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NVIDIA's forward P/E ratio is approximately 29.94, indicating the price investors are willing to pay for each dollar of estimated future earnings. This ratio is

NVIDIA's forward P/E ratio is approximately 29.94, indicating the price investors are willing to pay for each dollar of estimated future earnings. This ratio is lower than its trailing P/E of around ~53. How are they overvalued? They're making more money than ever in a rapidly growing new industry that is completely changing the landscape of the entire world.

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kgwgk 1y ago
“At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes which is very hard. And that assumes you pay no taxes on your dividends which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don’t need any transparency. You don’t need any footnotes. What were you thinking?” Written some time ago by the CFO of a company that was making more money than ever in a rapidly growing new industry that was completely changing the landscape of the entire world. (Not investment advice - it could be different this time.) > How are *they* overvalued? By the way, you forgot to mention that TESLA's forward P/E ratio is approximately 203.39, indicating the price investors are willing to pay for each dollar of estimated future earnings. This ratio is lower than its trailing P/E of around ~259.
- burnerRhodov2 1y ago
  You are conflating revenues and earnings. Analysts forecast that NVIDIA’s earnings (and EPS) will grow in the ballpark of ~21.9% annually over the coming years.
  - kgwgk 1y ago
    > You are conflating revenues and earnings. Enlighten me, what’s Nvidia’s price to sales ratio?
    - burnerRhodov2 1y ago
      Again, since revenue is the denominator in sales ratio, you are conflating what the OP said... The difference here and between the .com bubble is these companies have high earnings. They are literally walking cash cows and are printing money... AKA the earnings, with revenue not being important here because that's what CAUSED the .com crash. (High revenues, but absolutely burning money). NVIDIA is in the business of selling shovels to the gold miners in this scenario, not the gold miners themselves. One exception i will grant you, is they started giving away some of their tools on equity (investments in openAI, stargate, etc. are very circular), and then will turn around and sell that back to them at their prefered COGS+Profit.
      - kgwgk 1y ago
        > The difference here and between the .com bubble is these companies have high earnings. They are literally walking cash cows and are printing money... The difference between you and me is that I know that Sun Microsystems was not burning money and had a price to earnings ratio similar to Nvidia now. What are “these companies” by the way? Do you mean Tesla?
        burnerRhodov2 1y ago
        Sun microsystems was mainly selling to startups, who could go bankrupt. Nvidia is selling to Oracle, Microsoft, Apple, Tesla, Xai and to some extent Google. Excluding potential bubbles here which are coreweave, OpenAI, Antrhopic, etc. And by "these companies" I mean all the companies i just listed excluding the potential bubbles. They are all making heaps of cash, buying from a company who is also making heaps of cash on each sale. You also have to price in the geopolitical influence of controling such a important piece of tech.
mvdtnz 1y ago
> new industry that is completely changing the landscape of the entire world I am begging you people to touch some grass. Go and talk to some real people. Not tech peers, actual normal human beings.

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kgwgk 1y ago

“At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes which is very hard. And that assumes you pay no taxes on your dividends which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don’t need any transparency. You don’t need any footnotes. What were you thinking?” Written some time ago by the CFO of a company that was making more money than ever in a rapidly growing new industry that was completely changing the landscape of the entire world. (Not investment advice - it could be different this time.) > How are *they* overvalued? By the way, you forgot to mention that TESLA's forward P/E ratio is approximately 203.39, indicating the price investors are willing to pay for each dollar of estimated future earnings. This ratio is lower than its trailing P/E of around ~259.

burnerRhodov2 1y ago
You are conflating revenues and earnings. Analysts forecast that NVIDIA’s earnings (and EPS) will grow in the ballpark of ~21.9% annually over the coming years.
- kgwgk 1y ago
  > You are conflating revenues and earnings. Enlighten me, what’s Nvidia’s price to sales ratio?
  - burnerRhodov2 1y ago
    Again, since revenue is the denominator in sales ratio, you are conflating what the OP said... The difference here and between the .com bubble is these companies have high earnings. They are literally walking cash cows and are printing money... AKA the earnings, with revenue not being important here because that's what CAUSED the .com crash. (High revenues, but absolutely burning money). NVIDIA is in the business of selling shovels to the gold miners in this scenario, not the gold miners themselves. One exception i will grant you, is they started giving away some of their tools on equity (investments in openAI, stargate, etc. are very circular), and then will turn around and sell that back to them at their prefered COGS+Profit.
    - kgwgk 1y ago
      > The difference here and between the .com bubble is these companies have high earnings. They are literally walking cash cows and are printing money... The difference between you and me is that I know that Sun Microsystems was not burning money and had a price to earnings ratio similar to Nvidia now. What are “these companies” by the way? Do you mean Tesla?
      - burnerRhodov2 1y ago
        Sun microsystems was mainly selling to startups, who could go bankrupt. Nvidia is selling to Oracle, Microsoft, Apple, Tesla, Xai and to some extent Google. Excluding potential bubbles here which are coreweave, OpenAI, Antrhopic, etc. And by "these companies" I mean all the companies i just listed excluding the potential bubbles. They are all making heaps of cash, buying from a company who is also making heaps of cash on each sale. You also have to price in the geopolitical influence of controling such a important piece of tech.

mvdtnz 1y ago

> new industry that is completely changing the landscape of the entire world I am begging you people to touch some grass. Go and talk to some real people. Not tech peers, actual normal human beings.