Not to get overexcited, but it might be even better than that. The guide for next quarter, with any kind of beat even close to this quarter’s, could mean close to $15b in datacenter. Even if it’s a little under that, you’re looking at an almost $60b run rate (~$70b for NVDA total revenue since gaming contributes a bit too). Assuming $15b isn’t topped out, but still ramping up…well, maybe we’re talking about close to $18-20b in Q4 this year? Then even if that’s pretty close to topped out, datacenter in f2025 could look like:
19-20ish
21-22ish
23-24ish
23-24ish
Add in gaming and NVDA could flirt with $100b in revenue next year. And I’m not the only one who thinks so:
Kind of amazing that the low estimate is 47b and the high is 108b of revenue…maybe some analysts haven’t updated their numbers yet. But it seems to me that the average estimate of ~71b will likely be beaten, and as I said, maybe they can leap near 100b. That would mean ~50b of profit next year, so a $1.5 - 2.0 trillion dollar valuation would be pretty reasonable (a PE of 30 or 40).
But then I worry they’ll have a Zoom-like problem. Maybe after f2025 they level off around 100b in revenue, 50b in profit. I would imagine at this point a PE of 30-40 would seem kinda high. Look at ZM with its PE currently around 15. But that’s what happens when growth all but stops.
You might reasonably say, but Bear, why would NVDA stop growing? Well, because $100b is a ton of revenue and a ton of product. Is it possible demand goes even higher in future years? Of course. But it’s also possible it doesn’t…and at some point even drops back to a more historically normal level. Data (and datacenters) will grow year after year, driving NVDA’s revenue higher…except in extreme times when it will spike and then fall back – and I think we’re clearly in a spike now.
How high the spike will take NVDA’s business and how far back it will settle…that’s what the market is trying to figure out now. NVDA’s mkt cap is now ~$1.1 – no one is sleeping on this stock. Therefore it also seems unlikely we’ll see a much lower price any time soon.
So I decided to jump in with a small position. It’s amazing to me that NVDA has just more than doubled their datacenter revenue in a quarter, and might be able to double it again and more. Maybe they won’t and the stock will go sideways. But if they do, the market will likely believe their growth has some durability. At some point the market will even overshoot it…and this is just my gut, but I don’t think that has happened yet.
The overall market yesterday and today has kept the share price at bay, but I don’t expect NVDA to fall much after a quarter like they just put up. My small position will spur me to watch carefully, and if for some reason we do see more of a bargain, I’ll be ready to add.
The quarter definitely proved that the story is playing out. Now we just have to see how long the story can last.
If either of you are close (I like the chances that you are), then this company will put on a real show.
Bear