The Financial Results Thread

[DarrenM343]

Seems like they're losing quite a bit of their momentum this week. Down 5% so far today. Think people are losing their appetite to "buy at the peak" since this is about as high as market caps tend to go.

It was also a big move, consolidation to be expected if not a much deeper pullback. Could even be a good short term short - I'm sure short term traders will be looking for a good opportunity.

It's not about being allowed to fail or not, it's not a bank. Investors have no control over that. Nvidia is a great company, regardless of what we think about their 4000 series gaming GPU's . Q1 numbers aside, they have their fingers in lots of pies. All the recent hype sectors from crypto mining, metaverse and now AI Nvidia is involved in. And then self-driving, automation etc. Of course this all helps drive fomo among investor.

Investors do look far out to the future. Only have to read about Tesla to see that, with retail especially saying near the highs "if Tesla do this in 10 years then it will be worth this much". Back then if you told them Tesla would go on to lose 70% of it's current value they'd have laughed at you or much worse. Any disappointing results can have a huge negative impact too, showing evidence that those future targets may not be met. Tesla for example have had quite a downfall from its lofty highs and so far not recovered anywhere near some of the other big tech. People never thought interest rates would be on the up for example and such high value purchases, a more difficult decision.

The future looks good for Nvidia, AMD and even Intel if they can get their act together.

 

[humbug]

For the unenlightened like me, what could be the repercussions of their suspected stock price bubble bursting?

Nothing really as Nvidia aren't going to spend that invested money so if the bubble bursts people pulling that money out again just puts Nvidia back to how they were before the bubble.

To give you another example take AMD, in 2016 AMD's market cap was about $2 billion, by 2021 that market cap had reached about $150 billion, at that point AMD felt that money was secure enough to spend some of it, $46 billion on acquiring Xilinx, so technically AMD's shareholders own Xilinx, that has some risks, if everyone decided to take their money out AMD would have to find that money from their own assets to pay those investors, they don't have that much money sitting in the piggy-bank, i think AMD have about $30 billion in cash and fungible assets. AMD could buy those shares back using the profits they earn to own Xilinx outright, which they might, AMD have spent billions over the last few years buying shares back, learning from 2008 to 2016 the run on AMD's share almost bankrupted them, AMD sold everything they had, the very last thing they sold was their original art-deco style home they build when they founded the company in 1969. That campus is now a housing development, i'm not even sure the original art-deco style campus entrance building still stands, its really quite sad and i'm sure it hurt AMD personally and deeply.

It makes AMD very nervous and they buy back shares with a chunk of every bit of profit they make.

In a way its made AMD quite fortunate because after burning to the ground and hitting rock bottom they had no debts and owned what little they had, so to go from that to almost 2X as wealthy as Intel suddenly you're the one with the mountain of resources to draw on, Intel really can't just buy AMD in to bankruptcy anymore, now AMD have the big cash stash and Intel are broke.

And yes, what's going on is personal.

AMD HQ to Make Way for Luxury Apartments by the Irvine Company

The days are numbered for AMD's iconic Sunnyvale, California headquarters at One AMD Place (or 1090 E. Duane). The company is moving out of this property to another, smaller place elsewhere in Silicon Valley. AMD sold and leased-back this building to New York-based W.P. Carey in 1995 for $95...

www.techpowerup.com

 

[Murphy]

@humbug: I was more curious of what the repercussions would be for Nvidia's ability to keep paying its bills without having to dip into the $6bn odd of stock they've got laying around or if things get really bad having to sell off parts of the company.

If, and I'll admit it probably a big if, their stock prices started to fall and didn't stop until they hit something like $5 per share.

 

[humbug]

@humbug: I was more curious of what the repercussions would be for Nvidia's ability to keep paying its bills without having to dip into the $6bn odd of stock they've got laying around or if things get really bad having to sell off parts of the company.

If, and I'll admit it probably a big if, their stock prices started to fall and didn't stop until they hit something like $5 per share.

Nvidia are completely solvent, they have higher margins than AMD, they are in no danger of not being able to pay bills.

I will say this.

Nvidia's shares to me at least seem massively overvalued. Nvidia annual revenue isn't much higher than AMD's, AMD's Market cap is 8X their annual revenue, its a little on he high side but still reasonable, Nvidia's is 35X, that's ###### insane, this is some serious speculation, these people must think Jenson is a god, they must think Nvidia will quadrupole their revenue in the next few years or they wouldn't be investing this much in them.
To me it seems a bit mad, but i'm no expert.
if this is a bubble and it bursts there could be a minor run on Nvidia's stock and that could cause an escalation to a total run on the stock, the sort of thing that almost ended AMD.

 

[Murphy]

Nvidia are completely solvent, they have higher margins than AMD, they are in no danger of not being able to pay bills.

Seems odd to say that as even though I've said I'm no financial expert it seems strange to suggest that even if Nvidia shares fell to $5, or even 5c, that they'd still be able to pay bills.

 

[humbug]

Seems odd to say that as even though I've said I'm no financial expert it seems strange to suggest that even if Nvidia shares fell to $5, or even 5c, that they'd still be able to pay bills.

No i think that could do them in, AMD's bottomed out at $1.32, its recently been revealed that AMD had about 3 months lift to live had Ryzen not saved them

 

[Man-In-A-Teapot]

Not exactly news, but 34% of corporation tax in Ireland paid by 3 companies, including Apple.

Third of Irish corporation tax paid by three firms

The best known of those companies is Apple, which says it is Ireland’s largest taxpayer.

www.bbc.co.uk

 

[gpuerrilla]

Yeah but wasn't it like 10 years or thereabouts Apple paid close to nothing..?

 

[Gerard]

Yeah but wasn't it like 10 years or thereabouts Apple paid close to nothing..?

Was massively underpaid from 2004-2014 iirc.

 

[gpuerrilla]

Yeah so paying some once doesn't really make up for a decade of avoiding it, but at least Ireland have some positive sentiment for a while now. @Gerard probably in a good position to tell us how their economy and lifestyle status is, wouldn't count on the BBC these days!

 

[humbug]

Low corporation tax is never a bad thing, it attracts businesses, they provide jobs, jobs are good, lots of jobs = financial security for your population, a good standard of living.

High corporation taxes are born out of socialist ideology, people who hate people who generate a lot of wealth and think they owe everyone that wealth weather they earned it or not.
High corporation taxes are the result of short term big state governance, governments who woo voters with lots of costly freebies and social mothering they need to pay for, dependence on that government instead of just insuring there are lots of well paying jobs so that people can make themselves secure and independent from that government.

This country has a disease of low pay and over taxation, that's hidden taxes, tax on food, tax on your household fuels, tax on pretty much everything you buy the money you earn is taxed, then taxed again, and again and again.... its taxed everytime you put your hand in your pocket, tax stacked on top of tax, inflation is tax, the government print money, that devalues the money in your pocket and in that way you pay for that money printing, its your money, its a tax, this government has printed VAST amounts of money in the last decade +, that and deliberate wage depression is why you feel a lot poorer now than you did 20 years ago, you are.

 

[Bencher]

Low corporation tax is never a bad thing, it attracts businesses, they provide jobs, jobs are good, lots of jobs = financial security for your population, a good standard of living.

High corporation taxes are born out of socialist ideology, people who hate people who generate a lot of wealth and think they owe everyone that wealth weather they earned it or not.
High corporation taxes are the result of short term big state governance, governments who woo voters with lots of costly freebies and social mothering they need to pay for, dependence on that government instead of just insuring there are lots of well paying jobs so that people can make themselves secure and independent from that government.

This country has a disease of low pay and over taxation, that's hidden taxes, tax on food, tax on your household fuels, tax on pretty much everything you buy the money you earn is taxed, then taxed again, and again and again.... its taxed everytime you put your hand in your pocket, tax stacked on top of tax, inflation is tax, the government print money, that devalues the money in your pocket and in that way you pay for that money printing, its your money, its a tax, this government has printed VAST amounts of money in the last decade +, that and deliberate wage depression is why you feel a lot poorer now than you did 20 years ago, you are.

That's a very complicated topic. Low taxes sound great in theory. But the low taxation on Ireland cost tax money to the rest of the EU countries, since corps like Google Apple Meta and the liked moved their profits to IRL. If every EU country played the low taxation game we would end up at countries offering tax free policies to these companies to attract them over their competing EU country. So... well, don't think it's that great then is it?

 

[humbug]

That's a very complicated topic. Low taxes sound great in theory. But the low taxation on Ireland cost tax money to the rest of the EU countries, since corps like Google Apple Meta and the liked moved their profits to IRL. If every EU country played the low taxation game we would end up at countries offering tax free policies to these companies to attract them over their competing EU country. So... well, don't think it's that great then is it?

0 sum corporation tax, just provide jobs that pay well, if everyone has money to spend the economy will take care of its self.

 

[DarrenM343]

@humbug: I was more curious of what the repercussions would be for Nvidia's ability to keep paying its bills without having to dip into the $6bn odd of stock they've got laying around or if things get really bad having to sell off parts of the company.

If, and I'll admit it probably a big if, their stock prices started to fall and didn't stop until they hit something like $5 per share.

Instead of focusing on the negatives, read up a lot more on what Nvidia do aside from just the gaming aspect. Some of the stuff they're working on is fascinating. For example, the Earth's digital twin. It's no surprise to me the company is now worth this much. They're also key to many future growth areas, including AI and automation. Would be a bit foolish to bet against them longer term.
Nvidia has as much chance of hitting $5 as Apple, Google etc probably do. Very unlikely. Their biggest risk is China v Taiwan but if that kicks off, the whole chip sector probably will get rekt too, at least until the U.S based fabs are fully capable.

 

[Murphy]

And to think people were querying my claim that some people seem to believe Nvidia's valuation is entirely warranted.

 

[humbug]

Instead of focusing on the negatives, read up a lot more on what Nvidia do aside from just the gaming aspect. Some of the stuff they're working on is fascinating. For example, the Earth's digital twin. To me it's no surprise they company is now worth this much. They're also key to many future growth areas, including AI and automation. Would be a bit foolish to bet against them longer term.
Nvidia has as much chance of hitting $5 as Apple, Google etc probably do. Very unlikely. Their biggest risk is China v Taiwan but if that kicks off, the whole chip sector probably will get rekt too, at least until the U.S based fabs are fully capable.

Mostly true, Nvidia are on the up for sure and they are doing good things, a company that is capable of pushing things forward and innovating, which they are doing.

But 35X their market cap? one trillion dollars with annual revenues of $26 billion, that's the same as AMD, Nvidia say it will increase 30% next quarter, still only $9 billion for that quarter, Google have a market cap of $1.5 trillion, that's with revenues of $290 billion, a ratio of 5X.

 

[DarrenM343]

And to think people were querying my claim that some people seem to believe Nvidia's valuation is entirely warranted.

Referring to me Me? You seem emotionally biased against the company .The valuation is what it is. Investors think it's worth this amount. If you look at my previous reply you will my negative spin on it too, ie, how that can quickly change.
Investors usually focus on the long term however. If for example they they think this is a $5trillion company in 5 or 10 years time,then guess what? They're buyers at this price.

 

[humbug]

Referring to me Me? You seem emotionally biased against the company .The valuation is what it is. Investors think it's worth this amount. If you look at my previous reply you will my negative spin on it too, ie, how that can quickly change.
Investors usually focus on the long term however. If for example they they think this is a $5trillion company in 5 or 10 years time,then guess what? They're buyers at this price.

Nvidia are currently valued as a company with 8X more revenue, is that realistic in the next 5 years?

 

[DarrenM343]

Mostly true, Nvidia are on the up for sure and they are doing good things, a company that is capable of pushing things forward and innovating, which they are doing.

But 35X their market cap? one trillion dollars with annual revenues of $26 billion, that's the same as AMD, Nvidia say it will increase 30% next quarter, still only $9 billion for that quarter, Google have a market cap of $1.5 trillion, that's with revenues of $290 billion, a ratio of 5X.

I wasn't justifying their price but have to remember that markets are forward facing. Investors rightly or wrongly are seeing the potential there. And also one thing to remember is that markets can stay irrational for a long time, as in my previous Tesla example above.
Over the years now Nvidia has been a constant performer. Jenson himself pushes the company forward as other great leaders have too.
But do I think the company is overvalued at this moment? Of course there's some fomo and a bubble is forming around AI. Heck, it could easily hit $300 again or of course less.
I wouldn't buy stock at this price either, personally.
The markets are as much about human emotions as valuations

 

[Murphy]

Referring to me Me? You seem emotionally biased against the company .The valuation is what it is. Investors think it's worth this amount. If you look at my previous reply you will my negative spin on it too, ie, how that can quickly change.
Investors usually focus on the long term however. If for example they they think this is a $5trillion company in 5 or 10 years time,then guess what? They're buyers at this price.

Yes referring to you You. What gave the impression i was emotionally biased against the company?

The stock markets are about much more than just investors and what something is actually worth.