https://www.statista.com/statistics/607716/worldwide-artific…
I do not know if all of these markets are 100% opportunities for Nvidia, but Nvidia is the enabling technology for at least every single product being projected here.
The market for AI is expected to grow from $7.345 billion 2018 to $89.847 in 2025. 2025 is really just around the corner. Amazing how time moves so much faster the older you get. I hope it does not geometrically accelerate as each year goes by. From this projection, and I doubt many would quibble that the growth will be very large as AI is the largest technological change since the silicon chips that it requires to power AI itself, is 12x growth from this year to the end of 2025. Most estimates like this underestimate some trends, but sometime some trends take longer to take place than anticipated.
In this projection I believe the most speculative is the autonomous automobile market. We are still a bit away from full level 5 automated passenger cars. However the AI market does not need that to take off as autonomous machines are lower hanging fruit. Things like drones, tractors, trucks, construction equipment, and the like.
At present nearly all of this requires Nvidia GPUs and software. AMD does not have anything but an asterisk, and Intel has CPUs that are ancillary to the GPUs in learning, but can stand alone or with GPUs in inference, along with FPGAs, but those are all growing much slower than the GPU aspect of AI. Nvidia presently has ROE > 50%, meaning this company returns more than 50% for each dollar it invests in its business. An absurdly large number. There are around 47 start ups trying to become the “Nvidia killer” but as far as I can tell they are mostly like Google’s TPU chips that Nvidia has managed to largely outperform and the TPU has not made a dent in Nvidia’s business.
For a company with an effective world wide monopoly in multiple enormous and high growth markets that may exceed the TAM for any market in the world, their current PE of $24 TTM (after Q4 ends with this quarter), and probably 16x PE for next year…
I will leave it to others to comment. Low valuation is not necessarily a positive criteria, but at some point something has to give. Currently I think the market has equated Nvidia with AMD and general semi’s. Reality is most likely something else. Anyone else agree or disagree?
Tinker