The Absurdity of Nvidia’s Valuation

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In this video, we delve into the fascinating world of Nvidia, the semiconductor company that has taken the market by storm. With a staggering market cap of $750 billion, Nvidia has become the 6th most valuable company globally, surpassing giants like Berkshire Hathaway, Meta, and Tesla. However, the intriguing part is that despite its impressive market capitalization, Nvidia doesn't even rank in the top 100 in terms of revenue and net income.

Join us as we explore the valuation of Nvidia, which becomes even more astonishing considering the current historic chip glut and the drastic decline in PC sales over the past two decades. Despite these challenges, Nvidia's revenue has dropped nearly 30% since its peak last year, and its net income has been halved due to falling GPU prices.

We'll also examine the unique phenomenon of "pandemic round trips" experienced by many technology stocks, including Nvidia. While the company faced a 65% decline in share price and diminishing profits in 2022, its stock has more than doubled in recent months, nearly reclaiming its pandemic highs. Surprisingly, this rally can be largely attributed to the hype surrounding Chat GPT and generative AI, as generative AI models heavily rely on Nvidia's graphics cards for their immense computing power requirements.

Drawing parallels to Cisco, the internet infrastructure giant of the dot com era, we analyze the similarities between Nvidia's position today and Cisco's during the late 90s and early 2000s. Cisco experienced an explosive increase in revenue as companies scrambled to connect to the internet, leading to an unjustifiable bubble in its share price. When the bubble burst, Cisco's stock plummeted by 90% and has struggled to recover even after two decades.

The question arises: will Nvidia suffer a similar fate, or is this time different? Join us as we explore the prospects and potential risks associated with Nvidia's soaring share price and evaluate whether it can withstand the test of time and market fluctuations. Discover whether Nvidia truly holds the key to benefiting from the forthcoming AI gold rush or if caution is warranted.

Don't miss this insightful analysis of Nvidia's past, present, and future. Like and subscribe to our channel for more in-depth discussions on the latest trends and developments in the tech industry.

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0:00 - 2:45 Intro
2:45 - 5:30 What Nvidia does
5:31 - 8:03 The bubble pops
8:04 Overhyped?

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