The absolute number of $3.5T market cap seems high. But Nvidia's earnings last quarter were $17B. Annualized that is $68B.<p>The PE ratio calculated by current market cap of $3.5T divided by that annualized earnings is 52. Not unusual for a growing tech company.<p>I remember the arguments I hear here on HN these days "No company can be that big and still grow. Also competition will catch up!" from the early 2000's when Apple's market cap crossed $100B.<p>And from 2017 when Tesla's market cap crossed that of BMW.<p>It's not that easy. Companies are moving targets. Their future will be determined by revenue factors that are not generating any revenue today. With Apple it was the iPhone. With Tesla it was self-driving. With Nvidia it will be ... ?
The valuation is completely nuts. It assumes that Nvidia's revenues will continue to grow at the same pace for many many years, without any competition. That's a very silly assumption IMO.
The thing I worry about with Nvidia in terms of valuation is that they have very successfully ridden two waves and I am not sure if a third is on the immediate horizon.<p>Crypto mining kept demand for Nvidia processors artificially high throughout the pandemic and now then they transitioned immediately into AI hysteria. They, of course, have a healthy business without those things, but it is not entirely clear to me if such accelerated growth is sustainable.
The problem with this valuation is that the AMD MI300 exists. It is directly comparable to NVIDIA's accelerators, with differences measured in tens of percentage points, not orders of magnitude.<p>Sure, the software may not be as good as NVIDIA's <i>at the moment</i>, but would it take AMD $3 billion to match it, or $3 trillion? It didn't take NVIDIA trillions to develop CUDA!<p>Similarly, for users of NVIDIA hardware, are they willing to fork over $3 trillion of their own money instead of, say, a "mere" $2T to AMD and work out the kinks in the software compatibility with <i>the remaining one trillion dollars</i>!?<p>These valuations are not just insane, they are certifiably nuts.<p>I'm still waiting for Apple Intelligence to ship, Windows Copilot is looking more like Clippy every day, and ChatGPT might partially replace Google Search for me, but not the rest of Google's products.<p>I just don't see that $3.5T materialising as revenue <i>before</i> the bubble bursts, and if it doesn't, not before AMD starts taking a larger slice of the trillion-dollar-pie.