The fundamental model of company valuation is that the company's equity is worth the accumulation of the company's future cash flows, typically discounted by so

The fundamental model of company valuation is that the company's equity is worth the accumulation of the company's future cash flows, typically discounted by some rate so that predicted cash flows 5 years from now are worth some % less than 100%, with the intent of pricing in uncertainty. Nvidia has had a watershed moment of revenue growth, because they're the only significant player in the space of top-of-the-line GPUs for training LLMs. Their current valuation bakes in the assumption that not only is this unprecedented level of pricing power durable, but that top line revenue will also grow significantly over the next few years. Reminder that Nvidia is selling chips, mostly to datacenters, whose purchasing habits are primarily driven by "customer" demand (where customers are, in this case, tech companies wanting to train neural nets). So a bet that they go up from here is a bet that datacenters will want at least as many chips in the next N continuous quarters, and will be willing to pay the current premium that Nvidia is charging, today. The corollary is you're betting that "customer demand" for ever-improving GPUs is climbing an incredibly upwards, secular (read: permanent, non-cyclical) trajectory, such that it outpaces the assumptions of these already-lofty expectations. I think betray my own opinion, but the price is what it is. :)