Wow, $220bn is a massive number!


The size of Bank of America, or
Two Caterpillars, or
Deere + American Expresses, or
Fedex + Heineken + Colgate Palmolive + Yum Brands

Sorry, what is?

$220bn – the increase in value of Nvidia’s market cap after hours

The increase, not the entire value of the next Trillionaire

Yes, but it’s because of AI – that’s been all the “rage” since we started Chatting to GPT

Yes, but you’d think after the “rages” in recent years, people would be careful of “raging”

What do you mean?

Well, remember when people paid $588 per share for Zoom in October 2020
because “on-line” meetings were “raging” and were going to change the world

I do

Well, they did “change the world” and we’re all still Zooming and Teamsing

Except Shareholders “raged” when they only reported 5c of earnings last quarter

admittedly a different kind of rage with the share down 90% at $68

Understandably so – imagine if you gave me $588 a few years ago and I only gave you 5c a few years later!

Yes, I think I’d also “rage”, especially if I never actually received 5c..

And remember when people were raging about “fintech & payment systems and the death of cash”

Yes, I do

And people “raged” for PayPal and paid $310 per share

Well, it’s now down 80% in less than 2 years

Yes, but Nvidia is “different”, they’re the “leader”

Oh and Zoom & Paypal weren’t leaders…?

Well, yes they were .. for a moment

You see, that’s the thing about competition, it catches up

People thought no one would catch Intel

Until Nvidia did

And now nobody thinks anyone will catch Nvidia

Until someone does

Anyway, tell me about Nvidia’s numbers

Revenue fell 13% year over year

Sorry, did you say fall?

Yes, but it increased $1bn from last quarter

I should hope so! Their market cap increased a few-large-companies’ worth from yesterday

What about EPS?

Down 20%

Down? Don’t their clients know that AI is all the “rage”…?

And free cash flow

$5bn for the last 4 quarters

Oh, so a FCF yield of only 0.5% – tricky to get rich at that yield

Oh no, you don’t get it in the form of dividends, you really need to work there and then get it in the form of buybacks of your exercised options

Good point!

And, did they buyback any shares?

No, even 0.5% is too rich for them..

But shares in issue did rise 1.5% in the quarter so it seems their staff who are cashing in options, don’t know about the “AI” rage either..

Look, their revenue guidance of $11bn suggests being up 64% y/y next quarter

Ok, so:

IF that forecast is accurate & they make $45bn next year up 76%, and
IF they make 50% net margins = 22bn, and
IF there are no other competitors on the horizon (keeping in mind all the tech spend by the big guys on R&D), and
IF AI is still “raging” and investors are willing to pay nearly 50x earnings

Then your return will be ZERO – no Ifs or buts

But IF any IF falls short

You’ll be the one “raging” like your Zoom & Paypals