Nvidia, An Early Stage AI Company
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Sometimes You Do Get A Do-Over
by Alex King, CEO, Cestrian Capital Research, Inc
My colleague Yimin Xu recently recommended a book on Masayoshi Son of Softbank, Gambling Man - listening to the audiobook read by the author I was transported back in time to the 1980s and 1990s when respectively the PC and then Internet revolutions were getting started. Inevitably no matter how much success one may have had from that era - and tech has been very good to me over the years - one cannot but think “but why didn’t I see it sooner / be more committed / believe harder / etc”. This is a fruitless exercise of course because history is, as everyone knows, written from the perspective of the winner; I don’t recall any bestsellers about the fate of bond investors who lost their shirts and their minds backing capex-intense alternative telecom carriers in order to carry the wall of Internet traffic that arrived …. about 10-15 years later than scheduled.
Sometimes, though, life does give you a do-over. If you are worried that you missed the AI boom, I have news. It’s only just getting started. Here at Cestrian we use AI technology all day every day, in different ways; proprietary machine learning technology powers our SignalFlow AI family of services (here); we use ChatGPT and Google Gemini in our research work; and so on.
Alex King
I am simultaneously blown away by the capabilities of some tools - try ChatGPT Model 4-o on Deep Research mode, ask it a hard question, and I defy you to not be impressed with its response - and frustrated as to how painfully slow it all is. That hard question will take Sam’s Finest a full half hour to answer. Want to generate images or short videos? You can practically smell the overheating GPUs in your friendly local datacenter. Create a lengthy video? Don’t try and use the kettle or TV in your house at the same time, for the local utility provider is about to come under extreme pressure. AI today is both wonderful and awful. I last felt this way about new technology in … about 1995, when the promise of the Internet was incredible but the reality … wasn’t. Yes even post Netscape. (I never did care what was New or Cool and I certainly didn’t believe that corporate America could tell me these things according to its own judgment).
I believe the AI revolution is in its early days. I think that valuations may get a beating in before they moon once more - they won’t be straight-up from here. But I think companies like $NVDA have a long, long way to go before their markets start to become saturated. From power management to software, comm semi to GPU, PHY to user, across every span and up and down every level, AI is set to revolutionize computing in my view. The sheer intensity of computing, communication, memory usage, everything, that it uses, means the wave of capex-fuelled upgrades in the datacenter, the enterprise, the home and the mobile device, are in the early days yet I believe.
Let’s take a look at Nvidia numbers.
Well, that is remarkable. +69% growth vs. the same quarter last year; cashflow margins up to 59%; and a cool $45bn in net cash on the balance sheet. Unassailable, for now.
Let’s get into the detailed financials, valuation analysis, stock charts and price projections.