Not A Bubble (NVDA Q1 FY1/25 Earnings Review)

Not A Bubble (NVDA Q1 FY1/25 Earnings Review)
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Nvidia Q1 FY1/25 Earnings Analysis

Think AI is a bubble? It’s not a bubble. When one of the largest companies in the world brings in a quarter with revenue growth of +262% vs. the same quarter last year, which means TTM revenue growth of +208% vs prior year, and here we’re talking about a company clocking up nearly $80bn in annual revenue right now? That’s not a bubble. And the 60% cashflow margins tell you that nobody is buying much in the way of AI GPUs from AMD or Intel or other right-tail types either.

For now, Nvidia remains the King of the Street.

Nvidia Headline Financials

Detailed Fundamental Analysis

Huge rates of growth at huge margins with a huge pile of net cash on the balance sheet. That’s about as complicated as you need to make the analysis right now.

One day it will slow and one day someone will eat away at its margins. But not today.

Valuation Analysis

If you think 50x TTM cashflow is expensive for this, please tell the rest of us what you think is a good value stock and why. 50x TTM cashflow is not expensive for this in my humble opinion. It’s about 2x the price of a boring defense contractor. I’m not saying don’t own boring defense contractors, I own some and I love them. But if you stop yourself from owning the stock du jour because you think it’s expensive? I think your emotions are clouding your judgment.

Technical Analysis

You can open a full page version of this chart, here.

Price target, $1372; that’s the 3.618 extension of the prior Wave 1 up on this timeframe.

Here's a shorter-term take including a path of short-term selldown if one is taken. Full page version, here.

Stock Rating

We continue to rate NVDA at Hold. (We rated at Accumulate between $100-150 in 2022-3).

Cestrian Capital Research, Inc - 22 May 2024.

DISCLOSURE - Cestrian Capital Research, Inc staff personal accounts hold long position(s) in NVDA.