I agree people may have missed the boat but for that PE ratio i wouldn't focus too much on it as PE is calculated using 1 year of past data. It fails spectacularly in providing a valuation when there's extreme YoY growth which there is here.
See the PE chart of Nvidia here and notice the large step changes everytime a quarterly report comes out: https://ycharts.com/companies/NVDA/pe_ratio . As each quarter where they had <1/10th the earnings is pushed out of the PE calculation they have a big step change.
Their forward PE is 25.32x right now. They have an expected 8% quarterly growth forecast. The FAANG have PE's higher than that and much lower growth. Really on fundamentals of PEG (PE and growth) Nvidia is pretty good value. But... There's huge risk here. Will they continue or will a competitor emerge? Can they rely on chips from Taiwan? etc.
So the investor story isn't that they have a crazy PE. They honestly don't. The investor story is that fundamentals for Nvidia look quite good but there's also risks looming.
I guess PE is better for steady-state businesses like utilities. But even with PEG, $NVDA is quite high - I get 16, but I much prefer this to be below 1.
None of this means they're not a good buy, just that it would've been really fantastic to already be an owner.
Their PE ratio was over 100 before the earnings announcement last week, so it has fallen. 18.12B revenue, 9.24B net this last quarter - 6.05B revenue, 1.41B net three quarters ago.
With growth in revenue and net this quick, the 12 month trailing P/E ratio will be high.
There's not? Both AMD and Intel have GPUs that are competitive in certain market segments. AMD in particular is pretty much even in terms of rasterization performance on the high end. Intel is just new (again) to the game of discrete graphics.
Nvidia, on the other hand, invested tons and tons of money to make CUDA good over the last like 15 years, while AMD has not really put any serious effort into AI/ML workloads. It's mostly a software support problem, not a hardware problem to my understanding.
AMD is even on performance and significantly more affordable for consumers. but people wont stop buying nvidia's ripoff products like the 4060. really frustrating
CUDA’s definitely the “moat”, in the Warren Buffet sense - it’s not impossible for someone like AMD or Intel to make something CUDA compatible, but it might cost enough to wreck the economics of trying to compete in the space.
It’s important to have a vision of what you want to do as a company.
For as long as I can remember, Jensen has been telling us during all hands meetings that Nvidia is a visual computing solutions company, not a semiconductor company. (The “visual” part has only been dropped in the past few years.)
Nvidia sells hardware, but they also sell complete solutions, and everything in between.
AMD is coming out with the MI300x on Dec 6th, which has 192GB and runs on the same hardware platform as H100s (OAM-UBB). They've doubled down on ROCm/Pytorch and other projects. Don't expect them to stay behind for much longer.
Gaming isn't the lucrative part of the business — it's selling data center GPUs for AI/ML. That's where Nvidia is raking in the cash.
It's in the article:
"...of the company's $18.12 billion in revenue, $14.51 billion was generated by its data center division."
They spent over a decade building up CUDA into the industry standard for GPU compute programming. That's why it's so hard for anyone to compete in this domain. AMD is doing better in gaming, but that's practically a sideshow business for Nvidia now.
I know, but my point is there were heavy incentives to compete with Nvidia. But nobody did, at least not with the same intent. And now they're (Nvidia) raking it in due to the AI/ML wave.
If others had comparable GPU capacity and know how, the market wouldn't be so skewed in favour of Nvidia.
AMD's Radeon group has, by any definition, kept up. In gaming, in the tier of cards that people actually buy, they trade blows with NVidia.
But making a GPU is hard. Making a good GPU is even harder. This becomes a chicken and egg problem. If NVidia's hardware has quirks, and you're a game developer, you optimize your game for Nvidia's hardware. If someone else tries and builds a GPU, they discover that many, popular, games run like sh*t. Because of tens of years of strange workarounds to ship a game, drivers rewrite commands for specific games, game devs abuse the directx spec or do it wrong.
However, Nvidia set out 10-15 years ago to corner the professional general purpose GPU compute market with a software layer called CUDA. Software was written and optmised for CUDA, and not any other generic graphics library for reasons I don't know (I'm not a graphics developer, just a gamer). So now Nvidia enjoys a moat in gpGPU (as it was called).
I do wonder how much of an impact the PS5 and Xbox Series have on this though since they both have RDNA2 GPUs. Consoles tend to face higher optimization pressure, especially as the generation wears on. It might be why AMD has kept so competitive in gaming as of late.
Absolutely, positively nothing stops AMD from shipping affordable GPUs with more VRAM. It might not be a popular device - most people are buying $100-200 GPUs. But I would buy a 64GB 7900XTX, not a 24GB one.
The simple answer is, like many markets with few competitors, they like prices high. It's like a point of no return if they undercut their crappy workstation graphics.
Well there’s the looming threat of the fact that Nvidia is making margins that are way bigger so they can easily match any AMD undercutting and then undercut AMD if they want to.
The products that are red hot right now also use HBM not VRAM.
AMD typically loses out in certain features. Video encoding/decoding is worse on AMD, if I'm not mistaken. They've also had a reputation for bad drivers, at least in the past. Not sure how true that is now.
If you mean AI/ML/Cuda? I fully agree with you. AMD is suffering the consequences of their half hearted efforts with ROCm right now.
If you mean gaming? AMD has had better mid range gpus since the rx 480 was released in '16. Nvidia has been resting on their laurels and AMD has recently seemed to be fine playing the 'price is right' game where they price their gpus ~ 10% less than nvidia and don't even attempt to take market share.
AMD is committed to actively improving ROCm and directly supporting projects like Pytorch. They were caught with their pants down, but working hard to catch back up.
There's also AMD - but it seems like a hard industry to get into. Intel keeps trying, most recently with Intel Arc[1], but they've never been able to (or perhaps wanted to) crack the high end.
Saying they've "never been able to" is a kind of weird perspective. They're really only just starting on their dedicated GPUs. The Alchemist architecture is their very first attempt, and they've been putting a lot of effort into repairing and refining the drivers. The hardware is actually pretty decent when it's firing on all cylinders.
But Nvidia and AMD have a huge time advantage on Intel. It's going to be a few generations and billions of dollars before Intel can catch up, assuming they keep with it.
Intel has been in the integrated GPU market for awhile but with little pressure to innovate and very different design goals.
AMD has real good hardware to compete at least in the gaming sector. But, the hardware is only as good as the software/driver supporting it. In the ML and Cryptor sector, Nvidia has built a moat around their hardware called CUDA, a pretty much standard if you want your GPU specific code to be “portable”. I’m afraid OpenCL won’t matter anymore unless Nvidia supports it. Anyone with more industrial domain knowledge wants to chime in?
They also own a high end networking company and will sell you an entire rack or datacenter integrated for you. Also yeah, the decade or so they’re had thousands of in-house engineers and people around the world working on CUDA is HUGE. Also the crypto boom encouraged them to buy up tons of fab capacity. Nvidia had foresight on multiple levels here.
Nvidia’s problem is that every company is a credible threat because in the ongoing gold rush they can’t make enough shovels to meet demand and damn there is gold in them thar hills. People are going to do literally whatever it takes to make their competition’s products work. If you are selling a shovel, even a shitty shovel, you are a competitive threat to Nvidia right now.
I think Nvidia has built a firmware and library support moat around their hardware that is difficult for others to keep up with. They invest time to work with studios to make sure they have game ready drivers available the same day as new AAA games are launched.
AMD and Intel are competitive in gaming. Where Nvidia excels is other types of acceleration. AMD and Intel can't hold a candle to Nvidia when it comes the raytracing renderers used in every 3D and CGI workflow, for example.
Nvidia got out in front with CUDA. They got a huge first-mover and vendor lock-in advantage with that one. AMD dropped the ball and is playing catch-up.
Nvidia has been the pick axe vendor for 2 gold rushes in a row now. First crypto, then AI. It's an extremely nice position to be in. Regardless of how something like OpenAI shakes out, Nvidia will keep making money.
Seriously. I can't think of any other company that has managed to "luck out" this much.
GPU's were designed for graphics. But then they just happened to be the right tool for crypto, and then the right foundation for ML.
I can't think of any other company that has managed to benefit so much from a product designed for one thing, that turned out to be the solution to other things as well.
(Edit: obviously they've done a ton of work to capitalize on these two trends and plan for them as they saw them coming, but that was always leveraging their pre-existing massive investment in GPU design and expertise.)
If OpenAI doesn’t achieve AGI, which it won’t, demand probably won’t continue to grow. LLM’s will find their limit and massive training budgets won’t be needed.
Since I'm being rate limited for one downvote:
> All science is brute force of guess and test, and OpenAI does a lot of that.
Nope. Science looks to answer a critical question. It doesn't conduct trillions of experiments at one time.
> You don't think there's any possibility of emergent properties? Given that we understand physically how the human brain works, but not how consciousness emerges from that, I'm pretty damn unconfident.
Possibility? Why? Because Altman & co are hyping things up? They have no proof of a breakthrough. It's just posturing.
That’s a great business model, selling pickaxes and dynamite on credit though can backfire if your are the one loaning out the money. Nvidia is a bit at risk it this gold rush ends suddenly
Readit News
Their revenue is up 206% but they have massive margins on the datacenter side meaning their earnings are up 1276% YoY
Can we fix the title to either say revenue up 206% or earnings up 1276% to be correct?
See https://nvidianews.nvidia.com/news/nvidia-announces-financia... or even just look at the linked article. They do not say earnigns up 206%. They say revenue up 206%
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https://valustox.com/NVDA
A financial performance for the ages, and they look set to keep it up.
Unfortunately for new investors, their market cap is even more insane, giving them a crazy PE ratio of 73.
See the PE chart of Nvidia here and notice the large step changes everytime a quarterly report comes out: https://ycharts.com/companies/NVDA/pe_ratio . As each quarter where they had <1/10th the earnings is pushed out of the PE calculation they have a big step change.
Their forward PE is 25.32x right now. They have an expected 8% quarterly growth forecast. The FAANG have PE's higher than that and much lower growth. Really on fundamentals of PEG (PE and growth) Nvidia is pretty good value. But... There's huge risk here. Will they continue or will a competitor emerge? Can they rely on chips from Taiwan? etc.
So the investor story isn't that they have a crazy PE. They honestly don't. The investor story is that fundamentals for Nvidia look quite good but there's also risks looming.
I guess PE is better for steady-state businesses like utilities. But even with PEG, $NVDA is quite high - I get 16, but I much prefer this to be below 1.
None of this means they're not a good buy, just that it would've been really fantastic to already be an owner.
Their PE ratio was over 100 before the earnings announcement last week, so it has fallen. 18.12B revenue, 9.24B net this last quarter - 6.05B revenue, 1.41B net three quarters ago.
With growth in revenue and net this quick, the 12 month trailing P/E ratio will be high.
Nvidia, on the other hand, invested tons and tons of money to make CUDA good over the last like 15 years, while AMD has not really put any serious effort into AI/ML workloads. It's mostly a software support problem, not a hardware problem to my understanding.
For as long as I can remember, Jensen has been telling us during all hands meetings that Nvidia is a visual computing solutions company, not a semiconductor company. (The “visual” part has only been dropped in the past few years.)
Nvidia sells hardware, but they also sell complete solutions, and everything in between.
It's in the article: "...of the company's $18.12 billion in revenue, $14.51 billion was generated by its data center division."
They spent over a decade building up CUDA into the industry standard for GPU compute programming. That's why it's so hard for anyone to compete in this domain. AMD is doing better in gaming, but that's practically a sideshow business for Nvidia now.
I know, but my point is there were heavy incentives to compete with Nvidia. But nobody did, at least not with the same intent. And now they're (Nvidia) raking it in due to the AI/ML wave.
If others had comparable GPU capacity and know how, the market wouldn't be so skewed in favour of Nvidia.
But making a GPU is hard. Making a good GPU is even harder. This becomes a chicken and egg problem. If NVidia's hardware has quirks, and you're a game developer, you optimize your game for Nvidia's hardware. If someone else tries and builds a GPU, they discover that many, popular, games run like sh*t. Because of tens of years of strange workarounds to ship a game, drivers rewrite commands for specific games, game devs abuse the directx spec or do it wrong.
However, Nvidia set out 10-15 years ago to corner the professional general purpose GPU compute market with a software layer called CUDA. Software was written and optmised for CUDA, and not any other generic graphics library for reasons I don't know (I'm not a graphics developer, just a gamer). So now Nvidia enjoys a moat in gpGPU (as it was called).
The simple answer is, like many markets with few competitors, they like prices high. It's like a point of no return if they undercut their crappy workstation graphics.
The products that are red hot right now also use HBM not VRAM.
If you mean gaming? AMD has had better mid range gpus since the rx 480 was released in '16. Nvidia has been resting on their laurels and AMD has recently seemed to be fine playing the 'price is right' game where they price their gpus ~ 10% less than nvidia and don't even attempt to take market share.
[1] https://www.tomshardware.com/news/intel-arc-graphics-cards-a...
But Nvidia and AMD have a huge time advantage on Intel. It's going to be a few generations and billions of dollars before Intel can catch up, assuming they keep with it.
Intel has been in the integrated GPU market for awhile but with little pressure to innovate and very different design goals.
Like are companies like this a credible threat? https://www.cerebras.net/
I hear a big part of Nvidia's lock-in is that they provide software that runs these AI projects?
Nvidia’s problem is that every company is a credible threat because in the ongoing gold rush they can’t make enough shovels to meet demand and damn there is gold in them thar hills. People are going to do literally whatever it takes to make their competition’s products work. If you are selling a shovel, even a shitty shovel, you are a competitive threat to Nvidia right now.
GPU's were designed for graphics. But then they just happened to be the right tool for crypto, and then the right foundation for ML.
I can't think of any other company that has managed to benefit so much from a product designed for one thing, that turned out to be the solution to other things as well.
(Edit: obviously they've done a ton of work to capitalize on these two trends and plan for them as they saw them coming, but that was always leveraging their pre-existing massive investment in GPU design and expertise.)
AI is a little different for now, we'll see how it holds up.
Since I'm being rate limited for one downvote:
> All science is brute force of guess and test, and OpenAI does a lot of that.
Nope. Science looks to answer a critical question. It doesn't conduct trillions of experiments at one time.
> You don't think there's any possibility of emergent properties? Given that we understand physically how the human brain works, but not how consciousness emerges from that, I'm pretty damn unconfident.
Possibility? Why? Because Altman & co are hyping things up? They have no proof of a breakthrough. It's just posturing.
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