I don't think it's fair to say NVDA is meme stock, having reported 35B revenue last quarter.
Nvidia is growing profits faster than income.
Nvidia's net profit margin is 55% (vs Apple 15%) and they have an operating income of $21B vs Apple's $29.5
These are some pretty impressive financial results - those growth rates are the reason people are bullish on it.
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?
If it were valued that way, the P/E would be over 100.
Feel free to say Nvidia is overvalued, but you have to get the financials right.
No one expects this growth to be sustained for a decade. Companies aren't prices based on hypothetical growth rates in 10 years time.
That probably won't be the first question we ask AGI if/when we ever get there, but it will be near the top of the list.
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.
As you see NVidia doesn't stand out much, it's even lower than Amazon.
And NVDA’s P/E benefits from very recent huge spending that may not continue.
Look at their PEG ratios.
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.
DeepSeek supposedly nullifies that last part.
I can't see how DeepSeek hurts Nvidia, if Nvidia is what enables DeepSeek.
the simplest way to present the counter argument is:
- suppose you could train the best model with a single H100 for an hour. would that hurt or harm nvidia?
- suppose you could serve 1000x users with a 1/1000 the amount of gpus. would that hurt or harm nvidia?
the question is how big you think the market size is, and how fast you get to saturation. once things are saturated efficiency just results in less demand.
I'm skipping over some details of course, but the current Nvidia valuation, or rather the valuation a few days ago, was based on them being the only company capable of producing chips that can train the best models. That wasn't true for those in the know before, but is now very much more clearly not true.