The Financial Results Thread

[humbug]

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

I think that's all we are saying really. take nothing away from Nvidia and Jenson, but this seems irrational.

 

[Murphy]

^^ That ^^ And I'd add that my speculation was based on the unlikely situation that if the Nvidia stock bubble burst there'd be a run on it. Could it happen, yes. Is it likely to happen, no. But the chance is not zero.

 

[DarrenM343]

^^ That ^^ And I'd add that my speculation was based on the unlikely situation that if the Nvidia stock bubble burst there'd be a run on it. Could it happen, yes. Is it likely to happen, no. But the chance is not zero.

It's so improbable it's hardly worth saying. Could replace Nvidia with AMD, Apple,Google etc.
Nvidia have already gone from $345 to $105 and now back to $400 all since Nov 2021. If anything, investors seem to have missed a fantastic buying opportunity

 

[Murphy]

You could but then AFAIK AMD, APple etc don't seem to have stocks that are massively overvalued.

 

[DarrenM343]

How much would you say Nvidia is overvalued? Losing that amount of valuation is not going to cause the company problems or some kind run on it as you put it. If it lost 25% valuation from here, it'd be only back to near previous all time highs which is about where Apple, Msft etc are currently.

On another note the PE ratio for AMD is actually higher than Nvidia so in that regard, AMD has a higher valuation......

 

[gpuerrilla]

If you think about it though, AMD and Microsoft have been involved with AI from software or hardware so in that regard any of these companies are riding on the train so to speak.

 

[humbug]

How much would you say Nvidia is overvalued? Losing that amount of valuation is not going to cause the company problems or some kind run on it as you put it. If it lost 25% valuation from here, it'd be only back to near previous all time highs which is about where Apple, Msft etc are currently.

On another note the PE ratio for AMD is actually higher than Nvidia so in that regard, AMD has a higher valuation......

based on 2022 revenue

AMD: $23.6 billion, current market cap $200 billion. PE ratio = 8.5X

Nvidia: $26.9 billion, current market cap $983 billion, PE ratio = 36.5X

 

[DarrenM343]

AMD · PE Ratio
607.99

Nvidia · PE Ratio
206.69

Which also ties in with the current PE ratio TTM my platform provides:
AMD 495.32
Nvidia 206.68

TEsla for reference is now 61 vs the 700 or 1500 I think I've seen when the retail fomo was near its peak.
Earnings not revenue

 

[Murphy]

How much would you say Nvidia is overvalued? Losing that amount of valuation is not going to cause the company problems or some kind run on it as you put it. If it lost 25% valuation from here, it'd be only back to near previous all time highs which is about where Apple, Msft etc are currently.

On another note the PE ratio for AMD is actually higher than Nvidia so in that regard, AMD has a higher valuation......

I wouldn't know as like I've said previous I'm not a financial expert however I'm not sure why how much is relevant, isn't it enough to know that it simply is.

Yes loosing value is unlikely to cause a run, as i also said previously, however like i also said the chance is not zero.

 

[humbug]

AMD · PE Ratio
607.99

Nvidia · PE Ratio
206.69

Which also ties in with the current PE ratio TTM my platform provides:
AMD 495.32
Nvidia 206.68

TEsla for reference is now 61 vs the 700 or 1500 I think I've seen when the retail fomo was near its peak.
Earnings not revenue

Earnings.

Profit, before tax, after tax, after share buy backs, before or after debt repayments, purchases... and so on.

There are so many things that can influence earnings, so many ways to describe it its almost meaningless.

To me at least the only constant is revenue, beyond that you might factor in margins, AMD 50% Nvidia 65%, beyond that is how you get these quoted RE ratios which doesn't match what's consistent, so already it looks convoluted and contrived to be more like a sales pitch, which makes me wonder again about these frankly insane valuations. Like a lot of them are being taken for fools.

 

[Harlequin]

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.

Trickle down economics dont work - great in theory, but useless in practise. Buiild up works though.

 

[CAT-THE-FIFTH]

Trickle down economics dont work - great in theory, but useless in practise. Buiild up works though.

They just scarper off with the profits and don't create the jobs,and then depress the wages even more to pump up margins. Then the taxpayer doesn't get the tax benefit,but has to borrow even more money to prop up the low pay and more unemployed people. There was one study in the US(IIRC) where it was cheaper to pay the workers do nothing than actual give the tax breaks,etc.

It's this obsession with margin speculation in the stock market which is depressing wages,exporting jobs abroad and increasing prices and leading to short term thinking. Many jobs can be profitably be done in the west,but not enough for the stock market speculators. Endless margin increases is impossible and only leads to Boom and Bust. What has happened is governments have printed way too much money which is being used as cheap credit to hide all of this. Now interest rates are going back to "normal" levels we can see how much of our economies are based on cheap credit,at both the corporate and consumer level.

During the pandemic,most of that printed money helped the top few percent who got even richer. Yet the rest of us didn't and have to pay even more taxes.

 

[humbug]

Trickle down economics dont work - great in theory, but useless in practise. Buiild up works though.

Its not even great in theory.

So we take your money in the form of taxes, give it to those who can afford creative accounting to avoid tax, they then use that money to buy your goods and services, with your ####### money!

 

[DarrenM343]

Earnings.

Profit, before tax, after tax, after share buy backs, before or after debt repayments, purchases... and so on.

There are so many things that can influence earnings, so many ways to describe it its almost meaningless.

To me at least the only constant is revenue, beyond that you might factor in margins, AMD 50% Nvidia 65%, beyond that is how you get these quoted RE ratios which doesn't match what's consistent, so already it looks convoluted and contrived to be more like a sales pitch, which makes me wonder again about these frankly insane valuations. Like a lot of them are being taken for fools.

If a business cannot turn revenue into net profit, a business would not be a good one to invest in necessarily, unless that is likely to change in future.

The PE ratio as I posted is what most investors likely refer to, based on net income/earnings not overall revenue. If you multiply the EPS by the PE ratio then you get approximately the share price, it's not really convoluted and the EPS is standardised. AMD's EPS is around 1/8th of NVidia's without doing the exact maths Nvidia would need to be around $800 to have the same PE ratio.

AMD's shareprice rose 23% (open the day before Nvidia's results to the high) just on the results and future increased Q2 earnings increase projection from Nvidia while Nvidia's rose 38%. Both have since pulled back somewhat.
We can say they're overvalued but at end of day however investors want to make money. Valuations or fair value don't always matter especially for tech growth companies and this can go on for longer than people think before prices normalise somewhat. I wouldn't be surprised to see prices go much higher if the AI bubble inflates as it hasn't really got started yet but this is not a prediction or financial advice .

 

[Murphy]

Not saying everyone is one or the other but it seems there's more speculation going on than investment.

 

[Harlequin]

Not saying everyone is one or the other but it seems there's more speculation going on than investment.

welcome to the stock market - i wonder how much Nvidia is shorted for

 

[Lightnix]

Not saying everyone is one or the other but it seems there's more speculation going on than investment.

Always has been.

Any Monkey Can Beat The Market

Give a monkey enough darts and they’ll beat the market. So says a draft article by Research Affiliates highlighting the simulated results of 100 monkeys throwing darts at the stock pages in a newspaper. The average monkey outperformed the index by an average of 1.7 percent per year since 1964. [...]

www.forbes.com

 

[Murphy]

I feel my use of the word "more" maybe being missed somewhat.

 

[humbug]

Its part of the flaw in the system, IMO, you invest in a company you expect a return, why else would you do it?

For that company to keep giving investors their return they have to keep growing how much money they generate, not just make money, but keep increasing how much of it they make.
They can do that by growing their customer base, eventually there is no where left to grow in to, then what? Well then you start cutting costs to increase your margins, you've cut to the bone, now what? You increase your margins by pushing prices up, at that point you might start to look a bit deranged in trying to justify that to your consumers, sound familiar?

All the while investors never stop wanting more.

 

[HACO]

It's so improbable it's hardly worth saying. Could replace Nvidia with AMD, Apple,Google etc.
Nvidia have already gone from $345 to $105 and now back to $400 all since Nov 2021. If anything, investors seem to have missed a fantastic buying opportunity

The difference between Apple or Google and Nvidia is that the former two are profit making machines on a scale the world has never seen before.

Generally agree however that if Nvidia stock is not trading at or close to all-time highs, it's probably a good idea to buy. It's a typical thematic stock. Its valuation isn't based on their current financials, products or profits but about trends, ideas, and expectations of future revolutionary technologies. Beliefs about these expectations change quickly and so does their stock valuation so investors can take advantage of the volatility.