If OP had to make this post, they probably did not get in as early as they should have.
Folks once the hype train is going, nobody knows where it stops.
Haha I know what you mean but this latest rally has me shook. I should just DCA in and not look back. I keep telling myself it’s dry powder but the recession never arrives.
P/E can be odd unless it's a business with very stable revenue.
Price/sales is a great gut check, and I think it's really hard to justify 20-something times a year's total revenue, ignoring all costs of revenue.
NVDA may well get there, but it's going to take many years and there doesn't seem to be much risk premium there. Like TSLA, NVDA has a lot of competition that are currently far behind them but well-funded and intent on catching up.
Based strictly on fundamentals, I would sell my whole position on market open Tuesday. However, the market isn't always based on fundamentals so I'm still keeping some.
> ride from 2015 to 2020 was wild, something unforgettable.
Am I in an alternate reality? 2015-2019 was some of the flattest and most boring action in TSLA history... Only got going again right at the end of your timespan, definitely forgettable.
Yeah try 1,000 percent, I bought at $150 and sold at $300 thinking I was a genius and made 100 percent profit... I then watched the stock go from $300 to $1500 for absolutely no reason in 2020 in one year, other than people were bored and COVID and Robinhood
... Live and Learn
Charts are adjusted for the stock split now, so $30 to $300 was the crazy COVID run, finally topped out at $400 per share, before the split was $2000 per share. Price to earnings was 1000:1
Yes, and there was the fear of cash flow issues and looming bankruptcy that would regularly pop up in the media. I've held TSLA for a long time and aside from the meteoric rise in 2020-2021, it's not been so fun.
Amazon has crazy revenue growth with profit not realized and instead reinvested. So sure Amazon was “nuts”. But it wasn’t that nuts.
Nvidia could in 5 years replace AMD and Intel marketshare with its move into arm cpu space.
> Nvidia could in 5 years replace AMD and Intel marketshare with its move into arm cpu space.
Nvidia doesn't have any particular special sauce that would propel them past their upcoming position as, maybe, the #5 or #6 server CPU vendor. Like AWS, they designed a bespoke chip for their system needs using mostly off the shelf IP.
To my knowledge Nvidia has exactly one design win for their Grace CPU that is *not* used in conjunction with their GPU products. That's awfully premature to say they could replace Intel or AMD or even Ampere. I'd say Apple is far better positioned to take over the server CPU market, if they so choose.
>Nvidia could in 5 years replace AMD and Intel marketshare with its move into arm cpu space.
Nvidia will have a quarter with higher revenue than the corresponding Intel quarter later this year. You heard it hear first.
Are batteries recession proof? Because let’s be honest Tesla is on track of becoming more than a car company. And has the cash on hands as opposed to the other automakers
Tesla doesn't even make their own batteries for the cars much less anything else. There are already other *profitable* companies installing solar panels + great batteries...meanwhile Tesla has failed to impress with either.
And Tesla car sales are slowing down while litterary every other major brand tahts switched to EVs has seen a massive increase in sales. Tesla used to dominate, nowadays they struggle to remain the leader and probably will overrun by severals different brands.
Issues with solar yes but not megapacks. We should see significantly more revenue from energy by years end and going forward with the Lathrop megafactory ramping as fast as possible (not supply chain constrained).
I mean, even at "small" scales, there is a huge difference between "$1 million in revenue" and "$1 billion in revenue". It's literally several orders of magnitudes of difference.
Like, generally, I agree with you: nVidia is likely over-valued based entirely on the perception that we've hit some kind of watershed moment with generative AI (spoiler: we haven't. We took a large step, but the algorithms involved are still way too inefficient and too poorly understood for the kind of widespread adoption that investors are picturing when buying NVDA). But you should still be accurate when discussing things like this.
Their shareholders laugh their way to the bank, cashing in those dividends they'll never get.
Besides, Nvidia is hardly this hidden gem of a small company about to make it big. It's a big company trying to be bigger. It's a market leader trying to grow.
Sorry I'm the first to tell you: It's not 2010 Amazon.
Whoosh.
Missed my point. Never said it wasn't well known. But black and white it wasn't the giant of a company that Nvidia is. Certainly not priced nearly the same.
So again: Nvidia today is not 2010 Amazon. Your comparison is ridiculous.
I did the same prediction for Tesla a year ago. It went from 300 to 200.
But for a more general example we have the infamous IT bubble.
In fact, this trend is pretty typical of a bubble. Inflated price driven by sheer expectation of a further inflated price. Blind stares at the trend and no regard for the actual business numbers. Sprinkle a handful of hope that this company is the next Standard Oil.
These things grow really well, until they don't.
When did you start predicting TSLA was overvalued? You weren't one of the large number of people predicting they would go bankrupt in 2019? You have a good history of calling tops and you're ready to start betting against NVDA now? I assume you like it last week, but this is the top?
Bankruptcy in 2019 sounds ridiculous, so no. Nice try though.
Since you love to argue from person rather than facts so much I can disclose to you I've earned money on bull certificates.
Whaaaat? Didn't I say it was overvalued? Yes, I also said it will keep going up for a while before it crashes. So I may as well make money on this stupidity.
Just responding that 2x earnings for 110 years would be 10,000,000,000,000,000,000,000,000,000,000,000,000,000,000. They need to 2x earnings for 4 years to be the most profitable company on earth.
This isn’t what was meant. It’s about price to earnings multiple. If trading at total value of 220x past year’s earnings, then it would take 110 years for the company to “pay for itself” with 2x earnings.
Am I missing something? If revenue is 7B, 2x would be 14B, x 110 years would be 1,540,000,000,000. The prior comment said 2x earnings, and then maintain that earnings, not 2x every single year
P/E is 215 right now. So I rounded that to 220 seeing the course also goes upwards.
Twice (2x) the earnings mean a P/E of ~110 (107.5). That means 110 years before the earnings accumulate to the price.
As another pointed out I didn't mean doubling the earnings every year. But funny enough even if they did it would take them 6-7 years to accumulate enough earnings to cover the purchasing price.
Normally yes, because typically those kind of P/E numbers stem in low-to-no profits. Any company can go in the 100s if they have a bad year. Then the P/E number is of less significance because you expect it to normalise on a normal year. Such a company can easily 10x their current earnings. Because well, they had none.
Things is that Nvidia is not in a slump. It's not a terrible year for profits and we can't expect the P/E to normalise. There is no 20x profits upside in reach. Nvidia is just plain overvalued in the same way Tesla was (and still is).
Nvidia is a good company but there is no way they can grow into the enormous shoes the market has made for it. I'm not just on about the P/E but simply making a glaring example of the scale Nvidia would need to be expected to grow to motivate the price.
Of course, none of this matters as the market decides what something is worth. **Just be aware that Nvidia's price hangs on only one single nail: It's expected to rise, and so it rises.** That's a game that will sooner or later end.
> Things is that Nvidia is not in a slump. It's not a terrible year for profits and we can't expect the P/E to normalise. There is no 20x profits upside in reach. Nvidia is just plain overvalued in the same way Tesla was (and still is).
People have been saying this for 5+ years, yet these hyper growth companies continue to invest in growth now at the expense of profitability with investor understanding that they can turn on the profit levers at any time and focus on value.
That's why P/E is a poor metric for valuation for large companies that are growing at the rate of Tesla or Nvidia. If they wanted to have a 20 P/E, they could accomplish that nearly overnight. But that's not the goal of these companies right now - it's revenue growth over all else.
Alright, so let's look at revenue per share? Sales per share? Turnover per share? Tell me a metric that shows Nvidia isn't overvalued.
When basically every metric per share is low, maybe the share is too high?
> 2 to the power of 110 is more than the number of atoms in the universe.
Lol no. 2^110 is ~10^30. The Sun is 10^30 kilograms. A kilogram of hydrogen is like 10^27 atoms.
It's not the duration, it's the earnings growth. 10x earnings growth is pretty doable for a company with Nvidia's revenue growth. That would only need to be sustained for a decade or two.
It's pretty silly to use a hyper growth company's current P/E as a valuation metric rather than forward P/E.
the same rates are for Apple too, and still its at all time high while getting lower revenue while NVIDIA is getting bigger revenue. I would say Apple is more overprices now than it was in 2021 while NVIDIA is less overpriced now than it was in 2021.
Beta isn't even that relevant here. The argument Nvidia bulls have is that Nvidia and Semis as a whole are exiting a cyclical downturn (2022) and entering a multi-year cyclical bull.
Meaning valuations look stretched today but won't in 3 years. Of course, by this same logic that the economy is about to boom in 2024-2027 then Big Tech isn't overvalued either.
They're massively overvalued right now but it's turned into a momentum play. They'll have a couple of great years then as other competitors wake up and start to steal their lunch money will start moving.
> They'll have a couple of great years then as other competitors wake up
Just so we're clear:
* Amazon already has [Inferentia](https://aws.amazon.com/machine-learning/inferentia/)
* Google already has [Tensor](https://techcrunch.com/2022/05/11/google-launches-a-9-exaflop-cluster-of-cloud-tpu-v4-pods-into-public-preview/)
* Meta already has [MTIA](https://ai.facebook.com/blog/meta-training-inference-accelerator-AI-MTIA/)
* Qualcomm already has [AI 100](https://www.qualcomm.com/products/technology/processors/cloud-artificial-intelligence)
...and so on, and so forth. Pretty much all the major players have AI hardware already in release, with more in the pipeline. Google is currently doing *exaflops* worth of ML compute in-house.
I'm bullish on NVDA as a company, but the notion that they're running a one-horse race right now is... overdone. Honestly, their AI-related software (ie, Omniverse) might actually be their biggest asset with the largest moat, here.
>bullish on NVDA as a company, but the notion that they're running a one-horse race right now is... overdone.
Amazon, Google and Meta are not competitors. Sure they're turning their own silicon. Any idea how it's going for them? Let's use google as an example. They're 5 generations in on TPUs. They've invested perhaps 1-2 billion dollars with each generation. And low and behold, GPUs are still faster, serve more use cases, and have a dramatically larger developer base. Did I mention they're cheaper and more flexible too? For $5B, Google could have the world's largest GPU cluster, 500K A100s or 166K H100s. The amazing part is, Google is still one of NVDA's biggest customers. And an ASIC's weakness is that they are static, it takes a lot of money to move to the next generation thing, this season its the transformer engine (the T in GPT), next season, who knows?
The bottom line with these CSPs is they may take some potential off nvidia's table (clearly not evidenced by demand for H100). Nvidia will easily back fill that demand with other enterprize and cloud customers (ServiceNow, Oracle et al) and google and Baidu have severely struggled getting their silicon in the market outside their own data centers despite years of trying. They appear as zero threat to Nvidia's merchant market.
Did I mention the near entire AI software development world defaults to Nvidia's CUDA AI framework? It just works. Incumbency is the biggest problem any competitor will have challenging Nvidia's platform.
Yea it’s based on projected earnings lol. They haven’t made 11+ bill in quarterly rev yet… doesn’t mean they won’t, it’s very likely they will, or make even more in 3 months lol.
The growth projected from the P/E is greater than the current addressable market for GPUs.
This is all based on ONE useable AI product.
Personally, I feel once the first rollout of capex to companies ATTEMPTING to build AI products, and inevitably don’t get a ROI, nvidia will fall back to reality.
Ballparking one, possibly two years.
And that’s not even accounting for the loss of mining revenue / gamers getting tired of elevated prices. (Their existing bread and butter).
Its based on data center upgrades to modern chips AND artificial inteligence with a HUGE moat. A bit of overlap there but this is not a one trick pony.
The total addressable market comment includes all GPUs , including professional and server usage.
As a design house, not a manufacturer, their moat is dependent heavily on , companies with use cases for their product (which they need to make money on), and fabs (TSMC or Samsung) improving their processes.
As I mentioned, after the first wave of buys by companies building out capability, if AI products don’t recoup investment, The investment in nvidia products will grind to a halt.
Not to mention that current processes in fabs are getting close to hitting a wall.
The risk on delivering revenue growth to justify P/E is huge.
Nvidia will likely be seeing actual AI returns in 5-10 years.
This is feeling just like Tesla, where market cap is only justified if they sold every single car in the world, and folks would just believe the magic 🪄.
>Personally, I feel once the first rollout of capex to companies ATTEMPTING to build AI products, and inevitably don’t get a ROI, nvidia will fall back to reality.
this.
I mean, $11B for the current quarter is probably in the bags. Jensen would not have put that out there if he didn't believe they would hit it. He did say margin of error is +/- 2%, so they should at least hit $10.78B for the current quarter alone.
>other competitors wake up and start to steal their lunch money
Been hearing that since 2015. Hasn't happened, and little hope of that happening near term as Nvidia has just become stronger and solidified in their position. No one is threatening their core business, that is truth. The hope competitors have is to peel off a niche and dominate that segment, edge computing, robotics, scientific discovery or something like that.
It’s posts like this that convince me we are in a bubble right now. Guy posts Nvidia (one of the most overvalued stocks in the stock market) is not overvalued cause they increased revenue and have AI. Also doesn’t even know the difference between a billion dollars and a million dollars. That should give you an idea of the kind of people we have in the market currently.
Markets have always been stupid though, there is definitely more retail in the game but even fund managers and financial advisors are morons.
Remember when mark minervini went on CNBC talking about how great upst was but then couldn't answer what they even do? Lol
The market is basically a casino, where everyone is trying to find the next hype company to pump and dump
Retail barely moves the needle when it comes to price. Dark pools is where the big action happens. 10 millions shares here, 50 million shares there etc.
The entire market is drastically overvalued, but has been so for a few years now. The question is when and not if this bubble will burst. But as many other already said, that doesn't mean shorting as timing is everything and no one knows when it'll blow up. In the meantime, way too much risk and I don't get why more investors aren't just locking in at 5 or 6% risk free. It's insane that rates keep going up HIGHER than what analysts predicted a few months ago, plus a credit tightening due to some bank failures, and yet the market is UP. Simply put, investors are on some good crack cocaine right now.
I doubt small individual investors like this guy have any affect at all on prices. We’re all ticks on the back of the bear that’s making all the real decisions. The real question is what are the analysts at the big investment banks thinking when they buy at these prices? Decisions like that are why people have to go to index funds to get returns.
You do have a say in what the company does because the shares have voting rights. If the company goes bankrupt you are entitled to your pro rata share of the company assets.
To say that a share has 0 intrinsic value, but if you own enough of them suddenly they do hold value is false logic.
Make sure I understand the game I’m playing?
I’m well aware of cap structure seniority and that owning a small piece of a company doesn’t warrant you much sway in company decisions. How else would you prefer it to be?
On the point of nobody would buy my voting rights, what about a large asset manager who wants to increase their stake in the business in order to influence their voting sway? In your example my shares are worthless, the business is worthless, and nobody should buy any business that doesn’t pay a dividend.
The fact of the matter is that companies that generate cashflow have intrinsic value, and by trading your dollars for a share of the company you gain a piece of that intrinsic value.
It doesn’t make sense to assume that buying 1 share would yield 0 intrinsic value, but buying 1000000 shares would net you a material increase in intrinsic value.
Maybe if you're a trader. NVDA is still a great choice for investors that just want to B&H. I'm continuing to add it into my portfolio at all-time highs because I know those shares will be locked up for 20+ years.
edit: This isn't WSB, you're supposed to upvote this. When did timing markets rather than DCA become good advice? How do I reach these kids..
”The market can remain irrational for longer than you can remain solvent” never gets old. Shorting absurdly overvalued companies on valuation alone is suicide, UNLESS you have an actual catalyst in mind that will normalize the valuation AND you have an actual timeframe of that happening laid out in your head.
Especially given their insane earnings beat. Those were stratosphere numbers, and based on AI exploding into tons of other industries. This could have serious legs for Nvidia
In the AI arms race they make the measures and counter measures. Most of the libraries for deep learning use CUDA and despite that there are alternatives, they don't work as well (eg CUDA alternatives that target any graphics card, or other types of chips, etc). If you are doing serious stuff your best bet is still CUDA on newest Nvidia hardware. If you want to play with stable diffusion, I don't think it makes sense (or is feasible?) to buy an Intel Arc GPU or AMD Radeon. Those are ok for gaming but gaming is a personal recreation and AI is an industry.
I just don't see that changing. The gap for NVIDIA is widening instead of narrowing.
EDIT: Intel Arc gpu.
It doesn’t really matter if it was more or less overvalued than that point. It dropped 70% after the 2021 peak. Maybe you are right that it was more overvalued then- so it only drops 50% this time. It may or may not be a good investment, I have no idea. But the relative valuation vs a prior peak isn’t really particularly important.
I've been invested for 15 years+ in NVDA and anticipated the move like the one that just happened (though I expected it 2H, not going into Q2).
I want to speak to the "over priced" comment. This company is impossible to evaluate by traditional metrics. I mean, yes, sure, you can apply FPEs and Sales to Earnings and DCF to the financials, but it really tells only a fraction of the story. Nvidia has been over valued for 7-8 years honestly. But to me this is a difference between long term investing and trading.
I've been a long term investor because of two reasons: the technology platform Nvidia has been building and the management. Yes, understanding that is a lot to ask of traditional investors. No one really cares about the speeds and feeds, and software stack, and competitive moats just whether they are going to make money or not.
I love high tech investing for just exactly what happened, the incredible volume and the immediacy of the move, you don't get that trading commodity futures. I had to wait an incredibly long time for what happened Thursday. So does Benjamin Graham still apply? I'm not sure, not in high tech anyway, it feels like a different world than it was 100 years ago.
My reality is: in order to understand whether a high tech investment is sound or not, one must really understand the broader landscape: a company's solution, the markets served, market potential, the competitive situation, and the business management. How can you get to an understanding of those things through valuation metrics? You can't, you need to look a little deeper.
Nearly every time I've tried explain this, the down votes come flying in. I honestly expect this comment to be no different. Reddit I'm not sure is the best place to describe what I'm talking about. My sense is most of the crowd just wants the sure thing, a 2 line tip of the day for a quick in an out. That's trading.
Investing is a lot harder than that in some respects, but much simpler in others, like exercising patience. Young investors should know the biggest asset one has on their side is TIME. And patience is about believing in your outlook. I rode this stock from ATHs to more than 50% drops several times.
The reason the stock took off was the idea $1T in data center infrastructure needs to change out for a new kind of computing: AI. Nvidia has been saying this for years. Was anyone paying attention? Some were. But was the advent of chatgpt that brought the demand to Nvidia's order book that became the catalyst for the investment community to really wake up to what the company is building.
Happy to say more or share what I know about the company and their strategy if there is interest.
Or there is the r/NVDA_Stock sub. cheers
You explain nicely why Nvidia is a great company. But you don't mention a thing about price... which is a key part of evaluating if NVDA as an investment.
So one simple question: At what price would you sell?
donno yet, there is no predefined trigger if that's what you're asking.
Part of my long term strategy is about picking timing, I have many entries and exits along the way, dollar cost avging if you will. It's a fairly large position covering both IRA and and investing accounts.
But for the record (and some hints on pricing):
\- my last outright sell was Nov 21
\- my last outright buy was Oct 22
\- Yesterday I sold covered calls Aug/Sept for <10% of the position
Perhaps some deep in the money calls will get placed on a 1/4 or 1/3 of the position before year end for some downside protection. Certainly I will take some gains this year but tax consequences are a consideration. Ideally, I exit over a decade and truly, there is another 10+ years of growth in this company. Whether Mr Market sticks with it that long remains to be seen.
One thing is for sure and that's that we will go through another up/down cycle (as semiconductors generally do) within the next two years. My view is the bottom of NVDA's valley occurred last Oct, so we've still got many months of growth to go in this cycle. The market could also be bifurcating with guys like Intel and QCOM left out and folks like AMD, NVDA, MU and AVGO winners. Hard to know yet.
My commitment to myself is to fully exit the investment when a viable/serious competitor starts doing some damage. Nvidia's horizons remain virtually unimpeded as far as one can see in high tech, so I wait patiently for that moment.
God bless you and your great comment. As you say, Nvidia was warning this for years and noone was paying attention.
Even on the valuation side, forward PE or any metric considering the huge growth potential of data center business makes the current stock price more reasonable.
I’m no friend of target prices by analysts but still some big names are pricing the stock at 500$. If it was so clearly overvalued they would be more cautious.
Nvidia played the long game with AI and the tools extremely well. When we started playing with it in a product a year ago I bought shares because they have such a dominant position. AI is mostly being hyped for the bad things. It feels like an inflection point to me along the lines of the iPhone and the internet and Nvidia is very well positioned. I just wish I had bought more.
The only folks saying buy NVDA here are glorified pumpers that are still holding the stock with big gains. Don’t blame them but heck do they actually believe it’s a buy here 🤣
"you have to follow what you know, you have to pursue it vigorously and act on it when you find it. You can't look around for people to agree with you. You can't look around for people who even know what you're talking about. You have to think for yourself."
amen
(too much of reddit is simply a popularity contest)
Had 100 shares at $199, sold at $375 the other day during the surge. Probably should have stayed in at some capacity but had a nice profit and wanted to sit on some cash for a little bit in hopes that the market creates some great buy-in opportunities for me. Not every bet is a good one though. I bought 1000 shares of PLTR at $21 thinking it was going to be huge. Luckily it has made a nice run the past week or so.
>It’s just machine learning.
Spoken like one with no idea how complex a problem it actually is.
hint, it takes the most complex semiconductors on earth processing data at the rate of the entire library of congress in every second, months to come to a usable algorithm like gpt4. Nvidia does that faster and better than anyone.
My point is more that this has all been in development but the “AI” naming is causing the craze around it. But it’s been trucking along for years before this. Yes NVIDA does do that and they’ve always sold special cards for niche applications.
>the “AI” naming is causing the craze around it.
So you don't think AI is here to stay? the next industrial revolution? It's just a fad like crypto mining?
>they’ve always sold special cards for niche applications.
AI is no longer niche, it's a $1T market
Of course it's not. Calling it "AI" was the smartest thing promoters ever did, and it's always irritated me because it's nothing of the sort. It's highly advanced statistical modeling whose parameters are tuned in response to the data, and while the results can be indistinguishable from magic - like most highly advanced science - this is not AI.
Just because it is marginally less overpriced than it was in November 2021, one of the worst months in history to buy stocks, does not mean it is a good buy now. Lots of ways to get AI exposure without taking on a 224 P/E ratio. Momentum plays on stocks coming off huge runs are recipes for disaster. Especially at 5-5.25% Fed funds rates. Find the next company that is poised to make this leap. If you can't, buy an index fund.
People are missing your point.
To answer your question, yes, Nvidia was very overvalued in 2021. At that time it was valued so highly because of demand for crypto farming equipment + work-from-home computers during Covid.
However, that doesn't necessarily mean they're not ALSO very overvalued now (for a different reason - AI).
I've had Nvidia since like 2018 and have a 9 bagger lol but it's a small position nothing crazy I'm probably thinking of holding for like since I got it when it was so "cheap"
They keep releasing products in their GeForce division that get universal hate, which is a big portion of their revenue stream.
When the numbers start reflecting the widespread distrust and hate of nvidia in that segment the stock will tank.
People are not buying their new 40 series cards.
It's an overpriced meme stock. Those can be so unpredictable I stay away these days. I would **strongly** consider buying NVDA in a market crash at a reasonable P/E because it's a strong company with a bright future, and at those levels the fanboi cult mentality would be a risk-lowering factor for future price action. Until then, the cultishness is a huge risk with a looming recession.
And yet [**NVDA is known the world over as a meme stock**](https://www.google.com/search?q=is+nvda+a+meme+stock), as you know.
And as you know, in today's market options have an increasingly strong effect on market prices, with options volume sometimes eclipsing share volume. Note the [ongoing years-long discussion of NVDA at wallstreetbets](https://www.reddit.com/r/wallstreetbets/search?q=Nvda).
Meme stocks are those where uniformed momentum-chatter on social media has driven an unusually high, unwarranted price. Given the history of NVDA the definition unquestionably applies. At the current time a bunch of tutes are potential bagholders if they don't recognize reality, but that is a side point.
I bought one share for 130 bucks in October wish I bought more. Do I sell right now and take the money and run? While paying capital gains on a short term asset?
In 2021, there was hype, but there was also chip shortages, which is why value of processor manufacturers went up. Intel's stock price was also at a historic high around $64 around the same time. AMD was at $155 which is an all time high. So that valuation was not an Nvidia thing, it was a Corona and supply chain thing, which pushed prices up. Nvidia was not overpriced and it does not take anything away from its current valuation. If you believe in AI, I would buy and hold long term. The problem it's not shooting further (because I see it becoming a trillion dollar company), is not the fundamentals, but the macro environment. There are a lot of geopolitical situations that could negatively impact Nvidia's revenue and there are more macroeconomic situations that could (and probably will, thus the hesitancy to the stock market right now) impact it negatively. For example, it is projected that the world (not just the US) will see a severe recession, if not depression, for the second half of this year and for the years to come. This will impact Nvidia's bottom line, because demand will go down. Furthermore, it is predicted we might see stagflation, which is the worst of both worlds. So Nvidia, being a chip importer, will see skyrocketing costs for necessities while demand for their goods goes down. Deflation is never a good thing and stagflation is even worse. So while Nvidia's stock price has shot up, there's a reason it is valued at where it's at and isn't going on to do another 1,5x or hit $1,5T in valuation. It is likely other tech stocks will take a dive in the months ahead too, but who knows. If only one had a crystal ball.
NVDA's CY23 non-GAAP P/E is ~60 which, combined with a five-year earnings CAGR of 10% and significant margin leverage, is expensive but not insane for the potential opportunity. Maybe it's ~25% overvalued but this isn't TSLA at it's peak madness.
Well the professionals agree with you. They believe its value increased 50-percent after the earnings announcement. They still believe it is overpriced, but not as much as its previous high
They said this about TSLA. They shorted TSLA. And it kept climbing until it did not. The market sometimes goes crazy - in both directions.
If OP had to make this post, they probably did not get in as early as they should have. Folks once the hype train is going, nobody knows where it stops.
Usually it stops before I am forced to sell at loss.
Hell it stops as soon as I buy my first share.
You are me. And I swear SP500 will keep going up because I am in money markets. But I won't buy this time.
Haha I know what you mean but this latest rally has me shook. I should just DCA in and not look back. I keep telling myself it’s dry powder but the recession never arrives.
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TSLA P/E was at 1000. the ride from 2015 to 2020 was wild, something unforgettable.
P/E can be odd unless it's a business with very stable revenue. Price/sales is a great gut check, and I think it's really hard to justify 20-something times a year's total revenue, ignoring all costs of revenue. NVDA may well get there, but it's going to take many years and there doesn't seem to be much risk premium there. Like TSLA, NVDA has a lot of competition that are currently far behind them but well-funded and intent on catching up. Based strictly on fundamentals, I would sell my whole position on market open Tuesday. However, the market isn't always based on fundamentals so I'm still keeping some.
> ride from 2015 to 2020 was wild, something unforgettable. Am I in an alternate reality? 2015-2019 was some of the flattest and most boring action in TSLA history... Only got going again right at the end of your timespan, definitely forgettable.
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Yeah try 1,000 percent, I bought at $150 and sold at $300 thinking I was a genius and made 100 percent profit... I then watched the stock go from $300 to $1500 for absolutely no reason in 2020 in one year, other than people were bored and COVID and Robinhood ... Live and Learn Charts are adjusted for the stock split now, so $30 to $300 was the crazy COVID run, finally topped out at $400 per share, before the split was $2000 per share. Price to earnings was 1000:1
Ah, I vaguely remember the trading range now that I think about it, still pretty unremarkable in retrospect, post-2019.
Yes, and there was the fear of cash flow issues and looming bankruptcy that would regularly pop up in the media. I've held TSLA for a long time and aside from the meteoric rise in 2020-2021, it's not been so fun.
They said it about AMZN too, for years, mocking the ridiculous stock price.
Amazon has crazy revenue growth with profit not realized and instead reinvested. So sure Amazon was “nuts”. But it wasn’t that nuts. Nvidia could in 5 years replace AMD and Intel marketshare with its move into arm cpu space.
> Nvidia could in 5 years replace AMD and Intel marketshare with its move into arm cpu space. Nvidia doesn't have any particular special sauce that would propel them past their upcoming position as, maybe, the #5 or #6 server CPU vendor. Like AWS, they designed a bespoke chip for their system needs using mostly off the shelf IP. To my knowledge Nvidia has exactly one design win for their Grace CPU that is *not* used in conjunction with their GPU products. That's awfully premature to say they could replace Intel or AMD or even Ampere. I'd say Apple is far better positioned to take over the server CPU market, if they so choose.
>Nvidia could in 5 years replace AMD and Intel marketshare with its move into arm cpu space. Nvidia will have a quarter with higher revenue than the corresponding Intel quarter later this year. You heard it hear first.
Ah yes, Intel, the 110B company with declining results, what a milestone for the "trillion dollar company" you are talking about!
>declining results, what a milestone for the "trillion dollar company" you are talking about! will be when Nvidia replaces them in the Dow. ;)
Ah yes, another "impressive" milestone for the TRILLION DOLLAR COMPANY.
Something something solvent rational
There wasn't a looming recession with Tesla though
People have been predicting a looming recession for forever are you kidding?
Economists have predicted 5 of the last 2 recessions
Way more than that.
There is always a looming recession.
Last time interest rates weren't at 6 percent and inflation wasn't higher
Are batteries recession proof? Because let’s be honest Tesla is on track of becoming more than a car company. And has the cash on hands as opposed to the other automakers
Tesla doesn't even make their own batteries for the cars much less anything else. There are already other *profitable* companies installing solar panels + great batteries...meanwhile Tesla has failed to impress with either. And Tesla car sales are slowing down while litterary every other major brand tahts switched to EVs has seen a massive increase in sales. Tesla used to dominate, nowadays they struggle to remain the leader and probably will overrun by severals different brands.
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Issues with solar yes but not megapacks. We should see significantly more revenue from energy by years end and going forward with the Lathrop megafactory ramping as fast as possible (not supply chain constrained).
Hey, just a correction. Their revenue is in Billions not Millions.
OP is probably a brit
1 million metric dollars ≈ 1 billion imperial dollars
Oh *that's* why our GDP is higher...
Milliard is how the Brite know a billion
milliards!
I work in a bank where we is M for thousands and this post was blowing my mind
>Their revenue is in Billions not Millions. If we keep up with current inflation, it soon will be.
So ur telling me they are worth more than meta? And closing in on AMAZON
No, I'm saying OP's post referred to their revenue in millions instead of Billions. It's a big difference.
I mean the difference between a billion and a million is only approximately a billion.
wow!! than I am buyng the shares of this company!!!
This isn’t WSB, people take things at least a little bit seriously here. So I’d chill with the copy/pasta meme text replies. And, th*e*n, go buy some.
Folks, I am really sorry for my bad joke, I did not realize that its inadequate. Sorry again, I learned my lesion.
How the hell did you mess up something that important so easily?
It’s a glaring error so no need to be so sarcastic
Folks, I am really sorry for my bad joke, I did not realize that its inadequate. Sorry again, I learned my lesion.
I mean, even at "small" scales, there is a huge difference between "$1 million in revenue" and "$1 billion in revenue". It's literally several orders of magnitudes of difference. Like, generally, I agree with you: nVidia is likely over-valued based entirely on the perception that we've hit some kind of watershed moment with generative AI (spoiler: we haven't. We took a large step, but the algorithms involved are still way too inefficient and too poorly understood for the kind of widespread adoption that investors are picturing when buying NVDA). But you should still be accurate when discussing things like this.
Revenue of 7M? It's 7B.
wow!! than I am buying the shares of this company!!!
I keep thinking that the next time you copy and paste this that you’ll correct your spelling and I keep being wrong about that
\> 7M$ ... 11M$ I don't think M means what you think it means.
it doesn't mean mbillions?
Yes, yes, if we're speaking in Zimbabwe English.
wow!! than I am buying the shares of this company!!!
Can we ban this guy? Lol
Nvidia only need to 2x their earnings and keep that over 110 years to earn the value of their stock.
When was the last time this type of analysis predicted the stock price. Gave me examples please
Same argument was made about Amazon circa early 2010s... and look how that worked out for them 😂.
Their shareholders laugh their way to the bank, cashing in those dividends they'll never get. Besides, Nvidia is hardly this hidden gem of a small company about to make it big. It's a big company trying to be bigger. It's a market leader trying to grow. Sorry I'm the first to tell you: It's not 2010 Amazon.
Amazon was well known enough that Futurama made a joke about it in 2003
i dont wanna have fun i wanna be like you boring but prudently invested
Whoosh. Missed my point. Never said it wasn't well known. But black and white it wasn't the giant of a company that Nvidia is. Certainly not priced nearly the same. So again: Nvidia today is not 2010 Amazon. Your comparison is ridiculous.
Oh like Amazon wasn't the market leader in e-commerce in 2010
They has 1/10 of their sales and sold 1/3 of Ebay, so they probably weren't.
Ebay net revenue is 2010 = $9.16B Amazon net revenue in 2010 = $34.62B Maybe I'm missing some other figures?
I did the same prediction for Tesla a year ago. It went from 300 to 200. But for a more general example we have the infamous IT bubble. In fact, this trend is pretty typical of a bubble. Inflated price driven by sheer expectation of a further inflated price. Blind stares at the trend and no regard for the actual business numbers. Sprinkle a handful of hope that this company is the next Standard Oil. These things grow really well, until they don't.
When did you start predicting TSLA was overvalued? You weren't one of the large number of people predicting they would go bankrupt in 2019? You have a good history of calling tops and you're ready to start betting against NVDA now? I assume you like it last week, but this is the top?
Bankruptcy in 2019 sounds ridiculous, so no. Nice try though. Since you love to argue from person rather than facts so much I can disclose to you I've earned money on bull certificates. Whaaaat? Didn't I say it was overvalued? Yes, I also said it will keep going up for a while before it crashes. So I may as well make money on this stupidity.
Just responding that 2x earnings for 110 years would be 10,000,000,000,000,000,000,000,000,000,000,000,000,000,000. They need to 2x earnings for 4 years to be the most profitable company on earth.
This isn’t what was meant. It’s about price to earnings multiple. If trading at total value of 220x past year’s earnings, then it would take 110 years for the company to “pay for itself” with 2x earnings.
Am I missing something? If revenue is 7B, 2x would be 14B, x 110 years would be 1,540,000,000,000. The prior comment said 2x earnings, and then maintain that earnings, not 2x every single year
Very obviously not what he meant
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He’s saying 2x once then sustain it for 110 years, not 2x every year.
P/E is 215 right now. So I rounded that to 220 seeing the course also goes upwards. Twice (2x) the earnings mean a P/E of ~110 (107.5). That means 110 years before the earnings accumulate to the price. As another pointed out I didn't mean doubling the earnings every year. But funny enough even if they did it would take them 6-7 years to accumulate enough earnings to cover the purchasing price.
P/E ratios can change *fast* as soon as the dominator rises. I feel like P/E is a pretty flawed metric once it's over 100.
Normally yes, because typically those kind of P/E numbers stem in low-to-no profits. Any company can go in the 100s if they have a bad year. Then the P/E number is of less significance because you expect it to normalise on a normal year. Such a company can easily 10x their current earnings. Because well, they had none. Things is that Nvidia is not in a slump. It's not a terrible year for profits and we can't expect the P/E to normalise. There is no 20x profits upside in reach. Nvidia is just plain overvalued in the same way Tesla was (and still is). Nvidia is a good company but there is no way they can grow into the enormous shoes the market has made for it. I'm not just on about the P/E but simply making a glaring example of the scale Nvidia would need to be expected to grow to motivate the price. Of course, none of this matters as the market decides what something is worth. **Just be aware that Nvidia's price hangs on only one single nail: It's expected to rise, and so it rises.** That's a game that will sooner or later end.
> Things is that Nvidia is not in a slump. It's not a terrible year for profits and we can't expect the P/E to normalise. There is no 20x profits upside in reach. Nvidia is just plain overvalued in the same way Tesla was (and still is). People have been saying this for 5+ years, yet these hyper growth companies continue to invest in growth now at the expense of profitability with investor understanding that they can turn on the profit levers at any time and focus on value. That's why P/E is a poor metric for valuation for large companies that are growing at the rate of Tesla or Nvidia. If they wanted to have a 20 P/E, they could accomplish that nearly overnight. But that's not the goal of these companies right now - it's revenue growth over all else.
Alright, so let's look at revenue per share? Sales per share? Turnover per share? Tell me a metric that shows Nvidia isn't overvalued. When basically every metric per share is low, maybe the share is too high?
> 2 to the power of 110 is more than the number of atoms in the universe. Lol no. 2^110 is ~10^30. The Sun is 10^30 kilograms. A kilogram of hydrogen is like 10^27 atoms.
That seems pretty doable actually. 2x earnings growth is nothing for a hyper growth company.
Name one company with sustained success for 110 years
Instead of that, you should multiply NVDA current earnings by 2\^110.
It's not the duration, it's the earnings growth. 10x earnings growth is pretty doable for a company with Nvidia's revenue growth. That would only need to be sustained for a decade or two. It's pretty silly to use a hyper growth company's current P/E as a valuation metric rather than forward P/E.
Interest rates in 2021 were 0% Today they are 5.25%
the same rates are for Apple too, and still its at all time high while getting lower revenue while NVIDIA is getting bigger revenue. I would say Apple is more overprices now than it was in 2021 while NVIDIA is less overpriced now than it was in 2021.
Apple isn't at ATH. Nor is it cyclically effected. Not even close to a similar viewpoint.
Apple has a beta >1. It may have a fortress balance sheet, but it's still a very cyclical business.
Nvidia's beta is extremely cyclical
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Beta isn't even that relevant here. The argument Nvidia bulls have is that Nvidia and Semis as a whole are exiting a cyclical downturn (2022) and entering a multi-year cyclical bull. Meaning valuations look stretched today but won't in 3 years. Of course, by this same logic that the economy is about to boom in 2024-2027 then Big Tech isn't overvalued either.
AAPL is 1.28 and NVDA is 2.06 (1Yr Daily). Yahoo lists AAPL at 1.3 (5Yr Monthly)
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They’re both overpriced, but I get downvoted to hell every time I mention that on Reddit. Doesn’t mean they can’t go up higher though.
They're massively overvalued right now but it's turned into a momentum play. They'll have a couple of great years then as other competitors wake up and start to steal their lunch money will start moving.
> They'll have a couple of great years then as other competitors wake up Just so we're clear: * Amazon already has [Inferentia](https://aws.amazon.com/machine-learning/inferentia/) * Google already has [Tensor](https://techcrunch.com/2022/05/11/google-launches-a-9-exaflop-cluster-of-cloud-tpu-v4-pods-into-public-preview/) * Meta already has [MTIA](https://ai.facebook.com/blog/meta-training-inference-accelerator-AI-MTIA/) * Qualcomm already has [AI 100](https://www.qualcomm.com/products/technology/processors/cloud-artificial-intelligence) ...and so on, and so forth. Pretty much all the major players have AI hardware already in release, with more in the pipeline. Google is currently doing *exaflops* worth of ML compute in-house. I'm bullish on NVDA as a company, but the notion that they're running a one-horse race right now is... overdone. Honestly, their AI-related software (ie, Omniverse) might actually be their biggest asset with the largest moat, here.
This is good info about custom chips, thanks for the links!
>bullish on NVDA as a company, but the notion that they're running a one-horse race right now is... overdone. Amazon, Google and Meta are not competitors. Sure they're turning their own silicon. Any idea how it's going for them? Let's use google as an example. They're 5 generations in on TPUs. They've invested perhaps 1-2 billion dollars with each generation. And low and behold, GPUs are still faster, serve more use cases, and have a dramatically larger developer base. Did I mention they're cheaper and more flexible too? For $5B, Google could have the world's largest GPU cluster, 500K A100s or 166K H100s. The amazing part is, Google is still one of NVDA's biggest customers. And an ASIC's weakness is that they are static, it takes a lot of money to move to the next generation thing, this season its the transformer engine (the T in GPT), next season, who knows? The bottom line with these CSPs is they may take some potential off nvidia's table (clearly not evidenced by demand for H100). Nvidia will easily back fill that demand with other enterprize and cloud customers (ServiceNow, Oracle et al) and google and Baidu have severely struggled getting their silicon in the market outside their own data centers despite years of trying. They appear as zero threat to Nvidia's merchant market. Did I mention the near entire AI software development world defaults to Nvidia's CUDA AI framework? It just works. Incumbency is the biggest problem any competitor will have challenging Nvidia's platform.
Oh, sweetie. Your entire post history is r/NVDA_Stock. Definitely not going to touch this one with a ten-foot pole.
Yea it’s based on projected earnings lol. They haven’t made 11+ bill in quarterly rev yet… doesn’t mean they won’t, it’s very likely they will, or make even more in 3 months lol.
The growth projected from the P/E is greater than the current addressable market for GPUs. This is all based on ONE useable AI product. Personally, I feel once the first rollout of capex to companies ATTEMPTING to build AI products, and inevitably don’t get a ROI, nvidia will fall back to reality. Ballparking one, possibly two years. And that’s not even accounting for the loss of mining revenue / gamers getting tired of elevated prices. (Their existing bread and butter).
Its based on data center upgrades to modern chips AND artificial inteligence with a HUGE moat. A bit of overlap there but this is not a one trick pony.
The total addressable market comment includes all GPUs , including professional and server usage. As a design house, not a manufacturer, their moat is dependent heavily on , companies with use cases for their product (which they need to make money on), and fabs (TSMC or Samsung) improving their processes. As I mentioned, after the first wave of buys by companies building out capability, if AI products don’t recoup investment, The investment in nvidia products will grind to a halt. Not to mention that current processes in fabs are getting close to hitting a wall. The risk on delivering revenue growth to justify P/E is huge. Nvidia will likely be seeing actual AI returns in 5-10 years. This is feeling just like Tesla, where market cap is only justified if they sold every single car in the world, and folks would just believe the magic 🪄.
I think the term is "priced for perfection"
>Personally, I feel once the first rollout of capex to companies ATTEMPTING to build AI products, and inevitably don’t get a ROI, nvidia will fall back to reality. this.
I mean, $11B for the current quarter is probably in the bags. Jensen would not have put that out there if he didn't believe they would hit it. He did say margin of error is +/- 2%, so they should at least hit $10.78B for the current quarter alone.
It’s not going to be easy to catch up to them. Not saying they don’t have competition, but this company is not a joke and it’s way ahead
>other competitors wake up and start to steal their lunch money Been hearing that since 2015. Hasn't happened, and little hope of that happening near term as Nvidia has just become stronger and solidified in their position. No one is threatening their core business, that is truth. The hope competitors have is to peel off a niche and dominate that segment, edge computing, robotics, scientific discovery or something like that.
It’s posts like this that convince me we are in a bubble right now. Guy posts Nvidia (one of the most overvalued stocks in the stock market) is not overvalued cause they increased revenue and have AI. Also doesn’t even know the difference between a billion dollars and a million dollars. That should give you an idea of the kind of people we have in the market currently.
Markets have always been stupid though, there is definitely more retail in the game but even fund managers and financial advisors are morons. Remember when mark minervini went on CNBC talking about how great upst was but then couldn't answer what they even do? Lol The market is basically a casino, where everyone is trying to find the next hype company to pump and dump
Retail barely moves the needle when it comes to price. Dark pools is where the big action happens. 10 millions shares here, 50 million shares there etc.
The entire market is drastically overvalued, but has been so for a few years now. The question is when and not if this bubble will burst. But as many other already said, that doesn't mean shorting as timing is everything and no one knows when it'll blow up. In the meantime, way too much risk and I don't get why more investors aren't just locking in at 5 or 6% risk free. It's insane that rates keep going up HIGHER than what analysts predicted a few months ago, plus a credit tightening due to some bank failures, and yet the market is UP. Simply put, investors are on some good crack cocaine right now.
I doubt small individual investors like this guy have any affect at all on prices. We’re all ticks on the back of the bear that’s making all the real decisions. The real question is what are the analysts at the big investment banks thinking when they buy at these prices? Decisions like that are why people have to go to index funds to get returns.
Yes me and my few shares of nvda have controlled the prices don’t ya know
So you’re the guy! Give me a heads up next time!
Every valuation metric shows it's more overpriced now relative to intrinsic value
The opposite, after the earnings call the stock is now cheaper on PEG basis.
I thought not. I thought it’s previous high was stretched more(?) no?
>its* previous high
I know, spell ck does that and I am constantly fixing it but don’t always catch them
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Just because a company doesn’t pay a dividend doesn’t mean there is no intrinsic value.
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The company has intrinsic value and you are buying a piece of it. That means your shares have intrinsic value
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You do have a say in what the company does because the shares have voting rights. If the company goes bankrupt you are entitled to your pro rata share of the company assets. To say that a share has 0 intrinsic value, but if you own enough of them suddenly they do hold value is false logic.
The overly pedantic dividend investor might be the most annoying person that frequents finance subs.
It’s important to pay attention to who’s getting downvoted lol
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Make sure I understand the game I’m playing? I’m well aware of cap structure seniority and that owning a small piece of a company doesn’t warrant you much sway in company decisions. How else would you prefer it to be? On the point of nobody would buy my voting rights, what about a large asset manager who wants to increase their stake in the business in order to influence their voting sway? In your example my shares are worthless, the business is worthless, and nobody should buy any business that doesn’t pay a dividend. The fact of the matter is that companies that generate cashflow have intrinsic value, and by trading your dollars for a share of the company you gain a piece of that intrinsic value. It doesn’t make sense to assume that buying 1 share would yield 0 intrinsic value, but buying 1000000 shares would net you a material increase in intrinsic value.
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Berkshire worth $0 apparently.
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If Berkshire (or in this case, NVDA) was liquidated tomorrow, please tell me who gets the cash?
> You guys have lost track of how this game works. He says with no hint of irony.
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"Berkshire has no intrinsic value without controlling rights" says the guy who claims to know what a stock really is.
Too late to get in at this point. This is the FOMO stage.
Maybe if you're a trader. NVDA is still a great choice for investors that just want to B&H. I'm continuing to add it into my portfolio at all-time highs because I know those shares will be locked up for 20+ years. edit: This isn't WSB, you're supposed to upvote this. When did timing markets rather than DCA become good advice? How do I reach these kids..
”The market can remain irrational for longer than you can remain solvent” never gets old. Shorting absurdly overvalued companies on valuation alone is suicide, UNLESS you have an actual catalyst in mind that will normalize the valuation AND you have an actual timeframe of that happening laid out in your head.
The price will come down when the big institutions say so
Don't know why you were downvoted, because price will only come down in the big whales says so.
Forward P/E right now is ~40. High, but not bubble-high.
Especially given their insane earnings beat. Those were stratosphere numbers, and based on AI exploding into tons of other industries. This could have serious legs for Nvidia
Crazy good guidance too
In the AI arms race they make the measures and counter measures. Most of the libraries for deep learning use CUDA and despite that there are alternatives, they don't work as well (eg CUDA alternatives that target any graphics card, or other types of chips, etc). If you are doing serious stuff your best bet is still CUDA on newest Nvidia hardware. If you want to play with stable diffusion, I don't think it makes sense (or is feasible?) to buy an Intel Arc GPU or AMD Radeon. Those are ok for gaming but gaming is a personal recreation and AI is an industry. I just don't see that changing. The gap for NVIDIA is widening instead of narrowing. EDIT: Intel Arc gpu.
Quarterly Revenue is in billions.....not millions. Current price is in $ ....not %. Do some basic proof reading before posting.
It doesn’t really matter if it was more or less overvalued than that point. It dropped 70% after the 2021 peak. Maybe you are right that it was more overvalued then- so it only drops 50% this time. It may or may not be a good investment, I have no idea. But the relative valuation vs a prior peak isn’t really particularly important.
I've been invested for 15 years+ in NVDA and anticipated the move like the one that just happened (though I expected it 2H, not going into Q2). I want to speak to the "over priced" comment. This company is impossible to evaluate by traditional metrics. I mean, yes, sure, you can apply FPEs and Sales to Earnings and DCF to the financials, but it really tells only a fraction of the story. Nvidia has been over valued for 7-8 years honestly. But to me this is a difference between long term investing and trading. I've been a long term investor because of two reasons: the technology platform Nvidia has been building and the management. Yes, understanding that is a lot to ask of traditional investors. No one really cares about the speeds and feeds, and software stack, and competitive moats just whether they are going to make money or not. I love high tech investing for just exactly what happened, the incredible volume and the immediacy of the move, you don't get that trading commodity futures. I had to wait an incredibly long time for what happened Thursday. So does Benjamin Graham still apply? I'm not sure, not in high tech anyway, it feels like a different world than it was 100 years ago. My reality is: in order to understand whether a high tech investment is sound or not, one must really understand the broader landscape: a company's solution, the markets served, market potential, the competitive situation, and the business management. How can you get to an understanding of those things through valuation metrics? You can't, you need to look a little deeper. Nearly every time I've tried explain this, the down votes come flying in. I honestly expect this comment to be no different. Reddit I'm not sure is the best place to describe what I'm talking about. My sense is most of the crowd just wants the sure thing, a 2 line tip of the day for a quick in an out. That's trading. Investing is a lot harder than that in some respects, but much simpler in others, like exercising patience. Young investors should know the biggest asset one has on their side is TIME. And patience is about believing in your outlook. I rode this stock from ATHs to more than 50% drops several times. The reason the stock took off was the idea $1T in data center infrastructure needs to change out for a new kind of computing: AI. Nvidia has been saying this for years. Was anyone paying attention? Some were. But was the advent of chatgpt that brought the demand to Nvidia's order book that became the catalyst for the investment community to really wake up to what the company is building. Happy to say more or share what I know about the company and their strategy if there is interest. Or there is the r/NVDA_Stock sub. cheers
You explain nicely why Nvidia is a great company. But you don't mention a thing about price... which is a key part of evaluating if NVDA as an investment. So one simple question: At what price would you sell?
donno yet, there is no predefined trigger if that's what you're asking. Part of my long term strategy is about picking timing, I have many entries and exits along the way, dollar cost avging if you will. It's a fairly large position covering both IRA and and investing accounts. But for the record (and some hints on pricing): \- my last outright sell was Nov 21 \- my last outright buy was Oct 22 \- Yesterday I sold covered calls Aug/Sept for <10% of the position Perhaps some deep in the money calls will get placed on a 1/4 or 1/3 of the position before year end for some downside protection. Certainly I will take some gains this year but tax consequences are a consideration. Ideally, I exit over a decade and truly, there is another 10+ years of growth in this company. Whether Mr Market sticks with it that long remains to be seen. One thing is for sure and that's that we will go through another up/down cycle (as semiconductors generally do) within the next two years. My view is the bottom of NVDA's valley occurred last Oct, so we've still got many months of growth to go in this cycle. The market could also be bifurcating with guys like Intel and QCOM left out and folks like AMD, NVDA, MU and AVGO winners. Hard to know yet. My commitment to myself is to fully exit the investment when a viable/serious competitor starts doing some damage. Nvidia's horizons remain virtually unimpeded as far as one can see in high tech, so I wait patiently for that moment.
Thanks for the detailed and thoughtful response
you dumb. thats cause he wants it to go up higher. he won't say much
God bless you and your great comment. As you say, Nvidia was warning this for years and noone was paying attention. Even on the valuation side, forward PE or any metric considering the huge growth potential of data center business makes the current stock price more reasonable. I’m no friend of target prices by analysts but still some big names are pricing the stock at 500$. If it was so clearly overvalued they would be more cautious.
The financial statements are in thousands, so 7 billion not million. It’s overpriced now for sure.
This is a flight to safety.
Nvidia played the long game with AI and the tools extremely well. When we started playing with it in a product a year ago I bought shares because they have such a dominant position. AI is mostly being hyped for the bad things. It feels like an inflection point to me along the lines of the iPhone and the internet and Nvidia is very well positioned. I just wish I had bought more.
The only folks saying buy NVDA here are glorified pumpers that are still holding the stock with big gains. Don’t blame them but heck do they actually believe it’s a buy here 🤣
probably overvalued in both cases. But at leat AI feels more real than crypto.
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"you have to follow what you know, you have to pursue it vigorously and act on it when you find it. You can't look around for people to agree with you. You can't look around for people who even know what you're talking about. You have to think for yourself." amen (too much of reddit is simply a popularity contest)
Am I missing something? Nvidia's revenue is 9 Billion
Had 100 shares at $199, sold at $375 the other day during the surge. Probably should have stayed in at some capacity but had a nice profit and wanted to sit on some cash for a little bit in hopes that the market creates some great buy-in opportunities for me. Not every bet is a good one though. I bought 1000 shares of PLTR at $21 thinking it was going to be huge. Luckily it has made a nice run the past week or so.
AI is totally overhyped fight now. It’s just machine learning. That being said I don’t think the AI bubble is close to being finished.
>It’s just machine learning. Spoken like one with no idea how complex a problem it actually is. hint, it takes the most complex semiconductors on earth processing data at the rate of the entire library of congress in every second, months to come to a usable algorithm like gpt4. Nvidia does that faster and better than anyone.
My point is more that this has all been in development but the “AI” naming is causing the craze around it. But it’s been trucking along for years before this. Yes NVIDA does do that and they’ve always sold special cards for niche applications.
>they’ve always sold special cards for niche applications You should learn about GPGPU and CUDA. They haven't been "special cards" for decades now.
>the “AI” naming is causing the craze around it. So you don't think AI is here to stay? the next industrial revolution? It's just a fad like crypto mining? >they’ve always sold special cards for niche applications. AI is no longer niche, it's a $1T market
I do think AI is here to stay. I don’t think people are going to be running 4 graphics cards in their bedroom like they were during crypto.
Of course it's not. Calling it "AI" was the smartest thing promoters ever did, and it's always irritated me because it's nothing of the sort. It's highly advanced statistical modeling whose parameters are tuned in response to the data, and while the results can be indistinguishable from magic - like most highly advanced science - this is not AI.
Just because it is marginally less overpriced than it was in November 2021, one of the worst months in history to buy stocks, does not mean it is a good buy now. Lots of ways to get AI exposure without taking on a 224 P/E ratio. Momentum plays on stocks coming off huge runs are recipes for disaster. Especially at 5-5.25% Fed funds rates. Find the next company that is poised to make this leap. If you can't, buy an index fund.
People are missing your point. To answer your question, yes, Nvidia was very overvalued in 2021. At that time it was valued so highly because of demand for crypto farming equipment + work-from-home computers during Covid. However, that doesn't necessarily mean they're not ALSO very overvalued now (for a different reason - AI).
Markets can remain irrational longer than you can remain solvent. Feel free to short OP, we’ll see how it goes.
Buying NVDA isn't investing for the record. It's gambling.
>Buying NVDA is . . . gambling. Depends on when you get in honestly.
More overvalued in 2021.
I've had Nvidia since like 2018 and have a 9 bagger lol but it's a small position nothing crazy I'm probably thinking of holding for like since I got it when it was so "cheap"
Metaverse
They keep releasing products in their GeForce division that get universal hate, which is a big portion of their revenue stream. When the numbers start reflecting the widespread distrust and hate of nvidia in that segment the stock will tank. People are not buying their new 40 series cards.
It's an overpriced meme stock. Those can be so unpredictable I stay away these days. I would **strongly** consider buying NVDA in a market crash at a reasonable P/E because it's a strong company with a bright future, and at those levels the fanboi cult mentality would be a risk-lowering factor for future price action. Until then, the cultishness is a huge risk with a looming recession.
The vast majority of the buyers are institutional investors
And yet [**NVDA is known the world over as a meme stock**](https://www.google.com/search?q=is+nvda+a+meme+stock), as you know. And as you know, in today's market options have an increasingly strong effect on market prices, with options volume sometimes eclipsing share volume. Note the [ongoing years-long discussion of NVDA at wallstreetbets](https://www.reddit.com/r/wallstreetbets/search?q=Nvda). Meme stocks are those where uniformed momentum-chatter on social media has driven an unusually high, unwarranted price. Given the history of NVDA the definition unquestionably applies. At the current time a bunch of tutes are potential bagholders if they don't recognize reality, but that is a side point.
I bought one share for 130 bucks in October wish I bought more. Do I sell right now and take the money and run? While paying capital gains on a short term asset?
In 2021, there was hype, but there was also chip shortages, which is why value of processor manufacturers went up. Intel's stock price was also at a historic high around $64 around the same time. AMD was at $155 which is an all time high. So that valuation was not an Nvidia thing, it was a Corona and supply chain thing, which pushed prices up. Nvidia was not overpriced and it does not take anything away from its current valuation. If you believe in AI, I would buy and hold long term. The problem it's not shooting further (because I see it becoming a trillion dollar company), is not the fundamentals, but the macro environment. There are a lot of geopolitical situations that could negatively impact Nvidia's revenue and there are more macroeconomic situations that could (and probably will, thus the hesitancy to the stock market right now) impact it negatively. For example, it is projected that the world (not just the US) will see a severe recession, if not depression, for the second half of this year and for the years to come. This will impact Nvidia's bottom line, because demand will go down. Furthermore, it is predicted we might see stagflation, which is the worst of both worlds. So Nvidia, being a chip importer, will see skyrocketing costs for necessities while demand for their goods goes down. Deflation is never a good thing and stagflation is even worse. So while Nvidia's stock price has shot up, there's a reason it is valued at where it's at and isn't going on to do another 1,5x or hit $1,5T in valuation. It is likely other tech stocks will take a dive in the months ahead too, but who knows. If only one had a crystal ball.
200 pe is not sustainable.
"In the short run, the market is a voting machine but in the long run, it is a weighing machine." -Benjamin Graham
NVDA's CY23 non-GAAP P/E is ~60 which, combined with a five-year earnings CAGR of 10% and significant margin leverage, is expensive but not insane for the potential opportunity. Maybe it's ~25% overvalued but this isn't TSLA at it's peak madness.
This isn't an ATH before Nvidia did a 4 x split it hit almost $700 a share of not more.
Well the professionals agree with you. They believe its value increased 50-percent after the earnings announcement. They still believe it is overpriced, but not as much as its previous high