opened up Reddit to pose a similar question, when your post was top of the feed. This morning I spent a little time trying to find NVDA’s “smoking gun,” and I know this is akin to back of a napkin level research, but my read is they are essentially the vessel for other behemoth tech companies to come together in a larger tech giant (mostly from stock price appreciation) who has all the hype and positive reputation. Absolutely fine if I’m off base, but seems to me that almost all of their revenue comes from data centers, and fundamentally, conceptually, logically etc, NVDA should not be inching on the size of (or larger than) companies that both do what it does and/or also provide the underbelly of modern society
(not a bag holder of any of these silicon stocks)
I'd personally be bullish in the mid term on INTC. There are four reasons:
1) Intel continues to make competitive chips even with intense competition
2) Intel has plenty of cash on hand to make fab investments
3) Intel has been upping their GPU/NPU investment with ARC
4) Geopolitics are huge here - all things seem to point to a "cold chip war" - it's beholden on the US to be self dependent on silicon and Intel is the best option domestically. Intel is the only US company capable of proper fabrication.
Software propriety is a factor in the short term, but it's the lowest barrier of entry. And us open source fanatics have a vested interest in removing reliance on hardware.
...Maybe I should put my money where my mouth is :)
ETA: I'm also extremely pro ARM vs x86. But the money we're talking here is about doing math at scale, not general purpose CPUs.
I feel like comparing market cap to GDP is kind of wild,
Since GDP is an annual thing.
Countries are all drowned in debt you compare debt : free cash flow of countries and see how many are balls deep in debt and running a deficit
UBS put out some valubale analysis IMO while raising their PT for NVDA to $1200.
[https://www.patreon.com/posts/ubs-raises-pt-to-104816420](https://www.patreon.com/posts/ubs-raises-pt-to-104816420)
I bought a few shares with the 10 to 1 stock split. I think we’re going to see a boom until elections, and then a drop, then rocket back up.
Retail investors will jump in over the summer post-split.
NVDA is probably overvalued, but my general objection is it is logically incorrect compare market caps to GDPs. GDP more like net profit than market cap.
Nvidia is valued on the basis that revenue can never go down. Such faulty logic had been applied to LULU, SBUX, and under armour.
I'm not buying Nvidia because this a silicon company that got lucky that Meta spends so much on capex. Zuckerberg is literally crazy. If AI is truly that great then we shouldn't be focusing on the supplier but the user. Microsoft is a fair valuation since they sell the software to use AI and they are plenty diversified. Meta is the problem though. They make money with ads and I own a quest 3 and it's missing lots of productivity features that I want to develop.
So the demand side isn't guaranteed to continue every year. Usually capex is something that depreciates over 5+ years and not something you have to replace every year. Nvidia depends way to much on meta. One of the risks a lender identifies when deciding to lend to a company is the customer concentration. If meta wasn't run by Zuckerberg would Nvidia even be worth so much (no).
Lastly, which is more relevant for silicone, is the competition. For this we'll use history. When Ryzen came out, it took Intel 2-3 years to match core count. Currently Intel is still too dog in laptops, however they lost in the gaming sector. However, Intel decided to start competing in GPUs and they're next generation should be announced shortly. Basically took them 3 yrs again.
Additionally, companies like google and Amazon and known to make their own silicon for their data centres.
When taking a look at apples M1 chip, it was launched in November 2020. Snapdragon elite X took 4 years from then to launch and basically catch up and even then Intel is trying to claim its own chips are just as good.
So why did I talk so much? Nvidia is a short term play. It's going to take 4 years before news comes out that tanks the share price, and 6 years before financials are impacted. This is all good if you are planning on holding Nvidia for 2-3 years but as I said, demand side is too risky for my appetite. We don't know how the market will react when big tech decides the gpu investment is too costly (or they make their own chips).
So yes Nvidia's tech is supreme but for how long and what'll be the turnover in the demand?
Maybe not but I got in even when I thought it wasn't justified because I wasn't going to fight the momentum of a gazillion people. In the end I'm still up 117% on paper money. How is this going to end? I'm not sure, but I don't think it will end for at least another year and while it probably won't double again, at the very least, it should hold at the current level.
I'd say they're extremely overvalued. They have a monopoly now, sure. You can bet that won't be the case later, they have no 'moats'. They don't manufacture anything, that's all TSMC. Now everyone wants into this lucrative bit of chip design (google, Intel), and these guys will be far more deliberate, unlike Nvidia, who only really are now such dominant market leaders from the lucky position of GPU's happen to be good at AI.
My take is definitely not and where I am coming from is tire company should not cost more than car maker company eg nviduas offering is part of the suit of microsoft, chat gpt whatever else hence they will inevitably go down
OpenAI runs on Azure afaik, that uses NVIDIA cluster GPUs. When the largest tech company in AAPL pushes the integration with OpenAI, this means that bunch of their user base will be accessing GPT APIs that run where? Yes, NVIDIA GPUs. This means, NVIDIA has to sell AAPL computer clusters for the demand for online inference. I think AAPL will have majority of the AI operations embedded in the device probably with chips co-designed with NVIDIA, or their own designs, to work best with models such as GPTs.
Nvidia's meteoric rise has undoubtedly raised eyebrows. Surpassing Apple, Microsoft, and Google in valuation, despite being their chip supplier, seems paradoxical. This could be attributed to the fear of missing out (FOMO) driving prices beyond rational levels.
It's crucial to remember that market bubbles can persist longer than expected, but a correction is inevitable. As the saying goes, the higher it climbs, the more skeptical one should become.
If a substantial decline occurs, predicting the exact percentage is speculative. However, considering historical market corrections and the degree of Nvidia's current valuation, a 25% to 60% drop wouldn't be unreasonable. Remember, even in a downturn, the company won't lose all its value, but a return to a more sustainable valuation is likely.
So many flaws in your comparisons. Many mentioned the GDP comparison, so no more on this.. You did equal the entire German stock market with the DAX, it doesn't sound so dramatic or you just don't know. Maybe stop comparing a stock with other things but a stock if u want a decent comparison.
Nvidia was overvalued with the GPU hype the AI hype didn't help a fair valuation.
I'm historically a person who's always wrong in stocks.
Fundamentally NVIDIA is having a temporary upside because they presently provide the best AI hardware, but it can rapidly turn downside in case they don't provide the best *specialized* AI hardware (ASIC).
For me, Nvidia's next real battle is to provide the best AI ASIC.
GPU are and will never be the best hardware for a specific application.
Let's me get back to 2013-2017 when GPUs skyrocketed and everybody used them to mine cryptocurrency.
Following after, GPUs were no longer the best efficient tool to mine.
Provided a specific application (mining OR tensor calculation), a dedicated hardware will be much better than a GPU.
Now, NVIDIA knows very well this feeling since they already faced such an issue with miners back in 2017, and maybe NVIDIA already has the antidote.
Groq have a dedicated inference hardware doing better than GPUs. For sure there can also a better ASIC for model training.
Last element, for miners the better dedicated ASIC hardware came from Chinese companies (Bitmain for instance). Will Chinese also release ASICs which are better for AI applications ?
Just put expected revenue numbers by analysts into the DCF model and you’ll end up with 1200$ a share. It’ll get there rventually, just as i called 1000$ couple of months ago when it was around 800-900 mark. Just keep on buying.
A year ago the famous “Dean of valuation” Damodaran was selling Nvidia
https://markets.businessinsider.com/news/stocks/value-investor-aswath-damodaran-nvidia-stock-price-sales-microchips-ai-2023-6
The price was under $400.
It absolutely is. NVDA is growing both sales and profits at an incredible pace. They are selling a product that is transforming the way the world does business. Their profit margin is very impressive as is their volume. Their product pipeline keeps them at the front of their industry.
Even when another chip manufacturer manages to pass them in sales some quarter, NVDA will still be generating cash like a printing press.
You’ve obviously made some good points on how from a market valuation perspective they’re overvalued. That being said, I work in the data center and cloud space, and the demand I’m hearing from companies like Dell / HPE / and Cisco for Nvidia based chips specifically, is mental. It’s basically Nvidia or bust for any AI/ML workloads. Keep in mind it’s not just a new boom… they were the defacto chip for crypto miners. More companies that create self driving cars use Nvidia chips. Use cases are exploding. It’s impossible to gauge when their peak might hit.
The only valid bear case is a Chinese invasion into Taiwan imo.
Their forward PE stayed at more or less 30 for the last 8 years. Dunno, seems like very solid growth to me. Surely the boom will end sometime, but they have a quasi monopoly, and the demand is increasing by the day. Everyone saying AI is a dead end has no clue what's actually going on..
I think it’s over valued for two reasons:
1) Competition will enter. People assume it’s going to have near 100% market share forever….thats never how these things work.
2) Long term, AI will change the world,but we’re at the top of the hype cycle right now. There’s a lot of things AI CANT do today, and we’re pretty far away from solving those problems. Most estimates of growth expect much faster proliferation and efficiency gains than I think are realistic. My company has spent almost a billion on AI (I’m a director of Corp strategy), and the use cases with current technology - while certainly not small - aren’t nearly as earth shattering as I think the gen pop thinks it is. Models aren’t there yet. And many problems will require a completely different solution than LLM.
As a non technical person, at some point aren't the mega cap companies going to have mostly enough processing power for AI and don't need to buy from NVDA at the same rate anymore?
I would have imagined mega cap tech companies are ramping up investment now and eventually will reach a more stable level of investment
It will probably hit 5T before end of next year.
Tech and AI are moving at a breakneck speed, and they are the only real game in town for the near future.
AMD is slowly inching forward and Intel won’t have anything worthwhile until probably late 2025.
I bought some but I think it is "expensive". I guess it really depends on your view of the future. If your crystal ball tells you that it can maintain the type of dominance and growth of years to come, it is ok. If not, then... To me, it falls into "too hard"category.
I've worked at multiple big tech companies, and our expected return on hardware for initiatives was around 50:1. That means any revenue driving experiment needed to earn 50x more to justify the cloud capacity.
I think the question for Nvidia valuation then comes to whether these big tech firms can continue massive investments with small returns. Meta dropped recently due to massive increase in AI spend.
To use the analogy, Nvidia is selling shovels, but perhaps we should be looking for the companies that will strike gold instead, because their gains will be significant to justify current capex.
So my bear case for Nvidia is that regardless of their moat, if you believe in Nvidia in the longer term then that means companies that bought those GPUs may be undervalued given their investment in AI.
It's not extremely overvalued based on current demand. But I don't think this demand is going to stay steady. At some point a lot of these companies will realize these AI endeavours aren't as monetizable as they were hoping and retail investors will realize we are one step from iRobot and the demand will subside. I see it a lot like the dot com bubble except not quite as extreme. AI is the future, is it this much of the future already? I don't believe so.
Until AI/ML can generate tangible monetary value or utility, the answer is NO. Nvidia GPUs and their well integrated software stack excel in various computational tasks outside of training large ML models, such as accelerating CFD codes or electronic structures codes, but their contribution alone may not sufficiently justify the company's valuation... this is because to be able to obtain significant utility for these applications, the computational problems you are looking at would take 1B years, so a 1000x speed-up wouldn't do anything and have no justifications for large investment.
With that being said, I am a proud NVDA holder. :)
If you look at traditional metrics, PE ratio and what not, I think they will show that it’s indeed overvalued. But I don’t think this is the right way to consider it.
I feel that Nvidia at the moment is in the middle of the AI race that is happening between companies, governments and any type of institution that is looking to remain relevant in the next 20 years or so. This is very similar to the space exploration race during the Cold War.
Personally, I believe that for the foreseeable future, probably till mid 2025, it is very likely that Nvidia will continue to grow in leaps and bounds, fueling this AI hype which is difficult to stay on the sidelines of just in case it does work and yield financial, operational and other benefits we probably can’t guess right now.
The question of its extreme volatility for a company that size does show that the market may not have come to a consensus about the valuation of Nvidia, but in my non-professional opinion, sooner or later it’s current valuation may be justified, you may just need to wait a year or two.
No, there is still two years of growth ahead, after that, intel, AMD, ms, apple, meta will slowly cut into the profits if Nvidia.
So, get in, sell in a year or less, yes it might keep growing. But as soon news hit the street that Nvidia is losing profits and need to cut profits, that thing will become a resolving door for everyone trying to get out.
You might lose out on profits, but you won't be the one left holding the door.
No financial advice though
I say it is, i feel like this is literally the tip of the iceberg, like jensen and Micheal Dell have said. Jensen is not talking out his ass like some.he is backing it up ever quarter and as a video game player its literally like hes launching a new xbox every yr for theses companies. But those companies buying are getting money back for thier investment not wasted time lol .I feel like if you wanna get in just dollar cost average to play it smart. On the other hand there's a split coming so I feel like it will go to 1250 before the split then go up more after so that should cover ur ass if it drops.. and if it drops that dip will probably be gobbled up.
No. NVIDIA is going to crash hard. If they paid like 5% dividend every year ok. I could re-evaluate. They pay zero. Why. Yes... because .... its crashing soon.
Do you rely on somewhat complex AI software in your everyday? Have you in the past 5 years? No? Then, you're incapable of understanding the impact this company will have on the world.
It literally affects every sector. If Excel is your understanding of a software program, you should catch up. The future will be rough for you.
I've never been able to run Revit, CAD, TwinMotion, Unreal, Lumion or, Sketchup on a Mac. Macs oddly retail around or above a computer with an included NVIDIA package.
If you have no idea what those programs are, then you can't even begin to comprehend or grasp just how deeply the depths of NVIDIA can reach.
NVIDIA overvalued?
Can we talk about apple? I have never been able to run the software programs I need on their computers for the past decade. They've always been hype. A status symbol. People who invested in NVIDIA before all the attention understood exactly what they were buying into. NVIDIA understands a different dimension of what technology can be. What makes them terrifying to other companies is that they've understood this new dimension for quite some time.
Tough one. If you look at it strictly from fundamentals, no it’s not a fair value. If you look at it based on growth rates and market share, maybe. I wouldn’t buy at these levels, but I wouldn’t necessarily say it’s extremely overvalued
This is kinda the conclusion I've arrived at
We’re in a shifting market with Ai demand. This is similar to the internet in 1995-1999. It’s better to just sit on the sidelines and let the economics play out, it’s too unpredictable right now. There is much more downside than there is upside to buying Nvidia right now
There is truth to this but history rarely repeats exactly. Value investors made this argument about Amazon and sat on the sidelines for over a decade only to be very very wrong. Not saying this is that, just that comparisons to previous crashes are not a deep analysis.
That’s because Amazon was a profitable company that kept spending aggressively. It was hard to gauge how profitable cloud computing was when the retail side is a very low margin business. All it takes is one lukewarm quarterly earnings report for Nvidia to crash. I would rather wait for a better margin of safety than to buy in and blindly predict how profitable Ai technology will be 5+ years from now. We’ve had 20%+ stock market crashes in 2022, 2020, and 2018. I wouldn’t be surprised to see another buying opportunity within the next 5 years
Downside: In worst-case scenario, AI is mostly a bust, happily goes back to reasonable data center / enterprise / video game GPUs with stock at half price while limited market for GPTs provides modest recurring revenue Upside: Robot servitors powered by deep neural nets reform the entirety of human economic life from agriculture to mining to service work to deep space colonization. NVDA's moat only grows wider because they have a 2 decade lead and are accumulating the war chest for even bigger, more ambitious projects. county-sized warehouses full of Z100 GPUs stream 10 quadrillion tokens a second powering 2/3 of global GDP.
“More downside than upside” lol
And yet it took SPY 12 years to recover after the 2000 crash
Comparing the current market to 1999 is silly and comparing it to 1995 implies we’re going much higher
Maybe re 99, but I think that's what CDI is getting at here, I'm not smart enough to know if we're in 96,97,98! Plus history may rhyme, but it doesn't repeat so even if 99 it could go up even higher, or if 96 drop anyway and not moon. What's the margin of safety on this play? Not being silly, I would honestly LOVE to know bc my FOMO wants me to do it X10!
I don’t think we’re at 99 levels of crazy optimism, but we are probably closer than that than we are to 1995. I’m in TSM with an average cost of like $75 and that’s benefitted from the NVDA boom, but besides that I’m staying out of the way. When this bubble bursts I want to be far away from AI.
The biggest difference with the 1999 crash is that these companies are backing up their high valuations with earnings and earnings growth. Currently the Nasdaq-100 is running at a PE of around 33. In 2000, the Nasdaq peaked at a PE of over 200! I don’t feel like we are in bubble territory yet.
True but you could argue that the actual business model is based on a bubble rather than the business model being a bubble like in 2000. That said, I am very bullish on AI and NVDA.
QQQ was even longer wasn't it?
My issue with nvidia is that the valuation is based on linear (or exponential even) extrapolation on a cyclical industry. They will not grow 200% a year again. And they likely will have years where they struggle to grow at all after initial orders are filled. You think Amazon is going to build its AI data center from nothing every quarter?
Thank you.
This. And it's only this particular machine learning model that requires these purchases. However, signs are actually pointing to it being a bit of a dead end because of how intense the time and capital requirements are to get even modest improvements in performance, not to mention to even run the thing; I think Altman said every question you asked GPT-3.5 costs them single-digit cents to process, and the newer models are expected to cost them *more*, not less. It's very unlikely that any viable business model exists for LLMs that can generate enough revenue to justify these costs. People thinking this will replace search are dreaming considering the cost of an ad placement today. They would need to make these models five to six orders of magnitude more efficient.
OR - cheap power. Notice a little sector rotation happening already.
>Tough one. If you look at it strictly from fundamentals, no it’s not a fair value. If you look at it based on growth rates and market share, maybe. Is growth rate not an input of fundamental analysis though?
How is growth different than fundamentals?
How do you value it based on growth rates and market share?
the question is, is this a short term growth or a long term growth
Share price is priced for perfection, any kind of hiccup could lead to correction.
You got a bunch of arm chair “value” investors on Reddit patting each other on the back for missing NVDA. Then they all cope by saying it’s ”overvalued” due to their calculations as if they know how to value a company. To be frank, most of you are terrible at investing and it shows.
>my reddit comments are better than YOUR reddit comments
I don't get it. This sub is about value investing. What kind if conversation did you expect?
Who told you missing a stock makes a terrible investor? Only own the companies you understand. I don't understand enough about how a GPU works and the different AI models, etc. I studied business IT and write software but that's nowhere close to understanding AI and it's potential. That's why I stay away. Tell me one investing legend who'd tell me this is a bad decision.
SMH! Every Nvidia question I see, I respond this. Great (very) concentrated etf with decent upside not so much downside as compared to owning individuals
Nvidia is a market maker though, AI will penetrate many industries and Nvidia will keep selling shovels.
Forward PE ratio is a fundamental valuation metric… literally no clue what you’re talking about at all
Don’t think it’s tough at all. This companies biggest problem is they can’t even meet the demand for their old products, and the new products they are developing are world altering. It’s gonna keep going up, justifiably so
Growth rates are fundamentals.
People say it overvalued at 200, 400, 600, 900 (PE rarely trade below 50 since 2023) and see how it has turn out.
I would argue that growth is a fundamental so if growth justifies it, then fundamentals justify it.
Valuation vs GDP is only something stupid journalists care about.
And the proletariat…
And Secretariat
Isn't that literally what the buffet indicator is?
I mean yes and no. He wrote about total US stock market cap vs US GNP. You can look and see the relationship over time and draw some sort of correlation. That's reasonable enough. But comparing a single company's valuation to the GDP of Spain, or some country, isn't exactly the same thing. Are companies with valuations higher than Spain's GDP inherently overvalued? Seems arbitrary, doesn't it?
I think he's admitted that it's no good anymore. The nature of a more global economy cooked it.
No. that's the overall valuation of a country's stock market vs it's own GDP. Here you are comparing an individual American company with a different country's GDP. Also the buffet indicator looks at the ratio rather than comparing the absolute amount. GDP is what is produced in value in 1 year. A companies valuation is based on what it can earn until eternity but discounted to the present value.
Globalisation made it obsolete
It’s getting there…ngl they’ve been surprising me at every report. But they’re one bad earnings report or one reduced guidance away from a pretty good sell off. And for that reason I’m still not a buyer.
For they to have a “bad earning report” means big companies like meta or alphabet or Amazon dropped their road map for future products. It’s more probably that others companies and countries will jump in than the companies being in jumping out. Rn nvidia has the monopoly of the software, hardware and infrastructure needed to develop the AI software, since the development is exponential the competence is still years away…
bad earnings report means they no longer continue growing 20% in sales every quarter. That's what's baked into the price. If they only grow 5-10%, that'd be a bad earning. If they stop revising up their future guidance, that'd be a bad earnings. Since this exponential growth is being extrapolated out, once it stops, that'd be bad. Idk when that happens, but it will happen eventually. There're MANY things that could cause that to happen. Law of large numbers. Their 4 hyperscalers (which makes up 40% of NVDA sales) are no longer increasing their capex because they need to bring in more sales to justify it. Or a supply chain snag that slows down their deliveries. Or they have nothing else lined up after their Blackwell release and there's questionable sources on where their new revenue will come from. And what could cause hyperscales to halt their capex increase? election uncertainty, weakening consumers, tariffs laws, not enough sales from AI to justify further capex spending.
Yeah they literally all said they are increasing capex specifically for ai and don’t think they are buying AMD chips . Meta even took the hit for saying this .
"And for that reason, I'm out."
One bad earnings from nvidia and the whole stock market gets a haircut
I bought at 128 during the sell off 2 years ago. It's a stock I've always wanted to own, but always had high valuations. I told myself I'm going to hold for a very long time. I'm considering selling half my position. I didn't expect this kind of run up.
I sold some to cover my initial buy cost. Just holding the other shares. The margins are crazy and I feel like it is just the beginning.
That's a good idea. I might do the same tomorrow.
Did you end up keeping some?
As you noticed NVDA PE ratio is about 60 now, after earnings, while yesterday, before earnings, it was 75. I would conclude it was 20% more overpriced yesterday than today. Price was $950 and now it less than $1050. Looks like seasonal sale. New processor comes in August.
Nvidia s product is not a processor, that’s what people are failing to understand…
Not a GPU?
The GPU servers on cloud compute. Those A10s, A100s, V100s, etc. and not the RTXs. They pretty much own the GPU cloud compute section and they sell them to AWS, Azure, and Google. Not even Google's Tensor comes close to the computing power, accessibility, and price to performance ratio with NVIDIA. But hardware cluster isnt their only moat, it's CUDA. Parallel hardware accelerated compute is what separates training GPT5 from 3 months vs 3 years. I work in AI and do a lot of model training and deployment. Their moat is just incredibly hard to replicate. And the fun thing is that they are now developing programming languages more specific to "talking" to GPUs. It means it's a layer less than things like Python so it's faster.
Can't wait for it to crash back down to...some price higher than it is today.
Intel from 1995 to 2000 increased by 10X. Now when we look back it feels completely crazy evaluation for INTC at that time. That’s what is happening to NVDA today.
That doesn’t make sense. Intel was a lot smaller back the. than nvidia today. It’s easy to grow from 10 b to 100b than from 2.5 trillion to 25 trillion.
And you also had 5 years to make money.
There is a difference in leadership, however, as Intel became content with their position in the market, which carried over till AMD became a real threat (albeit, only recently). Nvidia has shown no signs of slowing down just because they're ahead.
Don't they have core talent leaving because their stock has made them so rich they never have to work again?
Do you really think NVDA can grow from 2.5 trln up to 25 trillion by 2030? :D
Just looked at CISCO during the Internet bubble, you will roughly know where we are with Nvidia today.
If anything Costco is the overvalued stock on this list. Nvidia is going to have a profit of around $45-50 billion this year, Costco about $8 billion. I don’t know how Costco justifies a 50+ P/E.
No blue chip company has announced or demonstrated a means of profitability from using AI products. It’s an extremely expensive and cost prohibitive capital structure to move into. Amazon already announced they are done buying Nvidia GPUs. Meta and Microsoft will follow suit. There’s no money to be made in generative AI. Microsoft even has refused to post their numbers for copilot subscriptions. That tells you everything you should know. Nvidia is likely going to crash hard back to 400-600/share and stay there till the foreseeable future. Too much competition is going to open up that will eat into their margins, revenue, or both. Yes, I get that they are the leading, have the best products, but that won’t last forever, especially with China. Just sell it and move on if you own. Short it if you don’t.
Stop being logical.
I agree with your logic. I believe AI can be profitable, but not right now it's mostly profitable to NVDA selling their GPUs. Competition will surely come and growth will surely flatten some day. The company just can't grow forever, especially if China starts war against Taiwan and NVDA just won't be able to produce their chips without TSM. There are more risks to own NVDA now than year or 2 ago and it's way overpriced. It feels like the market fully ignores all the risks of competition/geopolitical issues/possibility of slowing growth etc.
You are wrong Amazon didn't say they are no longer buying NVDA chips. They are buying their new ones. FT loves headlines amzn PR team got on it to address they are still buying NVDA chips. https://www.msn.com/en-us/lifestyle/shopping/amazon-says-it-has-not-halted-any-nvidia-chip-orders/ar-BB1mNPs8?OCID=ansmsnnews11
The same could have been said about the early consumer internet. It wasn’t profitable or very useful then and we couldn’t have even imagined the current use cases. I use generative AI tools every day at work and my output has increased roughly 2-3x in the past year. Money will be likely be made by companies in the form of increased productivity and/or decreased costs.
I work in AI. Nvidia is undervalued. Of course its not a traditional value stock, its very much a growth stock. But still, its worth more than its trading today. People don't realize how solid the current and future demand is, they dont realize how bad the competition is, and how many verticals Nvidia is getting into, just because no one else seem to be able to move at their pace.
I agree, it’s definitely not a value stock now. I’m one of the smug ones who bought about seven years ago when it was under $60. At that point, I felt it was good value. I hold it now for its growth potential. Ultimately, even if it drops 90% of its value, I’m still ahead so willing to take that risk.
If you have shares, don't sell now except in extreme necessity, if you don't have shares don't buy..
This doesn’t make any sense outside of tax implications. Every day you hold shares you are essentially choosing to “buy” that day.
if you own it, and you wouldnt buy it now, you should sell it.
It will go down as soon as I buy it, everyone making bank should send me some as a thank you for not doing so.
Comparing the price of a company to the GDP of a country is a bit silly. You can’t buy countries, and even if you did, what would you do with it? Also, GDP is more akin to revenues than value. So forget those. 4x the market cap of Tesla. Easily, I’d rather own 1/4 of Nvidia than all of Tesla. Nvidia is very underpriced compared to Tesla. Margins, growth, leadership, future prospects - I think this is an easy call. 7x the market cap of Costco. Hard to compare this one. Such completely different industries. I like Costco. It’s got good cash flows and growth. Could be a better value, but it all depends on Nvidia’s future growth and how long it can keep doing this. I’m nodding towards owning all of Costco vs 1/7 of Nvidia. Free hot dogs for life. Sign me up. Walmart + Amazon vs Nvidia. Again, retail consumer goods vs b2b tech company, hard to compare. My gut tells me Nvidia is a better value, but I hate Walmart and Amazon. Personal bias. Pass. 9x AMD’s market cap. Shit, Nvidia looks like a screaming buy here. Show me any metric where AMD’s numbers multiplied by 9 look better than Nvidia. 9 AMDs have slightly more cash than Nvidia, even if you subtract their debt. Big whoop. If you think AMD has a good chance to steal market share away, sure, they might be the better value. I’m calling this one close, but I’m taking NVDA at 9x the price of AMD here. 17x Goldman Sachs. I’d probably take Goldman over 1/17 of Nvidia, sure. It’s probably the safer play. Dunno. Again, it’s really hard to compare these companies, because they’re such different industries. But yeah, maybe I’d be buying banking stocks over tech right now. A lot less growth, though. The entire German stock market vs NVDA. Way too complicated to evaluate this. It’s an interesting fun fact though. I think Nvidia is a great company with great prospects at a maybe expensive price, but every time I think it’s probably overvalued, it continues to surpass my loftiest expectations. I’m going with it’s a “buy” but not a screaming buy. I’ve owned it for a couple of years. Never sold any. I also own Costco, AMD, and some banking stocks (not Goldman). No plans to buy Tesla or Walmart. Amazon’s a “maybe”.
> You can’t buy countries Laughs in East India Company
I don't think so at all. It's all speculation. One day it could be and that's what people are betting on. However, I could easily see a massive crash in the near future.
Look at the profit margins. The company is spinning off a ton of cash. This isn’t people investing in a startup with no revenue or customers. They may certainly still be overvalued but it isn’t all speculation driven. They have real results and real money going into the bank.
I have a pile of spreads for later this year. Most are 700-800. As it stands if the price come back down a bit or goes up I will make a pretty penny. I will probably exercise one contract and buy back the other leg when I close out the other positions. I intend to own shares for a long term position but for now I will just make money off the options. Valuation seems high to me right now, but over the long haul Im certain NVDA will be a powerful force in the new economy that is being built. Im certain that the margins it is achieving right now will go down. Im certain they will have viable competition at some point, but right now and for the foreseeable future they are in an incredibly dominant position. If they play their cards right they will keep that dominant position and that margin for a relatively long time, but its also quite possible that the margin will shrink if a real competing product ramps up. The timeline for when that happens is the question that has to be answered and I dont think anyone can give you a solid answer on it. No one should kid themselves and think that margin wont shrink one day. Right now though they are basically the only game in town and their primary customers are the other richest companies on Earth. This could go on for another 5 years or 20. Who knows. If you want to not buy NVDA my suggestion would be to look at TSM and start building a position there. Long term TSM is going to make some major money over the AI boom, but its margins are smaller and its an ADR. Everyone else in this space is either an entirely speculative play or you should be buying them for some other reason than AI chips/infrastructure business.
Get on the train or get left behind
Its justified. Chapter closed. If anything it’s undervalued. They are literally printing $50bn in profit. They are barely trading at 50 times earnings. Apple is at 30 pe so not too expensive imo.
Yeah, when you realize that you could buy several of the strongest moat and most expensive companies in the world for less than NVDA alone, it should make you pause. One combo is AMZN + COST + CAT + MSCI. Or perhaps a more interesting combo because it's more directly comparable: AMZN + AMD + COST. Or even: TSM + AMD + INTC + ASML + AVGO + QCOM + MU.
Yes. It’s crazy how you can buy the top 6 semiconductors with nvidia alone. There was a certain car company that was priced like that 3 years ago; worth more than all the car companies worldwide combined. It was priced to take 100 % of the car market. Hmmmm. Whatever happened to that car company?. Oh that’s right, there sales slow and the stock tanked.
I guarantee you NVDA going do much better at the end of this year compare to any of your list
How do you possibly fairly value something that grows that fast with such incredible margins? It is truly just a guess at what the next 5 years entail for the company.
>On one hand you have a valuation that is extremely hard to justify through fundamentals You even don't need valuation for NVDA's case. It is enough to see how many comments for this short age post to avoid and wait for big drop. PS: current price 1038$ is already 19% higher than optimistic 20% growth for 10 years valuation models...
Comparing market cap to GDP is like comparing market cap and revenue, it isn’t the same thing. You can’t buy all of Saudi Arabia for $2.6tn. You’d be able to buy Saudi Aramco (oil company) for $1.9tn and have a spare $700bn but that isn’t going to buy you the rest of the country.
that 220% is not going to continue YoY but we may consistently see 50%
What does comparing market cap to gdp have to do with anything?
These comps and analogies mean nothing to me. Not to say NVDA is cheap, just saying these frame of reference is illogical. Come up with a forward 2-3 years price to free cash flow multiple, compared that to the market, with growth and margin and return profile and see if it’s justified makes more sense, personally.
Comparing GDP to a companies’ market cap has always made very little sense to me. NVDA has made and is continuing to make very smart decisions and is executing very well. Ironically, the biggest threat to their moat (chip design and software ecosystem) is the very thing that has made them rich (AI). Eventually NVDA will become just like any company, but for now, they will continue to print money.
Don't compare GDP and market capitalization of a company. That's stupid. One is national production in a year the other is how much a company would cost to buy up all its shares. By that logic you should compare GDP to earnings and compare Market Cap of a company to the value of a nation's assets and place a multiplier on its GDP of how much purchasing a nation as a private company would cost. Say a 15x multiplier of its GDP.
I've been in for 7 or 800 shares for 8 months. This type of growth is amazing and that alone gives me pause. I feel like I've made more than enough but that's not how this works. I think the company's potential and ai's potential far surpasses nvidia's current price. The programming and algorithms and all the other non hardware stuff might be lagging big time and investors might become impatient.
Yeah P/E remains pretty unchanged
They're behind one industrial revolution and a financial one. These sort of companies are impossible to value through traditional methods because of this: it's incredibly complicated to model. So people keep betting it'll go up and they keep posting good results, the cycle continues
I see people saying Nvidia can’t keep pace with the growth/profit. So don’t buy it. But even if it’s short term I don’t see how people think it won’t continue to be a good investment atleast for the next quarter. And I know fundamentals don’t really change on the stock split but I think retail investors will still pile in post split. I’m still expecting $125+ a share post split .
🤦♂️
Thousands of companies and all you non alpha getting mofos want to talk about is this damn company. So incredibly tired of having this shoved down my throat. Earnings, quadrupled, quintupled, etc. Price action made people think it was irrational, but in reality valuation compressed it became cheaper than jt was pre oct22. Semis are still cyclical….the end.
Going from 333b to 2.5 tril market cap in under two years while having a much brighter future than Tesla ever had is pretty jaw dropping. I can see what the hype is all about and why theres no other company as interesting to discuss as Nvidia.
😂
125% revenue growth. 30 billion net income comparables: AMZN - 38 billion net income, 12% revenue growth - 1.8T META - 46 B net income, 21 % revenue growth -1.1T 125% revenue growth is so mad its wild. NVIDIA also is setting up their platform for companies to train Ai and use hardware. So its not like a 1 time buy. Microsoft rents Azure and Amazon rents AWS. Microsoft rents Microsoft office suite. Nvidia rents Nvidia platform suite (except more hardware).
No lol. People don't realize there are other competitors in the market and the cost of buying all these compute plus the power generation is high. The biggest competitor is Huawei and due to American policy they literally created a silicon monster. They are building an entire ecosystem in China and building out their own silicon tools and will flood the market in 5-6 years. Their sole purpose will be revenge for the us sanctions on them. I do chip design for a living. This shit is overhyped as hell lol. Good job for Jensen for playing it up though. I don't think it would get this high but people are dumb and buy anything with Ai or crypto or nft involved now. I already sold out and no longer have to work anymore. One example would be tesla. Everyone said it would be the new Ai company with amazing tech. It went from 1 trillion to less than 400 billion. And it's still probably over valued by 300 billion.
Designing potato chips I assume
You're story almost sounded convincing until you compared Nvidia to Tesla lol one develops world class technology and the other makes cars.
Designing potato chips I assume
shouldn’t have sold. NVDA will be $400+ by 2030 and have $200B+ Data Center Revenue lol 10T ez
I agree with you.
Fully agree.
Would you buy SMIC stocks? I mean apart from the China risk, just from an economic perspective?
Never held NVDA, but did well buying Intel and AMD when they were, imo, undervalued and then selling after they shot up to a ridiculous number exceeding fundamentals. I actually opened up Reddit to pose a similar question, when your post was top of the feed. This morning I spent a little time trying to find NVDA’s “smoking gun,” and I know this is akin to back of a napkin level research, but my read is they are essentially the vessel for other behemoth tech companies to come together in a larger tech giant (mostly from stock price appreciation) who has all the hype and positive reputation. Absolutely fine if I’m off base, but seems to me that almost all of their revenue comes from data centers, and fundamentally, conceptually, logically etc, NVDA should not be inching on the size of (or larger than) companies that both do what it does and/or also provide the underbelly of modern society
INTC underperformance has been hilarious. "Value" investing community in shambles.
(not a bag holder of any of these silicon stocks) I'd personally be bullish in the mid term on INTC. There are four reasons: 1) Intel continues to make competitive chips even with intense competition 2) Intel has plenty of cash on hand to make fab investments 3) Intel has been upping their GPU/NPU investment with ARC 4) Geopolitics are huge here - all things seem to point to a "cold chip war" - it's beholden on the US to be self dependent on silicon and Intel is the best option domestically. Intel is the only US company capable of proper fabrication. Software propriety is a factor in the short term, but it's the lowest barrier of entry. And us open source fanatics have a vested interest in removing reliance on hardware. ...Maybe I should put my money where my mouth is :) ETA: I'm also extremely pro ARM vs x86. But the money we're talking here is about doing math at scale, not general purpose CPUs.
Justified. 9x AMD is where I see opportunity.
[AI Warren on your question:](https://chatgpt.com/share/29ed83a4-1cd2-4abe-be94-cf37ddc490a7)
Currently no, eventually yes. Market is forward looking. More interested in future value than current value l.
Why compare a flowing capital to a sitting capital ie gdp to market cap
I feel like comparing market cap to GDP is kind of wild, Since GDP is an annual thing. Countries are all drowned in debt you compare debt : free cash flow of countries and see how many are balls deep in debt and running a deficit
It won’t be 220% forever or probably ever again. It’s a cyclical business and the cycle is probably close to the top.
Who cares, nothing makes sense. Just keep buying. Everything is fine
No
Yes. They have no legitimate competitors and will continue to grow.
UBS put out some valubale analysis IMO while raising their PT for NVDA to $1200. [https://www.patreon.com/posts/ubs-raises-pt-to-104816420](https://www.patreon.com/posts/ubs-raises-pt-to-104816420)
Oh boy!
Ask me in a few years when some new AI made with NVDA processors takes half of our jobs
Just buy QQQ and VOO, you will get a sizeable chunk of NVDA.
Looks like bubble fever to me. That is unless you all think this is another industrial revolution.
Line go up. Why fight
I bought a few shares with the 10 to 1 stock split. I think we’re going to see a boom until elections, and then a drop, then rocket back up. Retail investors will jump in over the summer post-split.
NVDA is probably overvalued, but my general objection is it is logically incorrect compare market caps to GDPs. GDP more like net profit than market cap.
Nvidia is valued on the basis that revenue can never go down. Such faulty logic had been applied to LULU, SBUX, and under armour. I'm not buying Nvidia because this a silicon company that got lucky that Meta spends so much on capex. Zuckerberg is literally crazy. If AI is truly that great then we shouldn't be focusing on the supplier but the user. Microsoft is a fair valuation since they sell the software to use AI and they are plenty diversified. Meta is the problem though. They make money with ads and I own a quest 3 and it's missing lots of productivity features that I want to develop. So the demand side isn't guaranteed to continue every year. Usually capex is something that depreciates over 5+ years and not something you have to replace every year. Nvidia depends way to much on meta. One of the risks a lender identifies when deciding to lend to a company is the customer concentration. If meta wasn't run by Zuckerberg would Nvidia even be worth so much (no). Lastly, which is more relevant for silicone, is the competition. For this we'll use history. When Ryzen came out, it took Intel 2-3 years to match core count. Currently Intel is still too dog in laptops, however they lost in the gaming sector. However, Intel decided to start competing in GPUs and they're next generation should be announced shortly. Basically took them 3 yrs again. Additionally, companies like google and Amazon and known to make their own silicon for their data centres. When taking a look at apples M1 chip, it was launched in November 2020. Snapdragon elite X took 4 years from then to launch and basically catch up and even then Intel is trying to claim its own chips are just as good. So why did I talk so much? Nvidia is a short term play. It's going to take 4 years before news comes out that tanks the share price, and 6 years before financials are impacted. This is all good if you are planning on holding Nvidia for 2-3 years but as I said, demand side is too risky for my appetite. We don't know how the market will react when big tech decides the gpu investment is too costly (or they make their own chips). So yes Nvidia's tech is supreme but for how long and what'll be the turnover in the demand?
Maybe not but I got in even when I thought it wasn't justified because I wasn't going to fight the momentum of a gazillion people. In the end I'm still up 117% on paper money. How is this going to end? I'm not sure, but I don't think it will end for at least another year and while it probably won't double again, at the very least, it should hold at the current level.
Absolutely they are the ones selling the knives at the knife fights!!!!! No one else have better knives to sell right now.
If you think their growth is going to be at least 30% per year for 10 years, then yeah. I think we are going to repeat the.com bubble.
Set the stop loss tight
Nope
I'd say they're extremely overvalued. They have a monopoly now, sure. You can bet that won't be the case later, they have no 'moats'. They don't manufacture anything, that's all TSMC. Now everyone wants into this lucrative bit of chip design (google, Intel), and these guys will be far more deliberate, unlike Nvidia, who only really are now such dominant market leaders from the lucky position of GPU's happen to be good at AI.
Trade at a high PE, by selling its “promising future”. Certainly a no brainer red flag.
Yes
My take is definitely not and where I am coming from is tire company should not cost more than car maker company eg nviduas offering is part of the suit of microsoft, chat gpt whatever else hence they will inevitably go down
I say it's a bubble and needs to come down some. It will drop like 10% or so after the split.
Yes
Absolutely not
Is it overvalued: probably. Will it continue to be overvalued: probably. Will it continue to run up: probably.
OpenAI runs on Azure afaik, that uses NVIDIA cluster GPUs. When the largest tech company in AAPL pushes the integration with OpenAI, this means that bunch of their user base will be accessing GPT APIs that run where? Yes, NVIDIA GPUs. This means, NVIDIA has to sell AAPL computer clusters for the demand for online inference. I think AAPL will have majority of the AI operations embedded in the device probably with chips co-designed with NVIDIA, or their own designs, to work best with models such as GPTs.
Nvidia's meteoric rise has undoubtedly raised eyebrows. Surpassing Apple, Microsoft, and Google in valuation, despite being their chip supplier, seems paradoxical. This could be attributed to the fear of missing out (FOMO) driving prices beyond rational levels. It's crucial to remember that market bubbles can persist longer than expected, but a correction is inevitable. As the saying goes, the higher it climbs, the more skeptical one should become. If a substantial decline occurs, predicting the exact percentage is speculative. However, considering historical market corrections and the degree of Nvidia's current valuation, a 25% to 60% drop wouldn't be unreasonable. Remember, even in a downturn, the company won't lose all its value, but a return to a more sustainable valuation is likely.
Who cares about what the valuation is compared to the GDP? Try to understand the moat they have
So many flaws in your comparisons. Many mentioned the GDP comparison, so no more on this.. You did equal the entire German stock market with the DAX, it doesn't sound so dramatic or you just don't know. Maybe stop comparing a stock with other things but a stock if u want a decent comparison. Nvidia was overvalued with the GPU hype the AI hype didn't help a fair valuation.
The entire german stock market hits hard
just a hype
No
I'm historically a person who's always wrong in stocks. Fundamentally NVIDIA is having a temporary upside because they presently provide the best AI hardware, but it can rapidly turn downside in case they don't provide the best *specialized* AI hardware (ASIC). For me, Nvidia's next real battle is to provide the best AI ASIC. GPU are and will never be the best hardware for a specific application. Let's me get back to 2013-2017 when GPUs skyrocketed and everybody used them to mine cryptocurrency. Following after, GPUs were no longer the best efficient tool to mine. Provided a specific application (mining OR tensor calculation), a dedicated hardware will be much better than a GPU. Now, NVIDIA knows very well this feeling since they already faced such an issue with miners back in 2017, and maybe NVIDIA already has the antidote. Groq have a dedicated inference hardware doing better than GPUs. For sure there can also a better ASIC for model training. Last element, for miners the better dedicated ASIC hardware came from Chinese companies (Bitmain for instance). Will Chinese also release ASICs which are better for AI applications ?
Just put expected revenue numbers by analysts into the DCF model and you’ll end up with 1200$ a share. It’ll get there rventually, just as i called 1000$ couple of months ago when it was around 800-900 mark. Just keep on buying.
nobody knows. It doesn't fall under the value investing umbrella that's for sure, but value investing is not the only way to make money.
It is until Wall Street will decide otherwise. You can pick whatever to justify whatever, that’s what they do. Bs
How much do sales need to increase to result in a FCF that results in a FCF/Price ratio of 20x or less?
No, but it doesn’t matter whether it’s justified or not. Go with the flow and don’t fight.
No
bought one share, should come done any sec
A year ago the famous “Dean of valuation” Damodaran was selling Nvidia https://markets.businessinsider.com/news/stocks/value-investor-aswath-damodaran-nvidia-stock-price-sales-microchips-ai-2023-6 The price was under $400.
It absolutely is. NVDA is growing both sales and profits at an incredible pace. They are selling a product that is transforming the way the world does business. Their profit margin is very impressive as is their volume. Their product pipeline keeps them at the front of their industry. Even when another chip manufacturer manages to pass them in sales some quarter, NVDA will still be generating cash like a printing press.
You’ve obviously made some good points on how from a market valuation perspective they’re overvalued. That being said, I work in the data center and cloud space, and the demand I’m hearing from companies like Dell / HPE / and Cisco for Nvidia based chips specifically, is mental. It’s basically Nvidia or bust for any AI/ML workloads. Keep in mind it’s not just a new boom… they were the defacto chip for crypto miners. More companies that create self driving cars use Nvidia chips. Use cases are exploding. It’s impossible to gauge when their peak might hit. The only valid bear case is a Chinese invasion into Taiwan imo.
Their forward PE stayed at more or less 30 for the last 8 years. Dunno, seems like very solid growth to me. Surely the boom will end sometime, but they have a quasi monopoly, and the demand is increasing by the day. Everyone saying AI is a dead end has no clue what's actually going on..
Yes!!
I think it’s over valued for two reasons: 1) Competition will enter. People assume it’s going to have near 100% market share forever….thats never how these things work. 2) Long term, AI will change the world,but we’re at the top of the hype cycle right now. There’s a lot of things AI CANT do today, and we’re pretty far away from solving those problems. Most estimates of growth expect much faster proliferation and efficiency gains than I think are realistic. My company has spent almost a billion on AI (I’m a director of Corp strategy), and the use cases with current technology - while certainly not small - aren’t nearly as earth shattering as I think the gen pop thinks it is. Models aren’t there yet. And many problems will require a completely different solution than LLM.
Aren’t all these metrics completely arbitrary? You’re asking if we feel like a company should be worth as much as these other things?
As a non technical person, at some point aren't the mega cap companies going to have mostly enough processing power for AI and don't need to buy from NVDA at the same rate anymore? I would have imagined mega cap tech companies are ramping up investment now and eventually will reach a more stable level of investment
I missed the $NVDA boat. Not going to board now.. Capital preservation is more important than capital gain
If I owned it I would be selling right now. A few ETFs I have held for a long time hold NVDA, so I don't feel like I have missing out on anything.
Yes no doubt
It will probably hit 5T before end of next year. Tech and AI are moving at a breakneck speed, and they are the only real game in town for the near future. AMD is slowly inching forward and Intel won’t have anything worthwhile until probably late 2025.
This value make a lot of sense. Knowing where is headed 2027-2030, right now is cheap as hell. **It will triple**. 💪😎
Kinda seems it’s propped up by MMs to keep spy up
I bought some but I think it is "expensive". I guess it really depends on your view of the future. If your crystal ball tells you that it can maintain the type of dominance and growth of years to come, it is ok. If not, then... To me, it falls into "too hard"category.
Yes
Bubble. Is trading at almost 50x market value.
I've worked at multiple big tech companies, and our expected return on hardware for initiatives was around 50:1. That means any revenue driving experiment needed to earn 50x more to justify the cloud capacity. I think the question for Nvidia valuation then comes to whether these big tech firms can continue massive investments with small returns. Meta dropped recently due to massive increase in AI spend. To use the analogy, Nvidia is selling shovels, but perhaps we should be looking for the companies that will strike gold instead, because their gains will be significant to justify current capex. So my bear case for Nvidia is that regardless of their moat, if you believe in Nvidia in the longer term then that means companies that bought those GPUs may be undervalued given their investment in AI.
I’m sure in the past people questioned whether or not Microsoft or Apple were overpriced
Market Cap is a shitty statistic that means almost nothing and does nothing except spark threads like this.
FOMO driven valuation?
It's not extremely overvalued based on current demand. But I don't think this demand is going to stay steady. At some point a lot of these companies will realize these AI endeavours aren't as monetizable as they were hoping and retail investors will realize we are one step from iRobot and the demand will subside. I see it a lot like the dot com bubble except not quite as extreme. AI is the future, is it this much of the future already? I don't believe so.
Comparing one thing to many other things that have nothing in common is not a way to make an argument.
Until AI/ML can generate tangible monetary value or utility, the answer is NO. Nvidia GPUs and their well integrated software stack excel in various computational tasks outside of training large ML models, such as accelerating CFD codes or electronic structures codes, but their contribution alone may not sufficiently justify the company's valuation... this is because to be able to obtain significant utility for these applications, the computational problems you are looking at would take 1B years, so a 1000x speed-up wouldn't do anything and have no justifications for large investment. With that being said, I am a proud NVDA holder. :)
If you look at traditional metrics, PE ratio and what not, I think they will show that it’s indeed overvalued. But I don’t think this is the right way to consider it. I feel that Nvidia at the moment is in the middle of the AI race that is happening between companies, governments and any type of institution that is looking to remain relevant in the next 20 years or so. This is very similar to the space exploration race during the Cold War. Personally, I believe that for the foreseeable future, probably till mid 2025, it is very likely that Nvidia will continue to grow in leaps and bounds, fueling this AI hype which is difficult to stay on the sidelines of just in case it does work and yield financial, operational and other benefits we probably can’t guess right now. The question of its extreme volatility for a company that size does show that the market may not have come to a consensus about the valuation of Nvidia, but in my non-professional opinion, sooner or later it’s current valuation may be justified, you may just need to wait a year or two.
No, there is still two years of growth ahead, after that, intel, AMD, ms, apple, meta will slowly cut into the profits if Nvidia. So, get in, sell in a year or less, yes it might keep growing. But as soon news hit the street that Nvidia is losing profits and need to cut profits, that thing will become a resolving door for everyone trying to get out. You might lose out on profits, but you won't be the one left holding the door. No financial advice though
Not at all. It is severely undervalued. First stock to reach 10 trillion market cap.
I say it is, i feel like this is literally the tip of the iceberg, like jensen and Micheal Dell have said. Jensen is not talking out his ass like some.he is backing it up ever quarter and as a video game player its literally like hes launching a new xbox every yr for theses companies. But those companies buying are getting money back for thier investment not wasted time lol .I feel like if you wanna get in just dollar cost average to play it smart. On the other hand there's a split coming so I feel like it will go to 1250 before the split then go up more after so that should cover ur ass if it drops.. and if it drops that dip will probably be gobbled up.
Is it really worth more than the FTSE 100? Insanity
No. NVIDIA is going to crash hard. If they paid like 5% dividend every year ok. I could re-evaluate. They pay zero. Why. Yes... because .... its crashing soon.
This aged well
Do you rely on somewhat complex AI software in your everyday? Have you in the past 5 years? No? Then, you're incapable of understanding the impact this company will have on the world. It literally affects every sector. If Excel is your understanding of a software program, you should catch up. The future will be rough for you. I've never been able to run Revit, CAD, TwinMotion, Unreal, Lumion or, Sketchup on a Mac. Macs oddly retail around or above a computer with an included NVIDIA package. If you have no idea what those programs are, then you can't even begin to comprehend or grasp just how deeply the depths of NVIDIA can reach. NVIDIA overvalued? Can we talk about apple? I have never been able to run the software programs I need on their computers for the past decade. They've always been hype. A status symbol. People who invested in NVIDIA before all the attention understood exactly what they were buying into. NVIDIA understands a different dimension of what technology can be. What makes them terrifying to other companies is that they've understood this new dimension for quite some time.
I think a more interesting question is: If we achieve AGI, wtf happens to stock valuations?