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The biggest issue with Nvidia is their revenue is not recurring but the market is treating their stock as it were, which is correlated with all semi stocks, wit

The biggest issue with Nvidia is their revenue is not recurring but the market is treating their stock as it were, which is correlated with all semi stocks, with a one-time massive CAPEX investment lasting 1-2 years. Simple as this - as to why its just not possible for this to continue.

cyanydeez 1y ago
TSLA is the same. Tge market is basically a new rich persons bank, abstracted by loans and lines of credit. Obviously its a bubble but thats meaningless for anyone but the richest to manage. The rest of us are just ants.
xadhominemx 1y ago
NVDA stock does not trade at a huge multiple. Only 25x EPS despite very rapid top line growth and a dominant position at the eve of possibly the most important technology transition in the history of humankind. The market is (and has been) pricing in a slowdown.
- digitcatphd 1y ago
  What do you think is going to happen to their earnings when CAPEX slows?
  - xadhominemx 1y ago
    Their earnings will certainly decline or at least decelerate if capex slows. I’m just saying, if the market wasn’t pricing in a slowdown, NVDA would be trading at 40-60x next year EPS, not 25x.
    - deleted 1y ago
      [deleted]
- SiempreViernes 1y ago
  Since you aren't talking about the green transition, whatever technology transition you have in mind is obviously second most important at best.
  - xadhominemx 1y ago
    If we get ASI it will figure out how to do the green transition for us!
    - popol12 1y ago
      This is peak techno-solutionism
      - xadhominemx 1y ago
        If we are not headed to ASI, the spending will slow down and the problem will solve itself.
- Printerisreal 1y ago
  most important technology transition in the history of humankind but Nvidia itself is not leading the software part? Are they selling shovels or why would they give that part of being the head develop the AGI and GOD?
  - xadhominemx 1y ago
    They just committed to invest $100b (!) in OpenAI and said $100b is only the start.
  - baobun 1y ago
    > most important technology transition in the history of humankind Get real. Farming? Plow? Steam engine? Combustion engine? Electricity? Air conditioning? Computers? Internet?
    - xnx 1y ago
      Creating a true digital brain would be humankind's greatest (last?) invention.
      - justsid 1y ago
        By what metric? In my opinion actually solving all of the problems we currently have and man we have a lot of them past the obvious ones like climate change, that would be our greatest achievement.
        xnx 1y ago
        The optimistic thinking is that with thousands/millions of tireless 24/7 brains at work on these problems we could address more problems in biology, chemistry, physics, materials science, etc. faster. It's a bold, but not unreasonable belief.
        justsid 1y ago
        But that’s not something actually actionable. This isn’t a plan, it’s pure hope that maybe potentially if we just put enough money and energy into this, it will just magically solve our problems. Call me a luddite but that’s a crazy amount of copium.
- swexbe 1y ago
  What are you talking about? It's trading at 55x EPS and 41x forward EPS.
  - xadhominemx 1y ago
    Consensus EPS for FY27 (~CY26) is $6.40. Buy side is higher!
    - deleted 1y ago
      [deleted]
    - foobarqux 1y ago
      That's 30x for earnings that will be known Jan 2027 (1 year and 3 months away). It's 40x earnings for Jan 2026 (3 months away). For reference Enron was 40x earnings for current year forward estimates early in the year of the crash.
- JumpinJack_Cash 1y ago
  > > the eve of possibly the most important technology transition in the history of humankind. Funnily enough when you spend some months thinking into this intensively the result is that a monetary investment into the company that will bring about the singularity / AGI is the most irrational thing one can do. If the enterprise is successful and the singularity/AGI is benign you won't need money anymore, if the experiment fail the possibility of things going rogue is very high, or even the panic from a possible series of rogue events. So for the first time the rational thing would be to either spend those money to learn poker/chess/videogames or whatever game we will play with each other to feel cool while the AI takes care of everything else, or maybe outright spend money on coke and strippers given the chance of doomsday.
  - xadhominemx 1y ago
    They are doing it for the love of the game, IMO
JCM9 1y ago
This. It’s basic economics. The second there’s a blip the market will be flooded with cheap used GPUs and there will be zero reason to buy new ones. At that point it will be impossible for NVidia to sustain their revenue numbers.
Workaccount2 1y ago
I'm pretty sure Nvidia sells out all their cards instantly once they are announced. Their margin is ridiculous and they are still unable to meet demand.
bwfan123 1y ago
Same could be said of the covid-darlings - zoom, pelaton etc. They got bid up assuming the present to continue into the future. That is the nature of the markets. Same story with fake meat companies. Across time you will find this pattern - 3d printing etc, all ushering some new faddish technology. Also, explains the investments into openai as a hedge against capex slowdown, so there is a captive customer.

cyanydeez 1y ago

TSLA is the same. Tge market is basically a new rich persons bank, abstracted by loans and lines of credit. Obviously its a bubble but thats meaningless for anyone but the richest to manage. The rest of us are just ants.

xadhominemx 1y ago

NVDA stock does not trade at a huge multiple. Only 25x EPS despite very rapid top line growth and a dominant position at the eve of possibly the most important technology transition in the history of humankind. The market is (and has been) pricing in a slowdown.

digitcatphd 1y ago
What do you think is going to happen to their earnings when CAPEX slows?
- xadhominemx 1y ago
  Their earnings will certainly decline or at least decelerate if capex slows. I’m just saying, if the market wasn’t pricing in a slowdown, NVDA would be trading at 40-60x next year EPS, not 25x.
  - deleted 1y ago
    [deleted]
SiempreViernes 1y ago
Since you aren't talking about the green transition, whatever technology transition you have in mind is obviously second most important at best.
- xadhominemx 1y ago
  If we get ASI it will figure out how to do the green transition for us!
  - popol12 1y ago
    This is peak techno-solutionism
    - xadhominemx 1y ago
      If we are not headed to ASI, the spending will slow down and the problem will solve itself.
Printerisreal 1y ago
most important technology transition in the history of humankind but Nvidia itself is not leading the software part? Are they selling shovels or why would they give that part of being the head develop the AGI and GOD?
- xadhominemx 1y ago
  They just committed to invest $100b (!) in OpenAI and said $100b is only the start.
- baobun 1y ago
  > most important technology transition in the history of humankind Get real. Farming? Plow? Steam engine? Combustion engine? Electricity? Air conditioning? Computers? Internet?
  - xnx 1y ago
    Creating a true digital brain would be humankind's greatest (last?) invention.
    - justsid 1y ago
      By what metric? In my opinion actually solving all of the problems we currently have and man we have a lot of them past the obvious ones like climate change, that would be our greatest achievement.
      - xnx 1y ago
        The optimistic thinking is that with thousands/millions of tireless 24/7 brains at work on these problems we could address more problems in biology, chemistry, physics, materials science, etc. faster. It's a bold, but not unreasonable belief.
        justsid 1y ago
        But that’s not something actually actionable. This isn’t a plan, it’s pure hope that maybe potentially if we just put enough money and energy into this, it will just magically solve our problems. Call me a luddite but that’s a crazy amount of copium.
swexbe 1y ago
What are you talking about? It's trading at 55x EPS and 41x forward EPS.
- xadhominemx 1y ago
  Consensus EPS for FY27 (~CY26) is $6.40. Buy side is higher!
  - deleted 1y ago
    [deleted]
  - foobarqux 1y ago
    That's 30x for earnings that will be known Jan 2027 (1 year and 3 months away). It's 40x earnings for Jan 2026 (3 months away). For reference Enron was 40x earnings for current year forward estimates early in the year of the crash.
JumpinJack_Cash 1y ago
> > the eve of possibly the most important technology transition in the history of humankind. Funnily enough when you spend some months thinking into this intensively the result is that a monetary investment into the company that will bring about the singularity / AGI is the most irrational thing one can do. If the enterprise is successful and the singularity/AGI is benign you won't need money anymore, if the experiment fail the possibility of things going rogue is very high, or even the panic from a possible series of rogue events. So for the first time the rational thing would be to either spend those money to learn poker/chess/videogames or whatever game we will play with each other to feel cool while the AI takes care of everything else, or maybe outright spend money on coke and strippers given the chance of doomsday.
- xadhominemx 1y ago
  They are doing it for the love of the game, IMO

JCM9 1y ago

This. It’s basic economics. The second there’s a blip the market will be flooded with cheap used GPUs and there will be zero reason to buy new ones. At that point it will be impossible for NVidia to sustain their revenue numbers.

Workaccount2 1y ago

I'm pretty sure Nvidia sells out all their cards instantly once they are announced. Their margin is ridiculous and they are still unable to meet demand.

bwfan123 1y ago

Same could be said of the covid-darlings - zoom, pelaton etc. They got bid up assuming the present to continue into the future. That is the nature of the markets. Same story with fake meat companies. Across time you will find this pattern - 3d printing etc, all ushering some new faddish technology. Also, explains the investments into openai as a hedge against capex slowdown, so there is a captive customer.