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Aswath Damodaran's Nvidia analsysis: Assuming 32% CAGR rate of over 5 years with 40% target operating margin at the end of period Nvidia is now 40% overvalued.

Aswath Damodaran's Nvidia analsysis: Assuming 32% CAGR rate of over 5 years with 40% target operating margin at the end of period Nvidia is now 40% overvalued. https://aswathdamodaran.blogspot.com/2024/02/the-seven-samurai-how-big-tech-rescued.html https://aswathdamodaran.blogspot.com/2024/02/the-seven-samur...

lootsauce 3y ago
Logical yet, how overvalued did Tesla get?
- Swizec 3y ago
  In a world where seed and A stage AI startups are getting $100mm rounds and half that money's going to NVIDIA ... eh it's probably not too overvalued. I think there's more oomph left in the bubble.
  - deleted 3y ago
    [deleted]
  - bombcar 3y ago
    When the valuation is something like "it looks like it's assuming they'll continue to sell $X billion a year" it can be reasonablish. When the valuation requires "they will continue to grow sales X% a year" is when it quickly becomes impossible, and for a much smaller X than you might realize.
  - __loam 3y ago
    Even if you do think AI is a bubble, Nvidia's capacity is completely booked for a few years or so if I'm not mistaken. And that's with huge margins.
- not2b 3y ago
  As the old saying goes, the market can stay irrational longer than you can stay liquid. So shorting a clearly overvalued stock can be a dangerous move.
  - AlbertCory 3y ago
    Oops. We posted that at the same time. Short Nvidia only if you hedge with some call options. Or other financial instrument that mitigates your losses.
- AlbertCory 3y ago
  the market can stay irrational longer than you can stay solvent.
airstrike 3y ago
> Last summer, when I valued Nvidia in this post, I found it over valued at a price of $450, and sold half my holdings, choosing to hold the other half. Now that the price has hit $680, I plan to repeat that process, and sell half of my remaining holdings. Well, it looks like he lost a lot of money
- msoad 3y ago
  He bought it before me at least, so he *made* money. Doesn't matter if didn't predicted the top. He saw a stock that he thought will increase in value, bought some and sold at a higher price. That's what it matters
- Ekaros 3y ago
  So if someone buys a stock and then that stocks goes bankrupt. By that logic they lost no money... Taking money off the table when it is enough for you is the way you guarantee that you make any money...
  - airstrike 3y ago
    yeah, but he could have waited a little bit to see signs of a slowdown instead of taking such a radical contrarian view and leaving ~80% upside on the table. better to risk it going down from $450 to $400 before selling than to miss out on the ride to $800
- smeeth 3y ago
  Nope. Failure to maximize returns is not losing money.
  - airstrike 3y ago
    There's a big difference between failing to maximize returns and missing out on an 80-90% upside (so far). Selling at $450 was a pretty bad call
- OtherShrezzing 3y ago
  I hope in both instances the author at least held out the extra couple of weeks until earnings day.
bloodyplonker22 3y ago
Aswath Damodaran looks at valuations with a very one-dimensional lens because he is not an innovator, engineer, or even a business person. Ever since Amazon was in its early days, he has said that Amazon was overvalued and he has always been wrong because Amazon has always found new verticals to build and create more value with.
- INGELRII 3y ago
  Damodaran makes detailed analysis with assumptions in the open. Put your numbers to the Exel sheet and calculate valuations using your own numbers. >Ever since Amazon was in its early days, he has said that Amazon was overvalued and he has always been wrong because Amazon has always found new verticals to build and create more value with. Amazon has been overvalued multiple times. Amazon stock had negative return 10 years between 1999 - 2009.
  - lotsofpulp 3y ago
    https://dqydj.com/stock-return-calculator/ https://dqydj.com/stock-return-calculator/ Jan 5, 1999 to Dec 28, 2009, AMZN had an 8.9% annual return. Jan 5, 1999 to Dec 28, 2008 was -0.52% annual return. Jan 5, 2000 to Dec 28, 2009 was 6.88% annual return. But why give a crap about returns during a specific 10 year period? Almost nobody is buying something today to liquidate all of it at a single point in time in the future.
  - woobar 3y ago
    > Amazon stock had negative return 10 years between 1999 - 2009. It did not. You will have to cherry pick very specific days in this time frame (top of the dot com bubble and bottom of the GFC) to get negative returns. But how about 1998-2008 or 2000-2010? Here is how $10K invested in AMZN performed in 10 years [1]: 1998 - 2008 $102,134 1999 - 2009 $25,124 2000 - 2010 $23,625 2001 - 2011 $111,229 [1] https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=28FqLdhmApVJzlaxLM4wFa https://www.portfoliovisualizer.com/backtest-portfolio?s=y&s...
- xetplan 3y ago
  This is seriously might be the worst post I have ever read online. To say it is clueless would be too nice.

lootsauce 3y ago

Logical yet, how overvalued did Tesla get?

Swizec 3y ago
In a world where seed and A stage AI startups are getting $100mm rounds and half that money's going to NVIDIA ... eh it's probably not too overvalued. I think there's more oomph left in the bubble.
- deleted 3y ago
  [deleted]
- bombcar 3y ago
  When the valuation is something like "it looks like it's assuming they'll continue to sell $X billion a year" it can be reasonablish. When the valuation requires "they will continue to grow sales X% a year" is when it quickly becomes impossible, and for a much smaller X than you might realize.
- __loam 3y ago
  Even if you do think AI is a bubble, Nvidia's capacity is completely booked for a few years or so if I'm not mistaken. And that's with huge margins.
not2b 3y ago
As the old saying goes, the market can stay irrational longer than you can stay liquid. So shorting a clearly overvalued stock can be a dangerous move.
- AlbertCory 3y ago
  Oops. We posted that at the same time. Short Nvidia only if you hedge with some call options. Or other financial instrument that mitigates your losses.
AlbertCory 3y ago
the market can stay irrational longer than you can stay solvent.

airstrike 3y ago

> Last summer, when I valued Nvidia in this post, I found it over valued at a price of $450, and sold half my holdings, choosing to hold the other half. Now that the price has hit $680, I plan to repeat that process, and sell half of my remaining holdings. Well, it looks like he lost a lot of money

msoad 3y ago
He bought it before me at least, so he *made* money. Doesn't matter if didn't predicted the top. He saw a stock that he thought will increase in value, bought some and sold at a higher price. That's what it matters
Ekaros 3y ago
So if someone buys a stock and then that stocks goes bankrupt. By that logic they lost no money... Taking money off the table when it is enough for you is the way you guarantee that you make any money...
- airstrike 3y ago
  yeah, but he could have waited a little bit to see signs of a slowdown instead of taking such a radical contrarian view and leaving ~80% upside on the table. better to risk it going down from $450 to $400 before selling than to miss out on the ride to $800
smeeth 3y ago
Nope. Failure to maximize returns is not losing money.
- airstrike 3y ago
  There's a big difference between failing to maximize returns and missing out on an 80-90% upside (so far). Selling at $450 was a pretty bad call
OtherShrezzing 3y ago
I hope in both instances the author at least held out the extra couple of weeks until earnings day.

bloodyplonker22 3y ago

Aswath Damodaran looks at valuations with a very one-dimensional lens because he is not an innovator, engineer, or even a business person. Ever since Amazon was in its early days, he has said that Amazon was overvalued and he has always been wrong because Amazon has always found new verticals to build and create more value with.

INGELRII 3y ago
Damodaran makes detailed analysis with assumptions in the open. Put your numbers to the Exel sheet and calculate valuations using your own numbers. >Ever since Amazon was in its early days, he has said that Amazon was overvalued and he has always been wrong because Amazon has always found new verticals to build and create more value with. Amazon has been overvalued multiple times. Amazon stock had negative return 10 years between 1999 - 2009.
- lotsofpulp 3y ago
  https://dqydj.com/stock-return-calculator/ https://dqydj.com/stock-return-calculator/ Jan 5, 1999 to Dec 28, 2009, AMZN had an 8.9% annual return. Jan 5, 1999 to Dec 28, 2008 was -0.52% annual return. Jan 5, 2000 to Dec 28, 2009 was 6.88% annual return. But why give a crap about returns during a specific 10 year period? Almost nobody is buying something today to liquidate all of it at a single point in time in the future.
- woobar 3y ago
  > Amazon stock had negative return 10 years between 1999 - 2009. It did not. You will have to cherry pick very specific days in this time frame (top of the dot com bubble and bottom of the GFC) to get negative returns. But how about 1998-2008 or 2000-2010? Here is how $10K invested in AMZN performed in 10 years [1]: 1998 - 2008 $102,134 1999 - 2009 $25,124 2000 - 2010 $23,625 2001 - 2011 $111,229 [1] https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=28FqLdhmApVJzlaxLM4wFa https://www.portfoliovisualizer.com/backtest-portfolio?s=y&s...
xetplan 3y ago
This is seriously might be the worst post I have ever read online. To say it is clueless would be too nice.