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Nvidia is now more valuable than Amazon and Google
- sebmellen 3y agoAnd with a P/E ratio of 95, versus 25 and 59 for Google and Amazon, respectively!
- jgalt212 3y agoagreed, it's very high, but with M2 growing again such outlandish valuations seem sustainable. https://fred.stlouisfed.org/series/WM2NS https://fred.stlouisfed.org/series/WM2NS
- brcmthrowaway 3y agoWhat is the implication of M2?
- pclmulqdq 3y agoIt's the amount of money in the economy, and its growth is one measure of inflation. GP may be commenting that the "good times" of super-high valuations are about to come back thanks to inflation. That isn't the financial datum that really matters, though - what matters for P/E ratios is the risk free rate (which establishes the discount rate for the time value of money), which is still very high.
- jgalt212 3y ago> what matters for P/E ratios is the risk free rate Where's the research showing the empirical relationship between P/E ratios and the risk free rate? Also, we are living in a a time of unprecedented monetary aggregate growth (for the US at least). I posit his why the yield curve has been inverted for so long and yet there is no recession in sight. The predictive power of asset prices seemingly no longer exists.
- pclmulqdq 3y agoThere's a ton of it: here's one person's regression. You can find the same in academic papers (although economics papers don't exactly deserve that label). https://www.currentmarketvaluation.com/posts/sp500pe-vs-interest-rates.php https://www.currentmarketvaluation.com/posts/sp500pe-vs-inte... It's also just common sense if you understand company valuation.
- jgalt212 3y agoIt's not 1:1, and only fits over long periods of time. Furthermore, none of those studies encompass the great money printing period of COVID, and post COVID. And most of those studies model the 10Y rate vs stocks. The 10Y rate is not the risk free rate. In 2000 the SP500 PE was 40, and fed funds was 6%. it's low 20s now, and fed funds is 5.25% studies over more recent times have shown this correlation break down. It's probably the reason Ray Dalio retired.
- FredPret 3y agoIf a 10 yr T bill isn’t risk free, what is? A shorter term US Gov bond? I mean realistically the US will just print the money it needs to pay that interest. It’s not a consequence-free decision for them, but much better than defaulting.
- jgalt212 3y ago10Y has duration risk. 1 week T bill have no credit risk or duration risk, hence this is the risk free rate.
- pclmulqdq 3y agoThat's not true at all. The "risk free rate" is a theoretical concept that represents the rate of return that you can get on capital without taking any risk. No bond alone is the risk free rate. Neither is the reverse repo rate or the rate of a money market. All of these are proxies.
- FredPret 3y agoBy risk-free rate, do you mean the yield on US gov bonds?
- pclmulqdq 3y ago"Risk-free rate" is a theoretical concept that represents the rate of return you get without taking any risk. T bill rates, reverse repo rates, and money market savings rates are a practical proxy for it, but it's not any one of these.
- throw0101b 3y ago> agreed, it's very high, but with M2 growing again such outlandish valuations seem sustainable. You know whose M2 has also been rising for decades? Japan's. And yet for most of that time the Nikkei has been flat (even negative): * https://fred.stlouisfed.org/graph/?g=17sx4 https://fred.stlouisfed.org/graph/?g=17sx4 China's M2 has also been going up steadily: * https://fred.stlouisfed.org/series/MYAGM2CNM189N https://fred.stlouisfed.org/series/MYAGM2CNM189N What has the Shanghai Stock Exchange (index) been doing lately? The UK's M2 has been going up continuously: * https://fred.stlouisfed.org/series/MSM2UKQ https://fred.stlouisfed.org/series/MSM2UKQ How's the FTSE 100? > https://fred.stlouisfed.org/series/WM2NS https://fred.stlouisfed.org/series/WM2NS Now let's overlay the S&P 500: * https://fred.stlouisfed.org/graph/?g=1gvKR https://fred.stlouisfed.org/graph/?g=1gvKR A giant spike in M2 in 2020, and yet at the same time the S&P 500 dropped. M2 has been on a downward trend since April 2022, and the S&P 500 bottomed in ~October 2022, but has been rising since then—while at the same time M2 has been dropping.
- jgalt212 3y agoyou're missing the investor preferences bit. You could print $7T or whatever crazy amount Sam Altman wants, and if everyone puts that money under their mattress instead of stocks or spending, there will be no observable effect on the real or financial economy. In short, the transmission mechanism of money creation to real effects is laggy and and somewhat unpredictable. e.g. why NVDA and not gold?
- throw0101b 3y ago> you're missing the investor preferences bit. You could print $7T or whatever crazy amount Sam Altman wants, and if everyone puts that money under their mattress instead of stocks or spending, there will be no observable effect on the real or financial economy. If you go through my posting history you'll see I've more than once mentioned that velocity is much more important than simple quantity. A good analogy from Cullen Roche that I often use: > But also – why do so many people insist that inflation is an increase in the money supply? This makes zero sense. Here’s why – our economy is mostly a credit based economy. So, if I take out a loan for $100,000 then the money supply has technically increased by $100,000. But what if I don’t actually tap that loan? What if I borrow the money because, for instance, house prices just went up 25% and I want to have some cash around for emergencies? This doesn’t tell us anything about prices, living standards or really anything. But this is what so much of the money supply represents – money that has been issued and is just sitting around unused. Why is this useful? It’s like calculating your weight changes by counting how much food you have in your refrigerator. No. That’s potential calories consumed and potential weight gain. The amount of food in your fridge tells you little about your future weight changes just like the amount of money in the economy tells us little about the actual price changes in the economy. * https://www.pragcap.com/three-things-i-think-i-think-i-see-dead-mutual-funds/ https://www.pragcap.com/three-things-i-think-i-think-i-see-d...
- tomoyoirl 3y agoTrailing or forward earnings?
- what_ever 3y agoNvidia haven't released their latest earnings yet.
- MuffinFlavored 3y ago> NVIDIA Corporation Common Stock is expected* to report earnings on 02/21/2024 after market close.
- foolswisdom 3y agoThat's a P/E ratio based on the past four reported quarters, over which time earnings at Nvidia increased so much that the earnings for the last reported quarter was over 4 times that of four quarters ago. Assuming that future earnings for the next year are consistent with the last reported quarter, they're valued at 45x earnings. But of course such a valuation still only reddit makes sense assuming growth (and the projected earnings for the next quarterly report is indeed expected to be 12% higher, giving a 40x p/e valuation). Consider that Amazon's P/E (using the last reported quarter as the baseline for the future - Amazon has had consistently increasing earnings over the last year, let's assume it doesn't decrease from here) is 43x.
- refurb 3y agoThe thing with P/E ratios is that they are backwards looking while stock prices represent future estimations. Bankers put together detailed models to estimate the earnings per share in the future. Yes they are estimates, but informed as best as possible. The model spits out an estimated $/share. If the current price is lower, they think the future value of the share is actually higher than the current price, so they buy or convince others to buy.
- beebmam 3y agoIt seems deeply overvalued to me, as it's pretty likely that NVIDIA's competitors will have parallel computation hardware that competes well enough. I'm personally not a fan of NVIDIA's drivers or the reliability of their hardware.
- teaearlgraycold 3y agoGoogle is actually working on 1st party datacenter chips. Although I doubt those would be user-facing GPUs.
- Laremere 3y agoGoogle Pixels have a "neural core", and they have edge TPUs in addition to their data center TPUs. However Google hardware seems much less poised to take immediate advantage of the AI gold rush.
- jeffbee 3y agoThe last decade of Google datacenter engineering can be viewed as an elaborate plan to avoid paying either Intel or Nvidia any more money than was really necessary.
- fnordpiglet 3y agoAnd, yet.
- brcmthrowaway 3y agoLooks like Mom and Pop have caught on to NVIDIA stock..
- odysseus 3y agoCongresspeople too ...
- jedberg 3y agoConsidering how much money Amazon and Google (and Microsoft and Oracle and....) are giving NVIDIA, this makes sense. Amazon and Microsoft in particular seem to be staking a pretty big part of their business on things that need GPUs. And even though Amazon makes GPUs, they are still buying NVIDIAs by the truckload.
- grogenaut 3y agoAmazon buys whatever they can sell to customers. You want windows? We got that. Oracle, got it. Amd, got it, Intel, got that. Mac, got that. Arm? Got that. Nvidia, got it. Their own arms, got em. Their own training and inference? Got it. They buy things by the cargo ship load.
- CSSer 3y agoAlright, alright! We got it already.
- ralph84 3y agoNvidia is still run by a founder, while the other two aren’t. I’d always bet on a founder over a McKinsey consultant or a Harvard MBA.
- hasmanean 3y agoWell a founder can make decades long bets. Any other company would have had an annual review of progress or a review any time mid-level leadership changed hands. Assuming a 50/50 chance of survival each time, the odds of the project lasting 10 years would be 1 in 1024.
- JoshTko 3y agoThis is a silly take the two largest companies are headed by non founder MBA grads. Each who grew their respective companies ~10x.
- Retric 3y agoWhich is underperforming compared to Nvidia. It’s not that founders are more skilled, it’s that successful ones who stick around have different priorities. The long term performance of their existing stock is worth more than hitting targets. Not a guarantee of success, but something to consider.
- magicalist 3y ago> It’s not that founders are more skilled, it’s that successful ones who stick around have different priorities. The long term performance of their existing stock is worth more than hitting targets. We're still talking about the current first derivative of their stock price. Let's not go overboard reading those tea leaves.
- Retric 3y agoThe market is pricing in those tea leaves. Look at the P/E ratios of Nvidia (95) and Facebook (31) vs Apple (29) and Google (25).
- berserk1010 3y ago[dead]
- refulgentis 3y agoI got a vision x LLM model running locally today, in addition to the voice recognition and voice activity detector and embeddings already done. It's astonishingly good and can run on phones released last 2 years. Told my friend it's finally time to buy NVDA puts, they'll pay (someday)
- behnamoh 3y agoSomehow I wish it weren't true because I hate monopolies in any markets. Nvidia has been enjoying their absurd premium on consumer and production GPUs and intentionally removed the NVLink capability in the GeForce 4090 series (3090 had them) to avoid cannibalizing their A100 and H100 business. With NVLink, people could chain multiple GPUs and increase the overall VRAM without much reduction in bandwidth. But without it, if you chain two 4090s, your effective bandwidth gets shrunk, so higher VRAM but much slower for LLM inference. I'm with Linus Torvalds on this—f*** NVidia.
- FredPret 3y agoI understand the sentiment. But the only reason you're mad at Nvidia is because they made something desirable (a GPU that does NN training) but didn't do it in the way you prefer (NVLink, Linux compatibility etc). It's not their fault AMD and others have been asleep at the wheel and handed them the whole market for free. Any company with a monopoly on the hot new thing would try to capitalize on it. When the other GPU makers eventually catch a wakeup, the situation will finally improve.
- llm_trw 3y agoThere is _one_ other GPU maker.
- philistine 3y agoIntel, AMD, Apple?
- oblio 3y agoApple's not super relevant for a mass market OEM type of discussion.
- deleted 3y ago[deleted]
- __float 3y ago
- 2OEH8eoCRo0 3y agoInsanity. How much of their success/future hinges on TSMC's continued success/future? Kudos to them but the risk makes me uneasy.
- modeless 3y agoNot that much I'd say. They could switch to Samsung or Intel. As long as they can use the same fabs their competitors use they'll be fine.
- coffeebeqn 3y agoThe early 30 series cards during COVID were made in the Samsung fab. Back in the days of no GPUs available anywhere for months
- foreverobama 3y ago[dead]
- Aeolun 3y agoHmm, AMD is worth 55B, and somehow almost keeping up. I'd consider that a success. I do think it's a bit sad they have basically no representation in the AI market though. Whenever it's about AI it's Nvidia all the way.
- FredPret 3y agoNvidia has seen a fantastic, geometric increase in profit [1]. This is exactly the kind of thing growth investors hope for. However, their PE ratio is currently 93. This is the kind of PE growth investors buy at, hoping for geometric earnings growth to kick in, not the situation after such growth has taken place. Which means they'll have to keep 2x-ing that profit for a long time to come. It could be doable but I don't see it. Even if they completely absorb Intel and AMD's market share, it doesn't make sense. [1] https://valustox.com/NVDA https://valustox.com/NVDA
- what_ever 3y agoWouldn't 2x-ing their profit over the next year get the PE down to half? Why do they need to 2x their profit for a long time to come?
- FredPret 3y agoHalf is still crazy; 1/4 is what I would consider a little high (I'm a value investor). Especially for a tech company, I don't understand the rationale behind high valuations. A high valuation makes sense to me if the asset will deliver a reliable cashflow over time, or if there's a high chance it'll start making much more cash in years to come. More reliable / more growth = higher premium. But tech companies come and go. Admittedly, Nvidia is more of an infrastructure company, but nobody can guarantee that they will be relevant 20 years from now, so even a PE of 20 seems risky to me.
- 3y ago
- nostrebored 3y agoWhen you look at the moat for these companies, is it really justified? I just think about ARM and Intel/AMD. I find it hard to believe that existing GPUs with their memory bandwidth considerations are optimal architecture and that in 20y we will have the same compute model But the last time I did any work with cuda was a decade ago, so very rough ideas here
- tomoyoirl 3y agoI’m not sure of all the details of the architecture, but my understanding is that there’s all sorts of “GPU Direct Storage” and massive on-chip CPU/GPU shared memory spaces on the new GH100s, plus all the Mellanox stuff for interconnects. At least in the datacenter space, anyway.
- nostrebored 3y agoThanks! The last time I cared about this I was doing SGD on GPU clusters and memory bandwidth was the limiting factor. Almost the entirety of the work was focused on chunking the problem so that a maximal number of subproblems was on the GPU. If storage really is becoming integrated at similar speed (EG not on an order of magnitude difference like L2 vs RAM) then I think I'm wrong
- jillesvangurp 3y agoExactly. Nvidia's current dominance is based on the notion that leading AI related libraries and tools depend on Cuda and run well on that. But that's not something that will last. Many parties are working on making these libraries work against alternative architectures and untangling them from Nvidia specifics. Apple's laptops for example are pretty popular with people into LLMs. Why? They are good laptops with decent enough hardware and lots of people have them. The key point with that is that there's no nvidia hardware on Apple's platform and that a lot of work seems to be going into making sure Apple silicon is supported well in all relevant libraries and tools. And they are of course not the only ones. A lot of the bigger AI companies are using their own chips and platforms. Tesla, Google, Microsoft, Amazon, etc. And then there are Intel and AMD that are equally eager to grab more of the AI market. Add to that the emerging open source ecosystem around LLMs and you have a nice recipe for vendor neutral libraries used by world+dog and users simply cherry picking the market for the best hardware that can run those libraries. Nvidia has enjoyed a nice software moat for the last years but it won't last. Everyone is trying to engineer around them currently.
- jumploops 3y agoThe crypto bubble (circa 2017/2018 [0]) looks like an ant hill compared to the recent Gen AI-based gains! $68/share in August 2018 would be $722/share today. [0] https://www.fool.com/investing/2018/08/22/the-cryptocurrency-bubble-is-over-for-nvidia.aspx https://www.fool.com/investing/2018/08/22/the-cryptocurrency...
- mmaunder 3y agoIt’s the guy collecting currency shells on the beach compared to a new Iron Age and the guy who has all the iron.
- dheera 3y agowell $1000 of crypto in early-2017 would be worth $50000 now if you didn't panic sell in 2018 so ...
- HWR_14 3y agoThey were talking about the effect of crypto mining on NVidias stock price.
- mizzack 3y agoThere was also a 4:1 split in there. So, $68 -> $2888.
- resters 3y agoIt seems like a good time to buy put options!
- __loam 3y agoThe market can stay irrational longer than you can stay solvent.
- xnx 3y agoNvidia is a great company with a great and highly desired product. Unfortunately, NVDA the stock seems to have entered "meme stock" territory.
- dheera 3y agoAt least their GPUs are free. Buy NVDA -> sell NVDA -> buy GPU I did the same with TSLA, got a free car
- lxgr 3y agoIt's at a P/E of 95, which is high but not bubble levels. Doubling their earnings twice seems achievable with the AI hype and everything. Meanwhile, Arm is at a P/E of 1650. That does seem completely unrealistic to me, also considering that they aren't even at the forefront of high-performance ARM designs themselves (that would be Apple, and they have a perpetual architectural license, I believe). The second they squeeze on the licensing fees too hard, maybe due to pressure from shareholders to deliver on that valuation, they'll catalyze the creation of a RISC-V based opponent.
- deleted 3y ago[deleted]
- jauntywundrkind 3y agoNvidia's nvlink is the most im actually most worried about. Their chips are amazing and their software moat is impressive, but I see clear response & hungered competition from many on these fronts. There's still a sizable lead, but I believe in the competition here. Nvidia buying Mellanox though means the entire rest of the planet is stuck on PCIe PHY (which includes CXL) or Ethernet. There's no other major interconnect presence left: Nvidia owns both the interesting rack & further scale nvlink & infiniband alrernatives. I don't think there's an insurmountable challenge here, but no one seems gearing up to compete, and there's no forum for that cooperation to compete together with that exists. Nvlink is fast, and even more important, it's very energy efficient per bit. As we go from many core to many chip, this is going to be a more and more distinguishing capability.
- fortran77 3y agoIt's nice to see a company that actually _makes something_ be worth more than companies who just act as middlemen to extract a few dollars from transactions.
- ein0p 3y agoAs much as I’d like to say it’s overpriced, its only potential competitor, AMD, is even more overpriced with an eye watering P/E of 324 as of right now, three times that of NVIDIA. Such numbers are stark raving insanity for hardware companies. For comparison, Apple, fully in possession of the world’s most valuable brand, and a gigantic money printer powered by a loyal, billion+ user strong customer base, and a deep pipeline of products, has P/E one third that of NVIDIA, and 1/10th of AMD. Make this make sense.
- yCombLinks 3y agoThe forward PE is 31 for AMD, and Nvidia is at 33. Apple's forward PE is 26. The market prices are based on future expectations. Nvidia is expected to increase earnings by something like 3x, and AMD by 10X
- nerdponx 3y agoApparently, AMD can remain irrational longer than retail investors can remain solvent.
- yCombLinks 3y agoRight, I'm not saying they will hit those projections, that's what they are though
- gpt5 3y agoTo be fair, it's much easier to increase your profits when your profit margins are 5% (AMD) vs 50% (Nvidia)
- givemeethekeys 3y agoHow does one find information on forward P/E? Are there historical forward P/E charts to get some context on whether the current prices are expensive / in-line with how tech is valued over the past ten.. twenty years? Thanks!
- 3y ago
- dagmx 3y agoAt the time of posting this, NVIDIA has dropped below both companies. I expect them to bounce back, but the headline as shared was not true at the time the article was submitted
- __loam 3y agoTotally not a bubble guys.
- rvz 3y agoNot a single mention of the massive geo-political risk that Nvidia is in and the wider semiconductor industry. This is not FUD, as even Jensen knows it. [0] Apple is doing a smart move in de-risking that possibility so far [1]. But Nvidia has only just become more dependent on TSMC. The stock price looks like another great time to hit that sell button as everyone from your uber drivers and plumbers are chatting about Nvidia's stock going from all time high valuation, stock price, revenue and no competition (yet). When a single company is carrying the stock market, it just takes one miss and the market gets upset. [0] https://www.ft.com/content/ffbb39a8-2eb5-4239-a70e-2e73b9d15f3e https://www.ft.com/content/ffbb39a8-2eb5-4239-a70e-2e73b9d15... or https://archive.is/MAZYk https://archive.is/MAZYk [1] https://www.bloomberg.com/news/articles/2023-04-05/inside-apple-s-plan-to-move-iphone-production-from-china-to-india https://www.bloomberg.com/news/articles/2023-04-05/inside-ap...
- vramana 3y agoFor now there doesn’t seem to be anything on the horizon that threatens Nvidia dominance that might turn it into another Cisco.
- Mistletoe 3y agoNothing more than father time. https://money.cnn.com/magazines/fortune/fortune500_archive/full/2000/ https://money.cnn.com/magazines/fortune/fortune500_archive/f...
- ptelomere 3y agoWhen there's a gold rush, sell the best shovels you can make. Pretty much the business model of Steam, Amazon, nVidia, Nintendo, all to some degree, we can go on and on.
- gmerc 3y agoMakes sense. take out AI and the stick narrative of most tech companies and their valuation would halve
- seydor 3y agoFinally i can safely invest
- zmmmmm 3y agoOur organization tried to buy an A100 last year. We were informed 12 months wait. nVidia can literally just print money at this point for the next 5 years I think.
- smsm42 3y agoCould somebody explain to me what is the moat that prevents somebody else from taking on Nvidia? OK, they make GPUs. Why somebody else can't make GPUs? AMD took on Intel, Google took on Microsoft and Apple - is GPU market somehow harder to enter? I mean, we're talking piles of money from the looks of it - Amazon and Google do a ton of stuff, and NVidia only does (roughly speaking) one thing - and that thing is not even directly consumed by the customers, so "it's hard to migrate" shouldn't be a huge deal since it's not the customers that would be doing the migration. So what are the barriers that make Nvidia unique?
- alecco 3y agoGPUs are very complex. Nvidia pioneers in everything related to GPUs. A rich software stack, the most sophisticated Tensor Cores, and bleeding edge features like 8 bit floating point (FP8) support. And they are working with FP4 next. This matters because by halving the data size it almost doubles the flops (see Hopper specs [1]). The compute is so powerful it creates bottlenecks in data loading. So they have SXM, Nvlink, and since Hopper smart data async load to Tensor Cores (TMA). It's so advanced the ML software hasn't caught up yet. And it's not trivial to tile and schedule properly at these levels. (See FlashAttention [2]) I wouldn't be surprised if they stay on Hopper for a while and just crank up the bandwidth and bundle more GPUs together. They already released H100 NVL which is basically 2 H100s. And the H200 with faster High Bandwidth Memory (v3). AMD and Intel are way behind and have nothing even remotely close in planning. [1] https://resources.nvidia.com/en-us-tensor-core/nvidia-tensor-core-gpu-datasheet https://resources.nvidia.com/en-us-tensor-core/nvidia-tensor... [2] https://crfm.stanford.edu/2023/07/17/flash2.html https://crfm.stanford.edu/2023/07/17/flash2.html
- Moldoteck 3y agonvidia is unique because of cuda and all ml software written/optimized for it. AMD can add cuda support too (and they started working in this direction) but they'll not be able to out-compete nvidia, with this strategy the'll stay at 2'nd place (by buying amd cards for inference you are by default less competitive as business doing ML compared to those that can buy nvidia) and will just strengthen nvidia's cuda moat. Imo it's less about money and more about a ton software that was optimized for nvidia cards and software that was built on top of that optimized software, it can't be easily ported to run as efficient on AMD, it's tons of code and it's unlikely devs would just port it + port all the new stuff that is researched at exponential scale.
- xyst 3y agoWith the recent story of openai pitching VCs for a collective $5-7 trillion dollars and a GPU manufacturer becoming more “valuable” than diverse companies such as Amazon or Google. I am thinking this market is due for a massive correction. It’s not sustainable and built on the “promise” or con it will continue to skyrocket YoY. Just like the cryptocurrency/digital currency craze. This one (artificial intelligence) will also come crashing down. I give it maybe 1-2 years at this rate. We will look back and these types of stories will be the red flags people will point to when the market is about to sink.
- lm28469 3y agoIt's literally the same story over and over again, buy the hype, buy the futur hypothetical profits, disregard everything else including logic. Pure greed Enron called it HFV, hypothetical future value
- testless 3y agoLofty valuation with a PE ratio of over 90 - even considering the growth and margins. Also almost no revenue growth in 2022/23 according to quickfs.net. Too expensive for my taste.
- jsnell 3y agoYou're being misled by the site. Those aren't really their 2023 results, but their FY2023 results. And Nvidia's fiscal years are just nuts, basically FY2023 is 2022. Their 2023 results will be reported as FY2024, and aren't out yet. But just the first three quarters showed 50% more revenue than the entire FY2023.
- testless 3y agoYou are right, I was wrong. I have compared financial years, not actual years. There seems to be strong improvements with respect to revenue (66% TTM increase) and earnings per share (334% increase TTM).
- ksec 3y ago1. Microsoft: $3.115 trillion 2. Apple: $2.904 trillion 3. Saudi Aramco: $2.034 trillion 4. NVIDIA: $1.831 trillion 5. Alphabet: $1.820 trillion 6. Amazon: $1.803 trillion 7. Meta: $1.217 trillion